Ashnoor Textile Mills Ltd Management Discussions

A. Business overview of Ashnoor Textile Mills Limited (ATML)

Ashnoor Textile Mills Limited is engaged in the manufacture and export of terry towels. It has only one plant located at Gurugram. The company generates more than 85% of income from operation by the export of its product to the USA. So, the business prospects of the company are dependent on global, particularly the economic conditions in the USA, as well as the Indian economy.

B. Industry Structure and Developments

Indias textile sector provides livelihoods to millions of households and has the second largest employer, employing more than 32 million workers. It has the potential to employ more than 50 million employments in the next 2-3 years. The textile sector, about generating formal and productive jobs, has potential for broader social transformation, generating exports and growth. The terry towels form an integral part of the home-textile segment. The demand for terry towels varies across the countries depending upon various factors like population, demographics, living style, economic status, and climatic conditions. In India, terry fabrics are manufactured mainly in decentralized handloom and power looms sectors. only 10-15% of total terry fabric production was produced in the organized sector. We are one of the prominent terry towel manufacturers in the organized sector. Most of the organized sector units are engaged in catering to market of export and also the high quality segment of domestic markets._

C. Opportunities and Threats and Future outlook Global Economic Conditions

The World has faced an exceptional situation in all facets of business and economy with the Covid-19 Pandemic in 2020 and 2021. The company is engaged in the manufacture and export of terry towels which are used mainly in the hotel industry. So, the COVID-19 has affected the company in terms of a decline in orders from overseas buyers in the financial Year 2019-2020 due to various restrictions and a slowing down in the economy. But, the company recovered in 2021-2022 and completed all the pending orders. There is tough competition for exports of terry towels to the USA. Major exports to the USA include China, Brazil, Turkey, Thailand, Israel, Bangladesh, Vietnam etc.

Terry towel is one of the strong product categories for Indian textile companies as Indian giants have a major share in the worlds leading market. The Global home textile industry is expected to increase to the US $ 60 billion by 2025. In India, the home textile industry is expected to increase significantly from current level of the US $ 8 billion by 2025-26. Further, in the global home textile segment, cotton terry towel is the single largest commodity with a massive market share of 14 percent.

According to the Office of Textiles and Apparels (OTEXA) US, India supplies more than 40 percent of the import of cotton towels to the US. The last financial year has been exceptional one due to pent-up demand post COVID. In line with this, the turnover and profits of the company have seen significant increase. The scenario in the current year is slightly uncertain due to unwinding policies of US Government and normalization of demand in hospitality sector. In the current year the company expects to consolidate the gains in the last financial year.

D. Segment Reporting

The company has only one segment of activity namely Terry Towels, as per the definition of "Segment" according to the Accounting Standard-17 issued by the Institute of Chartered Accountants of India. The companys performance in the said segment has been discussed detail in this report.

E. Risks and Concern

For towels, the export demand in India is mainly driven by the US, the largest market, accounting for 60 percent of Indias home textile exports. Compared to a 9 percent increase in Indias home textile product export of the US $ 5.7 billion in financial year 2021, exports to the US increased by 14 percent, while exports to the other major markets of the UK and the EU reported a year-on-year decline during the year.

The current global scenario after two years of COVID-19 marked by a slowdown in the entire world is a concern for the industry and cutthroat competition among terry towels exporting countries is a risk to the industry. In such an environment, a favorable textile policy by the Government of India to counter the global competition is most desirable. Further, volatility of the exchange rate and the cotton prices are other concerns. However, the depreciating Indian Rupee is a rather positive for the terry towel export industry.

F. Internal Control Systems and their Adequacy

The Company maintains adequate systems of internal controls to ensure that all assets are safeguarded against loss from unauthorized use or disposition. The Companys policies, procedures, and guidelines are in place. The Company also has adequate procedures for internal financial controls to detect and prevent fraud and protect the Companys resources. The financial statements are prepared in accordance with the accounting standards issued by the Institute of Chartered Accountants of India and a report on the Internal Financial Controls under clause (l) of sub section (3) of Section 143 of the Companies Act, 2013 has been given by the Independent Auditors is attached with Annual Report signifies that an adequate internal financial controls system over financial reporting and such financial controls over financial reporting were operating effectively as at March 31, 2022.

G. Financial and Operational Performance

During the year under review, the Company has taken several steps to control the damage inflicted by COVID-19, and income of the company from operations increased by more than 100% from Rs.11,573.61 Lakh to Rs.26,110.29 Lakh and profit after tax increased by 65% from Rs.542.15 Lakh to Rs.895.53 Lakh. The capital expenditure of the company to purchase plant and machinery, during the year, has been financed by way of secured loans from the Bank of Baroda. In the current year, the first quarter was the almost similar to the same quarter for the corresponding previous year. The Company is taking a number of steps to maintain the previous years pace in the current financial year and adopting regular actions to control liquidity, control of expenses and financial planning.

H. Human Resources/Industrial Relations and Number of people employed during the year

The Company has always valued its human resources. It believes in the unlimited potential of each of its staff. Its dedicated and efficient employees are great assets of the Company and the most important ingredient for achieving performance excellence. During the financial year, the overall industrial relations remained cordial in the Company.

I. Accounting Treatment

The financial statements have been prepared to comply with the Ind-AS including accounting standards notified under the provisions of the Companies Act, 2013. Details of significant changes in key financial ratios, along with details are given below:

Ratios	As on	As on	Percentage	Remarks/ Response
	31.03.2022	31.03.2021	change
Current	1.43	1.36	5.10	Positive liquidity
Debt Equity	1.94	1.42	26.66	Due to capital expenditure
Return of Equity	0.18	0.13	26.41	Improved due to increase in
				profits
Inventory Turnover	0.31	0.30	3.03	Normal
Trade Receivable	0.32	0.50	-57.61	Shows better collection
Turnover
Trade Payable Turnover	0.29	0.50	-70.44	Shows quicker payments
Net Capital Turnover	23.67	12.79	45.96	Improved operations
Net Profit	0.03	0.05	-33.73	Due to COVID
Return on Capital	0.19	0.17	11.97	Normal
Employed
Return on Investment	0.01	0.05	343.91	Due to sale/redemption of
				Mutual Funds

Disclaimer

Readers are cautioned that this discussion and analysis contains certain forward-looking statements. All these statements always have certain risks and uncertainties. Actual results could differ materially from those expressed or implied and the Company is not bound to publicly update or revise forwarding looking statements. Therefore, readers are cautioned not to place undue reliance on these forwarding-looking statements.

Sd/-	Sd/-
Suneel Gupta	Sangeeta Gupta
Managing Director	Director	Place: Gurugram
DIN-00052084	DIN-00052121	Date: August 9, 2022