Indo Rama Synthetics (India) Ltd Management Discussions

Structure and Development of the MMF industry

The Man-Made Fibre ("MMF") industry is witnessing steady global growth, driven by rising demand for synthetic and sustainable fibres, though growth rates vary across regions. MMF is mainly of two types, synthetic and cellulosic fibres. The synthetic fibres include polyester, nylon, acrylic, polypropylene and aramids, and the cellulosic fibres consist of viscose fibre and modal, etc.

The demand for MMF is increasing rapidly as a substitute for cotton amid changes in global fashion trends. Currently, MMF dominates the global textile fibre consumption, holding 79% of the global share, and the remaining is cotton, as per the International Cotton Association data. The share of MMF has been steadily increasing due to the inherent limitations of the growth of cotton and other natural fibres. Global fibre demand is expected to reach 149 million tons in 2030.

India is the second-largest producer of polyester and viscose globally and is rapidly emerging as a preferred sourcing hub for MMF-based textiles, particularly as global brands diversify beyond traditional suppliers. As the global focus shifts towards MMF, the Indian government recognises the potential growth and employment opportunities in the domestic MMF sector. Among man-made fibres, polyester is the most dominant, holding 59% of the total share. Demand for man-made fibres has increased because of their durability, quality, versatility, sustainability and reliability, even during unpredictable weather conditions. MMF is now the preferred choice among weavers and spinners in the country to stay cost-competitive, contributing about 100% of noncotton and blended fabrics.

With the potential for growth and employment in the MMF sector, the Indian government has taken multiple initiatives to fuel the MMF industry. These initiatives include the Production Linked Incentive (PLI) Scheme for textiles with an approval of Rs.10,683 crores over five years. Aiming to boost the production of MMF apparel, MMF fabrics, and technical textile products in India, the scheme is designed to foster the overall growth of the textile industry. In addition, India is actively promoting the growth of technical textiles, an MMF-intensive segment, with increasing applications in healthcare, automotive, infrastructure, and defence, supported by the National Technical Textiles Mission. The PM MITRA (Mega Integrated Textile Region and Apparel) scheme involves the establishment of 7 large-scale, modern textile parks across India. The scheme aims to create an integrated textile value chain, including spinning, weaving, processing/dyeing, logistics facilities and printing for garment manufacturing under the same roof.

The industry is also investing in innovation, focusing on recycled fibres, eco-friendly processing, and circular economy models, to align with sustainability imperatives and meet global ESG standards. To satisfy this need, 60 lakh new jobs would be created through PLI schemes within five years, 20 lakh jobs through seven PM MITRA Parks and through the route of other schemes. Free Trade Agreements (FTAs) with countries like UK, UAE, Australia and anticipated FTA with USA are expected to further open up export markets for Indian MMF-based products, offering a strategic growth avenue. In the Budget for 2024-25, the government increased its allocation for the textile industry to Rs.4,417 crore from the revised projection of Rs.3,443 crore in FY 2023-24, indicating a vigorous commitment to expanding the industry.

However, to fully unlock Indias MMF potential, it is crucial to address certain structural challenges such as fibre-to-fashion integration, technology upgradation, quality standardisation and workforce skilling.

Outlook

The MMF industry in India is self-reliant across producer of both polyester and viscose globally. From curtains to drapes to interior blinds or tarpaulins, the demand for MMF products has driven the rise of the MMF industry, holding about a 5% share in the MMF textile exports. Meanwhile, India will likely see a 75% increase in exports of MMF textiles, reaching around $11.4 billion in 2030, bolstered by several government initiatives, such as the Production Linked Incentive (PLI) Scheme and free trade agreements with UK, UAE and Australia, fostering a favourable export environment for Indias manmade fibre (MMF) textiles. This favourable export environment will further strengthen, in case undergoing discussion for FTA with USA and EU is successfully concluded, giving competitive space to India as compared to China, Bangladesh and Vietnam and other competing countries.

India is also emerging as a key player in global MMF supply chains, with increasing interest from international brands seeking a reliable alternative to China. The China+1 strategy presents India with a strategic opportunity to scale up exports of MMF-based garments and fabrics. To boost exports, including those of Man-Made Fibres (MMF), the Indian Government introduced the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. In addition, the removal of the anti-dumping duty on Purified Terephthalic Acid (PTA) - a key raw material for MMF and yarn - since February 2020 has further supported the sector by lowering input costs. But, with the introduction of Quality Control Order (QCO) on PTA and MEG in July 2023, the prices of both the basic raw material, i.e., PTA and MEG have become costly domestically as compared to international prices. This gap in basic raw material pricing is creating a big hurdle for textile export market for Indian producers and envisaged FTA with USA and EU will yield desired result, only if QCO is immediately removed on PTA and MEG. This is equally imperative in view of domestic demand supply gap of around 2.4 million Tonnes of PTA and around 1 million Tonne MEG annually. Government should also ensure that no anti-dumping duty/ Safeguard duty is imposed on these basic raw materials in order to achieve ambitious growth target for total Textile Trade of 350 billion USD by 2030 (250 billion USD domestically and 100 billion USD exports).

For the growth of MMF Industry in India aligned with Worldwide MMF industry growth, which is also a common man fabric, there is need of fibre neutral GST Rates across the complete production supply chain. Presently the growth of MMF industry is suffering badly due to inverted duty structure of GST whereby basic Raw Materials, i.e., PTA and MEG are suffering 18% GST Rate whereas

Yarn & Filaments are at 12% GST and Fabric & Garments are at 5% & 12% GST respectively. Furthermore, the main competing Cotton fibre is attracting only one GST rate of 5% rate whereas MMF is suffering higher inverted duty GST rates with three different rates, i.e., 18%, 12%, 5%, respectively.

There is also a growing policy and industry focus on sustainability, with rising investment in recycled MMF, particularly recycled polyester (rPET) made from PET bottles. The Indian Government has also formed Textile Advisory Group (TAG) of Man-Made Fibre (MMF) to promote this industry.

The trend for man-made fibre began recently in India following the skyrocketing cotton prices. As cotton crops were to hit a 15 year low in FY 2023-24, prices increased, and the demand for MMF textiles in the domestic market grew. However, the domestic MMF industry now faces a new challenge: a surge in cheap MMF imports from China. Over the past three years, India has seen a 50% increase in MMF textile imports from China, raising concerns about market dumping and the need for protective trade measures.

Vision of Indian Government is to achieve USD 100 billion exports of Textiles and Clothing by FY 2029-30 in which MMF will contribute at least USD 30 billion if not USD 50 billion.

Opportunities and Threats

The MMF industry in India presents strong opportunities backed by a skilled workforce, cost-effective raw materials, and rising global demand for synthetic and sustainable fibres. With growing awareness of MMFs environmental benefits, such as lower water usage compared to cotton, and its cost-effectiveness and versatility, the sector holds significant potential for value addition. India is also actively exploring new export markets like Vietnam, Japan and Poland alongside established ones such as USA, EU, Turkey, UK and Brazil.

However, the domestic MMF market faces mounting challenges. Rising imports, particularly from China and Vietnam, have placed Indian manufacturers under pressure, with hubs like Ludhiana, Surat, and Erode grappling with large-scale dumping and price volatility. Reports suggest that MMF imports have nearly doubled over the past three years, threatening a sector valued at approximately $60 billion. Compounding this, a slowdown in the global economy has weakened export demand, while higher crude oil prices, impacting the cost of synthetic fibre production, have squeezed margins for exporters.

To counter these threats, the Indian government has introduced corrective measures such as Quality Control Order (QCO) norms requiring BIS certification for key MMF products, and the insertion of Minimum Import Price (MIP) on select knitted fabrics to protect domestic players. These steps are expected to ease pressures on local manufacturers and improve competitiveness across key product categories.

About the Company

Indo Rama Synthetics (India) Limited began its journey in 1989, entering the polyester business with a firm belief that polyester was the fibre of the future. Through consistent commitment and perseverance, the Company has established itself as a market leader in Indias polyester industry. We have been one of the known players in the evolving polyester industry in India for the last three decades, with a state-of-the-art integrated manufacturing complex at Butibori near Nagpur, Maharashtra. Our Company is proud to be one of the nations largest dedicated polyester manufacturers with a niche in unmatched quality products. We offer a wide range of polyester products such as Polyester Staple Fibre (PSF), Partially Oriented Yarn (POY), Draw Texturised Yarn (DTY), Fully Drawn Yarn (FDY), and Polyester Chips.

We have several technical collaborations with technology leaders across the globe, including Japan, Germany, and the US. With a customer-focused approach, our Company prioritises high-quality standards and innovative business practices. We have a strong global presence across 35 countries worldwide. The Company has ventured into a new product segment, i.e., bottle grade pet resin of 650 tonnes per day installed capacity w.e.f. June 2, 2023, using the expertise of our principal, Indorama Ventures Public Company Limited, Thailand, who are number one in said product segment globally. We are ramping up our bottle-grade polyethylene terephthalate (PET) resin production to capture the domestic market extensively in a phased manner to make the Companys operations more sustainable to market volatilities in our product segments. To meet the demands globally, we have a production capacity of 6,72,000 tons per annum of Polyester Staple Fibre, Filament Yarn, Draw Texturised Yarn, Fully Drawn Yarn, Textile grade Chips and Pet Resin.

Our Financial and Operational Performance Corporate Strengths

• Proven Legacy: With over three decades of experience,

we operate an integrated production facility in Butibori, Maharashtra. Our diverse product portfolio includes Polyester Staple Fibre, Polyester Filament Yarn, Draw Texturised Yarn, Fully Drawn Yarn, Polyester Chips, and Bottle-Grade PET Resin, continuing from our offerings in the previous year.

• Nationwide Accessibility: Our manufacturing unit benefits from a strategic location in the centre of India ensuring efficiency, in meeting the demand across the country.

• Cost-effective Operations: Our integrated facility enables us to maintain cost efficiency and competitiveness in the market. Presently we are sourcing power from State DISCOM with sanctioned load of 51 MW in view of its cost efficiency, however, Indo Rama is having standby arrangement for power capacity of 71.08 MW comprising of 40 MW Coal based STG and 31.08 MW furnace oil-based DG Sets, integrated into a common power pool to meet internal energy needs.

• Best-in-class Quality and Processes: We consistently and efficiently deliver high-quality goods via our robust quality and process management systems.

• Technological Expertise: Our Company has streamlined and cost-competitive operations by investing in state-of-the-art equipment, improving the overall quality of our products. To gain a global edge, the Company has formed technical collaborations with leading firms like DuPont (USA), Toyobo (Japan), and Zimmer AG (Germany).

• Global Presence: We are a dominant player in India and enjoy a significant presence overseas, with a footprint in Asia and Europe.

• Enduring Client Relationships: We have forged long-standing ties with our loyal clients worldwide, which testify to the stability and credibility of our products.

• Dependable Parentage: As a subsidiary of Indorama Ventures Public Company Limited (IVL), a prominent player in the Bottle-Grade PET Resin and fibre industry, having PTA and MEG production helping us in securing regular and in times of need. Our Company leverages shared synergies in technology, finance, and operations to our advantage.

Production Performance

Production Data

Product	FY 2025	FY2024
	Standalone	Standalone
Polyester Fiber	1,55,507	1,57,361
Polyester Filament Yarn	1,46,706	1,17,448
Polyester Chips	1,05,179	79,950
Financial Performance (Rs Crore)
Particulars	FY 2025	FY2024
Total income	3,989.94	3,716.76
EBITDA	187.64	1.78
PBT	20.08	(141.66)
PAT	20.08	(141.66)
Book value per share (Rs.)	17.35	16.63
Earnings per share (Rs.)	0.77	(5.43)

*Change in more than 25% in Interest Coverage Ratio, Operating Profit Margin, Net Profit Margin, Return on Net Worth are due to improved operational performance.

Key Ratios

(Rs. Crore)

Particulars	FY2025	FY2024	% Change
Debtors Turnover Ratio (times)	12.49	15.72	20.54%
Inventory Turnover Ratio	7.30	6.14	18.89%
(times)
Interest Coverage Ratio (times)	1.47	(0.50)	* 394 %
Current Ratio (times)	0.69	0.65	6.15%
Debt-Equity Ratio (times)	1.90	2.31	17.74%
Operating Profit Margin (%)	4.7%	0.05%	* 9300%
Net Profit Margin (%)	0.50%	(4.01)%	* 87.53%
Return on Net Worth	4.43%	(33)%	* 1242.42%

Risks and Concerns

Our Company has established a robust risk management system, which is essential for achieving our business objectives and ensuring sustainable growth. To manage risks transactionally, we have adopted a decentralised risk management approach. By managing risks effectively, we can identify, evaluate, and control potential threats to our Companys capital and earnings, including financial uncertainties, legal liabilities, technical challenges, strategic management failures, and accidents. We address the entire spectrum of risks by relying on a comprehensive risk management methodology and framework.

Significant Risks and Mitigation Measures

Risks	Mitigation Measures
Cost Risk: The cost of raw materials for polyester production is subject to change due to fluctuations in crude oil price, posing a risk to the overall production cost.	• We source our primary raw material, such as PTA and MEG from local suppliers as much as possible to reduce price volatility and transit time.
	• We engage in vendor renegotiation and explore alternative procurement options to reduce the raw material cost.
	• Our pricing policy is synchronised with public raw material price indices.
Quality Risk: Any decline in product quality could harm our reputation.	• The implementation of rigorous quality control measures and reliable technological support plays a crucial role in upholding the output quality.
	• Our quality standards adhere to ISO 9001:2008 certification.
	• We have a well-equipped quality control laboratory that leverages state-of-the-art technology and software to deliver high- quality products consistently.
Employee Risk: An inability to attract and retain talented employees could restrict our growth.	• We follow a standardised and merit- based recruitment process that relies on a well-organised and accurate selection approach to ensure fairness and impartiality.
	• Our employee retention strategy revolves around objective evaluation methods and performance appraisals that eliminate bias.
	• We offer incentives to motivate and retain talented employees, including awards and recognition.
	• We aim to cultivate a positive work environment and promote staff engagement and overall job satisfaction.
Technological Risk: Technological obsolescence can harm our operational performance.	• We have established numerous technological collaborations with leading technology firms across the globe.
	• Our commitment to reengineering and continuous improvement is crucial to maintaining our competitive edge.
	• We prioritise ongoing investment in technological advancements.
	• We monitor operations closely to ensure smooth functioning.
Competition Risk: We face high business risk from our competitors in the market.	• Building customer trust, expanding our customer base, and meeting unique demands are critical focus areas.
	• We aim to offer a broad range of value- added products to a large customer base.
Forex Risk: Fluctuations in currency values across the globe pose a significant challenge for us.	• We manage currency fluctuations by balancing export receipts and import payments.
	• To mitigate currency volatility risk, we purchase forward contracts based on our requirements and assessments.

Power Generation and Sourcing

In June 2020, we discontinued power generation at our captive cogeneration facility to transition sourcing all required power from the state distribution company (DISCOM). However, we maintain diesel generators (DGs) in standby mode as a backup power source to meet critical power requirements in during an outage at the DISCOM. We constantly monitor power consumption internally and externally to identify ways to reduce costs.

internal Controls Systems and their Adequacy

We have an effective internal control system that ensures the effectiveness of our systems, processes, and controls. An independent agency and an internal enterprise risk management team conduct an internal audit, covering all major areas and processes per the managements review plan. We review the compliance of standard operating procedures and management- approved policies and identify improvement areas. The internal audit process checks if all systems and processes are appropriate for the size and structure of the business. Adequate internal control systems are in place to protect your Companys assets by promptly identifying and mitigating risks. The internal audit report is reviewed with the Management and Audit Committee members to monitor the current systems and take corrective measures to strengthen the control measures.

Statutory Compliance

The Company Secretary and Compliance Officer reviews all our units and declares our adherence to relevant statutes, including SEBI LODR Regulations, the Companies Act, 2013, and other applicable laws, at every Board Meeting. They ensure compliance with these regulations.

Human Resources and industrial Relations

Our accomplishments are attributable to our employees talent, skills, quality, and experience. We have implemented a structured performance management programme to enhance workforce engagement and retain the best talent in the Company. We also offer our employees growth opportunities within our organisation. We believe in cultivating a collaborative and pleasant working environment and maintaining transparency.

We are committed to the continuous development of our employees by providing comprehensive training programmes and opportunities for knowledge enhancement. These initiatives are aimed at improving overall efficiency, effectiveness, and job performance. Specialised training sessions are conducted to strengthen both technical competencies and soft skills, enabling employees to excel in their respective roles. Through these efforts, we strive to build a skilled, motivated, and future-ready workforce that contributes significantly to the companys sustained growth and success.

Safety, Health and Environment

Our sustainability depends on effective measures for safety, health, and environmental concerns. We strive to showcase environmental and social responsibility across all our operations, aiming to positively impact communities, including employees, the public, and the environment. Our safety, health, and environmental goals include complying with all industry-related laws, and we believe in shared responsibility for adhering to these regulations throughout the organisations hierarchy.

Maintaining high health and safety standards is a core priority and an integral part of our operations. Our Butibori Plant features a fully equipped health centre with qualified doctors, nurses, an ambulance, and other medical facilities, ensuring 24/7 medical support for employees, their families, and the local community. The centre conducts regular health check-ups and provides guidance on health, diet, and exercise. Additionally, periodic medical examinations are conducted for all employees, and health awareness sessions are held regularly. We are certified under OEKO-TEX and REACH (SVHC), for adhering to safety standards. Furthermore, we hold the ISO 45001:2018 certification for occupational health and safety, supported by a robust OH&S policy and management system to ensure full compliance.

We are committed to environmental conservation through pollution control, efficient operations, waste management, and water recycling. Our efforts to reduce our carbon footprint are reinforced by our ISO 14001:2004 certification, reflecting a globally benchmarked Environmental Management System (EMS).

Fire and Safety

• We adhere to all the legal compliance requirements outlined in the Factories Act 1948, Maharashtra Factories Rules 1963, and Maharashtra Fire Prevention and Life Safety Measures Rules.

• Our management continuously strives to educate and raise awareness about fire and safety among employees, their family members, and contractor workers.

• There were no significant fire incidents or fatalities in FY 2024-25. Fire audits were conducted on July 31, 2024 and January 21, 2025, as mandated by the Maharashtra Fire Prevention and Life Safety Measures (Amendment) Act, 2023. During the year, we covered the following topics under our fire and safety training:

a) First aid training;

b) Golden safety rules;

c) Safety training for project employees; and

d) Incident investigation procedure.

Apart from the above, we started a behavioural safety culture initiative for all employees. We have a comprehensive on-site emergency management plan to handle any emergency within and outside the plant premises, which is regularly updated.

information Technology

We implemented several digital transformation initiatives, including rolling out the SuccessFactors for eligible staff and configuring and integrating an additional subsidiary, Indorama Ventures Yarns Private Limited, into the existing SAP ERP central component (SAP ECC) setup. We also introduced the cloud-based O365 suite to enhance user collaboration and ease of use and implemented MFA-based authentication for VPN access to improve security. Furthermore, we have rolled out an asset management system for software license management and compliance and implemented a cloud backup solution for critical application data. Information Technology General Controls (ITGC) and statutory audits were effectively managed, with gaps addressed and closure within defined timelines. We reinforced the infrastructure, including servers and networks, to improve security and align with STCP audits and requirements.

To enhance the efficiency of HR-related activities, we have implemented a new platform named WFM from ukg. This system streamlines the attendance management process, ensuring accurate tracking of employee attendance while significantly reducing manual effort and time wastage. By automating routine tasks, the platform contributes to improved operational efficiency and allows the HR team to focus on more strategic initiatives.

To align with the provision of Information Technology Act, 2010 continuity of STEM tool has been maintained further strengthening the monitoring, management and response to security events and enhancing cyber security posture of the Company.

To align with SAPs roadmap for its ECC ERP Software, Indo Rama Synthetics (India) Limited is currently executing a project to upgrade its SAP ECC Software version.

Cautionary Statement

The Companys Management is responsible for the financial statements in this report, which follow Indias accounting principles. Statements in this management discussion and analysis section that describe the Companys objectives, plans, and expectations may be considered forward-looking statements. The management has attempted to identify such statements using phrases, like, anticipate, estimate, expect, project, intend, plan, and believe. However, such statements are subject to known and unknown risks, and actual results may differ due to changes in the political and economic environment, tax laws, litigation, and other factors. The Management cannot guarantee that these statements will be realised and has no commitment to update them publicly.