Thomas Scott India Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS Global Economic Outlook

The textile and apparel industry continues to be an important contributor to the Indian economy, supporting employment, manufacturing activity, domestic consumption and exports. The industry encompasses the entire value chain, from fibre and yarn to fabrics, garments, home textiles and technical textiles.

The mens wear segment continues to evolve in line with changing consumer preferences, increasing fashion consciousness, urbanisation, growth of organised retail and the rapid expansion of e-commerce and digital commerce. Consumers are increasingly seeking a combination of quality, comfort, design, functionality and value.

Indian Economy Outlook

The Indian textile and apparel sector demonstrated resilience during FY 2025 26 despite global demand uncertainties, fluctuations in raw-material prices and evolving international trade conditions.

According to the Ministry of Textiles, Government of India, Indias exports of textiles and apparel, including handicrafts, increased from 3,19,573 crore in FY 2024 25 to 3,25,339 crore in FY 2025 26, registering a growth of approximately 1.8%. Export growth was recorded across more than 100 international destinations during the year.

Over the longer term, Indias textile and apparel exports, including handicrafts, increased from

2,49,250 crore in FY 2019 20 to 3,25,339 crore in FY 2025 26, representing a CAGR of approximately 4.5%.

The performance demonstrates the underlying resilience of Indias textile manufacturing and export ecosystem despite a challenging international operating environment.

PERFORMANCE OF KEY TEXTILE SEGMENTS

Ready-made garments remained the largest component of Indias textile and apparel exports during FY 2025 26.

As per provisional DGCIS data reported by the Ministry of Textiles:

Segment	FY 2024 25	FY 2025 26	Growth
Ready-made Garments	1,35,428 Cr	1,39,350 Cr	2.9%
Cotton Textiles	1,04,064 Cr	1,02,427 Cr	(1.6%)
Man-made Textiles	44,788 Cr	46,254 Cr	3.3%
Segment	FY 2024 25	FY 2025 26	Growth
Carpets	13,037 Cr	12,887 Cr	(1.2%)
Jute Products	3,385 Cr	3,381 Cr	(0.1%)
Silk Products	1,370 Cr	2,262 Cr	65.1%
Wool & Woollen Textiles	1,355 Cr	1,566 Cr	15.6%
Handloom Products	1,201 Cr	1,359 Cr	13.2%
Handicrafts*	14,945 Cr	15,855 Cr	6.1%

*Excluding handmade carpets. Figures are provisional and rounded off.

The 2.9% growth in ready-made garment exports is particularly relevant to the Companys business in mens wear and reflects continued international demand for Indian garment manufacturing.

MENS WEAR AND READY-MADE GARMENT SEGMENT

The mens wear market continues to undergo structural changes driven by evolving lifestyles, increasing brand awareness and changing purchasing behaviour.

Key trends influencing the segment include:

? Increasing preference for branded and quality apparel;

? Growing demand for comfortable, fashionable and functional clothing; ? Continued shift towards casual and smart-casual wear; ? Growth in organised retail and e-commerce; ? Increasing penetration of digital and omnichannel sales; ? Greater consumer awareness of quality and sustainability; ? Increasing demand for differentiated products and designs; and ? Strong competition from domestic and international brands.

The expansion of e-commerce and digital channels is also providing apparel companies with greater access to consumers beyond traditional geographic markets.

For manufacturers and brands, product innovation, effective inventory management, quality consistency, cost competitiveness, speed-to-market and efficient distribution are increasingly important factors for sustainable growth.

BUSINESS OVERVIEW

The Company is engaged in the manufacturing and/or trading of mens garments and related apparel products.

The Companys product portfolio may comprise shirts, trousers, T-shirts, jackets, ethnic wear and other mens apparel, depending upon the Companys specific product offerings.

The Company remains focused on delivering products that meet evolving customer requirements with emphasis on quality, design, competitive pricing, timely delivery and operational efficiency.

The Key Advantages of the Indian Textile Industry

The Indian textile industry has several key advantages that contribute to its global prominence. India has a 5-6% share of the global trade in textiles and apparel. Here are some of the major ones:

- Abundant Raw Materials: It is the industry in the country which is self-reliant and complete in the value chain i.e. from raw material to highest value added products. India is one of the largest producers of cotton, jute, and silk. The availability of these raw materials reduces dependency on imports and ensures a steady supply for the textile industry.

- Skilled Workforce: India has a large pool of skilled and semi-skilled workers who are well-versed in traditional and modern textile manufacturing techniques. This workforce is crucial for maintaining high-quality production standards.

- Diverse Product Range: The Indian textile industry offers a wide variety of products, from traditional handloom and handicrafts to modern, high-tech fabrics. This diversity allows the industry to cater to different market segments and consumer preferences globally.

- Strong Domestic Market: India has a large and growing domestic market with increasing disposable incomes. This ensures a stable demand for textile products within the country, providing a buffer against international market fluctuations.

- Rich Heritage and Craftsmanship: India has a rich tradition of textile craftsmanship, including techniques like weaving, dyeing, printing, and embroidery. This heritage adds unique value to Indian textile products and attracts international buyers looking for authentic and artisanal items.

- Cost Competitiveness: India benefits from relatively low labor and production costs compared to other major textile-producing countries. This cost advantage makes Indian textiles more competitive in the international market.

- Integrated Value Chain: The Indian textile industry has an integrated value chain, from fiber production to garment manufacturing. This integration ensures efficient coordination and reduces lead times, making the industry more responsive to market demands.

- Emerging Fashion Industry: Indias burgeoning fashion industry, with its growing number of designers and fashion weeks, promotes Indian textiles and garments, boosting their visibility and demand both domestically and internationally.

- Environmental Initiatives: Increasing awareness and adoption of sustainable practices, such as organic cotton farming and eco-friendly dyeing processes, are enhancing the industrys appeal to environmentally conscious consumers and businesses.

- Government Support: The Indian government has implemented various policies and schemes to support the textile industry, such as the Technology Upgradation Fund Scheme (TUFS), the Make in India initiative, and export incentives. These measures help in modernizing the industry and boosting exports.

- Large Indian players such as Arvind Mills, Welspun India, Vardhman textiles, Raymond, Trident have established themselves as quality producers in the global market. This recognition would further enable India to leverage its position among global retailers. India has gathered experience in terms of working with global brands and this should benefit Indian vendors.

Outlook

The medium- to long-term outlook for the Indian textile and apparel sector remains constructive, supported by Indias large domestic market, established manufacturing ecosystem, availability of natural and man-made fibres, skilled workforce and increasing integration with global supply chains.

The growth of organised retail, e-commerce and digital commerce is expected to continue creating opportunities for the mens wear segment.

For the Company, opportunities are expected to arise from:

- Increasing demand for branded and quality apparel; ? Growth in casual and smart-casual wear; - Expansion of e-commerce and omnichannel retail; ? Product innovation and differentiated designs; -

Expansion into new geographical markets;

- Development of private-label and institutional opportunities; and ? Potential growth in export-oriented manufacturing.

At the same time, the Company remains mindful of risks arising from raw-material prices, demand volatility, inventory levels, competition, labour costs, foreign-exchange movements and changes in international trade policies.

Government Initiatives

The Government of India continues to implement various schemes and initiatives aimed at strengthening the competitiveness, manufacturing capacity and export potential of the Indian textile and apparel sector.

Key initiatives include:

? PM Mega Integrated Textile Regions and Apparel Parks (PM MITRA); ? Production Linked Incentive (PLI) Scheme for Textiles; ? National Technical Textiles Mission; ? SAMARTH Scheme for Capacity Building in Textile Sector; ? RoSCTL Rebate of State and Central Taxes and Levies; ? RoDTEP Remission of Duties and Taxes on Exported Products; ? Export Promotion Mission; and ? Credit Guarantee Scheme for Exporters.

These initiatives are intended to promote investment, enhance manufacturing capabilities, improve productivity, support employment and strengthen Indias competitiveness in international markets.

The Government has also undertaken measures to address emerging challenges affecting textile exports and to support the competitiveness of the sector.

OUTLOOK, OPPORTUNITIES AND THREATS

The Indian textile industry is in a much stronger place than it was at any point of time in the last half a dozen decades. The raise in productivity, increase in exports, replication of investment during few years under Technology Upgradation Fund Scheme (TUFS), clearly put forward that the Indian textile manufacturing industry has capability in facing the challenges of modern economic system. Its the time, to strengthen the Company through fuller exploiting of available opportunities in both the domestic and worldwide markets which are summarized here below:

OPPORTUNITIES

I. Growing Global Demand for Sustainable Textiles:

The increasing awareness and demand for sustainable and eco-friendly textiles present a significant growth area for Indian textile manufacturers. Innovations in organic cotton, recycled fibers, and eco-friendly dyes can help Indian companies capture a larger share of this market.

By investing in sustainable production practices and obtaining international certifications (like GOTS for organic textiles), Indian companies can appeal to environmentally conscious consumers worldwide.

II. Expansion of Technical Textiles:

The technical textiles segment, including products like geotextiles, agro-textiles, medical textiles, and protective clothing, is growing rapidly. This sector is expected to see increased demand in both domestic and international markets due to its diverse applications.

Indian manufacturers can leverage government incentives under schemes like the National Technical Textiles Mission to invest in R&D and production capacity for technical textiles, thereby diversifying their product portfolios and entering new markets.

III. Supportive Government Policies and Initiatives:

Government initiatives such as the PLI Scheme, PM MITRA parks, and various export incentives provide a favorable environment for the growth of the textile industry. These policies aim to enhance infrastructure, promote exports, and support modernization efforts.

Companies can take advantage of these schemes to upgrade technology, expand their production capabilities, and improve competitiveness in the global market. Strategic utilization of these benefits can lead to increased profitability and market share.

THREATS

I. Intense Global Competition:

Indian textile manufacturers face stiff competition from countries like China, Bangladesh, and Vietnam, which often have lower production costs and more advanced manufacturing capabilities. Mitigation: To stay competitive, Indian companies need to focus on innovation, efficiency, and quality improvements. Investing in automation, lean manufacturing practices, and branding can help differentiate their products in the global market.

II. Fluctuating Raw Material Prices:

The textile industry is highly dependent on raw materials like cotton and synthetic fibers, whose prices can be volatile due to factors like weather conditions, geopolitical tensions, and changes in global demand. Mitigation: Diversifying raw material sources, entering into long-term contracts with suppliers, and using financial instruments to hedge against price fluctuations can help manage this risk.

III. Environmental and Regulatory Challenges:

Increasing environmental regulations and the push for sustainable practices can be challenging for traditional textile manufacturers. Compliance with stringent environmental standards may require significant investments in new technologies and processes.

Mitigation: Proactively adopting sustainable practices and technologies, investing in waste management and pollution control, and staying ahead of regulatory changes can help companies mitigate these challenges. Embracing sustainability can also open up new market opportunities.

IV. Other threats faced by the Company: Apart from those mentioned above there are many other threats which are faced by the Company. Following is the list of other threats:

1. High Transportation Cost

2. Rising labour costs, the shortage of skilled labour and overreliance on labour-intensive technologies may impact the operations.

3. Frequent changes in consumer sentiments & preferences

RISK AND CONCERNS

Risks are inherent in all businesses. The challenge for the Company is to effectively and responsibly manage and control the risks on a sustained basis to enhance returns.

Industry Risk: The demand for textiles is perennial and major fluctuations occur largely due to changes in overall economic growth and manufacturing competitiveness. However, the business is cyclical on the supply side considering the quantum of capital investment involved in capacity expansion. This makes it necessary for the Company to incur large capital expenditure at the right time.

Raw Material Risk: The Company is exposed to the vagaries of nature, with cotton being the principal raw material for fabric manufacturing.

Product Substitution Risk: Man Made Fibers are a direct substitute for cotton textiles

Discussion on Financial Performance with Respect to Operational Performance

? The Companys Total Revenue is Rs. 25,488.58 Lakhs in 20225-26 as compared to Rs. 16,103.22 Lakhs in the previous year.

? Profit before Tax is Rs. 2707.61 Lakh as compared to Rs. 1588.03 Lakh in the previous year in the previous year.

? The Net Profit/(Loss) for the year is Rs. 1,930.45 Lakh as compared to Rs. 1279.76 Lakh in the previous year

? Total comprehensive income/(Loss) is Rs. 1,931 Lakh as against Rs. 1,285.14 Lakh in the previous year

Human Resource

Human resources have always been of supreme importance as they are the growth-drivers. Your Company firmly believes that a well-planned HRM program that is tailored to your organization and staff can actually improve your businesss bottom line. Our teams are integral to our business. We have embraced a culture of excellence and meritocracy to nurture our people. We believe in selecting the right talent, training them and instilling in them the spirit of "Bangs". We focus on developing the most superior workforce so that the organization and individual employees can accomplish their work goals in service to customers. We aim also at achieving advance flexibility, innovation, competitive advantage and improved business performance. We follow a performance measuring tool like Balance Score Card (BSC) and Key Performance Indicators (KPI), applicable depending on their position in the organization, by which periodical evaluation of the employees performance is done based on their area of working. This also encourages them to work hard and efficiently at all levels of work. As of March 31, 2025, the Company had 979 permanent employees.

Internal Control Systems & their Adequacy

Sound internal control systems are a prerequisite for building and enhancing shareholder value in the long run. The Company has a sound system of internal controls commensurate with the size of the Company and the nature of its business to ensure that all assets are safe guarded and protected against loss from unauthorized use or disposition and that transactions are authorized and recorded reported correctly and adequately. The Companys internal control are supplemented by internal audits, review by management and documented policies, guidelines and procedures. The internal control is designed to ensure that financial and other records are reliable for preparing financial information and for maintaining accountability of assets.

Internal

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal controls systems and suggests improvement for strengthening them.

Cautionary Statement

Statements in this report on Management Discussion and Analysis describing the

Companys objectives, projections, estimates, expectations or predictions maybe forward looking statements within the meaning of applicable laws or regulations. These statements are based on certain assumptions and reasonable expectation of future events. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and domestic demand supply conditions, finished goods prices, raw materials cost & availability, changes in Government regulations and tax structure, economic developments within India and the Countries with which the Company has business contacts and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the on the basis of subsequent developments, information or events.