Donear Industries Ltd Management Discussions

1. Global and Indian Economic Outlook:

The global economy demonstrated resilience during 2025 despite persistent headwinds arising from rising tariffs, trade policy uncertainties, fiscal consolidation in major economies, and ongoing geopolitical tensions. Continued conflicts in Eastern

Europe and the Middle East, including the Russia–Ukraine war, disrupted global supply chains, energy markets, and investor sentiment, resulting in periodic volatility in commodity prices and financial markets. Nevertheless, economies gradually adapted through supply chain diversification, enhanced energy security measures, and supportive fiscal and monetary policies, fostering a more stable growth environment.

According to the International Monetary Fund (IMF), global economic growth is projected to improve marginally from 3.3% in 2024 to 3.4% in 2025, supported by robust investments in technology, particularly artificial intelligence, and relatively accommodative financial conditions. Advanced economies are expected to grow by approximately 1.9%, while Emerging Markets and Developing Economies are projected to expand by

4.4%. Global inflation is estimated to moderate to 4.1%, although inflationary pressures remain uneven across regions.

For the global textile and apparel industry, the operating environment remained challenging yet showed signs of gradual improvement. Easing inflation in key consumer markets, normalization of inventory levels, and recovery in retail demand supported a gradual revival in textile consumption. However, volatility in cotton and other raw material prices, elevated freight costs, changing trade dynamics, and cautious consumer spending continued to influence industry performance.

India continued to strengthen its position as a preferred sourcing destination, supported by its integrated textile value chain, competitive manufacturing capabilities, government initiatives, and expanding export opportunities. The countrys focus on improving infrastructure, promoting sustainability, and encouraging investments under various policy initiatives is expected to enhance the long-term competitiveness of the Indian textile sector.

Against this backdrop, Donear Industries Limited remained focused on operational efficiency, product innovation, strengthening its distribution network, and expanding its value-added product portfolio. The Companys diversified presence across suiting, shirting, and lifestyle fabrics, coupled with its established brands and extensive distribution reach, positions it well to capitalize on improving domestic demand and emerging opportunities in both domestic and international markets while effectively navigating evolving market conditions.

Indian Economy: The Indian textile and apparel industry continued to demonstrate resilience and adaptability during FY 2025–26, despite a challenging global economic environment. India remains one of the worlds largest producers of cotton, jute and silk and has a fully integrated textile value chain spanning fibre, yarn, fabric, garments, home textiles and technical textiles.

The sector is among the countrys largest employment generators, providing direct employment to more than 45 million people and indirect employment to nearly 100 million people across the value chain..

The Government of India continued to strengthen the sector through various policy initiatives aimed at improving global competitiveness, attracting investments and promoting value-added manufacturing. Continued implementation of the PM MITRA Mega Textile Parks, the Production Linked Incentive (PLI) Scheme for textiles, the National Technical Textiles Mission, and increased budgetary support for the Ministry of Textiles are expected to enhance manufacturing capacity, encourage innovation and improve Indias export competitiveness over the medium to long term.

Looking ahead, the Indian textile industry remains well positioned to capitalise on emerging opportunities arising from global supply chain realignment, increasing demand for sustainable products, expansion of technical textiles, digital transformation and favourable demographic trends. Continued policy support, infrastructure development and investment in innovation are expected to further strengthen Indias position as one of the worlds leading textile and apparel manufacturing and exporting nations.

2. Indian Textile Industry: Market Trends and Developments:

During FY 2025–26, Indias textile sector recorded a notable improvement in export performance. Total textile exports, including handicrafts, increased to 3,16,334.9 crore, registering a 2.1% year-on-year growth over FY 2024 25. The growth reflected sustained global demand for Indian textile products, increasing product diversification, and improved competitiveness across key export categories. 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.

Sustainability emerged as a major industry trend during FY 2025–26. Global buyers increasingly demanded environmentally responsible manufacturing practices, including the use of sustainable fibres, recycled materials, renewable energy, water-efficient processing technologies, and enhanced supply chain traceability. Indian manufacturers continued to invest in ESG initiatives and green manufacturing practices to meet evolving international standards and strengthen long-term customer relationships.

3. Opportunities, Challenges and Risks:

India is the worlds most populous country, with an estimated population of approximately 1.48 billion people as of 2026. 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 Growth Drivers of the 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 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. People, Culture and Industrial Relations:

At Donear Industries Limited, human resources are regarded as the cornerstone of the Companys sustained growth and long-term success. The Company firmly believes that its employees are its most valuable asset and remains committed to fostering a workplace that promotes trust, collaboration, inclusivity, and continuous learning. Guided by the core values of integrity, transparency, accountability, and responsibility, the Company strives to create an environment that supports employee well-being, professional growth, and organisational excellence.

The Company places significant emphasis on attracting, developing, and retaining talent through fair employment practices, skill enhancement initiatives, performance-driven culture, and employee engagement programmes. It continues to invest in building a capable and motivated workforce that can effectively contribute to achieving the Companys strategic objectives while adapting to the evolving business environment.

Donear Industries has consistently maintained cordial and harmonious industrial relations across its operations. The Company values open communication, mutual respect, and constructive engagement with its employees, which has contributed to a stable work environment, high employee morale, and relatively low attrition levels. The positive industrial relations climate has played a vital role in ensuring operational continuity and enhancing organisational productivity.

6. Enterprise Risk Management and Internal Controls:

Every organisation operates in an evolving business environment that presents a range of risks and challenges capable of influencing its performance and long

Industries Limited, risk management is an integral part of the

Companys business strategy and governance framework. The Company has established a robust risk management framework to proactively identify, assess, monitor, and mitigate potential risks while capitalising on emerging opportunities. This structured approach enhances operational resilience, safeguards stakeholder interests, and supports the achievement of sustainable and long-term business growth. 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 atwww.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

The Company has established a robust internal financial control system commensurate with the size, nature, and complexity of its business. The framework is designed to ensure the accuracy and reliability of financial reporting, safeguard the Companys assets, promote operational efficiency, and ensure compliance with applicable laws and regulations. The Internal Auditors periodically review the effectiveness of these controls, and their findings are placed before the Audit Committee for review and appropriate action. The management believes that the Companys internal control systems are adequate and operating effectively to support its business objectives and sustainable growth.

7. Analysis of Key Financial Ratios:

Pursuant to SEBI Listing Regulations, 2015, the listed entities are required to disclose specificfinancial 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 Management Discussion and Analysis 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.