Rubfila International Ltd Management Discussions

Management Discussion and Analysis of Operations

1. ECONOMIC REVIEW & OUTLOOK

The global economy remained relatively stable during the financial year 2025-26 despite a challenging operating environment characterised by geopolitical tensions, trade policy uncertainty, shifting tariff regimes, supply-chain realignments and volatility in commodity and energy markets.

The global economy demonstrated a degree of stability and adaptability notwithstanding persistent trade and policy uncertainties. According to the World Bank, global growth was expected to remain broadly steady, although the medium-term growth environment continued to be weaker than historical averages. The IMF also highlighted that elevated trade barriers, geopolitical fragmentation and financial vulnerabilities continued to represent significant downside risks to global growth.

Trade policy developments remained one of the defining features of the year. Changes in tariff structures and bilateral trade arrangements influenced sourcing decisions, competitiveness and investment plans across manufacturing industries.

Against this global backdrop, the Indian economy continued to demonstrate strong underlying fundamentals. Indias real GDP for FY 2025-26 is estimated to have grown by 7.7%, compared with 7.1% in FY 2024-25. The Indian economy continued to benefit from strong domestic consumption, public capital expenditure, improving investment activity, a robust financial sector and continued structural reforms.

The textile and apparel sector, which constitutes the principal end-use market for latex rubber thread, continued to operate in a challenging but relatively steady environment.

At the same time, the US tariff environment remained fluid during the year. The Government of India continued to engage with the United States regarding tariff and market-access issues, while the textile industry adapted to changing trade conditions by increasing exports to a wide range of international destinations. The evolving global trade environment reinforces the importance of market diversification for Indian exporters.

For the Company, these developments have both positive and challenging implications. Since latex rubber thread is predominantly used in the textile and apparel industry, the Companys performance remains closely linked to the fortunes of the garment and innerwear sectors in India and overseas. Accordingly, diversification of export markets, strengthening customer relationships, maintaining product quality and improving cost competitiveness will remain important strategic priorities.

2. SECTOR OVERVIEW

Natural Rubber and Latex Industry

The natural rubber industry continued to experience considerable volatility during FY 2025-26. Global production and consumption remained closely balanced, with weather-related disruptions, inadequate replanting, changing plantation economics and geopolitical developments continuing to influence availability and prices.

India continues to remain structurally dependent on imports to bridge the gap between domestic natural rubber production and consumption. Industry data indicates that domestic natural rubber production remains substantially below domestic consumption requirements. This structural demand-supply gap has important implications for domestic rubber processors and downstream manufacturers.

During FY 2025-26, domestic natural rubber prices remained firm and volatile, influenced by domestic availability, international prices, climatic conditions and the balance between domestic production and consumption. The differential between domestic and international prices continued to remain an important competitiveness factor for Indian downstream rubber manufacturers.

The natural rubber market also remained exposed to international freight rates, currency movements, crude oil prices, geopolitical developments and changes in import policies. These factors can influence the landed cost of imported raw materials and consequently affect the competitiveness of Indian manufacturers.

For the latex rubber thread industry, the availability and cost of natural latex remain particularly important. The Companys ability to manage procurement effectively, optimise inventory, improve process efficiencies and maintain appropriate customer pricing therefore remains critical to protecting margins and sustaining operational efficiency.

Textile and Apparel Industry

The textile and apparel industry continued to face an uneven global demand environment during FY 202526. Consumers in several developed markets remained sensitive to inflation and economic uncertainty, while apparel manufacturers continued to manage inventory levels and sourcing costs carefully

The long-term prospects for the Indian textile industry remain positive, supported by Indias large manufacturing base, availability of skilled manpower, integrated textile clusters, growing domestic consumption and increasing global interest in supply-chain diversification.

The industry is also witnessing increasing emphasis on sustainability, traceability, responsible sourcing, energy efficiency, recycling and environmentally responsible manufacturing. These trends are expected to influence product development and procurement practices across the textile value chain, including suppliers of elastic and functional textile components such as rubber thread.

Against this backdrop, the latex rubber thread industry is expected to benefit from the long-term growth of innerwear, sportswear, medical textiles, hosiery and other elasticised textile applications. However, competition from spandex and other synthetic alternatives, together with fluctuations in raw material prices, will continue to require continuous improvement in product quality and cost efficiency

Companys Performance

Despite the challenging market environment, your Company delivered a satisfactory operational performance during FY 2025-26. Revenue from operations increased to Rs.51,171.86 lakhs from Rs.46,840.78 lakhs in the previous year, registering growth of approximately 9.24%. Profit After Tax stood at Rs.2,630.13 lakhs compared with Rs.2,464.52 lakhs in FY 2024-25, representing growth of approximately 6.72%.

The Companys performance reflects the strength of its core business, supported by stable customer relationships, growth in export markets, product quality and continued emphasis on operational efficiencies.

The Companys established brand, "Rubfil" continued to be an important competitive strength in both domestic and international markets.

3. OPPORTUNITIES & THREATS

Opportunities for the Company

1. Strong brand equity and established market position :

The "Rubfil" brand enjoys a strong reputation for quality and reliability in the latex rubber thread industry. The Companys established relationships with domestic and international customers provide a strong foundation for further business development.

2. Export market diversification

The Companys export performance during FY 202526 demonstrates the potential to expand into new geographical markets. The addition of customers in Hungary and Indonesia and continued business from Brazil, Morocco and Bangladesh provide opportunities for further diversification.

3. Long-term growth of the textile and apparel industry

The long-term growth of the global textile, apparel, innerwear, sportswear and hosiery sectors provides a favourable demand environment for latex rubber thread. Indias expanding textile manufacturing ecosystem and increasing export orientation provide additional opportunities.

4. India-EU trade opportunities

The conclusion of the India-EU Free Trade Agreement negotiations presents a potentially significant opportunity for Indian textile, apparel and rubber- product exporters. Improved market access and tariff competitiveness could support Indias integration into European supply chains over the medium term.

5. Increasing demand for specialised textile applications

Growing applications in innerwear, sportswear, medical textiles, shapewear and other elasticised textile products provide opportunities for product development and value-added applications.

6. Domestic consumption potential

Indias large and growing population, rising disposable incomes, urbanisation and increasing participation in organised retail and branded apparel provide a longterm opportunity for growth in the domestic textile and apparel market.

Threats

1. Volatility in natural latex prices

Natural latex prices remain subject to fluctuations arising from domestic supply-demand conditions, international commodity prices, climatic conditions, plantation economics and import policies. Sustained increases in raw material prices may adversely affect operating margins if the increase cannot be fully passed on to customers.

2. Domestic and international price differential

Indian natural rubber prices can remain higher than international prices during periods of domestic supply constraints. Such price differentials can adversely affect the competitiveness of Indian downstream manufacturers.

3. Competition from imports

Imports from countries benefiting from preferential tariff arrangements, particularly under existing trade agreements, may exert pressure on domestic manufacturers. Changes in tariff structures and trade agreements could alter the competitive environment.

4. Competition from substitute products

Spandex and other synthetic elastic materials continue to compete with latex rubber thread in several textile applications. Changes in product technology, customer preferences and relative pricing may influence the demand for rubber thread.

5. Climate-related risks

Natural rubber production is highly dependent on climatic conditions. Excessive rainfall, prolonged dry periods, extreme weather events and changes in seasonal patterns can adversely affect rubber tapping and raw material availability.

6. Geopolitical and trade-policy risks

Changes in tariffs, sanctions, trade restrictions, shipping routes and geopolitical relationships can affect international trade flows, freight costs and export competitiveness.

7. Global textile demand

Since a substantial portion of latex rubber thread is ultimately consumed by the textile and apparel industry, any sustained weakness in garment production or exports could adversely affect demand for rubber thread.

8. Increasing operating costs

Energy, labour, logistics, packaging and other operating costs continue to remain important factors affecting the competitiveness of manufacturing companies. Continuous improvement in productivity and cost management will therefore remain essential.

4. OUTLOOK

The outlook for the global textile and apparel industry remains cautiously optimistic. While the pace of recovery in individual markets may vary, the long-term fundamentals of the industry remain positive. Global sourcing is increasingly being influenced by supply-chain diversification, resilience, sustainability and the need to reduce concentration risk.

India is well positioned to benefit from these structural changes due to its established textile manufacturing base, availability of raw materials, skilled workforce, large domestic market and expanding international trade relationships.

The conclusion of negotiations for the India-EU Free Trade Agreement represents an important long-term opportunity for Indias textile and apparel sector. Improved access to the European market could strengthen the competitiveness of Indian exporters and create opportunities across the textile value chain.

At the same time, international trade remains subject to significant uncertainty. Tariff policies, geopolitical developments and changing sourcing strategies may continue to influence the global textile supply chain. The Company believes that diversification of export destinations will remain an important strategic priority.

The natural rubber industry is expected to remain sensitive to supply-side constraints and climatic conditions. Global natural rubber demand is projected to remain firm during 2026, while production is also expected to increase moderately. However, the market is likely to remain susceptible to periodic supply disruptions and price volatility.

PREMIER TISSUES INDIA LIMITED

The Indian tissue paper industry continues to offer significant long-term growth opportunities. Increasing awareness of hygiene and sanitation, urbanisation, rising disposable incomes, changing consumer lifestyles and the expansion of organised retail, hospitality, healthcare and food-service sectors are expected to support the long-term growth of tissue paper consumption in India.

Per capita tissue consumption in India continues to remain substantially below that of developed markets, indicating considerable headroom for future growth. Increasing consumer awareness of hygiene and convenience is expected to gradually expand the addressable market for tissue products.

The industry, however, remains highly competitive, with the presence of a large unorganised sector. Organised manufacturers continue to face challenges relating to pricing, product differentiation, distribution and imitation products.

Premier Tissues continues to leverage its established "Premier" brand, product quality, distribution network and customer relationships to strengthen its market position. The Company remains focused on improving distribution reach and increasing its presence across retail, institutional, e-commerce and other emerging channels.

Digital commerce continues to influence consumer buying behaviour. E-commerce and quick-commerce platforms provide opportunities to improve product availability and reach new customer segments, particularly in urban and semi-urban markets.

Institutional sales also provide an important avenue for growth, particularly across hospitality, healthcare, offices, education and other commercial establishments. Premier is continuing to explore opportunities in these segments.

During FY 2025-26, Premier Tissues India Limited recorded turnover of Rs.9,462.56 lakhs and net profit of Rs.31.30 lakhs. The business continues to focus on strengthening its market position, improving operational efficiencies and expanding its distribution footprint.

The tissue paper industry is also witnessing increasing attention towards sustainability, responsible sourcing, recycling, energy efficiency and resource conservation. Premier remains committed to adopting responsible manufacturing practices and aligning its operations with changing customer and regulatory expectations.

The Company is also pursuing opportunities in international markets to diversify its revenue base and expand its global footprint. The continuing development of export markets, institutional business and digital channels is expected to provide additional avenues for growth.

To support future growth, Premier is augmenting its manufacturing capabilities through additional production capacity. The proposed capacity expansion is expected to improve manufacturing flexibility, strengthen supply capabilities and enable the Company to address anticipated growth in domestic and international demand.

With an established brand, expanding distribution network, growing institutional and digital channels, capacity enhancement and continued focus on quality and operational excellence, Premier Tissues India Limited remains well positioned to participate in the long-term growth of Indias tissue paper industry.

Having said that, the company cannot also rule out the challenges it faces from the presence of numerous local converters who operate in their respective small geographical markets. These players with very low costs of operations offer products at much lower prices acting as a major threat to the organised players. Many unorganised players also resort to unethical and unfair practices like misrepresenting the labels, tampering with quality and quantity, evasion of taxes etc. This helps offer the products at highly competitive prices which are unviable for the companies in the organised sector.

5. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has established appropriate internal financial controls and operating controls commensurate with the size and nature of its business.

Internal financial controls form an integral part of the Companys risk management framework and are designed to safeguard assets, ensure the reliability of financial reporting, promote operational efficiency and ensure compliance with applicable laws and regulations.

The Companys internal control framework is supported by documented processes, management reviews, control self-assessment, segregation of duties, authorisation procedures and periodic review by functional management.

The effectiveness of the internal financial control framework is reviewed through management oversight and independent testing carried out by the Internal Auditors. Significant observations, if any, are reviewed by the Audit Committee and appropriate corrective measures are taken.

The Company believes that its internal financial control systems provide reasonable assurance regarding the reliability of financial reporting and the safeguarding of assets.

6. FINANCIAL AND OPERATIONAL PERFORMANCE

a) Segment-wise Financial Performance

	Standalone	Consolidated	Standalone	Consolidated
Particulars	2025-26	2025-26	2024-25	2024-25
Segment Revenue
Latex Rubber Thread	50,461.97	50,461.97	46,348.26	46,348.26
Corrugated Carton Box	1,271.12	1,271.12	991.61	991.61
Paper Tissue	0.00	9,462.56	0.00	8,513.06
Less Inter Segment Elimination	561.23	945.69	(499.09)	811.65
Total Segment Revenue	51,171.86	60,249.96	46,840.78	55,041.28
Segment Results
Latex Rubber Thread	3,432.97	3,432.97	3,253.51	3,253.51
Corrugated Carton Box	123.49	123.49	93.20	93.20
Paper Tissue	0.00	171.91	0.00	642.10
Sub Total	3,556.46	3,728.37	3,346.71	3,988.81
Less: Finance costs	3.45	15.25	0.72	12.33
Less: Unallocable Expenses	0.00	0.00	0.00	0.00
Profit Before Tax	3,553.01	3,713.12	3,345.99	3,976.48
Less Tax Expense	922.88	1051.93	881.47	1032.63
Net Profit for the year	2,630.13	2,661.19	2,464.52	2,943.85

b) Key Financial Parameters:

	Standalone		Consolidated
Particulars	2025-26	2025-26	2024-25	2024-25
Debtors Turnover Ratio	7.88%	8.28%	8.59%	9.05%
Inventory Turnover Ratio	13.02%	10.42%	14.08%	11.37%
Interest Coverage Ratio	NA	NA	NA	NA
Current Ratio	6.01%	5.22%	5.31%	5.19%
Debt Equity Ratio	NA	NA	NA	NA
Operating Profit Margin (%)	7.37%	6.71%	8.03%	8.13%
Net Profit Margin (%)	5.14%	4.42%	5.37%	5.43%

Please refer Board Report on performance review and financial statements for detailed performance.

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

Rubfila is committed to maintaining a professional, inclusive and performance-oriented work environment that enables employees to develop their capabilities and contribute effectively to the Companys objectives.

The Companys HR philosophy is centred on developing a high-performing organisation in which employees are encouraged to perform to their full potential, continuously upgrade their skills and contribute towards individual, departmental and organisational excellence.

The Company continues to focus on employee development, workplace safety, productivity enhancement, performance management and employee engagement.

Industrial relations during the year remained cordial and satisfactory. The Company recognises that a skilled, motivated and engaged workforce is essential for sustaining operational excellence and supporting the Companys growth objectives.

The Company continues to encourage a culture of teamwork, accountability, continuous improvement and responsible conduct across all levels of the organisation.

Employee strength as at 31st March 2026: 359 employees, compared with 324 employees as at 31st March 2025.

The Company will continue to invest in human capital development and capability building in line with its operational and strategic requirements.

8. RISK MANAGEMENT

The Company has established a risk management framework to identify, assess, monitor and mitigate material business risks and to identify opportunities arising from changes in the operating environment.

The principal risks relevant to the Companys business include raw material price volatility, availability of natural latex, market demand, foreign exchange movements, export-market risks, changes in trade policies, competition from imports and substitute products, climatic conditions, energy costs, logistics disruptions and regulatory developments.

The Audit Committee also functions as the Risk Management Committee and assists the Board in reviewing material risks and the Companys risk profile. Risk exposures are reviewed periodically and appropriate mitigation measures are implemented based on the nature and significance of the risks identified.

The Company continues to strengthen its risk management practices in response to the increasingly dynamic global business environment.

CONCLUSION

FY 2025-26 was a year of resilience and measured growth for Rubfila International Limited. Against a backdrop of global trade uncertainty, volatile natural rubber prices, changing tariff regimes and subdued demand in certain textile markets, the Company achieved growth in both revenue and standalone profitability.