Nagreeka Exports Ltd Management Discussions

1. ECONOMY SCENARIO Global

The global textile industry is a significant component of the world economy, encompassing the production of fibers, yarns, fabrics, garments, and other textile-based products. It plays a crucial role in employment, trade, and industrial development, especially in emerging economies.

Economic Contribution

The textile and apparel sector is valued at over $1.5 trillion globally. It provides employment to over 300 million people worldwide, with a large share in developing countries like India, Bangladesh, Vietnam, and China. In many nations, it represents a key export sector, contributing significantly to GDP.

Global Trade Patterns

China remains the largest producer and exporter of textiles. Bangladesh and Vietnam are major apparel exporters due to low labor costs and trade agreements. The U.S. and EU are among the largest importers of finished textile products.

Challenges

Rising labor costs in some regions are prompting shifts in manufacturing to lower-cost countries in Africa and Southeast Asia. Supply chain disruptions, especially due to geopolitical tensions have exposed vulnerabilities in the global textile supply chain. Growing demand for sustainability is pressuring companies to adopt eco-friendly materials and reduce waste.

Trends and Innovations

Increasing use of automation and AI in production. Rapid growth of e-commerce is changing retail and logistics dynamics. Consumers are driving demand for sustainable and ethical fashion, influencing sourcing and production strategies.

Indian Textile Economy:

The Indian textile industry is one of the oldest and most significant sectors in the countrys economy, playing a vital role in employment, exports, and industrial output.

Economic Importance

The textile and apparel industry contributes about 2% to Indias GDP, 7% of industry output, and approximately 11-12% of total exports. It is the second-largest employer in India after agriculture, providing direct employment to over 45 million people and indirect employment to around 100 million.

Key Features

India has a complete textile value chain, from fiber (cotton, jute, silk, wool) to garment

manufacturing. It is the largest producer of cotton and second-largest producer of silk and man-made fibers globally. Major textile hubs include Tirupur, Surat, Mumbai, Ludhiana, and Bengaluru.

Export Performance

India is one of the top global exporters of textiles and apparel. Key export markets: USA, European Union, UAE, UK, and Bangladesh. In FY 2024, Indias textile and apparel exports were valued at around USD 35-38 billion.

Global Cotton Industry

The cotton industry is a crucial part of the global textile economy, serving as the backbone for textile and apparel production. Cotton is grown in over 75 countries, supporting the livelihoods of millions of farmers worldwide. Global cotton production (as of recent years): ~25-27 million tonnes annually. Major cotton producers: India, China, USA, Brazil, Pakistan. Major consumers: China, India, Bangladesh, Vietnam, driven by their large textile industries. Cotton is traded globally, with the USA being the largest exporter, followed by Brazil and India.

Indias Role in the Global Cotton Industry:

India holds a strategic position in the global cotton landscape: Largest producer of cotton globally (around 6 million tonnes annually). Contributes to about 23-25% of global cotton production. Third largest exporter of cotton after the USA and Brazil. One of the largest consumers of cotton, supporting a vast domestic textile and apparel industry.

2. INDIAN COTTON ECONOMY:

Cotton cultivation is spread across major states like Gujarat, Maharashtra, Telangana, Punjab, and Rajasthan. Over 6 million farmers are engaged in cotton farming in India. India primarily grows medium to long-staple cotton, with increasing production of extra-long staple (ELS) varieties.

• Key Trends: Sustainability & Circular Economy: Consumers and regulators are increasingly demanding eco-friendly fabrics, recyclable materials, and low-impact dyeing processes.

• Digital Transformation: Use of AI, automation, 3D design, and blockchain in design, production, and supply chain tracking. Reshoring and Diversification: Brands are diversifying their sourcing away from China to India, Vietnam, Bangladesh, and Africa to manage geopolitical and supply chain risks. Smart Textiles and Technical Fabrics: Growth in sectors like medical textiles, defense textiles, and wearable tech will drive innovation and high-margin opportunities.

• Challenges: Climate change, raw material volatility, trade barriers, and labor rights compliance will remain key challenges. Need for adoption of clean energy, green certification, and carbon neutrality goals.

• Strengths: India has a strong raw material base (cotton, jute, silk & MMF), a large skilled workforce, and an integrated textile value chain. Rising domestic consumption due to a growing middle class, online retail, and fashion-conscious youth.

• Key Growth Drivers: PLI Scheme (Production Linked Incentive) to boost man-made fiber and technical textiles. PM MITRA Parks: Creation of mega textile parks to improve infrastructure and global competitiveness. Sustainability Initiatives: Shift toward organic cotton, recycled fibers, and sustainable manufacturing practices. Digital India and E-commerce: Enabling MSMEs to sell textiles and apparel globally via online platforms.

Areas for Improvement:

Boosting productivity in cotton farming. Modernizing machinery and adopting automation in MSMEs. Skilling and upskilling the labor force to handle next-gen textile technologies. Both globally and in India, the textile industry is entering a transformational phase. While opportunities abound? especially in sustainability, innovation, and exports?success will depend on the ability to adapt, modernize, and align with consumer expectations and global standards.

3. Opportunities and Threats -Textile Industry

A. Global Opportunities

• Rising Global Consumption

Rapid urbanization, rising disposable incomes, and expanding middle class in Asia and Africa. Growth of fast fashion and e-commerce platforms.

• Sustainability Demand

Growing global demand for eco-friendly, organic, and recycled textiles. Shift toward a circular economy is opening up new markets and innovations.

• Growth in Technical Textiles

Increasing use in healthcare, agriculture, automotive, defense, and sportswear. Technical textile market expected to grow at >5% CAGR globally.

• Digital and Smart Textiles

Opportunities in wearable technology, sensor-embedded clothing, and performance fabrics.

• Diversified Sourcing Strategies

Brands shifting from China to alternative sourcing hubs like India, Bangladesh, Vietnam, creating space for new players.

B. Threats

• Environmental and Regulatory Pressure Strict environmental regulations and carbon- neutral commitments from brands and countries. Geopolitical Risks and Supply Chain Disruptions Trade tensions (e.g., US-China), logistics costs

• Stiff global competition, especially from Bangladesh, Vietnam, and China.

• High cost of raw materials and outdated technology in some segments.

• Compliance with international environmental and labor standards.

• Rising Input Costs: Increased prices of raw materials, labor, energy, and transportation.

• Competition from Synthetic Fibers, Cheaper and more durable synthetic fibers like polyester threaten natural fiber markets like cotton.

• Changing Consumer Behavior. Shift toward minimalism, slow fashion, and rental/second- hand markets may reduce demand for fast fashion.

Indian Textile Industry -

A. Opportunities

• Free Trade Agreements

India has signed FTAs with UAE, Australia and UK and FTA under negotiation with EU and some other countries. Textile exports are significant beneficiaries under these FTAs.

• Global Supply Chain Realignment: India stands to benefit as global brands seek China +1 alternatives.

• Raw Material Advantage: Largest cotton producer, and significant capacity in jute, silk, and man-made fibers. Availability of a skilled and semi-skilled workforce at competitive costs. Yield per acre is below global average. This offer opportunity to import, yields leads to more raw material availability.

• Government Support: Schemes like Export incentives, Focus on technical textiles and sustainability. Production Linked Incentive (PLI) Scheme to promote high-value textile manufacturing. PM MITRA Parks scheme aims to establish 7 integrated textile parks. Schemes like TUFS (Technology Upgradation Fund Scheme) and Skill India support modernization and training.

• Strong Domestic Market: Fast growing economies, rising income levels, growing youth population, rising urban fashion trends, and online retail boom. Rising share of organic cotton, BCI-certified cotton, and eco-conscious brands.

B. Threats for India

• Low Productivity in Cotton Farming: Indian cotton yield is among the lowest globally due to small landholdings and pest issues.

• Infrastructure and Technology Gaps: Many small and medium textile units lack modern machinery and digital capabilities. Global Competition. Bangladesh, Vietnam, and even African nations offer lower labor costs and better trade access (e.g., EU GSP benefits).

• Climate Risks: Most of Cotton in India is rainfed, monsoon variability and climate change threaten production.

The textile industry globally?and especially in India?is at a turning point. India has strong fundamentals and rising global demand in its favor. However, sustainability, innovation, and competitiveness will be key to converting these opportunities into long-term growth while navigating serious threats from global market dynamics, regulations, and technological shifts.

Future Outlook

The global textile market is projected to reach USD 1.8-2 trillion by 2030, growing at a CAGR of around 4-5%. Growth will be driven by rising disposable incomes, urbanization, and fast fashion, particularly in emerging economies like India, China, and Southeast Asia.

Indias textile and apparel market is also expected to reach USD 300 billion by 2030 from around USD 165 billion in 2025. Exports are projected to cross USD 100 billion by 2030, driven by global demand and trade policy advantages. Increasing demand for technical textiles, and global outsourcing. Greater emphasis on sustainability, digitization, and innovation will define the next phase of growth. The industry is expected to grow steadily, driven by population growth, rising incomes, and changing fashion trends. However, future competitiveness will depend on adaptability to green technologies, regulatory pressures, and digital transformation.

i) Management perception of Risk Concern

The prices of raw cotton play a vital role on the fortunes of the textile industry. Various strategies are adopted by the Management from time to time to hedge the said risk. With an established Currency Risk Management Policy, the foreign currency exposures are continuously monitored and hedged accordingly which helps mitigate risk arising from volatile and fluctuating currency exchange rates.

5) Internal Control System

The Company has an effective and adequate internal control system and procedures which are commensurate with its size and nature of business. The Internal control systems are designed in such way that all the assets are safeguarded and protected against loss and all transactions are authorized, recorded and reported correctly. The Audit Committee monitors and evaluates and reviews the Internal Financial Control systems of the Company. Regular Internal Audits and checks are carried out to provide assurance that the responsibilities at various levels are discharged effectively and that adequate systems are in place.

6) Human Resources / Industrial Relations

Employees are the cornerstone of our business success. The Company has a supportive work culture and the employees have a strong affinity to the Company. We have an experienced and qualified workforce across multiple disciplines. We are also led by a dedicated and experienced executive management team that has a median of about 20 years of experience across the trade. Performance management is the key word for the company. Your Company also conducts in house training program at various levels. Industrial relations have been very smooth throughout the year.

7) Cautionary Statement:

The report may contain “forward looking statement” that describes our objectives, plan or goals. All these forward looking statements are subject to certain risks and uncertainties including but not limited to Government action, economic development, global and domestic demand-supply conditions, finished goods prices, raw materials etc. that could cause the actual results to differ materially from those contemplated by the relevant forward looking statements.

The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.