STL Global Ltd Management Discussions

Annexure - I

Global and Indian Economic Overview

In FY 2024-25, the global economy continued to face volatility due to lingering inflation, tighter credit conditions, and geopolitical uncertainties. While there was some stabilization, global GDP growth remained subdued at around 2.7%, reflecting only a modest improvement from 2.4% in the prior year. Inflation showed signs of moderation, with global averages easing below 4.5%, supported by improved supply chains and stable commodity prices. However, capital-intensive sectors and global trade remained under stress due to elevated interest rates and slowing consumption in the US and EU markets.

India, in contrast, demonstrated resilience. The Indian economy grew at an estimated 6.8% in FY 2024-25, up from 6.1% in the previous year, driven by domestic consumption, government capex, and strong manufacturing recovery. Inflation was kept in check at around 4.9%, and the fiscal deficit was curtailed to 5.5% of GDP, reflecting prudent policy measures and increased revenue collection.

Industry Structure, Market Size, and Developments

The Indian textile and apparel sector witnessed a moderate recovery in FY 2024-25. Domestic demand remained firm, especially in urban apparel, technical textiles, and home furnishings. Export growth, however, was sluggish due to global headwinds, particularly from Europe and the US. Exports of textiles and apparel touched approximately $47.5 billion, a marginal growth over FY 2023-24, driven primarily by value-added garments and sustainable product categories.

The governments continued push through schemes like PLI, MITRA Parks, and RoDTEP facilitated investment inflows and competitiveness, although persistent volatility in cotton prices and input costs remained a concern.

Operational and Financial Performance - FY 2024-25

The Company achieved 27% revenue growth, with operations at Rs.11,019.55 lakhs (vs. Rs.8,678.61 akhs in FY 2023-24).

Losses narrowed substantially, with Net Loss at Rs.65.67 lakhs (vs. Rs.258.39 lakhs), and EPS improved to Rs.(0.24) from Rs.(0.96).

Borrowings reduced to Rs.1,482.30 lakhs from Rs.1,932.30 lakhs, reflecting stronger cost controls and better balance sheet discipline.

The Company recorded revenue from operations in FY 2024-25, registering a growth of 27% FY 2023-24. This growth was supported by higher sales realization and an improved product mix.

While the Company remained in loss, the quantum reduced significantly owing to better capacity utilization, cost controls, and a more favorable raw material-price environment.

Opportunities and Threats

Opportunities:

• China+1 Strategy: Global buyers are increasingly looking at India as an alternative sourcing destination.

• Sustainability Demand: Growth in demand for organic cotton, recycled yarn, and environment-friendly processes.

• Government Support: Incentive schemes and infrastructure parks expected to benefit midsized players like STL.

• Digital Integration: Adoption of automation and data analytics improving supply chain efficiency.

Threats:

• Global Economic Risks: Slowdown in key markets may dampen exports.

• U.S. Tariff Uncertainty: Trade policy unpredictability in the U.S., especially during election cycles, may impact export margins and sourcing preferences. Rising protectionist rhetoric, including possible tariff hikes under the "America First" policy, poses a direct threat to Indian textile exports.

• Margin Pressure: Rising wage bills and competitive pricing pressure from Bangladesh and Vietnam.

• Raw Material Volatility: Cotton prices and energy costs remain unpredictable.

• Liquidity & Working Capital: Tight credit environment and delayed customer payments impact cash flow.

Internal Control Systems and Adequacy

• The Company has in place adequate internal control systems commensurate with the size and nature of its operations. These systems ensure accuracy in financial reporting, operational efficiency, and legal compliance. The Audit Committee periodically reviews the internal audit findings and corrective actions are taken accordingly.

Outlook

Despite short-term headwinds, the long-term outlook for the textile sector remains positive. STL aims

to:

• Strengthen customer base .

• Invest in sustainable technologies,

• Improve cost efficiency,

• Reduce debt gradually.

The management is committed to transforming STL into a future-ready textile player by focusing on operational excellence, customer centricity, and technology adoption.