Nahar Industrial Enterprises Ltd Management Discussions

Overview of economy

The Global economic activity is expected to maintain modest momentum with GDP growth projected at 3.0% in 2025, down from 3.2% in 2024 due to global uncertainties, rising trade protectionism and geopolitical tensions Russia-Ukraine war risk. Evolving US tariff policies and reciprocal actions by other countries may cause market volatility. The global economic outlook projected to slow in 2025 26 due to trade tensions, geopolitical tensions and extreme policy uncertainty. (Source: https://www.ey.com/en_us/insights/strategy/global-economic-outlook )

India is poised to lead the global economy once again with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026.The Inflation management faces challenges as rising input costs and weak global demand threaten Indias industrial growth. Despite this India has emerged the fourth largest economy of the world. (Source: https://www.pib.gov.in/Press ReleasePage.aspx?PRID=2123826)

Industry structure/ development (Textile)

IndiasTextiles & Apparel (T&A) industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns. Indias textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

The share of textile and apparel (T&A) including handicrafts in Indias total exports stands at a significant 8.21% in 2023-24. India has a share of 3.91% of the global trade in textiles and apparel. Major textile and apparel export destinations for India are USA and EU and with around 47% share in total textile and apparel exports. The sector holds importance from the employment point of view as well. It provides direct employment of over 45 million people and source of livelihood for over 100 million people indirectly, including a large number of women and rural population. The sector has perfect alignment with Governments key initiatives of Make in India, Skill India, Women Empowerment and Rural Youth Employment.

(Source: Ministry of Textiles Annual Report 2023-24)

In keeping with goal of making Indias development inclusive and participative, the Governments central focus has been on increasing textile manufacturing by building the best-in-class manufacturing infrastructure, up gradation of technology fostering innovation, enhancing skills and traditional strengths in the textile sector. The government has introduced multiple schemes to enhance textile production, boost investments, and promote exports, including: Production Linked Incentive (PLI) Scheme for Textiles; to increase manufacturing in man-made fibre (MMF) and technical textile, PM MITRA (Mega Integrated Textile Region and Apparel) Parks; to develop world-class industrial infrastructure for textile manufacturing, Amended Technology Up gradation Fund Scheme (ATUFS); to incentivise credit flow for benchmark credit linked technology up gradation in MSME driven Textile Industry for supporting capital investment, Samarth (Scheme for Capacity Building in Textile Sector); to provide skill training to workers in the textile industry, in partnership with the Ministry of Skill Development & Entrepreneurship, Textile Cluster Development Scheme (TCDS); to create an integrated workspace and linkages-based ecosystem for existing as well as potential textile units/clusters to make them operationally and financially viable, National Technical Textiles Mission (NTTM); to boost Technical Textiles in the country. These measures aim to boost domestic manufacturing, support MSMEs, modernize the textile sector and enhance Indias global competitiveness.

(SOURCE: https://www.pib.gov.in/Pressreleaseshare.aspx? PRID=1808759)

Management perception of Risk/Concern/Threat

The Indian textile industry continues to grapple with an array of challenges; rising costs of raw materials, freight, energy and labour are putting pressure on manufacturers besides reduced consumer spending in markets like US and EU is major concern. In addition to the continued impact of inflation, many key markets are facing the possibility of recession, which is dampening consumer confidence and reducing disposable income resultantly the industry finds itself navigating a complex and uncertain future.

Global economic uncertainty including trade tensions, can disrupt supply chains, impacting the textile industrys ability to access raw materials and deliver products. Additionally wage disparities in key textile-producing regions such as South-east Asia, India, and Bangladesh are further exacerbating the situation. Trade policies and international regulations will continue to impact the textile industry. The uncertainty created by trade wars, particularly between major economic players has the potential to further disrupt global textile trade. The ongoing Russia-Ukraine war remained a major reason of high inflation and subdued consumer demand across Europe.

Cotton

Cotton is a vital commercial crop in India, contributing about 24% to global cotton production and sustaining the livelihoods of millions of farmers and workers. It plays a crucial role in Indias foreign exchange earnings through exports of raw cotton, intermediate products, and finished goods. India is the 2nd largest producer and India holds the largest cotton acreage in the world. (Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=211747 0). Cotton grows over 13.06 million hectares in India compared to 33.1 million hectares globally. The Indian cotton industry provides livelihood to about 60 million people in the country. Consumer of cotton in the world.(Source:https://www.ibef.org/industry/textiles).The volatility in prices of cotton erodes the level field global market scenario, which can affect the performance of the industry. The Government of India ensures availability of cotton to Textile Industry through a mechanism namely committee on cotton Promotion and Consumption (COCPC). Cotton Balance Sheet for the cotton season 2024-25 as drawn by COCPC is as under:-

As on 31.03.2025	In lakh Bales
Opening Stock	47.10
Production	294.25
Imports	25.00
Total supply	366.35
Consumption	318.00
Exports	18.00
Total demand	336.00
Closing stock	30.35

The Union Budget 2025-26 has announced a five-year, ‘Mission for Cotton Productivity, highlighted that the five-year mission will facilitate significant improvements in productivity and sustainability of cotton farming and promote extra-long staple cotton varieties. The mission will benefit lakhs of cotton growing farmers as the best of science & technology support will be provided to farmers. The mission will help in increasing incomes of the farmers as well as ensure a steady supply of quality cotton for rejuvenating Indias traditional textile sector.

Opportunities and Outlook

The market for Indian textiles and apparel is projected to grow at a 9% CAGR to reach US$ 250 billion by 2030-31. Indias T&A exports have grown with a CAGR of 2% since 2019-20 to reach US$ 37 billion in 2024-25. Apparel forms the largest share of the exports accounting for approximately 45% in 2024-25.The Ministry of Textiles has set an ambitious target to achieve US$ 100 billion in exports by 2030-31, necessitating an accelerated growth rate of 14% from 2024-25.The global apparel market is estimated to be US$ 1.8 trillion in 2024.It is expected to reach US$ 2.3 trillion by 2030, growing at a CAGR of 4% from 2024. {Source: Annual report (Indian Textile and Apparel Industry 2025) wazir advisor}.

Government policies play an important role in shaping the future of the textile industry in India. The government has recognized the potential of the industry and has implemented various policies to promote its growth and competitiveness in the global market. The Make in India initiative, launched in 2014, has played a crucial role in positioning India as a global textile manufacturing and export hub. In the global market of textile and apparel, China is losing its market share. Many countries around the globe depend majorly on China for their textile needs and in recent past years China plus one policy has emerged so that they can divide their purchase between countries. This gives a golden opportunity for the growth of the textile industry in India and this can help India become the next textile hub.

The UK India Free Trade Agreement marks a transformative milestone for bilateral textile and apparel trade. By removing tariff barriers, it opens the door to expanded exports, deeper supply chain integration, and enhanced market access for both nations. With modernised infrastructure, government support and a renewed focus on innovation and market access would help to attain the target.

The textile industrys future will be influenced by global economic dynamics. Factors such as trade policies, currency changes, and geopolitical events can impact the industrys overall growth and profitability. Though there are some short term setback in the form of US tariffs which will make Indias exports costlier as compared to Bangladesh, Vietnam and Indonesia etc. as they are having lower tariffs on their exports. Companies will need to closely monitor these dynamics and adapt their strategies accordingly to mitigate risks and capture new opportunities. We expect that in the challenging period, Government will support the textile Industry.

Industry structure/development (Sugar)

Indian Sugar industry is rural centric and characterized by the co-existence of private, co-operative and public sector. It has tremendous opportunities to meet the countrys food, fuel and power needs. The sugar sector is an important agro-based sector that impacts the livelihood of about 5 crore sugarcane farmers and their dependents and around 5 lakh workers directly employed in sugar mills, apart from those employed in various ancillary activities including farm labour and transportation. The Indian sugar industry fits into the Aatma Nirbhar Bharat mission of the Government of India.

Sugar business is cyclical in nature but India has emerged structurally surplus over the last decade. As a result, the Indian sugar industry is seeking alternative avenues for its sugarcane production. Indias sugar exports are becoming less profitable due to various factors, including global over production, trade barriers, and fluctuating prices. Exports are feasible only when world prices are bullish or supported through Government subsidies etc. Realizing this, the Government promoted the ethanol blending programme that helps to absorb the surplus sugar. ISMA estimates the total sugar production for the 2024-25 season to close at 261 lakh tonnes. The season began with an opening stock of 80 lakh tonnes. Factoring in an expected domestic consumption of 280 lakh tonnes and export volumes of up to 9 lakh tonnes, the closing stock is likely to stand at a comfortable 52 lakh tonnes, ensuring stable supply for domestic demand. (Source:https://www.businesstoday.in/latest/economy/ story/indias-sugar-production-reaches-25744-lakh-tonnes-as-of-may-15-positive-outlook-for-2025-26-476600-2025-05-16)

The Government of India has undertaken a comprehensive review of the Sugar (Control) Order, 1966, leading to the formulation of the Sugar (Control) Order, 2025. This revision aims to simplify and streamline the regulatory framework governing the sugar sector in line with current industry dynamics and technological advancements. The Objective of the Sugar (Control) Order, 2025 is a step toward building a more efficient, transparent, and accountable sugar ecosystem, fostering both domestic stability and global competitiveness

(Source: https://www.pib.gov.in/PressReleasePage.aspx? PRID=2125723) .

Management perception of Risk/ Concern/Threat

The raw material of sugar industry is sugarcane. The cultivation of sugarcane is heavily dependent upon the monsoon which are uneven and uncertain. Because of monsoons the produce of sugarcane is affected. The production trends of sugarcane may not be constant because of fluctuating demand and supply. The demand for other agriculture produces may raise which gives more economic return to farmers. Besides fluctuating sugarcane production; low yields, high production costs, low sugar recovery rates and inefficient technology also pose significant challenges to the Indian sugar industry. The per capita consumption of sugar is low as compare to the world average per capita consumption.

Both Centre and State Government controlled Indian sugar industry. The Farmers receive protection in the form of a Fair and Remunerated price (FRP) on sugarcane which the sugar mills pay them. It is determined by the Central Government based on Commission for Agricultural Costs and prices (CACP) recommendations with discussions involving state authorities and sugar industry associations. States can set state agreed price (SAP) often higher than the FRP, based on local conditions.

Opportunities and outlook

The future of sugar industry looks encouraging but there are some persisting concerns which need solution. The Government has been always supportive to the industry keeping in mind the size of sugar industry and the number of livelihoods associated with it. Resolution of the problems with regard to Fair and Remunerative Price (FRP) and Minimum Selling price (MSP) is required immediately.

Consumption of sugar and related sweeteners in India has increased in the last few years. One of the primary reasons for the increasing demand for sugar is the growing population of India and improving economic conditions. The major consumers of the sugar are bakeries, soft drink, food products, manufacturers, hotels and restaurants also consume fair quantities of sugar. Sugar is most preferred among other alternatives across all age groups due to its affordability and easy availability.

The sugar sector in India is at a crossroads. Strategic decisions, sustainable practices, and policy support will determine its path going forward. While challenges exist, innovative approaches can lead to a more resilient and profitable industry. Having acknowledged the fact that India is one of leading producers of sugarcane in the world, it is needed that the government and private players work proactively and cohesively to push the industry forward so that it benefits each and every stakeholder at every step.

Segment wise/Financial/Operational performance

The company operates in two segments i.e. Textile and

Sugar. Please refer Directors Report on the performance review.

Internal Control System and their Adequacy

The company is having adequate internal financial control systems and procedures which commensurate with the size of the company. The Company is having internal audit department which ensures optional utilization and protection of companys resources. The internal Auditors monitor and evaluate the efficiency and adequacy of internal control systems in the Company, its compliance

Highlights of the companys Financial/operational performance

	(Rs. In lakhs)
Particulars	Current	Previous
	Year	Year
Revenue from operations	153008.40	147176.18
Profit/ (Loss) before tax	2655.55	1150.41
Profit/ (Loss) after tax	2047.20	961.68

 

Ratios	Current Year	Previous Year	Change (%)
Trade Receivable Turnover	8.74	9.09	(3.85)
Ratio (in times)
Inventory Turnover Ratio	2.76	2.97	(7.07)
(in times)
Debt Service Coverage	1.87	1.36	37.50
Ratio (in times)
Current Ratio (in times)	1.56	1.58	(1.27)
Debt Equity Ratio (in times)	0.63	0.55	14.55
Operating Profit Ratio (in %)	4.87	2.86	70.28
Net Profit Ratio (in %)	1.34	0.65	106.15
Return on Capital	5.95	3.69	61.25
Employed (in %)
Return on Investment (in %)	11.44	10.40	9.89

with operating systems, accounting procedures and also ensure that the internal control systems are properly followed by all concerned departments of the company. Significant audit observations and corrective actions taken thereon are presented to the Audit committee of the Board.

Material Development in Human resources/ Industrial Relation Front

The company is of firm belief that human resources are the driving force that propels a company towards progress and success and the company is committed to the development of its people. Your company is committed towards building a safe work place with underling safe work practice. The total employees strength was 7135 as on 31/03/2025. The industrial relations were cordial and satisfactory.

Cautionary Statement

Though the statement and view expressed in the said report are on the basis of certain assumptions and best judgment but actual results could differ from whatever is stated in the report. Important factors that could make a difference to the Companys operation include global demand-supply conditions, finished goods prices, raw material cost and availability, changes in government regulations and tax structure, economic development within India and the Countries with which the Company has business. The Company assumes no responsibility in respect of forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.

For and on behalf of the Board of Directors
	sd/-
	Jawahar Lal Oswal
Place: Ludhiana	(DIN: 00463866)
Date: 12th August, 2025	Chairman