Suryavanshi Spinning Mills Ltd Management Discussions

FORMING PART OF THE ANNUAL REPORT

1. INDUSTRY STRUCTURE, DEVELOPMENT AND PRODUCT WISE PERFORMANCE

Company is in the business of manufacturing of Polyester, polyester-viscose Blended Yarns and other Textiles & Medical Textiles Products at Aliabad, Shameerpet Mandal, Ranga Reddy District, in the state of Telangana catering to both domestic and the export markets.

The textiles and apparel industry contributes 2.3% to the countrys GDP, 13% to industrial production and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade. Indias home textile industry is expected to expand at a CAGR of 8.9% during 2023-32 and reached US$ 23.32 billion in 2032 from US$ 10.78 billion in 2023.

Medical textiles is one of the fastest growing technical textile fields in India. Medical textiles include many fiber types, yarns, fabrics, non-woven materials, woven, braided, as well as knitted fabrics. Physical and chemical alterations of fiber architectures, the use of functional finishes, and the production of stimuli-sensitive materials are major approaches for developing innovative medical textiles, the industry is experiencing significant expansion, though it also faces challenges related to cost, raw material availability, and competition. The India medical textile market generated a revenue of USD 994.2 million in 2019 and is expected to reach USD 1,795.2 million by 2028. The medical textiles market size is forecast to increase by USD 7.65 billion, at a CAGR of 6.6% between 2024 and 2029.

2. INDIAN TEXTILE INDUSTRY

Indias textiles sector is one of the oldest industries in the country, with a rich history that spans centuries, with a core strength lies in robust production of a diverse range of fibres and yarns, primarily sourced from natural materials. Its deep connection to agriculture, and the countrys ancient cultural traditions, set the industry apart and position it strategically vis-?-vis other manufacturing sectors in India.

Indias textile and apparel industry contributes 2.3% to GDP, 13% to industrial production, and 12% to exports. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade. The industry is the second-largest employer in India, providing jobs to 45 Million people, and is the source of livelihood for over 100 Million people, including a large number of women and rural population. India has emerged as the worlds second-largest producer of textiles and garments. Moreover, it is the worlds 3rd largest exporter of Textiles and Apparel, and ranks among the Top Five global exporters in several textile categories, with exports expected to reach US$ 100 Billion.

From its current size of US$ 160 Billion, Indias textile industry is projected to more than double by 2030 at US$ 350 Billion. Growth in Indias textile sector is driven by factors such as rising discretionary income and urbanisation. Indias home textile industry is projected to expand by a CAGR of 8.9% to reach US$ 23.32 Billion by 2032, from US$ 10.78 Billion in 2023. India is the worlds largest producer of cotton and jute, and the second- largest producer of silk. It produces 95% of the global hand-woven fabric and holds 4% share in global trade of textiles and apparel. Driven by favourable economic conditions, shifting consumer trends, and strategic government policies, Indias textile and apparels sector is poised for significant growth and positioned to capture a larger share of the global market.

3. OPPORTUNITIES AND THREATS

The rapid rise of online shopping platforms and organised retail stores is significantly fuelling the industrys growth.

Indias strategic position offers an advantage for global companies looking to move sourcing away from China, supported by trade agreements like CEPAs and FTAs.

Government initiatives such as PM MITRA Parks are attracting substantial investment and creating an integrated textile value chain, which is helping generate employment.

The widespread use of social media and digital technology is shaping consumer demand for fashionable and branded apparel.

Capital intensity: The textile sector in India requires significant capital investment, which affects its ability to compete on a global scale.

Resource management: Improper management of resources like energy, water, dyes, and other materials drive up costs and harm the environment. Inefficient energy use, in particular, leads to increase in production expenses and deplete natural resources.

Consumer demand: Shifting consumer preferences and fluctuating demand for textiles and apparel affects the business. Slow market demand and rapidly changing trends leads to excess inventory, low production, and declining exports.

Volatile costs: Rising labour costs due to a shortage of skilled workers, combined with reliance on labour-intensive technologies, as well as fluctuations in raw material and transportation prices, have the capability to disrupt business operations.

4. RISKS AND CONCERNS:

The Company has identified key risks such as Technology obsolescence, Market/Industry Risks, Logistics Risks, Political environmental risks, Disaster risks, Financial Risks, Labour Shortage and Foreign Exchange Rate Risks. Key Risks include fluctuation in raw materials prices, increased global and local competition, sales channel disruption. Retaining the existing talent pool and attracting new talent. Reduced purchasing power and increased demand could result in significant shifts in consumer behaviour, negatively impacting the textile and apparel market. Consumers might seek more budget-friendly options, potentially leading to reduced growth and profitability for the Company.

5. OUT LOOK:

Indias economy looks on an upward trend. Projections indicate that India will be the worlds third largest economy by 2027, surpassing US$5 trillion in GDP.

The India Home Textile Market size is estimated at USD 9.60 billion in 2024, and is expected to reach USD 15.36 billion by 2029, growing at a CAGR of 9.84% during the forecast period (2024-2029).

Technical Textiles is another sector that is receiving a huge push from Govt. of India. National Technical Textile Mission (NTTM) that was launched in 2020 with the objective of increasing penetration level of technical textiles for 5-10% as compared to 30-70% in the developed market.

Indias technical textiles market, which was valued at US $ 29 billion in FY 2024, is expected to grow significantly because of tax cuts for textile machinery and a rise in Basic Customs Duty (BCD) on knitted fabrics in Budget 2025. Approximately 15 percent of Indias total textile and clothing market is made up of technological textiles, which rank seventh in the world With a "India 2047- Vision and strategic roadmap for technical textiles" the Govt. of India has expressed its ambitious plans and programmes to develop India as one of the leading hubs of Technical Textiles globally and set up a robust manufacturing base in India.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate and effective internal control system commensurate with the size and complexity of the organization. The Company has undertaken a comprehensive review of all internal control systems to take care of the needs of the expanding size of the Company and 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 misuse or loss. The company has also upgraded the IT support systems. A system of internal audit to meet the statutory requirement as well as to ensure proper implementation of management and accounting controls is in place. The Audit Committee periodically reviews the adequacy of the internal audit functions.

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The aim is to create an inclusive working environment that attracts and retains the best people, enhances their flexibility, capability and motivation and encourages them to be involved in the growth of the Company. We believe in sophisticated equipment and skilled employee resources, together with strong management and design capabilities. As on 31.03.2025 the Company has 16 employees on rolls of the company.

8. ACCOUNTING TREATMENT

In the preparation of the financial statements the Company has followed the Indian Accounting Standards (IND AS) specified under Section 133 of the Act, read with relevant rules made there under. The Significant Accounting policies which are consistently applied have been set out in the notes to the financial statements.

9. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

In view of change in operations the companys revenue from operations was Rs. 65.68 lakhs in the previous financial year and it is increased to Rs. 111.18 lakhs during the financial year 2024-25.

10. HEALTH, SAFETY AND SECURITY MEASURES:

The Company continues to accord the highest priority to health and safety of its employees and communities it operates in. The Company has been fully committed to comply with all applicable laws and regulations and maintains the highest standard of Occupational Health and Safety and ensures safer plants by conducting safety audits, risk assessments and periodic safety awareness campaigns and training to employees. We believe in good health of our employees. Modern occupational health and medical services are accessible to all employees through well-equipped occupational health centers at all manufacturing units. Further, the Company had taken all precautionary and safety measures for its employees during pandemic and continue to ensure all preventive and protective safeguards for all employees against such threats at its plant and sites.

1. Readers are advised to kindly note that the above discussion contains statements about risks, concerns, opportunities, etc., which are valid only at the time of making the statements. These statements are based on certain assumptions and expectation of future events. Actual results could, however, differ materially from those expressed or implied. A variety of factors known / unknown, expected or otherwise may influence the financial results. These statements are not expected to be updated or revised to take care of any changes in the underlying presumptions.

2. Readers may therefore appreciate the context in which these statements are made before making use of the same. 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.