SVP Global Textiles Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPOR

This report covers the operations and financial performance of the Company for the year ended 31st March, 2025 and forms a part of the Directors Report.

Forward looking statements made in this Report, are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations will be accurate or will be realized.

Business & Performance Overview:

SVP Global Textiles Ltd. (SVP) is the fastest growing Multinational cotton yarn manufacturing company. The Company has consolidated manufacturing capacity of over 400,000 spindles and 5900 Rotors and is one of the leading Compact Cotton Yarn manufacturer in India i.e. the highest quality of cotton yarn in the world.

The financial statements have been prepared in accordance with Ind AS Rules, prescribed under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 and the other recognized accounting practices and policies to the extent applicable.

The summarized standalone financial performance is as under:

Particulars	F.Y. 2024 -25	F.Y. 2023 -24
	(Amount Rs. in lakhs)	(Amount Rs. in lakhs)
Total Turnover	66.87	312.45
Depreciation & Amortization	734.99	734.99
Total Expenditure	1039.19	2311.07
Profit Before Tax	(972.32)	(12336.05)
Profit After Tax	(996.33)	(12336.05)
Equity Capital	1265.00	1265.00
Reserves & Surplus	(6409.10)	(5412.77)

The summarized Consolidated Financial performance is as under:

Particulars	F.Y. 2024 - 25	F.Y. 2023 - 24
	(Amount Rs. In Lakh)	(Amount Rs. In Lakh )
Total Turnover	9296.79	30192.81
Depreciation & Amortization	10521.24	11232.86
Total Expenditure	78225.11	63050.29
Profit Before Tax	(97929.77)	(43194.90)
Profit After Tax	(97953.79)	(43194.90)
Equity Capital	1265.00	1265.00
Reserves & Surplus	(113443)	(17838.87)

The Management accepts responsibility for the integrity and objectivity of these statements as well as for the various estimates & judgments used therein.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONG WITH DETAILS EXPLANATIONS

Ratios	2024-25	2023-24	% Change
Debtors Turnover	-	0.04	(100)
Inventory Turnover	-	1.98	(100)
Interest Coverage Ratio	(0.21)	(10.58)	(98.01)
Current Ratio	2.22	2.31	(3.85)
Debt Equity Ratio	(2.89)	(3.61)	(19.79)
Operating Profit Margin (%)	(11.31	(0.25)	4424.47
Net Profit Margin (%)	(14.90)	(39.73)	(62.50)
Return on Net Worth (%)	0.21	(6.11)	(103.51)

Industry Structure and Developments:

The Textile Industry is facing exceptional and unprecedented challenging conditions. There is a rise of demand for low-cost products having sustainable and environment - friendly production processes. Consumers are seeking products that are made from renewable materials and from sustainable manufacturing processes. Further, rising importance of digital technology in textile products, 3D modelling and other technologies are enabling manufacturers to create more innovative and customized products while improving production efficiencies and reducing waste.

Hence, there is an optimism that post geopolitical stabilization, textile sector will show positive trends due to new opportunities and technological innovations supported by domestic & global demand, investment incentives (PLI) and strong balance sheets of companies. Further, China plus one policy adopted by USA / Europe will give a boost to Indian Textile Sector.

The textiles industry in India is also labour intensive and is one of the largest employers. The textile industry has two broad segments. First, the un-organized sector consists of handloom, handicrafts and sericulture, which are operated on a small scale and through traditional tools and methods. The second is the organized sector consisting of spinning, apparel and garments segment which apply modern machinery and techniques such as economies of scale.

Global Economy

Change is happening against quite a challenging economic backdrop. 2025 will not be a year of rapid GDP growth: U. S. growth is forecast at a modest 2. 0%, with the Eurozone lagging some way behind (0. 9%) and Chinese growth (4.2%) well below recent historical averages. Inflation could also prove tenacious, due to higher fiscal spending and possible tariff hikes. This, in turn, will give central banks less room to cut interest rates as they seek to balance growth and inflation control. The result may well be uncertain and shifting market expectations, triggering more bouts of volatility than in 2024. Geopolitical fallout, perhaps due to changing trade policy, could add to the uncertainty. For the global economy, we think 2025 will be a case of staying the course in turbulent times. The ability of individual economies to weather possible geopolitical and policy challenges next year will be determined by a number of factors. But, as the growth numbers highlighted above show, there is already a distinction between a high technology, higher productivity U. S. economy and a European economy that is lagging behind on the interlinked issues of productivity and investment. The market focus on stocks should not preclude interest in other asset classes in 2025.

Corporate bonds in the U. S., Asia and Europe, for example, are likely to remain interesting for investors for several reasons. These include institutional demand, still high yields and the return of the (term) premium. Supply and demand will remain fundamental to commodities such as oil and industrial metals but we also see other factors maintaining a relatively high price for gold in 2025. In alternative assets, we focus in this outlook on infrastructure - central to investing in future growth - and what we call the public and private mixology of investing in this area. FX considerations will, as always, be a central consideration for investors and here 2025 will clearly be a case of strong economy, strong currency for the U. S. dollar. The euro will look weak in comparison, but rate rises and growth could support the Japanese yen. 2025 will not always be an easy year for investors as markets navigate through geopolitical or other risks (including the "three Rs" of recession, rates and rotations). But we believe that these risks are manageable. With markets already anticipating the impact of future economic growth and development, this means that being and staying invested will be essential for portfolio success both in the short and long term.

Outlook

The global economy showed steady progress, despite facing a challenging and uncertain environment. According to the IMF World Economic Outlook, April 2025, the world economy grew by 3.3 percent in 2024,and is projected to grow by 2.8 percent and 3.0 percent in 2025 and 2026 respectively. While these figures reflect a stable trend, they also signal that the pace of growth is more moderate compared to the past. Sector-wise,the global services sector continued to expand, while manufacturing showed signs of weakness, particularly in Europe. Trade policy uncertainty remains high, with more protectionist measures being adopted by major economies. This could impact investment flows and global trade if such trends continue. Looking ahead, risks from geopolitical tensions and climate-related events persists. As the global economy adjusts to new realities, businesses are focusing more on resilience, diversification, and long-term value creation.

Indian Economy

India is set to dominate the global economic landscape, maintaining its status as the fastest-growing large economy for the next two fiscal years. The January 2025 edition of the World Banks Global Economic Prospects (GEP) report projects Indias economy to grow at a steady rate of 6. 7% in both FY26 and FY27, significantly outpacing global and regional peers. At a time when global growth is expected to remain at 2. 7 per cent in 2025-26, this remarkable performance underscores Indias resilience and its growing significance in shaping the worlds economic trajectory. The GEP report credits this extraordinary momentum to a thriving services sector and a revitalised manufacturing base, driven by transformative government initiatives. From modernising infrastructure to simplifying taxes, these measures are fuelling domestic growth and positioning India as a cornerstone of global economic stability. With its closest competitor, China, decelerating to 4 per cent growth next year, Indias rise is more than just a statistic. It is a powerful story of ambition, innovation, and unmatched potential. Complementing the World Bank report, the latest update from the International Monetary Funds (IMF) World Economic Outlook (WEO) also reinforces Indias strong economic trajectory. The IMF forecasts Indias growth to remain robust at 6. 5% for both 2025 and 2026, aligning with earlier projections from October. This consistent growth outlook reflects Indias stable economic fundamentals and its ability to maintain momentum despite global uncertainties. The continued strength of Indias economic performance, as projected by both the World Bank and IMF, underscores the countrys resilience and highlights the sustained strength of its economic fundamentals, making India a crucial player in the global economic landscape.

Outlook

Despite global macroeconomic headwinds, Indias economy has remained resilient, consistently outperforming the global average, driven by robust domestic demand, structural reforms, and strong policy measures. The country has managed economic stability even in the face of external challenges, including supply chain disruptions and inflationary pressures. In 2023-24, Indias real GDP is estimated at Rs.172.90 lakh crore (US$ 2 trillion), reflecting the sustained expansion of key sectors such as manufacturing, services, and infrastructure. Meanwhile, the nominal GDP has reached Rs.293.9 lakh crore (US$ 3.5 trillion), highlighting the countrys growing economic influence on the global stage. This growth trajectory, with a strong 9.2% expansion in 2023-24 compared to 7% in the previous year, underscores Indias ability to navigate global uncertainties while maintaining steady momentum. Looking ahead, the economy is expected to build further on this foundation, supported by increasing investments, digital transformation, and a favorable demographic dividend.

Global Textile

The global textile industry navigated several headwinds during the year, demonstrating a divergent regional performance. Africa emerged as the key growth engine, while Asian markets witnessed subdued growth. Global order intake declined during the year; however, global backlogs showed modest recovery, averaging 2.3 months. Capacity utilisation remained relatively strong, particularly in Asia, pushing global capacity utilisation at 72%. Despite these pockets of resilience, the industry faced major headwinds including weak global demand, escalating trade tensions and elevated operational costs.

World Cotton Outlook

The major cotton producing countries in the world are China, India, the United States, Brazil, Pakistan, and Australia. Together, these account for more than three-fourths of global production.

• Production: World cotton output in 2023/24 is estimated at 24.73 million tons, down about 2% from 25.32 million tons in 2022/23. The decline was mainly driven by lower harvests in China and the United States.

• Consumption: Global mill use rose modestly, increasing by 1.5% to 24.68 million tons compared with 24.31 million tons in 2022/23, reflecting a gradual recovery in textile demand.

• Trade: World trade expanded by 1.38 million tons, reaching 9.58 million tons. The increase was led by Chinas imports, which surged to 3.22 million tons—the highest in over a decade. This was partially offset by a decline in Pakistans imports (down 0.37 million tons). Among exporters, Brazil registered the strongest growth, with exports up 0.62 million tons.

• Stocks: Global ending stocks remained broadly stable at 17.52 million tons, similar to the prior year.

• Yield: The global yield fell by about 1% to 761 kg/hectare, continuing a multiyear downtrend largely attributed to adverse weather conditions in several producing regions.

Indian Textile

The Indian textile industry is a long standing and crucial part of the nations economy, valued at over USD 160 billion, contributing approximately 2.3% to national GDP and 13% of industrial output. It stands as the countrys second largest employer after agriculture, directly employing over 45 million people and indirectly supporting another 100 million. India ranks as the worlds second largest textile producer, with the sector accounting for 12% of the countrys export earnings. It is also the sixth largest exporter of textiles and apparel globally. In the past year, cotton yarn exports saw a decline due to reduced demand from China, though exports to Bangladesh showed growth. Integrating circular economy principles is vital for driving sustainability and reducing waste in the textile industry. A circular economy promotes the reuse, recycling and repurposing of materials to lessen resource depletion and environmental impact.

India produces about 7.8 million tonnes of textile waste annually, which is 8.5% of global textile waste. By adopting circular practices such as textile recycling, upcycling and waste reduction, manufacturers can create a closed-loop system, prolonging material life, decreasing environmental impact and improving resource efficiency.

Indian Cotton Outlook

During the 2024-25 cotton season, the Cotton Corporation of India (CCI) procured a total of Rs. 99.41 lakh bales as of March 25, 2025, out of total arrival of Rs.260.11 lakh bales, benefitting over 21 lakh farmers with Rs.37,450 Crore in payments Production trends during April to September 2024 remained largely stable compared to the previous year. Cotton-spun yarn output declined marginally by 1.15%, while the production of blended and noncotton yarn output rose by 1.91% over that period. To strengthen the global branding of Indian Textile, the Government of India has registered the Kasturi Cotton Indias brand as a trademark to give a unique identity to premium quality Indian cotton. Additionally, the successful organization of Global Mega Textile Event BHARAT TEX 2025 in February, 2025, led by Textile Export Promotion Councils (EPCs) and supported by the Ministry of Textiles, Government of India showcased Indias prowess as a premier textile manufacturing hub. The event highlighted the countrys end-to end value chain-from raw materials to finished products—reinforcing its role in the global textile ecosystem.

Opportunities

Sourcing shifts : With the ever-changing global geo-political scenario global buyers want to de-risk their sourcing strategy and reduce their dependence on China, which has been the most dominant supplier of textiles and apparel over the years. India stands to gain from this shift and there is a huge opportunity for India to have foot in the door of global buyers and make the most out of this opportunity. Attracting foreign direct investments (FDI) to enhance the value chain and infrastructure will be pivotal in capitalizing on this window.

Sustainable manufacturing :

With increasing global awareness around sustainability, Indian textile companies have a unique opportunity to lead in organic and eco-friendly fabrics. The demand for biodegradable materials, water-efficient processes, and ethical sourcing is rising, paving the way for innovative and sustainable business models. Government initiatives and policy support: The Indian government continues to bolster the textile sector through schemes such as the Production Linked Incentive (PLI) scheme, Make in India, and tax incentives for exporters. These initiatives provide businesses with financial and infrastructural support, encouraging investment in modern manufacturing facilities.

Technological advancements :

Automation, AI-driven quality control, and smart textiles are transforming the industry. Digital platforms enable manufacturers to streamline supply chains, enhance production efficiency, and deliver better customer experiences. The rise of e-commerce has further opened direct-to-consumer opportunities for textile brands. Digital printing has also allowed more vibrant and accurate colours to be printed onto fabrics, and inkjet printing has made production of printed fabrics faster.

Free Trade Agreements (FTAs)

India remains one of the top textile exporters globally. With rising global demand for affordable yet high-quality textiles, Indian manufacturers can leverage free trade agreements, diversified export markets, and global supply chain disruptions to strengthen their foothold in international markets.

Threats

Intensified Global Competition

India is under intense competition from Bangladesh, Vietnam and China in international textile markets. Vietnams textile sector benefits from high labour productivity and cost efficiencies, while Bangladesh remains a powerful competitor despite the latest political turbulence. As these nations enhance their capabilities, India must innovate and improve cost-effectiveness to retain market share.

High Raw Material Costs

Cotton, viscose and polyester are the three major raw materials for textiles and are the costliest in India, primarily because of import duties in the value chain upstream. For instance, cotton prices in India remained 10-15% above international levels for much of 2024. Similarly, polyester and viscose fibres cost up to 36% and 16% higher than in China, respectively, largely due to import duties and inefficiencies in the upstream supply chain.

Trade Barriers and Regulatory Challenges

Chinas cloth exports to India grew by 8. 79% during Q1 2024, which was due to Quality Control Orders (QCOs) on raw materials that inadvertently benefitted Chinese exporters. The QCOs resulted in non-tariff barriers impeding the free movement of specialized fibers and yarns, which led to shortages and increased domestic prices. Furthermore, complex export procedures and stringent compliance demands by Western buyers particularly strain smaller players and MSMEs.

Macroeconomic Uncertainty

Chinas cloth exports to India grew by 8. 79% during Q1 2024, which was due International economic instability, such as prolonged inflation and elevated interest rates, has restrained consumer demand for non-essential items such as apparel. Additionally, geopolitical tensions, such as the Russia-Ukraine conflict and the Middle Eastern instability, have disrupted shipping lanes and elevated freight costs. These external pressures are compelling manufacturers to build more resilient, adaptive supply chains amid rising operational expenses.

The Companys internal control system aims to ensure that:

The Companys internal audit system is continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee routinely reviews reports resented by the internal auditors. The committee notes the audit observations and takes corrective actions if necessary. It maintains a constant dialogue with the statutory and internal auditors to ensure effective operations of the internal control systems.

Material development in Human Resources / Industrial Relation:

The Company is having a competent team of dedicated employees. The company recognizes the importance and the contribution of its human resources for its growth and development. The company follows a progressive policy to retain its employees including their Training and skill development. The focus of all aspects of Human Resource Development is on developing a superior workforce so that the organization and individual employee can accomplish their work goals of service to customers. HR policies of your company are being aligned with the current trends in the market. The Company follows a recognition and reward scheme that motivates the employees to perform better.

Health and Safety Measures

As a conscientious and caring employer, the Company actively pursues safety and health measures continuously. Modern occupational health and medical services are accessible to all employees through well-equipped occupational health center at all manufacturing units. At all Plants, adequate safety measures for prevention of any untoward incident have always been taken. The Company has a range of policies, including on quality, safety and health aspects to guide the employees work practices, actions and decisions. The Company strives to continuously improve the effectiveness of its policies and the employees are encouraged to contribute their best in this direction. All employees are obliged to ensure that they fully understand all policies and they do fully comply with the requirements thereof

Cautionary Statement

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.

The Company assumes no responsibility in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.