Pearl Global Industries Ltd Management Discussions

GLOBAL ECONOMY OVERVIEW

The global economy progressed towards greater stability in 2024, recording a growth rate of 3.3%, supported by easing inflation, improving financial conditions, and resilient consumer demand. Economies demonstrated impressive adaptability despite persistent challenges from supply chain disruptions, energy transitions, and geopolitical tensions. Central banks continue to move cautiously towards policy normalisation, while businesses and investors remain agile, successfully navigating an increasingly dynamic global environment with confidence and optimism.

The evolving trade landscape is driving adaptability, innovation, and strategic adaptation. While recent shifts pose challenges, they also encourage stronger partnerships, supply chain diversification, and agile planning. Traditional forecasting models are being redefined, fostering more adaptive strategies for a dynamic global economy. As businesses and policymakers embrace change, they are paving the way for long-term stability and sustainable growth in global trade.

While growth in advanced economies is expected to moderate over the forecast period, the U.S. remains a strong and dynamic market. Economic growth in the U.S. is projected to remain positive, with real GDP expanding by approximately 1.8% in 2025 and rebounding to 1.7%–2.2% in 2026, supported by strong fundamentals and ongoing productivity gains. The Euro Zone is expected to navigate a period of adjustment, with growth stabilising at 0.8% in 2025 before recovering to 1.2% in 2026. Emerging markets are adapting with agility, leveraging policy innovation, structural reforms, and strategic investments to navigate financial challenges.

OUTLOOK

According to the IMFs World Economic Outlook released in April 2025, the global economy is projected to grow at a steady pace of 2.8% in 2025 and 3.0% 2026. This represents a slight adjustment from earlier forecast. Growth continues to be supported by moderating inflation, improving financial conditions, and sustained demand, although the pace of recovery remains uneven across geographies.

Advanced economies, particularly the U.S., are exhibiting strong resilience, while tighter financial conditions are posing challenges for some emerging markets. A significant drop in inflation across several regions has enhanced real incomes and strengthened consumer confidence, though the rate of improvement differs among economies. Despite global uncertainties and varying national trends, the economy remains on a steady path of growth, supported by stability, adaptability, and sustained momentum.

INDIAN ECONOMIC OVERVIEW

India remains on a strong growth path, with GDP projected at 6.5% for 2024–25, positioning it ahead of global peers. Structural reforms, technological advancements, and infrastructure development are driving broad-based expansion, while targeted government initiatives ensure long-term sustainability. Improving labour markets, strong consumption, and robust agriculture and services reinforce macroeconomic stability and investor confidence in Indias future.

Global Textile and Apparel Industry

The global textile and apparel market is estimated to be valued at USD 2,903 Billion in 2025 and is expected to reach USD 3,901 Billion by 2032, exhibiting a CAGR of 4.3% from 2025 to 2032. This growth is underpinned by rising population levels, increasing disposable incomes, and evolving consumer preferences.

As economic development continues to reshape lifestyles, demand is rising across key textile segments such as apparel, home furnishings, and technical applications. The rapid expansion of fast fashion and the proliferation of e-commerce platforms have further intensified the demand for diverse fabric types. In response, manufacturers are investing in innovation and agility to meet evolving market expectations and accelerate time-to-market across categories.

FOCUS ON SUSTAINABILITY

Additionally, there is a growing emphasis on sustainability, with rising consumer preference for environmentally responsible products. This is driving the development and adoption of textiles manufactured from recycled materials, organic fibres, and other renewable resources. The shift towards sustainable products is expected to create new opportunities and influence production and investment patterns across the textile value chain.

EMPLOYMENT AND RETAIL PREFERENCES

As of 2025, the global apparel and textile industry employs approximately 430 Million people, which represents about 11.9% of the total global workforce. This figure includes a wide range of roles across the value chain, such as manufacturing, design, distribution, retail, and other related sectors. The industrys employment impact is vast, making it one of the largest sources of jobs worldwide. India, which ranks fourth globally, employs around 45 Million people directly in its textile and apparel sector.

CONSUMER TRENDS

In developed markets such as the U.S. and Europe, rising disposable incomes are similarly fuelling demand for fashion-forward, non-essential lifestyle products. In the

U.S., disposable personal income hit a record USD 22.4 Trillion in March 2025, supported by a strong labour market, rising wages, and wealth gains from housing and stock markets. This has empowered both a_uent and middle-income consumers to increase discretionary spending.

In Europe, per capita household disposable income is projected to reach USD 24,890 in 2025, with total consumer spending at USD 15.8 Trillion. Strong wage growth, easing inflation, and a shift towards more accommodative monetary policies are driving a recovery in private consumption. As savings rates normalise, consumers are increasingly spending on fashion and lifestyle products that reflect trends and personal identity.

Innovation is also playing a key role in shaping the future of the apparel industry. Technologies like 3D printing and AI are transforming design, production, and distribution, enhancing efficiency and personalisation.

INDIAN TEXTILE AND APPAREL INDUSTRY

Indias textile and apparel market was valued at USD 222.1 Billion in 2024 and is projected to reach USD 647.0 Billion by 2033, at a CAGR of 12% during the forecast period. The textile and apparel industry continues to gain momentum, driven by growing demand for premium clothing, smart textiles, and sustainable materials, alongside targeted government initiatives supporting weavers and manufacturers.

Global market shifts, including political instability in competing regions, have enhanced Indias role as a preferred sourcing destination. To enhance industry competitiveness, the Indian government has undertaken key policy measures, including duty reductions on critical raw materials such as polyester and viscose, driving innovation, efficiency, and global expansion in the textile sector.

INCREASING GLOBAL DEMAND FOR TEXTILES

India is rapidly emerging as a global textile powerhouse, with exports projected to grow from USD 38 Billion in 2020 to USD 65 Billion by FY 2025-26. By 2030, India aims to triple exports to USD 100 Billion, driven by policy support, investment, and manufacturing competitiveness.

Key markets like the U.S., Europe, and the Middle East are fuelling this growth, supported by cost-e_cient production, a skilled workforce, and government initiatives to strengthen global competitiveness.

TECHNOLOGICAL ADVANCEMENTS AND AUTOMATION

Technology is reshaping every facet of Indias textile and apparel value chain, ushering in a new era of innovation, efficiency, and competitiveness. From automation and AI to IoT-enabled systems and smart textiles, the industry is rapidly embracing advanced technologies to streamline operations, enhance quality, and reduce costs. The automation market in Indias textile sector alone is projected to grow by USD 664 Million between 2025 and 2029 highlighting the sectors push towards future-ready infrastructure. Apparel manufacturers are adopting intelligent manufacturing solutions that integrate robotics, AI, and machine learning into core production processes. AI-driven tools like fabric pattern recognition and robotic cutting systems are not only reducing human error but also lowering production costs by 20–30%, enabling quicker turnaround times and greater customisation. With automated systems becoming the norm across factories, Indias textile and apparel industry is rapidly evolving into a global hub for tech-enabled, high-quality, and agile manufacturing.

OUTLOOK

Indias textile industry is on the cusp of transformative growth, powered by strategic trade agreements, supportive domestic policies, and technological advancements. As of May 2025, India has signed 14 Free Trade Agreements (FTAs) and 6 Preferential Trade Agreements (PTAs) with key global partners, enhancing market access across more than 50 countries.

The recently concluded UK-India FTA is particularly significant, offering zero-tari_ access for Indian textile and apparel exports to the UK. This breakthrough is expected to double textile exports to the UK by 2030 and strengthen Indias presence across both high street and luxury retail segments. It also includes provisions promoting adherence to international sustainability and quality standards, enhancing Indias reputation as a responsible sourcing destination.

In addition to the UK, FTAs under negotiation with the European Union, Canada, and the Gulf Cooperation Council (GCC) are set to open new, high-value markets with strong demand for sustainable, high-quality textiles. These agreements will reduce tariffs, simplify customs procedures, and further bolster Indias competitiveness in the global marketplace. Complementing this global outreach, domestic initiatives like the PM MITRA Parks and the Production-Linked Incentive (PLI) Scheme are playing a pivotal role. With 4,445 Crores allocated for seven mega textile parks, these initiatives aim to boost manufacturing capacity, reduce logistics costs, attract foreign direct investment, and create employment opportunities. Together, these developments position India to significantly expand its textile exports and emerge as a global leader in textile sourcing by 2030.

COMPANY OVERVIEW

Pearl Global Industries Limited (referred to as ‘Pearl Global or ‘the Company) is a leading Indian-headquartered multinational specialising in end-to-end apparel manufacturing solutions with a strong commitment to sustainability and innovation. Established in 1987, the Company has evolved into a trusted partner to many of the worlds leading fashion brands, delivering high-quality, ethically manufactured garments across diverse categories, age groups, and style segments. The Company has a global presence spanning 25 modern manufacturing units in India, Bangladesh,

Vietnam, Indonesia, and Guatemala, and design and marketing offices in key fashion hubs such as the U.S., the U.K., Spain, and Hong Kong. It combines speed, flexibility, and scale to meet evolving market needs. It has strengthened its existing diverse product portfolio to cater to a wider range of customer needs and market segments, enhancing its ability to serve global fashion brands with greater flexibility and innovation.

In 2024-25, Pearl Global recorded an annual production capacity of nearly 93.2 Million pieces, an increase of 11 Million capacity compared to ~82 Million in 2023-24. The Company generated

4,506 Crore revenue, reflecting the its scale, operational strength, and global market relevance. Its extensive product portfolio includes knits, wovens, denim, outerwear, activewear, athleisure, sleepwear, lounge and childrens wear, for men, women, and children. Listed on Indian stock exchanges (NSE, BSE), Pearl Global is powered by a diverse, skilled workforce and a culture of excellence, sustainability, and customer centricity. Trusted by global leaders like Chicos, Kohls, Old Navy, Poligono, Primark, PVH, Ralph Lauren, Stylem, Target and other marquee names in the industry as a pioneer of ethical manufacturing and circular economy principles, Pearl Global is committed to becoming the worlds preferred apparel partner, setting new benchmarks in responsible fashion and operational excellence.

REVENUE & PROFITABILITY GROWTH

Pearl Global is well-positioned for sustained growth, driven by strategic expansion, operational improvements, and favourable market trends. The Company is actively broadening its global footprint by expanding operations across key manufacturing hubs, enabling greater market access, supply chain agility, and regional balance.

The Company is also solidifying its foundation through continuous process optimisation, digital integration, and workforce development. In the year under review, the Company grew by 31.1% over the previous year. The Company is on a growth path, aiming for a 12-14% revenue CAGR over the next 2-3 years while working towards achieving double-digit EBITDA margin in the near future. The Company has demonstrated consistent growth and is ambitious to exceed its 2027-28 targets, and has laid out a plan to achieve double-digit margins in the near future.

Pearl Global stands as a key beneficiary of the UK-India FTA, leveraging its established UK-based design and sales office and a strong customer base serviced from Bangladesh. 5% exposure to the UK, the Company is strategically positioned to scale revenues 2x–3x within 1–2 years, capitalising on enhanced trade advantages and expanding capacity in India.

Building on its strategic focus and operational excellence from previous years, it is well-positioned to achieve sustained profitability, industry-leading performance, and long-term value creation for shareholders.

CAPACITY EXPANSION

Pearl Global is executing a strategic capacity expansion programme aimed at driving long-term growth and strengthening its global manufacturing footprint. As of 2024-25, the Companys total production capacity, including partnership facilities, stands at 93.2 Million pieces, strategically distributed across multiple geographies to de-risk supply chains and enhance resilience. Staying committed to its previously outlined capital expenditure plans, Pearl Global continues to invest in capacity creation and infrastructure development. The Company remains committed to achieve its target capacity of 135 million pieces by 2027-28, reinforcing its readiness to meet growing global demand and support its expansion strategy.

In India, Pearl Global is expanding its footprint into Tier-2 cities with a wholly owned manufacturing facility in Muza_arpur (Bihar) and a partner-operated unit in Bhubaneswar (Odisha). The Company is also evaluating future expansion in Madhya Pradesh, contingent on the performance and outcomes in Eastern India. Internationally, Pearl Global is actively exploring further expansion in Bangladesh, Vietnam, and Indonesia, capitalising on the advantages of skilled labour, cost efficiencies, and favourable trade ecosystems. During the year under review, production capacity in Bangladesh, including partner contributions, increased by 22%, 45 Million pieces to ~55 Million pieces while Guatemala recorded a significant 65% year-on-year growth in capacity, rising from 2 Million pieces to 3.3 Million pieces. This growth underscores Guatemalas growing strategic importance in the Companys global operations. All future expansion plans will be financed through a balanced mix of internal accruals, debt, and growth capital.

GROWTH POTENTIAL POST EXPANSION

Pearl Globals strategic capacity expansion in Bangladesh, Indonesia, and Guatemala is boosting sales, operational efficiency, and global competitiveness. With focussed plans to scale to 130 Million pieces by 2027-28, including new units in Tier-2 Indian cities, the Company is well-positioned to meet rising demand with agility and cost efficiency. Strengthening ties with key clients and onboarding marquee customers are driving revenue growth and a robust order book. By deepening its presence in existing markets and entering new ones, Pearl Global is accelerating market share gains and reinforcing its position as a global apparel leader.