Ginni Filaments Ltd Management Discussions

The Management of the Company is pleased to present its Report on Industry scenario including Companys performance during the financial year 2023-24.

The management of Ginni Filaments Limited has provided an analysis of the Companys division-wise performance and key business updates for the financial year ended on March 31, 2024, as well as an outlook for the future. The outlook is based on an analysis of the current economic landscape, although it may be impacted by socio-economic and political change due to future economic and related developments, both in India and internationally.

1. SLUMP SALE OF SPINNING, KNITTING AND PROCESSING UNDERTAKING TO M/S RSWM LIMITED.

With a view to enable the Company to focus on its profitable business, the Board of Directors of the Company at its meeting held on December 1, 2023 had approved the Slump sale of the Spinning, Knitting and Processing undertaking to M/s RSWM Limited. The objective of this Slump sale is to create value for all stakeholders of Ginni Filaments Ltd as the said undertaking was incurring huge losses.

The Slump sale shall enable the Company to focus on its different businesses i.e. Nonwoven, Consumer Product and Garment based on their unique core competencies. The Nonwoven business is consistent in its profitability for quite a long period, however, Consumer Product business, on the other hand, is dynamic and volatile and there is a gestation period of few months to realise the good returns for new investments recently made by Company. Management believes that the risk and reward associated with each aforesaid business and are at different maturity stage in their life cycles.

During the financial year ended March 31, 2024, Ginni Filaments Ltd obtained requisite approvals for slump sale from the Equity Shareholders of the Company through Postal Ballot with requisite majority. The undertaking under slump sale was transferred to M/s RSWM Ltd on 16^th February, 2024.

2. Industry Structure and Developments Nonwoven Division

The global market for Non-Woven Fabrics estimated at US$48.2 Billion in the year 2023, is projected to reach a revised size of US$87.9 Billion by 2030, growing at a CAGR of 7.8% over the analysis period 2023-2030. The Non-Woven Fabrics market in the U.S. is estimated at US$9.6 Billion in the year 2023. China, the worlds second largest economy, is forecast to reach a projected market size of US$21.7 Billion by the year 2030 trailing a CAGR of 9.8% over the analysis period 2023 to 2030.

Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 5.1% and 6.6% respectively over the 2023-2030 period. Within Europe, Germany is forecast to grow at approximately 5.3% CAGR.

Garment Division

The growth of global apparel market was largely adversely affected during COVID period and has not revived till now with adverse effect of global disturbances and negative sentiments. Indian Garment business is facing serious challenges due to duty free access to some garment manufacturing Countries.

Consumer Product Division

The segment of Consumer product in which Company operates is mainly consist of wet wipes. The global wet wipes market size was estimated at USD 27.07 billion in 2022and is expected to grow at a compound annual growth rate (CAGR) of 3.8% from 2023 to 2030.

The increased use of wet wipes to maintain hygiene, particularly when the availability of clean water is limited, drives the market growth. Disinfectant wet wipes are increasingly being used for contamination control, driving product penetration. Cost, convenience, hygiene, performance, ease of use, disposability, and safety are attributes augmenting product adoption. Diverse types of wipes, including intimate, moist, flushable, feminine, and scented, have been developed during the past decade to serve a variety of purposes According to TechSci Research report, "India Wet Wipes Market - By Region, Competition, Forecast & Opportunities, 2028F", the India wet wipes market is anticipated to grow at a CAGR of 18.38% in the forecast period, to reach to INR 2080 cr. by 2028. The growth of the market is attributed to the factors such as the rising female working population and growing health awareness among consumers. The shift of the market players towards alternate sales channels and the increase in demand for facial and cosmetic wipes further supports the India wet wipes market growth.

Furthermore, the rise in awareness about the benefits of using wet wipes and the increase in consumer expenditure capacity is expected to accelerate the India wet wipes market growth over the next five years.

3. Opportunities and Threats

In terms of market strategy, price trends, drivers, challenges, and opportunities through 2031, Nonwoven Fabrics market players are directing investments toward acquiring new technologies, securing raw materials through efficient procurement and inventory management, enhancing product portfolios, and leveraging capabilities to sustain growth amidst challenging conditions. Regional-specific strategies are being emphasized due to highly varying economic and social challenges across countries.

Government policies and incentives promoting the energy transition have bolstered manufacturing sector growth, particularlywiththesupportofbio-chemicalsandmaterials.However,unevenrecoveryacrossdifferentendmarketsand geographies presents a key challenge, prompting companies to prioritize cost consciousness and operational efficiency. Factors such as global economic slowdown, the impact of geopolitical tensions, delayed growth in specific regions, and the risks of stagflation necessitate a vigilant and forward-looking approach among Nonwoven Fabrics industry players. Adaptations in supply chain dynamics and the growing emphasis on cleaner and sustainable practices further drive strategic shifts within companies.

The market study delivers a comprehensive overview of current trends and developments in the Nonwoven Fabrics industry, complemented by detailed descriptive and prescriptive analyses for insights into the market landscape until 2031.

4. Segment-wise or product-wise performance

Nonwoven division has performed substantially in line will past years. Consumer product divisions performance has been adversely affected due to reduction in margins and volumes due to competition in domestic market and due to gestation period of new investment. Garment division continue to suffer due to global uncertainties & reduced demand.

5. Internal Control System and their adequacy

The company has Internal Control System commensurate with the size, scale and complexity of its operations. The framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use, executing transaction with proper authorization and ensuring compliance with corporate policies. The controls, based on the prevailing business conditions and processes have been tested during the year and no reportable material weakness in the design or effectiveness was observed.

The use of SAP platform and internal audit by independent Chartered Accountant firm with vast experience and knowledge further strengthens Internal control system.

6. Risk, Concerns and Outlook

The Nonwoven Fabrics market is anticipated to exhibit fluctuating growth patterns in the near term, largely influenced by persistent factors contributing to sluggish growth in 2023. However, improvements in the economy and alleviation of supply chain concerns are projected to facilitate a rebound in demand for the Nonwoven Fabrics market, particularly in the later half of 2024.

In anticipation of an economic downturn, the Nonwoven Fabrics industry faces several key challenges to address during the short- and medium-term forecast. These include shifting consumer preferences, the need for industrial policy amendments to align with growing environmental concerns, significant fluctuations in raw material costs due to geopolitical tensions, and expected subdued economic growth. Despite the anticipated challenges in 2024, the Nonwoven Fabrics industry can leverage valuable opportunities by prioritizing resilience and innovation. This entails maintaining investment discipline, actively engaging in business ecosystems, and demonstrating a strong commitment to sustainability, thereby underscoring the chemicals industrys pivotal role in driving sustainable solutions.

7. Financial performance with respect to operational performance.

The same is referred to Audited Financial Statement which is forming part of the Annual Report of 2023-24 may be referred, however the overall financial performance figures are indicated in Directors report which is further enumerated below;

FINANCIAL HIGHLIGHTS

The Company believes that the human resources are the most critical element responsible for growth. Company strives towards attracting, retaining and developing the best talent required for the business to grow. The employees are regularly provided with training and development programmes to enhance their skills and focus on career progression. Company nurtures a work culture that leads to employee satisfaction, unflagging motivation and high retention rate. Company HR policies ensure working together with the employees for their personal and professional development and at the same time aligning their goals with those of the Company to create a win-win situation. The Company focus on ensuring transparent, safe, healthy, progressive and engaging work environment is aimed at creating leaders of the future. Employees have a sense of belongingness and feel empowered in driving business profitability. The well-disciplined workforce who has served the Company for thirty years lies at the very foundation of the companys major achievements. The focus is on adopting best practices to ensure better work life balance for the employees of the Company. There were 458 permanent employees on the roll of the Company as on 31.03.2024.

9. Details of Significant Changes in Key Financial Ratios

Key Financial Ratios

Remarks: All the ratios of the Company has materially changed primarily due to transfer of Companys Spinning, Knitting and Processing Undertaking in scheme of slump sale.

10. Cautionary Note

Statement in this management Discussion and Analysis Report, describing the Companys objectives, estimates and expectations may constitute Forward Looking statement within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.