Suditi Industries Ltd Management Discussions

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2)(e) of Listing Regulations, read with Schedule V(B) thereto, with a view to provide an analysis of the business and Financial Statements of the Company for the financial year and should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report.

The objective of this report is to convey the Managements perspective on the external environment and our industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the financial year.

Industry Structure & Development:

The Indian textile and apparel industry remains a cornerstone of the national economy, contributing significantly to industrial output, exports, and employment. As one of the most diversified sectors globally, India ranks as the second-largest producer of textiles and garments, contributing approximately 7% to industrial production, 2% to GDP, and 10-11% to total merchandise exports. It also supports over 100 million people through direct and indirect employment, making it the second-largest employer after agriculture.

As of FY 2024-25, the Indian textile and apparel market is estimated to be worth USD 265-275 billion, with textiles accounting for USD 180-185 billion and apparel for USD 85-90 billion. The combined market is projected to grow at a CAGR of 8-10%, reaching approximately USD 295-310 billion by FY 2025-26, driven by strong domestic demand, digital innovation, and strategic policy interventions.

Indias textile sector spans a complex and integrated value chain-ranging from natural fibers (cotton, jute, silk) to man-made fibers (MMF), handlooms, technical textiles, and ready-made garments. The domestic market continues to dominate demand, accounting for nearly 75%, while exports contributed USD 42 billion in FY 2024-25, including USD 18 billion from apparel alone. Apparel exports are expected to rise to USD 2022 billion by FY 2025-26, making India one of the top five garment exporters globally.

Government initiatives such as the Production Linked Incentive (PLI) Scheme, PM MITRA Parks, and the National Technical Textiles Mission are expected to boost competitiveness by incentivizing investment in high-value MMF, technical textiles, and integrated infrastructure. The RoSCTL and RoDTEP schemes have further strengthened Indias cost competitiveness in global markets. Additionally, Free Trade Agreements (FTAs) with key trading partners like the UAE and Australia, and negotiations with the UK and EU, are expected to unlock new export opportunities.

Digitalization, product customization, and sustainability are transforming the industry landscape. Aided by increased urbanization, rising disposable incomes, and evolving fashion preferences-particularly among Gen Z and millennials-brands are embracing gender-fluid fashion, eco-friendly materials, 3D modeling, and digital printing to remain competitive. The growing demand for ESG-compliant sourcing, circular production models, and certified green textiles is pushing companies toward more responsible business practices.

On the global front, the China+1 sourcing strategy adopted by Western nations and economic instability in competing hubs like Bangladesh, Sri Lanka, and Pakistan have positioned India as a more reliable and

strategic sourcing partner. This has opened up new avenues for exports, especially in the premium and sustainable apparel segments.

Despite the positive outlook, the industry faces several challenges, including volatile raw material prices, intense global competition, currency fluctuations, and high compliance costs related to sustainability and labor regulations. Furthermore, supply chain disruptions and demand moderation in key markets such as the USA, UK, and Europe—largely due to inflation and inventory overhangs—have affected short-term export growth.

Nevertheless, the Indian textile and apparel industry remains structurally strong. Continued policy support, infrastructure development, capacity enhancement, and a skilled workforce provide a strong foundation for future growth. With a focus on value addition, brand creation, and digital transformation, India is poised to strengthen its position as a global textile and apparel powerhouse—serving both an expanding domestic consumer base and a diversified international clientele.

Opportunities & Threats

The Indian textile and apparel industry stands at a promising juncture, with several key opportunities shaping its growth trajectory. One of the most significant tailwinds is the global realignment of supply chains, where international brands are adopting a "China+1" sourcing strategy to reduce dependency on China. India, with its abundant raw materials, skilled labor, and large manufacturing base, is well-positioned to attract a higher share of global sourcing. Domestically, the sector is benefiting from a rising consumption trend fueled by urbanization, increasing disposable incomes, and fashion awareness, particularly in Tier-II and Tier-III cities.

Government initiatives such as the Production Linked Incentive (PLI) scheme, PM MITRA parks, and the National Technical Textiles Mission are catalyzing large-scale investments and modern manufacturing capabilities. Furthermore, Free Trade Agreements (FTAs) with key markets like the UAE and Australia are enhancing Indias export competitiveness. Another significant opportunity lies in the rapid growth of the man-made fiber (MMF) and technical textiles segments, which are increasingly in demand globally for their performance and versatility. The continued expansion of e-commerce and digital channels, alongside the emergence of direct-to-consumer (D2C) brands, is also creating new avenues for market penetration and consumer engagement. Moreover, the global pivot toward sustainability and circular fashion offers India the chance to lead in organic cotton, eco-friendly textiles, and ethical production practices.

However, the industry also faces several structural and external threats. Intense competition from cost- efficient countries such as Bangladesh, Vietnam, and Turkey remains a persistent challenge, particularly in the export of ready-made garments. Price volatility in key raw materials like cotton and synthetic fibers, often influenced by weather patterns or fluctuations in crude oil prices, can impact input costs and margins. Infrastructure limitations, such as high logistics costs, energy inefficiencies, and outdated technology in MSME clusters, hinder productivity and scale. The fragmented nature of the industry, with a large unorganized segment, further contributes to inefficiencies and limits modernization. Additionally, increasing compliance and sustainability requirements from global buyers necessitate substantial investment in traceability, certifications, and ESG initiatives. Lastly, any slowdown in major export markets due to global economic uncertainties or inflationary pressures could dampen demand for Indian textile and apparel products.

In this evolving landscape, the industrys ability to leverage its strengths while addressing structural challenges will determine its long-term global positioning and sustainable growth.

The Indian textile and apparel industry is undergoing a transformative phase, offering both growth potential and strategic challenges. One of the most significant opportunities lies in the global shift toward diversified sourcing, as brands and retailers look beyond China in response to geopolitical and supply chain risks. Indias integrated value chain—from fiber to fashion-coupled with a vast raw material base and skilled labor, positions the country favorably to become a preferred global sourcing hub. Domestic demand is also growing, supported by urbanization, rising income levels, and a fashion-conscious consumer base, particularly in emerging Tier-II and Tier-III cities.

Policy support from the government, including the Production Linked Incentive (PLI) scheme, development of PM MITRA integrated textile parks, and the National Technical Textiles Mission, is fostering investment and modernization across the sector. New Free Trade Agreements (FTAs) with key markets such as the UAE and Australia are enhancing export competitiveness by offering duty-free access to Indian garments and textiles. Meanwhile, the rising adoption of man-made fibers (MMFs) and technical textiles presents a high-growth segment, catering to both industrial and lifestyle applications. The rapid expansion of e-commerce, digital retail, and direct-to-consumer (D2C) models is enabling brands to reach new markets efficiently, while sustainability and ESG compliance are unlocking value among environmentally conscious global buyers.

Despite these opportunities, the industry continues to grapple with several threats. Competitive pressures from low-cost manufacturing countries like Bangladesh, Vietnam, and Turkey challenge Indias pricing advantage, particularly in labor-intensive segments like ready-made garments. Price volatility in cotton and synthetic fibers, driven by climate conditions or crude oil prices, impacts cost structures. Infrastructural bottlenecks, particularly for MSME units—such as outdated machinery, high energy costs, and inefficient logistics—continue to limit scalability and speed. The fragmented structure of the industry, with a large unorganized component, contributes to uneven quality, low productivity, and difficulties in compliance with global standards. Increasingly stringent sustainability, traceability, and labor-compliance norms from major global buyers require significant investment in systems and certifications. Furthermore, any global slowdown, particularly in the U.S. and EU—Indias major export destinations—poses demand-side risks in the short term.

Performance:

The Company has seen a rise in domestic sales as compared to the previous year. However, the Company had seen fall in income generated from other sources as compared to previous year. The performance of the

Compny

Key Ratios:

Earnings per share:

The Companys basic earnings per share is Rs. 0.85 and diluted earning per share is Rs. 0.84 for 2024-25 are as against Rs. (4.48) during 2023-24. Detailed analysis of ratio are given separately in the notes to the accounts.

Outlook:

The Company envisions a positive outlook for its future, aspiring to increase its business. The focus is on establishing long term strategic partnerships that offer enhanced visibility into the business and drive a consistent stream of revenue. This enables the Company to transition from transactional orders to value- accretive businesses, ultimately driving higher margins and improved return ratios in the long term. Adapting to the dynamic economic and fashion landscape, the Company continues to evolve and build resilience against market upheavals. While acknowledging the near-term challenges that may impact growth, the Company anticipates a positive outlook. As a global platform, we remain dedicated to strengthening our capabilities, accompanied by a gradual increase in profitability. We, therefore, look at the future optimistically.

Risk and Concerns:

There are various risks and concerns associated with the textile and apparel industry such as Regulations, Competition, Business risk, Technology Obsolescence, Retention of talent, cyber security etc. Price fluctuation, interrupted availability of raw material, high inventory and rising input cost remain the major concern for the industry. As business passes on the rising cost due to rise in input prices, consumer sentiments are getting affected and the demand is being further contracted.

Internal Controls & Systems:

The Company has in place robust Internal Control system to maximize the effectiveness and efficiency by including activities that are tailored to the nature, size and complexity of the entity. The Company follows proper hierarchy for reporting of routine activities. The company has set up adequate internal control and systems to ensure that all the functions and procedures followed are effective and any major revenue leakage or wastage of resources are timely checked and controlled. The Company implements and manages efficient internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, by maintaining proper records and reports in a timely manner. There is regular evaluation of all the Internal Controls Systems and procedures, and it is also reviewed by Internal Auditors through checking, inspection and verification. Apart from this the company has also adequate internal financial control systems that include a risk based framework to ensure orderly and efficient conduct

of its business, safeguarding assets and accuracy and completeness of the accounting records, and assurance on reliable financial information.

Internal Audit

Internal Audit at the Company is an independent and objective activity designed to provide assurance to senior management and add value by identifying opportunities to deliver business benefits and improvements to internal controls. It helps us accomplish our objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of processes, controls, and governance. The internal audit function carries out a focused and risk-based annual internal audit plan approved by the Audit Committee.

Human Resources

Beyond Balance Sheet, Companys single biggest asset is its Human Resources. The Company is of firm belief that the human resources are the driving force towards progress and success. The Company continued its policy of attracting and recruiting the best available talents so that it can face business challenges ahead. The industrial relationship continues to be cordial during the year. The total permanent employees strength of the Company was 130 as on March 31, 2025.

Though the statement and views expressed in the above-said report are on the basis of certain assumptions and expectations of future events, actual results may differ from whatever is stated in the annual report

Cautionary Statement:

The statements made in this Management Discussion and Analysis that pertain to the Companys objectives, plans, estimates, and expectations may be considered forward-looking statements under applicable laws and regulations. These statements, which discuss future performance and outcomes, are based on Managements current plans and assumptions using available information. However, these statements are subject to various risks, uncertainties, and potential inaccuracies in assumptions. Such forward-looking statements can be identified by the use of words like anticipate, estimate, expects, projects, intends,plans, believes, aims, drive towards or similar expressions. While we have exercised prudence in our assumptions, we cannot assure that these forward-looking statements will materialise. We undertake no obligation to publicly update any such statement, whether due to new information, future events, or other circumstances.