Lakshmi Mills Company Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian Textile Industry consists of spinning, weaving, furnishing and apparel manufacturing. The organized sector comprise large modern mills that use advanced technology and spans the entire value chain from raw material to finished products i.e., garments, fabrics and made-ups. The spinning mills produce yarn from raw materials such as cotton, synthetic fibers and of blends.

Globally India ranks as the second largest producer of textiles and garments and the fifteenth largest exporter, encompassing a wide range of products including apparel, home furnishings and technical textiles.

The textile industry is expected to see significant growth in exports to reach US$100 billion, driven by increasing demand in key markets such as the United States, Europe, and the Middle East. Indias textile market is projected to reach US$ 350 billion by end 2030. This growth is at a compound annual growth rate of more than 10% expected to be driven by increased demand, government support, focus on sustainability and technical innovations.

II. OPPORTUNITIES AND THREATS a) Opportunities Textiles

The Indian Textile Industry is offering numerous opportunities across various segments. The changing consumer preferences and rising global demand, the industry is expected to see better off- take of yarn in the coming years. Indias large population and burgeoning middle class provide a significant market for textile products, including fashion apparel, home textiles and technical textiles.

The growing focus on eco friendly and sustainable practices in textile production offers opportunities for innovative green fabrics. The spinning mills in India play a vital role in the overall textile industry. They form an integral part of the textile value chain, ensuring the availability of quality yarn in developing and producing unique yarn blends can create a competitive advantage. Additionally, tapping into new markets, both domestically and internationally, can drive growth and revenue.

The demand for technical textiles in various sectors like automotive, health care and construction offers a specialized market. The rise of e-commerce provides new avenues for textile brands to reach consumers directly. The industry has the potential to increase its export earnings, particularly with the right policies and support for global competition.

Rental Services

As regards to the Rental Services, the location being in the centre of the city, there is scope for refurbishing of further available buildings and offering of the space for rental to augment the revenue of the Company.

b) Threats:

The spinning industry went through a highly challenging phase due to weak demand for yarn and high inventory levels across the value chain. The margins remained under pressure due to price gap between domestic and international cotton and rising conversion costs. Thereby most of the spinning mills are operating below their capacity.

The imported fabric, particularly synthetic fabrics is considerably cheaper than Indian domestic prices.

Unexpected Geo Political development (viz., continuation of unrest and conflicts in Ukraine and Middle East and US Trade Policies) had affected normal trading activities.

In todays market, consumers and brands alike are increasingly demanding transparency and accountability in supply chains. Traceability, i.e., the ability to track products journey from origin to consumer, is crucial for verifying sustainability claims ensuring responsible sourcing.

The modernization of ginning and pressing sector needs attention for supply of quality cotton. Looked at from a dyeing perspective, the quality comparable with virgin fibers is more difficult with cotton than and neither dyeing results nor process efficiency are the same.

Rental Services

As a growing city, new developers may also enter into offering space at affordable rental.

III. SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is structured into two separate business segments – ‘Textiles and ‘Rental Services. i) Textile consists of manufacturing and sale of yarn and trading in fabric. ii) Rental services consist of letting out Properties.

Your Company has expanded its rental services during the year with well known Hypermarket, international brands like Starbucks, Adidas and also Restaurants serving different style of foods. Having the first and second phase of Rental Services are in place, the Company proposes to take up the third phase of this segment during the current financial year.

IV. OUTLOOK

India is focusing on maintaining its competitiveness in Cotton sector. New indigenous brand Cotton "Kasturi Cotton Bharat" has created awareness regarding quality, purity and durability among stakeholders. Ginners can get better value for this Cotton.

The FTA agreements with UK as well as with UAE and Australia are concluded and the Textile industry is awaiting for a possible FTA with Canada, Peru and few other countries. These FTAs are expected to give an impetus to exports as the disadvantages currently faced by Indian Exporters ranging from 9.6% to 12% in price realization could be removed. Sustainability will remain a key focus, and companies that embrace eco-friendly practices will lead the way in the global market. However, the industry must continue to innovate, improve infrastructure, and address environmental concerns to fully realize its potential. By 2025, the domestic market is expected to contribute significantly to the textile industrys growth.

V. RISKS AND CONCERNS

The Company has a risk management process and framework in place. The process is coordinated by the Board which meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate business risks and challenges across the Company through such framework. These risks include market risk and liquidity risk. Schemes of Modernisation to improve the productivity levels as well as for increasing capacity to be in place.

VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate Internal Control System commensurate with its size and operations to safeguard the assets and ensure reliability of financial results.

VII. DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The revenue during the year 2024-25 was 26,953.50 Lakhs and your Company incurred a net loss after tax and exceptional items of 467.53 Lakhs after deferred tax credit of 251.38 Lakhs. The EBITDA stands at

3,077.13 Lakhs.

The Companys energy cost during the year is lower by 21.46 Lakhs due to savings on captive generation of

Solar and Wind Energy. But for the disruptions caused due to the unprecedented floods at the site of the Solar and Wind generation plants, the supply of Captive Power would have been more.

The savings in the captive power during the current financial year is expected to be more due to increase in generation of solar and wind energy by the existing plants and also with the additions of 8.5MWp Solar Captive Power to be commissioned in July 2025. Hence, the total solar and wind captive power available will be 60% of the Companys total power consumption with an annual savings of 900 Lakhs.

VIII.MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NO. OF

WORKERS EMPLOYED

The relations with employees continue to be cordial. The Company had on its Roll 311 employees as on 31.3.2025 as against 327 employees as on 31.3.2024.

IX. KEY FINANCIAL RATIOS

Sl. No Description	2024 - 25	2023 - 24	% change	Explanation
1 Debtors Turnover Ratio	11.47	14.37	20.18	Increase in average Receivables Trade
2 Inventory Turnover Ratio	7.57	5.83	(29.85)	Decrease in average inventory
3 Interest Coverage Ratio	0.52	(0.97)	153.61	Increase in earnings before interest and taxes
4 Current Ratio	0.52	0.58	10.34	Increase in Liabilities
5 Debt Equity Ratio	0.15	0.16	6.25	Increase in Equity
6 Operating Profit Margin %	3.04	(4.26)	171.36	Increase in earnings before interest and taxes
7 Net Profit Margin (%)	(1.73)	(5.28)	67.23	Decrease in Loss
8 Return on Net Worth	2.17	26.28	91.74	Decrease in Comprehensive
				Income

 

	By Order of the Board
	For The Lakshmi Mills Co. Ltd.,
	S. PATHY
Coimbatore	Chairman and Managing Director
28th May, 2025	(DIN 00013899)