LWS Knitwear Ltd Management Discussions

Abundant availability of raw materials such as cotton, wool, silk and jute. India enjoys a comparative advantage in terms of skilled manpower and in cost of production relative to other major textile producers. In July 2022, the Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution, and Textiles, Mr. Piyush Goyal, stated that the mantra of 5 Fs - Farms to Fibre to Fabric to Fashion to Foreign export will help make India a strong textile brand globally.

100% FDI (automatic route) is allowed in the Indian textile sector.

Under Union Budget 2023-24, the total allocation for the textile sector was Rs. 4,389.24 crore (US$ 536.4 million). Out of this, Rs. 900 crores (US$ 109.99 million) is for Amended Technology Upgradation Fund Scheme (ATUFS), Rs. 450 crores (US$ 54.99 million) for National Technical Textiles Mission, and Rs. 60 crores (US$ 7.33 million) for Integrated Processing Development Scheme. In October 2021, the government approved a PLI scheme worth Rs. 4,445 crores (US$ 594.26 million) to establish seven integrated mega textile parks and boost textile manufacturing in the country.

In order to attract private equity (PE) and employee more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme. Total FDI inflows in the textiles sector between April 2000-March 2023 stood at US$ 4.2 billion.

The Indian technical textiles market is expected to expand to US$ 23.3 billion by 2027, driven by increased awareness of goods and higher disposable incomes. Cotton production in India is projected to reach 7.2 million tonnes (~43 million bales of 170 kg each) by 2030, driven by increasing demand from consumers. In FY23, exports of readymade garments including accessories stood at US$ 16.2 billion. It is expected to surpass US$ 30 billion by 2027, with an estimated 4.6- 4.9% share globally.

ROAD AHEAD

The future of the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. India is working on various major initiatives to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on the rise. The government is supporting the sector through funding and machinery sponsoring.

Top players in the sector are achieving sustainability in their products by manufacturing textiles that use natural recyclable materials. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The growth in textiles will be driven by growing household income, increasing population and increasing demand by sectors like housing, hospitality, healthcare, etc. The technical textiles market for automotive textiles is projected to increase to US$ 3.7 billion by 2027, from US$ 2.4 billion in 2020. Similarly, the industrial textiles market is likely to increase at an 8% CAGR from US$ 2 billion in 2020 to US$ 3.3 billion in 2027. The overall Indian textiles market is expected to be worth more than US$ 209 billion by 2029. References: Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, Press Information Bureau, Union Budget 2023-24

3. Segment wise or product wise performance

Our Company is currently engaged in trading of knitted apparels and provides a multi-divisional approach to our customersneeds of knitted apparels by offering them design, development, sourcing and manufacturing. We source our products through third-party manufacturers. Further, we also sell knitted garments under our brand

Our product offerings include various kinds of winter wear and summer wear garments for men, women and children in diverse styles, which includes flat knit sweaters, circular knit t-shirts, hooded t-shirts sweatshirts, knitted bottoms, sweatshirts, knitted sleepwear, cardgians, wollen mufflers, joggers for men, women and kids under third party brands and also under our own brand ‘LWS. We get these products manufactured as per the requirement and specification of our customers. We generally use variety of fabrics such as 100% cotton to cotton lycra, 100% polyester, blended (cotton and polyester), mercerized to plain, washed to over dyed and other blended fabrics in the production of apparels. We in-house design our own brand products and also outsource some of the designing work

As per Fiscal 2025 financial results for period ended March 31, 2025, we have generated total income of Rs. 108.69 Crores and net profit after tax of Rs. 2.53 Crores, which shows our commitment towards development and profit earning capacity.

4. Outlook

We believe our operating history in the knitted wear business has helped us gain significant expertise and makes us well-positioned in the knitted garments across segment. We believe that the following strengths enable us to compete successfully in our market. Company is exploring the possibility to export readymade garments and it is expected to earn good profits in the coming years. With Existing customer and supplier relationships and Diversified Product Portfolio, We believe that we are insulated to a degree against fluctuation in demand for a specific product because of the wide range of products that we currently offer across summer wear and winter wear garments and our ability to develop new products required by our customers. Such a comprehensive range helps us promote cross promotional sales whereby our customers buying behaviour leads us to anticipate the potential sale from our other product-mix. We believe our approach of presenting a portfolio of products for diversified customer profiles has helped us enhance our growth.

5. Risks and concern

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business, financial condition, results of operations and cash flows. If any or some combination of the following risks, or other risks that are not currently known or believed to be adverse, actually occur, our business, financial condition and results of operations could suffer, the trading price of, and the value of your investment in, our Equity Shares could decline and you may lose all or part of your investment. The company anticipates following risks for the future to name a few:

The company anticipates following risks for the future to name a few:

a. Political, economic or other factors that are beyond our control may have adversely affect our business and results of operations. b. Significant differences exist between Ind AS, Indian GAAP and other accounting principles, such as US GAAP and International Financial Reporting Standards ("IFRS"), which investors may be more familiar with and consider material to their assessment of our financial condition c. A slowdown in economic growth in India could cause our business to suffer. d. Changing laws, rules and regulations and legal uncertainties, including adverse application of corporate and tax laws, may adversely affect our business, prospects and results of operations e. Our results of operations may be materially adversely affected by our failure to anticipate and respond to changes in fashion trends and consumer preferences in a timely manner f. We have not entered into any long-term supply agreements with our vendors/suppliers. Our Business may be adversely affected if there is any disruption in the supply of trading material or due to non-availability of trading material g. We are dependent on third party transportation providers for delivery of our goods and materials to us from our suppliers and delivery of garments and materials to our clients. Any failure on part of such service providers to meet their obligations could have a material adverse effect on our business, financial condition and results of operation. h. We face significant competition. Any failure to compete effectively may have a material adverse effect on our business and operations.

6. Internal control systems and their adequacy

The company has a qualified and independent audit committee which reviews the adequacy of internal controls. The Company Secretary acts as the secretary of the Audit Committee.

The scope, functions and the terms of reference of the Audit Committee is in accordance with the Section 177 of the Companies Act, 2013 and Regulation 18 (3) Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule II Part C.

The Role of Audit Committee, together with its powers, are as follows:

oversight of our financial reporting process and disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; recommendation for appointment, remuneration and terms of appointment of auditors of our Company; approval of payment to statutory auditors for any other services rendered by the statutory auditors; reviewing, with the management, the annual financial statements and auditors report thereon before submission to the Board for approval, with particular reference to: matters required to be included in the directors responsibility statement to be included in the boards report in terms of Section 134(3)(c) of the Companies Act, 2013; changes, if any, in accounting policies and practices and reasons for the same; major accounting entries involving estimates based on exercise of judgment by the management; significant adjustments made in the financial statements arising out of audit findings; compliance with listing and other legal requirements relating to financial statements; disclosure of any related party transactions; modified opinion(s) in the draft audit report; reviewing, with the management, the quarterly financial statements before submission to the Board for approval; reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the Issue document / Red Herring Prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; reviewing and monitoring the auditors independence and performance, and effectiveness of audit process; approval or any subsequent modification of transactions of our Company with related parties; scrutiny of inter-corporate loans and investments; valuation of undertakings or assets of our Company, wherever it is necessary; evaluation of internal financial controls and risk management systems; reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; discussion with internal auditors of any significant findings and follow up there on; reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board; discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; to review the functioning of the whistle blower mechanism;

approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate; carrying out any other function as is mentioned in the terms of reference of the audit committee. reviewing the utilization of loans and/ or advances from/investment by the holding company in the subsidiary exceeding 100 crores or 10% of the asset size of the subsidiary, whichever is lower including existing loans / advances / investments existing as on the date of coming into force of this provision.

7. Discussion on financial performance with respect to operational performance

Our company Is currently engaged in trading of knitted fabric of various textures and thereby catering to our customers needs by offering knitted fabric of various design texture to suit the ingoing fashion trend and market demand. Knitted fabric is a textile that results from knitting, the process of inter looping of yarns or inter meshing of loops which may be used as for garments for men, women and children. Knitted fabrics are used for manufacturing of various garments such as dresses, skirts, tops, underwear, pajamas, t-shirts, scarfs, sweaters, cardigans, fitting dresses, leggings, cardigans, shirts, turtlenecks, cuffs, cardigans, etc. We source our products through third party manufacturers and traders. Further we are also engaged in trading of readymade knitted t-shirts.

The gross block of assets of the company stood at Rs. 0.81 Crores and net worth of the company is Rs. 30.36 Crores as at 31.03.2025.

8. Human Resources

We consider our human resource as a critical factor to our success and engage in a human resource strategy that focuses on recruiting, training and retaining our employees, as well as offering them competitive compensation. Our employee policies aim to recruit a talented and qualified work force, facilitate their integration and encourage development of their skills in order to facilitate the growth of our operations. We are also committed to providing an empowering environment that motivates and facilitates growth and rewards contribution.

Cautionary Statement

The Annual Report including those which relate to the Directors Report, Management Discussion and other reports may contain certain statements on the Companys intent expectations or forecasts that appear to be forward looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company bears no obligations to update any such forward looking statements.