Sueryaa Knitwear Ltd Management Discussions

We submit herewith the "Management Discussion and Analysis Report" on the business of the Company as applicable to the extent relevant.

GLOBAL ECONOMY OVERVIEW:

The global economy expanded by 3.2% in the CY 2023, demonstrating remarkable resilience in the face of continuing economic adversities like geopolitical challenges, demand slowdown and fluctuations in commodity prices which has led to inflationary pressures in both advanced and emerging markets*.

The global Manufacturing PMI has been under contraction in CY2023 but has indicated stabilisation towards the start of CY2024. Additionally, commodity prices have remained relatively stable in CY2023 despite the ongoing economic slowdown in China & Europe and geo-political challenges in Europe and the Middle East. Owing to the rising interest of foreign institution investor, several emerging economies like India, Vietnam and Mexico are expected to show a positive growth trajectory

*https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024

Outlook

Global growth is estimated to remain stable at 3.2% throughout CY 2024 and CY 2025*. Global inflation is receding at a faster pace than anticipated. It declined from 8.7% in CY 2022 to 6.8% in CY 2023 and is expected to further decline to 5.9% in CY 2024, according to IMF.

However, geopolitical risks remain high, particularly in light of the continuing conflict in the Middle East and political tensions in Europe. Going forward, declining inflation and greater government spending is anticipated to alleviate fiscal pressures and expected to attract investments for future growth.

*https://www.imf.ora/en/PublicationsWEO#:~:text=Description%3A%20Global%20growth%20is%20proiected,debt%20weigh%20on%20economic%20activity.

INDIAN ECONOMIC OVERVIEW

Indias economy is one of the fastest-growing major economies in the world. In FY 2024, India registered a GDP growth rate of 8.2%*. This growth was accompanied by a fall in the inflation rate and improved disposable income which resulted in increased private consumption and sustained demand for goods and services in the country. The Reserve Bank of Indias (RBI) proactive monetary policies contributed to strengthening the financial landscape of the country. The capital expenditure push, particularly on roads and railroads, has favoured in maintaining the economic growth rate. For the year under review, the FDI in India remained resilient and amounted to USD 71.0 billion#. The Government of India also allocated 3.3% of GDP to infrastructure development and supported the economy by creating employment opportunities. The manufacturing sector grew by 9.9% in FY 2024 owing to the favourable demand conditions in the economy. Notably, there has been greater capacity utilisation across the manufacturing sector, which has further fuelled economic growth.

* https://pib.gov.in/PressReleseDetailm.aspx?PRID=2022323 4Annual Report 2023-24. Reserve Bank of India (RBI)

# https://pib.gov.in/PressReleseDetailm.aspx?PRID=2022323 4Annual Report 2023-24. Reserve Bank of India (RBI)

Outlook

The Indian economy is expected to continue its upward trend and become the third-largest economy by 2027. According to the Organisation for Economic Co-operation and Development (OECD), the GDP is expected to grow by 6.6% in FY 2024-25. Inflation is expected to further fall and this will support the increased level of consumption of goods and services and contribute to increased activity in the economy.

With the support of various industry-promoting programmes like the Production-Linked Incentive (PLI) scheme and the governments Make in India initiative, the manufacturing sector can potentially expand into a USD 1 trillion industry by 2025-2026. This strategic move is expected to help the growth of the manufacturing sector and thereby contribute to economic growth in the coming years.

INDUSTRY OVERVIEW TEXTILE

GLOBAL TEXTILE MARKET

The global textile industry attained a market size of USD 1,837.27 billion in CY 2023*. The global textile industry witnessed a trend of adopting Artificial Intelligence (AI) in CY 2023, which also helped enhance the industrys productivity. Innovations such as automation and digital printing have significantly transformed the global market by enhancing the productive efficiency of the industries and meeting the dynamic market demands in the reported year.

The Global textile industry is recovering, with inventory levels of international retailers and brands back to prepandemic norms. Despite this, the industry remains cautious about demand as textile companies await an increase in order book momentum. The growth in this industry was significantly contributed by the growth in the Asia Pacific markets for the year under review. The European markets are also expected to experience significant growth in the future.

The consumers increasing environment-consciousness is moving the industry towards manufacture of sustainable products. Further the buyers thrust to diversify their supply chain beyond China to avoid over-reliance on a single country is a driver for India to come up as a value chain partner owing to our raw material strength and robust manpower pool.

Anticipated Free Trade Agreement (FTA) include the long overdue UK FTA and EU FTA, along with negotiations between India and the Russia-led five-member Eurasian Economic Union (EaEU) set to commence in 2024. Another FTA between India and Oman is on the horizon and is likely to be signed in 2024. This will make us competitive in these markets.

Rapid Adoption of Digitalization, Block chain, Traceability and increased action towards Sustainability & ESG focus would be an optimal strategy to boost efficiency and maintain competitiveness. ESG is at the core of Strategy for every retailer. They are prioritizing vendors on the basis of ESG score

* https://www. grandviewresearch. com/industry-analysis/textile-market#

INDIAS TEXTILE MARKET

Indias textile market is one of the worlds largest markets. The industry contributed to the Gross Domestic Product (GDP) by 2.3% in FY 2024. It has a 4% share in the global trade of textiles and apparel. This industry remained a significant contributor to the growth of the economy by providing employment opportunities and attracting investments.

Some of the most important textile production locations in India are Gujarat, Maharashtra, Tamil Nadu, Punjab, Uttar Pradesh and West Bengal. The domestic market faced several headwinds during the reported year including fluctuation of cotton prices. Even the festive season did not bring enough market demand, and at the same time increasing imports of fabrics from Bangladesh at lower production cost also put pressure in the domestic market. Although India is the largest exporter of textiles and apparel in the global market, the contribution of the industry in trade declined in FY 2024. However, the export statistics indicate that cotton yarn, fabrics and handloom products experienced an increase of 6.71% in their exports*.

The Government of India consistently made efforts to support the growth of this industry in the reported year. The Ministry of Textiles approved 18 Research and Development (R&D) projects across key strategic areas including sustainable textiles#, providing the industry with significant growth opportunities. This initiative is expected to boost innovation and enhance the industrys operational efficiency. The government signed the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association in the reported year. This agreement included integrating advanced technologies to enhance the productivity in the industry and support the industrys growth further

*https://citiindia.ora/newsletter-monthly/April-2024/News-Clippings-27042024.pdf

#https://pib.gov.in/PressReleaseIframePaae.aspx?PRID=1961802#:~:text=Ministry%20of%20Textiles%20approved% 2018%20R%26D%20proiects%20worth%20INR% 2046.74.durina%20the%207th%20MSG%20meetina

KEY INITIATIVES UNDERTAKEN BY THE GOVERNMENT OF INDIA IN FY 2024*

PM MITRA Scheme

The government launched the PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme to build and develop textile infrastructure. The scheme is inspired by the 5F vision: Farm to Fibre to Factory to Fashion to Foreign.

PLI Scheme

The government also launched the Production Linked Incentive (PLI) Scheme for Textiles, with an investment of INR 10,683 crore over the next five years, to promote the production of man-made fibres (MMF) apparel. The MMF are artificially produced fibres and are becoming common among the weavers and spinners in India. The PLI scheme also promotes the production of technical textile products in the country.

Kasturi Cotton Bharat

Kasturi Cotton Bharat programme of the Ministry of Textiles is a first-of-its-kind branding, traceability and certification exercise carried out jointly by the Government of India, Trade Bodies and Industry to promote the cotton produced in India.

National Technical Textile Mission (NTTM)

The GOI launched the National Technical Textiles Mission (NTTM). It promotes the development and export of technical textiles.

*https://pib. gov. in/PressReleasePage. aspx?PRID=1989149

Bharat Tex 2024

Prime Minister Narendra Modi inaugurated Bharat Tex 2024, one of the largest-ever global events held in India, at Bharat Mandapam in Delhi.

Speaking at the event, PM Modi promised his full support to the textiles sector, stressing its crucial role in Indias development.

OPPORTUNITIES, CHALLENGES AND OUTLOOK OPPORTUNITIES

• Bharat Tex 2024*

- Bharat Tex 2024 is an excellent platform to highlight Indias exceptional capabilities in the textile industry.

- Thread of Bharat Tex connects the glorious history of Indian tradition with todays talent; technology with traditions; and is a thread to bring together style, sustainability, scale and skill.

- Focussing on tradition, technology, talent and training.

- We are working in a very wide ambit to further increase the contribution of Textile Sector in building a developed India.

- Textiles and Khadi have empowered women of India.

- Today technology and modernization can co-exist with uniqueness and authenticity.

- Kasturi Cotton is going to be a big step towards creating Indias own identity.

- In PM-MITRA parks, Government strives to establish the entire value chain ecosystem in a single place where modern infrastructure with plug and play facilities are made available.

- Today a peoples movement is going on in the country for Vocal for Local and Local to Global *https://pib.gov.in/PressReleasePage. aspx?PRID=2009004

• Helping SMEs in the textile sector by providing them with modern machines and other allied infrastructure.

• Growing Population and Rising Disposable Income#

Indias textile market is primarily driven by its large and growing population, which creates a substantial demand for clothing and textiles. With a population exceeding 1.3 billion, India presents a vast consumer base for the textile industry. Moreover, the rising disposable income levels among the middle class and urban population further fuel this demand.

According to the Ministry of Statistics and Programme Implementation, Indias per capita income increased to USD 1615.55 in FY 2020-21, reflecting a steady rise in purchasing power. This growing purchasing power translates into increased expenditure on clothing and textiles, thus driving the market forward.

• Government Initiatives and Policies#

The Indian governments proactive initiatives and policies play a crucial role in driving growth in the textile industry. Programs such as the Make in India campaign and the National Textile Policy aim to promote domestic manufacturing, boost exports, and attract investments into the sector.

• Sustainability and Eco-Friendly Textiles#

Increasing awareness regarding environmental sustainability presents a significant opportunity for the Indian textile industry. Consumers are becoming more conscious of the environmental impact of textile production and are demanding eco-friendly and sustainable products.

The adoption of organic cotton, recycled materials, and eco-friendly manufacturing processes can help Indian textile manufacturers tap into this growing market segment. According to the Cotton Corporation of India, the demand for organic cotton in India has been increasing by 20-25% annually, indicating a promising opportunity for sustainable textiles.

• Digital Transformation and E-Commerce#

The rapid growth of e-commerce platforms presents new avenues for market expansion in the Indian textile industry. With the increasing penetration of smartphones and internet connectivity, online retailing has become increasingly popular among Indian consumers. Textile companies can leverage digital channels to reach a wider audience, improve customer engagement, and enhance the overall shopping experience.

According to the Ministry of Electronics and Information Technology, Indias digital economy is expected to reach USD 1 trillion by 2025, offering immense opportunities for textile businesses to capitalize on digital transformation and e-commerce trends.

#https://www.custommarketinsights.com/report/india-textile-market/

THREATS

Based on review of the textile market situation and level of rivalry present in the domestic market, following threats might be present in the market, which can hinder growth of the revenue of the Company:

• Infrastructure Challenges*

Despite significant progress, Indias textile industry still faces infrastructure challenges that hinder its growth potential. Inadequate transportation networks, outdated manufacturing facilities, and insufficient power supply infrastructure contribute to operational inefficiencies and higher production costs.

According to the Confederation of Indian Textile Industry (CITI), infrastructure bottlenecks increase production costs by up to 15-20% in some cases, making Indian textiles less competitive in the global market.

• Fragmented Industry Structure*

The Indian textile industry is highly fragmented, comprising numerous small-scale and unorganized players alongside larger corporations. This fragmented structure often leads to inefficiencies in production, distribution, and marketing. Small-scale producers face challenges such as limited access to finance, outdated technology, and lack of economies of scale.

Additionally, the presence of a large informal sector makes regulation and quality control difficult, impacting the overall reputation of Indian textiles in international markets.

*#https://www.custommarketinsights.com/report/india-textile-market/

• Intense competition between established brands and private label brands.

• Low cost substitute products from other countries

• Significant presence of small suppliers has reduced the bargaining power.

• Major clothing brands have better bargaining power over textile manufacturers, as the product differentiationis low and numbers of players are high and fragmented.

DISSCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements have been prepared in accordance with the requirements of the Companies Act, 2013 and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Accounts and other financial statements forming part of this annual report.

INTERNAL FINANCIAL CONTROL SYSTEM

Given the magnitude and nature of its business, the Company has maintained sound and commercial practice with an effective internal control system. The system ensures that all transactions are authorized, recorded and reported correctly to safeguard the assets of the Company and protect them from any loss due to unauthorized use or disposition. The adequate internal information system is in place to ensure proper information flow for the decision- making process. The Company also has well-established processes and clearly defined roles and responsibilities for people at various levels. The control mechanism also involves well documented policies, authorization guidelines commensurate with the level of responsibility and standard operating procedures specific to the respective businesses, adherence to which is strictly ensured. Internal audit is carried out frequently to create awareness and to take corrective actions on the respective units or areas, which need rectification. These reports are then reviewed by the "Management Team" and the "Audit Committee" for follow-up action.

HUMAN RESOURCE DEVELOPMENT

The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potential of its employees attracting and retaining the best manpower available by providing high degree of motivation.

Your Company believes in trust, transparency & teamwork to improve employees productivity at all levels.

DISCLOSURE OF ACCOUNTING TREATMENT

While preparation of financial statements, a relevant Accounting Standard treatment has been followed.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors.

On behalf of the Board of Directors

For Sueryaa Knitwear Limited

	Parul Singh
Date: 12.08.2024	Additional (Whole time) Director
Place: Ludhiana	DIN:09811725