Subhash Silk Mills Ltd Management Discussions

Indian Economic & Textile Industry overview -

The Indian economy continued to demonstrate resilience during FY 2025-26 despite persistent global uncertainties, supported by steady domestic demand, public infrastructure investment, and improving macroeconomic fundamentals. While global challenges such as geopolitical tensions, inflationary pressures, fluctuating commodity prices, and evolving trade dynamics continued to influence economic activity, India remained one of the fastest-growing major economies.

The Indian textile and apparel industry continues to be one of the countrys largest employment-generating sectors and a significant contributor to exports and industrial production. The sector contributes around 2% to Indias GDP and approximately 10% of the countrys merchandise exports. During the year, the textile industry witnessed mixed trends. While domestic demand remained relatively stable and certain export segments showed signs of improvement, manufacturers continued to face challenges arising from volatile raw material prices, pricing pressures, changing consumer demand, and global economic uncertainty.

The Governments continued policy supportthrough initiatives such as the Production Linked Incentive (PLI) Scheme, PM MITRA Mega Textile Parks, RoDTEP, and emphasis on technical textiles, sustainability, and value-added manufacturing is expected to strengthen the long-term growth prospects of the sector. Increasing global preference for sustainable and responsibly sourced textile products also presents opportunities for Indian manufacturers to enhance their competitiveness in international markets.

The Indian textile industry offers significant long-term growth opportunities driven by expanding domestic consumption, increasing demand for sustainable and value-added textile products, and diversification of global sourcing destinations. Indias integrated textile value chain, abundant raw material availability, skilled workforce, and supportive government initiatives position the industry favourably for future growth. Growing investments in technology, technical textiles, and sustainable manufacturing practices are expected to further strengthen the sectors competitiveness.

However, the industry continues to face several challenges. Volatility in cotton and synthetic fibre prices, fluctuations in energy and logistics costs, global inflationary pressures, and uncertain demand in key export markets may continue to impact profitability. Intense competition from other textile-producing countries, changing trade policies, compliance requirements, foreign exchange fluctuations, and increasing sustainability expectations from global customers remain key risks for the industry.

During FY 2025-26, the Company reported Total Income of Rs.1,27,047.29 as compared to Rs.2,44,698.85 in the previous financial year, primarily due to a significant reduction in Other Income. Income from Operations improved marginally to Rs.3,062.24 from Rs.2,840.02 in FY 2024-25, reflecting continued business operations despite challenging market conditions. Total Expenses stood at Rs.2,02,204.73, compared to Rs.2,47,155.28 in the previous year. The Company reported a Loss Before Tax 0Rs.75,157.43 as against a Loss Before Tax of Rs.2,456.42 in the previous year. Consequently, the Net Loss After Tax for FY 2025-26 stood at Rs.76,571.33, compared with Rs.22,055.83 in FY 2024-25.

The management continues to focus on cost optimisation, operational efficiency, prudent financial management, and exploring business opportunities to strengthen the Companys performance. Your Directors remain confident that these initiatives will contribute positively towards improving the Companys financial performance in the coming years.

The Company operates in a competitive and evolving business environment and is exposed to various business, operational, and financial risks. Fluctuations in raw material prices, particularly cotton and synthetic fibres, continue to influence production costs and margins. Rising energy, transportation, and labour costs, together with supply chain disruptions and changing regulatory requirements, may also impact operational performance.

The Company also faces competitive pressures from domestic and international textile manufacturers, technological changes, evolving customer preferences, foreign exchange fluctuations, and credit risks arising from delays in customer payments. Management continuously monitors these risks and undertakes appropriate mitigation measures to minimise their impact on business operations.

The Company has established adequate internal control systems commensurate with the nature, size, and complexity of its business operations. These systems are designed to ensure the orderly and efficient conduct of business, safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, and prevention and detection of frauds and errors.

The internal audit function independently evaluates the effectiveness of internal controls and risk management processes and submits its reports to the Audit Committee. Significant observations and recommendations are reviewed by the Audit Committee and appropriate corrective actions are implemented by the management. The Board believes that the Companys internal control systems remain adequate and effective for its business operations.

Employees: The Company has 5 employees on its payroll.