I would like to thank you all for your continuous support and trust in Alok Industries.Despite the challenges faced by the company in the last few years we remain optimisticfor a resolution that
will help us rebuild and regain our position in the industry. In terms of capacity andpotential we continue to be India's largest fully integrated textile company with adominant presence in the cotton and polyester value chain. We continue to be driven bybest global practices and a vision for bringing about a positive change. Ourstate-of-the-art manufacturing facilities built over the years continues to give usstrength and confidence in our ability to fulfill customer demand at all times. Our majorchallenge remains the current debt situation and the corresponding working capital crunchwhich has further affected the utilization levels of all the divisions and overallperformance of the company.
In terms of the external market scenario FY 2016-17 saw a slow pickup in the worldeconomy with growth projected at 3.4% up from 3.1% in the previous year. Correspondinggrowth in emerging market and developing economies reached 4.3% from 4% in the previousyear. India emerged as one of the fastest growing major economy at 7.1% GDP growth in2016-17 despite a temporary slowdown due to demonetization. For the textile industry oneof the concerning factor is recent policies implemented by China regarding import of yarn& cotton which has brought the industry on back foot. China has recently reducedimport of cotton & yarn which has been primary market for Indian textile spinningcompanies and these recent restrictions are hurting the industry growth. Raw material forpolyester became expensive due to levying of anti-dumping duty by the government and henceraised the manufacturing cost. Shortage of raw material due to regular breakdowns in theplants producing PTA also resulted in lower capacity utilization.
Major reforms like demonetization had short-term impact in the form of slow growth butholds the potential for long-term benefits in the form of reduced corruption greaterdigitalization of the economy increased flows of financial savings better tax complianceand greater tax revenues all of which could eventually lead to higher GDP growth.
GST is another important landmark in the Indian economy. It will create a common Indianmarket improve tax compliance and governance and boost investment and growth. GST willcatalyze in making the unorganized segment of the textile value chain more organized andwill bring them under the GST ambit to avail input tax credit. This will help instreamlining the Indian textile value chain. However the recently released rates fortextile industry still didn't answer to the Industry's long said demand of duty neutralityat fiber and yarn level.
The special package for the textile and apparel sector released by the Union Governmentlast year is a strategic decision that would strengthen the Indian textile and apparelsector by improving its cost competitiveness in the global market. Over the medium runthe implementation of the Goods and Services Tax (GST) follow-up to demonetizationeffective implementation of the special package and enacting other structural reforms isexpected to take the economy towards its true potential and make business environment moreconducive for the industry.
As mentioned earlier the overall performance of Alok industries in recent past hasbeen impacted by low plant utilization levels due to unavailability of required workingcapital. However once working capital requirement is addressed all the business divisionsof Alok are capable of running on self-sustaining basis and there are good opportunitiesfor each division to grow. In the polyester division Alok has developed a very goodreputation for quality and developed a good brand name (Alok) for its polyester yarn inthe domestic and export market. The Company has developed strong network of agents anddistributors for marketing of its products both in the domestic and
export markets. Alok has a well-established Home Textiles division. Its large scale andintegrated operations high product quality competitive pricing and timely deliveryschedules has enabled it to add in its portfolio of customers large reputed globalretailers and importers over the years. The apparel fabric segment company is the largestrevenue generator for the company. Alok has been expanding its apparel fabric capacitiesi.e. weaving knitting and processing from time to time and has emerged as the largestsupplier of Apparel fabrics. Alok is also offering more value added products than beforeand its consumer base includes globally renowned brands. Overall Alok's position in termsof its operational capabilities are good technically and sustainable for each of thedivisions and capable of growing once the debt resolution is achieved.
I would like to take this opportunity to thank all our stakeholders - our financersour shareholders our employees our customers our vendors and our well- wishers acrossthe country and the globe for their tremendous dedication commitment and contributiontowards strengthening Alok over the years. We are continuously working forward to fulfillour mission of generating maximum value for our stakeholders. I also wish to express mygratitude to fellow Board members for their guidance and direction; and our shareholdersfor placing their faith in us. I urge you all to continue to repose faith in us as westrive to resolve current issues and turn the corner for a brighter future.