Eastern Silk Industries Ltd Management Discussions

Global Economy

The global economy demonstrated remarkable resilience in 2025, achieving a growth rate of 3.4%, despite heightened trade tensions and persistent policy uncertainty. Economic activity was supported by technology-led investments, accommodative financial conditions and targeted policy measures across major economies. However, following a period of resilience in the face of elevated trade barriers and uncertainty, global activity now faces a significant headwind from the outbreak of conflict in the Middle East. Looking ahead, the global outlook remains broadly stable, albeit cautious. Structural drivers, particularly sustained investment in technology and AI, along with continued policy support are expected to support global economic stability. Policymakers will need to encourage the diffusion and adoption of new technologies while ensuring adequate investment in skills development to support a smoother labour market transition.

Indian Economy

Despite navigating multiple headwinds, India achieved real GDP growth at 7.6% , supported by robust domestic demand conditions and strong business optimism. Economic activity remained relatively resilient, with leading indicators pointing towards continued momentum in manufacturing. Within this broader growth environment, the textile and apparel sector, contributing approximately 2.3% to Indias GDP and employing over 45 million people, remained a significant beneficiary of Indias economic momentum. Direct tax exemptions for the middle-income segment under the Union Budget 2025-26 supported disposable incomes, thereby strengthening consumption. Building on this, the accelerated rationalization of GST slabs ahead of the festive season further boosted demand, while also providing relief to MSMEs and the informal sector amid subdued external demand conditions. Against this backdrop of easing price pressures, inflation moderated to multi-year lows, enabling the Reserve Bank of India to implement a cumulative 125-basis-point rate cut in 2025 to support growth and revive credit demand. Looking ahead, Indias growth outlook remains positive, underpinned by strong services sector, continued infrastructure investment and ongoing structural reforms. The proposed India EU Free Trade Agreement is expected to provide access to over 99% of Indias exports, while the recently concluded India UK FTA opens further avenues for trade expansion. Continued focus on infrastructure, manufacturing, digital transformation and supply chain diversification is likely to strengthen Indias position as a global hub for production and consumption.

Industry Overview

The global textile market was valued at Rs. 1,104 Billion in CY 2025, with Asia Pacific accounting for 48.7% of the market, supported by its strong manufacturing base, cost competitiveness and growing domestic demand. China, India and Bangladesh continued to maintain a significant presence owing to their extensive production infrastructure, availability of skilled labour and access to raw materials. India remains among the largest and most diversified textile producers. Total exports, including handicrafts, increased from 3,09,859.3 crore in FY 2024 25 to 3,16,334.9 crore in FY 2025 26, registering a growth of 2.1%. 6 Government initiatives, including enhanced budgetary allocation, the Production Linked Incentive (PLI) scheme and targeted support for MSMEs, strengthened the industry. These measures are expected to support capacity expansion, productivity improvement and long-term growth.

REVIEW OF MACRO-ECONOMIC FACTORS:

Currency trends at a glance The US Dollar rose to 86.96 USD/INR and holds steady, while the Euro was reported at 92.4326 EUR/ INR 19 in March 2025. The Pound Sterling stands at 113.531 GBP/INR. The depreciation of the Indian Rupee against the US Dollar, from 83.40 in April 2024 to 86.06 in July 2025, has made Indian exports more competitive in the US market. With the weakening of the INR, Indian products have become more affordable for US buyers, potentially driving higher demand and boosting export volumes.

EXPORTS:

Indias textile exports reached Rs. 35.90 billion 34 in FY24, making it the sixth-largest exporter of textiles across apparel, home and technical segments. During the same period, the share of textile and apparel including handicrafts in Indias total exports stood at 8.21%. India holds a 3.91% share in global textile and apparel trade, with the US and EU being key destinations, accounting for around 47% of total textile and apparel exports. Government incentives and favourable trade agreements have continued to power exports in this sector. During FY25, textile exports is estimated to be Rs. 37 billion. The sector is now set to play a key role in the coming years, aiming to grow exports to Rs. 100 billion by FY30, up from Rs. 34.43 billion in FY24.

Competitive landscape

India remains a strong global player in key segments, including: Home textiles: India maintains a leading position in global home textiles, supplying to major international markets like the US, which accounted for 56% of Indias home textile exports in the first nine months of FY25.

India benefits from a major cost advantage in the textile sector due to its skilled manpower and lower production costs. This competitive edge strengthens its position in both home and advanced textiles exports. While Indias fundamentals remain strong, sustaining a steady momentum in value-added segments like home and technical textiles will be critical amid intensifying international competition. In FY24, total textile exports stood at Rs. 35.9 billion, reinforcing Indias significant role in global supply chains across various textile categories. The home textile industry is attracting major investments in infrastructure from governments worldwide to support textile production and promote eco-conscious manufacturing practices. Additionally, with consumer preferences shifting towards organic cotton, recyclable materials and eco-friendly colours and stricter regulations, home textile manufacturers are increasingly adopting sustainable practices to innovate and meet updated safety and environmental standards. Furthermore, antimicrobial and smart textiles are gaining traction owing to their durability, enhanced hygiene, and ease of maintenance. The global home textile market is projected to grow at a CAGR of 6.1% 38 , reaching approximately Rs. 235.9 billion by 2033, up from Rs. 130.5 billion in 2023. This growth is being driven by advances in textile manufacturing, increased spending on new home construction, greater demand for home renovations and high disposable incomes. Asia-Pacific continues to dominate production, while North America and Europe drive high-value consumption due to premiumisation trends and sustainability mandates. E-commerce has emerged as a critical distribution channel for home textiles, offering customers a wider range of products, quick comparisons, and personalisation options. There is a growing consumer inclination towards branded, design-forward home textiles, especially in urban markets, reflecting a premiumisation trend. Driven by sustainability, technological advancements, and evolving lifestyle needs, the global home textiles industry is well-positioned for steady long-term growth, offering significant opportunities for both innovation and value creation.

REGIONAL INSIGHTS

The Asia Pacific region dominated the global home textiles market with a revenue share of over 48% in 2025, driven by strong manufacturing bases in China, India and Bangladesh. As of 2025, the Asia Pacific home textiles market is estimated at approximately Rs. 70 billion, up from Rs. 65.36 billion in 2024, growing at a 7.2% CAGR 39 with the global home textiles market projected to reach Rs. 146.47 billion in 2025. Europe is the largest importer and exporter of home textiles, with the regions home textile market expected to grow at a CAGR of around 7.5% from 2024 to 2030. In the UK, the home textile market is witnessing a potential surge in demand owing to the increasing adoption of sustainable home textile products. The market for home textiles in North America is projected to grow at a CAGR of over 5% from 2024 to 2030. Greater sustainability awareness is influencing consumer preferences, with more people seeking eco-friendly and organic products, such as bedding, towels and curtains made from sustainable materials. India accounts for approximately 4% 40 of the global home textiles trade. Growth in this sector is primarily driven by rising household incomes, a burgeoning population and expansion in end-use sectors such as housing, hospitality, healthcare and more. The US remains Indias largest export market, constituting 59% of exports in FY24 and 56% 41 in 9M FY25.

Going forward, Indias home textile industry is expected to expand at a CAGR of 8.9% 42 from Rs. 10.78 billion in FY23, reaching Rs. 23.32 billion in FY32. Industry revenues are anticipated to grow by 7 to 9% 43 in FY25 and 6 to 8% in FY26, with operating profit margins likely to remain between 13 and 15%. The growth trend will largely depend on the resolution of tariff issues with the US and the progress of free trade agreement negotiations with the UK and the EU

LINEAGE

Established in 1946, Eastern Silk Industries Limited is a leading textile manufacturer renowned for its high-quality furnishing fabrics. Our commitment to excellence is driven by state-of-the-art technology, enabling us to consistently meet and exceed international standards.

As a vertically integrated production unit, we oversee every stage of fabric creation from sourcing raw yarns to processes such as treating, twisting, warping, weaving, and embroidery. This end-to-end control allows us to maintain strict quality standards at every step, ensuring superior finished products.

Our advanced production capabilities include a wide range of weaving techniques such as jacquards, velvet jacquards, embroidery, and dobby. We specialize in crafting exceptional fabrics using both natural fibers like cotton, linen, and silk as well as innovative synthetic materials including polyester, viscose, and acrylic yarns.

Our Textiles and technologies stand for exceptional quality and a strong spirit of innovation. We consistently look to nature as our role model, placing sustainability at the forefront of everything we do

STRATEGIC CORPORATE TRANSFORMATION LEGACY OF EXCELLENCE IN TEXTILE MANUFACTURING

Decades-long track record in Textile Manufacturing delivering Textile Excellence Since inception in 1946.

TURNAROUND UNDER NEW BOARD & PROMOTERS POST CIRP

After a challenging period of financial stress and insolvency proceedings, a successful resolution has repositioned the company for stability. New Board was constituted on March 11, 2024 implementing governance and financial restructuring to set ESIL on a sustainable, profitable path.

POISED FOR GROWTH

ESIL is now on a multi-year growth trajectory, evidenced by strengthening fundamentals. With a cleansed balance sheet and a focused strategy, the company is targeting steady revenue expansion and margin improvement in the coming years, rebuilding investor confidence.

RISK MANAGEMENT:

Risk Management is an integral part of our Companys business strategy. A dedicated team is a part of the management processes governed by the senior management team. This team reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyses risk exposure related to specific issues and provides oversight of risk across the organization. The team nurtures a healthy and independent risk management function to avoid any kind of misappropriations in the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board holds the responsibility for assessing and approving the efficiency of internal controls, including financial, operational, and compliance aspects. The Company has implemented a robust and sufficient internal control system to safeguard its assets against loss and ensure proper authorization and recording of all transactions. The internal control system is continuously enhanced and evaluated for effectiveness. The information provided to management is accurate and prompt. The Company prioritizes the reliability of financial reporting and adherence to legal and regulatory requirements. To strengthen controls, the Company utilizes technology and centralizes processes, enhances monitoring, and maintains effective tax and treasury strategies. The Audit Committee oversees the effectiveness of internal controls, employing new technologies that influence financial controls and risk management. The Company has established an Internal Financial Control framework, encompassing internal controls over financial reporting, operating controls, and an anti-fraud framework. The framework undergoes regular reviews by management and is tested by both an independent audit firm and the internal audit team. The results are presented to the Audit Committee. Based on periodic testing, the framework is fortified to ensure the adequacy and effectiveness of Internal Financial Controls.

TOTAL QUALITY MANAGEMENT (TQM)

QUALITY STANDARDS

The Company adheres to quality standards compliant with ISO-9001:2008 regulations. Company has been granted an ISO 9001: 2015 (Quality Management System), ISO 45001:2018 (Occupational Health & Safety Management System), and ISO 14001:2015 (Environmental Management System) certificates by the Americo Quality Standards Registech, member of International Accreditation Forum (IAF) & United Accreditation Foundation (UAF).

The certifications have been granted in recognition of the robust Quality Management systems, standardized processes and continuous improvement practices adopted by the company in Environmental Management and Occupational Health & Safety Management Systems. The certification reaffirms the companys commitment to ensure adherence to internationally recognized standards for Quality, Environmental and Occupational Health & Safety Management Systems with focus on sustainable and responsible business practices.

Fabrics undergo a rigorous series of mechanical, efficacy, and compliance tests to ensure that they consistently deliver peak performance and fulfil their product promise. These tests are conducted not only at our in-house NABL-accredited lab but also at globally recognized third-party labs.

STAIN REMOVAL TESTING

To verify that its fabrics can withstand tough stains, are easy to clean, and retain their quality over time, we have created a unique testing process.

To ensure long-lasting appearance and superior stain-removal performance, we have designed a unique testing process for our fabrics.

To guarantee easy care, effective stain resistance, and lasting beauty wash after wash, we have developed a proprietary testing process.

We test all our fabrics both in our in-house laboratory and at independent third-party facilities to ensure they meet our rigorous quality standards. Multiple types of stains are applied to each fabric and evaluated under various cleaning conditions to verify effective stain removal. We also assess how well the fabrics withstand common household spills and stains, including those that have remained on the surface for an extended period. Finally, we conduct repeated wash-and-test cycles to ensure the fabrics maintain their durability, performance, and appearance over time.

PERFORMANCE & DURABILITY TEST

We are committed to delivering fabrics that are durable, dependable, and consistently perform to the highest standards. Thats why each fabric is rigorously tested in our fully accredited in-house laboratory and verified by independent third-party laboratories.

These are the tests our fabrics undergo to ensure peak performance:

MARTINDALE ABRASION AND PILLING TEST - For resistance to wearing and abrasion. BRUSH PILLING - Test to measure to measure a fabrics resistance to fuzzing and pilling COLOUR FASTNESS - Test to measure textiles resistance to fading or color bleeding

WASHABILITY - Testing to ensure the fabric maintains its strength, appearance, and performance wash after wash.

ANTIBACTERIAL TESTS - Evaluate the efficacy of antibacterial finishes added to textiles and fabrics by challenging the finishes with various bacterial strains

COST AND PRICE MANAGEMENT

The Company provides high-value offerings to consumers achieved through aggressive waste reduction and quality improvement strategies such as value engineering, modularity, lightweight, alternative materials, localization, and process innovation. These efforts extend across the entire supply chain, incorporating productivity enhancements, process improvements and low cost automation. The structured cost-reduction approach comprising alternate sourcing, alternate material, alternate design, light weighting helped in improving the overall cost realization across products. Employee engagement is a cornerstone, driving one of the industrys most active employee suggestion programmes. The staff, at all levels, focus on cost reduction, operational enhancements, and waste elimination. Digitalization of internal processes is increasing to reduce waste and improving efficiency, particularly in fixed costs. Intense focus on cost management has enabled the Company to navigate commodity price inflation successfully, achieving record profits and earning recognition, with customer satisfaction.

ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY

All manufacturing Plants have been certified under the Integrated Management System of ISO 14001:2015 and ISO 45001:2018.

A comprehensive Occupational Health and Safety Management System is in place across all manufacturing plants of Raymond Lifestyle Limited, providing maximum coverage to employees and workers. The system is aligned with international standards and certified under ISO 45001:2018. Safety culture is reinforced through regular training programmes, induction sessions for new employees and visitors, and continuous reinforcement of safe practices including mock drills and visible safety signage. Dedicated safety officers & welfare officers in all our plants are engaged in compliance with the provisions of the Occupational Safety, Health and Working Conditions Code, 2020

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Share Capital:

As on March 31, 2026, The paid up equity capital of company is 100 Lakhs.

Reserves and Surplus:

The Reserves and Surplus of Company is 3482.50 Lakhs for the Financial Year ended on March 31, 2026.

Total Income:

The Company has earned total Income of 2581.10 Lakhs for year ended on March 31, 2026

Employee Benefit s Expenses and Finance Costs:

Employee Benefit s Expenses stood at 1569.75 Lakhs and Finance Cost stood at 0.77 Lakhs for Financial Year 2025-26.

Material Costs:

Material Costs stood at 921.62 Lakhs in Financial Year 2025-26

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. Attrition has been managed well and has been below industry benchmarks. The Company employed 280+ Employees in the Financial Year 2025-2026. The Company has kept a sharp focus on Employee Engagement. We follow 360-degree feedback to ensure the satisfaction of our people. We have a strong system of grievance handling too. No concern of our people goes without addressing. We strive for excellence in Human Resource management.

CAUTIONARY STATEMENT:

This report contains forward- looking statements based on the perceptions of the Company and the data and information available with the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect Companys current views of the future events and are subject to risks and uncertainties. Many factors like change in general economic conditions, amongst others, could cause actual results to be materially different.