Mish Designs Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

As we look ahead to the landscape of the apparel industry in 2025, it stands at the brink of transformative changes. These changes, driven by technological advancements and shifting consumer behaviors, are shaping the fashion industry trends in profound ways. Traditionally marked by creativity and adaptability, this sector now faces a pivotal moment where innovation intersects with sustainability and ethical practices.

Understanding these emerging fashion industry trends is crucial for stakeholders at all levels from top fashion executives and designers to manufacturers, retailers, and end consumers. Staying abreast of these fashion industry trends is not just about remaining competitive; its about seizing new opportunities for growth, adapting to changing market demands, and making informed decisions that will shape the future of fashion.

In 2025, the apparel industry exemplifies how embracing technology, sustainability, and innovation can lead to a more responsible and dynamic future. This transformation is not just about staying competitive in light of emerging fashion industry trends; its about redefining the essence of fashion in the modern world.

The shift towards circular fashion supply chains and the embrace of the resale market reflect a broader move towards responsible consumption in the fashion industry. They not only address environmental concerns but also offer new opportunities for economic growth and creative innovation, aligning with the industrys evolving priorities and consumer expectations.

INDIAN MARKET:

India is among the top garment-manufacturing countries in the world. Indian textiles and apparel products have a history of fine craftsmanship across the entire value chain from fiber, yarn, and fabric to apparel with high global appeal. Indias cotton, silk, and denim are highly popular in other countries, and Indian apparel too has found success across fashion centres around the world. India is one of the largest consumers and producers of cotton with the highest acreage of 12.5 million hectares which is 38% of the global area under cotton cultivation. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool, and silk products to the organized textile industry in India.

Indias textile and apparel market size is growing at a CAGR of 14.59% from US$ 172.3 billion in 2022 and is expected to reach US$ 387.3 billion by 2028. Industry is one of the biggest contributors to the economy with a 2.3% contribution to the gross domestic product (GDP) which is approx. US$ 70 billion. It is also the second largest employer after agriculture, providing direct employment to 45 million people and 100 million people in the allied sector. Andhra Pradesh, Telangana, Haryana, Jharkhand, and Gujarat are the top textile and clothing manufacturing states in India..

GLOBAL MARKET

The global textile market size reached US$ 1,027.0 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 1,445.4 Billion by 2032, exhibiting a growth rate (CAGR) of 3.8% during 2024-2032. The changing consumer preferences, rapid population growth, rising preferences for ecofriendly, organic, and functional textiles, technological advancements, and government regulations and initiatives are some of the major factors propelling the market.

With the constantly expanding population, there is a continuous increase in the demand for clothing and textile production. As the purchasing power rises, the market experiences a surge in consumer spending on textiles. Moreover, the growth of emerging economies, coupled with rising disposable incomes, further fuels the demand for textiles. This population-driven demand creates opportunities for textile manufacturers and stimulates market growth.

Innovations, such as automation, digital printing, and smart textiles, in textile manufacturing processes have revolutionized the industry. Automation has improved production efficiency and reduced costs, enabling manufacturers to meet increasing demands. Digital printing has opened new possibilities for customization and design flexibility, allowing for faster and more accurate production. Smart textiles, integrated with sensors and electronics, offer enhanced functionality and performance. These technological advancements cater to the changing consumer preferences and drive industry competitiveness by enabling faster production, improved quality, and innovative product offerings.

MACRO-ECONOMIC OVERVIEW

India is the worlds sixth-largest textile and apparel exporter, with a robust raw material and manufacturing base. In FY23, India achieved its highest-ever textiles and apparel (T&A) exports at US$ 35.58 billion, representing 8.0% of its total exports and 5% of the global trade. For February 2025, textile products and apparel exports reached US$ 1.81 billion and US$ 1.48 billion, respectively, showing year-over-year growth. In the same fiscal year (FY23), ready-made garment (RMG) exports grew by 1.1% to US$ 16.19 billion compared to the previous year.

Key Details:

Global Ranking: India holds the 6th position as a global textile and apparel exporter.

FY23 Performance: o Total Exports: US$ 35.58 billion in textiles and apparel, including handicrafts, which was a record high. o Contribution to Total Exports: 8.0% of Indias overall exports.

o Global Market Share: Indias share in global textile and apparel trade stood at 5%.

Recent Performance (February 2025 vs. February 2024): o Textile Products: Exports grew from US$ 1.52 billion to US$ 1.81 billion.

o Apparel Exports: Increased from US$ 1.41 billion to US$ 1.48 billion.

Ready-Made Garments (RMG): o FY23 Exports: US$ 16.19 billion, marking a 1.1% growth over FY22. Supporting Context:

The Indian textile and apparel sector is a significant contributor to the countrys GDP and a major source of employment, especially for women and the rural population.

The industrys strong performance has been supported by government initiatives like Make in India and Skill India.

Bharat Tex 2025, a large-scale event, showcased the sectors advancements, sustainability efforts, and potential for high-value production, according to the Ministry of Textiles and PIB.

Based on product category, exports during 2022-23 witnessed a decline of -28.45% in cotton textiles followed by a decline of -11.86% in man-made textiles, 1.10% growth in ready-made garments (RMG) and -19.13% decline in handicrafts. Exports of Cotton Fabrics and Madeups stood at US$ 10.58 billion during April 2024-February 2025.

The Narendra Modi government is targeting US$ 250 billion in textiles production and exports of US$ 100 billion by 2030. This roadmap for achieving this production and export target was discussed by Mr. Piyush Goyal, Union Minister for Textiles, Consumer Affairs, Food and Public Distribution and Commerce and Industry, at the Chintan Shivir organized by the Ministry of Textiles.

OPPORTUNITIES

Sustainable products:

The textile industry is increasingly focusing on sustainability as consumers seek products with a reduced environmental footprint.

This trend involves the use of organic, recycled, and sustainably sourced fabrics, as well as efforts to reduce fabric waste.

Eco-friendly dyeing and printing processes and ethical production practices are central to this movement.

Circular fashion:

This trend has gained prominence for its emphasis on reducing waste and extending the lifecycle of clothing. It encompasses the use of recycled materials, recycling practices, and the repurchasing of used clothing items. Business models like clothing rental, exchanges, and repair services are gaining popularity in this context.

Digitization and e-commerce:

E-commerce is a dominant force in the textile market, enabling companies to reach a global audience and provide convenient purchasing options.

The digitalization of processes, including computer-aided design, 3D modeling, and on-demand production, is gaining traction, leading to increased operational efficiency.

THREATS:

Raw material prices

Increasing raw material prices affect operational costs and increase the price of the end product, especially for small and medium enterprises.

Government policies

Frequent policy changes at the national and state levels can put pressure on the textile business

Competition

The industry faces competition from cheaper imports.

Other challenges include:

Shortage of skilled workers

Rising production costs

Unsustainable resource consumption

Waste generation

Inadequate working conditions

Lack of value addition

Low productivity

Slow pace of modernization

Lack of scale and high fragmentation

Inadequate Attention Paid to Technology Up gradation and Regular R&D

BUSINESS PERFORMANCE:

8^th ANNUAL REPORT 2024-25

1) REVIEW OF OPERATIONS:

The Total Income of the Company stood at 1810.14 Lakhs for the year ended March 31, 2025 as against 1319.47 Lakhs in the previous year. The Company made a net profit of 88.99 Lakhs for the year ended March 31, 2025 as compared to the net profit of 81.27 Lakhs in the previous year.

2) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The company has an Internal Control System commensurate with its requirement and size of business to ensure that the assets and interest of the company assets are safeguarded. The adequacy and effectiveness of the internal control across various activities, as well as compliance with laid down system and policies are comprehensively and frequently monitored by your companys management at all the levels of the organization. The company has established well defined policies and processes across the organization covering all major activities including authority for approvals. In all cases where monetary decisions are involved, various limits and authorities are in place.

The Companys internal controls are structured in a manner that ensure reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies, laws and accounting standards.

With a strong monitoring system in place, the Company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. The Audit Committee of the Board of Directors review the existing audit procedures and internal systems of control on an ongoing basis keeping in mind the organizations requirements, growth prospects and ever evolving business environment. They also review the internal audit findings and recommendations and ensure that corrective measures are implemented. Suggestions for improvement are considered and the Audit Committee follows up on the implementation of corrective actions.

3) RISKS AND CONCERN:

After two pandemic-stricken years, textile and apparel manufacturers were hoping to be able to catch their breath in 2022. But then Russia invaded Ukraine, and manufacturers are now facing fresh challenges putting their already stressed cash positions under pressure, from the energy crisis to fluctuating raw materials prices to the global supply chains transformation.

Risk is an integral part of the business and we aim at delivering superior shareholder value by achieving an appropriate balance between risks and returns. The industry is subject to continuously evolving legislative and regulatory environment due to increasing globalization, integration of world markets, newer and more complex products & transactions and an increasingly stringent regulatory framework.

Our senior management identifies and monitors the risks on an ongoing basis and evolves processes/systems to monitor and control the same to contain the risks to minimum levels. Periodic monitoring by our officials helps in identifying risks in early stage. If required, a risk event update report is periodically placed before the Board of Directors of the Company.

Regulatory framework, focused on maintaining controls on domestic businesses but even inadvertently creating more favorable regulatory environment for global entities operating in India is a matter of concern. We actively participate in dialogue in industry bodies and with regulators to point these out and to recommend appropriate changes.

4) RISK MANGEMENT:

For Mish Designs Limited, an effective risk management policy lies at the core of our business philosophy, which is centered on delivering higher and better returns to all our stakeholders. With ups and downs, volatility and fluctuations in the financial business in which the Company operates, Mish Designs Limited is exposed to various risks and uncertainties in the normal course of our business. Since such variations can cause deviations in the results from operations and affect our financial state, the focus on risk management continues to be high.

5) KEY RATIOS

6) HUMAN RESOURCES:

Mish Designs Ltd. is part of a dynamic and progressive group that actively fosters a challenging work environment and encourages Entrepreneurship. With trust being the critical part of our business belief, we lay a strong emphasis on integrity, teamwork, innovation, performance and partnership. Our professional staff with diverse backgrounds brings varied talent, knowledge and experience to the Group, helping our businesses to remain competitive, achieve greater success and newer milestones. Our management team and board of directors are resolved to do what, we believe, is best for our shareholders, clients and associates.

At Mish Designs Limited, we recruit for skill, experience, right attitude, commitment and diversity. However, the one common trait that runs through the DNA of every employee is entrepreneurship. We encourage our employees to act as owners, partners and managers of their individual functions while providing a conducive environment for them to be creative and productive.

7) GOVERNMENT INITIATIVES:

As the textile industry is crucial for Indias growth, the government of India has implemented several schemes for the growth of production and ease of trade. The Amended Technology Upgradation Fund Scheme (ATUFS) and the Advance Authorization (AA) schemes are focused on strengthening and increasing the production of textile and apparel products in the country.

Over the last few years, the Government of India has launched various other initiatives to promote the textile and apparel industry such as production linked incentive (PLI) scheme for technical textiles, setting up of seven PM Mega Integrated Textile Region and Apparel (PM MITRA) parks in greenfield/brownfield sites and implementing Textile Cluster Development Scheme (TCDS) from 2021-22 to 2025-26. The government has also approved the continuation of the Scheme for Rebate of State and Central Taxes and Levies on the Export of Garments and Made-ups (RoSCTL scheme) up to March 2024 to boost the export competitiveness of Indian apparel and made-ups. The Government will continue the RoSCTL scheme until it gets merged with the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme. For this purpose, the Government made an ad-hoc allocation of funds of Rs. 73.98 billion (US$ 900 million) in 2020-21 for the issuance of duty credit scrips under the RoSCTL Scheme. Further, the government has removed the anti-dumping duty (ADD) on purified terephthalic acid (PTA), viscose staple fibre (VSF), and acrylic to promote exports in the man-made fibre (MMF) sector. National Technical Textiles Mission (NTTM) was launched from financial year 2020-21 and valid until March 31, 2026, with an outlay of US$ 178.74 million (Rs. 1,480 crore), with a view of positioning the country as a global leader in Technical Textiles. The Mission has four components component 1 which includes research, innovation and development, component 2 which includes promotion and market development, component 3 which includes export promotion, and component 4 which includes education, training and skill development. So far, 137 research projects have been approved under the component 1 of NTTM. The total cost approved of the said projects by the Government is US$ 57.33 million (Rs. 474.7 crore (approx.).

Inspired by the 5F Vision of the Prime Minister Mr. Narendra Modi, Bharat Tex 2024, the largest global textile event in India with a unified Farm to Fashion focus, was held in New Delhi in February 2024. The four-day event witnessed an overwhelming response from Indian and global players including top brands and retailers. The mega event was organised by a consortium of 11 Textile Export Promotion Councils and supported by the Ministry of Textiles. The event focused on trade, investment, and sustainability, attracting over 3,500 exhibitors, 3,000 buyers from 111 countries, and over one lakh trade visitors. Spanning around 2 million sq. ft. across two venues, Bharat Mandapam and Yashobhoomi, the event highlighted the entire textile value chain, featuring highlights like Vastra

Katha, an artistically curated textile narrative. Multiple Memorandum of Understandings (MoUs) were signed during the event

8) OUTLOOK:

The future of the textile industry in India looks promising, with several growth opportunities on the horizon. The industry is projected to reach a market value of $350 billion by 2025, growing at a blended annual growth rate (CAGR) of 14.8% from 2021 to 2025. The growth is attributed to various factors, such as increasing disposable incomes, changing consumer preferences, and the rising demand for durable and eco-friendly textiles. The industry is expected to attract investments worth $120 billion and increase the export of products to $300 billion by 2025.

9) SAFE HARBOUR:

This document contains statements about expected future events, financial and operating results of the businesses, which are forward-looking. By their nature, forward-looking statements require the businesses to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Mish Design Limiteds Annual Report,

FY2024-25