Raghuvir Synthetics Ltd Management Discussions

-Economic overview:

Global economic growth is anticipated to remain modest over the next few years, with forecasts indicating a 2.8% increase in cY 2025 and 3.0% in CY 2026. This outlook is supported by a gradual reduction in inflation and sustained efforts by central banks to maintain economic stability through targeted monetary measures. Emerging markets are projected to sustain robust growth, with an estimated expansion of 3.7% in CY 2025, whereas advanced economies are expected to recover at a slower pace, posing a growth rate of approximately 1.4% in the same year.

Commodity prices remained relatively muted in 2024. The World Banks commodity price index fell by roughly 3% in Q1 FY 2024, led by a 3% decline in energy prices on account of lower natural gas and crude oil prices, while metals and agricultural prices showed only minor changes. Meanwhile, global cotton prices decreased by nearly 9%, from 95 cents per pound in 2023 to 86.6 cents in 2024, benefitting textile manufacturers with reduced input costs and supporting downstream production.

Global manufacturing PMI is likely to remain near the 50 mark in early 2025, reflecting continued softening in new orders and cautious inventory restocking, even as services activity outpaces goods.9 Commodity prices are expected to stay relatively subdued as cotton prices, which fell roughly 9% in 2024 to 86.6 cents per pound, are projected to stabilise and possibly rise. USDA forecasts indicate tighter global ending stocks for 2025 and 26, which could lift the A-Index to around 82 cents per pound

In response to evolving market conditions, both governments and businesses are actively reconfiguring supply chains in response to shifting dynamics. Additionally, ongoing advancements in technology, rising workforce productivity and improved infrastructure are poised to support sustainable long-term economic growth, contributing to renewed global optimism.

-INDIAN ECONOMIC OVERVIEW

Indias economy remained remarkably resilient in the face of global disruptions. Strong domestic consumption, higher government spending on infrastructure and an accommodative monetary policy powered this growth. Retail inflation eased to 4.6% in FY 2024-25, the lowest since fY 2018-19. This led the Reserve Bank of India (RBI) to implement its first rate cut in five years to 6%, thereby supporting continued growth. 10 The financial services sector remained stable, supported by well-capitalised banks and a solid regulatory framework. Government initiatives, such as ‘Make in India spurred domestic manufacturing growth, while long-term prospects in manufacturing and technology attracted strong foreign investment. The expansion of Indias digital economy, including e-commerce and digital payments, further boosted economic activity.

Indias manufacturing sector grew at 4.8% in FY 2024-25, up from 4.7% in FY 2023-24. This contributed to 7.4% GDP growth in the fourth quarter of FY 2024-25.12 The government increased budget allocations to support manufacturing, with FDI in the sector reaching USD 184 Billion—a 90.5% rise over the past decade—fuelled by production-linked incentive schemes. 13 Over the past six financial years, total FDI inflows amounted to USD 464.54 Billion.14 With robust physical and digital infrastructure, India is now well positioned to expand the share of the manufacturing sector in the economy and strengthen its role in global supply chains.

India has strong potential to grow its presence in global markets, supported by economic growth, long term employment prospects and skill development opportunities for millions. To tap into this potential, the Government of India has announced the National Manufacturing Mission in the Union Budget 2025-26, which aims to boost Make in India through supportive policies, ease of doing business, MSME growth, a future-ready workforce and clean-tech manufacturing.

-INDIA TEXTILE INDUSTRY OVERVIEW/ INDUSTRY STRUCTURE AND DEVELOPMENTS*

The textile market in India has been on an upward trajectory, growing from USD 106 Billion in FY 2019-20 to USD 147 Billion in FY 2024-25, at a CAGR of 7%. With a contribution of approximately 2.3% to the national GDP in FY 2024-25 and accounting for 3.91% of global textile and apparel trade, India remains one of the worlds largest textile markets.24 Textile and apparel exports surged by 6%, reaching USD 36.6 billion in FY 2024-25, despite soft festive demand and competitive imports from Bangladesh. During the same period, exports of cotton-based products (yarn, fabrics, made-ups and handloom) grew by 3.19% to USD 12.056 Billion.25 Gujarat, Maharashtra, Tamil Nadu, Punjab, Uttar Pradesh and West Bengal continue to dominate Indias textile production. However, fluctuating cotton prices averaging INR 7,800 per quintal in FY 2024-25 added cost pressures, especially for spinners and weavers.26 Nevertheless, Indias abundant raw-material base with a cotton output of 301.75 lakh bales in FY 2024-25 provided a firm foundation for competitive manufacturing.

The textile industry being a major economic driver, contributes significantly to the nations GDP and employment generation. As one of the largest sources of employment after agriculture, the sector engages over 45 million people directly.2 The industry witnessed steady growth 2024, with the market value reaching an estimated US$ 222.08 billion and is projected to sustain its growth in the upcoming years.3 This growth is expected to be propelled by rising domestic consumption, with Indias expanding middle class fuelling demand for high-end and branded apparel and the exponential rise in online retail that has made fashion more accessible across both urban and rural markets. The sector benefits from a unique blend of traditional craftsmanship and modern innovation, displayed at landmark events like Bharat Tex 2025, which drew global attention to Indias capabilities in sustainable textiles.

Government initiatives have been crucial in shaping the industrys trajectory. Schemes such as the PM MITRA Parks and the Production Linked incentives (PLI) programme have enhanced infrastructure, encouraged large-scale production of man-made and technical textiles thereby, improving the sectors global competitiveness. Indias diverse product range and a strong push for sustainability and digitalisation, have positioned the country as an emerging leader in the global textile and apparel market.

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, while the capital-intensive sophisticated mills sector on the other end. The decentralised power looms/ hosiery and knitting sector forms the largest component in the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce wide variety of products suitable for different market segments, both within India and across the world. The textiles sector has witnessed a spurt in investment during the last five years.

Exports have been a core feature of Indias textile sector. Exports of both man-made textile and readymade garments have seen a major boost. A major factor behind the robustness of Indias textile industry is its strong production base with a wide range of fibres and yarns. India is among the top producers of jute and silk, and beyond its natural fibres such as cotton, jute, silk and wool; and synthetic, its manmade fibres such as polyester, viscose, nylon and acrylic have also created a niche for themselves in the market.

-OPPORTUNITY*

Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the sector under the automatic route. Union Budget 202021, a National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of Rs.1,480 crore (US$ 211.76 million). In Union Budget 2021-22, the announcement

on setting up of seven mega textiles parks, will directly impacting the textile industry. With the concept of these mega parks with a plug and play model, Indian textile and apparel sector, particularly SMEs, can work on scale and build competitiveness in manufacturing. The Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles with a total outlay of Rs.10,683 crore will help the textile industry to become globally competitive, attract large investments and boost employment generation. Further, reduction in customs duty on caprolactam, nylon chips and nylon fibre & yarn to 5 per cent is step in the right direction, as it will bring nylon chain on par with polyester and other man-made fibres. Accordingly, the increase in customs duty on cotton from nil to 10 per cent and on raw silk and silk yarn from 10 per cent to 15 per cent will benefit domestic cotton and silk growers. Custom duty policy announced has dual objectives of promoting domestic manufacturing and helping India get on to global value chain and export better as the domestic textile industry will get easy access to raw materials and exports of value-added products, which will make textile industry globally competitive. The Budget allocates Rs.700 crore for Amended Technology Upgradation Scheme (ATUFs) which will help to clear the pending capital subsidy.

* The Company undertakes no obligations to publicly update or revise any of the opinions of statements expressed in this report. Readers are hence cautioned not to place undue reliance on these statements and are advised to conduct their own investigation and analysis of the information contained or referred to this statement before taking any action with regard to specific objectives.

The Government of India has come up with a number of initiatives to support the textile industry, such as the PLI Scheme and Mega Integrated Textile Region and Apparel (MITRA) Parks. This will enable the textile industry to become globally competitive, boost employment generation and attract investments in value added segments.

-REVIEW AND FUTURE OUTLOOK OF THE COMPANY

The Company is continuously trying to accomplish the desired results. Steps have been taken for cost diminution and manufacturing quality products by various installed machineries of the Company. Various aspects of working conditions of workers, health related issues, minimizing risk of accidents at work place etc. are being taken care of by the Company. The Company will achieve more turnover by various marketing strategies, offering more quality products, etc. in coming years followed by increase in profit margin by way of various cost cutting techniques and optimum utilization of various resources of the Company. The Company has found export opportunities for the same line of textile products which they were doing job work presently. Till yet the Company was involved in job work but now with the view of export opportunities, the Company taken the lead towards the export in simultaneous with Job Work.

-THREATS/ RISK AND CONCERN

1) Cotton is pre-dominantly used as raw material in textile sector. Consequently, unavailability of raw material or price fluctuations may impact production.

Companys proposed step - Strong and long-term relationships with vendors to help ensure timely availability of raw materials.

2) The Companys business may be impacted by introduction of new policies or changes in existing policies.

Companys proposed step - The Companys management team keeps a close eye on policy regulations and formulates company plans appropriately.

3) Low-cost imports due to favourable government policies in other countries may pose significant risk to business and impact pricing strategy.

4) Companys proposed step - The Companys competitive advantage comes from leveraging economies of scale, cutting-edge technology and strategic partnerships with all stakeholders to offer competitive rates globally.