Maral Overseas Ltd Management Discussions

The Economic Environment

Global Economy: The global economy stabilised, with the GDP reporting a healthy growth at 3.2% in CY 2024, driven by moderate inflation and resilient yet divergent consumer spending.

Additionally, the beginning of monetary policy easing in major economies contributed to this growth. Notably, the Federal Reserve implemented a 25-basis point interest rate cut to support future progress in the U.S. economy.

Manufacturing growth was slow and uneven. Industrialised economies lagged behind industrialising economies in recent years, although both groups followed similar trends in 2024. High-technology industries performed well, while the low-tech manufacturing sector remained flat.

Global trade hit a record of $33 trillion in 2024, expanding 3.7% primarily driven by a growth in services trade, which rose by 9% for the year and added US$700 billion , nearly 60% of the total growth. Most regions saw positive growth, except for Europe and Central Asia. Growth varied by industry - agri-food, communication technology and transport saw gains, while energy, apparel and extractives slowed due to weaker demand and policy shifts. However, the 2025 trade outlook is clouded by potential US policy shifts, including broader tariffs that could disrupt global value chains and impact key trading partners.

Outlook: The global economy is anticipated to experience a growth rate of 3.3% during 2025 and 2026, primarily bolstered by advancements in the United States, which is expected to mitigate declines in other significant economies. Inflation rates will diminish to 4.2% in 2025 and 3.5% in 2026. Developed nations are likely to achieve target inflation levels faster than developing nations. Overall global shipping costs are down from their recent peaks, and a potential Red Sea reopening offers further price drops if peace holds. Moreover, geopolitical tensions, trade restrictions, and climate-related challenges could exacerbate disruptions within this economic landscape. Consequently, imposing tariffs on all imports will make it more expensive for U.S. businesses, which will likely raise prices for American consumers and could cause a recession. Recent talks of a potential Russia-Ukraine ceasefire offer hope for lower global commodity prices and improved supply chains, which could boost economic confidence. However, given the fragile nature of such discussions and persistent geopolitical tensions, the positive economic effects remain uncertain and depend heavily on the terms and durability of any agreement.

Indian Economy: The National

Statistics Offices First Advance Estimates project, register a moderate growth of 6.5% in FY2024-25, down from 9.2% in FY2023-24. But even with that number, India is still considered the fastest-growing major economy in the world.

A significant driver of this growth was the robust rural demand, which was further supported by favourable monsoon conditions and increased government spending. However, the slowdown highlights a more tempered pace of overall economic activity and indicates that the economys growth in this fiscal is much slowerthan in the last four years.

Overall consumer spending has surged, with private final consumption expenditure (PFCE) rising to 7.3% in FY25 from 4% in FY24, except for the urban consumption that has been severely affected, with inflation eroding the purchasing power of the urban poor. However, by the end of the fiscal year, moderating food inflation brought some relief.

Also, the slowdown in private investments and exports was a key factor weighing on the economy. However, Government consumption final expenditure (GFCE) has shown improvement, growing by 4.1% compared to 2.5% in the previous year. Also, merchandise exports are likely to witness a modest 2.2% growth in FY25, with trade policy uncertainty and geopolitical risks remaining.

The manufacturing sectors performance was hampered too, by a confluence of factors such as reduced global demand, which impacted exports, and seasonal fluctuations within the domestic market. During the period April2024 to February2025, gross GST collections grew 9.4% to Rs.20.13 Lakh Crore, while net GST collections rose 8.6% to Rs.17.79 Lakh Crore. The higher collection indicates a healthier business environment, suggesting increased economic activity, higher consumption, and potentially better compliance, although inflation could also play a vital role.

Outlook: The RBI forecasts a GDP growth of 6.7% for India in FY26, driven by robust rabi crops, industrial recovery, and increased consumer spending due to tax relief. Rebounding manufacturing activities, fixed investment, higher capacity utilisation, and better-than-expected corporate balance sheets further support this outlook. However, global risks such as geopolitical tensions, trade protectionism, volatile commodity prices, and uncertainties in financial markets pose significant challenges to this positive forecast.

Additionally, a muted global growth outlook and a delayed synchronised recovery in industrial economies, amid changing trade and policy regulations compared to previous expectations, will likely hinder Indias exports and outlook for the next fiscal year. India will need to adapt to the evolving global landscape and leverage its domestic strengths to drive sustainable growth in the years ahead.

The economic outlook aligns with Marals business trajectory, as strengthening rural demand, stable domestic consumption, and a recovering manufacturing sector provide a conducive environment for sustained growth in the textile and apparel industry despite prevailing global headwinds.

The Textile Sector

Global Textile Market

The global textile industry constitutes a fundamental component of the manufacturing sector and plays an indispensable role in the global economy. Prominent players in the industry include countries such as China, India, Bangladesh, and Turkey, which serve as significant hubs for textile production. In addition to this. Vietnams textile industry has risen to global prominence, driven by trade agreements, competitive labour costs, and foreign investment. The industry is profoundly interlinked with the fashion, retail, and home furnishing sectors, driving consumer demand.

Sustainability has emerged as a paramount concern, with concerted efforts directed towards mitigating environmental impacts and adopting eco-friendly practices. The Paris Agreement is a worldwide plan for countries to cut their carbon emissions based on their own goals. Reaching worldwide net-zero goals requires a combined effort involving government regulations and private sector ingenuity. Governments are establishing laws and funding mechanisms to back net-zero ambitions, while businesses are developing carbon-reducing technologies, including carbon capture and storage. Innovations in textile technologies, including smart fabrics and technical textiles, are poised to shape the industrys future. Trade policies, tariffs, and geopolitical factors exert substantial influence over the dynamics of global textile trade. Furthermore, the advent of e-commerce has revolutionised the marketing and sale of textiles, thereby augmenting access to global markets.

Performance in 2024: Adaptability became the fabric of survival

The year has seen dynamic shifts and surprising resilience in the global textile sector. Despite numerous challenges, the industry demonstrated an impressive ability to adapt and innovate.

Challenges persist as the global capacity utilisation rate slipped to 72% despite being above previous lows. Home textiles was the only segment that registered a positive growth.

The divergent performance has been majorly influenced by changing economic conditions and consumer preferences. This resulted in some regions expanding market share while others faced contraction. Specifically, nations with established reliance on exports to Western markets, most notably China and select European countries, faced considerable headwinds. These difficulties occurred due to several factors, including a marked reduction in consumer spending within Western markets and global competitive pressures. South Asia and South America recorded strong positive performances in 2024.

Further, nations like Bangladesh and Vietnam benefited from their low labour costs and developed manufacturing sectors. This effectively attracted substantial foreign investment, thereby expanding their respective market shares.

However, by the end of 2024, Bangladeshs textile industry suffered major setbacks from political unrest, floods and LNG shortage. Protests disrupted operations and exports, while the LNG crisis reduced production capacity, causing export shortfalls and higher costs. The government is now pursuing reforms to stabilise the struggling sector.

SEVERAL FACTORS INFLUENCING

GLOBAL TEXTILES IN 2024. THEV ARE

ECONOMIC SLOWDOWN

The global economic slowdown significantly impacted consumer spending, decreasing demand for apparel and textiles. This was particularly evident in major markets like the US and Europe.

INFLATION AND RISING COSTS

Inflationary pressures and increased raw material costs, especially cotton, squeezed profit margins for textile manufacturers.

GEOPOLITICAL TENSIONS

Ongoing geopolitical tensions and trade disputes, particularly those involving China, disrupted supply chains and created uncertainty in the market.

SUSTAINABILITY CONCERNS

Growing consumer awareness of environmental and social issues pushed sustainability to the forefront of the textile industry.

TECHNOLOGICAL TRANSFORMATION

Automation, Al, and 3D printing continued transforming textile manufacturing processes, improving efficiency and enabling new possibilities.

Supply Chain Trends of 2024:

The textile supply chain in 2024 was defined by a focus on technology integration, sustainability, and shifts in sourcing strategies.

Some of the supply chain trends were: Emphasis on Sustainable and Circular Practices: Brands shifted towards circular business models to meet consumer and regulatory demands for sustainability. This involved reducing waste, increasing recycling, and improving resource efficiency, driven by consumer preference and stricter regulations, particularly in the EU.

Digital Transformation and Automation: Digital technologies reshaped textile supply chains in 2024. Al improved forecasting, cutting inventory waste, and loT provided realtime production data for better quality control and efficiency.

Nearshoring and Reshoring of Production: Due to geopolitical issues and supply chain problems, brands in 2024 increasingly opted for nearshoring and reshoring. This strategy shortened lead times, boosted reliability, and offered better production control, mitigating the impact of global logistics challenges and rising freight costs.

Enhanced Focus on Traceability and Transparency: In 2024, increased consumer awareness of ethical and environmental issues drove brands to improve supply chain transparency. Traceability tools verified material origins and ethical labour, while certifications like GOTS and OEKO- TEX helped build consumer trust in sustainability.

Shift Toward Digital-First and Direct- to-Consumer (DTC) Models: In

2024, brands increasingly adopted digital-first and direct-to-consumer (DTC) models to enhance customer engagement and gather immediate feedback. This shift reduced reliance on retailers, accelerated trend responsiveness, and provided valuable consumer behaviour insights for targeted product development and marketing.

Rise of Slow Fashion and

Customisation: In 2024, fast fashion declined, with consumers favouring slow fashion and customisation. This shift emphasised quality over quantity, prompting brands to adopt made-to- order models and promote conscious purchasing, aligning with sustainability by reducing overproduction and waste.

Outlook: The global textile market is projected to experience substantial growth in the coming years, moving from an estimated US$1.98 trillion in 2024 to over $4 trillion by 2034. Fuelled by rising incomes, a strong warehousing infrastructure, high living standards, a growing workforce, and increased demand for durable military apparel, North America is projected to be the fastest-expanding textile market.

Indian Textile Sector: One of the

Worlds Oldest Industries Stitches a New Legacy

Indias textile sector is one of the oldest industries & second largest employment provider in the country, with a rich history spanning several centuries. This industry is highly diverse, encompassing a wide range of production methods. On one side, it includes hand-spun and hand-woven textiles, emphasising traditional craftsmanship. On the other side, there are capital-intensive and technologically advanced mills that represent the modern evolution of textile manufacturing.

The Indian textile sector, valued at US$146.6 billion in 2024, is projected to expand to US$213.5 billion by 2033, with a steady annual growth of 3.85% from 2025 onwards, driven by evolving consumer preferences in fashion, home decor, and lifestyle.

A look into 2024:

The year 2024 has been important for Indias textile sector, with bold government policies, industry innovations and a determined push for sustainability.

The year saw a slew of government initiatives taken for the textile ecosystem. The PM Mega Integrated Textile Region and Apparel (Mitra) parks emerged as a flagship effort to modernise infrastructure and attract foreign direct investments.

Exporters also benefited from the continuation of the Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) for the export of Apparel/ Garments Made-ups up to 31 March 2026. This measure strengthened Indias competitiveness in global markets, leading to a rise in shipments to regions like Africa and Southeast Asia.

While exports faced headwinds due to geopolitical stress, India capitalised on opportunities arising from competing nations challenges. The instability in Bangladesh, a key competitor, enabled Indian exporters to capture a share of the US market, with garments registering a 5% increase in market share, as per a report by the US International Trade Commission.

Key Trends playing out Immersive Fashion: Focusing on brand enhancement, digital sampling, and virtual showrooms empowered by AR/VR technology significantly improves cost-efficiency and marketing efforts. The use of immersive technologies also reduces fashion waste by replacing physical objects with digital assets.

Demand for luxury textile products:

Indias growing middle class increasingly demands premium and luxury textile products. As consumer spending power increased, the Indian textile sector is capitalising on the growing demand for high-quality and innovative textiles.

Regional Specialties: Indias textile industry is seeing a comeback of its regional specialities, thanks to a push for local products. Social media is a big part of this, letting craftspeople display their unique items online, connect directly with buyers, and build communities.

Government Initiatives: The Ministry of Textiles has secured investment commitments exceeding Rs.18,500 Crore through Memoranda of Understanding (MoUs) under the PM Mega Integrated Textile Region and Apparel (PM MITRA) scheme.

The Ministry of Textiles year-end report indicates significant progress in preparing for the PM MITRA textile parks. Essential infrastructure development, encompassing water, power, and road connections directly to the park entrances, is underway in the chosen states. These seven parks, planned for both new and existing sites, will offer advanced facilities and plug and play capabilities to streamlinetextile business operations.

With a government investment of Rs.4,445 Crore through 2027-28, land acquisition and environmental approvals are now complete for parks in Gujarat, Uttar Pradesh, Tamil Nadu, Karnataka, and Telangana, paving the way for construction.

Also, to demonstrate Indias comprehensive textile manufacturing capabilities, spanning the entire production process, the twelve Textile Promotion Councils, with the support of the Ministry of Textiles, Government of India, are organising Bharat Tex, a major international event. Further supporting the industry, the government has also reduced custom duties on certain raw materials, such as Extra-Long Staple (ELS) cotton, to enhance competitiveness and facilitate production.

Key takeaways for Textile Industry in Union Budget 2025-26:

To strengthen Indias cotton industry, a five-year Cotton Mission has been launched with Rs.600 Crore in funding. This mission aims to boost cotton production, especially high-quality extra-long staple (ELS) cotton, by providing farmers with scientific and technological assistance.

To encourage domestic technical textile production, the budget has eliminated customs duties on specific shuttle-less looms, namely Rapier and Air Jet looms operating below certain speeds.

To protect Indian knitted fabric producers, especially in major textile centres like Surat and Ludhiana, the government has increased the Basic Custom Duty (BCD) on imported knitted fabrics. The new duty is set at 20% or Rs.115 per kg, whichever is higher, replacing the previous 10% or 20% structure to combat low-cost imports.

The duration for export of handicrafts manufactured from duty-free inputs by bona fide exporters will be extended to one year, further extendable by three months.

Recognising the importance of MSMEs in the textile sector, the budget introduces initiatives such as enhanced credit access, export promotion measures and the creation of the Bharat Trade Net. To further boost the textile sector, Rs.1,148 Crore has been allocated for the PLI Scheme to enhance domestic manufacturing and exports. Additionally, Rs.635 Crore has been earmarked for the Amended Technology Upgradation Fund Scheme (ATUFS), supporting modernisation and efficiency in textile machinery.

The Textile Policy 2024: India has launched its Textile Policy for 2024, focusing on strengthening the textile sector with a range of financial incentives. The policy highlights two main areas: technical textiles, including clothing and apparel, and various manufacturing processes like weaving and dyeing. The policy also includes measures for quality certification, energy and water conservation savings, and technology acquisition support.

The Yarn Segment

Indias cotton yarn export landscape in CY 2024 (11M/CY24) revealed a complex situation. While overall exports experienced a 5% year-over- year decrease compared to the strong performance of 11M/CY23, this decline was not uniform across all markets.

The key reason forthe overall decrease, despite growth in some areas, was a drop in Chinas exports to a great extent. While exports to Bangladesh showed a promising 33% increase, this positive trend was ultimately outweighed by the substantial 61% decline in exports to China.

This disparity happened because of many reasons. One of the biggest was that the competitiveness of Indian cotton yarn exports was hampered by persistently higher Indian domestic cotton prices compared to international benchmarks, particularly since April 2024.

Furthermore, Chinas textile sector faced multiple challenges, including reduced domestic consumption, weak global demand, and the increasing adoption of the "China+1" diversification strategy by international buyers. These factors collectively contributed to the substantially reduced Indian cotton yarn exports to China.

The Garment Segment

Despite the export downturn, Indias domestic cotton yarn production and sales remained relatively stable, supported by a notable recovery in the Ready-Made Garment (RMG) and home-textile sectors. This was because international buyers increasingly sought diversification in their supply chains, and geopolitical disruptions affecting competing nations created an environment where India became a relatively more stable and attractive sourcing destination.

THE BUSINESS HND ITS PERFORMRNCE

About Maral

Maral Overseas Limited, a vertically integrated textile manufacturer, supplies diverse yarns, fabrics, and apparel to global and Indian brands. Headquartered in Noida, its yarn business drives revenue, while strategic growth is focused on fabric and garment divisions for higher value and global brand partnerships.

SWOT Analysis

STRENGTHS	WEAKNESSES
• Strong supply chain supported by efficient logistics.	• Intense competition owing to the fragmented nature of
• A reputable supplier of world-class products, both nationally and internationally.	the industry especially from the informal sector.
• Offering customised products for customers.
• Regular business investments to align with dynamic sectoral realities and customer requirements.
• The company holds all necessary compliance certifications.

 

OPPORTUNITIES	THREATS
• Growing awareness of fashion trends in Tier 1,2 and 3 towns.	• Tariffs, trade barriers, and changes in international trade agreements.
• Rise of organised retail.
• FTAs signed/in the process of being endorsed provide interesting growth opportunities.
• Significant impetus from the government to improve Indias competitive positioning in the global textile space

Business Performance: Driving sustainable growth through strategic focus and operational excellence

The enduring challenges encountered by the textile industry in the preceding fiscal year regrettably continued throughout FY25. Notwithstanding our collective aspirations and endeavours aimed at substantial enhancement, the fundamental weaknesses and deceleration within the textile market perpetuated their impact on overall business performance. To confront these persistent industry-wide factors, Maral strategically concentrated on the essential facets of our business where we possess direct influence.

A primary objective in this endeavour was to fortify existing customer relationships, as robust partnerships serve as a crucial source of stability in an unpredictable market. In conjunction with this, the Companys unwavering commitment to product development remains instrumental. This initiative is vital for longterm success and represents a proactive measure to maintain our products relevance, desirability, and competitiveness as the market gradually recovers.

Mara successfully increased its melange yarn production, supporting strategic growth plans. Also, the Company achieved a significant milestone by reaching the breakeven point in melange yarn operations. This indicates that the revenue generated from melange yarn now adequately covers the associated costs, establishing a foundation for future profitability and potential expansion within this product segment.

To bolster external and product strategies while maintaining a clear focus on efficiency and sustainable growth, the Company has meticulously developed strategies to face challenges in the market. It is presently implementing a new suite of internal processes. A comprehensive set of operational frameworks has been diligently crafted to enhance collective productivity. These initiatives have been conceived following an in-depth understanding of organisational objectives. Looking ahead, the strategic emphasis will be on judiciously balancing product offerings to augment profitability and efficiency. This approach entails prioritising high-demand, higher- value products while streamlining production to minimise costs and attain economies of scale. The Company will persistently monitor market trends and customer preferences to adapt our product mix, ensuring that its portfolio is optimised for improved realisations and sustained long-term success growth.

Financial Performance

Your Company achieved a turnover of Rs.1047.03 Crore for the financial year ended 31st March, 2025 against Rs.960.06 Crore in the previous financial year ended 31st March, 2024. Further, the Company achieved an operational profit of Rs.45.22 Crore for the financial year ended 31st March, 2025 as against Rs.59.75 Crore in the previous financial year. The Company recorded a Net Loss at Rs.24.20 Crore for the financial year ended 31st March, 2025 as against a Net loss of Rs.9.77 Crore reported in the previous financial year. The segment-wise revenue performance of your Company for the financial year ended 31st March, 2025 was Rs. 542.10 Crore, Rs.270.50 Crore and Rs.234.43 Crore for Yarn, Fabric and Garments respectively.

Change in Return on Net Worth in comparison to the previous year:

The Management utilized business liquidity for investing in strategic decisions that promise to sustain growth over the medium term. During the FY24, the Net worth decreased from Rs.131.54 Crore as of 31st March 2024 to Rs.108.89 Crore as on 31st

March 2025. The return on net worth was (20%) % in FY25 against (7.2)% in the FY24.

Significant changes i.e., a change of 25% or more in the key financial ratios:

In accordance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of significant changes i.e., change of 25% or more in key financial ratios as compared to the immediate previous financial year, along with detailed explanations are reported hereunder.

	FY25	FY24	% Change	Remarks
Stability Ratios
Debt-equity Ratio (in times)	1.70	1.45	17.21
Interest Coverage Ratio (in times)	1.57	3.42	(54.04)	Majorly due to losses
Liquidity Ratios
Current Ratio (in times)	1.01	1.10	(8.58)
Debtor Turnover Ratio (in times)	8.06	8.72	(7.62)
Inventory Turnover Ratio (in times)	6.98	5.59	24.92	Majorly due to reduction in inventory at optimized level
Profitability Ratios
Operating Profit Margin (%)	4.32	6.22	(30.54)	Majorly due to losses
Net Profit Margin (%)	(2.31)	(1.02)	(127.25)	Majorly due to losses

Disclosure of Accounting Treatment:

The Company has followed the same accounting treatment prescribed in the relevant Accounting Standards while preparing the Financial Statements.

Internal Control and their Adequacy

The Companys internal controls are commensurate with its size and the nature of its operations. They have been designed to provide reasonable assurance about recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use and ensuring compliance with corporate policies. The all-encompassing control framework covers all key business functions besides governance, compliance, audit, control and reporting.

The Companys state-of-the-art ERP system, coupled with stringent procedures, ensures high accuracy in recording and providing reliable financial and operational information, meeting statutory compliances.

Internal Audit reports are periodically reviewed by the Management and the Boards Audit Committee, and necessary improvements are undertaken if required. These findings provide inputs for risk identification and assessment. Timely and adequate measures are undertaken to ensure the undisrupted functioning of the business. The Company has engaged independent Chartered Accountant firms with vast experience and knowledge to monitor internal controls. The Companys robust and comprehensive internal control systems and processes are reviewed periodically to ensure they align with the evolving business ecosystems.

Human Resource

Maral understands that motivated employees are the Companys key strength. Through equitable pay practices, and a healthy work environment, it empowers them. Voluntary projects cultivate creative thinking and learning, enabling employees to reach their full potential. Furthermore, the Independent Directors on the Board possess vast and rich experience from various Corporates, providing valuable strategic guidance.

To achieve this, the Companys HR policies are meticulously designed to create a more competent workforce that is not only skilled but also adaptable to the rapidly evolving business dynamics. These policies promote a culture of adaptability to changes, agility to work fast, and affinity to grow, ensuring that the workforce is equipped to navigate the complexities of the modern business world.

Central to this approach is the implementation of open and equitable performance reviews, as well as gender-neutral procedures. These practices ensure that all employees are evaluated fairly and have equal opportunities for advancement, regardless of their background or gender. The Company provides a safe and secure environment where employees can perform at their best, knowing that their contributions are recognised and valued.

Furthermore, the Company understands the importance of employee feedback and constructive dialogue. To facilitate this, programs have been integrated within the appraisal system, providing employees with a platform to make meaningful and constructive comments. This feedback allows the Company to continually improve its practices and ensure that it remains responsive to the needs and aspirations of its workforce.

Risk Management

Risk is an integral and unavoidable component of all businesses. Maral is committed to managing its risk proactively. Though risks cannot be completely eliminated, an effective risk management plan ensures that risks are reduced and avoided.

We adopt an independent and comprehensive strategy to manage risks and safeguard the business. The approach enables us to continuously identify and assess risks and implement the necessary mitigation measures to eliminate or limit their impact on the business.

The Board of Directors and Audit Committee maintains oversight of our risks and is responsible for reviewing the effectiveness of the risk management plan or process. During the year under review, these controls were evaluated, and no material weaknesses were observed in their design or operations.