Sunil Industries Ltd Management Discussions

A) GLOBAL ECONOMIC OVERVIEW:

The Indian textile industry is one of the oldest and most significant sectors of the Indian economy, contributing substantially to employment, exports, and GDP. Globally, India is recognized as a leading producer and exporter of textiles and garments, with a strong presence across the entire value chain from fibre to fashion.

1. Post-pandemic global consumption of textiles rebounded in 2024 2025.

2. Rising demand in the US, EU, and Middle East has positively impacted Indian exports.

3. The shift towards sustainable fashion benefits Indian organic and handloom sectors. India signed Free Trade Agreements with the UAE, Australia, and UK (under negotiation), leading to: ? Reduced tariffs ? Better market access ? Increased competitiveness of Indian garments

Export Performance (2024 2025)

Category	Export Value (USD Billion)	Growth (YoY %)
Cotton Textiles	13.2	+7.5%
Readymade Garments (RMG)	17.5	+9.2%
Man-made Fibre (MMF) Textiles	8.4	+6.8%
Handloom & Handicrafts	2.1	+12.4%

B) INDIAN ECONOMIC OVERVIEW

Indias growth continues to be resilient despite some signs of moderation in growth, says the World Bank in its latest India Development Update, the World Bank Indias biannual flagship publication.

The textile and apparel industry is a cornerstone of the Indian economy, deeply integrated with both rural livelihoods and industrial growth. It contributes significantly to:

? GDP: ~2.3% of Indias total GDP

? Industrial Output: ~13% of total manufacturing production ? Employment: ~45 million direct jobs and ~100 million indirect jobs

? Exports: ~10% of Indias total merchandise exports

? Cotton Textiles India is the worlds largest producer of cotton

? Man-Made Fibres (MMF) Fast-growing due to global demand

? Handlooms & Handicrafts Major rural employer; strong export potential ? Technical Textiles High-potential, industrial-use segment

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? Readymade Garments (RMG) Major contributor to exports

The World Bank has revised its FY23/24 GDP forecast to 6.3 percent from 6.6 percent (December 2022). Growth is expected to be constrained by slower consumption growth and challenging external conditions. Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures. The Indian textile industry remains a pillar of economic strength, with a unique combination of traditional artisanship and modern industrial production. With rising domestic demand, policy support, and a push for export competitiveness, the sector is poised for robust and inclusive growth in the coming decade.

C) INDUSTRY STRUCTURE AND DEVELOPMENT:

The global textile industry has been facing exceptionally challenging conditions since the past two years due to the restrictions imposed because of the Covid-19 pandemic. Further, the global supply chain had seen unprecedented levels of pressure and disruption due to logistical impasse. This led to delayed delivery resulting into reduced product shelf life and increased inventory at importer / retailer level which resulted in reduction in export orders / delayed picking of confirmed orders, apart from sharp increase in vessel shipping cost. Further, prodigious liquidity globally led to a proliferation in commodity prices including Cotton, Dyes, Chemicals, Coal, etc.

The textile industry being majorly an unorganized and fragmented sector the entire industry size and figures cannot be estimated. The textiles market in India has grown tremendously over the decade. Indian textile industry is maturing and with urban population evolving, demand for casuals, sports and fashion textiles is picking up. Millenials are very brand conscious and demand for branded wear is on the rise. There is growth in the industry in tier I and II markets and brand awareness is growing significantly.

D) OPPORTUNITIES AND THREATS:

Accelerated reopening of activities have re-opened opportunities for the textile market which were quiet for a long time. Further, China plus one policy by USA and Europe will lead to increase in demand for the Indian Market. With an added advantage of high quality standards and globally renowned accreditations, our Company will be forging ahead with its sustainability vision to build potential so as to grab opportunities coming its way. The demand for clothing in India and other countries is on the rise. The flow of orders has been progressively increasing for last few years. Your Company is well poised to seize opportunities available in the textile industry on account of its state-of-the-art production facilities, technical expertise, good quality culture and emphasis on product innovation and growth potential. Market is shifting towards Branded Garment. Your Company has been ahead in making investment in plant and machinery to meet the growth and meet the huge demand creation in the market. We are constantly experimenting products made from innovative yarns and eco-friendly chemicals for manufacturing most comfortable clothing. These technically

50 innovative products are much in demand by international brands. Given the unrelenting spread of the second wave of pandemic and the large-scale impact on the lives of the people, the near-term outlook for the Indian economy is uncertain impacting the growth prospects, the threat of slow demand for few quarters is possible.

E) OUTLOOK:

Coming year will be challenging with respect to pricing. Due to constant investment in latest machinery your company is able to target a vast audience, enhancing product quality, improving delivery schedules and giving superior customer service. Expectations are high, prospects are bright, but capitalizing on the new emerging opportunities will be a challenge for the textile manufacturing Companies.

The Company is optimistic of growth through continued network expansion and innovation. The Business will continue to focus on increasing the premium and fashion quotient of its offerings on the basis of a deep understanding of consumer preferences and delivering products of world-class quality.

F) BUSINESS OUTLOOK:

There are signs of pickup in economic activity and the recovery should gather pace by the end of first quarter FY22, helped by the decline in COVID cases and faster vaccination. India is poised to grow at the fastest pace year-on-year among major economies, according to projections made by the International Monetary Fund (IMF). This recovery is supported by large-scale vaccination and sustained fiscal and monetary support. The results of growth-enhancing policies and schemes (such as production-linked incentives and governments push toward self-reliance) and increased infrastructure spending will start kicking in from 2023, leading to a stronger multiplier effect on jobs and income, higher productivity, and more efficiency all leading to accelerated economic growth. Also, several spillover effects of geopolitical conflicts could enhance Indias status as a preferred alternate investment destination. The Reserve Bank of India (RBI) has estimated the GDP growth rate for FY 2024 25 at 6.5%. The annual inflation rate in India stood at 5.3% in July 2025, showing signs of moderation compared to the elevated levels seen in previous years. However, inflationary pressures are expected to persist in the near term due to ongoing volatility in global commodity and energy prices, as well as supply-side constraints. The RBI has already taken measures to contain inflation by tightening the policy rates. The next few quarters will be critical for Indias economy as the Government and the RBI work at balancing the stress on inflation, currency and fiscal deficit. Consumer confidence is improving and households optimism in outlook for the year ahead has strengthened with an uptick in sentiments. Business confidence is in optimistic territory and supportive of revival in economic activity.

G) SEGMENT-WISE PERFORMANCE OR PRODUCT WISE PERFORMANCE:

The company has only one segment i.e., Manufacturing of Textiles, therefore the requirement of segment-wise reporting is not applicable to the Company.

H) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company maintains adequate and effective Internal Control Systems commensurate with its size and complexity. It believes that these systems provide, among other things, a reasonable assurance that transactions are executed with management authorization. It also ensures that they are recorded in all material respect to permit preparation of financial statements in conformity with established accounting principles along with the assets of the Company being adequately safeguarded against significant loss or misuse. An independent

Internal Audit function is an important element of Companys Internal Control System. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee of Board.

I) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year ended 31^st March, 2025, your Company reported total revenue of Rs. 172,19,22,000/- (One Seventy-Two Crore Nineteen Lakh Twenty-Two Thousand) which in comparison to previous years figures have decreased by approximately 4.64%. The Net Profit after tax and OCI is Rs. 3,92,00,000/- (Three Crore Ninety-Two Lakh) as compared to Rs. 2,25,16,000/- (Two Crore Twenty-Five Lakh Sixteen Thousand) in previous year marking an addition of approximately 42.56% as compared to previous years figure.

J) CAUTIONARY STATEMENT:

Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations, or predictions may be forward looking, considering the applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results could, however, differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include finished goods prices, raw materials costs and availability, global and domestic demand supply conditions, fluctuations in exchange rates, changes in Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility in respect of the forward-looking statements herein, which may undergo changes in future based on subsequent developments, information, or events.

K) HUMAN RESOURCE POLICIES:

Your company considers its human resources as its most valuable assets, among all other assets of the Company. It has been the policy of the company to actuate the talent by providing opportunities to develop themselves within the organization. The company continued to have maintained very cordial & harmonious relations with its employees.

L) RISKs AND CONCERNS:

The major challenge that the textile, apparel and hosiery industry faces is of ever-increasing production costs arising out of rising wages, power and other overheads.

Inflation is expected to remain elevated for the foreseeable future, driven by war-induced commodity price increases and broadening price pressures. In addition, the anticipated increase in interest rates by Central Banks in the coming year are also expected to lower growth and exert pressure on economies particularly those in emerging markets.

In these circumstances, the ability to successfully navigate cost pressures would have a significant bearing on the overall performance of your Company. Diminishing purchasing power and demand due to the economic circumstances could result in fundamental shifts in consumer behaviours and adversely impact the market for textiles and apparel.

Deterioration in supply chain and demand due to pandemic such as COVID-19 have emerged as a significant business risk. Strong supply chain system with robust digitization and interlinking of various divisions is the need of the hour to tackle similar situations in future.

M) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Name of Metric	FY 2024	FY 2025	% Change Increase (decrease)	Explanation in case change is 25 % or more, as compared to the previous year
Trade Receivables Turnover Ratio	3.93	5.34	-26.50%	Due to reduction of turnover and increase in average account receviable
Inventory Turnover	4.15	4.05	2.51%	NA
Current Ratio	1.24	1.21	2.59%	NA
Debt - Equity Ratio	1.12	1.19	-6.44%	NA
Net Profit Ratio	0.02	0.01	82.39%	Overall Performance of the Company Growth and Tenders executed.
Return on Capital Employed	0.21	0.20	6.98%	NA
Return on Investment	0.03	0.02	64.42%	Overall Performance of the Company Growth and Tenders executed.

ACCOUNTING TRAETMENT

The Company is following India accounting standards (IND AS) for financial year 2024-2025 as notified by the Central Government of India under the Companies (Accounting Standards) Rules under section 133 of the Companies Act, 2013 and as per guideline of the institute of chartered accountants of India in the preparation of financial statements and has not adopted a treatment different from that prescribed in any accounting standard.

ON BEHALF OF THE BOARD

FOR SUNIL INDUSTRIES LIMITED

SD/-

VINOD LATH

MANAGING DIRECTOR & CHAIRMAN

DATE: 14th AUGUST, 2025

DIN NO: 00064774

PLACE: DOMBIVLI