E-Land Apparel Ltd Management Discussions

OVERVIEW OF GLOBAL ECONOMY:

The apparel and textile industry are a cornerstone of the global economy and a significant contributor to Indias GDP. During 2024, the global economy showed stability despite navigating economic, international relations, and governmental challenges. The World Economic Outlook report by the International Monetary Fund (IMF) indicated global GDP growth at 3.3%. While expansion slowed in more established nations, developing economies, particularly in Asia, generally sustained stable growth. The global economic landscape in 2024 was characterised by persistent difficulties. Key among these were ongoing geopolitical tensions, including the conflict in Ukraine and disruptions impacting shipping in the Red Sea. Additionally, complications in international supply chains and trade disputes between major economies presented continued challenges.

MARKET DYNAMICS AND GROWTH OPPORTUNITIES:

The Indian apparel market is one of the largest in the world, valued at over $100 billion. It has been experiencing steady growth and is expected to continue expanding at a compound annual growth rate (CAGR) of around 7-8% over the next few years.

Key Drivers of Growth

Urbanization and Lifestyle Changes: Rapid urbanization and changing lifestyles are driving demand for fashionable and trendy clothing. Growing E-Commerce: The rise of online shopping platforms has revolutionized the apparel industry, providing a wide reach and convenience to consumers. E-commerce is expected to continue growing, with online sales contributing significantly to overall revenue.

Youth Demographics: India has a large young population that is highly fashion-conscious and increasingly influences apparel trends.

Industry Structure and Developments-

The Indian apparel industry is one of the largest in the world, with a rich history of textile production and a diverse consumer base. However, the industry has faced several headwinds: Shift in Consumer Preferences: There has been a noticeable shift towards casual wear, athleisure, and sustainable fashion. Consumers are increasingly valuing quality and ethical production practices over price. E-commerce Penetration: The rise of e-commerce has transformed the retail landscape, with online sales becoming a significant portion of overall apparel sales. The COVID-19 pandemic accelerated this trend, with many consumers opting for online shopping over traditional brick-and-mortar stores.

Raw Material Prices: Fluctuations in the prices of raw materials such as cotton and synthetic fibres have impacted production costs, putting pressure on margins. Government Policies: The Indian governments policies on labour, trade, and taxation have also influenced the operational environment. Initiatives like the Production-Linked Incentive (PLI) scheme are expected to boost the textile sector, though the full benefits are yet to be realized. The Indian apparel market, while holding strong potential, has also been impacted by these global trends. It is anticipated to grow annually by 3.81% for next two years. The Company, engaged in the business of apparels, has navigated through a challenging fiscal year marked by competitive pressures, supply chain disruptions, and the broader economic slowdown. In light of the projected 6.7% volume growth in 2025, the Company remains dedicated to fortifying its market position. We are committed to optimizing our operations and aligning our strategies with emerging industry trends to capitalize on market opportunities and achieve sustained growth. The global economy is predicted to maintain a steady expansion path, with anticipated growth rates of 2.8% for 2025 and 3.0% for 2026. However, recent extensive United States tariffs have driven global rates to historic highs, creating significant uncertainty and risking a near-term slowdown in global growth. United States growth is forecast at 1.8% in 2025 and 1.7% in 2026, influenced by expected labour market changes and potential lower consumer spending. The Eurozone predicts a recovery,with growth reaching 0.8% in 2025 and improving to 1.2% in 2026, linked to increased consumer spending and reduced inflation. While global price increases are generally slowing, some regions face stagnant conditions. Global inflation is projected to decline to 4.3% in 2025 and 3.6% in 2026. Developed economies should hit inflation targets sooner. Monetary policies will vary regionally, reflecting diverse economic situations.

INDIAN TEXTILE INDUSTRY:

The fundamental strength of Indian textile industry is its strong production base with wide range of fibers/yarns. These are natural fibers such as cotton, jute, silk and wool and synthetic/man-made fibers like polyester, viscose, nylon and acrylic. In producer-driven value chains, large, usually transnational, manufacturers play the central roles in coordinating production networks. Textile industry is capital- and technology-intensive comparable with automobiles, aircraft, computers, semiconductors and heavy machinery industry. Buyer-driven value chains are those in which large retailers, marketers and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in developing countries. Technological advancements are also driving opportunities in the industry. The adoption of automation, artificial intelligence, and sustainable practices can enhance production efficiency, reduce costs, and improve product quality. Investment in modern machinery and infrastructure, such as the development of textile parks and clusters, promises to attract investment and streamline supply chains. Additionally, the rise of e-commerce platforms offers new avenues for reaching broader audiences and tapping into emerging consumer segments, while digital marketing strategies can enhance brand visibility and drive sales.

In rural and semi-rural areas, opportunities lie in promoting traditional handloom and handicraft textiles, which can attract niche markets both domestically and internationally. This not only supports local economies but also preserves traditional practices. Government initiatives, including subsidies, tax benefits, and export incentives, further bolster the industrys growth potential. Embracing sustainability through eco-friendly textiles and circular economy practices can appeal to environmentally conscious consumers and open new market segments. With the global apparel market expected to reach USD 2.37 trillion by 2030, a CAGR of 8% and the global textile and apparel trade projected to grow to USD 1.2 trillion, opportunities for international expansion are set to increase. Domestically, the Indian textile and apparel market is anticipated to grow at a strong CAGR of 10%, reaching USD 350 billion by 2030, with exports contributing USD 100 billion offering a significant boost to companies with global ambitions. Additionally, the technical textiles sector is poised for substantial expansion, with the global market projected to hit USD 309 billion by 2047. Specifically, the Indian medical textiles segment, expected to grow at 15% annually, signals rising demand in high-value, specialised applications. For companies in the textile industry, this growth trajectory highlights an ideal environment for scaling operations, diversifying product lines, and tapping into both traditional and emerging high-margin markets.

GROWTH OPPORTUNITIES:

Rising global demand and geopolitical shifts are creating favourable supply chain opportunities, positioning India better than China, Vietnam, and Bangladesh

Indias expanding domestic market, fuelled by a growing middle class, e-commerce growth, and Gen Z consumption trends, is driving strong demand

Government initiatives like PM MITRA Parks, the PLI Scheme, and RoSCTL are boosting investment and expansion in the textile sector

Indias textile exports could grow from USD 45 billion to USD 100 billion, creating up to one million jobs annually through 2030

Recent state policies in the Uttar Pradesh, Bihar, Odisha & Madhya Pradesh offer substantial incentives, including capital subsidies, employment support, and tax exemptions, in order to encourage the establishment of textile units lead to job creation

Indias growing emphasis on textile recycling and the circular economy offers a chance to promote sustainable manufacturing and generate green jobs

The UK imports USD 20 billion in textiles, with India holding a 5% share. The FTA strengthens Indias position against Bangladesh and Vietnam

INDIAN TEXTILE INDUSTRY THREATS:

Indias export competitiveness remains low, trailing China, Vietnam, and Bangladesh due to high production costs, lower labour efficiency, fragmented supply chains, and weak vertical integration

India faces supply chain and cost challenges, with a fragmented cotton supply raising logistics costs and high raw material prices making man-made fibres like polyester and viscose costlier than in China

Complex regulations and trade barriers, including burdensome export procedures and limited FTAs, disadvantage India against competitors like Vietnam in major markets

Rising sustainability norms, led by global brands and strict EU regulations, challenge Indian MSMEs, especially in meeting demands for green sourcing, renewable energy, and recycling

Fast fashion and rising textile waste pose growing concerns, with Indias recycling market still small despite expected growth amid global waste projections for 2030

Labour issues like increasing minimum wages, high attrition and migrant worker challenges cause workforce instability, with shortages in textile hubs and underutilised surplus in other states

Sustainability compliance costs are rising as global regulations demand stricter environmental and labour standards, increasing production expenses.

OPERATIONAL PERFORMANCE:

Despite the challenging conditions, the Company has taken several steps to streamline its operations and mitigate losses: Product Portfolio: The Company has focused on diversifying its product portfolio to include a mix of traditional wear, casual wear, and sustainable clothing lines. Efforts are being made to innovate in design and fabric to cater to evolving consumer demands. Supply Chain Management: In response to supply chain disruptions, the Company has worked towards strengthening relationships with suppliers and optimizing its inventory management. However, challenges persist in ensuring timely procurement of raw materials at favorable prices. Cost Management: The Company has undertaken rigorous cost management initiatives, including reducing overheads, optimizing workforce deployment, and renegotiating vendor contracts. These measures have been crucial in limiting the impact of reduced sales on the bottom line.

RISK MANAGEMENT:

The Company has a robust risk management framework in place to identify, assess, and mitigate key risks. Regular reviews are conducted to ensure alignment with the changing business environment. The focus is on financial prudence, operational efficiency, and strategic agility.

HUMAN RESOURCES:

The Company believes that its employees are its greatest assets. Initiatives have been undertaken to enhance employee engagement, training, and development. However, the need for cost management has also led to a rationalization of the workforce, with efforts made to minimize the impact on morale and productivity.

OUTLOOK:

As of April 2025, cotton prices have seen a slight decrease since the beginning of the year, which could potentially improve profit margins and enhance price competitiveness in both domestic and export markets. However, market projections indicate a phase of stability ahead, with prices expected to be range bound throughout the year. This anticipated steadiness is largely due to improved balance in global supply and demand, alongside a more stable macroeconomic outlook.

Indias cotton production for the FY25 season is projected to decrease by 7% Y-o-Y, reaching approximately 30.2 million bales (bales of 170 kg each), primarily due to reduced acreage and crop damage from excessive rainfall. Consequently, cotton imports are expected to rise by 42% to 2.5 million bales, while exports may decline by 37% to 1.8 million bales. The increase in imports is further supported by lower international cotton prices and tariff uncertainties, making imported cotton more cost-effective for Indian buyers. Indias textile industry is witnessing a strategic shift towards man-made fibres (MMF), aligning with global consumption trends where MMFs constitute approximately 77% of fibre usage. However, the MMF sector faces challenges such as fragmentation and higher logistical costs due to a lack of vertical integration. Efforts are underway to develop integrated ‘fibre-to-fashion value chains to enhance competitiveness and meet the rising global demand for MMF-based textiles. As of March 2025, the Indian government has decided to let its USD 23 billion PLI scheme lapse due to underperformance, with no further expansion planned. This decision affects sectors including textiles and MMF.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Company has implemented adequate internal control systems commensurate with the size and nature of its business. These systems are designed to ensure operational efficiency, compliance with laws and regulations, and the safeguarding of assets. Regular audits are conducted to assess the effectiveness of these controls, and necessary improvements are made as required.

KEY FINANCIAL RATIOS

Sr. No	Par culars of Ra o	31.03.2025	31.03.2024
1.	Debtors Turnover	8.02	8.89
2.	Inventory Turnover	6.08	6.99
3.	Interest Coverage Ra o (%)	1153.37	25.41
4.	Current Ra o	1.12	1.77
5.	Debt Equity Ra o	-0.12	-0.10
6.	Opera ng Pro t Margin (%)	6.68	5.96
7.	Net Pro t Margin (%)	4.55	-18.49
8.	Return on Capital Employed	4.72	2.86

CONCLUSION:

The Indian apparel and textile industry is well-positioned for continued growth, driven by domestic demand, export potential, and technological advancements. By capitalizing on opportunities such as sustainability, e-commerce, and infrastructure investment, and by addressing challenges through strategic initiatives, companies can achieve substantial success. The sectors dynamic nature presents both opportunities and risks, and maintaining agility and innovation will be key to navigating this evolving landscape. With a focus on consumer trends, technological integration, and market expansion, the industry is set to thrive and contribute significantly to the economy.