Visagar Polytex Ltd Management Discussions

In this Management Discussion and Analysis Report (MDAR), we provide an insightful overview of Visagar Poytex Ltds performance, operations, and key developments during the reporting period. This section serves as an essential part of our annual report, offering stakeholders valuable insights into your Companys strategic direction and performance.

FORWARD-LOOKING STATEMENTS

Before delving into the MDAR, it is imperative to acknowledge the presence of certain "forwardlooking statements" contained within this document. These forward-looking statements appear throughout this report, including under chapters titled "Risk Factors," "Our Business", "Managements Discussion and Analysis of Financial Position and Results of Operations”, "Industry Overview”, etc

Forward-looking statements encompass projections, expectations, and insights into our Companys plans, objectives, strategies, future events, financial performance, and various other aspects of our business. These statements may include words or phrases such as anticipate, believe, continue, estimate, expect, intend, may, plan, potential, project, will, and similar expressions. While these statements offer valuable insights, its important to note that they are not guarantees of future performance.

Factors Affecting Forward-Looking Statements

Forward-looking statements, by their nature, are subject to various known and unknown risks, uncertainties, and assumptions. These uncertainties and factors can cause actual results, performance, or achievements to differ materially from what is expressed or implied by these statements.

Cautionary Note

While we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that they will materialize as anticipated. Given these uncertainties, stakeholders are urged not to place undue reliance on these statements.

These forward-looking statements reflect our Companys position as of the date of this report and the respective dates indicated herein. We, our Directors, our Promoter, and affiliates have no obligation to update or revise these statements to reflect circumstances arising after the date hereof or to account for events that may not align with our assumptions.

INDIAN ECONOMIC OVERVIEW

It is noteworthy that despite the global economic challenges caused by high inflation in developed countries such as the UK, coupled with looming recessions in many developed nations, notably the USA, and widespread corporate layoffs, particularly in the IT sector, the world economy faces further uncertainties due to ongoing international conflicts and turbulence in the global banking sector. However, amid this somber backdrop, the Indian economy has demonstrated remarkable resilience.

For the fiscal year 2022-23, it is anticipated that Indias GDP will reach a commendable 7%, taking into account all relevant data. Looking ahead to fiscal year 2023-24, the Reserve Bank of India (RBI) projects a growth rate of 6.5%, despite the presence of numerous adverse global factors. This resilience is a testament to Indias close integration with the global economy.

Indias success in mitigating the adverse effects of these global challenges can be attributed to a series of strategic actions taken by both the Central Government and the RBI. Notably, their efforts have been effective in controlling inflation and preventing a severe economic downturn.

The "Make in India" initiative, promoted by the Central Government, has attracted several global manufacturing and distribution companies to establish their presence in India. Furthermore, the Central Governments prudent decision to procure more affordable Russian crude oil has shielded the Indian economy from the shocks resulting from protracted international conflicts.

Additionally, the deliberate investments in basic infrastructure within the road and transport sector are expected to yield substantial long-term benefits for future generations. Moreover, the consistent growth in both direct and indirect tax collections, particularly through GST, exceeding one lakh crore rupees, underscores the positive trajectory of Indias economic growth.

In summary, despite the challenging global economic landscape, Indias economy has exhibited resilience, thanks to the strategic measures taken by the government and the proactive policies that have attracted global investment and ensured fiscal stability. This reaffirms Indias position as a promising player in the global economic arena.

TEXTILE INDUSTRY OVERVIEW IN INDIA

The textile industry in India holds a storied history, dating back many generations, making it one of the countrys oldest sectors. It plays a crucial role in Indias economic landscape, contributing significantly to both GDP and employment. This industry contributes 2% to Indias Gross Domestic Product (GDP) and constitutes 7% of the total industrial output. Moreover, it stands as a pivotal driver of export earnings, accounting for 12% of Indias total export revenues. On a global scale, India holds a 5% share of the textile and clothing trade. Due to its labor-intensive nature, the Indian textile sector is the second-largest employer after agriculture, providing livelihoods for about 10% of the nations manufacturing workforce.

India enjoys a competitive edge in this sector with its skilled labor force and favorable production

costs, positioning it advantageously among major textile-producing nations. The Indian textile and apparel market is a diverse landscape encompassing various segments. The yarn and fiber segment, as well as processed textiles and apparel, constitute the majority of this market. It spans a spectrum from capital-intensive sophisticated mills to hand-spun and hand-woven textiles, with decentralized power looms and knitting forming the core of the industry. Notably, over 70% of the industrys output is cotton-based, which makes it susceptible to fluctuations in the cotton market, distinguishing it from the global average where synthetic fibers have a larger share.

Global Standing:

India is the worlds fourth-largest producer and exporter of garments, trailing behind China, Bangladesh, and Vietnam, and is also the worlds second-largest producer and exporter of textiles after China. The United States and the United Kingdom receive nearly two-thirds of Indias textile exports, primarily due to Indias commitment to high-quality products. Additionally, Indias technical textile industry has gained prominence, with products like seatbelts, sticky tapes, thermal protection materials, and blood absorption materials finding applications primarily in healthcare and infrastructure sectors.

Challenges and Opportunities:

While the textile industry has faced challenges, including export slowdowns due to geopolitical conflicts and economic uncertainties in key markets, it continues to thrive domestically and explores new avenues for expansion. The Indian home textile and furnishings sector, despite hurdles, is expanding robustly in the domestic market. Furthermore, with Indias aim to grow its economy significantly and its burgeoning middle classs increasing demand for quality products, the textile industry is poised for substantial growth, offering domestic and international businesses ample opportunities for expansion.

India envisions an annual economic growth rate of over 7% and aims to achieve a $5 trillion economy by 2025 or 2026, driven by its population of 1.4 billion and rapid development. As Indian consumers increasingly seek better goods and designs, the market continues to provide prospects for business expansion, particularly in household goods. However, navigating Indias vast and diversified market remains a significant challenge for both foreign and domestic companies and producers.

Recent challenges include declining revenue and margins for spinners and relatively stagnant revenue and margins for apparel due to recessionary conditions in key markets. Despite these challenges, India has set ambitious targets, aiming for a 9% compound annual growth rate (CAGR) in textile exports by 2026, with a target of $65 billion. The Ministry of Textiles has set an even more ambitious target of $100 billion in exports over the next five years, which necessitates addressing cost disadvantages, negotiating free trade agreements, and investing in key areas.

Indias strategies for growth encompass export diversification, focusing on cotton and expanding into other sub-categories, such as man-made fibers (MMF) products. Additionally, investments in technical

textiles are crucial to tap into domestic demand, with the industry requiring substantial investments in the range of $20 to $25 billion. To enhance competitiveness and global reach, India is focusing on cost- effectiveness, digitization, design capabilities, sustainability, and traceability. Collaborative efforts between the industry and government are imperative to attract investments, reduce import duties on machinery, and pursue free trade agreements.

Despite challenges, the Indian textile and apparel sector anticipates significant growth, with a projected value of $350 billion by 2030. Apparel is expected to grow at a CAGR of 9.6%, reaching $45 billion, while textiles will reach a value of $55 billion with an 8.2% growth rate. Bilateral agreements with countries like the UAE and Australia, along with upcoming agreements with the US, UK, and EU, offer opportunities for India to expand its market share.

Source: DFUPublications, accessed on www.dfupublications.com dated 28-05-2023 FINANCIAL OVERVIEW & COMPANY OUTLOOK

Given the prevailing circumstances, where the companys sales have reached a standstill, it is imperative for your Company to implement stringent cost-cutting measures and diligently manage operational and inventory efficiency. These actions are of paramount importance in light of the ongoing challenges that continue to impede the companys business operations.

FACTORS THAT MAY AFFECT THE RESULTS OF OPERATIONS

Several factors may affect our result of operations that may make it difficult to predict the future financial results. Such factors are:

• Natural Calamities & Disasters and other unforeseen/ unavoidable circumstances

• Development / Innovation / Emergence of any substitute for our products

• Breakdown of machinery or plant

• Disrupted power supply from state electricity board

• Strike by laborers

• Government policies, rules and regulations affecting textile industries

• Competition

• Operating cost & Efficiency

• Exchange Rates

• Movement in Price of Fabric & Raw materials

• Product and Market Mix

• Availability of Government Benefits & Subsidies

• Ability to organize funds for projects

• Availability of skilled human forces

• Debtor Issues

• Creditworthiness

• Banking Risks

• Inventory Challenges

• Insurance

• Regulatory Changes

• Economic Conditio ns

• Supply Chain Disruptions

• Market Volatility

• Legal and Litigation Risks

DEVELOPMENT, EXPANSION & FUTURE OUTLOOK

Amidst the ever-changing business environment, your company is strategically treading through a complex landscape fraught with challenges. The textile industry is known for its volatile demand patterns, influenced by seasonal trends, changing consumer preferences, extended payment cycles and varying creditworthiness of customers which can strain working capital hence balancing inventory levels and debtors while ensuring free cash flow lingers as an issue. The industry is currently in the midst of a profound transformation, marked by a series of obstacles that have exerted substantial influence on your companys operations. In the face of substantial hurdles and complexities inherent to the industry, your management remains resolute. Despite these challenges, we maintain a forwardlooking perspective. We patiently await the right moment for the textile business to once again thrive profitably.

FUTURE PLANS AND OUTLOOK

• Cost-Cutting Measures: Implementing stringent cost-cutting measures to optimize expenses and improve cost-efficiency across all aspects of operations.

• Operational Efficiency: Focusing on enhancing operational efficiency by streamlining processes, reducing wastage, and improving resource allocation.

• Inventory Management: Prioritizing effective inventory management strategies to minimize holding costs and ensure a lean and agile supply chain.

• Adapting to Industry Changes: Continuously monitoring and adapting to the ongoing paradigm shifts and challenges within the industry to remain competitive and resilient.

• Business Resilience: Developing strategies to navigate through challenges and uncertainties, ensuring the companys ability to withstand market fluctuations.

• Reign ting Revenue: Exploring avenues for sales recovery and growth, considering innovative approaches to reinvigorate the business.

• Market Positioning: Evaluating market positioning and identifying opportunities to strengthen the companys presence in the industry.

• Sustainable Practices: Embracing sustainability practices that align with evolving market trends and customer expectations.

• Financial Prudence: Maintaining financial prudence and liquidity to support future growth and investment opportunities.

TECHNOLOGY ABSORPTION

Efforts made towards technology Absorption

Your Company tries to stay abreast with latest technology in the market. Your Company has a mix of latest machinery with various value addition capabilities, all under single setup. During the year, there was no import of machinery by the Company.

Benefits Derived

Having machinery with different capabilities help your Company provide umbrella solution to its clients as they do not need to go anywhere else for any kind of value addition requirements. This helps retain clients and is beneficial in the long term.

	By Order of the Board of Directors
	For Visagar Polytex Limited
	Sd/-
	Tilokchand Kothari
	Managing Director
Place: Mumbai	DIN:00413627
Date: 10.05.2023