Bombay Dyeing & Manufacturing Company Ltd Management Discussions

In FY 2024-25, the global economy experienced steady yet uneven growth. Manufacturing slowed noticeably in regions such as Europe and parts of Asia due to supply chain disruptions and weak external demand, while the services sector bolstered growth across many economies. Inflationary pressures eased in most regions, although persistent services inflation remained a challenge. Stabilized commodity prices were accompanied by concerns over the risk of synchronized price increases, complicating prospects for global monetary policy. The Indian real estate and construction sector, an important driver of the countrys economic growth, is showing a structural shift led by increased corporatisation, enhanced transparency and strong market fundamentals. This shift indicates an enhanced long-term stability and operational efficiency The demand for luxury homes in India, priced at 4 Crs. (US$ 0.5 million) and above, saw a remarkable surge in 2024, with sales rising by 53% across seven major cities. According to the available data the total number of luxury housing units sold last year stood at 19,700. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs. Backed up with rapid urbanization, changing demographies, Infrastructure development across key economic centres including hubs like Delhi NCR and Mumbai MMR, 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.

Looking ahead to FY26, Indias economic prospects appear balanced despite challenges from elevated geopolitical uncertainties, trade risks and potential commodity price shocks. Growth opportunities are expected to arise from the conversion of private capital goods orders into sustained investments, enhanced consumer confidence and a gradual increase in corporate wages. A rebound in agricultural production and an anticipated easing of food inflation may provide additional momentum, while targeted structural reforms and deregulation will be essential to bolster the countrys medium-term global competitiveness.

In the fiscalyear 2024, the Mumbai Metropolitan Region (MMR) experienced a notable uptick in sales, as compared to the previous fiscal year, FY23. This decline in the launch of new residential units during the same period. Concurrently, unsold inventory saw some modest rise by the end of FY24 in comparison to FY23. Despite the reduced supply of new units across MMR, the region observed an appreciation in apartment values from FY23 to FY24. This trend underscores sustained demand in the market, contributing to the appreciation in property values despite the decrease in available inventory.

With continued focus on multimodal infrastructure development, including the Navi Mumbai Airport, enhancement in connectivity such as metro expansion, and proposed cable car projects, targeted decongestion of key corridors, the outlook for MMRs residential market remains positive. The Mumbai Metropolitan Region Development Authoritys (MMRDA) commitment to USD 40 billion worth of urban transport and regional projects is expected to boost accessibility and attract further investment in suburban markets.

The real estate market in India and Mumbai continues to do well. Supported by a growing economy, the real estate sector in India has transitioned significantly. Indias real estate sector has forward and backward linkages with approximately 250 ancillary industries and it is one of the highest employment generators after the agriculture sector, accounting for approximately 18% of the total employment. Factors such as growing residential demand, increase in need for contemporary office space, expanding hospitality, retail sector etc. to cater to the growing consumption needs of the growing population with increased . income levels, are adding an impetus to real estate sector in India. Furthermore, from a government policy perspective, various initiatives such as focus on affordable housing, smart city measures, tax deductions on housing loans etc. have enabled investment opportunities in the real estate sector in India. Real estate as an asset class averaged a 12% return over the past decade. It has lower volatility and smaller price fluctuations than equities, apart from providing stability and the tangible benefits of owning The Mumbai Metropolitan Region (MMR) residential real estate market witnessed significant growth in the last quarter improvement in registrations as compared to the previous quarter. The 3-year CAGR shows accelerating growth, particularly in prime areas like Central Mumbai, indicating increasing market momentum. Steady compounding of returns has led to significant highlighting the potential for sustained growth that makes Greater Mumbai a compelling choice for potential homeowners aiming to secure future prosperity.

The Company is currently pursuing the development of 3rd Phase of ICC approximately 1.2 million square feet out of 3.5 million square feet. The Company will also explore and evaluate other joint development opportunities in the realm of Real Estate.

The Real Estate division of the Company has completed three major real estate projects in Mumbai including the Springs, WIC Worli Axis Bank HQ (Commercial Tower) and Island City Center (ICC) residential project. In addition, the Company has increased its focus on the real estate segment and over the past two years the Company has successfully sold all units in its existing projects (ICC I and II). The healthy sales velocity demonstrated in the past few years indicates the strong demand in the market given the strong brand and preferred project for end users. The past experience of executing projects within the same layout should limit the implementation risks of the next phase of the project helping smoother execution and sustain high profitability. With the land sale, the Company has become cash positive, new launches are expected to generate steady cash flows in future years.

Overall, with projected growth in Mumbais luxury real estate market in 2026, driven by factors like increasing ultra-high-net-worth individuals (UHNWIs), increasing disposable incomes, shifting towards premium housing, the expected new launch is expected to benefit significantly.

The average RERA carpet area in Greater Mumbai has reduced in recent years, driven by the need to maintain affordability which poses challenges, such as declining quality of life, increased urban density straining infrastructure, and a mismatch with the growing demand for home office spaces post-pandemic.

The residential real estate market continues to show signs of strength despite persistent challenges. Concerns remain around escalating construction costs, the upward pressure on property prices and widening gap between aspirations and affordability could adversely affect market performance. Additionally, liquidity shortages and continued regulatory hurdles pose potential risks in project execution adding layers of uncertainty.

The global home textile industry is projected to reach USD 134 billion, representing 7-8% of the overall textile industry. This sector is expected to grow at a CAGR of 5-5.5% up to 2030. The industry being the second largest market, accounting for nearly 7-8% of the global market. With its quality offerings, Indian home textile companies have established themselves as prominent suppliers to both the US and UK markets. Carpets, rugs and furnishing articles make up approximately 30-32% of total home textile exports, followed closely by bed linen and kitchen/table linen.

The retail sector is currently undergoing a significant spurred by the growth of e-commerce, which requires traditional retailers to adapt accordingly. Consumers are showing a preference for a hybrid shopping experience that offers the convenience of online browsing with the tangible engagement of in-store visits. Quick commerce has also become well-established in Indias metro and tier 1 cities due to the convenience it offers to affluent urban residents.

The home textiles industry faces significant growing demand for sustainable products, the rise of e-commerce, and the potential for innovation in smart textiles and 3D printing. Key factors driving growth are rising disposable income and expanding real estate markets etc. However, the industry is subject to threats including rising logistics costs, competition from low-cost imports, fluctuating raw material prices, potential disruptions in the global supply chain.

The Retail division has taken necessary steps to reduce credit risk and has increased distribution, operating with a lean cost business model. The launch of premium collections, including Celebrating India, Regal Living, Blooming Muse (All Digital), and Ecstasy (Dyed in 400TC), has been well received by trade partners and customers. Bombay Dyeing is a household name for every Indian, with the strong legacy of the brand and the top preference of trade partners and customers towards the brand and products, the division has been taking steps to expand retail counters and shelf space in existing retail counters to further enhance the brand presence and boost sales.

The home textile segment continues to experience robust and sustained demand. It is expected that the demand for categories like Bed linen, Bath linen and TOB will continue to see robust growth. The focus shall continue towards better product mix, Store conversion, increased shelf space and improving the operating cycle for enhanced efficiency and sustained profitability.

Retail Industry continues to be influenced by swings in commodity prices. It is also facing major challenges on account of fuel prices, increasing wages and rising raw material costs. The concern remains with low-cost imports and cheaper alternatives from the unorganized sector.

Your Company is one of the seven producers of Polyester Staple Fibre (PSF) in the country with a market share of around 12%. While the market leader is fully vertically integrated, the other producers, Indianhometextile including the Company are stand-alone Polyester manufacturers. New capacities added during last seven years have resulted in substantial surplus capacity in the country and increased competition for the Company.

The overall polyester industrys capacity utilization remained ~80%. The Companys utilisation remained comparatively higher at ~86%.

Impact on demand due to geopolitical events and inflation/recession transformation, in western countries posed a major challenge to increase/maintain the sales volume and capacity utilization for the industry while also adversely affecting the margins.

In the backdrop of volatile crude oil prices the prices of petrochemicals PTA and MEG, the raw materials for your Company remained volatile.

. Domestic availability of raw materials remained tight and industry had to depend on imports to sustain optimum operating rates. Recycled is primarily responsible for lower margins due to price differential. However, opportunities,including a wide range of fibre produced by your Company is of superior quality and has wider usage compared to such recycled fibre. fibre,your Therefore,despite competition from such Company is able to maintain the market share and higher capacity utilisation rate. However, we expect that with increasing awareness regarding reducing the usage of PET Bottles, there may not be enough changing consumer preferences and raw material available for recycled fibre over the following years. This is expected to benefit virgin fibre producers like your Company.

Opportunities and Threats and

. While the year 2024-25 has been a very tough year there are many positive developments for the year 2025-26 including Governments control on inferior quality products imported into India earlier that are now being checked through Quality Control Orders by Bureau of Indian Standards. This will certainly give strength to domestically produced better quality products. The impact of the two wars in Europe and Asia have been faded off during the year 2024-25 thereby giving much needed respite to the Textile Industry. The new energy saving initiatives by your Company are also expected to give the much desired strength to PSF Division.

We expect crude oil prices to largely remain range bound now due to global state of economy and sea freight that posed challenges due to rising trend owing to war in Asia has also faded off during the year 2024-25 and shall definitely help our exports. The world demand in textiles too is seeing a trend of shifting from China to other Asian countries including India that is also supposed to help us.

Prices of raw materials as well as energy costs, the two major input costs for the PSF division are significantly dependent on crude oil price Changes in oil prices could lead to impact on margins and profitability. With the main input costs based in US$, fluctuations in the Indian Rupee/US$ exchange rate could impact the business and margin. Supply and price of cotton crop in India and globally could have an impact on the demand of PSF. Increased competition due to surplus capacity in the country has resulted in pressure on margins due to price undercutting in the market. Any future wars or delay in an end to the two existing wars is also an area of concern.

Segment-wise performance together with a discussion on operational and financial performance has been covered in the Directors Report which should be treated as forming part of this Management Discussion and Analysis Report.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

M/s. PKF Sridhar Santhanam LLP, Chartered Accountants, were the Internal Auditors of the Company for FY 2024-25. The reports and findings of the internal auditors and the internal control system are periodically reviewed by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the internal audit report, process owners undertake corrective action in the respective areas and thereby strengthen the controls. Significant audit observations and are presented to the Audit Committee of the Board.

At Bombay Dyeing, employees are its prime assets and a vital key to its success. The Company is committed to creating a professional culture to nurture and enable people to grow in their careers alongside Companys success. The Company constantly strives to strengthen its manpower in alignment with the business needs and continue to engage them through various initiatives in the realm of learning & development opportunities, reward & recognition, employee engagement activities and career growth.

The Company has identified the following ratios as key financial ratios:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulation, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.