Donear Industries Ltd Management Discussions

1. Economic Overview:

World economy: A gradual recovery was experienced in FY 2024-25 amid the challenging macroeconomic environment. Global growth showed modest resilience after enduring the shocks from prolonged inflation, tightening monetary policies, and ongoing geopolitical tensions.

The latest World Economic Outlook (WEO) according to estimates by the International Monetary Fund (IMF), the world economy expanded by approximately 3.1% during the year 2025, reflecting improved consumer demand in certain regions and easing of supply chain constraints, aligning with the expectations set in 2023. Global trade remained subdued, impacted by reduced demand from developed markets and disruptions in key shipping routes. Commodity prices showed mixed trends, with energy prices stabilizing and agricultural prices facing volatility due to climate and geopolitical factors.

Global textile and apparel trade faced a mixed environment. While demand from key western markets softened due to inflationary pressures and inventory adjustments in the retail sector, certain developing markets showed signs of growing consumption. In addition, sustainability, traceability, and compliance became increasingly central to global sourcing strategies, reshaping demand patterns across the textile supply chain. Global economic issues such as persistent inflation, stagnant growth and rising geopolitical risks are still gauging the economy with perseverance solutions.

Indian Economy: It is the fourth consecutive year post-pandemic that the Indian economy has maintained growth at or above 7%. The Indian economy demonstrated resilience and steady growth during FY 2024-25, navigating global uncertainties and domestic challenges with notable fiscal discipline and structural reforms. According to provisional estimates by the Ministry of Statistics and Programme Implementation (MoSPI), Indias GDP is projected to grow around 7.2%, maintaining its position as one of the fastest-growing major economies globally.

Indias recently released Interim Budget allocated Rs. 11.21 lakh crore (3.1% of GDP) for capital expenditure in fiscal year 2026. This results in increasing of effective CapEx to around 5.5% of GDP. The sustained CapEx indicates continued focus on long-term economic drivers?€”traditional infrastructure plus urban, transport, and logistical frameworks. For the textile segment, this suggests improved facilities, enhanced supply-chain networks, and potential rollouts of manufacturing clusters or PLI-backed parks.

To improvise the future landscape, several initiatives are anticipated to unfold. Continued policy support, coupled with improved infrastructure and logistics, positions the industry to benefit from both domestic demand and export opportunities. With a growing emphasis on sustainability, traceability, and digital integration across global textile markets, Indian companies are increasingly investing in eco-friendly practices and smart manufacturing. These shifts are expected to shape the next wave of competitiveness for the Indian textile sector on the global stage.

2. Indian Textile Market Overview & Development:

The Indian textile and apparel industry remains one of the most significant sectors of the countrys economy, contributing approximately 2.3% to the countrys GDP, 12% to export earnings, 13% to the industrial production and providing direct and indirect employment to over 45 million people. India remains as one of the largest producers of cotton and jute in the world. The market is expected to reach US$ 350 billion by 2030, growing at a 10% CAGR. During FY 2024?€“25, the textile sector navigated a complex operating landscape shaped by fluctuating raw material prices, evolving consumer preferences, and shifting global trade dynamics. In financial year 2025, Indias cotton yarn exports are expected to see a rebound, potentially growing by 7-9% as compared to last year.

The Government of India has continued to prioritize the development of the textile sector through initiatives like the Production-Linked Incentive (PLI) Scheme for Textiles, with an outlay of 10,683 crore, aimed at promoting high-value MMF (man-made fibre) fabrics and technical textiles. Duty rationalization and export incentives have been implemented to improve global competitiveness, especially in segments such as apparel, home textiles, and technical textiles.

3. Opportunities, Risks and Concern:

India is the most populous country with estimated 1.46 billion people as of 2025. Amidst the increasing development of Indian textile industry, it is surrounded with numerous challenges such as fluctuations in cotton and crude oil prices which affect synthetic fibre costs, unpredictable weather patterns and global supply disruptions can impact the inputs availability and margins.

4. Future Outlook of Textile Industry:

The Indian retail market is one of the fastest growing markets in the world and is expected to cross US$ 1.4 trillion by 2027. Rising demand for premium and luxury products further fuels this growth trajectory, reflecting the evolving preferences with rising disposable incomes. There is an increase in the turnover of Donear Industries Limited compared to last year. Continuous improvements and rapid growth of the company underlines the future development of the company.

The governments continued focus on the sector through initiatives such as the Production-Linked Incentive (PLI) Scheme for Textiles, PM MITRA Parks, and strategic trade agreements (e.g., India-UAE CEPA, India-EU FTA under negotiation) is expected to enhance production capacity, attract investment, and improve the global competitiveness of Indian textiles. These initiatives are particularly encouraging for the growth of man-made fiber (MMF) and technical textiles, which are gaining demand worldwide. On the global front, India is well-positioned to benefit from the ongoing "China+1" sourcing strategy adopted by international brands seeking to diversify their supplier base.

The company continues to maintain its position in the market due to the continued thrust on new product development and technology up-gradation. Strategies to penetrate into the existing markets and diversify by reducing costs and increasing customer base will render in improving the performance of the company in the future years.

5. Human Resources / Industrial Relations Front:

Human Resources are considered as the heart of any organization and are so mirrored in the policies of Donear Industries. Their contribution and commitment towards developing the company have paved the path to success for Donear. The company is committed to prioritize the well-being of their employees and the principles followed in the company including but not limited to transparency, accountability, responsibility ensures the best interest of the employees.

Industrial relations of the company have always been peaceful and harmony is always maintained ensuing the retaining of best talent rendering in low attrition rates. The company has an induction process wherein employees are made familiar with the organization structure, their reporting authority, various units, major achievements and other related factors in order to make them congenial while working in the company. The nurturing of a strong and talented workforce provides opportunity for professional development and enhances the productivity of the organization.

6. Risk Management and Internal Control System :

Every organization is posed with challenges and risks that gives shape to its success. Donear industries has curated a risk management framework to not only reduce risks faced by the company but also to ensure a sustainable business. The framework is designed to promote pro-active approach in reporting, evaluating and resolving the risks which are material in nature and thus eliminating the element of danger surrounding the company. The policy can be availed of by surfing the website of the company at www.donear.com/investor .

The companys activities are exposed to credit risk, liquidity risk, market risk, price risk and Interest rate risk. The details of such risk exposure and the control measures used to combat such risk are tabulated below in a brief manner, the full details of which forms the part of the financial statements of the Annual report ?€“

Adequacy of internal financial controls of the company increases reliability of information. The internal financial control systems of the company provide reasonable assurance of recording the transaction of its operations in all material respects and of providing protection against significant misuse or loss of Companys assets. The Company maintains an efficient internal control system commensurate with the size, nature and complexity of its business. The internal auditors of the Company are responsible for regular monitoring and review of these controls. The Audit Committee periodically reviews the audit reports and ensures correction of any variance, as may be required.

7. Key Financial Ratios:

Pursuant to SEBI Listing Regulations, 2015, the listed entities are required to disclose specific financial ratios in quarterly and annual financial results.

The key ratios critically analyse the performance of the company with respect to various indicators such as Net Profit earned, the availability of assets to repay the debts. The variance between the previous year and the current year provides a compared review of the performance of the company in a year. The detailed aspects thereof, of the financial ratios are outlined in Notes to Standalone Financial Statements and the same forms part of the Annual Report.

8. Forward looking statement:

The statements made in this MDA Report regarding the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements as defined by applicable securities laws and regulations. Its pertinent to note that actual results could vary significantly from those expressed or implied in these statements. Several crucial factors could impact the Companys operations, including the availability and pricing of raw materials, cyclical demand and pricing trends in its primary markets, alterations in government regulations and tax regimes, economic development both in India and in the countries where the Company operates, and other related factors.