Pioneer Embroideries Ltd Management Discussions

Economic Overview

The global economy is entering a period of moderated growth, with GDP expansion expected to slow from 3.2% in 2024 to 2.8% in 2025 and 2.9% by 2026. This reflects growing geopolitical tensions, persistent policy uncertainty, and inflation divergence. Developed economies like the US and Eurozone are facing structural challenges, including high tariffs, fiscal tightening, and weak consumer sentiment.

Emerging markets show uneven resilience—India continues to lead with robust domestic demand, while China struggles with a soft property sector and shifting trade dynamics.

Although inflation is expected to ease, it remains vulnerable to external shocks such as commodity volatility and geopolitical risks. Six major geoeconomic shifts—trade realignment, tariff-driven inflation, diverging monetary fiscalconstraints, paths, repricing of risks, and evolving labour dynamics—are reshaping global strategy, leading to a more fragmented and volatile environment.

Source: IMF

Amid global uncertainty, Indias economy remains a bright spot, with FY25 GDP growth projected between 6.3% and 6.5%. This outlook is supported by easing inflation,strong monsoons, and recovering rural consumption. The labour market is improving, with rising formal employment and growing female workforce participation, especially in rural areas. Sectors like technology and finance are seeing increased demand for skilled professionals. Despite risks from elections, climate events, and trade volatility, Indias economic fundamentals and proactive fiscal measures support continued expansion.

Strategic tax incentives, infrastructure push, and digital inclusion efforts are expected to boost investor confidence and reinforce the growth trajectory.

Industry Overview

The global textile industry is undergoing a structural transformation, driven by sustainability imperatives, technological innovation, and shifting sourcing dynamics. Valued at USD 760.28 billion in 2025, the global market is expected to grow at a CAGR of 5.09% to reach USD 974.38 billion by 2030. Regulatory pressures—such as the EUs Green

Deal, Extended Producer Responsibility (EPR), and digital product passports—are accelerating the transition towards circular and traceable supply chains. The demand for technical and functional textiles is on the rise, fuelled by the growth of e-commerce and customisation trends, particularly among direct-to-consumer brands. Additionally, the "China +1" strategy has led to increased sourcing from regions like South

Asia, North Africa, and parts of Eastern Europe, benefiting countries with cost advantages and proximity to Western markets. Despite raw material volatility—especially in cotton and petrochemical-based feedstocks—investment in recycled and blended fibres is gaining traction, helping mitigate supply-side risks.

Source: Mordor Intelligence

India, as one of the worlds largest textile producers, plays a central role in the global supply chain. The Indian textile and apparel industry contributes ~2.3% to the nations GDP, 13% to industrial production, and 12% to total exports. It is also the second-largest employer in the country, providing jobs to over 4.5 crore people, including 35 lakh handloom workers. The domestic market is expected to grow at a robust CAGR of 10% to reach USD 350 billion by 2030, supported by rising income levels, evolving fashion preferences, and a surge in organized retail. On the export front, India reported textile exports of

USD 35.9 billion in FY24, with ambitions to reach USD 100 billion by FY30. The countrys position as the largest cotton producer—with an estimated 31.6 million bales in 2023–24—further strengthens its competitiveness. Government initiatives focused on production-linked incentives (PLI), infrastructure upgrades, and sustainability are set to bolster Indias global market share, positioning the industry for long-term, inclusive growth.

Segments

Yarn & Fabrics

India has long maintained a dominant position in the global yarn and fabric market, particularly in cotton spinning and weaving.

The segment is foundational to the countrys textile value chain, with over 50 million spindles and a wide base of organized and decentralized units. With a large raw material base, especially cotton, man-made fibres, and blends, India continues to cater to both domestic and international demand efficiently.

Recent Developments

• Cotton production in India is expected to touch 7.2 million tonnes by 2030, ensuring stable input availability.

• The Production Linked Incentive (PLI) Scheme is catalysing investments in man-made fibre (MMF) and technical textile production. ffer one of

• Technology Upgradation Fund (TUF) and other subsidy ory. programs are modernizing dyeing, spinning, and weaving units.

• Growing export interest in value-added fabrics like viscose blends, organic cotton, and digital-printed materials.

Growth in this segment is underpinned by abundant raw material availability, particularly cotton and synthetic fibres, and continued government support for modernization through targeted subsidies and policy frameworks. Rising demand from fashion and lifestyle brands for premium, sustainable fabrics is pushing innovation in yarn blends and dyeing processes. Furthermore, global buyers are increasingly sourcing from India as they pivot towards traceable, low-impact supply chains, reinforcing Indias leadership in the yarn and fabric segment.

Technical Textiles

Technical textiles are engineered products designed for performance rather than aesthetics, serving industries such as healthcare (Meditech), construction (Buildtech), automotive (Mobiltech), and sportswear (Sportech). India currently ranks

5th globally in this segment, but its penetration remains low

(~8%), indicating strong headroom for growth.

Recent Developments

• National Technical Textiles Mission (NTTM) with an outlay of 31,480 crore is supporting innovation, incubation, and commercialization.

• Several state governments are offering capital subsidies and R&D grants for technical textile units.

• India is seeing rising domestic consumption in protective gear, automotive textiles, and filtration media.

• Collaborations with global players are fostering knowledge transfer and advanced capabilities.

The technical textile segment is poised for rapid growth due to increasing sectoral awareness and rising domestic demand from healthcare, infrastructure, defense, and mobility industries. Government procurement of high-performance textiles is boosting the domestic market, while export potential for niche, certified technical fabrics is drawing investor interest. As innovation and R&D gain momentum, India is likely to strengthen its global position, especially in application-specific and value-added categories.

Non-Apparel Textiles (Home Furnishings & Upholstery)

Overview

The non-apparel segment, particularly home textiles—including curtains, bed linen, embroidered furnishings, table covers, and premium upholstery—has become one of the fastest-growing categories in Indias textile industry. The domestic market is evolving with urbanization and rising income levels, while exports remain strong due to Indias design capabilities and manufacturing scale.

Recent Developments

• Indias home textiles market is projected to more than double by 2032, growing at a CAGR of 8.9%.

• Increasing urban lifestyles, interior design trends, and short renovation cycles are boosting demand for embroidered and premium products.

• Large global retailers and D2C brands are sourcing value-added products from India due to its price-quality balance.

• Initiatives like MITRA Parks and upcoming logistics corridors are expected to integrate supply chains and enhance manufacturing efficiency.

The home textile segment is benefiting from a confluence of structural and lifestyle shifts, including urbanization, rising disposable incomes, and increased design consciousness among consumers. Export demand remains strong, particularly from developed markets like the US and EU, where Indian manufacturers offer an attractive balance of craftsmanship, scale, and sustainability. The rise of e-commerce and interior-focused online platforms is also expanding access to consumers, making this one of the most dynamic and promising textile categories.

Indias domestic garment industry continues to expand rapidly, emerging as one of the key consumption drivers within the broader textile ecosystem. The sector benefits from a strong foundation in textile manufacturing, a large skilled workforce, and growing consumer demand for fashion-forward, value-added apparel. With over 22,000 million garments produced annually and increasing penetration of organised retail, the segmentispoisedforsustainablelong-termgrowth.Categories such as womens ethnic wear, festive and occasion wear, childrens garments, and high-fashion casuals are increasingly incorporating embroidery and surface ornamentation as key design elements. For Pioneer Embroideries Limited, this presents a substantial opportunity, as its embroidered fabrics, laces, and trims continue to see high uptake among leading domestic apparel manufacturers and design houses.

Growth is further supported by evolving fashion sensibilities, higher discretionary spending, and deeper brand engagement, especially in Tier II and Tier III cities. With organised apparel retail projected to grow at 8 10% in FY25, the demand for embellished garments is expected to accelerate. The rise of fast fashion, e-commerce, and influencer-led consumption is pushing the need for product differentiation, placing embroidery-based solutions at the forefront of value addition.

Pioneers presence in this segment, both through fabric sales and brand partnerships, positions it well to benefit from this consumption-led momentum.

Key Highlights Garments:

• India produces 22,000+ million garments annually, supported by deep manufacturing and design capabilities.

• Organised retail apparel sales projected to grow 8–10% in

FY25, driven by urbanisation and festive demand.

• Embroidery remains integral in ethnic, occasion, kidswear, and premium fashion categories.

• Rising adoption of value-added fabrics in domestic brands creates increased demand for Pioneers offerings.

Garment Exports

India remains one of the worlds leading exporters of readymade garments (RMG), with a well-established global footprint and strong export capabilities. In FY24, exports of RMG including accessories stood at US$ 14.23 billion. Indias RMG exports are likely to surpass US$ 30 billion by 2027, growing at a CAGR of 12-13%. Despite macroeconomic headwinds and softer consumer spending in key markets, Indias cost competitiveness, skilled labour, and integrated supply chain continue to attract international buyers, especially under global sourcing diversification strategies like

"China + 1."

The shift in global fashion sourcing is increasingly favouring India for its ability to offer design-led, differentiated products with shorter lead times. Embroidered garments, especially in the womens fashion and occasion wear segment, are in high demand across Europe, the Middle East, and the United States. Pioneer, with its extensive embroidery portfolio, supports several export-oriented manufacturers that cater to global fashion labels and retailers. The Companys long-standing B2B relationships with export houses, coupled with its ability to deliver custom design solutions, make it a preferred partner in this high-value segment.

Key Highlights Garment Exports:

• Indias exports stood at US$ 14.23 billion in FY24 and likely to surpass US$ 30 billion by 2027, indicating stable export momentum.

• Global buyers continue to source embroidered fashion and occasion wear from India.

• Export-led manufacturers are focusing on shorter lead times and product customisation, favouring partners like

Pioneer.

• Export demand for differentiated fabrics like lace and embroidery is growing in line with fashion retail trends abroad.

Source: Wazir Advisors & IBEF

Government Support Catalyzing PELs Value Chain Strength

The Government of India continues to implement wide-ranging reforms and policy incentives to enhance competitiveness, sustainability, and global integration of the textile industry. Several of these initiatives align closely with the operational and strategic focus areas of Pioneer Embroideries Limited, particularly in the areas of value-added textiles, embroidery, man-made fibres, and technical textiles.

• Production Linked Incentive (PLI) Scheme: With a budget outlay of 310,683 crore, the PLI scheme is designed to boost domestic manufacturing in man-made basedfabrics fibre-and technical textiles both of which are increasingly relevant to PELs product innovation roadmap. By incentivizing production of high-value, differentiated inputs, the scheme supports greater integration of MMF and functional fabrics into embroidery-based applications.

• PM MITRA Parks: The allocation of 34,445 crore towards the development of seven world-class integrated textile parks under the PM Mega Integrated Textile Region and Apparel (MITRA) scheme offers PEL access to plug-and-play infrastructure, reducing logistics and operational costs. These parks are also expected to support co-location with key customers, improve backward and forward linkages, and foster collaborative product development in value-added textiles.

• Amended Technology Upgradation Fund Scheme (ATUFS): With a corpus of 317,822 crore, ATUFS aims to modernize technology and machinery across MSME clusters. For PEL, this facilitates further investment in advanced embroidery, lace-making, and finishing equipment, enhancing productivity, design capability, and quality standards while enabling transition to Industry 4.0 practices.

• Samarth (Skill Development Scheme): Over 3.82 lakh workers have been trained under Samarth, with a placement rate of 77.74%. PEL can benefit from this initiative by tapping into a skilled talent pool trained in textile-specific roles, especially in embroidery handling, quality control, and design implementation—critical for maintaining artisanal precision and output consistency.

• TCDS (Textile Cluster Development Scheme): With an allocation of 3853 crore, this scheme is focused on strengthening common infrastructure in textile clusters.

As PEL operates within specialized clusters of embroidery and lace manufacturing, TCDS investments can enhance shared resources such as design studios, testing labs, and logistics, thereby improving competitiveness and reducing operational bottlenecks.

• National Technical Textiles Mission (NTTM): The

31,480 crore allocation under NTTM underscores Indias ambition to become a global leader in technical textiles.

As PEL expands into functional embroidery applications in Meditech, Sportech, and Hometech, this mission offers funding support for R&D, prototyping, certification, and market access in high-performance textile segments.

• Bharat Tex 2025: As Indias flagship global textile expo,

Bharat Tex 2025 drew participation from over 5,000 exhibitors and 1.2 lakh visitors, reinforcing the countrys innovation and sustainability credentials. PELs potential engagement with such platforms boosts brand visibility, access to global buyers, and trend insights, supporting its positioning as a design-led, export-oriented player.

The Indian textile industry is poised for strong growth, with the market expected to reach US$ 350 billion by

2030, supported by rising domestic demand and export momentum. Government schemes like Make in India, PLI, and

Skill India offer policy tailwinds, especially for value-added segments such as embroidery. Growing global preference for sustainable and ethical textiles, coupled with increased digital adoption and MSME-led decentralization, presents Pioneer with multiple avenues for expansion across domestic and international markets.

At the same time, the industry faces challenges from low-cost global competitors, raw material price volatility, and rising compliance expectations. Uncertainties around trade policies, climate impacts, and the slow pace of tech adoption in MSME clusters could affect scalability and export competitiveness.

Pioneer remains focused on design-led innovation, operational efficiency, and leveraging policy support to mitigate risks and seize emerging opportunities.

Source: PIB

Business Overview

Pioneer Embroideries Limited is one of the leading Indian manufacturers and exporters of value-added Specialized

Polyester Filament Yarn (SPFY) and Embroidery & Laces (EL). With manufacturing facilities across Himachal Pradesh, Maharashtra, Gujarat, and Dadra & Nagar Haveli, the

Company has built a strong presence in both domestic and export markets.

Its product portfolio, marketed under well-established brands like SILKOLITE and Hakoba, is recognized for superior quality and design innovation, catering to diverse applications in the textile industry.

From FY23 to FY25, the Company recorded strong growth in its domestic business. Total domestic sales increased by 18.3%, rising from 328,959 lakh in FY24 to 334,261 lakh in

FY25 This growth reflects the Companys strong positioning in the domestic market, supported by steady demand for both value-added yarn and embroidery products. The continued expansion in SPFY sales highlights the resilience of core product lines, while the rise in embroidery-related sales indicates sustained consumption by garment manufacturers, reinforcing Pioneers role as a key supplier to the apparel industry.

During the year, however, the overall demand scenario, both in the exports and the domestic markets, remained subdued due to combined effect of multiple factors. Major exports markets - US and Eurozone - continued to remain impacted by high inflation and low consumption, and market sentiment further weakened due to tariffs policy uncertainty and various conflicts and resulting trade logistics restrictions and costs.

Enhanced exports should have resulted in better revenues and profitability, as typically export markets consume high-value, high-margin superior products.

Restricted export markets for manufacturers also resulted in excess supplies in the domestic market. This, coupled with cheaper imports flowing in, led to margin pressures even in the domestic market during the last year. Lower export resulted in excess supply in domestic market which in turn has impacted margins in domestic market leading to lower profits.

Operational Performance

Specialized Polyester Filament Yarn:

The companys Specialized Polyester Filament Yarn (SPFY) division, marketed under the SILKOLITE brand, is produced at its Kala-amb facility in Himachal Pradesh, with an annual production capacity of 26,000 MT. This division primarily caters to non-apparel segments such as carpets, bath mats, curtains, and upholstery. By focusing on high-value products like recycled and biodegradable yarns, the Company has built a strong foothold in both domestic and international markets.

The SPFY segment continues to serve as the backbone of the

Companys operations, contributing approximately 84% of total revenue in FY25. Over the three-year period, the segment demonstrated consistent growth, with revenue rising from

324,905 lakh in FY23 331,560 lakh in FY25. This represents growth, driven by robust domestic demand, increased sales volumes, and a strategic shift in the product mix toward high-margin, value-added yarns.

The strong FY25 performance also reflects the impact of the recently completed expansion at the Kala-Amb facility, which added 8,000 MT of capacity and enabled the Company to address incremental demand and unlock additional revenue potential. The segments strong performance reaffirms the

Companys market leadership in the specialized yarn space and reflects its ability to capture demand in both commodity and premium categories.

SPFYs domestic segment remained the cornerstone of its business, contributing 328,563 lakh, which formed 90.5% of the overall SPFY revenue. In Q4 FY25, the Company reported domestic sales of 37,008 lakh, reinforcing its strong brand presence and market reach. Strategic product placement and customer engagement initiatives played a key role in sustaining volume growth across regions.

On the global front, SPFY generated 32,997 lakh from export sales during FY25. The company continues to leverage its manufacturing strength and product quality to build deeper partnerships overseas.

Sales and Production of Value-added SPFY

Over the last three fiscalyears, the Companys value-added SPFY segment has shown robust growth in both volume and revenue. Sales rose from 8,964 metric tonnes in FY23 to 12,275 MT in FY24, and further to 14,421 MT in FY25.

Correspondingly, revenue increased from 316,108 lakh in

FY23 to 320,611 lakh in FY24, reaching 323,629 lakh in FY25.

This upward trend underscores the Companys strategic focus on higher-value offerings, consistent volume expansion, and product innovation, reinforcing its position in the premium yarn segment.

Embroidery & Laces:

The Embroidery & Laces (EL) vertical operates across facilities in Maharashtra, Gujarat, and Dadra & Nagar Haveli, specializing in the production of embroidered fabrics, guipure, and braided laces using advanced machinery. With a manufacturing capacity of 2,000 million stitches and 14 million meters of braided laces, this segment is anchored by the globally renowned Hakoba brand, celebrated for its premium quality and rich design legacy.

In line with its strategic consolidation plan, the Company sold its land and building at the Naroli unit for 3702 lakh in FY25. The proceeds are being utilized to reduce term liabilities and interest burden. Given the Naroli units marginal revenue contribution, this move aligns with the Companys objective to centralize operations at its new, state-of-the-art embroidery facility in Shree Ganesh Integrated Textile Park,

Degaon, Dhule, which now houses the bulk of its embroidery manufacturing operations.

PSI impact has been a contributing factor and should be considered while evaluating the segments performance.

In FY25, the EL segment reported a total revenue of 35,390 lakhs, reflecting a 12% growth compared to 34,812 lakhs in FY24. Embroidered products remained the dominant revenue driver, contributing 34,620 lakhs, an 11.6% year-on-year increase. The Bobbin Lace division generated 3770 lakhs in revenue, registering a moderate growth of 14.6%.

Financial Highlights

Particulars	FY24	FY25
Revenue from Operations	33,618.58	37,506.36
Other Income	397.52	629.65
Total Income	34,016.10	38,136.01
Total Expenditure	32,631.25	36,539.72
EBIDTA	2,638.66	3,161.41
PAT	388.29	456.39

FY25 marked a pivotal year for the Company, characterized by consistent revenue growth, margin enhancement, and strengthened operational fundamentals. The Company demonstrated double-digit top-line and bottom-line growth, supported by volume expansion in its core SPFY segment, decent performance in embroidery and bobbin lace, and sustained momentum in domestic markets. Strategic cost management, enhanced product mix, and improved contribution margins were instrumental in maintaining profitability.

Revenue and Profit Growth:

The Company achieved a total income of 338,136 lakh in

FY25, up 12.1% YoY, with EBITDA rising 19.8% to 33,161 lakh. PAT increased 17.5% YoY to 3456 lakh, reflecting improved scale and operational efficiency. Notably, cash profit

42.5% YoY to 32,021 lakh, underlining strong cash generation capabilities.

Segment Performance:

The SPFY division maintained its leadership, contributing over 84% of total revenues, backed by increased value-added products and enhanced realizations. The Embroidery and

Bobbin Lace segments recorded healthy growth, contributing

12.32% and 2.05% respectively to the total revenue. The embroidery division, in particular, witnessed significant EBITDA growth of 65.91%, reflecting better demand and margin expansion.

Production Efficiency & Contribution Improvement:

Total SPFY production grew 14.34% to 21,192 MT in FY25.

Cost Optimization & Margin Gains:

EBITDA margin improved to 8.4% in FY25 from 7.8% in FY24, driven by productivity gains, product mix optimization, and declining corporate overheads. The Company also managed to control total expense growth to 12.0%, marginally below revenue growth, indicating improved operational leverage.

Ratio Analysis

Ratio	FY24	FY25
EBITDA (%)	7.85	8.43
Net Profit (%)	1.15	1.22
ROE (%)	2.73	2.94
ROCE (%)	5.23	6.09
Book Value Per Share ()	50.64	51.96
Fixed Asset Turnover Ratio	1.81	2.06
Debt to Equity (Times)	0.72	0.59
Interest Coverage Ratio (Times)	1.49	1.66
Current Ratio (Times)	1.25	1.27

In FY25, the Companys financial health improved compared to FY24. Profitability rose as EBITDA increased to 8.43% and net profit to 1.22%, showing better cost control. ROE and ROCE grew to 2.85% and 6.09% respectively, indicating efficient capital use. The Fixed Asset Turnover Ratio rose to 2.06, reflecting improved asset utilization. Lower debt-to-equity of 0.54 shows reduced reliance on debt, while a slightly higher interest coverage ratio indicates better debt servicing ability. The book value and current ratio saw marginal increases, suggesting stable net worth and liquidity. Overall, the Company shows stronger profitability, efficiency, and financial stability.

Constraints to improved revenues and profitability:

The Companys performance could have been much improved, in both the product segments, were it not affected by certain headwinds. In a way, FY25 was a challenging year for business, and the reported performance should be viewed against this backdrop.

In the SPFY unit at Kala Amb, there was a continuous increase of power tariffs and impacting our unit profitability considerably. We had to absorb enhanced monthly cost of approximately INR 40 lakhs in the electricity bill. directly hitting our bottom line. The contracted power demand is almost 6 MW at this unit, as SPFY is a continuously-running, power intensive industry.

Similarly, in the EL segment, while the Company has directed its funds and operational resources to its new unit at Degaon,

Dhule, Maharashtra, the location-specific benefits from the

Government are yet to fructify. While the Company has received sanction of capital subsidy under the Textile Policy, technical issues have delayed the release of the same. Capital subsidy receipts were meant to lower overall debt in the

Companys books. Lower exports of EL division have meant slower-than-expected amortisation of government grants.

As a result of these factors, the Company continues to operate with constrained working capital limits and limiting reaping full potential of our expanded capacities.

Risks

1. Overdependence on Specialized Polyester Filament Yarn (SPFY)

• The SPFY segment contributed ~84% of total revenue in FY25, with ~90% of that from the domestic market.

• This heavy concentration increases vulnerability to sector-specific demand fluctuations, raw material shocks (e.g., PTA and MEG prices), and margin compression in case of industry downturns.

• Despite efforts in recycled and biodegradable yarns, the Companys topline remains under pressure due to sharp drop in exports, which was a high margin segment.

2. Volatility in Embroidery & Laces Export Demand

• The Embroidery & Laces (EL) segment reported a 27% YoY drop in exports in FY25 (248 lakh vs 339 lakh in FY24).

• This reflects Pioneers exposure to macro risks in key geographies such as the Middle East and Europe, where economic or geopolitical instability can directly reduce demand.

• Global brands are also shifting to shorter design cycles, requiring faster innovation and delivery—posing execution risks for Pioneers embroidery operations.

3. Execution Risk in Technical Textiles Expansion

• Pioneer plans to leverage Indias growing technical textiles segment through functional embroidery in

Meditech, Sportech, and Hometech.

• However, it currently lacks scale and brand presence in these niche, certification-intensive markets.

• The learning curve, R&D requirements, and capital investment needed for success in this space pose execution and gestation risks.

4. Low Margins in Value-Added Yarn Despite Volume

Growth

• While the Company saw strong growth in SPFY volume (from 8,964 MT in FY23 to 14,421 MT in FY25), the realization per kg stood at 149, reflecting a stable pricing environment. The Company maintained healthy contribution margins, underscoring operational efficiency despite input cost fluctuations.

• This suggests that despite volume gains, pricing power is limited in present scenario, and profitability is susceptible to downturn in overall yarn industry margins as a whole.

5. Export Growth Constraints in SPFY

• Even though the SPFY division serves international markets, exports contributed only 2,997 lakh in FY25, ~9.5% of SPFY sales.

• This low penetration indicates drop of demand in segments where the Company operates mainly in the floor covering side.

6. Slow Traction in Bobbin Lace Division

• Bobbin lace revenue rose only 14.61% YoY to 770 lakh in FY25, and remains a minor contributor to the EL segment.

• Given the capex-intensive nature of lace-making machinery and limited market expansion, the return on assets for this division may be lower unless productivity or demand sees a step change.

7. Lag in Digital Manufacturing Capabilities

• While the Company has begun adopting digital design and automation, it still relies on traditional MSME cluster-based operations, especially in the embroidery vertical.

• Inability to rapidly upgrade to Industry 4.0 standards (real-time production tracking, automated quality checks, etc.) may affect lead times, traceability, and compliance with global buyer standards.

8. Inventory & Working Capital Risk from Multi-Product SKU Complexity

• Operating across SPFY, embroidery, guipure, braided laces, and bobbin lace involves managing high SKU complexity.

• Without precise demand forecasting and efficient inventory rotation, the company risks working capital lock-in or obsolescence, especially in fashion-linked embroidery SKUs.

9. High Capex Dependence on Government Schemes

• Modernization initiatives rely on access to schemes like ATUFS, PLI, and PM MITRA.

• Any delay in disbursement, policy shift, or non-eligibility (e.g., due to compliance deviations) can stall capex cycles or impact RoCE projections.

10. Limited Global Brand Recall for Finished Products

• While Hakoba is a legacy brand in India, Pioneer lacks strong brand identity in global B2C segments, limiting its ability to command premium pricing or D2C opportunities overseas.

• This restricts its role in the value chain to a B2B vendor, subject to margin pressures from large aggregators or retailers.

Risk Management

• Monitors polyester and cotton price trends closely and uses diversified supplier base to reduce input cost volatility

• Engages in forward inventory planning and long-term procurement contracts to stabilize raw material costs

• Diversifies revenue streams across SPFY, embroidery, and laces to reduce dependency on a single product line

• Invests in product innovation—such as biodegradable, functional and recycled yarns—to stay competitive in niche and value-added segments

• Constant endeavour to work on product mix and geography mix to place volumes lost in exports due to geo-political and tariff situation.

• Expands into technical textiles and functional embroidery to tap new high-margin markets and reduce overreliance on traditional segments

• Implements selective currency hedging and uses INR billing for regional exports to manage forex risks

• Leverages government schemes like ATUFS and PM MITRA for modernization and capacity building to enhance production efficiency

• Adopts digital design tools and process automation to align with evolving global buyer expectations on lead times and traceability

• Strengthens ESG compliance by integrating traceability protocols, sustainable materials, and waste-reduction initiatives

• Maintains strong internal controls with regular audits, centralized governance, and prompt corrective mechanisms across locations

• Focuses on expanding domestic market share to offset geopolitical risks impacting exports

• Enhances brand equity of Silkolite and Hakoba to maintain pricing power and customer loyalty in premium segments

Outlook

The Company is poised for growth, backed by capacity expansions in SPFY/POY and DTY yarns, which are expected to significantly boost revenue as operations ramp up. The Companys diversification into technical and specialty textiles, along with its focus on sustainability through GRS-certified recycled yarns, biodegradabale yarns and other functional yarn categories, strengthens its market relevance amid evolving global trends. With a well-established export presence and recognized brands like Hakoba and Silkolite, the Company is well-positioned to benefit from the growing domestic and international textile demand. Strategic infrastructure investments, including its stake in Shree Ganesh Integrated

Textile Park, further enhance its long-term scalability. However, continued focus on improving profitability and navigating raw material cost volatility will be key to sustaining momentum.

To mitigate rising electricity costs, the Company has initiated multiple cost-saving measures—including a planned rooftop solar plant, and efforts to restore the electricity duty waiver in Himachal Pradesh. It is also exploring long-term power purchase agreements (PPAs) with independent producers.

Additionally, traction from ESG-conscious buyers, increasing adoption of recycled yarns, and improved working capital support are expected to enhance profitability and market reach. However, continued focus on improving profitability and navigating raw material cost volatility will be key to sustaining momentum.

HumanResources/Industrial

The Company regards its people as its most valuable asset and an essential component of its competitive position. It has a well-designed human resources policy that fosters a positive work environment, inclusive growth, equitable opportunities, and competitiveness, as well as aligning employees goals with the organizations growth vision. Its human resources division is critical in developing a robust and competent team. It offers possibilities for professional and personal growth and conducts comprehensive employee engagement and development programmes to boost staff productivity and capabilities. As of March 31, 2024, the Company employed 1,088 people. Furthermore, during the year, industrial relations remained tranquil and cooperative.

Internal Control Systems and their Adequacy

The Company has an effective internal control and risk mitigation system, commensurate with its size, scale, and complexity of operations. The scope and authority of the

Internal Audit function are clearly defined. The Audit

Committee of the Board actively reviews the adequacy and effectiveness of these systems.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of the internal control system within the Company, as well as its compliance with operating systems, accounting procedures, and policies across all locations of the Company and its subsidiaries. Based on reports from the internal audit function, corrective actions are taken in the relevant areas to strengthen controls. Significant audit observations and the corresponding corrective actions are presented to the Audit Committee of the Board.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company,alongwiththeworkperformedbyinternal,statutory, and secretarial auditors including audits of internal financial controls over financial reporting and the reviews carried out by management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and operating effectively as of March 31, 2025.

During the year under review, no material or serious observations were noted regarding inefficiency or inadequacy of such controls.

Disclaimer

The Companys objectives, projections, outlook, expectations, estimates, and other information expressed in the Management

Discussion and Analysis may be considered forward-looking statements under applicable securities laws and regulations. These statements are based on certain assumptions that the Company cannot guarantee. Several circumstances, some of which the Company may not have direct control over, could have a substantial impact on the Companys operations. As a result, actual results may differ materially from such projections, whether expressed or implied, because it would be beyond the Companys ability to successfully implement its growth strategy. The Company assumes no obligation or responsibility to update forward-looking statements or to publicly amend, modify, or revise them to reflect events or circumstances that occur after the date of the statement on the basis of subsequent development, information, or events.

The Management of Pioneer Embroideries Ltd. (Pioneer, or the Company) presents below an analysis of its performance during the year under review, i.e., accounting year ended 31st

March, 2025 (for the period April 1, 2024 up to March 31, 2025).

Notice

Notice is hereby given that the Thirty Third Annual General Meeting of the Shareholders of PIONEER EMBROIDERIES LIMITED will be held on Thursday, 31^st July, 2025 at 11.00 a.m. through Video conferencing(VC) or Other Audio Video Mode(OAVM) to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Financial Statements (including the Consolidated Financial Statements) of the Company for the year ended 31^st March, 2025 and the Report of the Directors and the Auditors thereon.

2. To appoint a Director in place of Mr. Harsh Vardhan Bassi (DIN:00102941) who retires by rotation and being eligible, offers himself for reappointment.

SPECIAL BUSINESS

3. To approve re-appointment and payment of remuneration to Mr. Raj Kumar Sekhani (DIN:00102843), Chairman of the Company and in this regard, to consider and if thought fit, to pass following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Sections 196, 197, 198 read with Schedule V and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and all other applicable rules made under the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in force) (hereinafter referred to as ‘the Act) consent of the members be and is hereby accorded to re-appoint Mr. Raj Kumar Sekhani (DIN:00102843) Chairman of the Company with effect from 29^th August 2025 for a period of 5 years at remuneration not exceeding 10,00,000/- (Rupees Ten Lacs only) per month on such terms and conditions set out in draft Letter of appointment a copy whereof initialed by Mr. Harsh Vardhan Bassi, Managing Director of the Company for the purpose of identification, has been placed before this Meeting."

"RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to vary or increase the remuneration in the said draft Letter of appointment to the extent the Board of Directors may consider appropriate and as may be permitted or authorised in accordance with any provision under the Act for the time being in force provided, however, that the remuneration payable to Mr. Raj Kumar Sekhani shall be within the limits set out in the said Act including the said Schedule V to the Act or any amendments thereto or any modification(s) or statutory re-enactment(s) thereof and / or any rules or regulations framed there under and the terms of the aforesaid Letter between the Company and Mr. Raj Kumar Sekhani shall be suitably modified to give effect to such variation or increase as the case may be."

"RESOLVED FURTHER THAT in the event of loss or inadequacy of profits in any financial year of the Company during the term of Mr. Raj Kumar Sekhanis office as Chairman, the remuneration set out in the aforesaid draft Letter of appointment be paid or granted to Mr.

Raj Kumar Sekhani as minimum remuneration provided that the total remuneration by way of salary and other allowances shall not exceed the ceiling provided in Schedule V to the said Act or such other amount as may be provided in the said Schedule V as may be amended from time to time or any equivalent statutory re-enactment(s) thereof."

"RESOLVED FURTHER THAT that the Board of Directors be and is hereby authorised to take such steps as may be necessary, proper or expedient to give effect to such resolution."

4. To approve re-appointment and payment of remuneration to Mr. Saurabh Maheshwari (DIN:00283903), Executive Director of the

Company and in this regard, to consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Section 196, 197 read with Schedule V and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and all other applicable rules made under the Companies Act, 2013 (including any statutory modification(s) or re-enactment thereof for the time being in the force) (hereinafter referred to as ‘the Act) and in accordance with the Articles of Association of the Company, consent of the members be and is hereby accorded for re-appointment and payment of remuneration to Mr. Saurabh Maheshwari (DIN:00283903) as an Executive Director of the Company for a period of 5 years with effect from 18^th May, 2026 at a remuneration not exceeding 4,50,000/- (Rupees Four Lacs Fifty Thousand only) per month including perquisites on the terms and conditions set out in draft Letter of appointment a copy whereof initialed by Mr. Harsh Vardhan Bassi, Managing Director of the

Company, for the purpose of identification has been placed before this Meeting."

"RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to vary or increase the remuneration in the said draft Letter of appointment to the extent the Board of Directors may consider appropriate and as may be permitted or authorised in accordance with any provision under the Act for the time being in force provided, however, that the remuneration payable to Mr. Saurabh Maheshwari shall be within the limits set out in the said Act including the said Schedule V to the Act or any amendments thereto or any modification(s) or statutory re-enactment(s) thereof and / or any rules or regulations framed thereunder and the terms of the aforesaid Letter between the Company and Mr. Saurabh Maheshwari shall be suitably modified to give effect to such variation or increase as the case may be."

"RESOLVED FURTHER THAT notwithstanding anything to the contrary herein contained, where in any financial year during the currency of his tenure, the Company has no profits or its profits are inadequate, remuneration by way of salary and perquisites shall not exceed the aggregate of the remuneration as provided in Section II of

Part II of Schedule V of the Companies Act, 2013."

"RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to take such steps as may be necessary, proper or expedient to give effect to such resolution."

5. To approve re-appointment of Ms. Sushama Bhatt (DIN:09168896), Independent Director of the Company and in this regard, to consider and if thought fit, to pass the following resolution as a Special Resolution:

"RESOLVED THAT pursuant to the provisions of Sections 149, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and

Qualification of Directors) Rules, 2014 and applicable provisions of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (including any statutory modification(s) or re-enactment thereof for the time being in force) consent of the members be and is hereby accorded for re-appointment of Ms. Sushama Bhatt (DIN:09168896) as an Independent Director of the Company to hold office for second consecutive term of 5 (five) years i.e. from 18 ^th May, 2026 to 17^th May, 2031 and she shall not be liable to retire by rotation.

"RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to do all the act, deeds and things which are necessary for the aforesaid re-appointment."

6. To approve the appointment of the Secretarial Auditor for the period of 5 years commencing from financial year 2025- 2026 and in this regard, to consider and if thought fit, to pass following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to Regulation 24A SEBI (LODR) Regulations, 2015 consent of the members be and is hereby accorded for appointment of M/s. Sanjay Dholakia & Associates, Practicing Company Secretaries as Secretarial Auditors of the Company for Annual Secretarial Audit for a period of 5 years, commencing from the financial year 2025-26 and Mr. Raj Kumar

Sekhani, Chairman of the Company be and is hereby authorized to fix the remuneration."

"RESOLVED FURTHER THAT Board of Directors of the

Company be and is hereby authorized to file necessary forms with the Registrar of Companies and to do all such acts, deeds and things as may be considered necessary to give effect to the aforesaid resolution."

7. To approve the appointment and payment of remuneration of the

Cost Auditor for the financial year ending 31^st March, 2026 and in this regard, to consider and if thought fit, to pass the resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Section 148 and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014

(including any statutory modification(s) or re-enactment(s) thereof, for the time being in force), consent of the members be and is hereby accorded for appointment of M/s. D S A & Co., Cost Accountants, to conduct the audit of the cost records of the Company for the Financial Year ending 31^st March, 2026 at a remuneration, amounting to 1,40,000 plus GST as applicable and re-imbursement of out of pocket expenses incurred by them, in connection with the aforesaid audit."

	By order of the Board of Directors
	For PIONEER EMBROIDERIES LIMITED
	Harsh Vardhan Bassi
Place: Mumbai	Managing Director
Date : 27th May, 2025	DIN:00102941