Nandan Denim Ltd Management Discussions

Global Economy Overview

The global economy remained resilient in CY 2025, with GDP expanding by 3.5% despite trade tensions and policy uncertainty. Technology-led investments, resilient consumer spending and favourable financial conditions supported growth. Inflation moderated to around 4.1%, strengthening capital inflows and currency stability. This enabled major central banks to gradually ease monetary policy through measured interest rate reductions.

Advanced economies grew by 1.9%, led by steady expansion in the US supported by resilient domestic demand and continued investment in advanced technologies. Emerging economies expanded by 4.5%, driven by strong export performance and resilient economic activity across Asia. Global trade remained resilient, supported by merchandise trade, front-loaded shipments and continued growth in services trade.

World Economic Output (%)

Region	CY 2025	CY 2026 (E)	CY 2027 (P)
Global Economy	3.5	3.0	3.4
Advanced Economies	1.9	1.7	1.8
EMDE	4.5	3.8	4.5

E-Estimate; P-Projection; EMDE-Emerging Market and Developing Economies
Source: IMF World Economic Outlook

Outlook

The global economic outlook remains uncertain, reflecting evolving trade policies, fiscal pressures, and persistent geopolitical risks. The conflict in West Asia has added to these uncertainties and could weigh on global economic activity. Assuming this dispute remains limited in duration and geographic scope, global GDP growth is projected to stabilise at 3.0% in CY 2026 and improve to 3.4% in CY 2027. This outlook reflects resilient domestic demand, supportive policy measures and gradual monetary easing across major economies.

This conflict could exert upward pressure on global inflation, with inflation projected at 4.7% in CY 2026. Inflation is expected to moderate to 3.9% in CY 2027, reflecting easing supply constraints, softer demand conditions and moderating labour market pressures.

Indian Economy Overview

Indias economy maintained strong momentum, with GDP growth of 7.7%, positioning India as the fastest-growing major economy for the fourth consecutive year. Robust domestic demand, aided by fiscal measures and improving consumer sentiment, sustained economic growth. Inflation moderated to 3.4%, remaining within the Reserve Bank of Indias target range of 2% to 6%, reflecting lower input costs and improved supply conditions.

Indias GDP Growth (%)

FY 2023-24	FY 2024-25	FY 2025-26	FY 2026-27
7.2	7.1	6.6	7.4

Source: MoSPI (First Advance Estimate), RBI, Economic Survey, Budget Documents
Note: FY 2025-26 data is Projected and FY 2026-27 is Projected

Outlook
Economic activity is expected to remain resilient with GDP growth projected at 6.6% for FY 2026-27, driven by sustained momentum in the services sector, strong domestic demand, and targeted fiscal support. Inflation is expected to remain within the target range, with food inflation projected at 5.1%, reflecting stable food prices, favourable supply conditions and monetary policy measures. To support economic activity, the Monetary Policy Committee reduced the repo rate to 5.50% while maintaining its neutral stance.

INDUSTRY OVERVIEW

Global textile Industry
The global textile industry has evolved through technological advancements and expanding global trade. In 2025, the global textile market size was estimated at USD 1,912.32 billion, and is projected to grow to USD 3,225.28 billion by 2035, registering a CAGR of 7.24% over the forecast period. This growth is being driven by rising global demand for natural fibers, along with the growth of global e-commerce enabling access to new fiber sources, and the establishment of large-scale textile mills.

The global textile market is projected to grow from USD 2,385.81 billion in 2025 to around USD 4,273.06 billion by 2035, achieving a Compound Annual Growth Rate (CAGR) of 7.24% over this timeframe. Growth is expected to be driven by rising demand for eco-friendly apparel, growing emphasis on circular economy, and the rising implementation of digital manufacturing technologies. The global textile industry is also undergoing a significant shift towards the adoption of sustainable, organic, recycled, and bio-based materials, alongside a stronger emphasis on supply chain traceability.

Strong rural demand, GST rationalisation and easing monetary conditions supported private consumption. Lower input costs, reduced energy prices and softening commodity prices kept manufacturing costs across several industries, including textiles. These developments improved cost competitiveness, supported consumer demand and strengthened export performance. Capacity utilisation remained strong at around 74% in manufacturing, while the services sector remained resilient.

The manufacturing purchasing managers index (PMI) moderated to 55.4 but stayed within the expansion zone in November 2025, signalling continued growth in new orders, output, and business expectations remained highly optimistic. However, supply-chain disruptions due to the West Asia conflict could tighten the availability of key inputs and raise freight and insurance costs, including plastics, resins, chemicals, and synthetic fibers.

Indias yta emerged with significant progress during FY 2025-26 with the implementation and conclusion of trade agreements with EFTA, the UK, Oman, New Zealand and the European Union. These agreements are expected to improve market access, reduce tariff barriers, strengthen supply chain integration and create opportunities across textiles, apparel, handicrafts and technical textiles. They are also expected to support export growth, market diversification, investment flows, and deeper integration into global value chains.

PMI Manufacturing

Month	PMI Manufacturing	New orders	Future output
Mar-25	58.1	60.5	60.5
Apr-25	57.2	61.0	61.0
May-25	57.6	58.5	58.5
Jun-25	58.4	59.5	59.5
Jul-25	59.1	61.5	61.5
Aug-25	59.3	61.0	61.0
Sep-25	57.7	60.0	60.0
Oct-25	59.2	61.0	61.0
Nov-25	56.6	58.0	58.0
Dec-25	55.0	55.0	55.0
Jan-26	55.4	55.0	55.0
Feb-26	56.4	56.0	56.0
Mar-26	53.9	53.0	53.0

Global Textile Industry & Indian Textile Industry

Global Textile Industry

Source: Precedence Research

Indian Textile Industry

Indias textile industry has undergone a remarkable transformation, emerging as a globally competitive, innovation-driven and employment-intensive sector. The domestic textile market has grown to ?16 lakh crore, reflecting the sectors robust expansion and increasing contribution to the national economy. Despite global trade challenges, the sector remained resilient. Total textile exports, including handicrafts, reached ?3,16,334.9 crore in FY 2025-26, registering a growth of 2.1%. This reflects steady global demand for Indian textile products and the continued competitiveness of the sector across major product categories.

To strengthen the sectors global competitiveness, the Government approved the Production Linked Incentive (PLI) Scheme for Textiles with a five-year outlay of ?10,683 crore. The scheme supports the manufacturing of man-made fibre apparel, man-made fibre fabrics and technical textile. In addition, the Ministry of Textiles has set a Vision 2030 objective to scale up exports to approximately ?9 lakh crore through fortified domestic manufacturing and broader global market penetration.

Overall, India is well-positioned to strengthen its footprint in the global textile industry and contribute to the vision of Viksit Bharat. This outlook is systematically backed by ongoing policy initiatives, infrastructure development, investment promotion, skill enhancement and technological advancement.

Indias Textile Industry (USD billion)

Year	Value
FY 2025-26	190
FY 2029-30	350

Source: PIB

Indias Textile Export Share in Key Markets

Source: PIB

Trends in the Indian Textile Industry

Key Trends	Description
Ecosystem Modernisation	Large-scale investments in research, innovation, incubation and industry-academia collaboration are building a future-ready textile ecosystem.
Empowerment Through Representation	The textile sector plays a crucial role in womens empowerment by serving as a primary employer for a major female workforce and fuelling a rise in women entrepreneurs.
Fabric Diversification	Consumers are moving away from basic, traditional materials to seek a wider variety of specialised, high-performance and custom fabrics.
Eco-Friendly Preference	A rapidly accelerating shift toward sustainable materials as global and domestic consumers prioritise environmental impact.
Urbanization and Middle-Class Spending	Rising disposable incomes and moving to cities are altering buying power, driving a massive spike in discretionary spending on branded apparel.
E-commerce Proliferation	Online retail channels are continuously expanding, bridging the gap between major manufacturing hubs and consumers in both urban areas and rural, Tier-2 and Tier-3 zones.

Provisions of Union Budget 2026-27 & Global Denim Industry

Provisions of Union Budget 2026-27

The Union Budget 2026-27 outlines a range of initiatives aimed at strengthening the textile sector through investment promotion, skill development, sustainability, infrastructure creation and export facilitation.

Key Initiatives	Description
National Fibre Scheme	The scheme aims to strengthen self-reliance across the fibre value chain by supporting natural fibres, including silk, wool and jute, alongside man-made and new-age fibres. It seeks to improve domestic fibre availability, reduce import dependence and support innovation in advanced textile materials.
Textile Expansion and Employment Scheme	The scheme focuses on modernising traditional textile clusters through capital support for machinery, technology upgradation and common testing and certification facilities. It is expected to improve productivity, quality standards and employment generation.
Tex-Eco Initiative	The initiative promotes sustainable and globally competitive textile and apparel manufacturing. It aims to align the industry with evolving sustainability standards and emerging green market opportunities.
Samarth 2.0	The upgraded skilling programme strengthens workforce capabilities through greater collaboration between industry and academic institutions. It aims to develop a skilled workforce across the textile value chain.
Mega Textile Parks and Technical Textiles	The Government has announced Mega Textile Parks to provide integrated infrastructure, improve scale efficiencies and promote value addition. The initiative is also expected to support the growth of technical textiles across industrial, medical, defence and infrastructure applications.
Export Promotion Measures for Textiles and Allied Sectors	The export obligation period has been extended from six months to twelve months for textile garments exporters using duty-free imported inputs. The measure provides greater operational flexibility and eases compliance requirements.

Global Denim Industry

The global denim market continues to evolve, driven by changing consumer preferences and increasing emphasis on sustainability. In 2025, the market was valued at USD 78.90 billion. Growing demand for sustainable apparel has encouraged manufacturers to adopt environmentally responsible materials and production processes.

North America remained the largest denim market in 2025, where the United States alone generated about 83.2% of the regional revenue. North Americas denim market is characterised by a strong heritage, established brands, and stable consumer demand. In contrast, Asia Pacific has emerged as the fastest-growing region, driven by a large youth population, rising disposable incomes, increasing adoption of Western fashion, and the growth of local denim brands.

Looking ahead, the global denim industry is expected to record steady growth, supported by evolving consumer preferences and innovation across the value chain. The market is projected to reach USD 151.10 billion by 2035, expanding at a CAGR of 6.61% from 2026 to 2035. This growth trajectory is underpinned by technological advancements, shifting consumer preferences, and the adoption of sustainable practices, reshaping the global denim landscape.

Global Denim Market Size

Year	Value
2025	$78.90 billion
2035	$151.10 billion

CAGR: 6.61%
Source: S&S Insider

Indias Denim Market Forecast & Opportunities and Challenges

Indias Denim Market

The Indian denim market was valued at USD 1.2 billion in FY 2025 and is projected to reach USD 1.9 billion by 2034, registering a CAGR of 4.99% from 2026 to 2034. Growth is primarily propelled by rising disposable incomes, rapid urbanisation, expanding e-commerce penetration, and increasing fashion awareness among consumers. In addition, strategic collaborations with international brands and advancements in fabric manufacturing technologies are broadening market reach.

A key driver of this evolution is rising demand for sustainable and eco-friendly denim, driven by increasing environmental awareness among consumers. Government focus on green initiatives and the global shift toward conscious consumption are reinforcing this trend. As a result, sustainable apparel is emerging as a significant segment within the industry.

At the same time, urban centres in India are witnessing a shift toward premium and designer denim. This trend is fuelled by a fashion-conscious youth population and a growing middle class with higher purchasing power. Consumers are increasingly seeking high-quality denim that combines style and comfort. In response, international brands entering the market and domestic players launching premium collections with innovative washes, fits and designs are gaining traction, strengthening the outlook of the Indian denim industry.

Indias Denim Market Forecast (USD Billion)

Year	Value
FY 2025	1.2
FY 2034	1.9

Source: IMARC Group

Opportunities

Opportunity	Description
Rising Demand for Denim Products	Denim continues to witness steady global demand due to its versatility and broad consumer appeal. Emerging markets, a growing youth population, expanding e-commerce channels and rising preference for sustainable products present opportunities for market expansion.
Global Sourcing Shift Towards India	Global apparel brands are diversifying sourcing beyond China, creating opportunities for Indian textile manufacturers. Indias integrated manufacturing base, competitive capabilities and expanding textile ecosystem position it as a preferred sourcing destination.
Growth in Technical Textiles	The National Technical Textiles Mission (NTTM) is promoting research, innovation, market development and exports. The segment offers opportunities for product diversification, value addition and long-term growth across the textile sector.
Sustainability-Led Demand Growth	Rising demand for sustainable textile products is creating new growth opportunities for Indian manufacturers. Sustainability remains a key focus of Indias textile export strategy and industry development roadmap.
Industry 4.0 Adoption	Greater adoption of automation, digital technologies and smart manufacturing is improving operational efficiency, product quality, resource utilisation and supply chain visibility across the textile value chain.
Supply Chain Traceability	The proposed EU Digital Product Passport (DPP) framework is increasing the focus on traceability, transparency and supply-chain visibility. Vertically integrated manufacturers are better positioned to address evolving customer and regulatory requirements.

Challenges & Company Overview

Challenges

Challenge	Description
Geopolitical and Supply Chain Disruptions	Ongoing geopolitical tensions and global trade disruptions affect freight costs, supply chains and export demand, creating operational uncertainty across the textile value chain.
Tariff and Trade Uncertainties	Indian textile exporters continue to face tariff-related challenges in key export markets. Changes in trade policies and tariff structures have affected export competitiveness and business uncertainty.
Volatility in Raw Material Price	Volatility in cotton prices and concerns over raw material availability continue to challenge the industry. Elevated domestic cotton prices can affect cost competitiveness, particularly for cotton-based textile manufacturers, including denim producers.
Intensifying Global Competition	Indian textile manufacturers compete with established textile-exporting countries such as Bangladesh, Vietnam and other low-cost sourcing destinations. Sustaining cost competitiveness and protecting market share remain key industry challenges.

Company Overview

Nandan Denim Limited (NDL) is a leading integrated denim fabric manufacturer in India. The company ranks 5th among the top 10 global manufacturers. The Company commenced operations in 1994 as a textile trading business and entered textile manufacturing in 2004. Today, NDL manufactures denim fabric, shirting fabric and yarn. It is part of the Chiripal Group, a diversified conglomerate established in 1972 with interests spanning textiles, chemicals, packaging, infrastructure, and education.

The Company operates a fully integrated manufacturing platform, covering the entire value chain from spinning to fabric finishing. NDL has two manufacturing facilities in Ahmedabad, Gujarat. The Company exports denim fabric to more than 10 countries, strengthening its presence across global markets.

Key Business Strengths

Key Strengths	Description
Experienced Workforce	NDLs skilled workforce supports operational excellence and long-term growth. The Chairman and Managing Director, together with the senior leadership team, bring extensive industry experience and strategic direction.
Strong Customer Engagement	The Company has built long-standing customer relationships through consistent quality, timely deliveries, and the ability to meet diverse product requirements. This has strengthened its customer base across domestic and international markets.
Industry Leadership and Export Presence	NDL has established a strong position in the denim industry through its integrated manufacturing capabilities and diversified product portfolio. The Company exports its products to more than 10 countries, expanding its global footprint.
Seasoned Management Team	The Company is led by an experienced management team with deep industry expertise. Its leadership continues to strengthen customer relationships, supplier partnerships, and business performance.
Operational Scale Advantages	The Company benefits from captive power infrastructure, including a 25 MW power plant, a 2 MW windmill and a 1 MW solar power system. These assets improve energy efficiency and optimise operating costs.
Vertically Integrated Manufacturing Infrastructure	NDLs integrated manufacturing facilities provide end-to-end production capabilities, enabling consistent quality, operational efficiency, and greater control across the value chain. Additionally, NDL ranks among the top 10 denim manufacturers in the world.
Innovation and Product Development	The Companys R&D initiatives focus on product innovation, evolving customer preferences, and changing market trends while maintaining high quality standards.
Stringent Quality Standards	All products undergo rigorous quality testing in accordance with standards prescribed by the American Society for Testing and Materials (ASTM) and the American Association of Textile Chemists and Colorists (AATCC).

Financial Performance & Key Ratios

Denim

Denim remains the core focus of the Companys operations, positioning NDL among the leading denim suppliers in India. The Company offers a diversified product portfolio comprising core and reinvented classics, novelty denim, structured and knit denim, lightweight blends, feather-touch fabrics, stretch fabrics, and printed denim.

80 MMPA - Denim Production Capacity (Depends on Fabric Count & Picks per Inch)

Financial Performance - Key Highlights

Particulars	FY2026	FY2025	Y-o-Y (%) Change
Revenue from operations (? Crore)	2,871.87	3,546.68	-19.03
PAT (? Crore)	33.13	33.45	-0.96
EBITDA (? Crore)	104.12	135.83	-23.35
Debtor Turnover (days)	57.21	46.19	23.86
Inventory Turnover (days)	23.19	20.07	15.55
Interest Coverage Ratio (times)	5.90	3.70	59.46
Current Ratio (times)	2.25	1.49	51.01
Debt/Equity Ratio (times)	0.18	0.40	-55.00
EBITDA Margin (%)	3.63	3.83	-5.22
Net Profit Margin (%)	1.15	0.94	22.34
Return on Net Worth (%)	5.09	5.41	-5.91

The Companys Revenue from Operations during FY 2025-26 is ?2,871.87 Crores as against ?3,546.67 Crores during previous year. The Profit Before Tax (PBT) for the current year is ?42.26 Crores against ?45.85 Crores in the previous year. The Profit After Tax (PAT) for the current year is ?33.13 Crores against ?33.45 Crores in previous year.

Key Ratios

Particulars	FY2026	FY2025	Reasons of variance (i.e. change of 25% or more as compared to the immediately previous financial year)
Debt Service Coverage Ratio	2.38	3.06	-
Return on Equity Ratio	0.06	0.06	-
Inventory Turnover Ratio	15.74	18.19	-
Trade Receivables Turnover Ratio	6.38	7.90	-
Trade Payables Turnover Ratio	10.16	12.54	-
Net Capital Turnover Ratio	8.46	13.30	Due to Decrease of Turnover and recovery of balances with Govt working capital utilisation reduced
Net Profit Ratio	1.17	0.96	-
Return on Capital Employed	0.08	0.12	Due to Decrease in Turnover compare to previous year
Return on Investment	0.45	0.50	-

Risk and Management & Technology & Human Resources

Risk and Management

Risk	Description	Mitigation Strategy
Economic Risk	Fluctuations in the global or domestic economic conditions, including slower growth and inflation, may affect demand, exports, and profitability.	Regular assessment of market conditions, diversified customer base, prudent cost management, and periodic review of business strategies.
Exchange Rate Volatility	Financial risk stemming from foreign currency exchange rate volatility linked to global business transactions.	Periodic monitoring of currency exposure through appropriate hedging instruments, including forward contracts and foreign exchange options, in line with the Companys risk management policy.
Raw Material Risk	Volatility in cotton and other raw material prices, along with supply disruptions, may affect production costs and margins.	Diversified sourcing, efficient inventory management, long-term supplier relationships, and continuous cost monitoring.
Competition Risk	Intense competition from domestic and international manufacturers may affect pricing, market share and profitability.	Focus on product innovation, operational efficiency, customer relationships, quality enhancement, and cost optimisation to strengthen competitiveness.
Logistic Risk	Focus on product innovation, operational efficiency, customer relationships, quality enhancement and cost optimisation to strengthen competitiveness.	Diversified logistics partners, long-term vendor relationships and continuous monitoring of supply chain operations.
People Risk	Inability to attract and retain skilled employees may affect operational continuity and productivity.	Competitive compensation, employee engagement initiatives, learning and development programmes, and structured succession planning.
Technological Risk	Inability to integrate or develop new technology can impact market competitiveness.	Continued investment in technology, automation, research and development, and periodic modernisation of manufacturing facilities.
Environmental Risk	Failure to conform to environmental regulations can adversely affect business operations.	Commitment to sustainability by establishing Central Effluent Treatment Plants (CETPs), cultivating green belts through tree planting initiatives, and securing mandatory environmental clearances.

Technology

Nandan Denim has effectively integrated advanced technologies across its operations, reinforcing its leadership position in the denim manufacturing sector of India. The company installed the latest technology and machinery sourced from different countries across the globe. This integration helps NDL produce all kinds of fashion denims with high-precision quality check systems.

The vertical integration of NDL spans from yarn to finished fabric. This setup works combined with an in-house R&D department to fuel ongoing product innovations, including stretch denims and sustainable blends. The company ensures strict quality control through advanced laboratory equipment and standardised inspection procedures.

Furthermore, NDL leverages technology for efficient resource management and wastewater treatment. This utilisation underscores its commitment to sustainability.

Human Resources

Nandan Denim considers its workforce a vital part of the organisation. The company relies on robust HR policies that promote a healthy, inclusive working environment and ensure equal employment opportunities. A strong emphasis is placed on employee engagement alongside training and development initiatives to enhance skill sets so the team is prepared to handle market challenges and niche customer demands. To support long-term goals and womens leadership, employees undergo a comprehensive personal development plan (PDP) featuring a structured skills analysis to identify individual strengths and areas for improvement.

To facilitate inter-departmental interaction and collaboration, NDL organised activities during the year, including tree plantation drives, blood donation, cultural programmes, and celebrations for Independence Day and Womens Day. Additionally, the company implements employee social security schemes that provide long-term benefits, which reduce employee absenteeism and increase productivity. As a voluntary effort to improve the existing industrial system and factory employment conditions, NDL provides statutory labour welfare facilities as per the act to foster social comfort, intellectual improvement, and a sense of responsibility, dignity, and pride among its staff.

The company is equally committed to safeguarding the health and safety of its employees. It conducted comprehensive safety and fire audits while establishing internal standard operating procedures (SOPs) to uphold occupational health and safety standards. NDL implemented stringent safety protocols, including safety training, access to first aid, and the mandatory use of personal protective equipment (PPE). For employee support, the company ensures the availability of medical professionals and psychologists.

1700+ - Total Employee Strength

Environment and Social Responsibility & Internal Control System

Environment And Social Responsibility

Nandan Denim Limited (NDL) acknowledges its responsibility toward environmental stewardship and upholds the highest standards of business ethics. As an established organisation, it embeds social and ethical principles into its core operations while actively engaging in effective water, waste, and energy management practices. The Company is aiming to become a carbon-neutral organisation, utilising an in-house 25 MW power plant, a 2 MW windmill, and a 1 MW solar power system for captive consumption, which generates 5.30 million units of wind and solar energy to reduce carbon emissions.

To promote the reuse and recycling of water and support waste reduction, the Company operates an Effluent Treatment Plant (ETP) and Reverse Osmosis (RO) facilities. These efforts achieve a daily 5% reduction in water consumption, equivalent to 50 KL. Further, NDL operates a caustic recovery plant, processes wastewater through a Sewage Treatment Plant (STP) to reuse it for horticultural purposes like gardening and has built a greenbelt by planting over 5,000 trees.

Beyond environmental protection, the Companys Corporate Social Responsibility (CSR) programs are designed to empower communities and foster inclusive development to ensure social well-being. NDL supports various bodies in carrying out activities across multiple societal sectors. These initiatives specifically target Community Healthcare, Sanitation and Hygiene, Education and Knowledge Enhancement, Social Care and Concern, and Animal Welfare.

Aiming towards a Carbon Neutral Company, the Company has invested ?4,00,20,960 for procuring 4.3 MW hybrid power (4.3 MW Wind and 4.64 MW DC Solar) under Group Captive Renewable Energy Project. So, in future, the Company shall get 14 million Units Annually additional from July 2026 onwards.

Internal Control System and Its Adequacy

The Companys internal control system reflects its operations size, nature and complexity. The internal control system is responsible for managing corporate risks, ensuring financial data correctness, reporting transactions on time, protecting assets and adhering to rules. These controls are regularly monitored and reviewed by the Companys internal auditors. The Audit Committee reviews audit reports and addresses any anomalies as needed. Important observations are communicated to management, who swiftly implement corrective actions.

Cautionary Statement

The MDA section may include forward-looking statements about prospects that are subject to risks and uncertainties. Geopolitical events may pose unforeseen, unprecedented, unascertainable and continuously changing risks to the Company and the environment in which it operates. The reports facts and numbers are based on assumptions developed using internal and external data. Assumptions can alter over time, affecting estimations. Forward-looking statements only apply to the date they were made and reflect the Companys current intentions, beliefs, or assumptions. The Company is not obligated to amend or update forward-looking statements based on new information or future events.