Modern Threads I Ltd Management Discussions

GLOBAL ECONOMY

After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.

A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial intelligence driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets.

Global conditions remain shaped by a mix of risks and moderating factors. Trade fragmentation and geopolitical uncertainties continue to challenge global trade flows and economic visibility. However, easing inflation across several economies is enabling central banks to gradually move away from earlier monetary tightening, thereby supporting financial conditions. https://www.imf.org

INDIAN ECONOMY

Indias economic outlook for 2025-26 reflects moderate growth, with GDP projections ranging between 6.4 percent and 6.6 percent. India Ratings & Research forecasts 6.6 percent growth, while ICRA estimates a slightly lower 6.5 percent, citing global uncertainties as a key risk. The Reserve Bank of India (RBI) has also revised its projection for FY 2024-25 to 6.6 percent (real GDP growth). Inflation remains a significant concern, with its impact on consumption and urban demand highlighted as a critical challenge.

The RBI has also pointed to subdued manufacturing activity in Q2 FY25 (petroleum products, iron, steel, and cement), contraction in mining activity, and lower electricity demand - in its latest bulletin dated December 6, 2024. Additional uncertainties stem from weather variability, agricultural output, and global factors such as tariff changes and commodity prices.

However, there are positives; the fiscal deficit target of 4.5 percent for 2025-26 may allow room for increased government spending, according to ICRA. On monetary policy, the RBI may consider a shallow rate-cut cycle in early 2025, with a 50-basis-point reduction potentially spread over two policy announcements, contingent on December CPI inflation data. https://www.india-briefing.com

GLOBAL TEXTILE INDUSTRY

The textile market size has grown strongly in recent years. It will grow from $660.13 billion in 2025 to $702.97 billion in 2026 at a compound annual growth rate (CAGR) of 6.5%. The growth in the historic period can be attributed to expansion of global apparel manufacturing, rising household consumption of textiles, availability of diverse raw fiber sources, growth of home furnishing demand, development of large-scale textile mills. The textile market size is expected to see strong growth in the next few years. It will grow to $919.08 billion in 2030 at a compound annual growth rate (CAGR) of 6.9%. The growth in the forecast period can be attributed to increasing demand for eco-friendly apparel, expansion of technical textiles in industrial applications, growing investments in smart textile manufacturing, rising focus on circular textile economy, increasing adoption of digital manufacturing technologies. Major trends in the forecast period include growing adoption of sustainable and organic fibers, rising demand for technical and performance textiles, expansion of digital textile printing, increasing use of recycled and bio-based materials, enhanced focus on supply chain traceability. https://www.researchandmarkets.com

INDIAN TEXTILE INDUSTRY

Indias textile and apparel industry continues to demonstrate resilience, anchored by a large domestic market, policy support and a gradual shift toward higher-value segments. Indias textile and apparel market is estimated at US$ 194 billion in 2025-26, registering a year-on-year growth of 5 percent. The domestic market continues to dominate, contributing nearly 80 percent of total industry size, while exports account for the remaining 20 percent. Indias domestic T&A market has grown from US$ 106 billion in 2019-20 to US$ 157 billion in 2025-26, reflecting a CAGR of 7 percent. To achieve the governments ambitious US$ 250 billion domestic market target by 2030-31, the industry will need to accelerate growth to nearly 9 percent annually, supported by investments, productivity improvements and formalisation.

Indias textile and apparel exports stood at US$ 37 billion in 2025-26, showing flat growth compared to the previous year. Apparel continues to account for the largest share at around 45 percent, followed by textiles including yarn, fabric and home textiles.

Source: textileinsights.in

GOVERNMENT INITIATIVES

During FY 2025-26, the Indian government launched and expanded major initiatives to modernize the textile sector include PM MITRA (Mega Integrated Textile Region and Apparel) Parksa, Textile Cluster Development Scheme (TCDS), new Cotton Mission, Production Linked Incentive (PLI) Scheme, Samarth Scheme and National Technical Textiles Mission (NTTM).

COMPANY OVERVIEW

Modern Threads (India) Limited (MTIL) is engaged in the textile industry, offering a diverse range of products including worsted yarn, wool tops, wool grease, polyester viscose fiber-dyed yarn, 100% polyester yarn, and lanolin. The company began its journey in 1973 under the name Modern Woollens, focusing on the production of wool and wool-blended worsted yarn in India. In 1989, MTIL expanded into the manufacturing of wool tops, and in 2006, it doubled its production capacity for both wool and blended worsted yarn.

Further expansion occurred in 2014 with the addition of approximately 1,000 spindles and preparatory equipment, increasing the annual worsted yarn production capacity from 1,700 to 2,100 tons. Aligning with Indias broader industrial growth, the company has emerged as one of the leading manufacturers and exporters of wool and blended worsted yarn in the country.

Operating from its facility in Bhilwara, Rajasthan, Modern Woollens has established a strong international presence and reputation. The company enforces rigorous quality control standards using an advanced in-house laboratory equipped with Inter-Wool Lab-accredited instruments. Over the years, MTIL has consistently received accolades for its excellence in exports, with its products now reaching over 25 countries, including regions in Europe, Latin America, the Far East, the Middle East, and Africa.

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