Shine Fashions (India) Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSTS REPORT

Overview of the Economy as a Whole

The World Economic Situation and Prospects Report forecasts a decline in global GDP growth, from an estimated 2.7% in 2023 to 2.4% in 2024, signaling a continuation of sluggish growth trends. Developing economies, in particular, are struggling to recover from pandemic-induced losses, with many facing high debt and investment shortfalls. The United States, the worlds largest economy, is expected to see a drop in GDP growth from 2.5% in 2023 to 1.4% in 2024. Consumer spending, a key driver of its economy, is likely to weaken due to various factors, including high interest rates and a softening labour market. Meanwhile China, amid domestic and international headwinds, is projected to experience a moderate slowdown, with growth estimated at 4.7% in 2024, down from 5.3% in 2023. Europe and Japan also face significant economic headwinds, with growth rates forecasted at 1.2% for both regions in 2024.

Developing countries present a divergent picture, with Africas growth projected to slightly increase from 3.3% in 2023 to 3.5% in 2024. The report notes that the least developed countries [LDCsJ are projected to grow by 5.0% in 2024, yet this falls short of the 7.0% growth target set in the Sustainable Development Goals [SDGsJ. High debt and limited fiscal space remain pressing concerns for these nations.Global inflation, a key concern over the past two years, is showing signs of easing.

International trade is losing steam as a growth driver, with global trade growth weakening to 0.6% in 2023 and expected to recover to 2.4% in 2024. The report points to a shift in consumer spending from goods to services, rising geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic as factors impeding global trade.

Furthermore, the shift towards protectionist policies in some countries has also influenced trade dynamics, leading to a re-evaluation of global supply chains and trade agreements. The repercussions of these changes are particularly pronounced in developing economies, which often rely heavily on exports for economic growth. In response, there has been a growing emphasis on diversifying trade partners and strengthening regional trade agreements to mitigate the risks associated with overreliance on a limited number of markets.

INDIAN ECONOMY OVERVIEW

The World Economic Situation and Prospects as of mid-2024 said "Indias economy is forecast to expand by 6.9% in 2024 and 6.6% in 2025, mainly driven by strong public investment and resilient private consumption". Although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly."

The 6.9% economic growth projections for India in the mid-year update is an upward revision from the 6.2% GDP forecast made by the U.N. in January this year. The U.N. World Economic Situation and Prospects (WESPJ 2024 report that was launched in January had said that growth in India was projected to reach 6.2% in 2024, amid robust domestic demand and strong growth in the manufacturing and services sectors. The projection in January for Indias GDP growth for 2025 remains unchanged at 6.6% in the latest assessment of the economic situation.

Global economic prospects have improved since January, with major economies avoiding a severe downturn, bringing down inflation without increasing unemployment. However, the outlook is only cautiously optimistic. Higher-for-longer interest rates, debt sustainability challenges, continuing geopolitical tensions and ever-worsening climate risks continue to pose challenges to growth, threatening decades of development gains, especially for least developed countries and small island developing states.

It noted that several large developing economies - Indonesia, India and Mexico - are benefiting from strong domestic and external demand. In comparison, many economies in Africa and Latin America and the Caribbean are on a low-growth trajectory, facing high inflation, elevated borrowing costs, persistent exchange rate pressures and lingering political instability.

TEXTILE INDUSTRY

The textile industry is an ever-growing market, with key competitors being China, the European Union, the United States, and India. China is the worlds leading producer and exporter of both raw textiles and garments. After the United States and the European Union, India is the third largest textile manufacturing industry and is responsible for more than 6% of the total textile production, globally.

The global textile industry was estimated to be around USD 920 billion, and it is projected to witness a CAGR of approximately 4.4% during the forecast period to reach approximately USD 1,230 billion by 2024, according to a recent report.

The textile industry has evolved greatly since the invention of the cotton gin in the 18th century. This lesson outlines the most recent textile trends around the globe and explores the growth of the industry. Textiles are products made from fiber, filaments, yarn, or thread, and can be technical or conventional depending on their intended use. Technical textiles are manufactured for a specific function. Examples include an oil filter or a diaper. Conventional textiles are made for aesthetics first, but can also be useful. Examples include jackets and shoes.

The textile industry is an immense global market that affects every country in the world either directly or indirectly. For example, the people selling cotton increased prices in the late 2000s due to crop issues but then ran out of cotton as it was being sold so quickly. The price increase and the scarcity was reflected in the consumer prices of products that contained cotton, leading to lower sales. This is a prime example of how each player in the industry can affect others. Interestingly enough, trends and growth follow this rule as well.

INDIAN TEXTILE INDUSTRY

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic.

The textiles and apparel industry in India has strengths across the entire value chain from fibre, yarn, fabric to apparel. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool, and silk products to the organized textile industry in India. The organized textile industry in India is characterized by the use of capital-intensive technology for the mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

The decentralised power looms/hosiery and knitting sector form the largest component of the textiles sector. The close linkage of textiles industry to agriculture [for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

Cotton plays a major role in sustaining the livelihood of an estimated 6 Million cotton farmers and 40-50 Million people engaged in related activity such as cotton processing & trade. Indias trade of technical textile products has been growing strongly and the country has been a net exporter.

Business Overview

We M/s Shine Fashions [India) Limitedis the manufacturing, processing, trading, import, export various types of fabrics and textile raw materials like Non woven interlinings, Polyester fusible interlining, Non texturised interlining, Cotton fusible interlinings, Tricot interlinings, Hot Melt adhesive non woven Interlinings, Water jet Interlinings.

Our management consist of highly qualified professionals having expertise in textile, mechanical, technical and commercial fields. These professionals are engaged in maintaining high quality norms consistently and cater to need of customers and other stakeholders not only in India but world-wide also. Our products are accepted and appreciated from last many decades for their high-grade quality standards.

We provide the perfect shirt interlining solution for every outer fabric. We support our customers in all phases of product development from the initial idea to serial production. Based on our long experience in application engineering, we enable our customers in achieving outstanding results. Shine Fashions is your competent partner for sophisticated interlining solutions with sales and application technology studios all over the world. We are market leaders in the development of innovative high-quality materials. Our comprehensive range of globally available products sets the standards for shirt interlining.

OPPORTUNITIES

Textile Exports: A Booster

The textile and apparel industry in India is spread across the length and breadth of the country. India is the second largest textile and clothing exporter in the world. Over the years, apparel has contributed to the majority of exports, followed by home textiles and fabric. Indias top textile export destinations are the USA, accounting for 27% share, followed by the EU [18%), Bangladesh [12%) and UAE [6%).

According to another report from IBEF, the Indian textile industry plays a crucial role in the countrys economy, contributing approximately 15% to its export earnings. Increasing exports not only creates foreign reserves but also opens doors for better employment opportunities in the country.

Advancements in Digital Textile Technologies

Digital textile technologies have advanced rapidly in recent years. Advances in digital printing, fabric weaving, and other processes have allowed for the production of a wide range of fabrics with greater accuracy, consistency, and cost efficiency than ever before. Digital printing has allowed for more vibrant and accurate colours to be printed onto fabrics, and inkjet printing has allowed for faster production of printed fabrics.

Digital weaving has enabled the creation of intricate patterns and styles while providing greater durability and strength. Digital textile technologies have also made it easier to source and produce fabrics with a variety of properties, such as water-repellent, fire-resistant, and antimicrobial. These advancements have revolutionized the textile industry, allowing for the production of fabrics that are both aesthetically pleasing and highly functional.

Self-employment Opportunities

Self-employment opportunities in the textile industry are vast and varied. From designing and producing unique clothing to creating custom blankets and upholstery, there is something for everyone and for textiles in India is expected to increase at a compound annual growth rate [CAGR) of 14.8% from 2021 to 2025. The report further states that the industry will reach a size of $350 billion by 2025, making it one of the largest segments in the country.

With the advancement in technology, the industry is well-positioned to tap into new and unexplored markets, which will further increase its potential for growth. Therefore, those with a creative eye and an entrepreneurial spirit can find success in this industry. With the rise of the internet, there are a number of outlets that individuals can use to showcase their work and get it out to potential customers. Additionally, those interested in creating their own products can find a range of tools and resources to help them get started.

Women Empowerment (More Jobs for Women)

Women have been making great strides in the textile industry in recent decades. This is a positive development, as it enables women to gain access to a sector that was previously dominated by men. Women are now able to pursue careers in areas such as fabric manufacturing, design, production, marketing, and retail. This is excellent news for women looking to break into the textile industry, as it gives them a wider range of options to pursue.Additionally, womens involvement in the textile industry can help to drive innovation, as well as create more diverse perspectives and ideas. Furthermore, women are increasingly taking on leadership roles and playing an important role in driving economic growth as they are often more open to new ideas and approaches. Ultimately, it is important to ensure that more jobs for women in the textile industry become available, as this will help create a more equitable and prosperous industry.

CHALLENGES-

Shortage of raw materials

35% of the overall cost of production is determined by raw materials. Cotton is in low supply in the nation, especially long-staple cotton that is imported from Pakistan, Kenya, Uganda, Sudan, Egypt, Tanzania, the United States of America, and Peru. It is unfortunate that despite having the largest amount of cotton planted (26% of the worlds acreage), the country only contributes 9% to global cotton production. Low production and illnesses in the mills are caused by fluctuating prices and unpredictability in the availability of raw materials.

Risk Management

The Company has an effective risk management framework in place to primarily control business and operational risks. The major risk areas are periodically and systematically reviewed by the senior management. Comprehensive policies and procedures help identify, mitigate and monitor risks at various levels. By taking such proactive measures, the Company ensures that strategic business objectives are achieved seamlessly. Risk Management procedure which depicts business risk and operational risks that are supported by policy framework.

Low productivity

The lower productivity level is one of the primary factors limiting the expansion of Indias garment sector in the face of escalating global competition. Indias textile factories produce comparatively little in comparison to Bangladesh, China, and Turkey.

The garment industry needs to be supported with the newest technologies and processes, which are more effective than the conventional ones, in order to improve this situation. As we have seen, the Indian government is taking a number of policy initiatives to strengthen the competitiveness of the Indian apparel industry in the international apparel market, in addition to its foreign policy and emphasis on the "Make in India" campaign.

Lack of skilled labour

More than 70% of Indian workers are either illiterate or have only a rudimentary education, which is a severe disadvantage. As a result, individuals are unable to explore their employment options or are oblivious to opportunities to develop their current abilities.

To start the rise of skilled labour, the government must implement specific policy measures. Everyone should have access to proper education, and vocational education and training should be encouraged.The textile industry will be able to enhance output by using the skilled labour produced by the training program to raise productivity. Providing local residents with training in textile manufacture will also aid in creating job prospects in rural areas. The lack of skilled and properly trained labour for the production of these products would be a barrier to the expansion of the Indian textile sector on a worldwide scale.

KEY CONCERNS

High wastage

The textile industry is infamous for its widespread resource waste, particularly water. Textile segment is the second biggest polluting industry. Five per cent of all global landfills is being taken up by dumped textile waste. With the aim of lessening their impact on the local environment, the more advanced businesses are minimizing their water usage, modifying the chemicals they use in dying processes, and reusing water for two or more procedures.

Pre and post-consumer waste are two general categories of textile waste. The pre-consumer waste is made up of materials from the garment industrys products, whereas post-consumer garbage is made up of materials from homes. Waste from previous consumers is recycled since it is utilized for embroidery. Bales are created by gathering fiber waste. These bales are shipped to various enterprises where they are utilized to create felted textiles, a non-woven material. Some of the fibers are employed in the fashion industry. Therefore, one of the key issues for the textile industry is waste management.

High Noise level

Noise has been accepted to the major threat to workers or employees in textile industry. Noise is the unwanted sound which interferes in the various functions of the textile industry. Noise is the disturbing sound irrespective of its duration and intensity. The humans are able to hear the sound up to 130 decibels. The sounds are mainly cause by machine gearings. So, noise level in textile industry should be reduce in textile industry for which the standards should to be followed. Some special gears are to be used in textile industry for reducing noise level e.g. Plastic gears.

Environmental Issues

The environmental pollution is the one of the important issues in the todays world especially by the industries. Tremendous globalization is going on in the sector of the textile industry. So, there will be increase in the environmental pollution. The textile industries mostly create all types of pollutions like air, water, noise, and the soil pollution also. In processing the various gases are mixed in the atmosphere such as C02, Volatile Organic Compounds (VOCs), etc. this VOCs can be the glycol ethers, detergents and the combustion gases. Due to these gases there will be effect on direct ozone layer. In water pollution, there will be releasing the various dyes, acids, alkalis and compounds directly in the water. In the world the 20% of fresh water pollution is created by textile industries. So, water pollution effects in the rural region. In soil pollution, there are many fashionable cloths are thrown on the soil after using. So, the cloths are may be made by natural fibers or the man made fibers. If natural fiber are used then, they are biodegradable but the man-made fibers like polyester, nylon are not biodegradable. So, they take many years to degrade in the soil. So, the environment is one of the main issues in the textile industry.

OUTLOOK

Growing demand for below applications around the world has had a direct impact on the growth of the Interlinings & Linings

• Clothing

• Outer Garment

• Bags

• Shoes

• Others

The major focus to stay competitive in the business shall be continuing measures of cost cutting, improving productivity, reduction in wastages and efforts on taking quality to next level and driving efficiency to make products further cost competitive, ii. We stand firm in the global disruption and with our century old good brand image and network in the market, we were back on track with renewed vigour.

HUMAN RESOURCES

The year presented unique challenges and tested our outlook towards employees and stakeholders. We are grateful to the Shine Fashion family - the employees and everyone in the extended value chain at our distributor points and depots, which made this, happen.

The company believes that the employees are at the core of it strategies to achieve all present and future organizational goals. During the year, the Company organized training programs in technical skills, behavioural skills, business excellence, general management, advanced management, leadership skills, customer orientation, safety, values and code of conduct.

Through the year, we built a systemic approach on wellbeing with customized interventions for various employee segments and continue to encourage work from home wherever possible andreinforce safety standards in office and factory locations.

INTKRNAL CONTROL SYSTEM ANDTHKIR ADKOUACY

The Company has in place an adequate system of internal control procedures for business processes, operations, financial reporting, fraud control and compliance with applicable laws and regulations, among others. They commensurate with the size of the company and the nature of the business and is in line with requirements of the regulations.

We have laid down adequate procedures and policies to guide the operations of our business. The unit/functional heads are responsible for ensuring compliance with the policies and procedures laid down by the management. Our internal control systems are periodically tested by the Management, Statutory Auditors and Internal Auditors.

CAUTIONARY STATEMENT

Some of the statements in this Management Discussion and Analysis, describing the companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable Laws and Regulations. The company assumes no responsibility in respect of forward-looking statements, which may be amended or modified in future.