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:

Global growth is projected at 3.3 percent for 2026 and 3.2 percent for 2027, revised slightly up since the October 2025. Technology investment, fiscal and monetary support, accommodative financial conditions, and private sector adaptability offset trade policy shifts. Global inflation is expected to fall, but US inflation will return to target more gradually. Key downside risks are revaluation of technology expectations and escalation of geopolitical tensions. Policymakers should restore fiscal buffers, preserve price and financial stability, reduce uncertainty, and implement structural reforms.

The crisis in the Middle East has delivered yet another shock to the global economy, slowing growth, reigniting inflationary pressures and heightening uncertainty.

Global GDP growth is now forecast at 2.5 per cent in 2026, 0.2 percentage points below the January projection and well below pre-pandemic norms. A modest recovery is projected at 2.8 per cent in 2027. Solid labour markets, resilient consumer demand, and AI-driven trade and investment in select economies are expected to provide some support, but the downgrade underscores a further weakening of an already subdued global outlook.

The shock is primarily felt in the energy sector-through constrained supply, surging prices, and rising freight and insurance costs-with effects cascading through supply chains and increasing production costs globally. While the surge in prices delivers substantial windfall gains for energy companies, it has intensified cost pressures for households and businesses worldwide. The overall impact will depend on the duration of disruptions in energy markets, leaving the outlook highly uncertain and risks tilted to the downside.

The conflict has halted the global disinflation trend underway since 2023. In developed economies, inflation is forecast to rise from 2.6 per cent in 2025 to 2.9 per cent in 2026, edging further above central bank targets in most cases. In developing economies, the uptick is sharper: inflation is projected to accelerate from 4.2 per cent to 5.2 per cent, as higher energy, transport and import costs erode real incomes and broaden price pressures across a wide range of goods.

INDIAN ECONOMIC OVERVIEW

According to the Economic Survey 2025-26 - PIB, Indias real GDP is estimated to grow at 7.4% in FY26. This growth is powered by robust urban and rural consumption, with private final consumption expenditure reaching its highest share of GDP since 2012 at 61.5%.

Indias monetary and financial sectors performed robustly in FY26 (Apr-Dec 2025). Banking sector asset quality improved significantly, with Gross Non-performing Assets (NPA) at 2.2% and net NPA at 0.5% in September 2025, while credit growth rose to 14.5% YoY by December 2025.

Financial inclusion deepened, with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts reaching 55.02 crore, alongside expanded credit access through Stand-Up India, PM SVANidhi, and Pradhan Mantri Mudra Yojana (PMMY), which has disbursed Rs 36.18 lakh crore across 55.45 crore loan accounts.

Capital market participation surged, with demat accounts exceeding 21.6 crore, 12 crore unique investors (nearly 25% women), and 5.9 crore mutual fund investors, increasingly from non-metro areas.

Indias external sector strengthened markedly, with its share in global merchandise exports rising from 1% to 1.8% and services exports from 2% to 4.3% between 2005 and 2024, alongside high trade partner diversification. Total exports touched a record USD 825.3 bn in FY25 (6.1% YoY growth), driven by services exports at an all-time high of USD 387.6 bn(13.6% YoY growth).

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 grew 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 in 2025-26 is undergoing a major structural shift, balancing supply-chain turbulence with a heavy focus on sustainability, advanced technical textiles, and regional diversification. India, as a leading global supplier, saw its textile and handicraft exports grow to over Rs. 3.16 lakh crore, expanding market access to more than 120 countries.

The countrys textiles and garment exports fell 2.2% to $35.8 billion in 2025-26 due to contraction in shipments of key segments such as cotton, think tank Global Trade Research Initiative (GTRI) said on Saturday (April 25, 2026). In rupee terms too, the exports fell 2.1% during the last fiscal.

GTRI said the declining pattern is visible across major segments - cotton textiles - (-3.9%), ready-made garments (- 1.4%), and carpets (- 5.3%). Only handicrafts grew slightly by 1.5% during the fiscal.

The textile market size is expected to see strong growth in the next few years. It will grow to $915.96 billion in 2029 at a compound annual growth rate (CAGR) of 7.1%. The growth in the forecast period can be attributed to global population growth and urbanization, a rapid growth in ecommerce, rising spend on leisure, increasing retail penetration, increasing internet penetration and smartphone usage and growing preference for contactless delivery solutions. Major trends in the forecast period include focus on adopting digital textile printing inks, focus on use of non-woven fabrics, focus on using organic fibers, focus on sustainable fibers, focus on using blockchain in the manufacturing processes, focus on implementing digital platforms in textile supply chain management, focus on collaborating with technology companies to design and develop smart fabrics, focus on adopting robotics and automation, focus on investing in artificial intelligence and focus on partnerships and collaborations to develop innovative products.

INDIAS TEXTILE MARKET

Indias textile exports recorded growth across more than 120 destinations during April 2025 to February 2026, indicating broad-based expansion in global markets.

Key export markets witnessed strong growth, including UAE (22.3%), Japan (20.6%), Spain (15.5%) and Germany (9.9%), alongside significant gains in emerging regions such as Africa.

Ongoing policy support through schemes like RoSCTL and RoDTEP, along with recent FTAs including India-EFTA TEPA, India-UK CETA and others, are expected to further strengthen market access, enhance competitiveness and support sustained export growth.

OPPORTUNITIES, CHALLENGES AND OUTLOOK

OPPORTUNITIES

Government Incentive & Support Programs

• PLI Scheme: The Production Linked Incentive (PLI) scheme provides financial incentives for large-scale manufacturing of MMF fabrics, MMF apparel, and specified categories of technical textiles.

• PM MITRA Parks: Mega Integrated Textile Regions and Apparel (PM MITRA) parks are being established to create world-class integrated industrial ecosystems with plug-and-play facilities to reduce logistics costs.

• ATUFS & Skilling: The government offers capital investment subsidies through ATUFS and runs demand-driven skilling programs like SAMARTH to ensure a steady supply of trained operators and technicians

High-Growth Segments

• Technical Textiles: Indias technical textiles market is growing rapidly. Opportunities include producing geotextiles (road/civil engineering), agrotech (crop covers), and protech (personal protective equipment).

• Man-Made Fibers (MMF): With a global shift away from traditional cotton, demand for MMF apparel and blended fabrics is surging. Establishing vertically integrated MMF garmenting facilities offers strong global export potential.

• Home Textiles & E-Commerce Retail: The domestic consumer market is expanding quickly due to rising disposable incomes and organized retail. B2B and D2C brands in home furnishings and customized apparel are major growth areas

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:

• Global Trade & Tariff Volatility: Uncertainties in key export markets (such as the US and EU) and reciprocal tariffs disrupt supply chains and lower the price competitiveness of Indian garments compared to regional competitors.

• Intense International Competition: Countries like Vietnam and Bangladesh possess lower production costs and enjoy favorable trade access, making it difficult for Indian exporters to maintain or scale their global market share.

• Raw Material Volatility: Dependence on monsoon-reliant agriculture creates irregular supplies and unstable prices for raw cotton. Furthermore, a structural deficit in domestic cotton production frequently forces the industry to import to meet mill demand.

• High Power and Operational Costs: Rising utility tariffs (such as electricity and water) and increasing labor wages significantly increase operating expenses. This burden is particularly heavy on the Micro, Small, and Medium Enterprises (MSMEs) that make up a vast majority of the sector.

• Lagging Technological Adoption: With a large percentage of weaving and processing remaining in the unorganized sector, slow adoption of automated, "Industry 4.0" technology leads to sub-optimal machine usage, higher downtimes, and lower productivity compared to global peers.

• Strict Environmental Compliance: Stringent pollution control and effluent treatment regulations impose heavy capital and maintenance costs on dying and processing units.

CHALLENGES

Key challenges include:

• Raw Material Fluctuations: Indias cotton supply is frequently vulnerable to weather, supply chain issues, and quality issues. Furthermore, government-imposed Quality Control Orders (QCOs) on man-made fibers (MMF) like polyester and viscose restrict imports, forcing domestic yarn makers to rely on costlier local alternatives.

• Fierce Global Competition: India trails competitors like Bangladesh and Vietnam in apparel exports. These nations benefit from vertically integrated supply chains, lower labor costs, and favorable Free Trade Agreements (FTAs) with major markets like the US, whereas India faces higher production costs and complex export compliance burdens.

• Fragmented Supply Chain: The industry is heavily fragmented and dominated by Micro, Small, and Medium Enterprises (MSMEs). This lack of integration leads to logistical inefficiencies, delays, and an inability to achieve economies of scale compared to competitors like China.

• Outdated Technology: Significant technological gaps exist, especially in the weaving and processing sectors. Many manufacturers use obsolete machinery, which drives up operational costs, lowers productivity, and restricts the ability to meet strict global quality standards.

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	Aliva Dey
For Sueryaa Knitwear Limited	Chairperson & Whole time Director
Date: 13.07.2026	DIN: 10805742
Place: Ludhiana