Neelam Linens and Garments India Ltd Management Discussions

Annexure-D

Global Economy

The global economy has faced serious headwinds due to prevailing geopolitical situation reflecting in regressive trade policies and armed confrontation mainly in the world energy supply centres i.e. Middle East. Not only, it resulted in supply side shocks for the exporting countries but high tariff regime has also led to spiral inflation in developed countries namely USA and EU. One of the most inauspicious outcome is also the heightened economic uncertainties linked with ever increasing distrust among economies considered as great allies of all times. Emerging economies dependent upon export market for faster economic growth and creation of employment are facing hardship in containing inflation, protecting employment and keep their manufacturing sector running by minimizing supply side obstacles.

Despite of abovementioned facts, in 2025, global GDP growth demonstrated notable resilience amid structural transformations, registering an approximate growth of 3.3%. Going forward, the world economy is likely to slow down marginally and is expected to achieve growth of 3% approximately in 2026.

Indian Economy

The Indian economy continued to be one of the fastest growing economies, which is also growing in size and become the fourth largest economy in the world 2025. Though, the exports sector, which is central to higher economic growth on sustainable basis continued to lag. The domestic demand and manufacturing activities continued to remain robust with moderate inflation despite of supply side constraints linked with higher uncertainty in energy availability and prices. As per a latest IMF report, the economic growth is expected to be 7.6% for FY 2025-26 against 5% in China.

The Textile Sector

The world textile and clothing (T&C) trade as reflected in the performance of the leading exporters of textiles and clothing products has shown poor outlook as most of the exporting countries witnessed fall in the T&C exports. Chinas textile and clothing (T&C) exports marginally declined to USD 294 bn in 2025 against USD 302 bn in 2024. Bangladesh, T&C exports declined from USD 47 bn in 2024 to USD 42 bn in 2025. However, against the trend, the T&C exports of Vietnam reportedly increased from USD 41 bn in 2024 to USD 44 bn in 2025. Pakistan and Srilanka have also sustained their exports at previous level of USD 17-18 bn and USD 5-5.50 bn respectively.

Company Overview:

Our Company was incorporated as private limited company under the name “Neelam Linens and Garments (India) Private Limited”, under the provisions of the Companies Act, 1956 and Certificate of Incorporation was issued by the Registrar of Companies, Mumbai on September 22, 2010. The status of the Company was changed to public limited, and the name of our Company was changed to “Neelam Linens and Garments (India) Limited” vide Special Resolution dated August 12, 2022. The fresh certificate of Incorporation consequent to conversion was issued on September 1, 2022, by the Registrar of Companies, Mumbai. The Corporate Identity Number of our Company is L17299MH2010PLC208010.

Our Company is based in Mumbai and its registered office is located at 446-447, 4th Floor, Shah & Nahar Industrial Estate Sitaram Jadav Marg, Lower Parel, Delisle Road, Mumbai- 400013, Maharashtra, India. Our processing facility is located at Gala No. 103, 104, 105, 106, 107 First Floor, Prithvi Complex Building No A-3, Old Agra Road, Bhiwandi, Thane- 421302, Maharashtra, India, and Gala No. 201, 202, 203, 204, 205, 206, 207 and 208, Second Floor, Prithvi Complex Building No A-3, Old Agra Road, Bhiwandi, Thane- 421302, Maharashtra India.

Our business is divided into two parts as under:- 1. Processing and trading of products 2. Sale of licenses

We operate as a soft home furnishing company based out of Maharashtra, India, extending our services to a global clientele, including USA, Australia and Far East. We specialize in the processing, finishing and supplying of bedsheets, Pillow cover, Duvet Cover, Towels, Rugs, Doher, Shirts & Garments predominantly for discounted retail outlets. We source surplus or slightly imperfect fabric from the domestic market, applying value-added services such as designing, digital printing, dyeing, stitching, embroidery, and other enhancements. Subsequently, we distribute these refined products to discounted retail outlets in diverse countries. We entered the apparel industry by starting an in-house production of mens and womens fashion apparel since 2023.

Our Company also earns revenue from sale of import licenses. An import license is a governmental authorization required for the importation of goods that are not freely importable. Licenses of this form restrict the number of items entering a country to exactly the requirements of those products and the countrys customs regulations. The government primarily offers the licenses as a financial incentive to exporters, and once granted, they become commodities. Import licenses, which grant the holder the right to import goods that may be restricted or regulated, are considered a service when they are sold or transferred.

The sale of license business of the Company can be bifurcated into two parts, i.e. sale of the import license received from the government as an incentive and trading of the import license available in the market. The sale of import license received from government as a part of incentive includes RODTEP (Remission of duties and taxes on export product) and ROSCTL (Rebate of state & central Taxes and Levies). These e-scripts are issued by customs in respect of Remission of embedded local duties & taxes levied on FOB value of the exported goods. As the Company does not import any type of goods, they sale the same to the importer available in the market at a reasonable discount.

To make Indian product competitive against the nation such as Vietnam, Bangladesh, Thailand etc., government give incentive to the eligible exporters. Textile industry is one of the industry which is covered under this scheme.

The other part of the sale of license is the trading activity that the Company does in the license market. In this regard the Company purchases the license from any exporter one of the exporter and then sells the same to the importer for earning the margin available in between this activity. This activity is facilitated by the trade intermediary such as broker or agents, through whom the buyer and seller are connected.

Manufacturing Units :

We operate out of our manufacturing operations out of two units. Unit 1 is located at Gala No. 103, 104, 105, 106, 107 First Floor, Prithvi Complex Building No A-3, Old Agra Road, Bhiwandi, Thane- 421302, Maharashtra, India and Unit 2 occupies 2nd Floor of the same complex with Gala No. 201, 202, 203, 204, 205, 206, 207 and 208. Our manufacturing units are strategically located with availability of transportation, which facilitates convenient transportation of our products. Our Units are supported by infrastructure for storage of raw materials, manufacturing of our products, storage of finished goods, together with a quality control. Our Unit 1 is engaged in cutting fabric and stitching whereas Unit 2 has checking department and packing department.

Procurement and Processing Method:

We have following products namely, Bed Sheets, Towels, Pillow covers, Rugs, Hand towels / napkins, Doher, Shirts and T-shirts. The process of Bedsheet, Pillow covers, Shirts and T-shirts are processed at our units and other products are just procured readily and sold after the process of thread cutting, final quality check and packaging by us. Below is the process of bedsheet, pillow covers, Shirts and T-shirts:

Bedsheet, pillow covers, Shirts and T-shirts:

Strengths:

1. Purchase of higher quality thread count fabric at lower price.

Fine lines begin with higher thread count, to get higher thread count one requires high quality of the cotton that depends on the length of the individual fibers. High thread count bedding is used in all the western countries as it is the status symbol for the riches, as the higher the count the better the fabric. By procuring surplus or slightly imperfect fabric in bulk from our suppliers, we benefit from advantageous pricing, allowing us to acquire these materials at a reduced cost. This strategic sourcing enables us to offer modified and customized products to our customers at discounted prices. Our ability to obtain these fabrics at a lower expense translates into significant cost savings, which we pass on to our customers, ensuring that they can enjoy high-quality, tailor-made products at affordable rates.

2. Experienced promoters and dedicated employee base

Our promoters experience in the textile sector has allowed us to quickly respond to market developments by identifying emerging trends and adapting our product offerings accordingly. Through their extensive industry experience and wide network of contacts, our promoters have been able to identify and pursue our customers. This has allowed us to expand our operational capacities by leveraging the resources and expertise of other organizations.

1. Infrastructure and Integrated capabilities to deliver quality Products

To cater to the growing demand from our existing customers and to meet the requirements of new customers, we intend to invest the embroidery machines, which will help to improve the efficiency and the quality of work. We believe in providing quality products to our customers. We are devoted to quality assurance. We believe that our quality products have earned us goodwill from our customers, which has resulted in customer retention and order repetition and also new addition to the customer base. We provide products with competitive rates.

Quality Control:

We have many skilled staff in each department to control quality of product. We have departments like storage, cutting, stitching, checking & final packaging. In each department, there is a designated quality control manager who are responsible for quality of the products. They are tasked with identifying any defects or issues and implementing corrective measures to address them. Apart from the departmental quality control managers, we also have a in house Quality Control team and this team is responsible for inspecting the final product. In addition to in-house quality control measures, we also hire external agencies to inspect goods and shares inspection report to the buyer.

Acknowledgement:

Your directors take this opportunity to express their deep sense of gratitude to the vendors, business associates, employees, investors and banks for their continued support and co-operation during the year under review.