Management Discussion and Analysis Report for the Financial Year under review as stipulated in Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015-
ECONOMY AND OUTLOOK
The Indian economy is a standout as a bright spot, with robust growth prospects and an increasingly influential role in the global economic landscape. Macros are very well placed, and growth momentum should improve hereon. The USA economy also continues to be strong with low employment and despite high rates, the economy has performed very well. The European economy has been improving with renewed fiscal spending focus alongside low energy prices. Trade tariffs in USA will reshape the global trade in 2025/2026 and are expected to create new world trade order.
Inflation is gradually being brought under control, allowing central banks especially the U.S. Federal Reserve and the European Central Bank to consider policy easing. While rate cuts are anticipated, they are expected to be gradual and measured to avoid reigniting inflationary pressures. At the same time, geopolitical tensions, including ongoing conflicts in Eastern Europe and the Middle East, as well as uncertainties in U.S. China relations, continue to cast a shadow over the global outlook. These factors could disrupt energy supplies, increase market volatility, and hinder trade flows.
In contrast to the cautious outlook for much of the developed world, emerging markets are expected to perform better, with India leading the pack. The Indian economy is projected to grow at 6.8% in 2025 and 6.9% in 2026, driven by strong domestic demand, structural reforms, and sustained government investment. Indias performance is being bolstered by a number of positive factors, including a young and growing workforce, rising urbanization, and increasing digital penetration. The governments focus on infrastructure development, particularly in roads, railways, and energy, is creating a strong foundation for future growth.
Indias services sector, especially in information technology and financial services, remains a global leader. At the same time, efforts to boost manufacturing under initiatives like Make in India and Production Linked Incentive (PLI) schemes are beginning to show results. These policies aim to integrate India more deeply into global supply chains and reduce dependence on imports. Furthermore, Indias improving ease of doing business, enhanced logistics networks, and digitized public service delivery systems are helping to attract foreign direct investment.
India is also benefiting from the ongoing China Plus One strategy, with global firms expanding their sourcing and manufacturing base in India. This is particularly evident in sectors like technical textiles, MMF-based apparel, and electronics. With global buyers diversifying away from China exacerbated by sanctions and supply chain recalibrations India is gaining strategic traction as a competitive and stable manufacturing hub. The fully implemented ban on Chinese cotton globally is also playing to Indias advantage, boosting demand for synthetic and value-added textile exports.
TEXTILE INDUSTRY
Indias textile industry among the oldest and most diverse in the world continues to be a cornerstone of the countrys economic and social framework. As of 2025, it remains the second-largest employer in India, providing direct employment to over 45 million people and contributing approximately 2% to national GDP and 12% to total exports. Looking ahead to 2026, the industry is positioned for steady growth, driven by expanding domestic consumption, increasing global demand, and strong government support.
The industry spans a wide range of segments, from handloom and handicrafts to advanced technical textiles, catering to markets across price points and geographies. Indias status as the second-largest textile and apparel exporter globally, after China, is underpinned by its strong raw material base especially in cotton, where India ranks as the largest producer worldwide, contributing about 23% of global cotton production.
Domestically, the growth of the sector is being fuelled by rising urbanization, an expanding middle class, and increasing disposable incomes. Indias textile consumption is expected to grow at a CAGR of 8 9% over 2025 and 2026, supported by higher retail penetration, fast-growing fashion and lifestyle markets, and booming e-commerce platforms.
On the export front, Indias global competitiveness continues to improve. In FY2024, the countrys textile and apparel exports were estimated at around USD 36 billion, and this figure is expected to rise to USD 45 47 billion by FY2026, as international brands diversify supply chains beyond China. The United States remains Indias largest export market, accounting for over 25% of total textile exports, particularly in segments like home textiles.
Home textiles, in particular,have emerged as a strong growth driver. India has consolidated its position as the second-largest exporter of home textiles globally, accounting for nearly 7% of the global trade in this segment. Bed linen, bath towels, curtains, and rugs are key categories, with bed and bath linen alone making up around 70% of the Indian home textile market. The annual turnover of the home textiles industry in India is estimated to be around INR 780 billion (approx. USD 9.5 billion) as of 2025, and it is expected to grow steadily through 2026, driven by both export and domestic demand.
To support this momentum, the government is implementing large-scale initiatives like the PM MITRA (Mega Integrated Textile Region and Apparel) Parks and the Production Linked Incentive (PLI) scheme, aimed at attracting investment, modernizing infrastructure, and creating globally competitive manufacturing hubs. These reforms are expected to boost production efficiency, job creation, and export competitiveness.
FAZE THREE LIMITED COMPANY OVERVIEW
Faze Three Limited (hereinafter referred to as FTL/the Company) is engaged in manufacturing and exporting superior quality high-end Home Textile products supplying to top retailers across the globe. It has a diversified product line, main products include Bathmats, Bath Rugs, Chairpads, Blankets, Rugs, Throws, Floor covering, Bed spreads, Patio Mats, Seat covers etc., The Company is known for its sheer pursuit for innovation, ideas and designs which reflects in its products and has enjoyed being a preferred vendor to most of its customers. Majority of FTLs revenue (90%) is derived from Exports to USA, UK and Europe region. The Company has eight state of the art facilities situated at Dadra and Nagar Haveli, Vapi (Gujarat), Aurangabad (Maharashtra) and Panipat (Haryana) in India. Refer www.fazethree.com for more details.
The company has significantly invested across all factories / product lines to scale up to 2-3x of current level of operations in terms of capacity. The scale will happen within the same customer base by adding volumes in products or introducing new product category to a customer. We intend to grow and double volumes every 4-5 years sustainably.
PERFORMANCE - YEAR 2024-25
Financial Performance
1. Delivered a robust 5-year CAGR of 18% in Revenue, 20% in EBITDA, 18% in EPS.
2. Q4 FY-2025 Revenue run rate crosses INR 200 Cr for the quarter
3. Total Consolidated Income for year ended March 31, 2025, stood at INR 701.74 Crores vs INR 572.32 Crores for year ended March 31, 2024. Thus, the Company has seen a growth of 22.6%. EBIDTA at INR 92 Crores vs INR 94 Crores and PAT at INR 40.7 Crores vs INR 46.6 Crores
4. EBIDTA & Net profit for FY 25 have been lower owing to one time product development costs, higher initial operating costs on new product line / capacities (impact of ~1.5%), higher Employee Costs (~2-3%) for prior scale up in capability to service high growth ahead, depreciation on recent capex, increase in Interest rates and certain one-time costs. The Company expects significant operating leverage in coming years leading to improvement in margins to optimum and beyond.
5. Earnings Per Share for year ended March 31, 2025, INR 16.72 per share versus INR 19.16 per share for year ended March 31, 2024.
6. Invested over ~INR 270 Crores from internal accruals across units for Expansion, new machinery, new location, new technologies, new product lines & debottlenecking since FY 2019
Awards
The Company was awarded Dun & Bradstreet - G7 CR Technologies Business Enterprises of Tomorrow Summit 2024 Business Excellence Awards in Category Mid-Corporate Textile & Textile Articles in June 2024.
The Company awarded status of Four-Star Export House from Ministry of Commerce & Industry (Upgraded from Three-Star Export House in November 2023)
The Company was awarded with Dun & Bradstreet "Business Enterprises of Tomorrow 2022" Business Excellence Awards in Category Mid-Corporate Textile & Textile Articles on November 29, 2022.
The Company was recognized as one of the "Best Global Business Category (Mid-Corporates) in India 2021"by Dun and Bradstreets Business Excellence Awards 2021 on November 24, 2021.
The Company was recognized as one of the leading "Mid-Corporates in India - 2020 "by Dun and Bradstreets premier publication released on November 25, 2020.
The Company was awarded the Dun & Bradstreet - RBL Bank SME Business Excellence Awards 2019 in the Mid- Corporate Segment for excellence in the Textile Sector.
Ratings
The Credit Rating of the Company was re-affirmed at CARE A1 (Short term); CARE A; Stable (Long term) (in August 2024).
Products
The Company has a diversified product basket which includes cotton and rubber backed bathmats, blankets, durries, throws, hand tufted carpets and rugs made of cotton and wool, cushion covers, curtains as well as poly cotton and cotton mask, table covers, patio mats, seat covers amongst many others under the technical textiles ambit.
Geographic distribution
Majority (~90%) of Revenue is derived from direct exports to organized retail in USA, UK and Europe region.
SWOT ANALYSIS
The companys strengths lie in a well-diversified product portfolio and a wide global customer base. Long-standing relationships with reputed international retailers across multiple categories ensure stable revenue visibility. With over three decades of operational experience since its incorporation in 1985, the company has demonstrated resilience through various economic cycles. Its in-house design and development capabilities, coupled with globally benchmarked manufacturing facilities, enable the quick introduction of new products. The business operates with a long-term debt-free capital structure, giving it the flexibility to expand capacity without increasing leverage. Products are positioned in the $10 $25 retail price range, a segment that historically remains resilient during downturns. Additionally, the companys expanded capacity and order-backed manufacturing model with direct exports ensure efficient operations and readiness to capture demand surges.
Opportunities for the company are substantial. The current US China tariff differential, with India enjoying a 20% advantage (10% vs. Chinas 30%), is driving a "China Plus One" sourcing shift in value-added MMF-based textiles. If this advantage is sustained at 15 20% after the expected policy decisions in late 2025, it could unlock a significant wave of incremental demand, akin to the transformation witnessed in Indias sheet and towel exports post-2008. The company is well-positioned to expand in categories historically dominated by China, such as floor coverings, table and outdoor products, window curtains, and other value-added textiles. The strong US jobs market, rising incomes, and post-inflation recovery support sustained consumption in home textiles. Further, its investment in Mats and More Pvt. Ltd. to produce patio mats has the potential to generate USD 10 million in revenue in its first phase within 3 4 years. The possibility of government incentives, such as sector-specific PLI or employment-linked schemes, and the structural shift in sourcing priorities of top US retailers, present major long-term growth catalysts.
On the other hand, the company faces threats that could impact its growth trajectory. A reduction in the US China tariff differential to below 10% would lessen the urgency for US retailers to diversify sourcing away from China. Broader macroeconomic and geopolitical risks, including potential recessions, shifts in US trade policy, and supply chain disruptions, could also affect demand. Volatility in raw material costs and foreign exchange rates poses ongoing challenges to maintain margins. Additionally, intense competition from China, other South Asian countries, and low-cost producers globally continues to exert pricing pressure. Heavy dependence on export markets means the business remains vulnerable to external demand cycles and global economic conditions.
However, the Company boasts an operational track record spanning four decades, having been incorporated in 1985. Over this period, it has successfully navigated multiple economic, geopolitical, and industry-specific cycles, demonstrating resilience and adaptability in the face of challenges such as global recessions, raw material volatility, currency fluctuations, and shifting trade policies. This long-standing presence in the market reflects not only the stability of its business model but also the depth of its customer relationships, the strength of its leadership team, and its ability to evolve product offerings in line with changing consumer preferences and market trends.
INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY
FTLs internal controls are commensurate with its size and the nature of Companys operations and are working effectively. The affairs of the Company are managed in such a way that there is free flow of information between the management and the same is only communicated on a need-to-know basis. The Internal controls of the Company are designed in such a way that reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance of corporate policies is possible. The framework ensures adherence to regulations, asset safeguarding, detection and prevention of frauds and errors, adequacy and completeness of accounting records, and timely preparation of reliable financial information.
The efficacy of the internal control system is validated by internal auditors and re-examined by the management. The Internal Control systems are quarterly assessed by the Audit Committee and the report of the same is submitted to the Board for its review. Our Audit Committee has concluded that, as of March 31, 2025, our internal financial controls were adequate and operating effectively.
HUMAN RESOURCES/ INDUSTRIAL RELATIONS
The Company has 8 state-of-the-art manufacturing facilities situated at Dadra and Nagar Haveli, Gujarat, Haryana and Maharashtra in India and employs over 3000 workers directly and indirectly.
The Company fosters a growth-oriented work culture with a safe, productive, and healthy environment. The Company prioritizes the development of all its employees through personnel management system. The Company is led by an experienced management team with vast domain knowledge. The operations are overlooked by its directors / professional management who are highly qualified and have extensive industry experience. The management is also backed by well-defined second-tier management with designated functional heads for each department. The Professional Management along-with second-tier management & functional heads provides training for skill development as well as grooms leaders as a part of succession planning to ensure business continuity. The Company has continued its investment in Human Resource and Talent acquisition during last year.
The Company continuously taking efforts to provide safe working environment, trainings, strict standards of personal hygiene, necessary infrastructure and equipment across all our operations. We are equally focused on protecting the lives and livelihoods of all our employees. The operations of the Company are conducted in such a manner that it ensures safety and security of all the workers and employees.
POLLUTION AND ENVIRONMENTAL CONTROLS
The company has continued its efforts to have sustainable practices to conserve energy and adoption of clean energy across our manufacturing operations.
The Company is continuously looking for ways to replace fossil fuel energy with renewable energy. The Company has transitioned its dyeing operation in North India from Coal Based Boilers to Gas Based Boiler and has signed agreement for supply of Gas with Indian Oil Adani Gas Private Limited. These efforts have also helped improve environment in surrounding area as well as reduced reliance on Coal Import for India. The company has invested over INR 25 Cr in aggregate for Rooftop Solar energy 3.5 MW (captive) at Silvassa, which would generate around ~35% of current electricity consumption at said units. Companys finished goods warehouses (capacity upto 130 HQ containers at a time) are operated by fully Electric lithium-ion fleet of forklifts / reach trucks. Apart from being cost effective, it enhances goal & commitment towards ESG. In line with its commitment to sustainable manufacturing and energy conservation, the Companys initiatives are reinforced by a robust framework of globally recognized certifications. The ISO 14001 Environmental Management System certification underscores the Companys structured approach to minimizing environmental impact through efficient resource utilization and waste reduction.
The Company endeavors to have minimum impact on the environment with sustainable production methods, use of energy efficient and environment friendly technology, use of recycled and eco-friendly raw materials, etc. Sustainability has always been a culture in the Company which believes in giving back to the environment and the society. It believes that profitability not only depends on the actual profit but also the benefit derived by the community through the activities of the Company.
Along with collection and processing, your Company is also progressing towards making plastics packaging circular by eliminating unwanted plastics by moving from Conventional polybag to Recycled polybags as well as ensuring there is no plastic waste. The Company continues to focus on sustainable raw materials, including organic cotton, recycled polyester, and 100% recycled polypropylene in its product offerings. All manufacturing processes are designed to minimize carbon footprint and are regularly upgraded to enhance environmental performance. Additionally, certifications such as OEKO-TEX Sustainable Textile Production (STeP), Global Recycled Standard (GRS), Higg Index, and Better Cotton Initiative (BCI) further validate the Companys adherence to environmentally responsible practices across its energy, water, and material usage. These certifications not only ensure regulatory compliance but also drive continuous improvements in the Companys energy management systems, fostering a culture of sustainability and accountability at all levels of operations.
All the manufacturing facilities of the Company have requisite permissions and certificates under the pollution and environmental laws of the state. The Company actively participates in the sustainability programs with international standards by adopting strict measures and alternatives to control the negative impact on the environment which includes optimum production methods, use of renewable energy, responsible sourcing, use of recycled materials, zero waste, high health and safety standards, etc., Such efforts by the company are regularly applauded by the customers which help them tick their responsible sourcing commitments.
OUTLOOK
The Company is looking at pipeline of opportunities in all of our core business categories, the growth potential is immense based on customers projections subject to ones ability to manufacture, bandwidth across design & development to turnaround faster. The Company is looking at very encouraging feedbacks from customer on our enhanced ability to now deliver larger volumes in our core focus on value added home & technical textiles.
KEY FINANCIAL RATIOS:
Sr. |
Ratios | 2024-25 | 2023-24 | Explanation for significant change |
No. |
(more than 25%) | |||
1. | Debtor Turnover Ratio (times) | 7.99 | 6.04 | Increase in non-due receivablesleading to |
high Trade Receivable Turnover Ratio | ||||
2. | Inventory Turnover Ratio (times) | 2.06 | 2.36 | NA |
3. | Current Ratio (times) | 1.39 | 1.63 | NA |
4. | Debt Equity Ratio (times) | 0.40 | 0.41 | NA |
5. | Interest Coverage Ratio (times) | 0.43 | 0.54 | NA |
6. | Operating Profit Margin (%) | 13.62 | 16.49 | NA |
7. | Net Profit Margin (%) | 0.06 | 0.08 | NA |
8. | Return on Net Worth (times) | 0.15 | 0.17 | NA |
CAUTIONARY STATEMENT
Statements used in the Management Discussion and Analysis should be read in conjunction with the Companys Audited Standalone and Consolidated financials along with the auditors report as on March 31, 2025 which forms an integral part of the annual report, describing the Companys objectives, projections, estimates and expectations, may constitute forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.
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