R&B Denims Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

DISCLAIMER

Statements in the Directors Report & Management Discussion and Analysis describing the companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the companys operations include raw material availability and its prices, cyclical demand and pricing in the companys principle markets, changes in government regulations, tax regimes, economic developments within India and the countries in which the company conducts business and other ancillary factors.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS:

a) Global Denim Industry Structure

The global denim market, valued at approximately USD 86.7 billion in 2024, is projected to reach USD 121.5 billion by 2030, growing at an estimated 5.8-5.9% CAGR. Denim fabric alone generated around USD 24.6 billion in 2024, with forecasts suggesting growth to nearly USD 35 billion by 2032 -33. Market segmentation reflects diverse demand—comfort-driven stretch denim, eco-friendly recycled and organic lines, and premium categories—all witnessing expanding consumer preference. Notably, mens denim held a 53% share in 2024, though womens denim is currently growing at a slightly faster pace. The industry remains fragmented geographically; North America led with a 31-34% revenue share, while Asia-Pacific is the fastest-growing region, supported by rising incomes and casualwear trends. Theoretical drivers shaping the sector include premiumisation, rise of smart and sustainable textiles, direct-to- consumer models, and omni-channel retail—which are reshaping the denim value chain globally.

b) Indian Denim Industry Structure

Indias denim fabric market stood at USD 6.15 billion in FY 2023, expected to head upward to USD 9.15 billion by 2026 at a robust 8-9% CAGR. The denim apparel segment reached USD 1.14 billion in 2024, projected to grow to USD 1.83 billion by 2033, at a 5.04% CAGR. India ranks among the top three fabric exporters—accounting for around 11% of global denim exports—with export values touching USD 8.2 billion in 2024. Production capacity in India hovers around 1.6-1.74 billion meters per annum, of which 60-65% serves domestic demand and the rest is exported to over 80 countries.

Indias denim industry has solidified its position as a global leader, ranking third in denim production worldwide. Gujarat, often referred to as the Denim Capital of India, contributes approximately 60-70% of the countrys denim fabric production. The Indian denim market is projected to reach $9.15 billion by 2026, driven by rising income levels, evolving fashion trends, and a growing emphasis on sustainability.

The governments initiatives, such as the Production-Linked Incentive (PLI) scheme and the establishment of PM MITRA parks, aim to bolster the textile sector by enhancing competitiveness and attracting investments in high-value-added segments like technical textiles and apparel.

c) Developments and Trends in Indian Denim Industry:

• Eco-friendly production has become central. Mills across Gujarat are widely adopting organic cotton, recycled fibers, and water-saving dyeing techniques to meet growing demand for sustainable denim.

• Circular initiatives are advancing with producers using post-consumer recycled (PCR) content, while brands and suppliers run take-back programs and explore AI-powered textile sorting for reuse and recycling.

• Aligned with national goals under the PM MITRA mega-parks, many mills are transitioning to biomass boilers and rooftop solar to reduce reliance on coal and curb GHG emissions.

• Smart fabrics with UV protection, moisture-wicking, and enhanced stretchability are gaining traction; laser finishing, digital printing, and IoT-based quality monitoring are becoming mainstream.

• AI and automation are being employed to optimise design-to-production workflows, weaving, inventory forecasting, and recycling operations.

• Post mid-2023 slowdown, Gujarat mills have ramped up operations, reaching 85-90% capacity utilization by late FY 25 .

• Prominent denim producers are aggressively integrating fabric-to-garment value chains, supported by the Gujarat Textile Policy 2024

• The domestic denim market is estimated to grow from USD 6.15 bn (FY 23) to USD 9.15 bn by 2026 (8-9% CAGR), driven by rising incomes and western fashion influence

• International and homegrown premium brands are scaling presence in Tier 1-3 markets, bolstered by technology-enabled shopping experiences

• Influenced by the "wrap-up 2024" trends, consumers are favouring wide-leg, high-waist, vintage, and distressed styles, with increasing demand for customizable fits and embellishments.

• Indias denim export footprint is expanding; domestic producers are seizing opportunities from disruptions in Bangladesh and Vietnam through infrastructure investments to meet global brand sourcing needs

• National events like Denims and jeans India 2025 attracted global buyers spotlighting Indias position as a key sustainability and innovation focus hub.

2. OPPORTUNITIES AND THREATS: a) Opportunities:

• Global Sourcing Shift from Bangladesh & China

US tariffs on Bangladesh (35%) and a political crisis in Bangladesh are prompting western brands to diversify sourcing to India, presenting an immediate export opportunity for garment makers. Indias apparel exports grew 11.3% YoY in May, signalling momentum from redirected orders.

• Enhanced Government Incentives

The PLI scheme expansion targets small textile firms, aiming to grow garment exports to USD 50 billion by 2030. The India-UK Free Trade Agreement (May 2025) eliminates duties on UK imports and boosts export potential with luxury labels. ^•

• Sustainability-Driven Differentiation

Rising consumer and brand demand for organic cotton, recycled materials, and water- efficient dyeing enables premium positioning and access to niche eco-markets. Participation in circular fashion ecosystems—including take-back programs and recycled-content lines— enhances brand image and captures environmentally aware consumers.

• Technology-Led Value Creation

Adoption of laser finishing, digital printing, IoT quality controls, and Al-driven design-to- production systems enhances efficiency, reduces waste, and supports customized offerings. Smart fabrics (e.g., UV-blocking, stretchable, moisture-wicking) cater to rising demand in performance and athleisure segments.

• Customization & Premiumization

A rise in personalized denim—from custom fits to embellishments—driven by youth and urban consumers. Premium and designer denim is gaining traction thanks to higher disposable incomes and participation of fashion weeks (e.g., Lakme, other platforms) showcasing innovative denim eco-lines

• Tier-2/3 & E-commerce Expansion

Rapid urbanization and internet retailing are opening new frontiers in smaller cities and rural India via platforms like Myntra, Flip kart, and brand D2C channels. This enables cost- effective, scalable entry into emerging markets, bypassing traditional retail infrastructure challenges.

• Vertical Integration Momentum

Gujarat-based mills are expanding into garment manufacturing, encouraged by Gujarat Textile Policy 2024. This offers scope for end-to-end supply services, higher margins, and greater control in the value chain.

• Free Trade Agreements & Market Access

New and prospective FTAs with Australia, ASEAN, UK, EU allow duty-free or reduced tariffs for Indian exports, strengthening competitiveness.

b) Threats:

• High Raw-Material & Energy Costs

Cotton and input prices remain elevated compared to global benchmarks: spandex-30% costlier, polyester-25%, cotton>10% higher—significantly affecting manufacturing margins during FY 24-25. Denim production is energy-intensive, especially in dyeing and finishing, making margins vulnerable to energy price spikes.

• Intense Global & Regional Competition

Indian mills face pricing pressure from low-cost producers like Bangladesh, Pakistan, and Vietnam. Pakistans lower labour costs and streamlined export policies present a tangible competitive threat. Despite looming U.S. tariffs on Bangladesh, the sustained price competition requires India to constantly optimize cost and efficiency.

• Supply Chain Disruptions & Trade Slowdowns

Global disruptions such as the Red Sea shipping crisis spiked freight rates by up to 5* via the Suez Canal, squeezing timelines and increasing working capital cycles for Indian exporters. Softening demand in developed regions (e.g., Europe, Japan) during late 2023 and early 2024 weakened overall export volumes. ^•

• Regulatory and Labor Hindrances

Complex labour laws and high compliance burdens (e.g., licenses, shift restrictions, worker facilities) obstruct scalability and inflate operational costs. Cumbersome export-import processes and high duties on textile inputs (e.g., synthetic yarns) hinder competitiveness.

• Environmental and Social Compliance Pressures

Denim manufacturing is under scrutiny for high water usage (-22,500 L per kg cotton), disruptive dyeing waste, fossil-fuel energy consumption, and chemical pollution. Failure to meet global ESG norms could result in lost business, especially from brands prioritizing sustainability certifications and low environmental footprints.

• Domestic Demand Challenges

Despite rising aspirations, Indias discretionary consumer base is limited: only ~130-140 million Indians fall into the real consumer class, constraining growth in premium denim. Competitive threat from fast fashion entrants is intensifying price pressures in the value segment.

• Counterfeiting & Intellectual Property Risks

The prevalence of counterfeit or unbranded denim erodes margins and brand equity for authentic players.

3. SEGMENT WISE REVENUE PERFORMANCE:

F.Y.	Denim	Solar Energy	Wind Energy	Total
2024-25	23603.38	103.77	522.52	24229.66
%	97.42%	0.42%	2.16%	100.00%

4. OUTLOOK:

The Indian textile industry at large, as well as the denim industry in specific, is expected to grow further in the coming years. The global industry also has a promising future. This implies growth opportunities for R & B Denims Limited, in the domestic as well as global market. Owing to the growth in demand of apparels, especially from developing countries, as well as rise in income, the demand for denim has significantly increased and will continue to grow. Over the last 4-5 years, denim demand has increased steadily and several Indian denim players, including our company, have increased their capacity under the prevailing government incentive scheme. The industry has become more competitive in these terms. The companys values that focus on constant evolution and product innovation will help it in maintaining its strong standing in the industry and will eventually help in growing further in the future.

The outlook for the Indian denim industry remains optimistic. With supportive government policies, increasing domestic demand, and a focus on sustainable manufacturing, the industry is poised for continued growth. The adoption of advanced technologies and expansion into new markets will further enhance the global competitiveness of Indian denim manufacturers.

R&B Denims is well-positioned due to its capacity, sustainability initiatives, and improved profitability. The management plans to continue leveraging its integrated, eco-friendly model while expanding into higher-margin denim segments, so that the company can outperform peers in the evolving Indian denim landscape.

5. RISK AND CONCERNS:

The company is exposed to specific risks that are particular to its business and environment within which it operates, including Foreign Exchange Risk, Interest Rate Risk, Commodity Price Risk, Risk of Product Concentration and other Business Risk. While risk is an inherent aspect of any business, the company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measure for its mitigation including business portfolio risk, financial risk and legal risk and internal process risk.

The list of the potential risks the industry is exposed to domestically/internationally is given below:

a. Business Operational Risk: The business operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events like economic and market conditions, cut throat competitions at local as well as at international level, introduction of new players in textile markets, even events which are not directly connected with the organization like natural disasters, political and military turmoil etc.

It can be minimized by decreasing labour turnover, power cost, logistics, balancing demand & supply risks, implementing latest technologies to create new and innovative designs of textile products, techniques required to upgrade plants, boiler house, machines, equipment, uninterrupted availability of raw material at competitive prices so as to avoid production loss, maintenance of quality and harmonizing production for completing the orders in time as well. Fluctuations in yarn prices in international market which can impact the price / cost of a particular product(s) and its blend(s) is also a part of business operational risk.

b. Environmental Risk: The safety of environment is important because of its ecological, economic or social significance to an ecosystem. If environment get impact/suffer more due to highly polluting nature or due to violation of any environmental law/norms by the industry/business, then it may get adverse remarks from the Regulator/Statutory Authority or may have to face penal provisions as well as implications. An effort should be made to recycle the waste, make reusable products, use natural resources instead of hazardous chemicals to protect the environment.

c. Raw material risk: There is always a risk of inadequate or non-availability of raw materials in the market due to volatility in the prices of cotton, transportation cost etc. which could impede business profits and prospects.

d. Quality risk: Easy entry of various competitors in the market could affect the quality of products in order to match the competitive prices. Also, inability to match the stringent quality standards of leading retails brands consistently could impact product off take.

e. Working capital risk: To expand the business operations requires increased working capital and its proper management.

f. Purchasing power risk: It means loss of purchasing power due to the effect of inflation. This risk is also known as inflation risk. When there is inflation in the economy, the currency loses its value due to the rising price level in the economy. The higher the inflation rate, the faster the money loses its value.

g. Financial Risk: It is the uncertainty associated with how firms finance its business like by issue of shares, debentures, taking loans from government / financial institutions etc. Such financial transactions also include risk of default in payment of interest, dividend or repayment of capital due to various internal or external factors like increase in credit days of debtors, inflation, interest rate fluctuations, change in government policies etc. It may lead to loss of liquidity, falling assets value, significant change in cash inflow and outflow etc.

h. Liquidity Risk: Liquidity Risk reflects the possibility/position that a party may have insufficient funds to settle an obligation for full value when due because of insufficient capital or difficulty in selling as asset or an investment to generate capital, but will have funds to cover settlement obligations on some unspecified date thereafter. In non-bankruptcy situations, the allowable methods to cover short positions are generally driven by local market conventions. As a result, liquidity could be adversely affected by prohibitions on transactions such as Repos, Reverse Repos, Securities Lending and other allied components.

i. Global Risk: Global risk refers to an uncertain event or condition that can cause significant negative impact to several countries or industries for a long period of time. India is still emerging in the market of textile industries. There is a tremendous competition around the world. Indian manufacturers will have to face a tough fight to sustain in the competition. Due to poor infrastructure facilities, the production and transaction cost remain high in India. Also, Indias logistic disadvantage due to its geographical location can give it a major thumbs-down in global trade. As a result, high cost of shipments and longer lead time coupled with lack of infrastructure facility may prove to be a major hindrance. To overcome this problem, India needs to increase the size of its industrial infrastructure to capture the efficiencies of the economies of scale and it must cluster the textile production.

j. Political Risk: Political risk may be defined as the probability that a political event will impact adversely on a firms profit. It represents the financial risk that a countrys government will suddenly change its policies. A new law or a change in an existing could have a significant impact on an investment. Whatever laws the government passes today may be extinct tomorrow. This risk covers restriction on remittances in the buyers country or any government action which may block or delay payment to the exporter, war, revolution or civil commotion in the buyers country, cancellation or imposition of new export / import licensing restrictions in the buyers country, any other kind of loss occurring either in India or outside India which is not within the control of the exporter or the buyer.

k. Technological risk: Technology can response corporate culture and facilitate innovative procedures. In a garment manufacturing industry, the firm is constantly required to make changes and transformations in the production process over time, upgrade their machinery besides creating new facilities and additional capacities in order to survive in the highly competitive market.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The company maintains an efficient internal control system commensurate with the size, nature and complexity of its business. The internal control system is responsible for addressing the evolving risks in the business, reliability of financial information, timely reporting of operational and financial transactions, safeguarding of assets and stringent adherence to the applicable laws and regulations. The internal auditors of the company are responsible for regular monitoring and review of these controls. The Audit Committee periodically reviews the audit reports and ensures correction of any variance, as may be required. Key observations are communicated to the management who undertakes prompt corrective actions.

7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFOMRMANCE:

During the FY 2024-25, your company recorded total revenue of Rs. 23,613.76 Lakhs against Rs. 26,226.44 Lakhs in the previous year, representing a decrease of 9.92% during the year but Net Profit for the year 2024-25 stood at Rs. 2,091.85 Lakhs as compared to Rs. 1,872.75 Lakhs in financial year 2023-24 which has increased by 11.69% (Standalone basis)

During the current year, your company recorded total revenue of Rs. 36,678.27 Lakhs against Rs. 34,905.12 Lakhs in the previous year, representing an increase of 5.08% during the year and Net Profit for the year 2024-25 stood at Rs. 2,747.40 Lakhs as compared to Rs. 2,197.65 Lakhs in financial year 2024-25 which has increased by 25.02%. (Consolidated basis)

To conserve resources for the companys future growth plans, no dividend is being recommended by the Directors for the year ended 31^st March, 2025.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

At R & B Denims Limited, employees are its prime assets and a vital key to its success. The company is committed to creating a professional culture to nurture and enable people to grow in their careers alongside Companys success. The Company aims to build an inclusive and empowering work environment, focused on enhancing employee experiences. The Companys philosophy for People, Process, Policies and Practices contributes towards building an agile and performance- oriented organization. The company constantly strives to strengthen its manpower in alignment with the business needs and continue to engage them through various initiatives in the realm of learning & development opportunities, reward & recognition, employee engagement activities and career growth.

The company now has a pool base of more than 300+ employees which are contributing daily to the growth of the company.

9. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO :

Ratio	2024-25	2023-24	Variance
Debtors Turnover Ratio	5.31	6.40	-16.96%
Inventory Turnover Ratio	10.23	28.45	-64.06%
Interest Coverage Ratio	12.14	11.31	07.34%
Current Ratio	2.20	2.45	-10.29%
Debt-Equity Ratio	0.26	0. 20	29.48%
Operating Profit Ratio	0.12%	0.09%	33.33%
Net Profit Ratio	8.86%	7.14%	24.06%

Explanation for Change in the Ratio by more than 25% as compared to previous year:

Inventory Turnover Ratio: The Inventory turnover ratio has decreased due to higher closing stock retention in the current year.

Debt-Equity Ratio: The ratio has increased as the company has utilised more cash credit facility increasing the debt base with respect to previous year.

Operating Profit Margin: Increase in Earnings before interest and tax lead to increase in operating profit margin

10. RETURN ON NET WORTH AS COMPARE TO IMMEDIATELY PREVIOUS FINANCIAL YEARALONG WITH A DETAILED EXPLANATION THEREOF:

Return on net worth has decreased to 12.15% in FY 2024-25 as compared to 15.52% in FY 2023-24 due to increase in average shareholders equity in the current year.

Financial Year	2024-25	2023-24
Net Profit after tax	2,096.22	1,872.75
Average Shareholders Equity	17,248.50	12,064.03
Return on Net Worth	12.15%	15.52%

11. SUSTAINABLE DEVELOPMENT:

Sustainability has been deeply embedded into the Companys business and has become an integral part of its decision-making process while considering social, economic and environmental dimensions. During the year 2024-25, a Sustainable Development Strategy was developed with a focus on the following areas:

• Water Pollution Control Measures

Our company is a member of Gujarat Eco-Textile Park (GETP) since 2014; The Park helps us to reduce water pollution. The company has made sure that it implements various measures across all its operations to control fugitive emissions from polluting our water bodies.

• Air Pollution Control Measures

Initiatives have been taken to reduce air pollution which is caused due to production processes. Our company has obtained a license from Gujarat Pollution Control Board (GPCB) to ensure pollution control. Gujarat Pollution Control Board (GPCB)ensures that the pollution control limits are maintained by surprise inspections at the factory. These inspection samples are then tested in their own laboratory and report is issued. The Company has also installed Air Receiver in the weaving department to reduce and control on toxin emissions.

12. HEALTH & SAFETY:

The company believes Health & Safety as an indispensable province. Company has placed suitable facilities for all workers and employees like proper lighting, ventilation, no congestion, medical kits, stretchers, fire extinguishers etc. at prominent places. Personnel at supervisory level have been trained in basic life support techniques. The safety measures taken by the company has resulted in improving the conditions under which workers are employed and work, consequently increasing the productivity.

13. INFRASTRUCTURE:

The company is equipped with modern infrastructure facilities which assist in smooth production. The companys manufacturing unit is outfitted with advanced machines and equipment and a trained staff, who have years of experience behind them. To sell products to the clients, the company has facilitated a smooth transportation mechanism through a strong base of transporters and traders.

14. CAUTIONARY STATEMENT:

The above Management Discussion and Analysis contains certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to several risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding a fluctuation in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time on behalf of the company.

Date: 11th July, 2025	For and on behalf of the Board of Directors
Place: Surat	R & B Denims Limited
	Sd/-
	Amit Dalmia
	Chairman & Managing Director
	DIN:00034642