T T Ltd Management Discussions

TEXTILE INDUSTRY OVERVIEW

The Indian textile industry continues to play a significant role in the countrys economic growth, employment generation, exports and industrial production. The industry has a strong presence across the entire textile value chain including fiber, yarn, fabrics, garments and technical textiles.

India remains one of the leading global producers of cotton, cotton yarn and textile products, supported by strong raw material availability, skilled workforce, expanding manufacturing infrastructure and growing domestic demand.

During FY 2025-26, the textile industry witnessed gradual improvement in demand despite global economic uncertainties, inflationary pressures and volatility in raw material prices. The Government of India continued to support the sector through various initiatives including the PLI Scheme, PM MITRA Parks, National Technical Textile Mission, RoDTEP and SAMARTH schemes.

The shift in global sourcing strategies away from China continued to create opportunities for Indian textile manufacturers. Increasing urbanisation, rising disposable income, expansion of organised retail and e-commerce platforms and growing demand for sustainable and value-added products continued to support industry growth.

The technical textiles segment also emerged as a key growth area with increasing applications across healthcare, infrastructure, defence, agriculture and automotive sectors. The industry further continued to focus on sustainability, digitisation, automation and operational efficiency to align with evolving global market requirements.

SOME SIGNIFICANT DATA ON THE TEXTILE SECTOR:

• Indias textile and apparel industry continued to demonstrate resilience during FY 2025-26 despite global economic uncertainties and demand fluctuations in international markets.

• Total textile exports, including handicrafts, increased to approximately 3.16 trillion during FY 2025-26 as compared to approximately 3.10 trillion in FY 2024-25, reflecting steady growth in the sector supported by improving global demand and policy support measures.

• Indian textile exports expanded across more than 120 international destinations during the year under review, with healthy demand witnessed from several key global markets.

• While exports recorded positive growth in rupee terms, certain industry estimates indicated marginal pressure in USD terms primarily due to currency fluctuations and depreciation of the Indian Rupee.

• The Government of India continues to focus on strengthening the textile sector through various initiatives and has set an ambitious target to significantly enhance textile exports by the year 2030.

Investments & Policy Support

• Budget Allocation

The Union Budget 2025-26 allocated approximately 52.7 billion to the Ministry of Textiles, representing an increase of around 19% over the previous financial years budget estimates.

• PM MITRA Parks

The Government is developing 7 PM MITRA Parks with an estimated investment potential of over 274.3 billion aimed at creating integrated textile manufacturing infrastructure.

• Foreign Direct Investment (FDI)

Total FDI inflows into the Indian textile sector stood at approximately USD 4.8 billion between April 2000 and June 2025.

• Export Promotion Schemes

The Government extended the RoSCTL and RoDTEP schemes beyond March 2026 to continue supporting textile exports and improve global competitiveness.

• Skill Development

Under the SAMARTH Scheme, around 541,000 persons have been trained, including nearly 88% women participants. The Government has further targeted training of an additional 200,000 persons during FY 2025-26.

Sectoral Trends

• Technical Textiles

Under the National Technical Textiles Mission, approximately 168 projects worth nearly D5.09 billion had been approved by early 2025, with major focus on specialty fibres and high-performance textile applications.

• Employment Generation

The textile sector continues to remain one of the largest employment generators in India with an estimated workforce exceeding 45 million people.

• Sustainability & Innovation

The industry continued to witness increasing focus on: sustainable manufacturing, eco-friendly processes, recycled materials, energy-efficient production systems, and technology-driven "smart fabrics" and advanced textile solutions.

INDUSTRY OPPORTUNITIES

1. Strong Domestic Demand

Indias growing population, rising disposable income and increasing consumer spending continue to support strong domestic demand for apparel and textile products. Expansion of organised retail, growth of e-commerce platforms and increasing fashion awareness are expected to further drive industry growth.

2. Global Sourcing Diversification

The shift in global sourcing strategies by international brands and retailers away from over dependence on China presents significant opportunities for Indian textile manufacturers. Indias strong raw material base, integrated manufacturing ecosystem and skilled workforce position the country favourably to capture larger export opportunities.

3. Government Policy Support

The Governments Production Linked Incentive (PLI) Scheme is expected to boost investment in man-made fibre apparel, fabrics and technical textiles. The scheme aims to enhance manufacturing scale, improve competitiveness and increase exports from the textile sector.

4. PM MITRA Parks Development

PM MITRA Parks are expected to strengthen textile infrastructure through integrated manufacturing facilities, common utilities and logistics support. Such integrated textile parks are likely to reduce production costs, improve operational efficiency and strengthen supply chain management.

5. Growth in Technical Textiles

The technical textiles sector presents substantial growth opportunities due to increasing applications across healthcare, defence, agriculture, infrastructure, automotive and industrial sectors. Rising infrastructure development and industrial expansion are expected to support long-term growth in this segment.

6. Sustainability and Eco-Friendly Products

Increasing global demand for sustainable and eco-friendly products is expected to create new opportunities for textile manufacturers adopting green manufacturing practices, recycled fabrics, water conservation measures and energy-efficient production systems.

7. Digital Transformation and Automation

Adoption of advanced manufacturing technologies including automation, artificial intelligence, digitalisation and smart manufacturing processes is expected to improve productivity, operational efficiency and product quality across the textile industry.

INDUSTRY CHALLENGES

1. Volatility in Raw Material Prices

Fluctuation in cotton prices, yarn prices and other raw material costs continues to remain one of the major concerns for textile manufacturers. Any significant volatility in raw material prices may adversely affect operating margins and profitability.

2. Global Competition

The textile industry faces increasing competition from countries such as Bangladesh, Vietnam and China due to lower labour costs, favourable trade agreements and export incentives available in such countries.

3. Global Economic Uncertainties

Global economic slowdown, inflationary pressures and geopolitical tensions may impact consumer spending and export demand across international markets. Any slowdown in key export destinations may adversely affect order flows and pricing realisations.

4. Logistics and Supply Chain Disruptions

Freight cost fluctuations and supply chain disruptions continue to pose operational challenges for exporters and manufacturers. Disruptions in logistics and transportation systems may affect delivery schedules, inventory management and overall business operations.

5. Environmental and Sustainability Compliance

Increasing environmental regulations and sustainability compliance requirements from global buyers require continuous investment in green manufacturing technologies, waste management systems and energy-efficient operations.

6. Labour and Workforce Challenges

Labour availability, rising wage costs and shortage of skilled workforce continue to remain key industry challenges. The industry requires continuous investment in employee training, skill development and automation to improve productivity and operational efficiency.

7. Foreign Exchange Fluctuations

Foreign exchange rate volatility may impact export competitiveness, import costs and the overall financial performance of textile companies engaged in international trade.

8. Risk Mitigation Measures

The Company continues to closely monitor these risks and undertakes appropriate mitigation measures through operational efficiency improvements, prudent financial management, diversification strategies, strengthening internal controls and continuous review of business processes.

COMPANY PERFORMANCE AND OUTLOOK

The Company continues to operate in the textile and apparel segment and focuses on improving operational efficiency, product quality and market presence.

During the year under review, the Company continued its efforts towards strengthening manufacturing capabilities, improving customer satisfaction and enhancing distribution channels.

The Company has successfully repositioned itself from a volume-driven textile player to a value-focused, brand-led organisation, with a clear emphasis on branded garments, value-added products, and export- oriented growth. This strategic shift is expected to drive sustainable profitability and long-term value creation.

Going forward, the Company aims to rebuild and significantly scale its top line through aggressive expansion across domestic and international markets. The domestic business is expected to witness strong growth driven by deeper penetration of the Companys brands in innerwear, casual wear, and active wear segments across traditional retail, modern trade, and e-commerce platforms.

The export segment is poised to emerge as a key growth driver, supported by favorable global trade dynamics, including Free Trade Agreements with key markets and Indias increasing competitiveness in man-made fibre (MMF) textiles. The Companys strengthened sourcing capabilities and focus on MMF-based products are expected to further enhance its global positioning.

The newly commissioned garment manufacturing facility in Howrah is expected to stabilize and contribute meaningfully to operational performance in the coming periods. Additionally, the Company is exploring expansion opportunities within textile clusters such as PM MITRA Parks, which will provide scale efficiencies and ecosystem advantages.

Management remains committed towards enhancing operational efficiency, maintaining financial discipline and improving shareholder value through sustainable business growth.

RISK MANAGEMENT AND MITIGATION

The Company has established a comprehensive risk management framework to identify, assess, monitor and mitigate various business risks. The risk management process is regularly reviewed by the management and the Board to ensure effective implementation of mitigation measures.

Followings are potential risk in business of the Company-

Financial Risk

The textile industry faces various financial risks, from having lenient payment terms to negotiating weak contracts. You must practice caution to ensure prompt payments for items delivered, which is possible through various strategies, including placing requirements for advanced payments, leveraging invoice factoring, seeking bank guarantees, and insuring trade credit. Furthermore, be sure to evaluate the risk scores of your current and potential customers to minimize the likelihood of non-payment.

Operational Risk

These risks have a broad scope that covers elements like workers health and safety, product quality, management externalities, and regulatory compliance. Monitoring factory conditions and work processes can help gauge your overall risk exposure on specific operations and facilitate the necessary improvements.

Supply Chain Risk

A study by the Institute of Supply Management revealed that about 75 percent of organizations reported supply disruptions since the commencement of the pandemic, and this brought about a renewed focus on supply chain risk mitigation. Maximum purchases are from india, hence not much logistic risk, however there is always risk of delayed supplies from Indian suppliers. The bigger risk is the fluctuating international freight rates and lead times while exporting.

Industry Risk

With a birds-eye view of the entire industry, you must closely follow trends in trade policies, competitive landscape disruptions, and macroeconomic developments. Its also essential to monitor changes to your controls, especially in todays business environment that experiences quick and frequent adjustments. Staying ahead of these risk factors will help you anticipate market developments and adapt your business strategies accordingly. Textiles is a global industry and hence both supply & demand is impacted by the events across the globe.

Compliance Risk

To stay ahead of compliance risk, organizations in the textile industry must meticulously understand the regulations governing their sector, evaluate their adherence level with each, identify any control setbacks, and take relevant corrective measures. These steps will prevent the fines and reputational damage resulting from non-compliance.

Mitigation of Various Risk

The Company has implemented a robust risk management framework to identify, assess and mitigate various business risks in a timely manner. Appropriate internal controls, monitoring mechanisms and compliance systems are in place to minimize financial, operational, supply chain and regulatory risks. The management regularly reviews risk factors affecting the business and takes necessary corrective measures to safeguard the interests of the Company.

The Company has reworked its dependence on cotton fibre and has shifted more of its fabric and garments to cotton/manmade fibre blends to reduce the risk of its business due to cotton volatility. However, we believe that risk has not subsided yet and we are constantly monitoring the situation.

A significant step taken by the Company has been introduction of credit insurance that apart from reducing bad debt, also give the Company confidence to sell more aggressively in the domestic market on credit. In exports, the Company does not sell anything on unsecured credit.

The Board of Directors periodically reviews the effectiveness of the risk management framework to ensure sustainable business operations and growth.

The Risk Management Policy may be accessed on the Companys website at the link https://tttextiles.com/wp- content/uploads/2023/12/Risk-Management-policy-T-T-Ltd.pdf

INTERNAL CONTROL SYSTEM

The Company has established adequate internal control systems commensurate with the size, scale and nature of its business operations.

The internal control framework is designed to ensure reliability of financial reporting, safeguarding of assets, compliance with applicable laws and regulations and operational efficiency.

The Company has implemented proper systems and procedures for monitoring business operations, financial transactions, inventory management and statutory compliance.

Internal audits are conducted periodically to evaluate the adequacy and effectiveness of internal controls, operational processes and compliance mechanisms. Audit findings and recommendations are reviewed by the Audit Committee and corrective actions are implemented wherever necessary.

The Audit Committee regularly reviews internal audit reports, risk management processes and financial reporting systems to ensure transparency and accountability in operations.

The Company also continues to strengthen digital systems, process automation and management information systems to improve efficiency and governance standards.

HUMAN RESOURCES

Human resources continue to remain one of the most valuable assets of the Company. The Company believes that employee engagement, skill development and performance-driven culture are essential for sustainable business growth.

The Company continued to focus on employee training, skill enhancement, safety awareness and leadership development initiatives during the year under review.

Industrial relations remained cordial throughout the year. The Company continues to maintain a healthy, safe and inclusive work environment for all employees.

Various employee welfare initiatives, safety measures and motivational programs were undertaken during the year to improve employee satisfaction and productivity.

The management remains committed towards creating a positive organisational culture based on teamwork, integrity, transparency and professional excellence.

FINANCIAL PERFORMANCE

During the year under review, the Company achieved Revenue from operations of Rs. 19151.94 lakhs as compared to Rs. 21,443.15 lakhs in the previous financial year. Further, the Company has earned profit after tax and exceptional items of Rs. 29.09 lakhs in the current financial year as against profit of Rs. 409.91 lakhs in the previous financial year..

J. FINANCIAL RATIOS

Ratios	2025-26 (%)	2024-25 (%)	% Variation	Reason for Changes
Current Ratio	2.00	1.83	9.74	Current Ratio has improved due to higher increase in current assets compared to current liabilities.
Debt - Equity Ratio	0.64	0.99	(35.62)	Debt Equity Ratio has changed due to lower borrowings and a stronger equity base during the year.
Debt Service Coverage Ratio	0.85	0.85	(0.63)	Debt Service Coverage Ratio (DSCR) remains almost unchanged, reflecting that the companys earnings available for debt servicing moved proportionately with debt obligations.
Return on Equity (ROE)	0.00	0.05	(94.66)	Return on Equity (ROE) is decreased due to increase in equity share capital & lower profitability.
Inventory Turnover Ratio	1.83	2.38	(23.08)	Inventory turnover ratio is decrease due lower cost of goods sold relative to average inventory.
Trade Receivables turnover ratio	4.18	5.75	(27.32)	Trade Receivable turnover ratio is decreased due to mainly faster debtors recovery
Trade payables turnover ratio	14.35	17.47	(17.87)	Trade Payables Turnover Ratio has decreased, indicating faster payment to vendors/creditors
Net Capital turnover ratio	2.60	3.65	(28.84)	Net Capital Turnover Ratio has decreased, primarily due to increase in working capital.
Net profit ratio	0.00	0.02	(92.05)	Net profit has decreased due to significantly lower net profit margins during the year.
Return on capital employed (ROCE)	0.06	0.02	251.39	ROCE has improved due to a higher EBIT during the year, while capital employed increased at a lower proportion, resulting in better returns.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company are prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 ("the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendments thereto. The financial statements have been prepared under the historical cost convention on accrual basis except for certain financial instruments measured at fair value and in accordance with the guidelines issued by the Securities and Exchange Board of India (SEBI).

CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied due to various factors including changes in government policies, economic conditions, raw material prices, market demand, foreign exchange fluctuations, competition and other risks and uncertainties beyond the control of the Company.

ACKNOWLEDGEMENT

The Directors of the Company wish to express their appreciation for the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and all the valuable assistance received from the shareholders. The Directors also wish to thank all the employees of the Company for their contribution, support and continued cooperation throughout the year.