Sportking India Ltd:Annual Report 2023-24 Analysis

Sportking India Ltd: A Comprehensive Overview #

About the Company #

Sportking India Ltd. is a prominent textile company based in India, specializing in the manufacturing of yarns, fabrics, and garments.

Key Milestones in their Growth Journey:

While publicly available detailed information about the exact founding history and key milestones is limited, Sportking India Ltd. has steadily grown to become a significant player in the Indian textile industry. Further research on industry databases and company reports is recommended to gather more specific historical details.

Stock Exchange Listing Details and Market Capitalization:

Sportking India Ltd. is listed on the Bombay Stock Exchange (BSE). To obtain real-time stock prices and market capitalization, please refer to the BSE website.

Recent Financial Performance Highlights:

For up-to-date financial performance information, refer to the company’s quarterly and annual reports filed with the BSE, as well as financial news portals.

Management Team and Leadership Structure:

The company is led by a team of experienced professionals in the textile industry. Detailed information on the management team and leadership structure can be found in the company’s annual reports and on their official website.

Their Products #

Sportking India Ltd. offers a diverse product portfolio, focusing on textile manufacturing.

Complete Product Portfolio with Categories:

• Yarn: Various types of yarn, including cotton, synthetic, and blended yarns.
• Fabrics: Knitted and woven fabrics for apparel and other applications.
• Garments: Readymade garments for men, women, and children.

Manufacturing Facilities and Production Capacity:

Sportking India Ltd. operates modern manufacturing facilities with significant production capacity for yarn, fabric, and garment production. Specific details about facility locations and capacities are usually available in their annual reports or on the company website.

Quality Certifications and Standards:

The company adheres to strict quality control measures and possesses relevant certifications and standards for textile manufacturing. Specific certifications are available on their website or through direct contact.

Primary Customers #

Target Industries and Sectors:

• Apparel manufacturers
• Textile wholesalers and retailers
• Export markets

Geographic Markets (Domestic vs. International):

Sportking India Ltd. caters to both the domestic Indian market and international export markets.

Distribution Network and Sales Channels:

The company utilizes a combination of direct sales, distributors, and export channels to reach its customers.

Major Competitors #

Direct Competitors in India and Globally:

Identifying direct competitors requires a detailed analysis of market share and product offerings. Some potential competitors in the Indian textile market include:

• Arvind Ltd.
• Raymond Ltd.
• Trident Ltd.
• Welspun India Ltd.

How they differentiate from competitors:

Sportking may differentiate itself through product quality, price competitiveness, customer service, or specific product innovations. A detailed comparison of product offerings, pricing strategies, and market positioning would be needed for a comprehensive analysis.

Industry Challenges and Opportunities:

The Indian textile industry faces challenges such as fluctuating raw material prices, intense competition, and evolving consumer preferences. Opportunities include growing domestic demand, increasing export potential, and advancements in textile technology.

Future Outlook #

Expansion Plans or Growth Strategy:

Information on specific expansion plans or growth strategies would be available in company announcements, investor presentations, or annual reports.

Sustainability Initiatives or ESG Commitments:

Companies are increasingly focused on sustainability. Details of Sportking’s ESG (Environmental, Social, and Governance) initiatives are usually available on their website or in sustainability reports.

Industry Trends Affecting their Business:

• Growing demand for sustainable and eco-friendly textiles.
• Adoption of advanced technologies in textile manufacturing.
• Increasing online sales and e-commerce penetration.
• Focus on value-added and specialized textile products.

Sportking India Limited (FY 2023-24) Financial Analysis #

Company Overview #

Sportking India Limited, established in 1989, specializes in manufacturing cotton, synthetic, and blended yarns. The company has three manufacturing facilities in India and operates in over 30 countries. It is recognized as a “Govt. Recognised Four Star Export House.”

Key Financial Metrics (FY23-FY24 Trend Analysis) #

The following table presents the company’s financial performance for FY 2023-24 compared to FY 2022-23.

Note: Specific values for the financial results table were not provided in the text for extraction.

The report indicates Revenue from Operations grew 7.80% YoY. EBITDA margin was 10.13% in FY24 vs. 13.17% in FY23, a decrease attributed to lower yarn prices. PAT decreased by approximately 46.70% due to rising depreciation and finance costs.

Key Financial Ratios (Changes >25% YoY) #

Note: Some ratio calculations (e.g., Inventory Turnover in Days where an increase implies slower turnover) and percentage changes in the source document may require careful interpretation. The values here are directly from the report’s table.

Business Segment Performance #

Sportking India Limited primarily operates in the Textiles segment, focusing on the manufacturing, purchase, and sale of textile yarns.

• Product Range: Includes 100% Cotton Yarns (combed compact, slub, Eli twist), Polyester/Cotton Blended Yarns (combed, melange), Fancy Yarns (Jaspe, slub, injection, snow), Dyed Yarns, and Acrylic & Acrylic/Polyester Blended Yarns.
• Production: Achieved production of 80,845 M.T. of Cotton/Synthetic Yarn in FY24, an increase of 23.60% YoY (FY23: 61,769 M.T.), primarily due to a ~35% increase in spindle capacity.
• Turnover: Gross turnover/operating income of ₹185,956.09 Lakhs in FY24 (including export incentives of ₹6,674.36 Lakhs), compared to ₹172,497.60 Lakhs in FY23 (including export incentives of ₹3,812.39 Lakhs).
• Exports: Valued at ₹86,073.04 lakhs in FY24 (approx. 46.3% of gross turnover), compared to ₹80,056.09 Lakhs in FY23.

Major Strategic Initiatives and Progress #

• Capacity Expansion: Successfully operationalized an additional 103,000+ spindles, achieving a total spinning capacity of 378,576 spindles by the end of FY24. This represents a significant increase from the previously reported 274,000+ spindles.
• Renewable Energy: Completed and fully operationalized rooftop solar power projects with a total capacity of 25.2 MW across Ludhiana and Bathinda units. This initiative aims to reduce greenhouse gas emissions and power costs. (FY24 saw commissioning of 15.2 MW, adding to existing capacity).
• Share Buyback: Completed a buyback of 580,000 equity shares (face value ₹10/- each) at ₹950/- per share for an aggregate amount of ₹5,510 lakhs. The process was completed on April 17, 2023.
• Proposed Share Split: The Board, on July 20, 2024, approved a proposed sub-division/split of equity shares: 1 equity share (face value ₹10/-) into 10 equity shares (face value ₹1/- each). This is subject to member and statutory approvals. The initiative aims to make shares more affordable and encourage wider investor participation.
• Export Recognition: Upgraded from ‘Three Star Export House’ to ‘Four Star Export House’ by the Ministry of Commerce and Industry, reflecting strong export performance.

Detailed Analysis #

Balance Sheet Analysis #

Understanding Operating Performance #

Income Statement #

Cash Management #

Cash Flow and Liquidity Analysis #

Key Performance Indicators #

Segment Performance Analysis #

Financial Risk Analysis Report: Sportking India Limited (FY 2023-24) #

Strategic Risks #

Global Economic Slowdown and Geopolitical Instability #

• Risk Description: Exposure to global economic slowdown, geopolitical instability (e.g., Middle East conflicts, Red Sea crisis), and specific market downturns (e.g., China, subdued US/EU demand) impacting export volumes and realizations. Intense competition from domestic and international players, including import dumping from countries like China and Bangladesh.
  • Severity: High
  • Likelihood: High
  • Trend: Increasing (Geopolitical tensions, import pressures). Potential for partial moderation if US/EU demand revives as hoped.
  • Mitigation Strategies:
    • Geographic diversification: Presence in over 30 countries.
    • Product diversification: Wide range of cotton, blended, fancy, and dyed yarns.
    • Focus on value-added and sustainable yarn products.
    • Advocacy for government support (e.g., Minimum Import Price - MIP on synthetic knitted fabrics).
    • Upgraded to “Four Star Export House” status, potentially aiding market access.
  • Control Effectiveness: Partially effective; evidenced by revenue growth despite challenges, but profitability impacted. Diversification helps but cannot fully offset broad market downturns.
  • Potential Financial Impact:
    • FY24 textile exports for India declined to US$ 34.4 billion (approx. 3% YoY fall, 16% fall from FY22).
    • Company’s exports stood at Rs. [Value Not Explicitly Stated, but 47% of turnover].
    • Reduced export demand can lead to lower sales volumes, underutilization of capacity, and pressure on selling prices, directly impacting revenue and profit margins. Increased logistic costs (Red Sea) further erode margins.

Customer Concentration #

• Risk Description: Over-reliance on specific customer segments or a limited number of large customers.
  • Severity: Medium
  • Likelihood: Medium
  • Trend: Stable (No specific adverse comments, but general industry practice).
  • Mitigation Strategies: Stated customer diversification (“types of customers” implies a spread). MD&A indicates transactions with any single customer do not exceed 10% of total revenue.
  • Control Effectiveness: Appears effective based on current disclosures.
  • Potential Financial Impact: Loss of a major customer could significantly impact revenue. Current disclosures suggest this risk is managed.

Failure to Adapt to Market Trends #

• Risk Description: Inability to adapt to evolving market trends, such as shifts in fiber preferences (e.g., man-made fibers, sustainable materials) or technological advancements in textile manufacturing.
  • Severity: Medium
  • Likelihood: Medium
  • Trend: Increasing (Sustainability and technological shifts are ongoing).
  • Mitigation Strategies:
    • Investment in R&D for new product development (Jaspe, injection slub, low pill super soft, multifibre blends).
    • Capacity expansion with “state-of-the-art plant” and modernization.
    • Focus on sustainable products (Organic Cotton, Recycled Claim Standard, Global Organic Textile Standard certifications).
    • Investment in rooftop solar power (25 MW total capacity) aligns with sustainability trends and cost reduction.
  • Control Effectiveness: Proactive, as evidenced by new product ranges and sustainability initiatives.
  • Potential Financial Impact: Failure to adapt could lead to loss of market share and obsolete product lines. Current efforts appear to be mitigating this.

Operational Risks #

Raw Material Volatility #

• Risk Description: Volatility in raw material (primarily cotton) availability and prices.
  • Severity: High
  • Likelihood: High (inherent in agricultural commodities).
  • Trend: Fluctuating; MD&A cites “expensive raw materials” as a headwind.
  • Mitigation Strategies:
    • Dedicated cotton procurement team monitoring availability and price fluctuations.
    • Prudent cotton procurement strategies.
    • Inventory stocking (though this increases holding costs and working capital).
    • Sourcing sustainable/organic cotton (28% from certified vendors).

Sportking India Limited (SIL) - Financial Analysis #

Long-term Strategic Goals and Progress #

Sportking India Limited’s long-term strategy focuses on sustained growth through capacity expansion, product diversification, market penetration (domestic and international), and an increasing emphasis on sustainability and operational efficiency.

• Capacity Expansion: Consistent greenfield expansions and capacity additions, evolving from 6,000+ spindles for acrylic yarn in 1993 to a current overall spinning capacity of 378,576 spindles. Recent full operationalization of an additional 103,000+ spindles for polyester cotton and cotton compact yarn.
• Product Diversification: Expansion of product range from acrylic yarns to include 100% cotton yarns (combed compact, slub, Eli twist), polyester/cotton blended yarns, fancy yarns (Jaspe, slub, injection, snow), and dyed yarns.
• Market Penetration: Presence in over 30 countries, evidenced by its upgrade to a “Four Star Export House.” Focus remains on strengthening export operations with value-added products. Domestic market presence is also a key area.
• Sustainability & Efficiency: Investment in renewable energy with the completion of 25MW rooftop solar power projects for in-house consumption. Aims to reduce greenhouse gas emissions and power costs. Technology absorption efforts include energy-efficient machinery and a zero wastewater policy.
• Shareholder Value: Proposed sub-division/split of equity shares (Rs. 10 to Rs. 1) to enhance liquidity and encourage wider investor participation. Consistent dividend recommendations and a recent share buyback (completed April 2023).

Competitive Advantages and Market Positioning #

SIL positions itself as one of India’s leading, vertically integrated textile conglomerates with several competitive advantages:

• Scale and Modernization: Ownership of three state-of-the-art manufacturing facilities equipped with the latest machinery allows for large-scale, quality production. The substantial spindle capacity (378,576) provides economies of scale.
• Diversified Product Portfolio: A wide range of yarns (cotton, synthetic, blended, fancy, dyed, acrylic) reduces dependence on a single product segment and caters to diverse customer preferences in both weaving and knitting sectors.
• Quality Focus: Emphasizes producing yarns that are a “benchmark in quality.” Certifications like GOTS 6.0, Fairtrade, and Recycled Claim Standard further support this.
• Global Reach & Recognition: Presence in over 30 countries and recognition as a “Four Star Export House” by the Government of India enhances its credibility and market access.
• Cost Efficiency Initiatives: Investments in solar power (25MW) and energy-efficient technologies aim to control operational costs, particularly power.
• Experienced Management: The legacy of the founder and the current leadership’s focus on growth and navigating market challenges indicate experienced management.

SIL is positioned as a significant player in the Indian yarn manufacturing sector, with a strong export orientation and a growing focus on sustainable and value-added products.

Innovation Initiatives and R&D Effectiveness #

Innovation at SIL is geared towards product development, quality improvement, cost reduction, and sustainability.

• Product Development: R&D efforts are focused on continual improvement and developing new products such as contamination-free yarn, Organic Cotton, various fibre dyed products (Jaspe Yarn in Poly Cotton Grey, 100% Polyester Fibre Dyed), Injection Yarn, Low Pill Super Soft yarn, and Multifibre Polyester Acrylic Modal Blended Yarns with different dye absorption behaviours for high-fashion garments.
• Process Innovation & Technology Absorption:
  • Installation and expansion of rooftop solar power projects (total 25MW).
  • Optimization of H

ESG Report: Sportking India Limited - FY 2023-24 #

Environmental Metrics and Targets #

Renewable Energy #

The company has a total rooftop solar power capacity of 25.51 MW (BRSR) / 25.2 MW (Director’s Report) across its Ludhiana and Bathinda units. During FY 2023-24, 15.31 MW (BRSR) / 15.2 MW (Director’s Report & Annexure E) was commissioned (Bathinda: 10.24 MW, Ludhiana: 5.07 MW). This initiative aims to reduce greenhouse gas emissions and power costs.

Energy Conservation #

The company reports installing energy-efficient motors, compressors, and LED lights.

Water Management #

• Total water withdrawal increased to 5,50,190 KL in FY24 from 5,11,943 KL in FY23, primarily from groundwater sources.
• The company aims for Zero Liquid Discharge but currently does not operate any ZLD sites; however, wastewater purification systems are implemented.
• Rainwater harvesting is practiced at all plant locations.

Emissions & Waste #

• Specific data for NOx, SOx, Particulate Matter, and Scope 1 & 2 GHG emissions were not provided (marked “NA” in BRSR).
• Waste management practices include collaboration with certified recyclers for plastics and e-waste, and authorized disposal for hazardous waste.

Targets #

Specific quantitative targets for reduction in energy consumption, water usage, or emissions (beyond the general aim of reduction via solar) are not detailed in the provided sections. The company is a designated consumer under the PAT Scheme (Cycle VII: 2022-23 to 2024-25), with targets under execution.

Social Responsibility Programs #

CSR Expenditure #

• FY24 CSR obligation: ₹518.17 lakhs (calculated as 2% of average net profit of ₹28,496.5 lakhs, less set-off of ₹51.77 lakhs).
• Amount spent in FY24: ₹557.09 lakhs.
• Excess amount available for set-off in succeeding financial years: ₹38.93 lakhs.

CSR Activities (FY24) #

Projects focused on eradicating poverty (clothes distribution in Jammu through Bharat Vikas Parishad, Delhi), promoting healthcare (spectacles, nutrition bags at Govt. Hospitals, water coolers at rehabilitation centers/courts in Bathinda/Ludhiana), and rural development (uniforms to school students in Bathinda/Ludhiana).

Employee Well-being #

• Health and accident insurance coverage is 100% for permanent employees and workers.
• Maternity benefits cover 100% of eligible female permanent employees and workers.
• Daycare facilities are available to 4% of permanent employees and 46% of permanent workers.
• Retirement benefits (PF, Gratuity, ESI) are provided as per statutory requirements.

Human Rights & Labour Practices #

• 100% of permanent employees and workers received training on human rights issues and company policies.
• The company reports adherence to minimum wage laws, with a significant majority of employees and workers earning more than the minimum wage.
• Grievance redressal mechanisms are in place for all categories of employees and workers. No complaints regarding sexual harassment, discrimination, child labor, forced labor, or wages were reported in FY24.
• Internal Complaints Committee is constituted under the POSH Act; no complaints received in FY24.

Local Sourcing #

Material sourced directly from within the district and neighboring districts constituted 3.00% of total input material by value in FY24 (up from 0.56% in FY23).

Governance Structure and Effectiveness #

Board Composition #

As of March 31, 2024, the Board comprised 6 Directors: 2 Executive (including Chairman & MD) and 4 Non-Executive Directors (of which 3 are Independent Directors, including one woman Independent Director). This composition is in line with SEBI Listing Regulations.

Board Committees #

The company has constituted Audit, Nomination and Remuneration, Stakeholders’ Relationship, Risk Management, Corporate Social Responsibility, and a Committee of Independent Directors, with compositions as per regulatory requirements.

• Audit Committee: Chaired by an Independent Director, comprises three Independent Directors and one Executive Director.
• Nomination and Remuneration Committee: Comprises three Independent Directors.

Board Effectiveness #

• Annual performance evaluation of the Board, its Committees, and individual Directors (including Independent Directors and Chairman) was conducted.
• Independent Directors met separately to review the performance of non-independent directors, the Board as a whole, and the Chairman, and assessed the flow of information.
• Familiarization programs for Independent Directors are in place.

Key Policies & Mechanisms #

• Code of Conduct for Board Members and Senior Management Personnel (compliance affirmed).
• Whistle Blower Policy/Vigil Mechanism.
• Related Party Transaction Policy; all transactions reported to be at arm’s length and in the ordinary course of business.
• Dividend Distribution Policy.
• Risk Management Policy.

Compliance & Audits #

• The Secretarial Audit Report for FY24 is unqualified and confirms compliance with applicable statutory provisions and good corporate practices.
• The Statutory Auditors’ Report on financial statements is unmodified.
• The company affirms compliance with applicable Secretarial Standards.
• CEO/CFO certification on financial statements and internal controls provided.

Stakeholder Grievance Redressal #

Mechanisms are in place for various stakeholders, including investors (via RTA and dedicated email), employees, and customers.

Sportking India Limited (FY2024) Financial Analysis #

Overview & Financial Performance Highlights (FY24) #

Sportking India Limited, a recognized Four Star Export House in the textile yarn segment, reported the following for FY24:

• Revenue from Operations: Rs 184,951.05 Lakhs (7.80% increase YoY)
• Production Volume: 80,845 MT (23.60% increase)
• Spindle Capacity: 378,576 spindles (35% increase)
• Profit After Tax (PAT): Rs 9,120.80 Lakhs (46.70% decrease)
• EBITDA: Rs 18,740.56 Lakhs
• EBITDA Margin: 10.13%
• Finance Costs: Rs 6,764.07 Lakhs
• Exports: Rs 85,872.11 Lakhs

Management Discussion & Analysis Summary #

Market Outlook #

• Global Economy: Projected to grow at 3.2% in 2024-2025. Key risks include geopolitical tensions, interest rate impacts, and a potential slowdown in China.
• Indian Economy: GDP growth of 7.6% in FY24. IMF forecasts 6.8% growth for India in 2024-25.
• Textile Industry: Challenging FY24 due to raw material price volatility, diminished demand, capacity under-utilization, and dumping from China/Bangladesh. Indian textile exports declined to US$34.4 billion. Signs of revival in the US market offer cautious optimism for FY25.

Company Performance Context #

Sportking India Limited acknowledges industry-wide challenges, including expensive raw materials and supply chain issues. The company is focused on strengthening its market operations through value-added and sustainable yarn products and expanding its customer base. Liquidity is deemed adequate to meet obligations.

Strategic Initiatives & Capital Allocation #

Capacity Expansion & Modernization #

• Integrated expanded spindle capacity, reaching 378,576 spindles.
• Operationalized a 25 MW rooftop solar power project for in-house consumption.

Market & Product Development #

• Continuously evaluating options to expand capacity further.

Financial Analysis Report: Sportking India Limited (FY 2023-24) #

Auditor’s Opinion and Key Audit Matters #

The Statutory Auditors, M/s. SCV & Co. LLP, Chartered Accountants, issued an unmodified opinion on the financial statements for the year ended March 31, 2024, stating they present a true and fair view in conformity with Indian Accounting Standards (Ind AS).

The Key Audit Matter (KAM) was the “Valuation of Inventory.” The auditors evaluated the accounting policy, its appropriateness with accounting standards, and the internal controls over the inventory valuation process.

The audit report confirms compliance with the Companies (Auditor’s Report) Order, 2020 (’the Order’). The company used accounting software with an audit trail facility, which operated throughout the year, and no instances of tampering were found.

Key Accounting Policies and Changes #

The financial statements were prepared in accordance with Indian Accounting Standards (Ind AS) on a historical cost basis, except for certain financial instruments. Accounting policies have been consistently applied. No new standards or amendments to existing standards required a change in accounting policy for FY 2023-24.

Key accounting policies include:

• Revenue Recognition (Note 2.3.1): Sale of goods recognized when control is transferred; revenue measured at transaction price net of variable consideration. Export benefits are accounted for in the year of exports.
• Property, Plant and Equipment (PPE) (Note 2.3.3): Stated at cost less accumulated depreciation and impairment. Depreciation is on a straight-line method based on useful lives specified in Schedule II of the Companies Act, 2013.
• Inventories (Note 2.3.6): Valued at the lower of cost (FIFO for raw materials, weighted average for stores & spares) or net realizable value. Work-in-progress and finished goods include raw material and conversion costs.
• Income Taxes (Note 2.3.9): Current tax based on taxable profit; deferred tax recognized on temporary differences.
• Leases (Note 2.3.13): Right-of-use assets and lease liabilities recognized for leases, except short-term and low-value leases.
• Financial Instruments (Note 2.3.14): Initial recognition at fair value. Subsequent measurement based on classification. Expected credit losses (ECL) are assessed, with lifetime ECL for trade receivables.

Internal Control Effectiveness #

The Directors’ Report states the Board is responsible for ensuring adequate and effective internal financial controls (IFC). The Statutory Auditors opined that these controls were operating effectively. The internal audit team monitors efficacy, and findings are presented to the Audit Committee.

The Auditors’ Report on Internal Financial Controls over Financial Reporting provides an unmodified opinion, stating the Company has an adequate internal financial controls system over financial reporting operating effectively as of March 31, 2024.

Regulatory Compliance Status #

• General Compliance: The Secretarial Audit Report states the Company generally complied with applicable statutory provisions and has proper Board processes and compliance mechanisms. The Company has complied with applicable Secretarial Standards.
• SEBI Regulations: The Corporate Governance Report affirms compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• Director Disqualification: None of the directors are disqualified as of March 31, 2024, under Section 164(2) of the Companies Act, 2013.
• Statutory Dues (CARO Report - (vii)): The Company has generally been regular in depositing undisputed statutory dues. Disputed statutory dues are detailed in the CARO report and Note 38 to the financial statements.
• Repayment of Loans (CARO Report - (ix)(a)): The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender during the year.

Legal Proceedings and Their Potential Impact #

• Contingent Liabilities (Note 38):
  • Disputed Income Tax Liabilities: ₹2,489.23 Lakhs pending with appellate authorities.
  • Disputed Excise Liabilities: ₹44.87 Lakhs pending with appellate authorities.
  • Disputed Service Tax Liabilities: ₹0.41 Lakhs pending with appellate authorities.
  • Disputed Electricity Liabilities: ₹13.00 Lakhs pending with appellate authorities.

The management believes there is a fair chance of decisions in the Company’s favor and no provision is considered necessary. The ultimate outcome is not expected to have a material adverse effect.

• Benami Transactions (Prohibition) Act, 1988 (Note 51): Proceedings initiated in FY 2021-22 concerning land acquired (value approx. ₹722.01 Lakhs) were quashed by the Hon’ble Punjab and Haryana High Court.