Delta Manufacturing Ltd Management Discussions

1. Economic Review

The global economy is still grappling with major challenges. Slower growth, stubborn inflation, and geopolitical instability are all contributing factors. Leading economic organizations recently predicted a decline in worldwide economic activity, with the United States and China being particularly affected.

Higher US tariffs are likely to affect the global economy by increasing inflationand slowing growth, though a worldwide recession isnt expected. The global economy seems to be settling into a low-growth pattern, which wont be enough to support long-term economic development. To boost growth and development, global and national policies are needed to improve the external economic environment, enhance macroeconomic stability, ease structural limitations, and address climate change.

Global economic growth forecasts for 2025 are looking grim, with major organizations predicting a significant slowdown. The United Nations Conference on Trade and Development (UNCTAD) projects a low 2.3% growth, attributing it to escalating trade tensions and ongoing uncertainties. The International Monetary Fund (IMF) has also cut its 2025 forecast sharply to 2.8% from an earlier 3.3%. Similarly, the Peterson Institute for International Economics (PIIE) expects global GDP growth to slow to 2.7% in 2025, with only a slight improvement to 2.8% in 2026, a notable drop from 2024s 3.2% growth.

India is projected to continue its lead as the fastest- growing major economy in 2025, with a 6.5% growth rate, according to reports from both the World Bank and UNCTAD. This growth will likely be fuelled by sustained momentum in the services sector and an acceleration in manufacturing activity, thanks to government efforts in improving logistics infrastructure and implementing tax reforms.

India stands out among countries driving global growth through increased government spending and supportive monetary policies. While robust domestic demand, a shrinking trade deficit, and controlled inflation are bolstering its economy, persistent weak global demand continues to pose trade challenges. Although the risk of foreign investor outflows remains, a rise in domestic investment offers a significant buffer. The Reserve Bank of Indias (RBI) proactive policies have also been instrumental in stabilizing liquidity and managing inflation expectations.

Overall, Indias economic outlook is strong, but global market uncertainties, financial volatility, and trade disruptions remain key risks. Continued policy support and domestic resilience will be vital to maintaining this economic momentum.

The financial year 2024-25 was characterized by a complex and evolving global economic landscape. Geopolitical tensions and macroeconomic uncertainties in international markets continued to pose challenges.

F or India, while the economy demonstrated resilience and maintained its position as one of the fastest-growing major economies, it was not immune to these pressures. Persistent high inflation, particularly during the first half of the fiscal year, exerted significant pressure on consumer wallets, leading to subdued demand

This directly impacted the auto, textile and apparel sector, which is highly sensitive to consumer sentiment and disposable income levels. While inflationary pressures began to moderate towards the end of the year, the impact on consumption patterns was visible throughout the period.

2. Industry Overview

The Indian textile and apparel industry, a cornerstone of the national economy, contributes significantly to industrial output, and employment. The industry is undergoing significanttransformation, driven by evolving consumer behavior, technological advancements, and a greater focus on sustainability. Key developments include a noticeable shift from unbranded to branded products, the rapid growth of e-commerce and omnichannel retail, and increasing demand for casual wear and specialized product categories like ethnic wear. Government support through initiatives like the Production-Linked Incentive (PLI) scheme continues to encourage domestic manufacturing and investment in the sector.

The global apparel market is a significant force, valued at US$ 1.84 trillion in 2025 and representing 1.65% of

GDP. Its set for steady growth, projected to hit US$ 2.04 trillion by 2029 with a CAGR of 2.61%. Indias apparel industry is particularly well-positioned for this expansion, fuelled by innovation, government backing, and rising global demand. The future leaders in this market will be those embracing eco-friendly practices. India is poised to become a central hub for textile innovation and sustainable production, continuing to export high-quality goods and serve its booming domestic market. To fully achieve this potential, the industry must prioritize ongoing innovation, infrastructure improvements, and environmental responsibility.

The Indian automotive industry recorded a strong FY25, marked by a 7.3% rise in domestic sales and a

19% surge in exports, reaching over 5.3 million units.

Production & Sales: Total production across all segments was 3,10,34,174 units. Passenger Vehicles hit a record 4.3 million units sold, driven by SUVs, which comprised 65% of sales.

Exports: Exports of passenger vehicles reached an all-time high of 0.77 million units, spurred by demand from Latin America, Africa, and potentially developed markets. Overall exports were supported by ‘Make in India initiatives and strong global demand.

T wo-Wheelers & Three-Wheelers: Two-wheeler sales rebounded strongly with 19.6 million units sold, a 9.1% increase, fueled by improved rural demand. Three-wheeler sales also reached a new peak of 7.4 lakh units, surpassing previous records.

Commercial Vehicles: Sales declined slightly by 1.2% year-on-year, though the last quarter showed a modest recovery. Exports for commercial vehicles, however, experienced strong growth, increasing by 23%.

Electric Vehicle (EV) Growth: EV registrations reached 1.97 million units in FY25, a 16.9% increase. Notably, EV penetration in two-wheelers crossed 6%. Government schemes like PM E-DRIVE and EMPS are accelerating EV adoption.

The industry is optimistic for continued growth in FY26, supported by stable economic conditions, government policies, and infrastructure spending. Challenges like global geopolitical tensions and supply chain dynamics remain, but opportunities in EVs, shared mobility, and manufacturing localization are expected to drive future growth. India is poised to become a key player in the global automotive landscape, potentially leading in shared mobility by 2030 and attracting significant investments in the EV sector.

The Indian electronics industry, including the white goods and other electrical goods segments, experienced robust growth in FY25, driven by strong domestic demand, increased production, and a surge in exports. Government support through various initiatives further bolstered the sectors momentum.

Overall Industry Growth: Indias electronics production reached an estimated $135-140 billion in FY25, showcasing significant year-on-year growth. The sector aims for $300 billion in production by 2026.

Exports Boom: Electronic goods exports surged by 32.46% in FY25, totaling $38.58 billion and making it the fastest-growing export segment.

Mobile Manufacturing Dominance: India solidified its position as the worlds second-largest mobile phone manufacturer, with locally made smartphones accounting for 97% of domestic sales. Mobile phone exports are a major contributor, expected to grow 35% in FY25.

White Goods Sector Growth: The Indian white goods market, encompassing appliances like air conditioners, refrigerators, and washing machines, is valued at USD 11,788.81 million. It is experiencing significant by rising disposable incomes and changing lifestyles. The market is expected to cross $21 billion by 2025, expanding at a CAGR of 11%.

Government Initiatives: Schemes such as the Production Linked Incentive (PLI) for Large Scale Electronics Manufacturing and White Goods (ACs and LED lights), the Scheme for Promotion of Manufacturing of Electronic

Components and Semiconductors (SPECS), and the Semicon India Program are attracting significant and boosting domestic manufacturing across the electronics and white goods sectors.

The Indian electronics industry, encompassing white goods and other electrical appliances, is poised for continued growth. According to Grand View Research, the market is projected to exhibit a CAGR of 6.90% during 2025-2033, reaching a value of USD 152.59 Billion by 2033. Factors such as increasing disposable income, urbanization, expanding e-commerce penetration, and government support will sustain this growth trajectory. The focus on indigenous manufacturing and the development of a robust component ecosystem are crucial for India to achieve its ambition of becoming a global hub for electronics manufacturing and exports, particularly in the white goods sector.

3. Company Overview

Delta Manufacturing Limited (DML) is one of the oldest business house in India, incorporated in 1982.

In a world of unprecedented technological disruption and end market volatility, our direction for growth has always revolved around transformation, technology, innovation and the need to generate new value – to unlock new opportunities, drive growth and deliver new efficiencies. The aim is to create an effective business transformation from the traditional products to a wide range of newly developed technologically advanced components and sub- systems. We intend to integrate and align our new strategic businesses with the existing business, to differentiate and stay ahead in the industry, even as we pursue new innovation-driven opportunities that emerge, as well as respond to shifting market demands. We strive to separate ourselves from competitors and establish a platform for future growth.

W e have two primary business lines:

(i) The manufacture and supply of magnets to tier 1 suppliers of all the two wheeler, three wheeler, passenger vehicles, electronic components and aerospace OEMs in India and worldwide, which we undertake through our magnet division.

(ii) The design, manufacture and supply of a wide range of garment trims in India i.e, woven labels, heat transfers, fabric printed labels, elastic & non-elastic tapes primarily to major garment / textile companies in India. We have 3 operating manufacturing cum R&D facilities in India.

4. Highlights and Progress

Our focus on technology-enabled capability development has played a key role in driving growth and enhance stakeholders value. We continuously focus on building capabilities by establishing ourselves in new locations for manufacturing as well as R&D, focusing on select value-accretive acquisitions and expanding our customer base. During the year, many such initiatives were undertaken, which are summarised as follows: (i) W e have established a trim manufacturing facility in Tirupur, Tamil Nadu. This strategic move enhances ability to serve customers more efficiently and meet delivery expectations in a we see this facility as a platform to deepen engagement with existing customers and secure new business opportunities.

(ii) W e have entered into a joint venture with PREMO S.L., Spain, for the manufacturing of soft ferrite magnets. partnership allows us to fully utilize the divisions capacity while expanding our participation in higher value-added activities.

( in Lakhs)

The Financial Performance of our Company has been affected by the slowdown in the domestic and global markets owing to the pandemic, margins have been under pressure due to the liquidity crunch in the unorganized sector, who are affected during this fiscal because of higher compliance cost, eroding market share and limited ability to pass on the increase in raw material cost.

W e are in the process of restructuring the customer & product portfolio with a single objective of growing business. We believe this will enable us to achieve our long-term objectives.

6. Outlook

The overall economic revival and private consumption rebound bodes well for demand recovery in the auto, electronic and textiles segment. Further, the return of discretionary spending towards aspirational purchases is likely to drive demand for products in the industry we operate.

In anticipation of growing demand, the Company is looking at capacity expansion with increased infrastructure and facilities in the trim segment. This will allow scalability and ramp up incremental machinery and manpower to meet the expected growth in demand. The Company expects to be on a profitable growth momentum.

The Company is focused on liquidity management through cost reduction initiatives and working capital optimization with a stated aim of becoming a net debt-free company in next 3 years. Our Company is well positioned to capitalise on the existing and emerging opportunities in the industry by focusing on innovation, partnerships / J.V, global presence.

7. Risks And Concerns

Risk is an inherent part of any business. There are various types of risks that threaten the existence of a company Strategic Risk, Business Risk, Finance Risk, Environment Risk, Personnel Risk, Operational Risk, Reputation Risk, Regulatory Risk, Technology Risk, Political Risk, etc. Your company aims at enhancing and maximizing shareholders value by achieving appropriate trade-off between risk & returns.

8. Internal Control System And Adequacy

The Company is committed to maintaining adequate internal control systems as a part of efficient governance. The system ensures that all transactions are authorised, recorded and reported correctly to safeguard assets and protect them from any loss due to unauthorized use or disposition. The operating managers make sure that all operations within their area are compliant and safeguarded against all risks whereas on the other, auditors carry out random audits to detect flaws in the system, which makes it effective and efficient.Internal audit reports are prepared to create awareness and to take corrective actions on the respective units or areas, which need rectification.

These reports are then reviewed by the management team and the Audit Committee for follow-up action.

9. Human Resources And Industrial Relations

The man and machine combination are balanced optimally, as the Company believes that Human Resource is one of the most vital resources and a key pillar in providing the Organization a competitive edge in current business environment. A motivated and efficient workforce can help it attain its target in a realistic manner. Taking cognizance of that fact, the Company provides extensive training to its employees in order to develop their skill sets and keep them motivated. The Company appreciates the productive co-operation extended by its employees in the efforts of the management to carry the Company to greater heights.

As on 31^st March, 2025, the Company had employee strength of 306 on its payroll.

The statements made above may be construed as forward-looking statements within the meaning of the applicable laws and regulations. Actual performance of the Company may vary substantially depending upon the business structure and model from time to time. Important external and internal factors may force a downtrend in the operations of the Company.