Rishi Techtex Ltd Management Discussions

Economic Outlook Performance

The new decade has witnessed a series of adverse shocks since its outset. From pandemics to wars, from trade tensions to climate disruptions, the world economy has endured an extraordinary string of crises since 2020.

In the globalised world, the intensity of these challenges is compounded by their interconnectedness. For instance, a heating climate increases the risk of pandemics; pandemics undermine economies; shaky economies fuel political upheaval.

According to the June 2025 edition of the World Banks Global Economic Prospects report, the world economy is forecast to have expanded by just 2.3% in 2025—down from 2.8% in 2024. In FY26, the global economy is projected to slow further as geopolitical tensions and trade wars disrupt international commerce and increase economic uncertainty. (See Chart I: Global GDP Growth) .

Decelerating Global Growth

This decelerating global growth is projected to be the slowest pace since 2008, excluding outright global recessions. This has resulted in growth forecasts being cut in nearly 70% of all economies across all regions and income groups.

Furthermore, trade tensions are setting the stage for the weakest decade of growth since the 1960s. Economic development in many of the worlds poorest regions has come to a standstill.

Monetary Policies

At a projected average of 2.9% in 2025, increased tariffs and tight labour markets exerted upward pressure on global

services inflation are proving more persistent, declining more gradually and remaining above pre-pandemic averages in most countries.

This stickiness complicates monetary strategy normalisation. Central banks are likely to maintain a vigilant and prudent stance, implying that borrowing costs may remain elevated for an extended period.

Rapidly Evolving Polycrises

The primary risks for FY26 include further escalations in trade barriers and heightened ambiguity, which could intensify growth slowdowns and disrupt. Core cross-border supply chains.

Geopolitical tensions also continue to pose a threat, with the potential to trigger new price spikes in commodities.

India Overview

Amid global uncertainty, India stands tall an island of growth, resilience and opportunity. In FY25, Indias economy continued its robust growth trajectory, reinforcing the countrys position as one of the fastest-growing major economies globally.

According to the June 2025 edition of the World Economic Prospects by the World Bank, Indias GDP growth is projected to be significantly higher than both the global average and the average for developing economies between 2025 and 2027. (refer Chart II: Real GDP Growth) .

This period of sustained economic expansion underlines Indias continued role as a key driver of global economic growth. It is driven by a combination of evolving factors:

Strong Fundamentals

While global economic uncertainties persist, Indias economy demonstrated strong growth, supported by robust consumption and government spending in FY25. During the period under review, inflation moderated, and government measures helped stabilise market liquidity.

Furthermore, political stability, policy continuity, stimulus, and strong reforms increased economic activity, thereby boosting investor confidence in the strengths of domestic demand. However, foreign portfolio outflows and currency depreciation continue to remain key risks.

Positive Interplay of Domestic Conditions

In FY25, Indias economic growth was significantly driven by a positive interplay of domestic factors. These include a strong domestic demand, consistent government spending, and resilient external demand. These factors supported stable commerce & economic activity, helped contain inflation, and fostered optimism in financial markets. The prospects were further propelled by digitalisation, consumption-driven demand, and infrastructure investments.

Opportunities to Scale

Indias continuous economic growth is a positive signal for industries, creating fertile ground for investment, production, and consumption. However, as highlighted in the 2025 edition of the Economic Survey, there are challenges in producing critical goods at the required scale and quality. This affects the ability to meet the infrastructure and investment demands of an aspiring economy. Addressing this gap requires focused investment in domestic supply-chain capabilities, automation and quality control. For the MSME sector, this presents a significant to scale operations, enhance manufacturing competitiveness, and play a pivotal role in powering Indias next phase of growth.

Industry Update

Despite the broader economic turbulence, the global technical textile market is projected to sustain robust growth, consistently outpacing general global GDP forecasts.

The industry is forecast to grow at a Compound Annual Growth Rate (CAGR) of 6.5% between 2025-2032. (refer Chart III: Technical Textiles: Global Growth Prospects).

Domestic Technical Textile Sector

Indias technical textile sector is witnessing focused institutional assistance and structural growth, driven by increasing demand across various industries, including healthcare, defence, infrastructure, and agriculture. In recognition of its strategic importance, the Government of India launched the National Technical Textiles Mission (NTTM) for the period 2020–21 to 2025 26, with a financial outlay of Rs1,480 Crore. The Mission is structured around four key components to enhance Indias capabilities and competitiveness in this high-potential segment. These are:

• Research and innovation

• Promotion and market development

• Export promotion

• Education, training, and skill development

Since the inception of NTTM, Rs393.39 Crore has been deployed towards initiatives in these categories. Notably, 168 research projects worth approximately Rs509 Crore have been approved, underscoring the missions emphasis on innovation and indigenous development.

Through coordinated efforts involving industry, academia, and government, NTTM aims to position India as a global hub for technical textiles while also fostering self-reliance and export growth in the sector.

Factors Lending to the Growth of the Technical Textiles Sector

The inherent momentum of the technical textiles industry, even amidst a slowing global economy, is driven by several key factors:

Diverse and Non-discretionary Demand Drivers:

The strength of the technical textile market lies in its vast array of applications across critical industries, such as agriculture, automotive, construction, healthcare, and packaging. All of these are direct beneficiaries of the economic ecosystem. This factor makes the technical textile sector less susceptible to downturns in any single industry.

Structural Shifts: The long-term demand for essential, high-performance technical textile materials is being driven by structural shifts such as urbanisation and ageing populations. Additionally, evolving defence requirements and advancements in science and technology are further contributing to this trend. This demand transcends geographic, income, and regional boundaries.

Continuous Innovation: The sector is undergoing a profound transformation fuelled by continuous technological innovation, including the integration of smart textiles and advanced manufacturing processes. These factors, coupled with continuous innovation, allow the sector to maintain a robust growth trajectory that often outpaces the general economic environment.

A Future Ripe with Opportunities

An accelerating global shift towards sustainability and circularity, reinforced by increasingly stringent regulatory frameworks, is reshaping product development and market access for the global technical textiles industry. The competitive landscape is dynamic, marked by strategic consolidation and collaborations aimed at leveraging these trends. Indias journey towards becoming a global leader in technical textiles is gaining momentum. A robust policy framework, combined with advancements in technology and research, as well as investments in skill development, is laying a strong foundation for this transformation. With sustained focus on innovation, capacity building, and strategic regulatory support, India is well-positioned to drive growth in the global technical textiles market. This approach promises to enhance both its economic potential and international competitiveness.

Performance Analysis

In FY25, Rishi Techtex registered revenues of Rs12,562.23 lakhs as against Rs11,173.57 Lakhs in FY24. This marked an increase of 12% in y-o-y performance.

Further, in FY25, Rishi Techtex demonstrated a robust increase in EBIDTA by 16.74% - registering an increase from Rs761.30 Lakhs in FY24 to Rs888.72 Lakhs during the year under review.

During the year, the companys net profits stood at Rs229.94 Lakhs. This is a 71% increase over the last years profits which stood at Rs134.83 Lakhs.

Operational and Strategic Progress

The increase in both topline and profits is attributed to a combination of operational efficiency, strategic cost control, and a focus on automation. Key contributing factors include:

Capacity Expansion: In FY25, Rishi Techtex doubled the capacity of its Vapi facility, adding new state-of-the-art automated finishing lines and expanding infrastructure to meet growing demand across domestic and export markets.

Operational Efficiency: The Company undertook significant process improvements, optimising material usage without compromising product quality. This lean approach helped reduce input costs and improve margins amid a price-sensitive market.

Automation Drive: Investments in automation—particularly in the bag manufacturing division—resulted in increased output, greater consistency, and better product quality. The increased production capacity, enabled by automation, allowed us to onboard new institutional customers.

This contributed to a more balanced and profitable order book.

Strategic Sourcing: Raw material sourcing was diversified from vendors. This included government vendors, such as Mangalore Refinery and Petrochemicals Limited (MRPL), and suppliers based in the Middle East. This sourcing strategy led to better pricing and supply stability. We also introduced recycled raw materials as a part of our sourcing strategy in line with our commitment to sustainable manufacturing.

Stable Product Portfolio: Alongside investing in a few new products, the company concentrated on refining existing formulations and expanding the efficiency of its current lines. This approach ensured profitability without incurring R&D expenses.

Together, these strategic and operational moves created a strong foundation for profitable growth.

Challenges to Performance

While the year saw significant gains, Rishi Techtex faced certain macro-economic challenges in the border context of operational and market realities faced by our ^industry:

Price-sensitive Segments: Some product categories, particularly in the construction and infrastructure space, operate within highly price-competitive environments. This limits our pricing flexibility and puts pressure on per-unit margins.

Technology Adaptation: Even as we continued to invest in automation, adapting to new technologies and ensuring alignment with performance expectations remains an ongoing process.

Barriers to R&D Investments: In some categories, consumer understanding of long-term product value remains limited, impacting demand for more durable or specialised variants. This factor presents a hurdle to product innovation and long-term differentiation, which we believe will see a correction.

These challenges underscore the importance of our strategic agility, deeper customer engagement, and sustained investment in technology and skilling to navigate evolving market dynamics.

Opportunities for growth

As we consolidate our core strengths, we continue to identify emerging areas that can drive sustainable, long-term value for the business.

Export Markets

There is clear potential for further market development and geographic diversification

However, we remain prudent in our approach to expanding export-led growth, given the evolving global trade environment and associated complexities.

Recycled Material Integration

Over the last two years, our use of recycled materials has increased from 0% to 15%.

While fully biodegradable solutions remain absent due to durability requirements, the Company continues to explore hybrid solutions without compromising strength or shelf life.

Evolving Regulatory Landscape

Rishi Techtex operates across segments where public and government policy plays a significant role in driving adoption.

Increased enforcement of regulatory guidelines, especially in the areas of safety, along with targeted incentive mechanisms, can create strong tailwinds for growth across our product categories.

Together, these avenues represent forward-looking opportunities to diversify our portfolio, increase our competitiveness, and reinforce our position as a resilient, future-ready enterprise.

Division-wise Review

Rishi Techtex structures its operations around two specialised manufacturing verticals: the Woven Division and the Knitted Division. Both the divisions leverage distinct technologies and market applications.

Together, these divisions enable the Company to meet a broad spectrum of industry requirements with precision and adaptability.(refer Chart IV:FY25 :Segment wise Revenue Contribution (in%)

Woven Department

Overview

The Woven division focuses on products made using weaving techniques, where flat tapes of Poly Propylene (PP) or

High-Density Poly Ethylene (HDPE) are interlaced at right angles to form strong, durable fabric. The process ensures high tensile strength and structural integrity.

FY25 in Review

The Woven Division maintained its contribution to the Companys consolidated revenues in FY25, driven by continued demand from the paints, cement, and petrochemical industries.

With a total installed capacity of 50 million woven sacks per annum, the division reported stable volumes in domestic markets. Efforts in process streamlining, cost rationalisation, and automation helped mitigate price sensitivity in core segments.

Automation Supports Scale

The division operates in highly price-sensitive environments, especially in the construction segment, where product differentiation is low. Investments in automation enabled us to increase the output across bag production lines, leading to improved throughput and reduced dependence on manual labour. Two automated lines were added this year, further standardising output and supporting scale.

An Expanding Customer Base

Further, the Company also broadened its institutional customer base, successfully onboarding entities such as Aditya Birla Paints. At the same time, we continued to strengthen our long-term relationship with anchor clients such as Asian Paints.

A healthier portfolio diversification continues to be our goal to ensure a robust de-risking strategy.

Innovating to Capture New Segments

Over the past few years, we have expanded the product mix of the Woven Department beyond traditional segments such as PP and HDPE woven sacks to include tarpaulins, weed mats, and ground covers.

These additions have supported the Companys entry into new sub-segments such as horticulture and civil infrastructure.

Knitted Department

The Knitted Division produces fabrics by inter-looping yarns typically of High Density Polyethylene (HDP) to create flexible, lightweight nets with high breathability and UV resistance.

Rishi Techtex exports its knitted products which are designed to protect crops, enhance yields, and ensure safer environments. They are ideally suited for horticulture, construction, and environmental protection.

Revenue Performance

The Knitted Division continued to be a key growth driver for Rishi Techtex in FY25, anchored in a commitment to quality, innovation, and export excellence. Our state-of-the-art facility is equipped with advanced production lines to deliver shade nets ranging from 20 GSM to 400 GSM. They are available in all industry-standard configurations Tape x Tape, Tape x Mono, and Mono x Mono.

These capabilities enable the division to address a broad spectrum of requirements with precision and flexibility.

Portfolio Expansion

In FY25, we introduced an expanded range of Aluminet, Anti-Hail, and Fire-Retardant (FR) Nets, supporting climate resilience and safety requirements across international markets. Together, these categories accounted for over 1.32 million sq.mts in exports during the period under review.

Additionally, the Company enhanced its portfolio of Bird Nets and Crop Covers. The combined exports in both these categories exceeded 4.95 million sq.mts, reflecting growing demand across agriculture, horticulture, and urban infrastructure.

Product Innovation and Improvement

In line with our commitment to continuous product improvement, we developed a new variant of the silver net that closely mirrors the quality of imported alternatives at a more accessible price point. The newly introduced material is 40% stronger than the previous version, enabling us to offer a 3-year product guarantee. This marks a significant enhancement over earlier iterations that carried no warranty. The division also piloted a direct-to-customer packaging model, with plans to roll out retail-ready variants in FY26.

Expanding Export Footprint

In FY25, the Company exported over 39.4 million sq.mts of shade and technical nets to 11 countries, including established markets in the Middle East, UK, and Guatemala. We also added new institutional buyers in Ireland and the USA (refer chart V: Country-wise Exports.)

• The total weight of exported products increased from 560.60 MT in FY24 to 668.62 MT in FY25 – indicating a growth of 19.3%

• The surface area expanded by 9.74% - from 35,93,592.00 sq. mtrs in FY24 to 39,43,553 sq. mts in FY25

• The export revenues registered a double digit increase at 13.7% - from Rs1,292.46 Lakhs in FY24 to Rs1,468.88 Lakhs in

FY25

This consistent performance across volume, surface area, and revenue underscores the trust placed by international buyers in the quality and reliability of the products manufactured by us.