Shantai Industries Ltd Management Discussions

This Report contains forward-looking statements that involve risks and uncertainties. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the included financial statements and the notes.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economy and Outlook

The global economy in FY 2024–25 remained on a cautious path of recovery amid a challenging and uncertain macroeconomic environment. While headline inflation eased across several major economies, tight monetary policies, geopolitical tensions, and structural shifts continued to influence global growth patterns.

According to the International Monetary Fund (IMF), global GDP growth for the year was estimated at around 3.0%, reflecting moderate expansion in both advanced and emerging markets. Advanced economies, including the United States and the Eurozone, experienced slower but stable growth, supported by resilient labor markets and gradual normalization of interest rates. Emerging economies, particularly in Asia, continued to be key drivers of global demand, led by domestic consumption and improved manufacturing activity.

Global trade, however, remained under pressure due to fragmented supply chains, rising protectionist policies, and slower industrial output in several regions. Currency volatility and higher borrowing costs also posed challenges for capital-intensive industries and export-driven sectors.

Geopolitical uncertainties—including ongoing conflicts in parts of Europe and the Middle East, and strained trade relations between major economies—contributed to elevated global risk perceptions and cautious investor sentiment.

Looking ahead, the outlook for FY 2025–26 suggests modest but uneven growth, with central banks expected to gradually ease monetary policy depending on inflation trends. Key global themes such as supply chain diversification, sustainability-driven innovation, digital transformation, and regionalization of trade are expected to shape economic activity and investment flows.

Amidst these conditions, businesses must remain agile and resilient. The Company continues to monitor global macroeconomic developments closely and is actively pursuing strategies to enhance operational efficiency, strengthen market presence, and mitigate external risks.

Indian Economic Overview & Outlook

Indias economy maintained its strong growth trajectory in FY 2024–25, with GDP expanding at an estimated rate of around 7%, supported by resilient domestic demand, continued infrastructure development, and government-led reforms. Despite global headwinds and geopolitical uncertainties, India remained one of the fastest-growing major economies in the world.

From a textile industry perspective, FY 2024–25 was a year of gradual recovery and realignment. After facing challenges in the previous fiscal year due to weak global demand, raw material price fluctuations, and high logistics costs, the sector showed signs of stabilization. Improvement in cotton availability, easing input costs, and stronger domestic consumption contributed to better performance in the second half of the year.

The Government of Indias sustained focus on the textile and apparel sector through schemes like the Production Linked Incentive (PLI) Scheme, PM MITRA Parks, and enhanced support for export competitiveness played a key role in reviving industry confidence. Growth in e-commerce and organized retail also provided new channels for domestic textile demand.

The outlook for the Indian economy and the textile sector in FY 2025–26 is cautiously optimistic. With inflation moderating and interest rates expected to stabilize, consumer sentiment is likely to strengthen. The governments continued emphasis on "Make in India", coupled with rising global interest in China +1 sourcing strategies, positions Indias textile industry to gain a larger share in the global textile and apparel trade.

Key growth drivers include:

Rising domestic consumption, especially in fashion, home textiles, and technical textiles Increased investment in textile infrastructure and digitization Greater emphasis on sustainability and circular economy practices Ongoing integration into global value chains

The Company remains committed to building operational resilience, enhancing product quality and design innovation, and pursuing strategic export opportunities. With a favorable macroeconomic environment and proactive industry initiatives, the Indian textile sector is well-positioned for long-term, sustainable growth

Industry Outlook and Trends

The Indian textile industry, a vital contributor to the countrys economy and employment, demonstrated resilience and adaptability during FY 2024–25 amidst a dynamic global and domestic landscape. The industry witnessed a gradual recovery driven by improving demand, supportive government policies, and increasing integration with global value chains.

Sustainability continued to gain prominence, with increasing demand for eco-friendly fabrics, organic cotton, and sustainable manufacturing processes. Textile manufacturers are adopting circular economy principles and compliance with global environmental standards to meet evolving consumer expectations and regulatory requirements.

The adoption of Industry 4.0 technologies such as automation, IoT, and AI in textile manufacturing improved operational efficiencies, quality control, and supply chain visibility. Digitization also enabled better inventory management and faster response to market trends.

There was a growing focus on technical textiles, including specialty fabrics used in healthcare, automotive, construction, and protective gear sectors. This segment offers higher margins and export potential, attracting increased investments.

The rise of e-commerce and omni-channel retailing reshaped the demand landscape, with consumers seeking greater customization, faster delivery, and sustainable fashion options. Brands are leveraging digital platforms to enhance customer engagement and reach.

While traditional export markets faced headwinds, Indian textile exporters diversified into emerging markets in Asia, Africa, and Latin America. The ongoing geopolitical shifts and trade realignments presented opportunities to strengthen Indias position as a preferred sourcing destination.

Schemes such as the Production Linked Incentive (PLI) for textiles, PM MITRA Parks, and enhancements in infrastructure and logistics boosted competitiveness. The governments focus on "Make in India" and export promotion remains a key growth driver

The textile industry is poised for steady growth in FY 2025–26, supported by structural reforms, rising domestic consumption, and expanding export opportunities. Companies that invest in innovation, sustainability, and supply chain agility are expected to outperform in this evolving market environment. Challenges such as raw material price volatility, regulatory compliance, and global economic uncertainties will require proactive risk management and strategic planning.

Opportunities in 2025

The year 2025 presents several promising opportunities for the Indian textile industry, driven by evolving consumer trends, global trade shifts, and policy support. As the sector continues to adapt to a rapidly changing landscape, forward-looking textile companies are well-positioned to capitalize on emerging growth areas.

The expansion of online fashion and home textile retail continues to reshape consumer buying behaviour. Direct-to-consumer (D2C) models and digital sales platforms provide opportunities for higher margins and brand visibility. Adoption of smart manufacturing, automation, and data analytics offers cost savings, better quality control, and faster time-to-market—key enablers for competitiveness in 2025 and beyond.

Segment-Wise or Product-Wise Performance

Over the last few years, as a growth-oriented company we have focused on diversifying into finished products as we see a long run way for growth in sales of these products. This has helped us to grow our profitability margins.

The total revenue of the company stood at INR Lacs 2024.96 which was INR 129.91 Lacs in previous year.

Outlook

Our growth will depend upon the improvement of the operational efficiencies. The improvement of operational efficiency will enhance the profitability of the Company. We intend on implementing various measures to improve our operational efficiencies. We intend to maximize our operational efficiency by achieving greater integration and by implementing a stronger supply chain management.

Risks, Threats and Concerns

Raw Material Price Volatility

The Company is exposed to fluctuations in the prices of key raw materials such as cotton, polyester, and dyes. Sudden spikes or supply disruptions can impact production costs and profitability. Diversified sourcing and inventory planning are used to mitigate this risk.

Geopolitical and Trade Uncertainties

Ongoing geopolitical tensions, changing international trade policies, and the imposition of tariffs or non-tariff barriers can disrupt supply chains and demand in key export markets.

Competition and Pricing Pressure

The textile industry is highly competitive, both domestically and globally. Price undercutting by low-cost producers, especially in countries with government subsidies, can impact margins. Continuous focus on quality, innovation, and efficiency helps the Company stay competitive.

Environmental and Compliance Risks

Increasing regulatory requirements related to pollution control, sustainability, and labor laws pose compliance risks. Non-compliance may result in penalties, loss of reputation, or restricted market access. The Company is committed to environmental and ethical standards and continuously invests in sustainable practices.

Technological Disruption

Failure to keep pace with technological advancements in manufacturing, automation, and product development may impact operational efficiency and market relevance. The Company mitigates this risk through regular upgrades and investment in modern technologies.

Consumer Behavior Shifts

Rapid changes in fashion trends and customer preferences, especially in global markets, pose a risk of inventory obsolescence. The Company monitors market trends closely and maintains a flexible production model to respond to changing demand.

Climate and Natural Risks

Being dependent on agricultural inputs like cotton, the Company may be impacted by erratic weather patterns, droughts, or floods. These factors can affect both availability and cost of raw materials.

Material Developments in Human Resources / Industrial Relations Front, including number of people employed

During the year under review, the Company continued to focus on fostering a positive and productive work environment through employee engagement initiatives, training programs, and performance-driven culture. Emphasis was placed on skill development and workforce upskilling to meet the evolving needs of the textile manufacturing sector. The industrial relations climate remained cordial throughout the year, with no major disruptions in operations. Today, the Company employed a total of 15 employees, comprising both skilled and semi-skilled personnel, ensuring smooth production and operational efficiency. The Company remains committed to employee welfare, safety, diversity, and implementing best HR practices to attract and retain talent.

Internal Control Systems and Their Adequacy

Achieving adequacy in internal controls requires a comprehensive and integrated approach that addresses risks across all levels and functions of the organization. It requires commitment from management, ongoing monitoring and evaluation, and responsiveness to changes in the internal and external environment. Well-designed and effectively implemented internal controls contribute to operational efficiency, reliability of financial reporting, compliance with laws and regulations, and protection of assets. All the internal control measures have been reviewed by Audit Committee and the Management and necessary steps has been taken to improve the same to meet the companys objective.

Discussion on Financial Performance with respect to Operational Performance

During the FY 2024-25, company had placed adequate internal control in the company and ace in achieving the more than 100% increase in revenue from operations to INR 2024.96 Lacs as compared to INR 129.91 Lacs in previous year.

Details of Significant Changes in Key Financial Ratios

The Significant ratios of the company are as follow: -

S. N. Ratio	2025	2024
1 Income from Operations (In Lakhs)	2024.96	129.19
2 Operating Profit Margin	1.60	-4.88%
3 Current Ratio	3.62	273.12
4 Trade Receivables Turnover Ratio	2.98	1.17
5 Trade Payables Turnover Ratio	8.41	2.33
6 Net Profit Margin	1.51%	-4.88%
7 Return on Capital employed	4.24%	-0.86%

Reasons for significant variation in ratios:

The reasons for variation in excess of 25% in various ratios are explained as follows:-

1. Operating Profit Margin

During the year, the company have earned profit whereas in the earlier year the company has incurred loss and hence, there is a variation in the Net Profit Ratio

2. Current Ratio

During the year, current liability of the company has increased significantly as compared to the current asset of the company and hence, there is a variation in current ratio.

3. Trade Receivables turnover ratio

During the year, the turnover and trade receivable of the company has increased significantly and thus, there is a variation in the Trade Receivable Turnover Ratio in the current year as compared to the earlier year

4. Trade payables turnover ratio

During the year, the purchase of the company has increased significantly and hence, there is a variation in the Trade Payable Turnover Ratio.

5. Net profit ratio

During the year, the company have earned profit whereas in the earlier year the company has incurred loss and hence, there is a variation in the Net Profit Ratio.

6. Return on Capital employed

During the year, the company have earned profit whereas in the earlier year the company has incurred loss and hence, there is a variation in the Return on Capital Employed Ratio.

Place: Surat	For the Board of Director
Date: 29-08-2025	Shantai Industries Limited
	Sd/-
	Harishbhai Fatandas Sawlani
	Chairman and Managing Director
	DIN: 00831848