Shree Rajasthan Syntex Ltd Management Discussions

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The management of Shree Rajasthan Syntex Ltd. is presenting the Management Discussion and Analysis Report covering the operations and financial performance of the Company for the financial year 2024-25. The core business of the Company is manufacturing and marketing of synthetic blended yarn, cotton yarn and polypropylene multifilament yarn.

> BUSINESS OVERVIEW

The Company is one of the players in man-made fibre and Filament spinning industry with following capacity:

Units	Location	Products	Capacity
Texchem - Division	Simalwara Road	(i) Synthetic Yarn	i. 31,488 SPINDLES
	Dungarpur	(ii) Polypropylene Multi filament Yarn	ii. 2,000 TPA

* The Synthetic Yarn production Capacity remained shut during FY 2024-25 due to market conditions

> INDUSTRY STRUCTURE AND DEVELOPMENTS

1. The textile industry is one of the most significant industries for the Indian economy. The industry is one of the largest employers in India, employing more than 45 million people directly and 60 million people indirectly.

2. Due to its fragmented nature, the textile industry employs more in the unorganized sector especially in the rural areas and hence, it is of vital importance.

3. The textile industry can be segmented into Natural Fibres and Man-Made Fibres (MMFs) based on the use of basic raw material, cotton or crude derivative respectively. Among the various MMF product in the synthetic and cellulosic segments, polyester and viscose forms about 80% of total domestic consumption. Globally man-made fibres are the most dominantly consumed textile fibre.

4. India s textile sector was historically cotton-dominant, but MMF share is increasing due to demand for performance fabrics and cost-efficiency. PLI Scheme (Production Linked Incentive) launched in 2021 to boost MMF and technical textiles. Focuses on increasing global competitiveness of Indian MMF manufacturers.

5. While the industry would face stiff competition from established players in the sector - China, Taiwan, South Korea, etc., increasing labour and manufacturing costs in these countries would give ample opportunities for Indian players. The Indian industry could attract global investments to produce high-value-added MMF.

6. Realizing the importance of the textile industry to the Indian economy, the government undertakes various measures through multiple governing bodies viz. Ministry of Textile, Ministry of Finance, Ministry of Rural Development, and Ministry of Human Resource Development. The government has allowed 100% FDI under the automatic route in the textile and clothing sector.

7. The Sustainable Textiles for Sustainable Development (SusTex) project by the United Nations Climate Change entity enhances the employment and working circumstances of textile artisans while promoting the sustainable production and use of environmentally friendly textiles.

8. Top players in the sector are achieving sustainability in their products by manufacturing textiles that use natural recyclable materials.

9. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The growth in textiles will be driven by growing household income, increasing population and increasing demand by sectors like housing, hospitality, healthcare, etc.

> INDUSTRY OPPORTUNITIES

1. The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand.

2. Currently Indian yarn industry is dominated by cotton yarn. However, world over the usage of synthetic textile is gaining popularity due to the advantages it offers. Additionally, increasing cost of cotton, which results in increasing cost of cotton textiles, is also helping in the growth of synthetic yarn. Although cotton yarn would continue to hold the largest share in Indian yarn industry, its domination is expected to diminish in the coming years.

3. India intends to advance the manufacturing capabilities of its man-made fiber (MMF) apparel and fabrics and technical textile products under the Production Linked Incentive (PLI) Scheme. Achieving this objective will enable the country s textile industry to gain a larger market presence, enhance its global competitiveness, and generate employment opportunities. India hopes to achieve the target of US$250 billion-worth textiles production and US$100 billion in exports by 2030.

The Production Linked Incentive (PLI) Scheme for Textiles for Promoting MMF and Technical Textiles is designed to facilitate the establishment of sustainable enterprises and foster a competitive textile industry in India.

4. The Skill India and Make-in India programs of Central government headed by Prime Minister Shri Narendra Modi is helping the industry in getting required skilled manpower and good market for textile products. It is an opportunity for the textile industry to upgrade their technology and implement ERP to streamline supply chain and enhance customer relations management activities.

5. The structural reform of The Goods and Services Tax (GST) is expected to provide a boost to the economic growth and investments in the long run.

6. India s textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country.

7. Huge potential in medical textiles, geotextiles, agro-textiles, industrial fabrics, etc. Backed by the National Technical Textiles Mission and increased use across sectors.

8. New and upcoming FTAs with UAE, Australia, UK, EU, and Canada could significantly reduce tariffs and improve export competitiveness.

9. Textile industry is labour-intensive—huge potential to generate rural employment, specially for women. Government schemes promoting handloom and handicraft clusters can uplift rural economies.

10. Huge potential in medical textiles, geotextiles, agro-textiles, industrial fabrics, etc. Backed by the National Technical Textiles Mission and increased use across sectors.

> INDUSTRIAL CHALLENGES

Even though India s textile industry is a huge contributor in terms of exports, industrial output and employment, like Chinas, India s domestic industry is not without its challenges.

1. Higher input costs compared to competing nations

India has one of the highest costs of capital compared to most competing countries which affects the cost of production and thus its competitiveness. Also, the power cost in India is much higher compared to competing nations.

2. Low technology level

The Textile Industry suffers from the use of low and outdated technologies. In general, spending on R&D, product development etc. by textile companies in India is quite low.

3. Cyclical ups and downs & Demand adversities

There has never been a continuous positive growth rate in textiles products for a longer time periods. Sometimes it was treated as a cyclical ups and downs, sometimes the demand adversities have really dented the growth.

4. High debt servicing cost:

The industry requires to give high debt servicing cost and with the lending rates in India in the range of 12 to 14%, they are significantly higher in comparison to the competing countries like China. The complete textile chain is not covered in the TUF Scheme and thus a large capital investment needs to be made at a very high rate of interest.

5. Limited Innovation and R&D

Lack of sufficient investment in product innovation, R&D, and technical textiles. Slow adoption of smart textiles, functional fabrics, and performance wear.

6. Policy and Regulatory Hurdles

Multiple layers of taxation, state-level policy differences, and slow implementation of schemes. Delays in disbursement of subsidies/incentives discourage private investment.

> RISK AND CONCERNS

a. Raw material availability

Though India is having sufficient availability of raw materials, namely, cotton, man-made fibres and silk but factors such as low rain fall in the cotton growing areas, increase in crude oil prices in the international markets for basic raw materials of man-made fibres and increase in logistic cost may effect the availability of raw material and competitiveness of the industry.

b. Power availability

Most of the textile mills in India, particularly in north and western parts are dependent on power supply by self-generation using coal as fuel due to lower availability of power from the government. Because of increase in cost of coal the cost of generation of power is increasing which may affect the competitiveness of the Industry.

c. Currency risk

Since the textile industry has a major portion of its revenue from exports, Indian rupee relationship with foreign currencies such as US Dollar is important. The industry hedges currency risks by forward currency cover against sale contracts. Hence movement in foreign currency vis-a-vis rupee has direct impact on exports realization and import cost. The volatile movement of Rupee against the US Dollar is a serious concern for the industry.

d. Government Policies

The Textile Industry is highly dependent on the Government Policies on various matters. Frequent changes in the taxation policies bring instability in the industry.

> PRODUCT WISE PERFORMANCE OF THE COMPANY

Chart given below gives the break-up of sales between the domestics and export markets for the last 3 years:

			(Rs. In Lakhs)
Revenue from operations	2024-25	2023-24	2022-23
Sale of Product
- Domestic	1229.92	1311.86	2054.63
- Export	NIL	NIL	NIL
Sale of Service
- Income from Job Work	100.83	1216.83	3108.90

The current yarn portfolio of SRSL can be classified into 2 main categories-Grey yarn, and PPMF yarn.

? Grey Yarn: Grey yarn is produced using blends of different synthetic fibre such as polyester/viscose, 100% viscose yarn, 100% polyester fibre yarn and pure cotton. These qualities are produced in Shree Rajasthan Texchem division of the Company. The Company has niche markets for 100% viscose fibre yarn. Specialty fibre yarns were developed for industrial and home textile applications.

? PPMF Yarn: Polypropylene multi filament yarn is produced at Shree Rajasthan Texchem division of the company at Dungarpur; POY and texturised yarn is produced for knitting, socks and furnishing applications. BCF yarn is produced for carpet applications.

> OPERATIONS

During the year under review, the Company s operations continued to be affected due to non availability of working capital for operations resulting in lower capacity utilisation and constrained margins due to high cost of Raw Material. Furthermore, the Company has not been able to undertake necessary regular capital expenditure as per industry norms for proper maintenance and upkeep of plant and equipment due to paucity of funds.

The Company produced 1064.52 M.T. of yarn valuing Rs. 1330.74 Lakhs during the period under review as against 2709.18 M.T. of yarn valuing Rs. 2528.69 Lakhs produced during the last year. During the year, there were no exports.

The Company s financial highlights are summarized below:

ANNEXURE- 5

		(Rs. in Lakhs)
	Financial Year
Particulars	March 31, 2025	March 31, 2024
Revenue from operations	1,330.74	2,528.69
Other Income	345.90	1,206.05
Total Revenue (A)	1,676.64	3,734.74
Expenses:-
Cost of materials consumed	854.36	751.22
Purchase of Stock-in-trade	-	276.65
Changes in inventories of finished goods, Work in progress and stock-in-trade	2.13	3.04
Employees benefit expenses	245.18	777.40
Finance Costs	128.61	168.03
Depreciation and Amortization expenses	117.45	190.92
Other Expenses	1,680.36	1,580.25
Total Expenses (B)	3,028.10	3,747.51
Profit/(loss) before exceptional items and tax (A) - (B)	(1,351.69)	(12.77)
Exceptional items (gain)	(86)	11,228.44
Profit/(Loss) before tax	(1,437.69)	11,215.67
Less : Tax expense	-	-
Profit/(Loss) for the period	(1,437.69)	11,215.67
Other comprehensive Income (Net of Tax)	29.32	72.19
Total Comprehensive Income for the period (Comprising profit after tax and other comprehensive income after tax for the period)	(1,408.37)	11,287.86

> OUTLOOK

Yarn is an intermediary product, and its demand is dependent on the demand sentiment prevailing in the downstream industries, namely apparels and home textiles. In the case of Indian yarn industry, apart from demand from downstream industries, export sentiment too has a bearing. This is because India is a major exporter of yarn, supplying cotton yarn to countries like China and Bangladesh. This export forms an integral part of the domestic yarn industry, contributing to its steady growth. The Covid pandemic and the subsequent lockdowns have impacted both the demand avenues of Indian yarn industry, dealing to a significant blow to the industry.

> DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company recognizes the importance of Human Resource as a key asset instrumental in its growth. The Company believes in acquisition, retention and betterment of talented team players. HRD activities are taken in the Company involving positive approach to develop employees to take care of productivity, quality and customer needs. The Company has to make constant efforts to manage labour shortages. To develop skilled labour, training facilities are provided to the employees in house or by deputing them to the machinery suppliers and to training institutes for specific training.

The Company has well developed management information system giving periodical information to the different levels of management. Such reports are being analyzed and effective steps are taken to control the efficiency, utilization, productivity and quality in the Company. As on 31^st March, 2025, the employee strength of the Company stood at 54 while on 1^st April, 2024, it was 53.

> KEY FINANCIAL RATIOS AND DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Particulars	Financial Year		Change in %	Reason (If more than 25%
	2024-25	2023-24		Change)
Current Ratio	0.18	0.17	5.06	Due to decrease in liabilities current ratio is higher.
Debt Equity Ratio	-13.90	1.09	-1374.34	Change in ratio as equity value became positive in preceding financial year.
Debt Service Coverage Ratio	-	-	-	Company is not generating cash earnings to service debts.
Return on Equity	-	0.70	-	Shareholders equity became positive due to exceptional gain in preceding financial year.
Inventory Turnover Ratio	14.26	13.75	3.75	Higher inventory of own production
Trade receivable Turnover Ratio	14.32	36.36	(60.62)	Decrease in sale has resulted is lower ratio.
Trade payable Turnover Ratio	0.84	0.57	48.27	Decrease in Purchase during the year
Net Capital Turnover ratio	(1.18)	(0.25)	371.34	Decrease in sale during the year
Net Profit Ratio	(108.04)	433.54	(124.36)	Decrease in profitability
Return on Capital employed	-	405.76	-	NA
Return on Investment	-	-	-	No Investment by the company.

> RETURN ON NET WORTH

The Company has negative Return on Net worth in current year and in previous year due to negative Total Comprehensive Income and negative Net Worth respectively.

> INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control system commensurate with its size and nature of business. The internal control systems are complemented by various Management Information System (MIS) reports covering all areas. The management reviews and strengthens the controls periodically.

Apart from self-monitoring of the internal controls, there is a Chartered Accountant firm appointed to conduct internal audit of the Companys operations as approved by the Audit Committee. This firm presents their important observations to the Audit Committee that is chaired by an Independent Director. The internal auditors provide a reassurance to the affirmation given by the Management that the control systems are effective, operational and adequate.

The Audit Committee takes due cognizance of the observations made by the auditors and gives their suggestions for improvement. The suggestions of the Audit Committee further ensure the quality and adequacy of the control systems.

The Company has appointed internal auditors for all the 4 units. The internal control ensures that all assets were safeguarded and protected against loss through unauthorized use or disposition and transactions were authorized, recorded noticed and reported correctly. While operating managers ensure compliance with their areas, internal auditors carry out audit test on randomly selected samples and report on non-compliance or weakness if any through internal audit reports of the respective unit/areas. These reports are reviewed by the management and then by Audit Committee of the Board for follow up action.

A report of Auditors pursuant to Sec 143(3)(i) of Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditor s Report.

> CAUTIONARY STATEMENT

Statements in the Management Discussions and Analysis report describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws and regulation. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include economic conditions affecting demand and supply and price conditions in domestic and overseas market in which the company operates, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factor.

		For and on behalf of the Board of Directors
		For Shree Rajasthan Syntex Ltd.
Date	: August 11th, 2025	Sd/-	Sd/-
Registered Office	: Plot No. 106, Opposite Fire,	Vikas Ladia	Anubhav Ladia
	Brigade Station, Syntex	(Managing Director and CEO)	(Whole Time Director and CFO)
	Chauraha, Bhicchiwara Road,	DIN:00256289	DIN: 00168312
	Dungarpur, Rajasthan, India, 314001