Supertex Industries Ltd Management Discussions

GLOBAL-ECONOMIC OVERVIEW

The global economy maintained a stable growth trajectory during the year, despite ongoing macroeconomic challenges, including the imposition of higher US tariffs on key traded goods, which have weighed on global trade flows. Global GDP growth stood at 3.3% in 2025, improved marginally from 3.2% in 2024. Growth in advanced economies remained subdued, moderating from 1.8% to 1.7%, reflecting tighter financial conditions and weaker demand. In contrast, emerging economies continued to drive global growth, expanding by 4.4% in 2025, supported by strong domestic demand, increasing infrastructure investments, and improving manufacturing activity. Additionally, ongoing geopolitical tensions, including in the Middle East, have contributed to some volatility in energy prices, adding to the uncertainty in global energy markets. Overall, the global outlook remains uncertain due to geopolitical developments which continue to pose risks to sustained economic growth.

INDIA ECONOMIC OVERVIEW

Indias economy continued to demonstrate resilience amid global macroeconomic challenges, consistently outperforming the global average on the back of strong domestic demand, GST rationalization, and resilient policy push. Despite external pressures such as supply chain disruptions and inflation, the country has maintained relative economic stability. In 2024-25, Indias real GDP is estimated at Rs 299.89 lakh crore, grown by 7.1% supported by sustained growth across manufacturing, services, and infrastructure sectors, reflecting the economys ability to adapt to evolving global conditions. Nominal GDP has reached Rs 318.07 lakh crore, underscoring Indias expanding presence in the global economy. Going forward, continued investments, rapid digitalization, and a favourable demographic profile are expected to further strengthen Indias growth outlook.

As of December 2025, Indias overall Index of Industrial Production (IIP) recorded a growth of 7.8% YoY, indicating a gradual stabilization in manufacturing activity despite continued global trade headwinds. However, the textile and apparel sectors experienced a visible slowdown, with the textile manufacturing index declining marginally from 113.8 to 111.4, while apparel manufacturing contracted sharply by nearly 8%, falling from 119.2 to 109.5 during the same period. This decline reflected a combination of factors including fluctuating export demand, elevated US import tariffs, inventory rationalization by global brands, and prevailing global macroeconomic uncertainty.

The industry outlook for FY 27 remains uncertain, with growth drivers intact but near- term performance constrained by demand uncertainty, input cost volatility, and geopolitical disruptions. A broad-based recovery will depend on revival in global consumption and export markets. Recent Free Trade Agreements (FTAs) with the EU and UK, currently under discussion, are likely to enhance market access and improve export competitiveness for Indian players.

TEXTILE INDUSTRY SCENARIO

Indias textile and apparel market is estimated to be worth US$ 194 billion in 2025-26. This market has demonstrated consistent growth over time, driven primarily by strong domestic demand. The industry is largely driven by the domestic market, which accounts for US$ 157 billion (81%), while exports contribute US$ 37 billion (19%), indicating a strong internal consumption base alongside a significant export presence.

Within the domestic segment, apparel dominates with US$ 115 billion, making it the largest contributor, supported by rising disposable income and increasing fashion consumption. Technical textiles form the second-largest segment at US$ 30 billion, reflecting growing demand across sectors such as healthcare, infrastructure, and automotive. Home textiles contribute US$ 12 billion, driven by steady demand in both urban and export- linked categories. In recent times, the Iran-Israel-US conflict has significantly impacted Indias textile and apparel sector, creating pressures across logistics, input costs, and overall operations. Disruptions in key maritime routes, particularly the Red Sea and the Strait of Hormuz, have led to shipment rerouting, increasing transit times, and raising freight and insurance costs, thereby affecting exporters margins and delivery timelines. Concurrently, energy supply constraints have intensified the situation, as Indias LPG imports, of which majority pass through the Strait of Hormuz, have been disrupted. Overall, the industry is witnessing as additional cost burden due to war-related surcharges, adversely impacting global competitiveness.

OPPORTUNITIES AND THREATS

With the expansion of Indias middle-class population and higher disposable incomes, high- quality textiles and apparel are witnessing a surge in spending.

Growing consumer inclination towards environmentally responsible textiles is influencing product development and sourcing across the industry, making avenues for sustainable materials.

Government initiatives such as PM Mitra Parks, facilitate the development of integrated textile ecosystems, scale efficiencies, and generate investment inflows and employment.

India benefits from shifts in global sourcing, as trade agreements, including the Comprehensive Economic Partnership Agreement (CEPA) and FTAs, reinforce its attractiveness manufacturing and export base.

Lower domestic output constrains supply, leading to increased imports and heightened price volatility. Man-made fibre and specialty yarn prices are higher, relative to competing manufacturing locations, affecting cost competitiveness.

Export witnessed pressure, amid subdued global demand, adverse tariff structure and intense price competition. Restrained Free

Trade Agreements with major markets reduced export market access.

Order volatility and extended receivable cycles restrict working capital. Lender risk aversion and tighter credit conditions limit access to timely financing.

COMPANY REVIEW

Due to the shift in the Companys product mix in favour of finer deniers, including nylon, the production of the Company was lower during the year. The exports activity continued to be hit by the political conditions. However, the Company has been given an extension of a period of five years for lower ADD from Turkey, which continues to remain the chief synthetic yarn buyer for India. The realizations were slightly better during the year even though the rising cost continued to cause concern.

The Company continued innovations which is at the core of its growth strategy. Several new products, including geo textiles, technical textiles and high performance yarns catering to the evolving needs of our customers were developed during the year. Our research and development team continues to focus on developing sustainable products that align with global trends.

FUTURE OUTLOOK

The global economy is expected to face renewed uncertainty in 2026, mainly due to the ongoing conflict in West Asia, particularly tensions involving the United States, Israel, and Iran. If geopolitical tensions persist, prolonged disruptions in Oil, LNG, Fertilisers, and critical industrial inputs could lead to sustained inflation, tighter financial conditions, and weaker global growth. However, improving diplomatic efforts, strategic energy diversification, and stronger regional cooperation are expected to gradually ease these pressures, supporting supply chain stability, moderating inflation, and fostering a balanced and resilient global economic recovery.

Global growth is projected to moderate to 3.1% in 2026 and improve slightly to 3.2% in 2027, supported by stable demand, technology investments, and improving trade opportunities, despite risks from geopolitical tensions and trade policy uncertainty. Advanced economies are expected to grow at 1.8% in 2026, while emerging markets and developing economies are projected to grow by 3.9% supported by domestic demand and infrastructure spending.

Growth in the United States (U.S.) remains a key driver of the global outlook, with the IMF raising the U.S. forecast, with GDP projected to grow by about 2.3% in 2026 and 2.1% in 2027. Central banks are expected to remain cautious, while governments focus on fiscal discipline, targeted policy support, and supply chain resilience. Overall, the outlook reflects a balance between headwinds and emerging growth drivers, with investment-led productivity gaining momentum across sectors.

SEGMENT-WISE PERFORMANCE

(Rs.in lakhs)

Sr. Particulars	Year Ended
	31-Mar-26	31-Mar-25
1 Segment Revenue
(a) Domestic	4788	7340
(b) International	--	-
Total (Net Sales/Income from Operations)	4788	7340
2 Segment Results
(a) Domestic	317	301
(b) International	--	-
Total	317	301
Less : Finance cost	285	263
Total Profit before Tax	32	38

RISK MANAGEMENT

The Company is exposed to various risks which include factors such as rising competition in the market on the domestic and export fronts, duty free access to competing countries in US and European markets, uncertain business environment including conflict between Russia and Ukraine, rupee fluctuation, volatility in raw material prices and its availability, slowdown in demand, possibility of increase in interest rates etc.

Besides this the Company is also exposed to factors such as the change in government policies, duties & taxes, availability of power from the grid, availability of labour etc. The Company tries to mitigate these risks by taking quick actions and proactive initiatives to minimize the impact of these risks to the extent possible.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE AND INDUSTRIAL RELATIONS

As on March 31, 2026 the Company had 73 employees at its manufacturing plants and administrative offices. The Company recognises the importance of Human Resource as a key asset instrumental in its growth. The Company focused on harmonizing employee benefits and streamlining policies to reward teamwork. The Company remains committed to fostering a dynamic and engaging work environment that empowers people and drives performance excellence.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control system in place which is commensurate with the size and nature of the business. The internal controls are aligned with statutory requirements and designed to safeguard the assets of the Company. The Management reviews and strengthens the controls periodically. Apart from self monitoring of the internal controls, there is an independent internal auditor of the Companys operations. The Statutory Auditors present their observations to the Audit Committee on financial statements including the financial reporting system. The Audit Committee takes due cognisance of the observations made by the auditors and gives their suggestions for improvement. The suggestions of the Audit Committee further ensure the quality and adequacy of the control systems.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Highlights :

(Rs. in lakhs)

	2025-26	2024-25
Revenue from operations	4788	7340
Profit before Finance Cost, Depreciation, Exceptional items and Tax	392	377
Finance Cost	285	263
Depreciation	75	76
Deferred Tax	(16)	(46)
Profit After Tax	16	(8)
Earnings per share	0.10	0.10

Significant Changes in Key Financial Ratios:

During the year, there was significant change in the following key financial ratio as compared to the previous year:

Ratio	2025-26	2024-25	Reason for change
Net Profit Margin Ratio %	0.0034	(0.0012)	Better Realisation
Return on Equity %	0.005	0.003	Deferred tax
Creditors Turnover Ratio	1.77	2.97	Faster Payments
Stock Turnover Ratio	4.52	7.60	Decrease in Sales

Forward Looking Statements

Certain statements in this report on Management Discussions and Analysis may be forward looking statements within the meaning of applicable securities laws and regulations. There are several factors, which would be beyond the control of the management, and as such, actual results could differ materially from those expressed or implied.