Betex India Ltd Management Discussions

This chapter on Management s Discussion and Analysis ("MD&A") is to provide the stakeholders with a greater understanding of the Company s business, the Company s business strategy and performance, as well as how it manages risk and capital.

The following management discussion and analysis is intended to help the reader to understand the results of operation, financial conditions of BETEX INDIA LIMITED.

The global economy entered 2025 with cautious stability. After enduring a prolonged period of unprecedented shocks ranging from the Covid pandemic to global geopolitical instability, green shoots of stabilization began emerging in 2024. Inflation moderated from multi-decadal highs, while labour markets showed signs of normalization, with unemployment and vacancy rates returning to pre-pandemic levels. Global growth has hovered around 3% in recent years. However, the international trade landscape has once again been thrown into a frenzy with clouds of uncertainty threatening to destabilise the global economy, which was looking to get back on track. A series of tariff increases initiated by the United States was proposed to be countered in equal measure by most of its major trading partners. Although the tariff war has been paused for the time being, the sword still hangs over the neck of the global economy. If implemented, the effective global tariff rates will rise to their highest levels in a century. This represents a major spanner in the works of the global economy, considerably dragging down the growth outlook at a time when international trade dynamics were already unstable and looking for some fresh impetus.

According to the IMF, the global economy is expected to grow at 3.3% both in 2025 and 2026, primarily on account of an upward revision in the United States offsetting downward revisions in other major economies. Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

While the trade war threat still looms, recent developments such as the trade deal between the US and the UK, the positive tone coming out US s trade talks with China, and India and US working constructively on a bilateral trade deal provide some sense of relief and hope. A retreat from protectionist measures and renewed multilateral cooperation could help restore growth momentum. Policymakers must prioritize transparency, debt sustainability, and coordination to mitigate risks and bolster medium-term growth prospects.

Even in FY25, the Indian economy continued to emerge as of the fastest growing economies in the world, but at a sluggish pace compared to the previous years. Slower growth in the first half of the fiscal (6%) led the RBI to bring down the annual projection to 6.6% (down from an earlier projection of 7%). However, according to the first advance estimates, India s real GDP is expected to grow at 6.4% in FY25.

Some of the key factors which helped drive the growth of the Indian economy include, rural consumption has remained robust, supported by strong agricultural performance, while the services sector continues to be a key driver of growth. Manufacturing exports, particularly in high-value-added components (such as electronics, semiconductors, and pharmaceuticals), have displayed strength, underscoring India s growing role in global value chains.

With an approximately 10% Y-o-Y increase in its budget for 2025-26, the government has allocated 11.2 Lakh Crores for capital expenditure, underlined its continuing thrust on investment-led growth in India. The outlook for the Indian economy continues to be positive, driven by macroeconomic stability, pro-growth monetary policy environment, and resilient domestic demand.

India s 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.

India s textile and apparel industry continues to demonstrate resilience and growth amidst dynamic global market conditions. The sector has shown notable progress in exports during FY 2024-25, coupled with a slight dip in imports, indicating an ongoing push for self-reliance and strengthened production capabilities. India s textile and apparel exports, including handicrafts, witnessed a 7% growth from April to October in FY 2024-25, reaching USD 21.35 billion compared to USD 20 billion during the same period in FY 2023-24. This growth highlights the sector s steady recovery and competitiveness on the global stage.

The textiles and apparel industry contributes 2.3% to the country s GDP, 13% to industrial production and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade. India s textile and apparel industry is poised for further growth, driven by strong export performance and strategic domestic policies. While challenges persist in specific sectors like wool and handloom, the overall trajectory suggests a positive outlook for the industry as it strengthens its position in global trade. Addressing high input costs and enhancing competitiveness will be crucial for sustaining this momentum.

Incorporated in 1987, Betex India Limited is mainly engaged in job processing work on grey fabrics through its dying and printing units. It has two Dyeing & Printing processing units namely:- 1. Sumeet Silk Mills (Unit-1) 2. Sumeet Silk Mills (Unit 2)

Such units have total output capacity to process 55000 thousand meters fabrics per day which comes to 295 million meters fabric per annum. The company has shown outstanding performance in the year under review due to business re-engineering work undertaken in the previous year, diversification in product portfolio in value added products. It has restrained its position in the industry due to proactive planning, efficient use of resources, capitalizing on emerging opportunity and striving on cutting edge technology. The Company is recognised as a Dyeing and Printing mills providing job work on different types of Polyester Fabrics.

However, our approach is to stay close to our customers, understand their challenges, The Company has accelerated its cost optimisation drive across the value chain to further improve its operational efficiency. The execution excellence initiatives pursued to optimise efficiencies, reduce cost and eliminate wastage has been adopted across functions and processes.

The future of the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. India is working on various major initiatives to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on the rise. The government is supporting the sector through funding and machinery sponsoring.

The Indian government has come up with several export promotion policies for the textile sector. It has also allowed 100% FDI in the sector under the automatic route. Other initiatives taken by the Government of India are:

? The Central government aims to achieve Rs. 86,680 crore (US$ 10 billion) in technical textile exports under the National Technical Textiles Mission, launched in FY21 and extended until FY26 with a financial outlay of Rs. 1,480 crore (US$ 170.74 million). Indias technical textile exports range between Rs. 17,336 crore (US$ 2 billion) and Rs. 26,004 crore (US$ 3 billion).

? The Prime Minister Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme aims to establish 7 world-class mega textile parks with state-of-the-art infrastructure, plug-and-play facilities, and a fully integrated textile value chain with a total investment of US$ 541.82 million (Rs. 4,445 crore) for the years up to 2027 28 was approved by the government. These parks are expected to attract investments worth Rs. 85,370 crore (US$ 10 billion).

? A tripartite Memorandum of Understanding (MoU) was signed by the Textiles Committee under the Ministry of Textiles, the Government e Marketplace (GeM) under the Ministry of Commerce and Industry, and the Standing Conference of Public Enterprises (SCOPE) to promote upcycled products made from textile waste and scrap.

? Mr. Piyush Goyal also discussed the roadmap to achieve the target of US$ 250 billion in textiles production and US$ 100 billion in exports by 2030.

1. Lack of Trade Agreements: Countries like Vietnam and China benefit from Free Trade Agreements (FTAs) with major markets, making its exports more competitive. India lacks similar FTAs in key textile-consuming regions like the US.

2. Stagnant Growth and Declining Exports: Textile sector contracted by 1.8% annually (FY20-FY24), while apparel sector shrank by 8.2% per year. Apparel exports fell from USD 15.5 billion in FY20 to USD 14.5 billion in FY24.

3. Expensive Raw Materials: Government-imposed Quality Control Orders (QCOs) restrict imports of polyester and viscose, forcing domestic yarn makers to rely on costlier local alternatives. Polyester fibre in India is 33-36% costlier than in China, while viscose fibre is 14-16% more expensive.

4. Low Export Competitiveness: Indias textile exports are costlier than those of China and Vietnam due to supply chain integration issues. Unlike vertically integrated supply chains (company takes ownership of suppliers) in China, Indias fragmented supply chain spread across states and complex customs increase logistics costs and reduce competitiveness.

5. Sustainability Pressures: Global brands are enforcing strict environmental norms, requiring higher renewable energy use, waste recycling, and traceability of raw materials. The European Union has implemented several regulations (2021-2024) covering the fashion industry, impacting nearly 20% of India s textile exports.

Despite the challenging global landscape during the year, India emerged as the fastest-growing major economy, driven by a robust push in capital formation with public investment leading the path. The large domestic consumption basket in the country also supported this growth, though overall, it showed signs of moderation from the earlier years. Government-led strategic reforms, substantial investments in physical and digital infrastructure, and initiatives like Make in India and the Production-Linked Incentive (PLI) scheme bolstered the country s growth, resilience, and self-reliance.

Looking ahead, reviving consistent demand in the domestic market will be essential for the Company s sustained growth. In response to these challenges, the Company is actively exploring new business avenues, including expanding its presence, to diversify revenue sources and ensure long-term stability.

With completion of necessary capital expenditure to rampup the plants, the operations of the company are gradually increasing. The human resources required to cope-up with the growth requirements of the company are also gradually being put in place. The company is progressively improving its capacity utilization and regaining its market share. It is also generating adequate cash-flows to meet its obligations.The outlook for the Company can therefore be termed as optimistic and expects higher growth then inflation and average grow thin the industry.

As a diversified enterprise, the Company believes that, periodic review of various risks which have a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment so that it can limit negative impacts and capitalize on opportunities.

Risk management framework enables a systematic approach to risk identification, leverage on any opportunities and provides strategies to manage, transfer and avoid or minimize the impact of the risks and helps to ensure sustainable business growth with stability of affairs and operations of the Company. The risks and concerns associated with our company s business are discussed while reviewing Management and Discussion Analysis. The other risks that the management reviews also include:

a) Industry & Services Risk: This includes Economic risks like demand and supply chain, Profitability, Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness.

b) Management and Operational Risk: This includes Risks to Property; Clear and well-defined work process; Changes in technology / up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros.

c) Market Risk: This includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rate risk and forex risk.

The Company monitors price fluctuations and follows inventory management and responsive procurement policy to ensure timely procurement of raw materials at competitive prices. It also engages in contracts with clients and tries to pass on variations in the prices of raw materials to them to protect margins.

d) Liquidity Risk: This includes risks like financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks.

e) Disaster Risk: This includes Natural calamities like fires, floods, earthquakes etc.; Manmade risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

The Company prioritises the safety of its stakeholder community and ensures business survival during unpredictable crises. It has a well-designed safety management policy that eliminates/reduces the risk of workplace incidents. Its proper implementation and updation enable effective prevention besides equipping the employees to handle any incident that may occur. To reduce exposure to fire-related hazards, it has placed pressurised fire protection and related systems at strategic locations to deal with any fire-related incidents.

f) Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc. Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework.

g) Competition Risk: We face competition from existing players and potential entrants in the Indian textile industry. The Indian textile industry is highly competitive both in the Dying & Printing Process. Domestic production is dominated by few organized players who have integrated facilities and large economies of scale and the unorganized sector is virtually absent.

h) Technology Risk: The Company gives utmost importance to technology and proactively invests in R&D, modern and sustainable technologies, machinery and equipment for improving the manufacturing process, and quality and strengthening its product portfolio to cater to emerging market trends.

The Company has mechanisms in place to establish and maintain adequate internal controls over all operational and financial functions. The Company intends to undertake further measures as necessary in line with its intent to adhere to procedures, guidelines and regulations as applicable in a transparent manner. The Company has a well-established framework of internal controls in all areas of its operations, including suitable monitoring procedures and competent personnel. Its audit system is continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly.

The Internal audit covers all areas of activities with periodical reports submitted to the Management. Internal Auditors submit their quarterly report to the Audit Committee and are invited to the meeting to clarify any issues that may be raised by the Committee members. The Audit Committee reviews all financial statements to ensure adequacy of internal control systems. The Company has a well-defined organization structure, authority levels and internal rules and guidelines for conducting business transactions.

The Audit Committee is headed by an Independent Director and this ensures independence of functions and transparency of the process of supervision. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory auditors to ensure that internal control systems are operating effectively. Based on its evaluation (as provided under Section 177 of the Companies Act, 2013 and Clause 18 of SEBI Listing Regulations), the Audit Committee has concluded that as of March 31, 2025, the Internal Financial Controls were adequate and operating effectively. The Company conducts its business with integrity and high standards of ethical behaviour and in compliance with the all applicable laws and regulations that govern its business.

During the year under review, the Company has posted higher Revenue from Operation of 9637.99/- lakhs as compared to 8940.09/- lakhs in the corresponding previous year. The company has posted lower Finance Costs of 74.89 lakhs as compared to 103.85 lakhs in the corresponding previous year. Though the company has incurred lower finance costs but due to higher other manufacturing costs and depreciation during the year under review,it has posted lower Net Profit after tax of 195.49/- lakhs in the current year as compared to 332.57/- lakhs in the corresponding previous year.

Your Company treats its Human Resources as an essential asset and believes in its contribution to the overall growth of your Company. Your Company takes steps, from time to time, to upgrade and enhance the quality of this asset and strives to maintain it in an agile and responsive form. Your Company is an equal opportunity employer and practices fair employment policies. Your Company is confident that its Human Capital will effectively contribute to the long-term value enhancement of the organization.

Your Directors further state that during the year under review, no cases were filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has been able to attract a team of dedicated professionals with appropriate expertise and experience, leaders who are passionate, eager to learn and succeed.

Recruitment based on merit by following well defined and systematic selection procedures eliminating discrimination, sustain motivated and quality work force through appropriate and fair performance evaluation to retain the best talent. Various training programs, with internal and external experts are organized regularly for skill up gradation. The sincere efforts of the employees have resulted in major administrative expense savings.

A competency based performance appraisal system has been devised and implemented the same across the organization. The best performers get recognized and rewarded by the management with the objective of motivating them for further improved performance. Employees are promoted to higher positions on the basis of their performance, attitude and potential to motivate them for further improvement in their work.

The company from time to time fosters a culture of training, people development and meritocracy to ensure that the maximum efficiencies are derived from its human capital. The newly recruited employees undergo a comprehensive induction program. The employees underwent both functional/technical and behavioural training that would eventually result in improved productivity. Safety training is given on regular basis to all employees including temporary employees.

On the labour front, during the year, there were no incidents of labour unrest or stoppage of work on account of labour issues and relationship with them continues to be cordial. To increase team spirit inter department tournaments are organized and various festivals are celebrated in the company.

The Industrial relations remained cordial throughout the year and the Board records its appreciation for the contribution of all employees towards the growth of the company without which the achievements made, would not have been possible. As of 31^st March 2025, the Company has 995 employees on roll.

Pursuant to provisions of Regulation 34 (3) of SEBI (LODR) Regulation, 2015 read with Schedule V part B(1) details of changes in Key Financial Ratios is given hereunder:

*Previous year s Figures have been regrouped / rearranged wherever necessary.

The Company is conscious of the importance of environmentally clean and safe operations. The Company s policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of guidelines in force by local authorities, environmental regulations and preservation of natural resources.

In keeping with the environment-conscious tenure of the times, your company has taken effective steps in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staffs and labours for maintaining hygienic and green surroundings. Being providing continual efforts and stress on fire and safety, no major incident was noted in the year 2024-25.

The Company is aware of its responsibilities as a good corporate citizen, in health, safety and environmental management. To achieve the environment, health & safety visions, various objectives have been set forth. These are as follows:-

? Compliance with environment, health & safety laws and regular assessment of the compliance of operations against the requirement. ? Ensuring safety related practices to enable employees and others to eliminate work related injury and illness. ? First Aid training camps organized.

Moreover, the Company has in place the "Conviction for Safety" policy, which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by accidents and creating more awareness at the work place about safety and compliance so as to avoid accidents at the work place.

We have adopted various methods and practices for solid and hazardous waste management. Solid waste like Drums, Ashes, and Waste Cloth are sold to authorized parties for re-use. Hazardous wastes are handled through registered recyclers, who are authorized by the concerned Pollution Control Boards.

The Conservation of energy in all the possible areas is undertaken as an important means of achieving cost reduction. Saving in electricity, fuel and power consumption receive due attention of the management on a continuous basis. Various measures have been taken to reduce fuel consumption, reducing leakages, improving power factor optimizing process controls etc. resulting in energy savings.

The Whole-time Directors and CFO makes a declaration in the Board Meetings from time to time regarding the compliance with the provisions of various statutes, after obtaining confirmation from all the units of the Company. The Company Secretary ensures compliance accordance to SEBI regulations and provisions of the Listing Agreement.

The company is committed to its corporate social responsibility and undertakes programs that are sustainable and relevant to local needs. The Company works for sustainable development by achieving excellence in its key functional areas including safety, business operations, process management, business results, climate change, carbon footprint reduction, energy and water management, Medical Aid, community development, customer promise and engagement, governance and compliance, human capital, and innovation under its CSR program.

The Company contributes to the development of its community near the plant at G.I.D.C., Pandesara as well as through employee volunteerism as a part of its Corporate Social Responsibility in the areas of education, training, health care and self-employment.

This document contains forward-looking statements about expected future events, financial and operating results of the Company. These forward-looking statements are based on assumptions and the Company does not guarantee the fulfillment of the same. These statements may be subject to risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the management s discussion and analysis of Betex India Limited s Annual Report, 2024-25.