Global economy
According to the IMF, the global economic out grew by 6.1% in CY2021.
This can be attributed to the opening of global markets and the subsequent recovery in
economic activities. Additionally, the fading of supply-chain disruptions contributes
substantially to the economic upswing, and offer major tailwind to the global demand.
However, owing to the rising inflation at the back of rising geo-
political conflict, the global economy is expecting a moderation in the coming years. Even
though supply-demand imbalances are gradually recovering, it is taking some time for the
supplies to reach the global market. This delay is further bolstering the inflation and
raising the commodity prices.
Moreover, slower vaccination rollouts, in combination with
unaccommodating monetary policy and slow development make it difficult for EMDEs to
recovery rapidly. However, advanced economies have already restored to the pre- pandemic
levels, owing to wider availability of vaccines and fiscal assistance. Altogether, global
economy is looking at a divergent growth, since rising food and energy costs also pose
certain downside risks.
Indian economy
Indian economy is likely to grow by 6.5% in FY2022. This can be owed to
the constant government support, along with rigorous vaccination. Even though, FY2023 is
expecting an economic slowdown, the rising government spending and strong focus on asset
creation can get the country back on track.
In the Union Budget (FY2022-23), the GOI has addressed the
developmental policies, such as PM GatiShakti, PLI schemes, etc. and is looking to prevent
climate change by effectively contributing in energy transition. The widely acclaimed
Atmanirbhar Bharat is likely to create employment opportunities for almost 60 lakh people,
and can account for an extra output of Rs 30 lakh billion.
To keep up with the changing times, the country is shifting to digital
currencies. In addition to that, almost 75 digital banking units in 75 districts are
likely to be established by scheduled commercial banks. India is acting on numerous
reforms and is on the verge of becoming the fastest growing major economy.
The GOI is looking to bolster the countrys production capabilities, to
decline its reliance on imports and further cater to the growing demand. Recently, the
textile industry has been approved under the PLI scheme, which will enable the industry to
focus more on exports. This is what the government is looking at, with a scheme outlay of
Rs 10,683 crore.
Outlook
Indian economy has demonstrated strong resilience, in the face of
crisis. Owing to the strong focus on asset creation, the country is likely to drive
private sector investments. This will further augment sustainable growth for all the
sectors of the economy. The discretionary income is on the rise, albeit gradually.
Consequently, consumption is slowly picking up pace. As a result, several private sectors
are offering investments, since India fosters a huge lucrative market, with a growing
demand among the demography. Even though, the elevated inflation is likely to persist for
longer than expected, the country is well equipped to move ahead with minor constraints.
Barring the unpredictable external shocks, in terms of geo-political conflicts and its
subsequent impact on economy, Indian economy looking at a promising future.
Industry overview
India is one of the worlds leading textile and apparel producers and
is the 6th largest exporter in the world. The countrys domestic clothing and textile
sector accounts for 5% of the countrys GDP, 7% of industrial production in value terms,
and 12% of the countrys overall export revenues.
India is one of the worlds leading producers of cotton and jute and
the 2nd largest producer of silk, accounting for 95% of all hand- woven cloth.
Approximately, the Indian technical textiles market is worth $16 billion, accounting for
6% of the global market.
The industry creates substantial employment opportunities, thus
employing 45 million people directly and another 100 million in related businesses. India
has surpassed China as the worlds 2nd largest producer of personal protective equipment
(PPE), with more than 600 Indian businesses being qualified to manufacture PPE. By FY2025,
the market worth is likely to be more than $92.5 billion
Almost 7 major textile parks have been proposed to bolster the Indian
textile and apparel sector, which is likely to account for a valuation of $190 billion by
FY2026. The export of cotton yarn/ fabrics / made ups, handloom products, etc. generated a
total amount of $1297.82 billion in August 2021. Collectively, the RMG of exports
accounted for $1235.11 billion in August 2021, marking a rise of 13.99% against the same
time in the previous year. Further, a total of 1,77,825 weavers and artisans have
registered in the Governmenr e-Marketplace, which leaves a lot of room for the industry to
expand.
Opportunities
• Gaining investment
Owing to the generous revenue generation, and the surged demand for
textiles and apparels. investments in the sector are likely to gain traction. It requires
almost $200 billion to enhance its production capacity, worth $650 billion by FY2025. A
solid supply network, affordable logistical, and manufacturing costs is further expected
to facilitate to market growth. Also, the ROI remains cardinal to attract substantial
investment with in the sector. Both startups and FDI remains crucial to the sector.
• Robust innovation and R&D
India is striving to offer a substantial edge in the global market.
Thus, the industry is laying strong emphasis on innovation and a robust R&D to achieve
excellence in terms of quality and product sustainability. However, it is essential to
create a new business plan, prior to implementing advanced strategies, and business
process innovation.
• New approach towards and handloom and handicrafts
Anchoring on Indias rich cultural legacy, the handloom and handicraft
sector offers significant opportunities and further employs almost 15 million people.
However, owing to the shift in consumer preferences, the industry is suffering a reduction
in output. Nonetheless, the rising per capita income will enable the Textile Ministry to
pay a larger wage. This will assist the market to grow, considered it is advertised and
sold in the domestic and international markets.
• Revising of existing schemes and policies
The Ministry of Textiles has provided significant programmes, such as
Technology Upgrading Fund Scheme (TUFS), Scheme for Integrated Textile Parks (SITP), Mega
Cluster, and Integrated Skill Development Scheme to drive the sector towards growth. Even
though these have proved to be beneficial, it requires revision and restructuring to keep
up with the developing industry and the global markets pace.
Challenges
• Labour
The Indian textile industry is heavily reliant on manual labour, unlike
foreign countries. Hence, it is highly dependent on labour, which again is difficult to
acquire to meet the desired quality standards.
• Uncertainty over physical retail
Sectors entailing human interaction has been significantly influenced
by the pandemic. Thus, it has impeded the proper functioning of retail stores. This in
turn has led to confusion among consumers, since they are now hesitant about investing
large amounts in clothing, especially among the uncertainties revolving the collection
available.
Company overview
Owing to its experience of 30 years, Vishal Fabrics is a reputed
player, known for dyeing, printing and processing denim, and other fabrics. With a strong
focus on delivering more than expected, the Company has created a strong value chain in
the market. Keeping innovation at the centre, the Company has pioneered the production of
wider width fabrics and has made a strong presence in the industry.
Manufacturing capabilities
Vishal Fabrics has always retained its competitive edge with the help
of sustainable production policy and advanced manufacturing facilities. With a dyeing
capacity of 80MMPA and a processing capacity of 105MMPA and a robust design team, which
designs 40+ products per month, VFL has achieved remarkable operational excellence.
Further, the Company believes in delivering quality, across domestic
and international markets. VFL is certified with following Certification of ISO 9001:2015,
ISO 14001:2015, OEKO-TEX, BCI, GOTS, which ensures the Companys compliance to global
standards.
Financial Performance
(Rs. in crores)
| Particulars |
FY 2022 |
FY 2021 |
YoY Change (in %) |
| Revenue from operations |
1546.76 |
967.54 |
11.66 |
| EBITDA |
161.38 |
88.26 |
24.03 |
| PAT |
69.04 |
18.10 |
34.59 |
| Net worth |
334.61 |
264.66 |
26.43% |
Key Ratios
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements) (Amendment) Regulations 2018, the Company is required to provide details of
significant changes (i.e. change of 25% or more as compared to the immediately previous
financial year) in key financial ratios, along with detailed explanations therefor. The
key financial ratios are given below:
| Ratios |
FY 2021-22 |
FY 2020-21 |
Reason for variance of 25% or more |
| Debtors Turnover (no. of days)* |
4.11 |
2.90 |
Due to increase in sales |
| Inventory Turnover (no. of days) |
19.88 |
15.44 |
Due to increase in sales |
| Interest Coverage Ratio (in times) |
4.27 |
2.57 |
Increase in EBIDTA |
| Current Ratio (in times) |
1.57 |
1.50 |
NA |
| Debt Equity Ratio (in times) |
1.13 |
1.46 |
NA |
| Operating Profit Margin (in %) |
10.43 |
9.12 |
NA |
| Net Profit Margin (in %) |
4.46 |
1.87 |
Owing to better realisation |
| Return on Net Worth (in %) |
20.63 |
6.84 |
Increase in Net Income |
Human resource
VFL fosters a nurturing human resource policy, which ensures long-term
association and complies to corporate responsibilities. The Company believes in keeping
its people at the fore, by ensuring a transparent and inclusive work culture. VFL further
encourages its workforce of about 2,101 people, with their ideas and is known for laying
strong focus on employee development.
Along with employee development, the Company also believes in building
a strong network of people, who delivery on the basis of VFLs strategy. The Company
organises training programmes to enhance the to enhance the skills and knowledge of its
employees, and further offer induction programme for new recruits.
To ensure steady employee engagement, VFL provides an interactive
platform for the workers to exchange their knowledge, skills, and experience.
Additionally, the Management regularly communicates with the staff.
Outlook
Given the increasing opportunity in the industry, the Company is
well-positioned to capaitalise on the same. The Company plans to focus on increasing its
top line and bottom line alongside of expanding its reach, striving for operational
excellence, optimising its cost, improving return ratios and maintaining healthy balance
sheet position. It is also working on building strategic and long-term tie-ups with global
retail brands for direct sales.
Disclaimer
Certain statements in the MDA section concerning future prospects may
be forward-looking statements which involve a number of underlying identified / non
identified risks and uncertainties that could cause actual results to differ materially.
In addition to the foregoing changes in the macro-environment, a global pandemic like
COVID-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving
risk(s), inter-alia, to the Company and the environment in which it operates. The results
of these assumptions made, relying on available internal and external information, are the
basis for determining certain facts and figures stated in the report. Since the factors
underlying these assumptions are subject to change over time, the estimates on which they
are based are also subject to change accordingly. These forward-looking statements
represent only the Companys current intentions, beliefs or expectations, and any
forward-looking statement speaks only as of the date on which it was made. The Company
assumes no obligation to revise or update any forward-looking statements, whether as a
result of new information, future events, or otherwise.
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