RRIL Ltd Management Discussions

Economic overview Global economy

The global economy is facing substantial headwinds, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the weak outlook limits their ability to boost job creation and reduce extreme poverty. This challenging context is compounded by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable global trade environment and scale up support for vulnerable countries, including those in fragile and conflict situations. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To unlock job creation and long-term growth, reforms should focus on raising institutional quality, attracting private investment, and strengthening human capital and labour markets.

Global GDP growth

Global GDP growth is currently projected to be around 2.9% for both 2025 and 2026. This is a slight slowdown from the 3.3% growth experienced in 2024. The OECD projects that global growth will be particularly weak in 2025, with global output rising by only 2.6% over the year to the fourth quarter.

RRIL Limited is concentrated on its two-business horizon namely Textile Business and Real Estate Redevelopment activities in the state of Maharashtra and Gujarat. The visionary management policies and enthusiastic professionals executives engaged in the company are dedicated to delivering the demands on time with the entire satisfaction of customer.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The following operating and financial review of the Company throughout the Financial Year 2024-25, achieving consolidated sales of Rs.112.86 crore. This impressive success is attributed to the sales momentum gained from textile segments. With industry reforms and sustained home buyer demand, supported by an optimum repo rate, the company holds a highly optimistic outlook for its growth strategy and the future of the real estate sector.

Additionally, the Company achieved the growth in consolidated PAT, reaching Rs. 6.84 crores.

DISCUSSION ON FINANCIAL PERFORMANCE: Consolidated Financial Performance

(Amt in lakhs)

Particulars	2024-25	2023-24
Income from Operation	11,286.00	9,521.28
Earnings before interest, tax, depreciation and amortization (EBITDA)	1,172.88	994.67
Profit Before Tax (PBT)	960.50	770.70
Profit after tax attributable to shareholders of the company	684.55	576.51
Earnings per share (Rs.)	0.56	0.48

Analysis of revenue growth

The overall financial performance on consolidated basis is satisfactory on business performance.

BUSINESS SEGMENT: i. TEXTILE BUSINESS

Industry Structure and Development:

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic.

The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

According to Crisil Ratings, the organised retail apparel sector is projected to achieve revenue growth of 8-10% in FY25, driven by rising demand from a normal monsoon, easing inflation, and the festive and wedding seasons. The increasing preference for affordable, trendy fashion clothing that mimics high-fashion designs is expected to be the primary revenue driver. In order to attract private equity and employee more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme.

OPPORTUNITIES AND THREATS: Opportunities:

? Cotton production in India is projected to reach 7.2 million tonnes by 2030, driven by increasing demand from consumers.

? The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030, with exports expected to reach US$ 100 billion.

? The total exports during April-October of FY25 stand at US$ 21.3 billion (Rs. 1,84,105 crore), with RMG (41%), Cotton Textiles (33%), and Man-Made Textiles (15%) as key contributors.

? 100% FDI (automatic route) is allowed in textiles.

? Production-linked Incentive (PLI) Scheme worth Rs. 10,683 crore (US$ 1.44 billion) for manmade fibre and technical textiles over a five-year period.

? The Indian government has notified uniform goods and services tax rate at 12% on man-made fabrics (MMF), MMF yarns and apparel, which came into effect from January 1, 2022.

? 1,83,844 beneficiaries trained across 1,880 centres under Samarth.

? The growing popularity of ‘fast fashion products will contribute to the growth of the textile and apparel industry.

Threats:

? Being a labour-intensive sector, the shortage of skilled workforce may impact the operations and there will be a struggle to complete orders.

? Intense competition in the global market, especially from the textile and garment industries in Bangladesh and China.

? Subdued demand for textile and apparel exports as consumer confidence is low in the key markets.

? Compliance issues with the environmental norms and regulations. a. Outlook

Textile business performance was satisfactory considering the near-term uncertainty for the financial year 2024-2025, the Company is taking all efforts to improve sales to get more orders at competitive rates. b. Challenges

Textile industry is always subject to facing crisis in a cyclical way and increased competition due to surplus capacity in the country has resulted in pressure on margins due to price under cutting in the market. Timely action is needed to overcome this situation by taking corrective and proactive steps, then and there. Rupee values in the global market has affected in the past few months thus making it extremely difficult to be competitive at a time when some of our major competing countries are depreciating against dollar and exporters are being badly affected. Indian textile industry needs to overcome some of the threats looming large in this front. ii. REAL ESTATE BUSINESS

Industry Structure and Development

The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Indian Economy

Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

The Indian real estate market is projected to experience a substantial increase, potentially reaching a value of US$ 5-7 trillion by the year 2047, with the possibility of surpassing US$ 10 trillion.

Fresh real estate launches across Indias top seven cities grabbed a 41% share in the first quarter of 2023 (January-March), marking an increase from the 26% recorded in the same period four years ago. Out of approximately 1.14 lakh units sold across the top seven cities in the first quarter of 2023, over 41% were fresh launches.

Indias physical retail landscape is poised for a substantial boost, with nearly 41 million sq. ft of retail developments set to be operational between 2024 and 2028 across the top 7 cities, encompassing projects in various stages from construction to planning.

OPPORTUNITIES AND THREATS: Opportunities:

? The Government has allowed FDI of up to 100% for townships and settlements development projects.

? The real estate sector shows promise with a projected 9.20% CAGR from 2023 to 2028. 2024 is expected to drive growth with urbanization, rental market expansion, and property price appreciation.

? The Union Budget 2025-26 boosts homeowners with nil tax on two self-occupied properties (earlier one) and raises TDS threshold on rent from Rs. 2.4 lakh (US$ 2,769) to Rs. 6 lakh (US$ 6,924), driving property ownership demand.

? Private market investor, Blackstone, which has significantly invested in the Indian real estate sector (worth Rs. 3.80 lakh crore (US$ 50 billion), is seeking to invest an additional Rs. 1.70 lakh crore (US$ 22 billion) by 2030.

? According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025.

? The demand for luxury homes in India, particularly those priced at Rs. 4 crore (US$ 0.5 million) and above, saw a remarkable surge in 2024, with sales rising by 53% across seven major cities. According to data from real estate consultancy firm CBRE, the total number of luxury housing units sold last year stood at 19,700.

? Driven by increasing transparency and returns, theres a surge in private investment in the sector.

Threats:

? As the real estate industry continues to evolve, the industry faces a multitude of threats and challenges. Rapid technological advancements, changing market trends, and regulatory complexities pose constant hurdles. Moreover, competition intensifies as new players enter the market. Navigating these obstacles requires strategic planning, innovation, and adaptability to ensure continued success in this dynamic landscape. a. Outlook

As the Indias property market has struggled in the year amid high bank interest rates and slowing economy but by introducing various measures, the government has given boost to the sector by inspiring confidence to the builders as well as the buyers. With a customer-centric approach, their new-age structures redefine the real estate landscape, exceeding conventional expectations. b. Challenges

The major challenges to our business are constraints of funds, human resources, change in government policys and legal compliances.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: -

The Company has in place well established framework of internal control system which commensurate with the size and complexity of its business. The Company has an independent internal audit function covering major areas of operations and is carried out by external firms of Chartered Accountants engaged for this purpose.

STATEMENT OF CAUTION:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations and based on the fact that the Resolution Plan for the Company has been implemented. These statements have been based on current expectations and projections about future events. Wherever possible, all precautions have been taken to identify such statements by using words such as ‘anticipate, ‘estimate, ‘expect, ‘project, ‘intend, ‘plan, ‘believe and words of similar substance in connection with any discussion of future performance. Such statements, however, involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs and may cause actual results to differ materially. There is no certainty that these forward-looking statements will be realised, although due care has been taken in making these assumptions. There is no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.?