I am privileged to write to you after a very challenging year.
The last couple of years have seen unprecedented challenges in the form
of the pandemic, geopolitical _areups and a volatile macro environment with wide-ranging
impacts on people, economies and businesses.
As an organisation, we have used this period to strengthen our
capabilities, build innovative thinking and agility, and enhance our focus on
efficiencies, all in the interest of creating a growth oriented company.
This mindset has helped your Company remain focused on our business
strategy and firmly on track to achieving our goals.
After an outstanding performance in FY22, fiscal 2023 was a sharp fall.
Although revenue from operations were almost at previous year levels, we reported a Net
Loss. We were expecting this slide, considering the multiple issues that plagued the
progress of the Indian textile industry.
The Russia-Ukraine war directly impacted Europe and other western
markets as inflation skyrocketed, forcing people to curtail expenses. In the US, the
stubborn and persistent inflationary headwinds also slowed garment ofitake. The slowdown
in garment demand had a domino effect on fabric and yarn.
The textile sectors woes were compounded by extreme volatility in
cotton prices – it rose to a historic high and subsequently plummeted in 2023 which
saddled yarn manufacturers with high cost inventory which could not be passed on to the
weavers and knitters (as demand dropped).
As a result, the entire industry has su_ered. The spinners were the
worst hit. Our performance would have been worse had it not been for our people, who left
no stone unturned to make the best of the prevailing bad times.
We are always prepared for changes in business environment. And there
is a positive side to sectoral dips. Case in point is the pandemic which throttled demand.
But after short cyclical ups and downs in demand, the net effect of the pandemic has been
a net increase in the size of the domestic market by 15-20%, as people preferred to spend
more time on their homes and living environment in favor of better-quality living.
Likewise, this downturn could result in capacity consolidation, which
augurs well for established textile players.
The highlight of the year was our undeterred resolve to continue with
our capex plans, most of which should be operational in the current year, during which we
expect to see the green shoots of a turnaround in the fortunes of the textile industry.
Our melange unit should commence operations in FY24. This value-added
yarn is in high-demand in India and across the world; it promises to emerge as a new
growth lever and profitability driver for the Company.
The opportunities over the medium term appear very promising. Consider
this: the benefits of India-UAE?s CEPA to the textile sector shall be an additional
increase in exports projected at US$ 2 billion over the next five years. Also, the FTA
with Australia coming into vogue from December 2022, will catapult India?s exports of
textiles and apparel from US$392 million to US$1,100 million in the next 3 years.
India also promises substantial opportunities. The forward-looking
Government is targeting an average GDP growth of over 7% per annum to become a
US$5-trillion economy by 2025. As the world's fifth-largest economy with a
population of 1.4 billion people, it is today one of the world's biggest and most rapidly
emerging markets. India's aspiring young consumers with rising incomes are consistently
moving upwards, adapting to better products, designs, and an international lifestyle.
Besides, India is also working persistently towards forging trade
alliances with the US, Canada, the UK and the EU which are large and growing markets. A
successful endorsement of these trade agreements promises to open enormous markets for the
Indian textile sector. This opportunity will further amplify with the playing out of the
China+1 policy, which will see many more global textile players making a beeline for
India.
At Maral, we are ready for a promising future, having enhanced our
capacities and capabilities considerably. From a product perspective, we will continue to
map our product offering against the dynamic market environment to create a portfolio that
delivers value to our customers and serves as a lever for our growth ambitions.
In closing, I sincerely thank our employees, our customers for their
undeterred trust in our capabilities, and our stakeholders for their continued support.
This collaboration navigates us ahead, motivates us to improve our performance, and
remains value driven. We have added more wind to our wings. And ready to soar even higher
as headwinds turn to tailwinds.
Warm regards
Shekhar Agarwal
Chairman & Managing Director and CEO