Visagar Polytex Ltd Management Discussions.

Disclaimer

Statements made in the Management Discussion and Analysis and relating to companys objectives, projections, outlook, expectations, estimates, etc., may constitute forward looking statements within the meaning of applicable securities, laws and regulations. These statements are based on certain assumptions, which cannot be guaranteed by the Company. Several factors, over which the Company may not have any direct control, could make a significant difference to the companys operations. As such, actual results may differ materially from such projections, whether expressed or implied, since it would be beyond Companys ability to successfully implement our growth strategy. The Company undertakes no obligation or responsibility to update forward looking statements and to publicly amend, modify or revise to reflect events or circumstances after the date thereof on the basis of any subsequent development, information or events.

The management of Visagar Polytex Limited presents below its analysis on the performance of your Company during the year under review, i.e. accounting year end 31st March, 2021.

Overview of the economy

A country-wide lock down was enforced by the government in late March 2020 due to the COVID- 19 pandemic. The economic impact of this has been so devastating that manufacturing and services activity came to a grinding halt, resulting in demand falling to unprecedented lows that fed into PMI indices going into a free fall. The country is now faced with enormous job losses, migration of labour, increased expenses in medical and health infrastructure, lower tax collections and high fiscal deficit. The manufacturing sector contracted further, recording a negative growth of 1.4%. Public administration, defence and other services grew at 10.1%. The most disturbing news is that the three components of demand have fallen, consumption demand has slowed, while investments and exports are both in negative territory, Economic activity remained largely subdued and tighter financial conditions impinged upon activity. The Government of India has responded to this economic fallout by announcing two stimulus packages and liquidity easing measures to fuel the economic activity. The lockdown is being removed in a phased manner and efforts are being made to revive the manufacturing, services and other productive activities. During the financial year 202021, market sentiments remained volatile since the start of the financial year due to escalating trade tensions between US and China, fears of disruptions to supply chains, prolonged uncertainty on Brexit and geopolitical tensions in Middle East. Amongst the growth enabling pillar of the economy, the service sector is the largest contributor to the nations GDP, followed by the manufacturing sector. With the intent to boost the domestic manufacturing sector output, the government has spearheaded several campaigns, reforms and initiatives like make in India, Start-up India to help the sectors increase its share in the overall GDP.

Economic Overview with specific reference to Textile Industry

India is the second largest textile manufacturer in the world. The Indian textile industry is a global leader thanks to the economic liberalization. Though it used to come under unorganized sector few years back, the scenario has changed and a large part of the industry is now in the organized sector. The Indian textile industry is one the largest and oldest sectors in the country and among the most important in the economy in terms of output, investment and employment. Contributing 14% to the countrys Industrial production and 4% to the countrys Gross Domestic Product (GDP) the segment also accounts for 13% of Indias export earnings thus being the second largest provider of employment after agriculture in the country. The textile industry employs about 40 million workers and 60 million indirectly. Textile and apparel exports from India is estimated US$ 65 billion. The domestic textile and apparel industry in India is estimated to reach US$ 141 billion by 2021.

Overview of the Sector & Business

The domestic market for apparel and lifestyle products, currently estimated at $85 billion, is expected to reach $160 billion by 2025. While mens apparel currently dominates the space, it is the womens apparel category that is set to grow at a faster rate and will equal the mens wear segment. "The fashion and lifestyle segment is witnessing a paradigm shift with womens apparel expected to match mens apparel at par in terms of 37% market share each in 2016. Keeping this trend in mind, the organised retailers need to pay more attention to women consumers as India is one of the few countries where the share of mens apparel is higher than that of womens and that is changing. The current Indian ethnic wear market is highly unorganized with a few branded players operating primarily in metropolitan cities. The Saree, Salwar Suit and Lehenga market occupy a major chunk of women apparel sales in the country.

Your Company is into textile manufacturing, trading, wholesaling and retailing activities comprising of a number of independent as well as interdependent verticals viz. Ethnic wear & Garment manufacturing, wholesale & retail and Contract-based manufacturing. Your Company has a retail chain retailing apparel and ethnic wear under its flagship brand Vividha, in addition to its comprehensive manufacturing and sales facility at Surat.

Financial Overview

Your Company has seen a decrease in turnover during the year under review which accounted for Rs. 481.40Lakhs as compared to Rs1016.96 Lakhs in FY 2020-21. The Company has incurred Net Profit of Rs.4.18 Lakhsas compared to Net Loss of Rs. (1435.32) Lakhs in FY 2019-20.

Your Company is trying to reduce costs and maximize operational & inventory efficiency in the Industry which has been seeing a paradigm shift and going through numerous challenges, all of which have affected the business of your Company.

Factors that may affect the results of operations

Several factors may affect our result of operations that may make it difficult to predict the future financial results. Such factors are:

• Competition

• Break down of machinery or plant

• Disrupted power supply from state electricity board

• Strike by labourers

• Development / Innovation / Emergence of any substitute for our products

• Natural Calamities & Disasters and other unforeseen/ unavoidable circumstances Movement in Price of Fabric & Raw materials

• Operating cost & Efficiency

• Product and Market Mix

• Exchange Rates

• Government policies, rules and regulations affecting textile industries

• Availability of Government Benefits & Subsidies

• Ability to organise funds for projects

• Availability of skilled human forces

Development, Expansion & Future Outlook

Your Company will continue to invest wherever it seems an opportunity to get healthy sustainable results. Our performance largely depends on the Textile market. During the year under review, Your Company has been concentrating at further streamlining its current business activities which will allow for greater operational efficiency in future. The Textile market in general has been going through numerous challenges. During the year under review the Company has closed operations at its Gurgaon unit and has considerably withdrawn its retail operations due to business challenges, particularly in debtor collection and inventory cycle, amongst other factors.

Our clients include stockists, wholesalers, semi-wholesalers, exporters, retailers and end-users of textile products. Your Company is honing itself by optimising its businesses in terms of inventory, costs & overhead optimisation and await right opportunity to further its businesses and secure stable and long term growth for its stakeholders.

Future plans and Outlook

• Intensifying focus on R&D and production

• Leveraging resources to deliver innovative and successful product portfolio

• To bring in efficiency through consistent and continuous improvement process throughout all the levels in the Organization

• To develop a Customer Centric approach

• To develop a Strong Marketing Network and establishing solid client base in the country and overseas

Technology Absorption

Efforts made towards technology Absorption

Your Company tries to stay abreast with latest technology in the market. Your Company has a mix of latest machinery with various value addition capabilities, all under single setup. During the year, there was no import of machinery by the Company.

Benefits Derived

Having machinery with different capabilities help your Company provide umbrella solution to its clients as they do not need to go anywhere else for any kind of value addition requirements. This helps retain clients and is beneficial in the long term.

Details of technology imported in last four years

There has been no technology imported in last 4 years. The Company had imported and consequently installed 22 multi-head embroidery machinery via High Seas Sale Agreement made in the FY 2015-16 amounting to Rs. 409.17 Lacs.

By Order of the Board of Directors For Visagar Polytex Limited

Sd/-

Managing Director
Place: Mumbai (DIN: 00413627)
Date: 02.09.2021