Dhanlaxmi Fabrics Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. Global growth is projected to grow at 2.8 percent in 2025 and 3 percent in 2026, this is much below the historical (2000 19) average of 3.7 percent. For India, the growth outlook is relatively more stable at 6.2 percent in 2025, supported by private consumption, particularly in rural areas.

Medium-Term Outlook: Lacking structural reform momentum and facing headwinds from a range of challenges, global economic performance is expected to remain mediocre. The five-year-ahead growth forecast stands at 3.2 percent, below the historical average during 2000 19 of 3.7 percent. A key and increasingly common driver of these sluggish medium-term growth dynamics is demographics. Population aging is expected to weigh significantly on productivity, labour force participation, and ultimately, growth. Population movements across borders could help alleviate some of the demographic drag, and policies governing these movements can have complex spillovers onto growth.

Geopolitical uncertainty is significantly impacting global energy dynamics, causing disruptions in supply chains, market prices, and energy security. Ongoing conflicts, trade tensions, and shifting alliances are testing the resilience of energy systems and altering strategic priorities for nations and corporations. Simultaneously, there is a growing emphasis on ESG (Environmental, Social, and Governance) principles, influencing investment patterns, regulatory changes, and corporate strategies. While this shift is vital for longterm sustainability, it also brings new challenges and opportunities that affect economic performance across various sectors.

INDIAN ECONOMIC OVERVIEW

Indias economy remained remarkably resilient in the face of global disruptions. Strong domestic consumption, higher government spending on infrastructure and an accommodative monetary policy powered this growth. Retail inflation eased to 4.6% in FY 2024-25, the lowest since FY 2018-19. This led the Reserve Bank of India (RBI) to implement its first rate cut in five years to 6%, thereby supporting continued growth.

The financial services sector remained stable, supported by well-capitalised banks and a solid regulatory framework. Government initiatives, such as ‘Make in India spurred domestic manufacturing growth, while long-term prospects in manufacturing and technology attracted strong foreign investment. The expansion of Indias digital economy, including e-commerce and digital payments, further boosted economic activity.

Indias manufacturing sector grew at 4.8% in FY 2024-25, up from 4.7% in FY 2023-24. This contributed to 7.4% GDP growth in the fourth quarter of FY 2024-25.12 The government increased budget allocations to support manufacturing, with FDI in the sector reaching USD 184 Billion a 90.5% rise over the past decade fuelled by production-linked incentive schemes.13 Over the past six financial years, total FDI inflows amounted to USD 464.54 Billion.14 With robust physical and digital infrastructure, India is now well positioned to expand the share of the manufacturing sector in the economy and strengthen its role in global supply chains.

INDUSTRY STRUCTURE AND DEVELOPMENT

Textile and Apparel Market

The global apparel market is estimated to be US$ 1.8 trillion in 2024. It is expected to reach US$ 2.3 trillion by 2030, growing at a CAGR of 4% from 2024. Indian textile and apparel market size is estimated to be US$ 184 billion in 2024-25. Domestic market contributes ~80% to the market size while exports have a share of ~20%. Within domestic market, apparel accounts for ~75% share.

The Indian domestic T&A market has grown from US$ 106 billion in 2019-20 to US$ 147 billion in 2024-25, registering a CAGR of 7%. The market needs to grow at 9% CAGR from 2024-25 to reach US$ 250 billion by 2030-31, which is the target set by Ministry of Textiles, Govt. Of India.

Indian Apparel Market

The overall apparel segment size in FY 2025(E) was estimated to be USD 108 bn. The market is projected to grow at 9 percent and reach USD 180 bn by FY 2031. This growth is expected to be driven by factors such as increased purchasing power driving growth in primary discretionary spend, better access and availability of products, acute brand consciousness, increasing urbanisation and increasing digitisation.

Indias Innerwear Market

The innerwear market, as a whole, is expected to grow at an encouraging CAGR of 10% between 2024-2029, driving the market from 667.02 billion in 2024 to 1,083.78 billion in 2029. The largest segment, lingerie estimated to be valued at 441.85 billion in 2024, is expected to show a promising CAGR of 9.70% to reach a market size of 701.86 billion in 2029. This segments fast growth can be attributed to the positive wave of body positivity and self-expression that has taken over India.

Bras and brassieres emerge as the largest subsegment in the lingerie segment because of their variety and versatility. Womens lingerie makes up the majority of this segment. A whopping 55% of all lingerie comprises womens lingerie while the remaining 35% and 10% is credited to mens and kids undergarments respectively. This split values the womens lingerie market at 243.02 billion, mens undergarments market at 154.65 billion, and kids undergarments at 44.18 billion in 2024 with the womens, mens, and kids markets roaring up to 386.02 billion, 245.65 billion, and 70.19 billion respectively in 2029. A smaller but emerging segment under innerwear is shapewear and compression garments, estimates to grow from 100.05 billion in 2024 to 161.07 billion in 2029 at a CAGR of 10%. Compression wear, especially, is expected to grow rapidly within this segment because of increased health consciousness amongst customers. As customers interest in the fitness peaks, so will the demand for compression garments as it is a popular choice of clothing for heavy workouts. Sleepwear includes pyjamas and shorts, sleep shirts, camisoles, nightgowns, etc. This category estimates to grow from 125.13 billion in 2024 to 220.85 billion in 2029 to

Apparel Industry in India

Indias apparel industry is one of the largest in the world, with a market size of around $74 billion. It plays a crucial role in the countrys economy, contributing significantly to exports, employment, and GDP. Key Characteristics driving the force are as - Diverse Production: India produces a wide range of apparel, from traditional ethnic wear to modern fashion, catering to both domestic and international markets. Export-Oriented: A substantial portion of Indias apparel production is export-oriented, with major markets in the United States, European Union, and the Middle East. Employment: The industry is one of the largest employers in the country, providing jobs to millions, particularly in rural areas.

The apparel industry, both in India and globally, is a vibrant and rapidly evolving sector. In India, the influx of global brands has transformed the market, influencing consumer behavior and increasing competition. As the industry continues to grow, the interplay between local and international brands will shape the future of fashion in India.

SUSTAINABILITY & TECHNOLOGICAL ADVANCEMENTS

Sustainability has become a key priority, with Gen Z consumers driving demand for ethical and eco-friendly textiles. This shift has led to innovations in traceable supply chains, circular fashion models, and sustainable fabric production.

Advances in artificial intelligence, automation, and robotics are reshaping textile manufacturing, improving efficiency, precision, and sustainability. Smart textiles featuring moisture-wicking and antimicrobial properties are gaining traction, reflecting evolving consumer preferences for performance-driven fabrics.

E-COMMERCE

Indias e-commerce industry, valued at 10,828.75 billion (US$ 125 billion) in FY24, is projected to grow to 29,887.35 billion (US 345$ billion) by FY30, reflecting a compound annual growth rate (CAGR) of 15%.

The e-commerce industry in India demonstrated remarkable resilience and diversification in FY23, recording a robust 26.2% jump in order volumes. This growth was primarily driven by a 31.1% surge in demand from tier-1 cities, as work-from-office arrangements resumed following the pandemic-induced disruptions.

Indias e-commerce market is set to reach US$ 345 billion by FY30, fuelled by 500 million shoppers and increased internet access, especially in rural areas. By FY26, over 1.18 billion people are expected to have smartphones, enhancing digital transactions. Rural areas will drive over 60% of demand, particularly from tier 2-4 towns. As of December 2023, India has around 936.16 million internet subscribers, including about 350 million mature online users actively engaging in transactions.

Indias digital sector is expected to increase multi-fold and reach US$ 1 trillion by FY30. India is poised for massive growth, with

Indias quick commerce market expected to reach 434.35 billion (US$ 5.0 billion) by FY25 and 860.01 billion (US$ 9.9 billion) by FY29.

The online retail market in India is estimated to be 25% of the total organized retail market and is expected to reach 37% by FY30. India had the third-largest online shopper base of 225 million in 2023. Over the next five years, the Indian e-retail industry is projected to exceed ~300-350 million shoppers, propelling the online Gross Merchandise Value (GMV) to US$ 100-120 billion by FY25. The growth of Indias e-retail market is supported by key drivers such as improved digital access, enhanced affordability, and the rise of digital ecosystems, all of which are expected to sustain a robust annual growth rate of 23-25% in the coming years.

SWOT ANALYSIS

Strengths:

? Diversified Business Portfolio: Presence across textiles (bath & bed linen), paper, chemicals, and energy reduce dependence on a single sector and enhances revenue stability. ? Increase in consumption with factors like education, occupation, urbanisation, nuclear families, influence of social media, disposable incomes moving in a positive direction. ? Increase in fashion and brand consciousness making consumers more aspirational and discerning. ? Increasing urban women population and women corporate workforce

Brand:

In-house manufacturing and a robust distribution chain allow the brand to ensure adequate supply.

Brand footprint expanding across exclusive retail as well as multi-brand retail creating an excellent base for its growth.

The new / first time consumers acquired by the brand during the pandemic in categories such as athleisure will aid in growth.

The hybrid work culture provides excellent opportunities for categories like work-leisure to expand and grow. Threat Long Term:

Several international apparel brands have commenced operations in India realizing that the Indian market is likely to emerge as one of the largest apparel markets in the world in the next few decades

The emergence of D2C startups in the innerwear and athleisure space in the last few years with aggressive discounting as the key USP to acquire customers

STRATEGIC INITIATIVES

The Companys value system and success revolves around the pillars of Quality, Comfort, Integrity, Simplicity, Transparency, People and Customer delight.

Key strategic initiatives taken to maintain market position and profitability:

Capacity ramp-up in both manufacturing and sales

Expanding channel presence in distribution, exclusive brand stores, large format stores & e-commerce

Expanding investments and spends in sales and marketing at point of sale along with traditional and digital advertising

Enhance investments in R&D, product development and innovation, automation, and digital transformation

TECHNOLOGY & SUSTAINABILITY DRIVING TRANSFORMATION

To enhance efficiency and quality control, textile manufacturers are adopting computer vision technology for fabric pattern recognition and colour matching, a shift expected to reduce production costs and improve accuracy.

Sustainability remains a central focus, driving consumer interest in organic and recycled materials. Major global brands introduced textile recycling initiatives aimed at reducing carbon emissions by 85%, with a particular focus on polyester waste minimization. These efforts align with EU regulations promoting environmentally conscious production.

INDUSTRY OUTLOOK & GROWTH OPPORTUNITIES

Despite challenges such as import competition and economic uncertainties, the U.S. textile industry remains poised for expansion. Its commitment to sustainability, technological innovation, and adaptability will be critical in driving growth into FY25 and beyond.

As the market integrates advanced materials, AI-powered production, and digital supply chain solutions, continued progress in sustainability and efficiency will reinforce the industrys long-term competitiveness in the global economy.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company is engaged in the business of textiles and there is no separate reportable segment.

RISK AND CONCERN

The Companys risk management procedure helps identify and evaluate risks on an ongoing basis. Risks are inherent in business activities and to mitigate these effectively and efficiently, the Company has implemented a SCORE framework: -

Strategic Risks, Compliance Risks, Operational Risks, Reporting obligations and

Environment, Health and Safety Risks

The identified risks are integrated into the business plan and a detailed action plan to mitigate these risks and concerns is put in place.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has established a robust internal control framework designed to achieve its operational, compliance, and reporting objectives effectively. Its policies and procedures are structured to align with both its current operations and future growth strategies.

To ensure continuous improvement and mitigate risks, the Company has implemented a comprehensive system of internal controls, complemented by external audits. These controls are supported by digital systems and applications that enhance oversight and accountability. It has also taken a significant step in its digital transformation journey by migrating to SAP S4 HANA, a strategic move that will significantly enhance internal control systems.

Additionally, the adequacy of internal controls, financial policies, risk management strategies, key audit findings, and accounting compliance are regularly reviewed by the Audit Committee of the Board of Directors, ensuring transparency and accountability in operations.

HUMAN RESOURCES

The Company places a strong emphasis on the expertise and quality of its workforce, recognizing it as a key driver of success. With a commitment to equipping employees with the necessary skills to adapt to an evolving technological landscape, the Company fosters a culture of continuous learning and professional development

The HR team plays a pivotal role in nurturing and retaining talent within the dynamic textile industry. Prioritizing employee safety, the Company conducts comprehensive facility audits to ensure workplace well-being. Additionally, plant safety committees have been established to proactively monitor and address safety concerns.

A supportive and rewarding work environment remains central to the Companys values, where merit is recognized, and a positive workplace culture is actively promoted. As of 31st March 2025, the Company employed 3637 individuals,

FINANCIAL PERFORMANCE AND ANALYSIS

(Rs. in Lakh)

Particulars	F.Y. 2024-2025		F.Y. 2023-2024
	Standalone	Consolidated	Standalone	Consolidated
Revenue from Operation	928.39	1311.20	1659.34	1992.78
Revenue from other Income	162.00	182.85	120.83	147.67
Total Revenue	1090.39	1494.05	1780.17	2140.45
Profit before Dep. & Int.	(280.32)	(265.21)	(504.14)	(555.09)
Depreciation	62.61	62.98	81.30	85.30
Interest	30.90	41.69	19.32	20.34
Profit after Depreciation & Interest and before Tax	(373.83)	(369.88)	(604.76)	(660.73)
Exceptional Items	446.77	446.77	(60.91)	(78.44)
Profit after Exceptional Items	72.94	76.89	(665.67)	(739.17)
Provision for Taxation	-	0.64	8.22	9.80
Provision for Tax (deferred)	72.41	75.52	24.27	23.35
Provision for Taxation for earlier year	(8.22)	(8.22)	-	(0.33)
Profit/Loss after Tax	8.75	8.95	(698.16)	(771.99)

KEY FINANCIAL RATIOS:

	F.Y. 2024-2025		F.Y. 2023-2024
Particulars	Standalone	Consolidated	Standalone	Consolidated
Current Ratio	8.42	5.88	4.17	3.76
Debt-Equity Ratio	-	0.00	0.03	0.03
Debt Service Coverage Ratio	-8.99	-6.30	-25.50	-27.04
Return on Equity Ratio	0.00	0.00	-0.14	-0.15
Inventory Turnover Ratio	3.05	3.17	2.16	2.24
Trade Receivable Turnover Ratio	3.31	3.69	2.45	2.66
Trade Payable Turnover Ratio	2.27	2.40	2.60	2.93
Net Capital Turnover Ratio	0.79	1.00	1.50	1.59
Net Profit Ratio	0.01	0.01	-0.42	-0.39
Return on Capital Employed	0.02	0.02	-0.13	-0.15
Return on Investment	-	-	-	-

CAUTIONARY STATEMENT

This Management Discussion and Analysis Report may contain forward-looking statements, such as goals,estimates, projections and expectations of the Company, as defined under applicable laws and regulations. Actual results may differ materially from those expressed or implied in such statements due to various factors, including but not limited to changes in governmental regulations, tax laws, foreign exchange fluctuations, raw-material availability and pricing, cyclical demand and pricing in key markets and broader economic conditions in India and other jurisdictions where the Company operates. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. The Company assumes no obligation to update any forward-looking statements, except as required by law.

FOR & ON BEHALF OF THE BOARD
Sd/-	Sd/-
Vinod S Jhawar	Mukul V Jhawar
(Managing Director)	(Whole Time Director)
DIN: 00002903	DIN: 07966851
Place: Mumbai
Date: 06.08.2025