Trident Ltd Management Discussions

Global economic overview

The global economy expanded by 3.2% in the CY 2023, demonstrating remarkable resilience in the face of continuing economic adversities like geopolitical challenges, demand slowdown and fluctuations in commodity prices which has led to inflationary pressures in both advanced and emerging markets.1

The global Manufacturing PMI has been under contraction in CY2023 but has indicated stabilisation towards the start of CY2024. Additionally, commodity prices have remained relatively stable in CY2023 despite the ongoing economic slowdown in China & Europe and geo-political challenges in Europe and the Middle East. Owing to the rising interest of foreign institution investor, several emerging economies like India, Vietnam and Mexico are expected to show a positive growth trajectory.

Outlook

Global growth is estimated to remain stable at 3.2% throughout CY 2024 and CY 2025.2 Global inflation is receding at a faster pace than anticipated. It declined from 8.7% in CY 2022 to 6.8% in CY 2023 and is expected to further decline to 5.9% in CY 2024, according to IMF.

However, geopolitical risks remain high, particularly in light of the continuing conflict in the Middle East and political tensions in Europe. Going forward, declining inflation and greater government spending is anticipated to alleviate fiscal pressures and expected to attract investments for future growth.

Growth in the Global GDP

Indian economic overview

Indias economy is one of the fastest-growing major economies in the world. In FY 2024, India registered a GDP growth rate of 8.2%.3 This growth was accompanied by a fall in the inflation rate and improved disposable income which resulted in increased private consumption and sustained demand for goods and services in the country. The Reserve Bank of Indias (RBI) proactive monetary policies contributed to strengthening the financial landscape of the country.

The capital expenditure push, particularly on roads and railroads, has favoured in maintaining the economic growth rate. For the year under review, the FDI in India remained resilient and amounted to USD 71.0 billion.4

The Government of India also allocated 3.3% of GDP to infrastructure development and supported the economy by creating employment opportunities. The manufacturing sector grew by 9.9% in FY 2024 owing to the favourable demand conditions in the economy. Notably, there has been greater capacity utilisation across the manufacturing sector, which has further fuelled economic growth.

Outlook

The Indian economy is expected to continue its upward trend and become the third-largest economy by 2027. According to the Organisation for Economic Co-operation and Development (OECD), the GDP is expected to grow by 6.6% in FY 2024-25. Inflation is expected to further fall and this will support the increased level of consumption of goods and services and contribute to increased activity in the economy.

With the support of various industry-promoting programmes like the Production-Linked Incentive (PLI) scheme and the governments ‘Make in India initiative, the manufacturing sector can potentially expand into a USD 1 trillion industry by 2025–2026. This strategic move is expected to help the growth of the manufacturing sector and thereby contribute to economic growth in the coming years.

Industry Overview

Textile

Global Textile Market

The global textile industry attained a market size of USD 1,837.27 billion in CY 2023.5 The global textile industry witnessed a trend of adopting Artificial Intelligence (AI) in CY 2023, which also helped enhance the industrys productivity. Innovations such as automation and digital printing have significantly transformed the global market by enhancing the productive efficiency of the industries and meeting the dynamic market demands in the reported year.

The Global textile industry is recovering, with inventory levels of international retailers and brands back to pre-pandemic norms. Despite this, the industry remains cautious about demand as textile companies await an increase in order book momentum.

The growth in this industry was significantly contributed by the growth in the Asia Pacific markets for the year under review. The European markets are also expected to experience significant growth in the future.

The consumers increasing environment-consciousness is moving the industry towards manufacture of sustainable products. Further the buyers thrust to diversify their supply chain beyond China to avoid over-reliance on a single country is a driver for India to come up as a value chain partner owing to our raw material strength and robust manpower pool.

Anticipated Free Trade Agreement (FTA) include the long-overdue UK FTA and EU FTA, along with negotiations between India and the Russia-led five-member Eurasian Economic Union (EaEU) set to commence in 2024. Another FTA between India and Oman is on the horizon and is likely to be signed in 2024. This will make us competitive in these markets.

Rapid Adoption of Digitalization, Block chain, Traceability and increased action towards Sustainability & ESG focus would be an optimal strategy to boost efficiency and maintain competitiveness. ESG is at the core of Strategy for every retailer. They are prioritizing vendors on the basis of ESG score.

Indias Textile Market

Indias textile market is one of the worlds largest markets. The industry contributed to the Gross Domestic Product (GDP) by 2.3% in FY 2024. It has a 4% share in the global trade of textiles and apparel. This industry remained a significant contributor to the growth of the economy by providing employment opportunities and attracting investments.Some of the most important textile production locations in India are Gujarat, Maharashtra, Tamil Nadu, Punjab, Uttar Pradesh and West Bengal. The domestic market faced several headwinds during the reported year including fluctuation of cotton prices. Even the festive season did not bring enough market demand, and at the same time increasing imports of fabrics from Bangladesh at lower production cost also put pressure in the domestic market. Although India is the largest exporter of textiles and apparel in the global market, the contribution of the industry in trade declined in FY 2024. However, the export statistics indicate that cotton yarn, fabrics and handloom products experienced an increase of 6.71% in their exports.6

The Government of India consistently made efforts to support the growth of this industry in the reported year. The Ministry of Textiles approved 18 Research and Development (R&D) projects across key strategic areas including sustainable textiles7, providing the industry with significant growth opportunities. This initiative is expected to boost innovation and enhance the industrys operational efficiency. The government signed the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association in the reported year. This agreement included integrating advanced technologies to enhance the productivity in the industry and support the industrys growth further.

Key initiatives undertaken by the Government of India in FY 20248

PM MITRA Scheme

The government launched the PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme to build and develop textile infrastructure. The scheme is inspired by the 5F vision: Farm to Fibre to Factory to Fashion to Foreign.

PLI Scheme

The government also launched the Production Linked Incentive (PLI) Scheme for Textiles, with an investment of INR 10,683 crore over the next five years, to promote the production of man-made fibres (MMF) apparel. The MMF are artificially produced fibres and are becoming common among the weavers and spinners in India. The PLI scheme also promotes the production of technical textile products in the country.

Kasturi Cotton Bharat

Kasturi Cotton Bharat programme of the Ministry of Textiles is a first-of-its-kind branding, traceability and certification exercise carried out jointly by the Government of India, Trade Bodies and Industry to promote the cotton produced in India.

National Technical Textile Mission (NTTM)

The GOI launched the National Technical Textiles Mission (NTTM). It promotes the development and export of technical textiles.

5https://www.grandviewresearch.com/industry-analysis/textile-market#

6https://citiindia.org/newsletter-monthly/April-2024/News-Clippings-27042024.pdf

7https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1961802#:~:text=Ministry%20of%20Textiles%20approved%2018%20R%26D%20projects%20worth%20 INR%2046.74,during%20the%207th%20MSG%20meeting. 8https://pib.gov.in/PressReleasePage.aspx?PRID=1989149

In Q4 FY 2024, the Indian textile sector saw an 8% year-on-year revenue growth. As cotton prices stabilize, value growth is expected to match volume growth soon. Indian exporters gained market share, with the countrys share in US cotton sheet imports hitting a record 62%.

Paper

Global Paper Industry

The global paper and pulp market attained a market value of USD 357.21 billion in CY 2023.9 The industry is growing steadily and was driven by factors such as increased need for paper and paper-based products across the globe, expected to grow from USD 360.08 billion in 2024 to USD 391.4 billion by 2032. Demand for packaging materials which was fuelled by the growth in e-commerce. The push for sustainable packaging solutions has given thrust for adoption of eco-friendly paper packaging materials. The printing and writing (P&W) paper segment of the market exhibited significant growth in emerging economies such as India and China. The markets growth in these regions was supported by growth in the education sector and increased use of e-commerce platforms by individuals. The Asia-Pacific region remained a leading market for paper and paper-based products in the reported year with a market share of 50.16% in 2023 (Fortune Business Insights). It was visible that the key industry players were focused on investing towards expanding their global presence and thereby, tap into the new markets and diversify their customer base. The adoption of automated manufacturing processes to reduce reliance on labour intensive production processes and integrating technologies into its operations proved to be impactful. This further aided the industry to enhance its productivity and manage costs efficiently. With the revival in global economy and easing global supply chain scenario, the demand for paper in the global market is expected to rebound in the forthcoming years. In addition to this, the North American markets are expected to remain the second largest markets for paper in the coming years.

However, Industry experts believe that the market is anticipated to experience fluctuating growth patterns.

Indias Paper industry

India is one of the largest producers of pulp and paper and it has experienced significant growth in recent years. It is a highly fragmented industry with small, medium and big mills that use a variety of raw materials including wood, bamboo and wheat straw. Various types of papers used for writing, printing and packing are produced in India. The industry contributes to 5% of the worlds paper production.

The domestic market got largely benefitted from the advancement of technology. Integration of advanced technology has helped the Indian paper manufacturers to enhance production efficiency and control the cost of production. The advanced technology and innovation also led to offer of new and value added paper products. These products meet the diversified needs of the paper packaging industry. The paper packaging industry benefitted the most in the reported year, as the government launched initiatives to minimise the use of single-use plastics. The growth of the e-commerce industry had propelled the growth of the paper packaging market in the year under review.

The domestic paper industry is expected to grow in the forthcoming years at around 7% per annum. The growth is anticipated to be driven by increased literacy rates within the country with the governments support. The adoption of the New Education Policy (NEP) is one such initiative that is expected to boost the demand for P&W papers in the economy. The growth in the Fast-Moving Consumer Goods (FMCG) market, e-commerce sectors and health sectors are expected to facilitate and sustain the growth of the industry in the coming years.

The FMCG industry will grow at a CAGR of 27.9% from 2024 to 203010 and the demand for paper packaging products is also expected to rise.

Indias retail market is expected to be valued at USD 1.1 trillion, by 2027.11

The governments launch of initiatives such as Samagra Shiksha is expected to provide a major boost to the paper industry

Demand for various environment friendly alternatives are increasing due to growing environmental concerns and the single-use plastic prohibition, accelerating the growth of the paper industry.

Increased disposable income in India is also a reason for the growth of the domestic market, thereby creating demand for paper and paper-based products. Per capita consumption of paper in India is 17 Kg in 2024-25, way behind the global average of 57 Kg which gives further impetus to growth.

Company Overview

Trident Limited (Trident) is a flagship company of the Trident Group . The Company is a vertically integrated textile and paper manufacturer. The Company has four major business segments namely Yarn, Home Textiles (bath and bed linen), Paper and Chemicals. The manufacturing facilities of Trident are located in Punjab and Madhya Pradesh.

The Company has earned global recognition for its yarn, bath linen, bedlinen, paper and chemical businesses.It is well recognised for being the worlds largest producer of wheat straw-based paper manufacturer.

The Company is known for its product quality, social responsibility and its contribution towards the environment. The Companys dedication towards sustainability and integration of advanced technologies have earned it the global recognition. Trident has devised a strategic growth plan which includes product development, world class manufacturing and brand promotion.

Business overview

Yarn

The Company manufactures premium cotton yarn for domestic textile manufacturing. The Company uses cutting-edge technology in its manufacturing facilities. The product portfolio of the Company includes a wide range of high-quality yarns.

Product portfolio

• 100% cotton combed yarn

• Special open-end yarn

• Air jet yarn

• Carded yarn

• Organic cotton yarn

• Core spun yarn

• Blended yarn

• Eli-twist yarn

• Slub yarn

• Compact yarn

• Air-rich yarn

• Certified cotton yarn

• M?lange yarn

• Packed dye yarn

• Gassed mercerised yarn

• Zero twist yarn

• Wrapper yarn

• Bamboo/ cotton yarn

• Modal/ cotton yarn

• Soya/ cotton yarn

• Polyester/ cotton yarn

• BCI cotton yarn

• BMP cotton yarn

• 100% dyed yarn

Home textiles

Trident is the biggest vertically integrated Company in the home textile industry. Bath and bed linen are the primary segments of the Company. It focuses on innovation in its business.

Bath linen division

The Company has 2 production facilities for bath linen in Dhaula (Punjab) and Budhni (Madhya Pradesh). The Company focuses on innovation and launching quality products that adhere to the global standards

Product portfolio

• Luxury

• Organic

• Spa and hotel

• Beach

• Designer

• Jacquard

• Dobby texture

• Bath mats

• Checkered

• Waffle

• Infants and kids

• Bath rugs

During the year the company demonstrated robust performance, achieving a revenue of 1290 Cr and sustaining an impressive 30% YOY growth over LY 2022. In the past year, we secured major retail partnerships with big box retailers, expanded our product range, capitalized on our patented and trademarked technology, expanded our capacities, made our process leaner and sustainable.

In the current year, out focus would be to expand our reach in the Non-US market. With the current opportunities in hand, this is one of the drivers for growth in the business. Fashion bedding, prints & TOB, would be another avenue for growth in coming year. Organic growth in the existing customers assortment will also add to the revenue growth.

Product portfolio

• Luxury

• Organic

• Spa and hotel

• Designer

• Jacquard

• Dobby texture

• Checkered

• Waffle

• Infants and kids

Bed linen division

The Company also has a wide range of bedding solutions. The Company has production facility at Budhni (Madhya Pradesh) for bed linen. Trident is dedicated to maintaining quality and innovation and this has helped the Company to gain recognition in the industry.

Paper

The Company is the worlds largest wheat straw-based paper producer. It maintains its position, with a capacity of 175,000 TPA. It offers multi-colour, quick-turn publishing and branded copier paper. Trident Paper is known for its eco-friendly paper and enjoys good domestic market.

Branded copier paper

• Trident Spectra

• Trident My Choice

• Trident Royal Touch

• Trident Digi Print

• Trident Spectra Bond

• Trident Enviro

Writing and printing maplitho paper

Product portfolio

• Super Line

• Prime Line

• Cartridge paper

• Index paper

• Stiffener paper

• Diamond Line

• Drawing paper

• Platinum Line

• Silver Line

• Trident Royale

• Copier Grade

• Cup Stock

• Carry Paper

Bible and offset printing paper

Product portfolio

• Cream wove

• Offset Printing Paper (watermark)

The Company also manufactures and markets My Choice Notebooks, with the USP of Anti-Bacterial paper.

Chemicals

The Company produces supreme quality LR/AR grade sulphuric acid. The sulphuric acid produced by the Company has several applications like use in batteries, to manufacture zinc sulphate, alum, dyes and detergents.

The Company is the major manufacturer of industrial and battery-grade sulphuric acid in the Northern regions of India.

Growth drivers of the Company

• India being the largest producer of cotton, makes it easier for the Company to avail raw materials domestically

• The Company can also capitalise on the opportunity providedbythestrongeconomytoexpanditsbusiness.

• The textile industry is backed by Indian Government, which creates growth opportunities for the companies operating in the industry

Financial Performance

The total income of the Company increased from INR 62,913 million in FY 2023 to INR 67,903 million in FY 2024. The Operating Profit (EBITDA) for the year under review has been INR 9949 million as compared to INR 9,418 million in FY 2023. In FY 2024 the Company generated a profit of INR 3,896 million, which decreased by 8% from FY 2023.

The earnings per share of the Company was INR 0.78 in the year under review.

Dividend

The Company declared an interim Dividend of 36% on the face value of each equity share, during the FY 2024.

Segmental revenues

Yarn and Textile

The revenue collected from the textile was INR 55,846 million in FY 2024 as compared to INR 49,236 million in FY 2023.

Paper and Chemicals

The revenue of the Company from Paper and chemicals was INR 11,459 in FY 2024 increasing/decreasing from INR 13,438 million in FY 2023.

Balance sheet

Paid-up capital

The total equity share capital for FY 2024 was INR 5,096 million.

Net worth

As on March 31, 2024 the Net worth of the Company was INR 43,091 million, against INR 41,258 million as on March 31, 2023.

Key financial ratios and other parameters

Particulars	March 31, 2024	March 31, 2023	% of change
Debtors Turnover	18.57	14.83	25%
Inventory Turnover	4.54	4.41	3%
Interest Coverage Ratio	5.85	10.08	(42%)
Current Ratio	1.58	1.35	17%
Debt Equity Ratio	0.57	0.40	42%
Operating Profit Margin (%)	13.9%	14.6%	(5%)
Net Profit Margin (%)	5.8%	6.7%	(13%)
Return on Net Worth	10.9%	12.5%	(15%)

Other key financial ratios, related information along with detailed explanations for a change of 25% or more (as compared to previous financial year) are provided in detail in Note 57 to standalone financial statements.

Risk Management

Risk	Risk Description	Risk Mitigation
Raw material risk	Risk arising from non-availability/delayed availability of key raw materials like cotton disrupting operations	The company maintains robust relationships with vendors to ensure timely availability of raw materials
Customer and regional concentration risk	Risk arising from customer concentration and regional concentration- risk of loss of revenue in event of loss of a key customer, slowdown in the key region	The company is focusing on penetrating new markets and nurturing relationship in existing markets such as EU/UK and ROW to improve region wise revenue mix
Cyber security risk	Risk arising from inadequate cyber security controls leading to loss of data	The company has conducted Cyber Security assessment and is working to continously strengthen its cyber security controls
Foreign exchange risk	Risk arising from inability to manage forex rate fluctuations	The company undertakes hedging of foreign currency to manage foreign exchange risk

Human resource

As at March 31, 2024, the total employee count of the Company stands at 2297 while the total worker count stands at 13350. The Company undertakes various measures to improve the productivity of its employees. Additionally, the Company also focuses on building transparent, safe and inclusive workplaces that will motivate its employees to enhance their productivity. Moreover, the existing HR policies of the Company also help in recruiting and retaining the right employees in the organisation. Additionally, the upcoming leaders of the Company are provided with training and development opportunities. Various initiatives undertaken by the Company in HR space include:

• Right people in the right positions, to ensure maximum Organisation Structure efficiency

• Making employees Partners in Prosperity, through Variable Pay

• Role Rotation

• New Joinee Assimilation

• Incentivising Innovation

Internal Control systems and adequacy

Internal control systems for financial reporting have been put in place by the Company and they are appropriate for its size and sector. These solutions are made to protect company assets while increasing productivity and efficiency at every level of the organisation. The Company has set up strict protocols to guarantee operational support and financial reporting accuracy. Business operations are regularly observed by an internal team and audit committee, which swiftly notifies the Management Board of any anomalies. To guarantee steady and sustainable growth, the Company creates strategies to recognise, evaluate and reduce risks based on these findings. These internal control mechanisms are essential for upholding regulatory compliance, combating fraud and preserving transparency. Ultimately, the Company attracts investment, builds stakeholder confidence and achieves long-term success in the market by offering strong financial reporting and operational support.

Cautionary statement

Certain statements that are forward-looking within the meaning of applicable laws and regulations may be included in the Management Discussion and Analysis Report along with your Companys goals, estimates, projections and expectations. There is a chance that the statements made or implied elsewhere will not exactly match those in this Management Discussion and Analysis Report. Aside from other incidental factors, significant factors that could affect the Companys operations include changes in governmental regulations, tax laws, the forex market, availability and pricing of raw materials, cyclical demand and pricing in the Companys primary markets and economic developments in India and the nations in which the Company conducts business. Subject to relevant laws and regulations, the Companys Management Discussion and Analysis Report may include forward-looking statements about its goals, estimates, projections and expectations. The Companys operations may be adversely impacted by certain factors and the actual results may differ from these statements.