Prakash Woollen & Synthetic Mills Ltd Management Discussions

OVERVIEW OF THE ECONOMY Global Economy

The global economy remained resilient in FY 2025 26, despite rising trade tensions, geopolitical conflicts, and policy uncertainty. However, the IMF has lowered global growth projections, citing high borrowing costs, weaker investment, and trade disruptions. Medium-term growth remains subdued, highlighting the need for structural reforms and fiscal discipline.

The IMF projects global GDP growth at 2.8% in 2025 and 3.0% in 2026, below the historical average. Global inflation is expected to ease from 5.7% in 2024 to 4.3% in 2025, with further moderation in 2026.

Advanced economies are projected to grow by 1.4% in 2025 and 1.5% in 2026, while emerging market and developing economies are expected to grow by 3.7% in 2025 and 3.9% in 2026. Although the global outlook remains stable, the IMF warns that trade tensions, geopolitical risks, and high public debt continue to pose significant challenges to long-term growth..

Indian economy

India continues to strengthen its position in the global economic landscape, driven by sustained economic growth, a resilient domestic market, and a strong commitment to industrial development and innovation. With a population of over 1.4 billion and one of the fastest-growing major economies in the world, India has emerged as a key global manufacturing and investment destination. Government initiatives focused on infrastructure development, digital transformation, ease of doing business, and manufacturing competitiveness continue to support long-term economic growth.

The textile and apparel industry remains one of the most significant contributors to the Indian economy. With a rich heritage spanning centuries, India is recognized globally for its diverse textile ecosystem, which includes cotton textiles, apparel, home textiles, man-made fibre (MMF) products, technical textiles, handicrafts, and traditional handloom products. The industry provides a complete value chain from fibre production to finished garments, making India one of the worlds leading textile manufacturing hubs.

India is the worlds second-largest producer of textiles and garments and among the top six exporters of textiles and apparel globally. The sector accounts for approximately 2.3% of Indias GDP, 13% of industrial production, and around 12% of the countrys merchandise exports. It is also one of the largest employment generators, providing direct employment to nearly 45 million people, including over 3.5 million handloom workers, while supporting millions more through allied industries.

Indias textile manufacturing is concentrated in major textile clusters across Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh, Punjab, Rajasthan, Karnataka, and West Bengal, each specializing in different segments such as spinning, weaving, processing, garments, technical textiles, and home furnishings.

The Indian textile and apparel sector continues to witness robust growth, supported by increasing domestic consumption, rising exports, and favourable government policies. During FY 2025 26, Indias textile and apparel market is estimated to be valued at approximately US$ 185 190 billion, with exports expected to exceed US$ 45 50 billion, driven by improving global demand, diversification of export markets, and increasing competitiveness of Indian manufacturers.

Government initiatives continue to play a pivotal role in strengthening the sector. The Production Linked Incentive (PLI) Scheme with an outlay of 10,683 crore continues to encourage investments in Man-Made Fibre (MMF) apparel, MMF fabrics, and Technical Textiles, promoting scale, efficiency, and global competitiveness. Complementary initiatives such as the PM MITRA Parks Scheme, the National Technical Textiles Mission, the Scheme for Integrated Textile Parks (SITP), and various export promotion measures are expected to further enhance Indias position as a preferred global sourcing destination.

The Governments economic agenda remains focused on accelerating manufacturing-led growth under initiatives such as Make in India, PM Gati Shakti, Digital India, Skill India, and Atmanirbhar Bharat. Continued investments in logistics, multimodal infrastructure, digital connectivity, ease of doing business, and policy reforms are creating a conducive environment for industrial expansion and export growth. These measures are expected to improve supply chain efficiency, attract foreign investment, encourage innovation, and enhance the global competitiveness of Indian industries, including textiles.

Looking ahead, Indias textile industry is well-positioned to capitalize on emerging global opportunities through sustainable manufacturing practices, technological advancement, product diversification, and expanding export capabilities. Supported by strong domestic demand, favourable demographics, government reforms, and increasing global sourcing from India, the sector is expected to remain a key driver of economic growth, employment generation, and export earnings during FY 2025 26 and beyond.

Global Textile and Apparel Industry

The global textile and apparel industry is one of the worlds largest and most important industries, contributing significantly to employment, trade, and economic growth. It includes the production of fibers, yarns, fabrics, garments, and fashion products.

Overview

The industry covers the entire value chain, from raw material production (cotton, wool, silk, synthetic fibers) to textile manufacturing, apparel production, retail, and recycling.

It employs hundreds of millions of people worldwide, with a large share of workers in developing countries. Major textile and apparel manufacturing hubs include China, India, Bangladesh, Vietnam, Turkey, and Pakistan. Key consumer markets are the United States, European Union, China, and Japan.

Major Segments

1. Fiber Production o Natural fibers: Cotton, wool, silk, flax. o Man-made fibers: Polyester, nylon, acrylic, rayon.

2. Textile Manufacturing o Spinning o Weaving o Knitting o Dyeing and finishing

3. Apparel Manufacturing o Garment design o Cutting and sewing o Branding o Packaging

4. Retail and Distribution o Physical stores o E-commerce platforms o Fashion brands and wholesalers

Key Trends

Sustainability: Increased use of organic cotton, recycled fibers, and environmentally friendly production methods. Digitalization: Adoption of automation, AI, 3D design, and smart manufacturing.

Fast Fashion: Rapid production cycles driven by changing consumer preferences. E-commerce Growth: Online shopping has expanded the global reach of apparel brands. Circular Economy: Greater emphasis on recycling, reuse, and reducing textile waste.

Major Challenges

Rising raw material and energy costs. Environmental pollution from textile processing. Labor rights and ethical sourcing concerns. Supply chain disruptions due to global events. Competition from low-cost manufacturing countries.

Leading Textile and Apparel Producing Countries Country Strength

India Strong in cotton textiles, garments, and technical textiles China Largest producer and exporter of textiles and garments Bangladesh Major exporter of ready-made garments Vietnam Rapidly growing apparel exporter Turkey High-quality textiles and fashion products

Economic Importance

Contributes significantly to global GDP and international trade. Generates employment for millions of workers, particularly women.

Supports related industries such as agriculture, chemicals, logistics, machinery, and retail. Plays a vital role in the export earnings of many developing economies.

Future Outlook

The global textile and apparel industry is expected to continue growing, driven by: Rising disposable incomes.

Expanding middle-class populations in emerging economies. Increasing demand for sustainable and functional textiles.

Technological innovations such as smart textiles, automation, and digital supply chains.

However, future growth will depend on balancing cost competitiveness with sustainability, ethical labor practices, and technological advancement.

GOVERNMENT INITIATIVES

The Indian government has introduced several initiatives to boost the textile industry in 2026.

Some of the major Government of India initiatives announced or emphasized in 2026 to strengthen the textile sector include:

1. National Fibre Scheme o Promotes domestic production of natural fibres such as cotton, jute, silk, and wool. o Aims to improve productivity, quality, and value addition while reducing import dependence.

2. Textile Expansion and Employment Scheme (TEES) o Supports modernization of traditional textile clusters. o Provides capital assistance for new machinery, technology upgrades, and common testing and certification facilities. o Intended to boost productivity, improve quality standards, and create employment.

3. National Handloom and Handicraft Programme o Integrates and strengthens existing schemes for handloom weavers and artisans. o Focuses on better market access, higher incomes, skill development, and preservation of Indias textile heritage.

4. Tex-Eco Initiative o Encourages environmentally sustainable textile and apparel manufacturing. o Helps manufacturers adopt greener production practices and comply with international sustainability standards, improving access to global markets.

5. Samarth 2.0 o Expands skill development and workforce training across the textile value chain. o Seeks to improve employability and provide industry-relevant skills, particularly for youth and women.

6. Expansion of PM MITRA Mega Textile Parks o Continues the development of integrated textile parks with world-class infrastructure. o Aims to reduce logistics costs, attract investment, and enhance Indias competitiveness in textile manufacturing.

7. Strengthening Textile Support Infrastructure o The Ministry of Textiles is developing Integrated Textile and Apparel Development Centres (ITADCs) into one-stop facilitation hubs for textile entrepreneurs and MSMEs, offering technology and business support.

Overall, these initiatives are designed to: Increase employment in the textile sector. Modernize manufacturing and textile clusters. Improve exports and global competitiveness. Promote sustainable and eco-friendly production.

Strengthen support for handloom weavers, artisans, and MSMEs. Build a stronger domestic textile value chain.

Economic Trends Impacting Growth Prospects in the Textile Industry in 2025-2026 .

The Indian textile industrys growth prospects in 2025-2026 are influenced by several key economic trends:

1. Strong Domestic Demand o Rising disposable incomes, urbanization, and growth in organized retail and e-commerce are increasing demand for apparel, home textiles, and fashion products.

2. Government Support and Investment o The Union Budget 202627 prioritizes the textile sector through initiatives such as the National Fibre Scheme, Textile Expansion and Employment Scheme (TEES), and continued development of PM MITRA parks, encouraging investment and modernization.

3. Export Growth Opportunities o New trade agreements and expanding global market access are expected to strengthen Indias textile exports, particularly in home textiles, garments, and technical textiles.

3. Shift Toward Sustainable Textiles o Growing international demand for eco-friendly and recyclable textiles is encouraging manufacturers to adopt sustainable production processes and circular economy practices.

4. Expansion of Technical Textiles o Demand for technical textiles in healthcare, automotive, construction, agriculture, and defense continues to rise, creating new avenues for industry growth.

5. Digitalization and Manufacturing Modernization o Increased adoption of automation, digital supply chains, AI-driven production planning, and smart manufacturing is improving productivity and reducing operational costs.

6. Supply Chain Challenges o Despite growth opportunities, inefficiencies in supply chain coordination are estimated to cost India between US$37 billion in potential apparel exports, highlighting the need for better logistics and integration.

7. Global Economic Uncertainty o Volatile raw material prices, geopolitical tensions, and fluctuating global demand continue to affect export performance. Recent data show textile exports growing modestly while apparel exports have faced pressure.

8. Focus on Domestic Manufacturing o Indias broader manufacturing strategy aims to reduce dependence on imports and strengthen domestic production in sectors including textiles, improving long-term competitiveness and resilience.

Conclusion

The Indian textile industry in 2026 is expected to benefit from strong domestic demand, supportive government policies, export opportunities, technological modernization, and the growing importance of sustainable and technical textiles. However, improving supply chain efficiency, managing input costs, and adapting to global economic uncertainties will be critical to sustaining long-term growth.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

During the year under review, there were no material adverse developments in the Human Resources or Industrial Relations front. The Company continued to maintain a healthy and collaborative work environment, with cordial relations between employees and management.

Key highlights of HR initiatives during the year include:

Strengthening of employee training and development programs to enhance skills and productivity. Implementation of employee engagement initiatives to support well-being, diversity, and inclusion. Continued focus on digital transformation in HR processes for enhanced efficiency and transparency.

Compliance with all applicable labour laws, including those related to maternity benefits, social security, and workplace safety. As on March 31, 2026 the total number of employees on the rolls of the Company stood at 404.

HEALTH, SAFETY AND ENVIRONMENT

Company considers its Human Resources as a very important asset and a key in achieving operational performance. Company continues to provide them with a safe and comfortable working environment. During the difficult pandemic times, the company has taken numerous precautions to protect its staff and workers. The company regularly complies with all stipulated environmental and safety norms.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has an effective internal control and risk-mitigation system, which is constantly assessed and strengthened with new/ revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of operations. To enhance the internal control procedures, the Company has appointed Akshay Anand & Co. as its internal auditor. It also ensures that they are recorded in all material respect to permit preparation of financial statements in conformity with established accounting principles along with the assets of the Company being adequately safeguarded against significant loss or misuse. An independent Internal Audit function is an important element of Companys Internal Control System. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee of Board.

INDIAS ROLE:

Indias textile industry is a significant player, contributing significantly to the countrys GDP, exports, and employment. The Indian government is also actively promoting domestic manufacturing and exports through initiatives like “Make in India” and “Atmanirbhar Bharat”.

CAUTIONARY STATEMENT

Statement in Management Discussion and Analysis report describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could make a difference to the Companys operations include finished goods prices, raw materials costs and its availability, domestic as well as global demand supply conditions, fluctuations in exchange rates, changes in Government policies, tax changes, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility to amend, modify, or revise any forward-looking statement, on the basis of any subsequent developments, information, or events. Besides, the Company cannot guarantee that these assumptions and expectations are accurate or will be realised.

2) Key Financial Ratios

Changes in key financial ratios are as under:

S. No.	Ratio	2025-2026	2024-2025	% Variance	Reason for variance
1	Debtors turnover Ratio	43.95	31.53	10.61	5
2	Inventory turnover Ratio	3.75	3.76	(0.45)	3
3	Interest Coverage ratio	2.19	2.31	0.02	4
4	Current Ratio	1.08	1.07	1.55	1
5	Debt Equity Ratio	0.84	0.86	(3.40)	2
6	Operating profit margin (%)	3%	(3.00)%	-2.28	4
7	Net profit Margin (%)	0.80%	1.19%	0.25	4
8	Return on Net Worth (%)	1.85	2.56	0.56	4

Reason for variance

1 Usage/ non usage of internal accruals in new projects caused decline/ increase in current ratio and increase/ decrease in net capital turnover ratio.

2. New Term loans for new projects/temporary working capital caused increase in the ratio or vice versa.

3. Increase in inventory reduces the ratio.

4. Net profit/ loss in the current year caused improvement/decline in the ratio.

5. Decrease in level of debtors reduces the ratio.

	For and on behalf of the Board of Directors
Place :Vill. Amhera (J.P. Nagar)	Daya Kishan Gupta
Date : 11th August, 2026	Managing Director
	DIN: 00337569