Prakash Woollen & Synthetic Mills Ltd Management Discussions

OVERVIEW OF THE ECONOMY GLOBAL ECONOMY

Economic activity continued to grow even as concerns about stagflation (stagnant growth with high inflation) and recession were raised, while the short-term outlook appears stable; the projected growth rate for the next five years is the lowest in decades. This raises concerns about long-term economic health. The report emphasizes the need for urgent reforms to address these long-term challenges. While acknowledging the recent Israel-Palestine conflict adds uncertainty, IMF believes its impact on global supply and demand will be less severe compared to the war in Ukraine. It remains cautiously optimistic about the overall global economic situation. The global economy is expected to grow at a steady pace of 3.2% in 2024 and 2025, similar to 2023. However, this growth rate is lower than the historical average due to various factors like high borrowing costs, reduced fiscal support, and the ongoing Russia-Ukraine conflict. In terms of inflation, the global headline inflation is expected to decrease from 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. Advanced economies are expected to achieve a growth rate of 1.7% in 2024 and 1.8% in 2025, while emerging market and developing economies will experience a modest slowdown from 4.3% in 2023 to 4.2% in both 2024 and 2025.

INDIAN ECONOMY

India shines brightly in the global economic landscape, driven by its remarkable growth trajectory and unwavering commitment to excellence. With a rich cultural heritage and a vast population of over 1.4 billion, the nation has emerged as a formidable economic powerhouse, consistently making its mark on the world stage.

The textile manufacturing industry is a vital sector of the Indian economy, with a rich history dating back centuries. India has been known for its textiles and is one of the largest textile producers and exporters in the world. The Indian textile manufacturing industry is diverse, encompassing a wide range of textiles, including apparel, home textiles, technical textiles, and traditional handloom textiles.The Indian textile manufacturing industry is a significant market, contributing to Indias GDP and employment. It is one of the largest employers in the country, generating jobs across the entire value chain, from cotton farming and spinning to weaving, dyeing, printing, and garment manufacturing. India has several textile manufacturing clusters, concentrated in regions like Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal. These clusters specialize in different segments of the textile industry.

India is the worlds second-largest producer of textiles and garments. It is also the sixth-largest exporter of textiles spanning apparel, home and technical products. India has a 4% share of the global trade in textiles and apparel. The textiles and apparel industry contribute 2.3% to the countrys GDP, 13% to industrial production and 12% to exports. The textile industry has around 45 million of workers employed in the sector, including 3.5 million handloom workers. Indias textile and apparel exports (including handicrafts) stood at US$ 44.4 billion in FY22, a 41% increase YoY. Total textile exports are expected to reach US$ 65 billion by FY26. The Indian textile and apparel industry is expected to grow at 10% CAGR from 2019-20 to reach US$ 190 billion by 2025-26. The Indian apparel market stood at USS 40 billion in 2020 and is expected to reach US$ 135 billion by 2025. The Rs. 10,683 crore (US$ 1.44 billion) PLI scheme is expected to be a major boost for the textile manufacturers. The scheme proposes to incentivise MMF (man-made fibre) apparel, MMF fabrics and 10 segments of technical textiles products.

The Governments economic policy agenda is sharply focused on unlocking and amplifying Indias growth potential. This multifaceted strategy encompasses a range of initiatives aimed at revitalizing the financial sector, simplifying business conditions, and upgrading both physical and digital infrastructure to enhance connectivity and boost manufacturing competitiveness. Moreover, ongoing economic reforms are designed to create a more favorable business environment, improve the quality of life for citizens, and strengthen governance systems to align with this overarching vision. By pursuing these comprehensive efforts, the Government aims to drive sustainable growth, foster innovation, and establish India as a leading economic powerhouse on the global stage.

GLOBAL TEXTILE AND APPAREL INDUSTRY

The global textile and apparel industry is a large and dynamic sector, with a market size estimated at US$1.7 trillion and contributing about 2% to the worlds GDP. The industry is experiencing growth, particularly in developing economies like China and India. Factors like rising population, increasing disposable incomes, and changing consumer preferences are driving this growth. However, the industry also faces challenges such as economic uncertainty, rising costs, and increasing consumer price sensitivity. The global textile and apparel industry is a complex and multifaceted sector, characterized by both growth opportunities and significant challenges. Developing economies like India are playing an increasingly important role in shaping the future of this industry.

Key Trends and Dynamics:

> Market Size and Growth:

The global apparel market is projected to reach US$2.6 trillion by 2025, with a growth rate of 4%.

> Leading Markets:

The EU, USA, and China are the largest apparel markets, holding a combined share of approximately 54%.

> Growth Drivers:

Developing economies, particularly China and India, are experiencing double-digit growth, making them significant contributors to the markets expansion.

> Indias Role:

India is a major player, ranking as the 6th largest exporter of textiles and apparel. It holds a 3.91% share of the global trade in textiles and apparel.

> Export Destinations:

Indias textile and apparel exports are largely directed towards the USA and EU.

> Sustainability:

Theres a growing emphasis on eco-friendly fashion and sustainable production practices, influencing consumer choices and industry trends.

> Technological Advancements:

AI technology are being integrated into production processes to enhance efficiency and personalization.

> Economic Factors:

Economic uncertainty, rising costs, and price sensitivity are impacting the industry, particularly in discretionary spending on apparel.

> Shifting Sourcing:

Theres a trend of global sourcing shifting towards countries like India, driven by factors like gradual reduction of retail inventory in key markets and government incentives.

INDIAN TEXTILE AND APPAREL INDUSTRY

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic. According to Crisil Ratings, the organised retail apparel sector is projected to achieve revenue growth of 8-10% in FY25, driven by rising demand from a normal monsoon, easing inflation, and the festive and wedding seasons.

Market Size:

The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030. Moreover, India is the worlds 3rd largest exporter of Textiles and Apparel. India ranks among the top five global exporters in several textile categories, with exports expected to reach US$100 billion.The textiles and apparel industry contributes 2.3% to the countrys GDP, 13% to industrial production and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade.

Textile manufacturing in India has been steadily recovering amid the pandemic. The manufacturing of textiles Index for the month of June 2024 is 106.

During FY24, the total exports of textiles (including handicrafts) stood at US$ 35.9 billion. Exports of textiles (RMG of all textiles, cotton yarns/fabs/made-ups/handloom products, man-made yarns/fabs/made-ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 35.90 billion in FY24. In FY24, exports of readymade garments including accessories stood at US$ 14.23 billion. Indias textile and apparel exports to the US, its single largest market, stood at 32.7% of the total export value in FY24.

In FY25 (April- June) the total exports of textiles stood at US$ 9.17 billion

In FY25 (April-June), exports of readymade garments including accessories stood at US$ 2,244 million.

Indias textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country. GOVERNMENT INITIATIVES

The Indian government has introduced several initiatives to boost the textile industry in 2025. Some of these initiatives include:

• Samarth: The Samarth scheme, which is administered by the Ministry of Textiles, was extended for financial year 2024-25 and 2526 with the budget of Rs.495 crores. The scheme aims to train and skill textile workers to increase their productivity and employability.

• Production-Linked Incentive (PLI) Scheme: The PLI scheme was approved with an outlay of ¹ 10,683 crore to promote the production of technical textiles, man-made fiber fabrics, and man-made fiber apparel. The scheme aims to help the textile sector achieve scale and size, and become competitive.

• Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA): This is another initiative for the textile industry.

• National Technical Textiles Mission (NTTM): This is another initiative for the textile industry. Indias textile industry is projected to grow at a CAGR of 14.8% from 2021 to 2025, reaching a market value of $350 billion by 2025

SWOT analysis Strengths

> Substantial availability of raw materials

> Indias strength lies in its self-sufficiency in raw materials, particularly natural fibre, with the country being the worlds third-largest producer of cotton. What distinguishes the Indian textile industry is its capability to produce and process various types of fibre.

> Continuous government support

> Relatively lower costs

> Reduced supply time

> Low cost and skilled manpower Indian Textile industry has historically thrived due to its combination of low-cost labor and robust entrepreneurial capabilities.

> Rising disposable incomes

> Digitalization catalyzing e-commerce growth

> Increase in Population

> Growing urbanization Weaknesses

> Labour productivity is low

> Competitive imports

> Fabric processing

> High cost of electricity and lengthy export lead time

> Use of outdated technology

> Inadaptable labour laws

> Growing competition from e-commerce

> Increased reliance on cotton Opportunities

> Immense growth potential

> Bilateral relations

> Economic growth and manufacturing of value-added

> Proposed FDI in multi-brand retail

> products to boost unit value realization

> Foreign investments

> According to the new Draft of the National Textile Policy, the Government is planning to attract foreign investment and creating employment opportunities for 35 million people.

> Constant innovation and technological up-gradation Threats

> Multiple seasons cycle

> Growth of international brands

> International labour and environmental laws

> Out of quotas phasing

> Inventory pile ups on account of global slowdown

> manufacturing and sales

> Geographical disadvantages SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

The Company has determined its business as Textiles Trading and Manufacturing. Since there is no other business segment in which the Company operates, there are no other primary reportable segments. For the period under review, the Company has noted the export sales of Rs. 73 Lakh and domestic sales of Rs. 10517.37 Lakh.

RISKS AND CONCERNS

The textile and apparel industry faces significant growth challenges amidst a complex economic landscape. Two major trends will impact growth prospects:

Economic Trends Impacting Growth Prospects:

1. Inflation: Elevated inflation rates are expected to persist, driven by commodity price increases and broadening price pressures. This will lead to higher production costs, reduced consumer purchasing power, and decreased demand.

2. Interest Rate Hikes: Central Banks anticipated rate increases will lower growth, exert pressure on economies, and disproportionately affect emerging markets. This will lead to reduced consumer spending, decreased investment, and slower economic growth.

Challenges for the Company:

1. Cost Pressures: Navigating increased costs will significantly impact performance. Companies must implement effective cost management strategies to maintain profitability.

2. Consumer Behaviour Shifts: Diminishing purchasing power and demand may lead to fundamental changes in consumer behaviour, including reduced spending, changed preferences, and increased price sensitivity.

3. Market Impact: Adverse effects on the textile and apparel market due to economic circumstances may lead to reduced sales, decreased market share, and increased competition.

FUTURE OUTLOOK:

The industry is expected to continue growing, with a predicted market size of $4.01 trillion by 2034, driven by innovation, sustainability efforts, and evolving consumer preferences

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 31,2025, the total number of employees on the rolls of the Company stood at 379.

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.

Key Financial Ratios

Changes in key financial ratios are as under:.

S. No.	Ratio	2024-2025	2023-2024	% Variance	Reason for variance
1	Debtors turnover Ratio	31.53	20.92	10.61	5
2	Inventory turnover Ratio	3.76	3.52	0.24	3
3	Interest Coverage ratio	2.31	2.29	0.02	4
4	Current Ratio	1.07	1.08	-0.01	1
5	Debt Equity Ratio	0.86	1.09	-023	2
6	Operating profit margin (%)	3.00%	5.28	-2.28	4
7	Net profit Margin (%)	1.19%	0.94	0.25	4
8	Return on Net Worth (%)	2.56	2.00	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.

Place : Vill Amhera (J.P. Nagar)	For and on behalf of the Board of Directors Sd/- Daya Kishan Gupta
Date : 23rd July 2025	Chairman
	DIN:00337569