Polytex India Ltd Management Discussions

1. Global Economy

The global economy remained resilient in the year 2024 (Calendar Year 2024), expanding at 3.2% (as per IMF World economic outlook, Apr25). The rapid rise in trade tensions and heightened policy uncertainty are likely to exert a substantial drag on global economic activity. It is estimated to grow by 2.8% in CY2025 and 3% in CY2026, much below the historical average of 3.7% (2000-19) due to global challenges on various fronts. While strong real income growth and lower interest rates boosted activity, weaker government spending, sluggish consumer confidence, and external demand fluctuations restrained growth in some regions.

In advanced economies, the U.S. growth forecast for CY2025 is expected to slow down to 1.8%, on account of greater policy uncertainty, trade tensions and softer demand momentum, whereas the euro area is expected to grow at 0.8%, before rising to 1.4% in 2026 as financial conditions improve. Other advanced economies see stable growth, with recovering incomes offset by trade uncertainties. In emerging markets and developing economies, growth is expected to slow down to 3.7% in 2025 due to various trade measures in recent times. On the back of the recently implemented tariffs and prolonged trade policy uncertainty, Chinas growth was revised downward to 4% in 2025. Indias growth to remain stable at 6.2% in 2025 and 6.3% in 2026 supported by private consumption, particularly in rural areas.

Global trade expanded by nearly US$1.2 trillion in 2024, reaching US$33 trillion which is a result of 9% growth in services trade and 2% growth in goods trade. In 2024, trade growth in developing countries outpaced that of developed countries. Developing nations, particularly China and India, saw better than average trade expansion, while many developed nations experienced trade contractions. However, the global economy is entering a new phase of heightened trade tensions as the Trump 2.0 administration rolls out fresh tariffs, potentially triggering reciprocal measures from key trading partners. Indias trade position remains resilient, supported by a strong services sector, proactive domestic policies, and strategic shifts toward higher-value exports such as electronics and pharmaceuticals. Global growth rate is expected to soften to 2.8% in CY2025 on account of the imposition of new bilateral tariff rates, the associated increase in policy and geopolitical uncertainties.

India retained its position as the 5th largest economy, maintained its status as the fastest growing amongst large economies and is expected to be the third largest economy by 2027 (crossing GDP of $5 Tn) after USA and China. The Indian economy is expected to grow by 6.2% in CY25.

Table: India set to Become 3rd Largest Economy by 2027

India, as one of the fastest growing and largest economies globally, presents a conducive environment for the expansion of its credit market. The total NBFC credit outstanding stood at approximately 52 trillion as of December 2024 and is projected to cross 60 trillion by FY2026, reflecting the sectors continued expansion. Amongst banks, NBFC and All India Financial Institutions, NBFCs have maintained 21-24% share of credit from FY2017 to FY2024. As India targets becoming a $5 trillion economy in the coming years, the demand for financing is set to increase, underscoring the vital role of NBFCs in supporting economic growth and development. Retail loans, which accounted for 58% of total NBFC credit in December 2024, remain the cornerstone of growth. Unsecured business loans accounted for 28% of retail NBFC credit in December 2024. Earlier, RBI had raised risk weights by 25 bps to 125% on unsecured retail loans, due to its indiscriminate growth, especially in personal loans and credit cards. Asset segments such as microfinance, personal loans, credit cards and unsecured business loans witnessed higher stress in FY2025, leading to higher delinquencies and write-of

Over the years, NBFCs have significantly strengthened their balance sheets, marked by reduced leverage and improved asset quality, with a notable shift towards the retail segment. NBFCs are effectively utilising digital data to improve credit assessments and operational efficiency. The interest of equity investors remains strong and there is vast pool of debt capital overseas which is largely untapped. With such a stable foundation, the sector remains well-positioned to navigate the evolving regulatory environment while maintaining momentum.

Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. The control systems set on place are checked and further supplemented by MIS which provided for planned expenditure and information on disposal and acquisition of assets. Your company has an adequate system of internal control, designed to provide reasonable assurance that assets are safeguarded; transactions are executed in accordance with managements authorisation and properly recorded. Accounting records are adequate for preparation of financial statements and other financial information. Besides, the management has put in place system for review and monitoring of non-performing assets, if any of the company for effecting recoveries.

The financial performance of the Company has been satisfactory in the year under review. The Financial performances of the Company are given as under:-

Your company always regards human resources as its most valuable asset and continuously evolves policies and process to attract and retain its substantial pool of managerial resources through friendly work environment that encourages initiatives by individuals and recognizes their performance. The company has a competency based performance and potential appraisal systems for identifying and developing managerial talents and is reviewed on an ongoing basis.

Emphasis is laid on providing adequate training to its employees, to meet the attitudinal and cultural values of the organization to achieve customer satisfaction.

Certain Statements in the management Discussion and Analysis describing the company" s views about the industry, expectations, objectives, etc. may be understood within the meaning of applicable laws and regulations. Factors like changes in Government regulations, tax laws and other factors are such a s industrial relations a n d economic developments etc. may further influence the companys operations or performance.