Swasti Vinayaka Synthetics Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

The textiles and apparel industry in India has strengths across the entire value chain from fiber, yarn, fabric to apparel. The Indian textile and apparel industry is highly products of traditional handloom, handicrafts, wool, and silk products to the organized textile industry in India. The diversified organized textile industry in India is characterized by the use of capital-intensive technology for the mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

The textile and apparel industry is one of the leading segments of the Indian economy and the largest source of foreign exchange earnings in India.

The industry support by the government, the favourable Geo-political equations coupled with the resilience of Indian entrepreneurs will likely hold the Indian economy and the Textiles and Apparel sector in good stead.

II. OPPORTUNITIES AND THREATS

Indias textile sector is the second largest employment generator, both skilled and unskilled. India is the sixth largest exporter of textiles and apparel in the world. Consumers across the globe import textiles from India due to the high quality fabric and the affordable cost. The Indian textile market is expected to be worth more than US$ 209 billion by 2029. Indias exports of textiles and apparel are expected to reach $100 bn in the next 5 years, growing at a CAGR of 11%.

Indias readymade garment exports to see a CAGR of 12-13% and surpass $ 30 Bn by 2027. y Indias Textiles Exports were highest ever in FY 2021-22, crossing US$ 44 Bn y India is a largest cotton producer (23%) in the world and has the highest area under cotton cultivation (39% of world area). Cotton plays a major role in sustaining the livelihood of an estimated 5.8 Mn cotton farmers and 40- 50 Mn people engaged in related activities such as cotton processing and trade. y India produced 90 Lakh bales of raw jute in FY 2021-22 y The domestic textiles and apparel industry stood at $152 bn in 2021, growing at a CAGR of 12% to reach $250 bn by 2025 The estimated production of cotton in the country is 341.91 lakh bales and estimated consumption is 311 lakh bales. Further, the domestic consumption of $75 Bn was divided into apparel at $55 Bn, technical textiles at $15 Bn and home furnishings at $5 Bn. While exports comprised of apparel exports at $12 Bn; home textiles exports at $4.8 Bn; fabric exports at $4 Bn; yarn exports at $3.8 Bn; fiber exports at $1.8 Bn and others at $2 Bn.

USA was the top export destination accounting for 27% share, followed by EU (18%), Bangladesh (12%) and UAE (6%). Exports of RMG of all Textiles values at $ 988.72 Mn in October 2022 and exports of Handicrafts excl. handmade carpet values $ 98.05 Mn in the same period. Exports of Cotton Yarn/Fabs/Madeups, Handloom products etc. values at $ 719.03 Mn in October 2022.

The governments focus has been on increasing textile manufacturing by building best-in class manufacturing infrastructure, upgrading technology, fostering innovation and enhancing skills and traditional strengths in the sector for making Indias development inclusive and participative.

(source: https://www.investindia.gov.in/sector/textiles-apparel)

III. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your Company operates in one segment only.

IV. OUTLOOK

In order to satisfy the taste of customers in future and focus on cost optimization, improve the quality of our product, we expect the outlook to be satisfactory. Our focus remains on value added products and new product development to cater to the niche segment of the market.

V. RISKS AND CONCERNS

y Competition from cheaper imports: The textile industry faces competition from cheaper imports, especially from countries with lower labor costs.

y Lack of innovation: The textile industry has been slow to adopt new technologies and innovative processes, which has resulted in a decrease in competitiveness.

y Rising costs: The cost of raw materials, labor, and energy has been increasing, which has put pressure on the profit margins of textile companies

y Changing consumer preferences:Consumers are shifting towards more sustainable and eco-friendly products, which is affecting the demand for traditional textile products.

y Highly fragmented: The unorganized sector and small and medium-sized businesses dominate Indias textile industry, which is highly fragmented.

y Outdated Technology: Due to market competition and access issues, the Indian textile sector struggles to keep up with international standards. This is especially true of small-scale businesses.

The Companys risk management framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks. The risk management framework goes beyond traditional boundaries and seeks to involve all our key managers.

VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The existing internal controls are adequate and commensurate with the nature, size, complexity of the Business and its Processes. During the year the Company has laid down the framework for ensuring adequate internal controls and to ensure its effectiveness, necessary steps were taken by the Company.

VII. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your Companys total textile sales registered a growth, resulting in revenue from operations being Rs. 2682.30 Lakhs for the financial year ended on March 31, 2023 as against Rs. 2035.47 Lakhs in preceding financial year and profit after tax was recorded at Rs. 198.94 Lakhs in the current year as against Rs. 174.67 Lakhs in the previous financial year.

VIII. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Your Company believes that its employees are one of the most valuable assets of the Company. The employees are deeply committed to the growth of the Company. With the growing requirements of the Company, Company has taken necessary initiatives to ensure not only there is retention of the employees but also their growth and development. The Company also provides various opportunities to the employees to develop their skills to take up higher responsibilities in the organization. Company also uses various communication channels to seek employees feedback about the overall working environment and the necessary tools and resources they need to perform at their best potential.

Number of people employed in the Company are 18.

IX. KEY FINANCIAL RATIOS:

Ratio	2023	2022	Change	Explanation for change of 25% or more in the key financial ratio
Debtor turnover ratio	0.34	0.33	2.12%	-
Inventory turnover ratio	1.55	1.93	-19.65%	-
Interest coverage ratio	5.84	5.98	5.98%	-
Current ratio	2.14	2.07	3.48%	-
Debt equity ratio	0.04	0.04	0.00	-
Operating profit ratio	0.10	0.10	0.00	-
Net profit ratio	10.04	4.70	113.47%	Net Profit Ratio decreased due to increase in operating expenses
Return on Net Worth	14.47	14.01	3.22	-

X. DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has not been followed; thus, managements explanation is not required. Forward Looking Statements

Statement in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts.