Globe Textiles (India) Ltd Management Discussions

GLOBAL ECONOMY

In 2025, the global textiles industry continued to demonstrate resilience amid a cautiously optimistic global economic environment. Economic activity continued to grow even as concerns about stagflation (stagnant growth with high inflation) and recession were raised, while the short-term outlook appears stable; the projected growth rate for the next five years is the lowest in decades. This raises concerns about long-term economic health. The report emphasizes the need for urgent reforms to address these long-term challenges. While acknowledging the recent Israel-Palestine conflict adds uncertainty, IMF believes its impact on global supply and demand will be less severe compared to the war in Ukraine. It remains cautiously optimistic about the overall global economic situation.

The global economy is expected to grow at a steady pace of 3.3% in 2025 and 2026. However, long-term growth projections remain historically low, signaling structural challenges ahead. While regional conflicts, including the ongoing Russia-Ukraine war and tensions in the Middle East, contributed to uncertainty, their global economic impact was contained.

In terms of inflation, the global headline inflation is expected to decrease from 4.2 percent in 2025 and to 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies. Advanced economies are expected to achieve a growth rate of 1.7% in 2024 and 1.8% in 2025, while emerging market and developing economies will experience a modest slowdown from 4.3% in 2023 to 4.2% in both 2024 and 2025.

INDIAN ECONOMY

India shines brightly in the global economic landscape, driven by its remarkable growth trajectory and unwavering commitment to excellence. With a rich cultural heritage and a vast population of over 1.4 billion, the nation has emerged as a formidable economic powerhouse, consistently making its mark on the world stage.

India is one of the fastest-growing major economies. It demonstrated a growth rate of 6.5% in FY 2024-25. Despite global headwinds, Indias growth is expected to remain range bound, 6% - 6.5%, in the next couple of years. The economy is expected to be driven by strong domestic consumption, government capital expenditure, and robust expansion in the services and manufacturing sectors.

India is expected to grow at 6.5% in FY 2024-25, lower than 8.2% growth in FY 2023-24, as per IMF. This moderation is attributed to subdued external demand, manufacturing and services sector slowdowns, and inflationary pressures. The manufacturing sectors growth is expected to decline to 5.3% from 9.9% in the previous fiscal, primarily due to global supply chain disruptions and rising input costs. The services sector is anticipated to grow at 5.8%, down from 6.4% in FY 2023-24.

Inflation is projected to moderate and be range bound, 4.0 4.5% in the near term, supported by favourable food price trends. Core inflation across goods and services has remained stable, while fuel prices have declined. The moderation in inflation has enabled the Reserve Bank of India to adopt a more accommodative stance, with interest rate cuts anticipated to stimulate consumer spending and credit growth. Foreign Portfolio Investment volatility is expected to subside, while softening crude oil prices will likely support exchange rate stability.

The Government of India (‘GoI) remains focused on fiscal consolidation, employment generation, and boosting capital investment. The share of capital expenditure in central government spending has continued to rise, playing a critical role in industrial and infrastructure development. Increased capital outlays on infrastructure and asset creation are expected to generate growth multipliers. The PLI scheme has successfully attracted investments and stimulated production across various industries. The Government is exploring further sectoral expansion to enhance domestic manufacturing and develop labour-intensive industries.

Overall, Indias economic outlook remains strong, driven by robust domestic demand, policy support, and sectoral resilience. Improving trade relations with the developed economies will provide the requisite impetus to the economy. The India UK trade agreement is a positive development in this direction. By leveraging its domestic strengths and implementing strategic reforms, India is well-positioned to navigate global challenges and maintain its trajectory as a leading global economic powerhouse.

GLOBAL TEXTILE AND APPREL INDUSTRY

The global textile industry is dynamic, influenced by technological advancements, evolving consumer preferences and sustainability demands, playing a vital role in the global economy. It encompasses the production, design, and distribution of fibers, yarns, fabrics, and finished garments. Currently, the industry is characterized by increasing demand for sustainable practices, driven by consumer awareness and regulatory policies. Key players are adopting eco-friendly materials and production methods to reduce environmental impact.

Global Textile and Apparel Market was valued at USD 535 Billion in 2024 and is expected to reach USD 986.5 Billion by 2033, at a CAGR of 6.7% during the forecast period 2024 2033.

The worlds population is still expanding steadily, which is driving up demand for apparel and textiles. The United Nations said in 2020 that there were 7.7 billion people on the planet as of 2019; by 2030, that number is expected to rise to around 10 billion.

The ever-increasing apparel demand from the fashion industry and the meteoric growth of e-commerce platforms are expected to drive market growth over the forecast period. The textile industry works on three major principles: designing, producing, and distributing different flexible materials such as yarn and clothing. Many processes, such as knitting, crocheting, weaving, and others, are primarily used to manufacture a wide range of finished and semi-finished goods in bedding, clothing, apparel, medical, and other accessories.

The market for textiles has been witnessing a rising trend through strategies such as geographical expansions and mergers & acquisitions. Companies are trying to increase their sales through various government trade agreements and partnerships with e-commerce portals such as Amazon, Flipkart, eBay, and others.

The textile industry is an ever-growing market, with key competitors being China, the European Union, the United States, and India. China is the worlds leading producer and exporter of both raw textiles and garments. The United States is the leading producer and exporter of raw cotton, while also being the top importer of raw textiles and garments. The textile industry of the European Union comprises Germany, Spain, France, Italy, and Portugal at the forefront with a value of more than 1/5th of the global textile industry. India is the third-largest textile manufacturing industry and is responsible for more than 6% of the total textile production, globally. The rapid industrialization in the developed and developing countries and the evolving technology are helping the textile industry to have modern installations which are capable of high-efficient fabric production. These factors are helping the textile industry to record more revenues during the study period and are expected to help the industry further in the forecast period.

Global apparel market size

The apparel market is valued at $1.84 trillion in 2025, accounting for 1.65% of the global gross domestic product. The market will experience a CAGR of 2.81% between 2025 and 2028.

The Apparel market accounts for 1.65% of the worlds GDP.

The textile industry is on the cusp of transformative changes as we approach 2025. Key trends such as sustainable textiles, smart fabrics, and the rise of digital printing are expected to shape the future of textiles. Sustainability will continue to be a driving force, pushing for eco-friendly materials and processes. Smart fabrics will usher in a new era of functionality and interactivity. Digital printing will allow more customization and reduce waste.

These innovations promise to redefine how we produce and interact with textiles, aligning with both consumer demands and environmental needs. Embracing these trends will be crucial for industry players aiming to stay competitive in a rapidly evolving landscape.(Source: uniform market, custom market insights)

INDIAN TEXTILE AND APPREL INDUSTRY

Indias textile and apparel industry remains a cornerstone of the national economy, India has emerged as the second largest manufacturer of PPE globally; it is expected to exceed US$ 92.5 billion by 2025 as compared to US$ 52.7 billion in 2019.

India is the worlds second-largest producer of textiles and garments. It is also the fifth-largest exporter of textiles spanning apparel, home, and technical products. The textiles and apparel industry contributes 2.3% to the countrys GDP, 13% to industrial production and 10.5% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade.

India has a 4.6% share of the global trade in textiles and apparel. Moreover, India is the worlds third largest exporter of Textiles and Apparel. India ranks among the top five global exporters in several textile categories. In FY25 (April-June), exports of readymade garments including accessories stood at US$ 2,244 million. The textile sector is expected to play a significant role, with a target of US$ 100 billion in exports by FY30, up from US$ 34.43 billion in FY24. In FY25 (April- September) the total exports of textiles stood at US$ 21.35 billion.

Around 45 million people are working in the textile business, including 3.5 million people who work on handlooms. Textile manufacturing in India has been steadily recovering amid the pandemic. Textile manufacturing in India has been steadily recovering amid the pandemic. The Manufacturing of Textiles Index for the month of June 2024 is 106.

Global apparel market is expected to grow at a CAGR of around 8% to reach US$ 2.37 trillion by 2030 and the Global Textile & Apparel trade is expected to grow at a CAGR of 4% to reach US$ 1.2 trillion by 2030. The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030, with exports expected to reach US$ 100 billion.

Despite the current challenges, industry experts remain optimistic about the potential for export improvement, especially with signs of revival in the US market. However, the domestic market presents its own set of challenges, with sluggish demand observed even during festive seasons. Reduced yarn imports by China, and decreased buying by weavers and knitters have contributed to under-utilization in the spinning sector. Additionally, reduced exports and subdued local consumption have posed challenges for the local textile industry.

The apparel industry is currently experiencing a shift towards digital-first brands. These brands prioritize online sales and digital marketing over traditional brick-and-mortar retail and are utilizing technology to create a seamless and personalized shopping experience for consumers.

One of the biggest advantages of digital-first brands is their ability to reach a global audience through e-commerce. These brands can sell directly to consumers, bypassing traditional retail channels and cutting down on costs. This allows them to offer a wide range of products at competitive prices.

With the advancement in technology and more people turning to the internet for fashion inspiration and shopping, digital-first brands will have a significant opportunity to thrive in the industry. (Source: Team Unicommerce)

Government initiatives

The Indian government has introduced several initiatives to boost the textile industry in 2025. Some of these initiatives include:

Samarth: The Samarth scheme, which is administered by the Ministry of Textiles, was extended until March 31, 2025. The scheme aims to train and skill textile workers to increase their productivity and employability.

Production-Linked Incentive (PLI) Scheme: The PLI scheme was approved with an outlay of 10,683 crore to promote the production of technical textiles, man-made fiber fabrics, and man-made fiber apparel. The scheme aims to help the textile sector achieve scale and size, and become competitive.

Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA): This is another initiative for the textile industry.

National Technical Textiles Mission (NTTM): This is another initiative for the textile industry.

Indias textile industry is projected to grow at a CAGR of 14.8% from 2021 to 2025, reaching a market value of $350 billion by 2025.

The Company has determined its business as Textiles Trading and Manufacturing. Since there is no other business segment in which the Company operates, there are no other primary reportable segments. For the period under review, the Company has noted the export sales of Rs. 51.12 Cr and domestic sales of Rs. 365.32 Cr.

OUTLOOK

Looking ahead to 2025, the World Bank has raised its growth forecast for Indias economy to 7 per cent for the current financial year (FY25), up from an earlier projection of 6.6 per cent. This upward revision reflects stronger-than-expected momentum in private consumption and investment activity, reinforcing Indias position as one of the fastest-growing major economies in the world.

While the economy remains resilient, achieving the ambitious goal of $1 trillion in merchandise exports by 2030 will require strategic diversification and deeper integration into global value chains. (source: https://www.business-standard.com/economy/news/world-bank-follows-imf-revises-india-s-fy25-gdp-growth-forecast-to-7-124090300443_1.html)

RISKS AND CONCERNS

The textile and apparel industry faces significant growth challenges amidst a complex economic landscape. Two major trends will impact growth prospects:

Economic Trends Impacting Growth Prospects:

1. Inflation: Elevated inflation rates are expected to persist, driven by commodity price increases and broadening price pressures. This will lead to higher production costs, reduced consumer purchasing power, and decreased demand.

2. Interest Rate Hikes: Central Banks anticipated rate increases will lower growth, exert pressure on economies, and disproportionately affect emerging markets. This will lead to reduced consumer spending, decreased investment, and slower economic growth.

Challenges for the Company:

1. Cost Pressures: Navigating increased costs will significantly impact performance. Companies must implement effective cost management strategies to maintain profitability.

2. Consumer Behaviour Shifts: Diminishing purchasing power and demand may lead to fundamental changes in consumer behaviour, including reduced spending, changed preferences, and increased price sensitivity.

3. Market Impact: Adverse effects on the textile and apparel market due to economic circumstances may lead to reduced sales, decreased market share, and increased competition.

HEALTH, SAFETY AND ENVIRONMENT

Company considers its Human Resources as a very important asset and a key in achieving operational performance. Company continues to provide them with a safe and comfortable working environment. During the difficult pandemic times, the company has taken numerous precautions to protect its staff and workers. The company regularly complies with all stipulated environmental and safety norms.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has an effective internal control and risk-mitigation system, which is constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of operations. To enhance the internal control procedures, the Company has appointed M/s Shefali R Sheth & Co. as an internal auditor of the company.

It also ensures that they are recorded in all material respect to permit preparation of financial statements in conformity with established accounting principles along with the assets of the Company being adequately safeguarded against significant loss or misuse. An independent Internal Audit function is an important element of Companys Internal Control System. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee of Board.

PERFORMANCE

Key Highlights of the Companys financial performance for the year ended March 31, 2025 is summarized below:

The Financial Statements as stated above are also available on the website of the Company at www.globetextiles.net.

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

As on March 31, 2025, we have 674 employees across in our businesses. The industrial relations remained cordial throughout the year. The employees of the Company have extended a very productive cooperation in the efforts of the management to carry the Company to greater heights. Continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees and workmen of the Company.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND RETURN ON NETWORTH

The changes in the key financial ratios for the financial year 2024-25 as compared to the immediately previous financial year are provided under Note 36 to the Standalone Financial Statements and hence not repeated here for the sake of brevity.

CAUTIONARY STATEMENT

Statement in Management Discussion and Analysis report describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could make a difference to the Companys operations include finished goods prices, raw materials costs and its availability, domestic as well as global demand supply conditions, fluctuations in exchange rates, changes in Government policies, tax changes, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility to amend, modify, or revise any forward-looking statement, on the basis of any subsequent developments, information, or events. Besides, the Company cannot guarantee that these assumptions and expectations are accurate or will be realised.