vippy spinpro ltd Management discussions

IMF January 2023 World Economic Outlook Update projects that global growth will fall to 2.9 percent in 2023 but rise to 3.1 percent in 2024. The 2023 forecast is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook but below the historical average of 3.8 percent. Rising interest rates and the war in Ukraine continue to weigh on economic activity. Chinas recent reopening has paved the way for a faster-than-expected recovery. Global inflation is expected to fall to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic levels.

INDUSTRY STRUCTURE AND DEVELOPMENT

The global textile market grew from $573.22 billion in 2022 to S610.91 billion in 2023 at a compound annual growth rate (C AGR) of 6.6%. The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID- 19 pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe. The textile market is expected to grow to $755.38 billion in 2027 at a CAGR of 5.5%.

The textile and apparel industry in India is the second largest employer in the country providing employment to 45 million people.

The Textile Sector in India ranks next to Agriculture. Textile is one of Indias oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainfiil employment to millions of people. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. The contribution of the textile industry to gross domestic product (GDP) in terms of percentage share of industrial output was around 7 per cent during the last three years. The direct employment in Indias textile sector is estimated at 45 million.

The Indian textile industry is aiming to export products worth $40 to $100 billion within 2027. These garment units are fast expanding in size and investments, to meet the bulk orders pouring in from various foreign countries in the west.

The Company is engaged in the manufacturing of cotton yam for different applications by Rotor Spinning. Rotor Spinning is economical, since the process is very short, consumes less energy and other substantial cost benefits in the choice of raw material in comparison to Ring Spinning especially in coarse counts. The Company is also engaged in generation of power through Wind Mill & Solar Panels for captive consumption.

OPPORTUNITY AND THREATS

Opportunity

The Make In India campaign, attracting investment and new manufacturing opportunities, also ensures constructive government provisions for the development of textile trade and manufacturing.

The Union Ministry of Textiles is more active in developing the textile industry, by constant coordination with business owners of this sector. For textile sector the annual budget has been kept at Rs. 4,389 cr. in 2023-24. The exclusion of the textile sector from custom duty reduction should positively impact the domestic texti les sector. Also, the E-commerce market, increasing demand for online shopping is expected to drive the textile manufacturing market. Manufacturers can now sell their products on a larger platform than before, which will increase their customer base geographically, driving the growth of the textile manufacturing market.

Threats

After two pandemic-stricken years, textile and apparel manufacturers were hoping to be able to catch their breath in 2022. But then Russia invaded Ukraine, and manufacturers are now facing fresh challenges putting their already stressed cash positions under pressure, from the energy crisis to fluctuating raw materials prices to the global supply chains transformation.

On the raw materials side, the invasion of Ukraine caused worrying price fluctuations during 2022. Orders are increasing more in value than in volume, so manufacturers arc beginning to worry that volumes will continue to stagnate even when production costs will eventually fall. Ascenario that would undermine their profitability.

SEGMENT WISE PERFORMANCE

The Company generates power through wind mill & solar panels for captive use. Hence no Segment reported.

OUTLOOK

From a global perspective, the textile industry is an ever-growing market, with key competitors being China, the European Union, the United States. China is the worlds leading producer and exporter of both raw textiles and garments. I lowcvcr China is exporting less apparel and more textiles to the world due to the corona virus pandemic. The United States is the leading producer and exporter of raw cotton, while also being the top importer of raw textiles and garments.

According to the WTO. India is the third-largest textile manufacturing industry and holds an export value of more than USD 30 billion. India is responsible for more than 6% of the total textile production, globally, and it is valued at approximately USD 150 billion. At present. India holds a 4% stake in the worldwide trade of textiles and apparel. It is predicted that India will export USD 95.5 billion worth of textiles. Growing at a CAGR of 15.3%, the total exports will reach USD 145.6 billion by 2023.

RISK AND CONCERNS

The Company had adopted Risk Management Policy to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The volatility in price of cotton w hich is raw material for the Company, volatility in oil prices in international market and non - availability of skilled manpower are the major threats to the company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls with reference to all its operations and such systems are continuously reviewed and upgraded. All the transactions arc properly authorized and recorded. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The Internal Audit is conducted by outside auditing firms which evaluate the functioning and quality of internal controls and check; and provides assurance of its adequacy and effectiveness. The Internal Audit Reports are actively reviews by the Audit Committee and adequate remedial measures, if any. are taken. The Internal Audit Reports are also reviews by the Board of Directors periodically. During the year, no reportable material weaknesses in the design or operations were observed.

OPERATIONAL & FINANCIAL PERFORMANCE

OPERATIONAL PERFORMANCE

Particulars	2022-23	2021 -2022
Production	7733.45	8536.79
Sales	7764.68	8516.88

FINANCIAL PERFORMANCE (Rs.in Lakhs)

Particulars	2022-23	2021-22
Income
Revenue from Operations	15632.26	13942.78
Other Income	112.27	106.93
Total Revenue	15744.53	14049.70
Less: Expenses other than Finance cost and Depreciation	13962.06	12257.22
Profit before finance cost, depreciation & amortization, and tax	1782.47	1792.48
Less: Finance C osts	52.20	25.83
Less: Depreciation and amortization expenses	290.17	133.65
Profit before Tax	1440.10	1633.00
Less: Tax Expenses
Current Tax	325.47	422.06
Deferred Tax (Assets)/Liabilities	43.16	(5.95)
Profit for the year	1071.47	1216.89
Other Com prehensive Income	22.15	7.28
Total Comprehensive Income	1093.62	1224.18
Earning per equity share
Basic	18.25	20.73
Diluted	18.25	20.73

The Companys total revenue for the year under review amounted to Rs. 15744.53 Lakhs as compared toRs. 14049.70 Lakhs of the previous year. The Profit before Tax for the year under review amounted to Rs. 1440.10 Lakhs as compared to Rs. 1633.00 Lakhs of the previous year. The Profit after Tax for the year under review amounted to Rs. 1071.47 Lakhs as compared to Rs. 1216.89 Lakhs of the previous year, The Company is engaged in the manufacturing of cotton yarn for different appl ications by Rotor Spinning.

KEY FINANCIAL RATIOS AND PERFORMANCE

Ratio	2022 - 23	2021-22	% Variance	Explanation in case change is more than 25%, as compared to previous year
Inventory Turnover	4.06	3.57	13.73%	-
Current Ratio	3.39	3.10	9.35%	-
Debt Equity Ratio	0.47	0.01	4.600.00%	Term Loan received for expansion.
Debtors Turnover ratio	7.56 time	7.20 time	5%	-
Net Profit Margin	6.85%	8.73%	-21.53%	-
Return on Net worth	15.02%	20.15%	-25.450%	Decrease in Net profit
EPS	18.25	20.73	-11.96%
Operating Profit Margin	8.83%	10.76%	-17.93%	Decrease in Net profit
Interest Coverage Ratio	28.59	58.07	-50.76

MATERAL DEVELOPMENT IN HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Human resource is considered as the most valuable of all resources available to the Company, The Company continues to lay emphasis on building and sustaining an excellent organisation climate based on human performance. The Management has been continuously endeavoring in fostering high performance culture in the organisation. The Company has 101 permanent employees as oti the roll of the Company as on 3FMarch, 2023. Further, industrial relations remained peaceful and hannonious during the year.

CAUTION ARY STATEMENT

Statement in the "Management Discussion and Analysis" describing the Companys objectives, estimates, expectations or projections may be "forward looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectationof future events. Actual results could, however, differ materially from those expressed or implied. The Company assumes no responsibility in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.