Safety is of the utmost importance and our primary focus was on makingthe workplace a safer environment.
Encouraged by the prospects of a large nation and needing to beSelf-Dependent 85 years ago Sutlej was born with the sole objective of supplying localcloth manufacturers with the best quality of yarn. We built our business with thisperspective: to meet the opportunities that came with a rapidly developing nation whilereinventing ourselves to keep up with the times.
This past year was a highly unpredictable one and precisely the kind ofmarket for which we were well prepared for. The Indian economy slowed from 4.2% in 2019-20to -7.3% in 2020-21. Manufacturing declined by 6.4% as against an increase of 2% in FY2019-20. The global textile sector declined by around 2% in FY 2020-21.
It required us to be resilient and responsive without losing ourambition of sustained growth.
In comparison to last year our revenues fell by 21% and EBITDA fell by28%. Although we faced a slight set back due to the lockdown the comeback of Sutlej wascommendable. Our perseverance and resilience cushioned the impact of the first quarter.
This past year was one where we had to focus more on our stability thanour growth. This stability enabled us to take advantage of the market once everythingstarted normalizing.
Our finished goods inventory cycle turnover was 23 days in 2020-21compared to 28 days in the previous year. Our working capital utilization remained half ofnormal. We repaid Rs. 126 crore of debt during the year. Our interest outflow declined by18%. We finished one of the most challenging years in our history with no Balance Sheetimpairments and with improved business quality.
As personal safety was threatened and individuals were asked to stayat home in most parts of the world non-essential commodity shops were shut indefinitely.Unfortunately clothing came under that segment. This impacted our revenues bothdomestically as well as in exports while our overheads were unchanged.
As various countries including India slowly started unlocking theireconomies in the latter part of the first quarter of the current financial year newchallenges of reduced demand under-utilized capacities work force dislocation and cashcrunch affected the industry. The implementation of social distancing and lockdowns acrosscountries changed consumer behaviour with regard to formal-wear that affected theconsumption of textiles across countries.
There is an opportunity in every situation. The lockdown was anopportunity for those who could make the most of it. Once lifted the pent-up demand ofcustomers would hit the markets so it was our job to prepare ourselves for this demandspike. It required us to move efficiently and adapt to the new market.
Safety is of the utmost importance and our primary focus was on makingthe workplace a safer environment. The Company temporarily shut its manufacturingfacilities and offices in India embracing the "work-from-home" policy. TheCompany's management team continued to communicate remotely facilitated anaggressive vaccination drive for all our employees and regularly disinfected ourproperties. We also donated hospital beds ventilators and oxygen generator to hospitalsto help bolster the social infrastructure.
The R' Words
During the last year the two R' words that gainedpopularity at Sutlej were Reinvent' and Rebound'.
In a world where uncertainty is the new normal reinvention andflexibility became crucial for our survival. Continuously thinking on our feet on a dailybasis we were able to find quick solutions to the sudden change in the consumptionpattern helping us to project positive financials as compared to others in this sector.
At Sutlej we have been reinventing ahead of the curve as anorganization for the last couple of decades. At a time when most yarn makers in India werefocused on the large commodity segment Sutlej graduated to the value-added. When mostIndian companies were focused on the domestic market Sutlej extended its reach intoglobal markets.
The result is that we consistently invested in enhancing our capacities(spindles looms and ancillaries). The Company was able to create margins giving us theability to continue repaying debts without letting it multiply over time. Besides theCompany moderated debt during the last financial year reduced its interest outflow andstrengthened its liquidity through tighter working capital management.
In a business influenced by a host of variables we recognized thatthese initiatives would protect us during difficult times. This protection would not meanthat we would not take any risk; it would mean that our business would be broad basedacross locations products and segments (blend types). We believed that this reinventingand broad basing would give us the platform to maintain our ideology of growth anddiversification.
The Company increased its focus on the knitwear segment which gainedpopularity during the lockdown period as demand for comfort clothing increased.
In a business where consumer preferences are evolving and the world isputting a bigger emphasis of clean and green' products there is a need torebound with speed from a setback.
The faster a Company capitalizes on upcoming opportunities the more acompany can grow and have benefits in the following ways: diversify the business with newrevenue streams strengthens its business sustainability and reinforces the brand.
At Sutlej we strengthened our capacity to rebound by strengtheningdigitalization in our manufacturing quality marketing and controls. This improved ourdecision making process and enhanced the overall customer experience.
We are attracting younger talent not necessarily from the textilesector with the objective to revitalize and encourage new ideas. At the same time we areretraining our existing talent leading to superior productivity while balancing innovationwith stability.
We commissioned the Sutlej Green Fibre plant that will recycle 7million PET bottles a day at peak capacity. This will help reduce costs and make ourenvironment greener. We intend to increase the renewable energy generation within ourbusiness to reduce carbon footprint while reducing costs at the same time.
In this direction we launched the Nesterra brand during the year underreview the first brand launched by the Company in its multi-decade existence.
At Sutlej our phased debt reduction should not mean that the Companyis moderating its growth ambition. On the contrary we will continue to seek opportunitiesfor growth. We will continue to focus on enhancing our efficiency with modernization andtechnology upgradation to sharpen our competitive edge. The Company expects to widen itsmargins following the stabilization of the Green Fibre plant.
A stronger focus on what we do over what we have will help Sutlejshift the needle reinvent and then rebound and in doing so create value for all thestakeholders. I must end by expressing my heartfelt thanks to all our stakeholders fortheir unwavering support during this rocky year.
C. S. Nopany Chairman