Vishal Fabrics Ltd Management Discussions.

INDUSTRY STRUCTURE & DEVELOPMENT

The fundamental strength of Indian Textile Industry flows from its strong production base of wide range of fibres/yarns - from natural fibres like cotton, jute, silk and wool to synthetic/man-made fibres like polyester, viscose, nylon and acrylic. The Indian textile industry is likely to continue its strong growth, buoyed by both strong domestic consumption as well as export demand. It is currently estimated at around USD 108 billion and is expected to grow at a CAGR of 8.7 percent to reach USD 223 billion by 2021. The industry is the second largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly. The Indian Textile Industry contributes approximately 5 percent to Indias gross domestic product (GDP) and 14 percent to overall Index of Industrial Production (IIP). India accounts for 63 percent of global market share of textiles and garments. India accounts for about 14 percent of worlds production of textile fibres and yarns.

OUTLOOK

The Indian textile industry has the potential to double itself in size over the next 6-7 years. Government has been overall supportive in encouraging textile industry in India. Textiles and garment industry has been included in list of 25 sectors of ‘Make in India initiative of the Government of India. With the right Government policies, we believe that the Indian Textile Industry is well poised to benefit from the large oppo tunity offered in the domestic and export market. Under the ‘Make in India initiative, investment opportunities for foreign companies and entrepreneurs are available across the entire value chain of synthetics, value-added and specialty fabrics, fabric processing set-ups for all kinds of natural and synthetic textiles, technical textiles, garments, and retail brands.

COMPETITION

The industry in which we operate is highly competitive and fragmented. Competition emerges from small as well as big players in the textile industry. The organized players in the industry compete with each other by providing high quality-time bound products and value added services. We have a number of competitors offering services similar to us. We believe the principal elements of competition in textile industry are price, fabric quality, timely delivery and reliability. We compete against our competitors by establishing ourselves as a knowledge-based processing unit with industry expertise in Dying and Printing which enables us to provide our clients with innovative designs suitable to current fashion and market requirements.

OPPORTUNITIES AND THREATS

The Company is engaged in manufacturing of textile products. The Companys future relies on the Textile industry growth. China, the leader in global textiles and apparel trade is witnessing an erosion of its cost competitiveness due to increasing labour and power costs, its upward currency valuation and need to service local demand. This is opening out space for other countries like India to provide a value proposition for global sourcing and increase its share of business. Our Company is taking all steps to leverage this opportunity. We are in fact a living and breathing personification of the Make In India campaign launched by our Honourable Prime Minister. But, lack of economies of scale is a major issue in Indian textile. Countries like China and Bangladesh have developed large production set-ups, whereas smaller units, which lack economies of scale and have a low level of technology, dominate the Indian textile sector. Due to lack of large manufacturing capacities Indian manufacturers are unable to cater to large orders and become globally competitive. The threats to the textiles industry are in the form of lack of enough skilled workforce and urgent need for labour reforms in this sector. There is a need for attracting more investments in the industry. The technology up gradation of the textile mills is another area of serious concern.

ENVIRONMENTAL PROTECTION

The Environmental Policy of your company is maintaining clean and green environment and eco friendly atmosphere. Your company has been complying with applicable environmental regulations and preventing pollution in all operations. Your company continues to strive for energy saving and conservation of natural reserves.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has an adequate internal control system commensurate with its size and the nature of its business in order to achieve efficiency in operation and optimum utilization of resources. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information. Internal audits are conducted in the Company on regular basis.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human resources are valuable assets for any organisation. The employees of the Company have extended a very productive cooperation in the efforts of the management to carry the Company to greater heights. The Company is giving emphasis to upgrade the skills of its human resources and continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees and workmen of the Company. Further, this is in keeping with its policy of enhancing the individuals growth potential within the framework of corporate goals. The industrial relations remained cordial throughout the year.

FINANCIAL AND OPERATIONAL PERFORMANCE (Rs. in Lacs)

PARTICULARS 2016-17 2015-16
Net revenue from operations 37363.63 27357.80
Profit Before Depreciation & Tax 2477.70 2123.60
Less : Depreciation 626.39 343.94
Profit Before Tax 1852.62 1780.97
Less : Provision for Taxation (Including Deferred Tax) 798.82 354.78
Profit After Tax 1053.80 1426.19
Earnings per share (in Rs.) 8.00 10.83

CAUTIONARY STATEMENT

Statement in this report describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the companys operations include economic conditions affecting demand / supply and price condition in the domestic markets in which the company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.