Sangam India Ltd Management Discussions

GLOBAL ECONOMY: STABILITY HOLDS AS FAULT LINES PERSIST

The global economy continues to grow steadily, although performance remains uneven across regions. According to the IMFs January 2026 World Economic Outlook Update, global GDP is projected to grow by 3.2% in 2025, rising modestly to 3.3% in 2026. This stability reflects diverging trends across major economies, with emerging and developing markets contributing a larger share of growth, while advanced economies expand more slowly.

Global conditions remain shaped by a mix of risks and moderating factors. Trade fragmentation and geopolitical uncertainties continue to challenge global trade flows and economic visibility. However, easing inflation across several economies is enabling central banks to gradually move away from earlier monetary tightening, thereby supporting financial conditions.

Within advanced economies, the United States is expected to moderate to around 2.0% growth in 2026, while the Euro Area is projected to grow by approximately 1.3%, reflecting persistent structural constraints despite some labour market support. In contrast, emerging markets, particularly in Asia, continue to demonstrate stronger growth momentum, supported by domestic demand and investment activity.

[Source: https://www.imf.org/en/publications/ weo/issues/2026/01/19/worid-economic- outiook-update-january-2026 ]

INDIAN ECONOMY: SUSTAINED MOMENTUM IN A DYNAMIC ECONOMY

India continues to record rapid growth compared with other major economies. The National Statistical Offices second advance estimates, released in February 2026, project real GDP growth at 7.6% for 2025-26, up from 7.1% in 2024-25. Nominal GDP is projected to grow by 8.6%.

Economic activity remains supported by multiple sectors. Services and construction continue to contribute meaningfully, alongside steady domestic demand. Rural demand is also improving, supported by agricultural output and sustained government spending.

At the same time, macroeconomic stability remains within policy targets. Inflation has moderated and stays within the Reserve Bank of Indias tolerance band of 4% (?2%), aided by easing price pressures and supply-side measures. The Union Budget 2026-27 reinforces this trajectory, maintaining focus on infrastructure development, manufacturing support, and MSME financing, signalling policy continuity. Collectively, these factors keep India among the fastest-growing major economies.

[Source: https://www.indiabudget.gov.in/ economicsurvey/ ]

INDUSTRY OVERVIEW

Global Textile Industry

The global textile and apparel market continues a sustained structural growth trajectory, adeptly navigating shifting trade policies, evolving regulatory environments, and the rapid onset of digital and green transformations. Driven by rising middle-class populations in emerging economies, the ongoing evolution of fast-fashion into more agile, on-demand supply models, and a booming e-commerce ecosystem, the market is expanding robustly. Agility and adaptability have become the ultimate competitive advantages.

Furthermore, consumer awareness regarding environmental sustainability has transitioned from a niche, premium preference to a central, non- negotiable pivot for the mass industry. [Source: https://www.

thebusinessresearchcompany.com/report/ textile-global-market-report ]

Regulatory frameworks, particularly the Carbon Border Adjustment Mechanism (CBAM) in the EU and stringent US sourcing laws, are increasingly mandating transparent and ethical manufacturing practices,

effectively penalising high-carbon supply chains. Simultaneously, the industry is witnessing the rapid adoption of Industry 4.0 models. Advanced digital manufacturing, Al-driven supply chain optimisation to predict demand and minimise deadstock, 3D garment design, and the commercialisation of smart textiles are significantly enhancing productivity. These technological advancements are reducing time-to-market while enabling the development of new, high-margin functional apparel categories.

Key Industry Metrics

1 KPI Metric	Details (Period and Comparison) j
Market Size (2025)	USD 660.13 Billion
Market Size (2026)	USD 702.97 Billion (Growth over 2025)
Projected Market Size (2030)	USD 919.08 Billion
Growth Rate (2025-26)	6.5%
Forecast CAGR (2026-35)	6.9%
Largest Region (2025)	Asia-Pacific
Fastest-growing Region	Western Europe

[Source: https://www.thebusinessresearchcompany.com/report/textile-global-market-report]

Indian Textile Industry

The Indian textile and apparel (T&A) industry stands as a historic and contemporary pillar of the national economy. It seamlessly blends traditional craftsmanship with modern, large-scale automated manufacturing.

Valued at approximately USD 179 Billion, the sector is a significant economic contributor, accounting for around 2% of GDP, 11% of manufacturing GVA, and over 8% of total exports. Recent government surveys highlight robust growth, with the domestic textiles market expanding at an 8.3% CAGR.

During this period, per capita textile demand has tripled, reflecting sustained momentum driven by rising incomes and evolving lifestyle preferences.

[Source: https://www.pib.

gov.in/PressReieaseDetaii.

aspxRs.PRID=2222927&reg=3&lang=1

; https://textilesphereindia.

com/2026/02/03/from-disruption-to-

dominance-indian-textiies-navigating-

2025-and-shaping-2026/ ]

Indias deeply rooted legacy across the textile value chain remains globally unmatched. The country offers a comprehensive raw material base, spanning natural fibres such as cotton, jute, and silk, alongside rapidly expanding capacities in synthetic and regenerated blends. This end- to-end integration positions India advantageously within the ongoing ‘China Plus One sourcing shift.

Global brands are no longer seeking mere back-ups; they now prioritise scalable, compliant manufacturing ecosystems to mitigate supply chain risks. Supported by favourable demographics, a large domestic market, and strong policy tailwinds, Indian manufacturers are steadily modernising infrastructure and scaling operations to strengthen their global position.

[Source: https://www.pib.

gov.in/PressReieaseDetaii.

aspxRs.PRID=2222927&reg=3&lang=1;

https://textilesphereindia.com/2026/02/03/

from-disruption-to-dominance-

indian-textiies-navigating-2025-and-

shaping-2026/ ]

Man-Made Fibre (MMF) Industry

The Man-Made Fibre (MMF) segment is currently the fastest-growing vertical in the textile industry, driven by a clear shift in global and domestic consumption towards functional, durable, lightweight, and affordable synthetic blends.

India has retained its position as the worlds second-largest MMF producer, supported by strong capabilities in polyester-viscose (PV) blends. This segment continues to see robust demand due to its versatility and performance advantages. PV blends offer excellent drape, wrinkle resistance, durability, and cost efficiency, making them suitable for both everyday wear and specialised applications such as corporate uniforms, activewear, and automotive interiors.

The Indian MMF landscape is witnessing unprecedented capital expenditure.

This momentum is being strongly supported by the governments transformative Production-Linked Incentive (PLI) scheme, which has already attracted significant investments across the sector.

[Source: https://www.texmin.gov.in/static/upioads/2025/12/ C865d599cae0c357c02d247a8a82d24e.pdf]

Cotton Yarn Industry

Despite the rapid rise of synthetics, India retained its leadership as a premier global cotton producer. For 2025-26, the Cotton Association of India (CAI) revised output estimates upwards to 320.5 Lakhs bales (170 kg each). This increase reflects improved crop prospects, favourable climatic conditions during sowing, and higher yields in key states driven by advanced pest management.

Amid these developments, the domestic spinning industry experienced stable demand throughout the year. This was supported by normalised raw material availability, which curbed the extreme price volatility seen earlier, alongside a strong revival in downstream garmenting. Consequently, improved cotton price stability enabled spinning mills to operate at higher

capacity utilisation. This, in turn, helped manufacturers sustain better operational spreads and margins.

Further strengthening the sector, initiatives such as the ‘Kasturi Cotton Bharat programme are enhancing global acceptance, traceability, and premium positioning of Indian cotton. Simultaneously, Indias skilled labour base, cost efficiencies, and integrated spinning ecosystem continue to reinforce the competitiveness of its cotton yarn exports.

[Source: https://www.fibre2fashion.com/ news/raw-materiai-price-news/cai-revises- india-s-2025-26-cotton-output-upward-to- 320-5-lakh-bales-309089-newsdetails.htm ]

Activewear Segment

Indias activewear and athleisure markets are expanding at an explosive pace, growing at a strong double-digit CAGR, and surpassing USD 15 Billion. This momentum is driven by rapid urbanisation, a post-pandemic shift towards health and wellness, and the mainstreaming of functional fashion in everyday and corporate wear.

At the same time, consumers increasingly prefer multi-functional garments offering stretch, breathability, temperature control, and moisture-wicking properties. In response, domestic and global brands are expanding local manufacturing to shorten supply chains and mitigate import tariffs. The brand is rapidly expanding its footprint and consumer mindshare across direct-to-consumer (D2C) channels, modern large-format retail, and major e-commerce platforms.

Innerwear Segment

Indias innerwear segment continues its premiumisation journey, evolving from a fragmented, unorganised sector into a more organised, brand- led, and quality-conscious market, now exceeding USD 10 Billion.

This shift is driven by rising brand awareness in tier-2 and tier-3 cities, a clear move towards organised retail, and growing demand for superior fabric comfort, innovative fits, and sustainable materials. Womens

innerwear continues to drive the highest volume and value growth within the sector (around 60% market share), demanding constant innovation in design and functionality. Concurrently, the mens and kids categories are showing steady, reliable expansion.

Parallelly, the rapid rise of e-commerce has significantly widened market access, bringing

premium offerings to previously underserved demographics. In parallel, government-led infrastructure improvements are easing supply chain constraints, enabling stronger backward integration for organised players. This is improving margin profiles and allowing faster responses to evolving fashion trends, further strengthening the sectors competitive positioning.

[Source: https://www.imarcgroup.com/ india-innerwear-market ]

GOVERNMENT INITIATIVES

Policy support remained a key enabler for the textile sector during 2025-26, with a focus on infrastructure development, capacity expansion, skill enhancement, and sustainability. These initiatives were aimed at strengthening Indias competitiveness across the textile value chain, while improving scale, efficiency, and export potential.

Key Government Initiatives in the Textile Sector

COMPANY OVERVIEW

Founded in 1984, Sangam (India) Limited (‘Sangam, ‘SIL or ‘The Company) has evolved into a fully integrated textile powerhouse. Operating across the value chain, from yarn manufacturing to fabric processing and garmenting, the Company is headquartered in Bhilwara, Rajasthan, widely known as Indias textile city. Over four decades, it has built a solid foundation of manufacturing excellence, consistent quality, and continuous innovation.

SIL operates multiple advanced manufacturing units across Rajasthan. These facilities house state-of-the- art spinning frames, high-speed shuttleless looms, eco-friendly processing houses, and modern garmenting technologies

sourced from global leaders in textile machinery.

As one of Indias largest producers of PV-dyed yarn and premium denim fabric, Sangam serves a diverse and reputed client base. This includes leading global apparel brands, domestic retailers, and major export

houses. The Company is executing a strategic shift from a volume-driven model to a value-led portfolio. This transition is supported by its growing presence in seamless garments under the C9 brand and an expanding export footprint across 50 countries, helping mitigate regional economic risks.

RISK OVERSIGHT AND MITIGATION

SIL has established a comprehensive risk governance framework covering identification, assessment, mitigation, and continuous monitoring. The Risk Management Committee actively reviews key risks affecting operational and financial performance. These include shifts in business and market conditions, input and output volatility, geopolitical developments, environmental challenges, and liquidity constraints. Each risk is evaluated for likelihood and impact, enabling targeted mitigation strategies.

This structured, proactive approach strengthens SILs ability to respond to evolving risks, ensuring continuity while supporting informed, resilient decision making.

PEOPLE AND CULTURE

People remain the core pillars of SILs growth journey. The Company continues to foster an inclusive, engaged, and high-performing workforce, recognising its employees as a critical source of intellectual capital. With a strategic focus on attracting, developing, and retaining talent, SIL is building capabilities that support both current operations and longterm aspirations.

Training and Skill Development

SIL continues to invest in capability building through a structured learning calendar covering technical, managerial, and behavioural competencies. During the year, several focused programmes were conducted to strengthen organisational effectiveness and employee productivity:

Soft Skills and Workplace Readiness

Complementing technical training, SIL emphasised holistic employee development through targeted sessions on:

EMPLOYEE EXPERIENCE AND DEVELOPMENT

During 2025-26, SIL advanced its people agenda through targeted initiatives to enhance engagement, capability, and well-being. These efforts focus on equipping the workforce with future-ready skills, strengthening a safety-first culture, and promoting inclusivity across all levels. A structured learning and development framework supports these priorities, enabling continuous skill enhancement across functions and roles.

Operational and Safety Training

Aligned with its commitment to operational excellence and workplace safety, during the year SIL conducted focused training programmes across key areas:

Workforce Strength

As of 31^st March, 2026, SIL employed over 10,000 individuals across diverse geographies and functions. Through sustained investments in people, SIL continues to strengthen organisational resilience and support scalable, sustainable growth.

INTERNAL CONTROLS AND ASSURANCE

SIL maintains a robust internal control framework aligned with the scale and complexity of its operations. These controls ensure all transactions are duly authorised and consistently embedded across the organisation.

The framework supports compliance with statutory and regulatory requirements while enabling accurate and timely recording of financial and operational information in accordance with accepted accounting principles.

It also provides reasonable assurance on asset safeguarding and mitigates risks of material misappropriation or loss.

A key pillar of this system is the independent internal audit function, which operates through a

comprehensive audit programme. The effectiveness of controls is regularly reviewed by Management and further reinforced through periodic oversight by the Audit Committee of the Board.

CAUTIONARY

STATEMENT

This Management Discussion and Analysis Report contains certain ‘forward-looking statements, which are based on the Companys current expectations, assumptions, and projections regarding its future business strategies and operating environment. These statements are inherently subject to risks and uncertainties that could cause actual outcomes to differ materially from those expressed or implied. Such risks include, but are not limited to,

changes in economic and political i" conditions in India and globally, fluctuations in interest rates and

capital markets, evolving regulatory

frameworks and government policies, as well as challenges in executing the Companys

strategic initiatives. The information presented herein is as of the date j

of this report, and the Company does not assume any obligation

to publicly update or revise these forward-looking statements to

reflect subsequent events or developments. Market data and other information included in this

report have been derived from sources considered reliable or from

internal estimates; however, the Company does not guarantee their

accuracy or completeness.