Suryalakshmi Cotton Mills Ltd Management Discussions

ANNEXURE - V

Global economy

Overview

The global economy expanded by 3.2% in the year 2023, demonstrating remarkable resilience in the face of several economic adversities, like geopolitical challenges and fluctuationsin commodity prices. This has led to inflationary pressures across both advanced and emerging markets.

To fight these headwinds, central banks of several economies employed strategies. They implemented interest rate increases, suppressing the escalation. Despite persistent geopolitical tensions, disrupting global supply chains and trade, inflation rates declined more swiftly than anticipated from their peak in 2022, resulting in gradual economic recovery and job creation in the US, Europe and other emerging markets.

The Chinese economy continued to experience strain throughout 2023, a trend expected to persist even in 2024, given its significant manufacturing capabilities and supply chain influence, posing a potential risk to global economic stability. Quing to the rising foreign institution investor interest, several emerging economies like India, Vietnam and Mexico are expected to a show positive growth trajectory.

Outlook

Global grousth is estimated to touch 3.1% in CY24, before rising modestly to 3.2 % in 2025%. Amidst unwinding supply-side issues and restrictive monetary policy, inflation is declining faster than expected across most regions. Global headline inflation is also anticipated to decline to 5.8 % in 2024.

For advanced economies, growth is projected to decline slightly from 1.6% in CY23 to 1.5 % in CY24 before rising to 1.8% in CY25, reflecting the impact of restrictive monetary policies and the withdrawal of fiscal support. World trade is also estimated to report growth of 3.3% in CY24 and 3.6% in CY25•, staying persistently below the historical average of 4.9%.

However, geopolitical risks remain high, particularly in light of the conflict in the Middle East and tensions in Europe. Meanwhile, high-frequency economic indicators suggest a positive momentum for most major economies. Going forward, declining inflation and greater government spending is anticipated to alleviate fiscal pressures and expected to attract investments for future growth.

Indian economy

Overview

India is the third largest economy in the world after the US and China in terms of purchasing power. It ranked fifth in terms of market exchange rates. According to high- frequency indicators, the Indian economy is maintaining the same momentum it had in the first half of the year even in the face of many upgrades for 2023-24 and 2024- 25 by multilateral agencies. Companies in the oil and gas industry made up the largest portion of the profit gain overall, aided by higher marketing margins.

The announcements made in the Interim Union Budget 2024-25 align with the goal of “Viksit Bharat,” which is to create a prosperous nation that is in harmony with the environment, has access to modern infrastructure and offers chances for all of its residents and regions to realise their full potential. The capital expenditure push, particularly on roads and railroads, has persisted in order to maintain the economic grousth pace.

Outlook*

Several high-performance indicators point towards robust growth in the Indian economy. Along with increased capex deployment by the government, strong tax revenue collections, burgeoning domestic demand and increasing capacity utilisation across sectors as well as the booming food industry have helped bolster economic activity. Besides, stable repo rates, government bond yields and healthy foreign exchange reserves indicate macroeconomic stability in the near term.

The government has given the green light to the Production Linked Incentive (PLI)) Scheme for Textiles, allocating Rs. 10,683 crores over five years commencing from FY24. The aim is to boost the production of MMF Apparel MME Fabrics, and Technical Textile products within the country, fostering growth and competitiveness in the textile sector. The scheme consists of tuo parts- Part-1 requires a minimum investment of Rs. 300 crores and a minimum turnover of Rs. 600 crores per company, While Part-2 mandates a minimum investment of Rs. 100 crores and a minimum turnover of Rs. 200 crores per company.

The apparel and textile sector in India contribute approximately 2.3% to the nations GDP, 13% to industrial production, and 12% to exports. India holds a 4% share in global textiles and apparel trade. India ranks among the top producers of cotton and jute worldwide, and it is the second-largest producer of silk globally. Notably, 95% of hand-woven fabric worldwide originates from India. Textile exports are projected to hit $65 billion by FY26, With an expected 10% compound annual growth rate (CAGR) from 2019-20, reaching $190 billion by 2025-26.

Employment-wise, the textiles and apparel industry are the second-largest employer in India, providing direct jobs to 45 million people and impacting 100 million in allied industries.

Industry overview

Indian textile industry

Despite festive season in Western markets, textile exports continued their downward trend in November FY24. Readymade garments (RMG) saw a 15% decrease in exports, dropping from $10.36 billion in April-Nnovember of FY23 to $8.84 billion during the same period in FY24. However, cotton yarn and handloom products showed signs of growth with a commendable 6% increase in exports from April to November FY24.

Challenges in major export destinations such as the European Union (EU), the US and the Middle East have impacted apparel demand. The EU, Which contributes a significant portion to Indias apparel exports, is. still grappling with the aftermath of the Ukraine-Russia conflict. Similarly, the US and the Middle East, affected by the Israel-Gaza conflict, experienced reduced demand in FY24 compared to the previous year.

Nevertheless, as FY25 begins, there will be signs of improvement, especially in the US market, indicating a potential export rebound in the coming months. CRISIL forecast a revival in Indias textiles industry in FY25, driven by three factors such as, sustained growth in domestic demand, gradual recovery in exports and lower cotton prices.

The domestic market, which accounts for a significant portion of overall demand, continues to grow steadily. Anticipation of increased demand ahead of the spring- summer season in the West, is expected to strengthen garment exports from India, supporting the entire value chain. Additionally, improved consumer demand may prompt major overseas retailers to replenish their inventory, leading to increased orders from Indian exporters.

Cotton prices in India have moderated. With higher cotton production expected this season, prices are unlikely to surge in the near future. This stability in cotton prices along with increased availability, can provide much-needed support to the domestic textile value chain, which predominantly relies on natural fibres.

India, being the largest exporter of cotton yarn, competes with the same nations in the global apparel market, namely China, Bangladesh, Vietnam, Sri Lanka and Pakistan. In order to improve exports further, there is a need to reconsider strategies to utilise Indias dominant position in cotton production. Encouraging or mandating companies to focus on value addition by converting yarn into garments, rather than exporting raw materials or yarn, could be a viable approach.

Furthermore, there is a need to establish globally- recognised Indian garment brands to enhance margins. Initiatives like the “Brands of India” event, organised by the Clothing Manufacturers Association of India (CMAIT), dim to promote Indian brands internationally. Hosting such events in markets like Australia, the US and the UK can further bolster the visibility of Indian brands on the global stage.

Upcoming trend

The textile industry, a global giant, is undergoing a significant transformation which is fuelled by shifting consumer preferences, technological advancements and rising environmental concerns. The global textile industry is steadily moving away from traditional methods and embracing a more sustainable and innovative path. Consumers are increasingly demanding eco-friendly clothing and textiles. This is driving the textile industry to adopt sustainable practices throughout the supply chain. From using organic cotton and recycled materials to implementing low-impact dyeing techniques and water conservation measures, sustainability is becoming a core principle.

Theres a renewed interest in natural fibres like organic cotton, hemp, flax and bamboo. These fibres offer several advantages: breathability, comfort, biodegradability and often require less processing compared to synthetic fibres. This trend aligns with the growing consumer preference for natural and healthy products.

The textile industry is witnessing a surge in novel materials such as bio-based fabrics derived from corn or algae, self-cleaning textiles with anti-microbial properties and even shape-shifting materials that adapt to Weather conditions. These advancements are pushing the boundaries with textiles and creating exciting possibilities for new applications.

Technological developments in the industry include clothes that track our health data, regulate your body temperature or even harvest energy. This is the era of smart textiles and wearable technology. By integrating electronics and sensors into fabrics, the industry is creating garments that dre not just functional but also interactive.

The textile industry is embracing digitalisation to streamline processes, reduce waste and improve efficiency. From computer-aided design (CAD) for creating intricate patterns to 3D printing for rapid prototyping, technology is transforming the way textiles are designed and manufactured. Additionally, on-demand manufacturing is gaining traction, allowing room for more personalised and customised clothing options with reduced lead times.

Consumers are becoming increasingly conscious and concerned about the textile manufacturing processes. This is leading to a growing demand for transparency in the supply chain. Ethical sourcing practices that ensure fair wages, safe working conditionsand minimal environmental impact are becoming increasingly important for brands to stay competitive.

The vast amount of textile waste generated by the industry is also a pressing concern. Recycling and upcycling textiles are emerging as viable solutions. Recycling involves breaking down used fabrics into usable fibres for new products, while upcycling involves reusing discarded textiles to create new items.

These practices not only reduce waste but also create unique and sustainable products. In addition, Virtual reality (VR) and augmented reality (AR) are making inroads into the textile industry. VR allows designers to create and visualise textile patterns in a virtual environment, While AR can be used to help consumers virtually try on clothes before purchasing them. These immersive technologies enhance design and shopping experience.

Opportunities

The Indian textile industry is expected to witness an uptick in demand in FY25. Some of the opportunities that the industry can capitalise on include:

• Resurgence in domestic demand: a growing middle-income population with rising disposable income is expected to fuel the domestic consumption of textiles. Moreover, understanding the needs and preferences of consumers allow the manufacturers to innovate and cater to Wider market segments. This can lead to a large variety of high-quality textiles suited for the local tastes.

• Gradual export recovery: the US market is showing signs of revival, which can potentially lead to increased demand for Indian exports. Moreover, weakening of the Eurozone economies might create an opportunity to diversify exports to Southeast Asia and other regions.

• Lower cotton prices: lower cost of raw materials can translate to higher savings for manufacturers. This improves profit margins, allowing them to invest in innovation, technology or even reduce the price of the final product for consumers. This, in turn will help the Indian textile industry become more competitive in the global market.

Focus on sustainable and technical textiles: growing global demand for eco-friendly and functional textiles like organic cotton, recycled fibres and technical textiles for industrialapplications present a significant opportunity.

• Government support: the government is willing to boost the sector through initiatives like tax breaks for sustainable practices and infrastructure improvements.

Existence of established infrastructure: the Wwell-set infrastructure and established transportation networks will enable swift movement of raw materials, finished goods and exports. This translates to faster delivery times. Moreover, textile hubs with concentrated production facilities leverage infrastructure for power, water and communication. This shared resource pool reduces individual costs and allows for economies of scale.

Indian denim industryR>

The Indian Denim Apparel market has seen consistent growth over recent years, fuelled by advancements in technology, evolving trendsand broader market penetration. Even in non-metro areas, denim is gaining popularity, with more people choosing it over traditional attire.

In FY23, the Indian Denim Apparel market was valued at US $6.15 billion and itis projected to maintain a Compound Annual Growth Rate (CAGR) of 14% over the next three years, reaching US $9.15 billion by FY26.

The promising growth of the denim sector is driven by its fusion of high fashion and comfort, increasing emphasis on stretch and lightweight materials and a growing array of options in fits, washes and detailing among other factors.

The highest growth prospects observed in the Indian denim apparel market can be found in the womens segment. By FY2026, Womens denim apparel is expected to account for 14% of the overall market, compared to 11% in FY2023. This hike is propelled by factors such as the rising number of women entering the workforce, increasing acceptance of western attire and the popularity of fusion-wear and mix-and-match styles.

With respect to price segmentation, the denim market is primarily controlled by the mid to premium segment. These brands offer a wide range of high-quality products at reasonable price points. Additionally, the value segment also commands a notable share in the market, supported by asubstantial unbranded sector and the rise of prominent value retail chains. The super-premium and luxury segment dre also dominated by top international brands leveraging their prestigious brand heritage and capitalising on the increasing premiumisation trend in India.

The Indian casual wear market has undergone significant transformation over time, with categories like denim, activewear and casual shirts experiencing faster growth compared to formal wear. This shift reflects changing consumer preferences, with casual attire increasingly popular both in workplace settings and at home.

The COVID-19 pandemic and the widespread adoption of remote work practices have accelerated this trend towards casualisation. This has led to a redefinition of work attire, with a greater emphasis on casual dressing in many corporate environments. As a result, there has been a surge in demand for "smart casual-wear" options, particularly among young professionals. To capitalise on this trend, numerousformal wear brands have introduced casualwear and denim-focused sub-brands and collections, further driving growth in the casual wear segment.

Grouuth drivers of the industry

The Indian denim industry is on the rise due to the following factors:

Young and fashion-conscious demographics- India has a massive young population eager to embrace global fashion trends. Millennials and GenzZ are particularly interested in denim as a way to express their style, thereby fueling the demand for a variety of designs and fits.

Rising disposable income: as disposable income rises, Indian consumers have more money to spend on clothing, including trendy denim pieces. In addition, denim in India comes in a wide range of prices. It offers variations in terms of quality of material, texture, comfort and so on. Cheaper denim is being used as everyday jeans and premium jeans are usually reserved for special occasions.

Expanding retail landscape: the growth of organised retail stores and the presence of international and domestic denim brands have made a wider variety of jeans and denim apparel available for Indian consumers. This increased exposure has driven awareness and boosted sales.

Innovation and experimentation: the Indian denim industry is constantly innovating with new designs, fits, Washes and even materials, like stretch denims and lightweight fabrics. This keeps consumers interested and entices them to try out new looks.

Skilled workforce and cost-effective manufacturing: India have a large pool of skilled textile Workers, thus making it a cost-effective location for denim production. This allows manufacturers to offer competitive prices while still maintaining good quality of the products.

Sustainability concerns: there is a growing awareness of sustainability in the fashion industry, and Indian denim manufacturers are also trying out such practices. Efforts are being made to use eco-friendly dyes, reduce water consumption during production and develop recycled denim options.

Opportunities

The Indian denim industry is expected to grow at 8-9% annually. Projections indicate the market value of the Indian denim industry is expected to reach USS 9.15 billion. This presents ample opportunities both on domestic and international fronts. Some of the key factors are:

• Domestic market boom: a growing domestic market reduces the dependence on international fluctuations. Consistent local demand allows local manufacturers to plan production more efficiently and build a strong financial base. Moreover, understanding the tastes and preferences of Indian consumers allows the companies to tailor their designs and styles. This can lead to innovation in fits, washes and finishes.

• Global market potential: a larger global market translates to a broader customer base. Indian denim manufacturers can enter into such new markets and increase their export volumes, leading to higher revenue grousth. Indian denim industry also holds a strong reputation for quality and cost-effectiveness. By leveraging this advantage, manufacturers can compete effectively with their global competitors.

• Eco-conscious consumers: consumers are increasingly demanding sustainable clothing options. Indian denim manufacturers can cater to this shift in preferences by adopting eco-friendly practices like organic cotton, water-saving dyeing techniques and recycled fabric blends. This will allow them to enter into a rapidly growing market segment. Moreover, sustainability is a key differentiator in todays fashion landscape. By using eco-conscious practices, they can position themselves as responsible and forward-thinking, which will attract a loyal customer base that values environmental responsibility.

• New designs and technologies: by incorporating the latest trends in washes, fits and fabrics, Indian denim manufacturers can cater to a fashion-forward audience. This can involve everything from athletic-inspired denim to high-tech performance fabrics, thus keeping the industry fresh and exciting. Moreover, new technologies can enhance the functionality of denim. This can open doors to new market segments and elevate the value proposition of Indian denim.

• Government support: the government can provide tax breaks or raw material subsidies for modernisation, which can make Indian denim more competitive in the global market. It can also support vocational training programmes to ensure a readily available pool of skilled workers, which will allow manufacturers to scale up their operations efficiently. Moreover, the funding for research and development can incentivise innovation in the denim industry. This can involve exploring sustainable practices, developing new denim blends or creating cutting-edge finishing techniques.

Source Rs. https://apparelresources.com/business-news/retail/denims-explosive-grouth-india/

Company overview

Suryalakshmi Cotton is a prominent integrated manufacturer of premium yarns and denim in India, enjoying over fifty years of market leadership. Over the past tuo decades, it has emerged as the primary supplier of denim to leading global and domestic brands, securing a dominant market share in the premium denim sector.

Leveraging cutting-edge design and the latest spinning technology, along with end-to-end manufacturing facilities, it produces top-quality yarn and premium denim for renowned private labels, fashion brands, and retail chains.

29+

Countriesworldwide presence.

The Company ‘s comprehensive presence across the entire value chain, from yarn manufacturing to denim production, confers a significant competitive edge. This allows it to closely monitor and adapt to the ever-changing economic trends that impact the industry. This strategic positioning enables it to anticipate and plan for the cyclical demand- supply dynamics well in advance, staying ahead of the curve, which can be seen in the Companys performance where its exports continued growing despite industry exports coming down.

1962

Year of establishment

Suryalakshmi Cotton is a vertically integrated enterprise with over five decades of expertise in spinning and denim operations. Managed by a second-generation family of olwner-managers and professionals, it employs future- ready automation and measurement-led controls to achieve sustainable growth while upholding responsible business practices.

Drawing upon its proficiency in cutting-edge international designs, it offers a diverse range of premium yarns and denim fabrics tailored for fashion-conscious clientele

Suryalakshmi Cotton has evolved into a successful end- to-end clothing enterprise, seamlessly integrating a strong backend spinning process leading to premium yarn production and fabric manufacturing, thus creating a superior denim value chain. Its state-of-the-art spinning mill production facilities located in Telangana and Maharashtra, India, enables us to efficiently source materials across our operations.

Through forward and backward integration, coupled with best-in-class quality assurance measures, it achieves one of the highest per meter sales realisations in both yarn and denim cloth within the industry. Committed to conducting business responsibly, it ensures manufacturing compliance with the highest standards of health, safety, and environmental (HS ) regulations, aiming to safeguard communities and the environment.

Core strengths

Certifications

The Company is dedicated to quality from its aim to foster trust and loyalty among the customers. Through state-of the-art automated manufacturing facilities and enhanced denim finishing techniques, it pledges to provide products that consistently exceed customer expectations in terms of quality and value. The Company prioritises customer feedback and actively seek opportunities to enhance the processes, products and services.

The Companys manufacturing operations has earned certifications in certain areas, such as quality, health and safety, environment and ethical areas. Some of them are:

• ISO 14001:2004 Certification

• ISO 9001:2008 Certification

• Oeko-Tex Certification

• Better Cotton Initiative

As part of the adherence protocols for USA and European clients such as VF Corporation and Levis, the Company guarantees compliance with social and environmental assessment audits conducted by third-party auditors.

Robust R&D

The Companys focus on R&D led to innovative higher premium products such as smart denims. In addition, it also focuses on key areas of comfort wear, lightweight wear and value addition. It also closely collaborates with merchandising teams of brands.

The Companys R&D initiatives have developed several vintage to modern fits in its Denim portfolio. Its fibre to shade to finishes reflects the Companys efforts in sustainable line developments. The R&D efforts focus on Cleankore Range Developments for its customers and develop market competitive products with different blended yarns. The Companys R&D is working on laser friendly dyeing processes, different ways of enriching value addition products, more varieties of denim shades, etc.

Key buyers

The companys reputed clientele include Lee, Wrangler, WalMart, Amazon, Levis, etc.

Design strategy

The Companys specialised internal R&D unit utilises comprehensive market analysis and worldwide fashion trends to translate innovative ideas and concepts into denim products ready for production. Its design strategy is rooted in understanding consumer trends, allowing the Company to align its product development endeavours with those of consumer preferences.

The Company grasps the fine distinctions of the Worldwide fashion arena and recognises the cultural distinctions being inherited in various markets, enabling it to address the unique garment design requirements of a diverse clientele.

Innovation permeates every aspect of its denim design, spanning aspects like colour, texture, flexibility, and rigidity. Through seamless coordination between the front-end and back-end teams, the design units constantly come up with unique approaches to deliver specialised, sustainable, socially responsible and trend-setting denim fashion.

High-value products

The Company is committed to meeting customer requirements by prioritising the development of top-tier product and by widening the product base that resonates with evolving customer preferences. Through the production of value-added denim fabrics and polyesters, the Company has cultivated a competitive advantage and fostered collaborations with multinational corporations worldwide.

Product portfolio

The Company partners closely with global fashion brands to swiftly introduce trend-setting yarns, denim and fabrics to the market. Its partnerships extend to working hand-in- hand with the design, sourcing and production teams of both globaland local customers. It has developed over 3000 high-quality specialised denim variants, characterised by rapid production turnaround times. From yarn to denim cloth, it upholds exacting standards of innovation, design and service throughout the production process. In line with the Government of Indias “Make in India initiative, it is dedicated to meeting the demands of both global and local clientele, with the aim of establishing itselfas a global center of excellence in denim manufacturing.

YARN

The Company produces specialised, high-performance cotton, polyester and blended yarns destined for both domestic and international markets, including the denim industry. Its expertise in research and development, coupled with a deep understanding of raw materials, empowers it to craft super-specialised and functional yarns tailored to precise specifications.

Utilising cutting-edge technology and equipment sourced from premier global suppliers, it manufactures yarns at Suryalakshmi Cotton. Emphasising on modernisation and automation, it harnesses the advanced R&D facilities to explore emerging trends in yarn technology and fashion, ensuring alignment with evolving market dynamics while upholding benchmark quality standards throughout the denim value chain.

Current Capacity

The Company hasa dedicated quality team to meticulously oversee every phase of production, guaranteeing that each yarn batch meets stringent international quality benchmarks, achieving a remarkable Uster 5% quality level. The Companys strong dedication to quality control at every manufacturing juncture ensures that the delivery of yarn products with a superior finish.

Denim

For the past two decades, the Company has started with denim cloth manufacturing as a part of its forward integration strategy. Through cutting-edge research and development, we engineer and produce specialty denim fabrics tailored to the distinct requirements of global fashion markets. The Company has a fully integrated fabric manufacturing facility at Ramtek, Maharashtra, that stands at the forefront of technological advancement.

40 million meters Capacity per annum

The Company achieves the industrys highest per meter sales price realisation. Its fabric development process is customer-centric, commencing with custom-engineering a wide array of finish chemistries to address diverse fabric needs. Leveraging state-of-the-art equipment for dyeing, weaving and finishing, the Company has delivered over 3,000 unique varieties of specialty fabrics to clients Worldwide.

Financial overview

During the year the turnover declined by about 9% as also the EBITDA. The Softening of the global commodity prices and the consequent raw material prices, followed by a steeper decline in the sales realization was the main reason for the lower numbers. The Company however did well to strengthen its balance sheet by reducing the long-term debt by Rs. 28.80 crores. More significantly the Company did Well in its Denim Exports inspite of a declining performance by the industry as a whole.

Particulars	FY24	FY23	YoY change (%)
Revenue from operations (in lakhs 3)	7824081	85104.89	-8.07
EBITDA (in lakhs 3)	5424.73	6075.84	-10.72
PAT (in lakhs 3)	360.75	1040.11	-65.3
Debtors turnover ratio (in times)	4.84	5.68	14.8
Inventory turnover ratio (in times)	4.19	5.02	-16.5
Interest coverage ratio (in times)	0.88	0.82	7.32
Current ratio (in times)	1.25	1.33	- 6.02
Total debt equity ratio (in times)	0.85	0.75	13.33
Operational profit margin (in %)	4.62	4.75	“2.74
Net profit margin (in %)	0.46	1.22	-62.0
Return on net worth (in %)	1.36	3.95	-65.6

Internal control

Suryalakshmi Cotton Mills has implemented a robust internal control system to ensure the efficiency and effectiveness of operations, accurate financial reporting, and compliance with laws and regulations. The Company has established comprehensive policies and procedures for all major business processes, including management, human resources, procurement, and inventory management. Regular audits are conducted by internal auditors to monitor compliance with these policies and procedures and to identify areas for improvement. The Company also maintains a system of checks and balances, including the segregation of duties and clear lines of authority and responsibility. Through these measures, Suryalakshmi Cotton Mills aims to minimise the risk of fraud, errors, and other financial irregularities, and to foster transparency and accountability throughout the organisation.

Corporate social responsibility

The Company continues to do its bit towards the society at large where its manufacturing units are located by working in areas like promoting education, healthcare and sports promotion. It has also worked on fields like environmental protection and promotion of cultural activities.

Risk management

Risk management is one of the most important parts of the Companys operations. A tight framework is in place to identify, evaluate and address risks across all areas of the business. This framework encompasses routine risk assessments, monitoring of key indicators and the formulation of mitigation strategies for identified risks.

Moreover, a dedicated Risk Management Committee, composed of senior executives, oversees this framework. The committee routinely scrutinises policies and procedures while offering guidance to the management team on risk- related matters. In alignment with sustainability goals, the Company systematically evaluates environmental, social and governance risks, ensuring responsible and sustainable business practices. Through rigorous risk management, the Company not only mitigates potential adverse impacts but also bolsters its capacity to realise strategic objectives.

Sustainable practices

In its responsible manufacturing process, the Company harnesses sustainable practices to revolutionise denim production. The key focus areas involve reducing waste throughout the denim manufacturing process and optimising the utilisation of natural resources in its resource-limited world. It is committed to recycling all feasible resources, including water, chemicals and more.

Following the 3 R Concept of Reduce, Replace, and Recycle, the Company:

• Decreases water consumption and minimises chemical waste.

• Substitutes hazardous materials with environmentally friendly alternatives.

• Maximises resource recovery by recycling water and chemicals, and utilising recycled raw materials for efficient production.

Waste: The Company is dedicated to minimising waste throughout the denim value chain. Through effective effluent management systems that guarantee zero discharge. It is steadfast in its commitment to preventing hazardous substances from entering the environment. Ultimately, the overarching goal is to develop denim fabric and products that generate zero waste in the long term.

Water: Water stewardship forms a crucial aspect of the Companys responsible manufacturing strategy. It is actively engaged in designing denim manufacturing and post-manufacturing value-added processes that demand lesser water, thereby minimising the water- related footprint.

Climate: Climate change presents a significant challenge to the business of the Company, the industry, and the planet It is actively striving to decrease the carbon footprint by minimising greenhouse gas emissions throughout the denim operations.

Human resources

The Company views safety as a fundamentaland essential obligation for any manufacturing organisation. Aligned with its overarching vision, the objective is to enhance employee Well-being and foster a safe and comfortable working environment for its personnel.

Quality measures

• Providing a healthy and safe workplace

• Providing protective gear to the employees

• Having a fire safety management to prevent hazards

• Protection from harmful and hazardous materials.

Employee welfare

Recognising its significant role in fostering an ecosystem of partnership, empowerment and inclusion, the Company is dedicated to enhancing the lives of workers in the factories. Through a steadfast commitment to worker welfare and well-being, it prioritises holistic community development in the regions where it operates. The initiatives encompass:

• Health and hygiene programmes

• Learning and development opportunities

• Employee transportation services

• Provision of accommodation for women employees

Cautionary statement

This report on Management Discussion and Analysis includes forward-looking statements, which are predictions, expectations, projections, or estimates about the Companys objectives. These statements are based on certain assumptions and expectations of future events. However, actual results may differ from these statements due to various factors such as changes in government regulations, tax laws, and other statutes. Additionally, unforeseen events such as force majeure could affect the actual result. It is important for readers to understand the context in which these statements are made and that they may not reflect future outcomes accurately.