Valson Industries Ltd Management Discussions

Industry Structure and Development:

Economy Overview:

Indias economy is projected to grow at 6.6% in the Financial Year 2026-27, as against the GDP growth for the Financial Year 202526, which is likely to be at 7.5%. Stating that India continues to demonstrate resilience despite global uncertainties and regional conflicts, the report says that credit growth is likely to remain robust for the first half of 2026-27. It added that domestic consumption is also expected to hold GDP growth upwards.

While stating that the near-term food supply prospects have been boosted by robust rabi crops, the report warns that volatility in crude oil and other commodity prices, along with possible El Nino conditions, may impart considerable volatility to inflation.

Indias textiles sector is one of the oldest and most diverse industries in the country, with roots stretching back centuries. It spans from traditional hand-spun and handwoven clusters to sophisticated capital-intensive mills, supported by a robust base of fibres and yarns ranging from cotton, jute, silk, and wool to polyester, viscose, and acrylic. The decentralised power loom, hosiery, and knitting segment remains the largest component, reflecting the industrys ability to cater to multiple consumer markets. Its close linkage with agriculture, reliance on natural resources like cotton, and strong cultural heritage give the Indian textiles industry a unique identity compared to other manufacturing sectors.

Technical textiles are revolutionizing the textile industry in India by offering innovative solutions across various sectors. These specialized fabrics are designed for specific performance attributes and applications, ranging from automotive and aerospace to healthcare and construction. With a growing emphasis on technology and research, India is positioning itself as a global leader in this field, leveraging its strong textile heritage and advanced manufacturing capabilities.

The Indian composites market is expected to reach an estimated value of US$ 1.9 billion by 2026 with a CAGR of 16.3% from 2021 to 2026 and the Indian consumption of composite materials will touch 7,68,200 tonnes in 2027.

Notably, the Indian textile sector possesses significant intrinsic strengths- the country is the worlds largest cultivator of cotton by acreage, the largest producer of jute, the second-largest producer of silk and cotton, second major global hub in the manmade fibres (MMF) segment and the second-largest producer of polyester and viscose fibres.

The textile sector is the second-largest employment generator in India, after agriculture. As per the Economic Survey 202627, textiles industry has a 9% share in employment across 8 major industry groups. The 2025 estimates show that the sector provides direct employment to 45 million+ people, including women and rural communities.

Growth Drivers of Indias Textile Sector

Over the years, India has developed the capacity to cater to a broad spectrum of demand- from affordable mass-market apparel to niche, high-value segments- across both domestic and international markets. To sustain this competitiveness and further attract investment, the Government has been actively supporting the sector through a range of targeted initiatives-

PM MITRA Schemes significant progress in 2025

• The Government approved setting up of 7 PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/ Brownfield sites with an outlay of 4,445 crore for a period of 7 years up to 2027-28.

• Investment MoUs with expected investment potential of 27,434 crore+ have been signed.

• Infrastructure works worth 2,590.99 crore have been started by all 7 State Governments.

• The scheme is expected to generate employment of 3 lakhs (1 lakh direct and 2 lakh in-direct) with an estimated investment of 10,000 crore per park.

PLI Scheme for Textiles

• The Production Linked Scheme (PLI) for Textiles, operational up to FY 2029-30 aims to promote production of MMF Apparel & Fabrics and products of Technical Textiles.

• It aims to help the industry achieve size and scale, become competitive, create employment opportunities and support creation of a viable enterprise and competitive industry.

Cotton Sector Reforms

• The cotton sector supports ~6 million farmers and 40-50 million people across value chains.

• To enhance transparency, the Kapas Kisan mobile app was launched, enabling farmer self-registration and slot booking.

• The ‘Kasturi Cotton Bharat Programme was launched, to enhance the global market acceptance of Indian cotton.

• Additionally, the Quality Control Order (QCO) 2023 for cotton bales has been deferred till August 2026.

Initiative to Promote Sustainability and Circularity

• A tripartite MoU was signed between Textiles Committee, GeM and Standing Conference of Public Enterprises (SCOPE), Circle Back campaign, National Handloom Development Programme, National Textile Sustainability Council to promote and mainstream the public procurement of upcycled products.

Labour Reforms

• The implementation of the new Labour Codes carries significant implications for the textile industry.

• By establishing a unified framework covering wages, employment conditions, workplace safety, social security and dispute resolution, the Codes streamline compliance while reinforcing worker welfare.

Goods & Service Tax 2.0 (GST)

• 2025 s Next-Gen GST rationalisation in textiles resulted in lower prices for consumers, relief for manufacturers and boosted exports and employment.

The sustained export momentum, broadening market footprint, and robust performance of value-added segments reaffirm Indias position as a reliable and resilient global sourcing hub for T&A. With continued emphasis on diversification, competitiveness, and MSME participation, the sector is well-placed to scale up exports and deepen its integration with global value chains in the period ahead.

Outlook:

India is one of the fastest growing economies of the world and is poised to continue on this path, with The recent policy push is towards scale and modernisation - integrated textile parks, support for MMF and technical textiles, investment incentives, and easing of raw-material constraints are all aimed at boosting competitiveness and value addition.

At the same time, the Ministry of Textiles has set an ambitious direction for exports, with current textile exports around 3 lakh crore and a Vision 2030 objective of expanding this to about 9 lakh crore through stronger domestic manufacturing and wider global outreach.

Trade developments add another layer to the outlook. A transformational trade deal for Indias T&A sector, the India-EU FTA offers zero duty access in textiles and clothing, covering all tariff lines and reduces tariffs by up to 12%. It lowers duties of up to 10.5% in Indian wooden, bamboo, and handcrafted furniture. The Commerce Minister Piyush Goyal recently said the India-EU FTA could significantly expand Indias textile and garment exports to the European market by improving duty conditions, particularly benefiting labour-intensive segments.

The Union Budget 2026-27 direction further emphasizes employment generation, inclusive growth, sustainability, and coordinated implementation led by the Ministry of Textiles in partnership with States, industry, MSMEs, artisans, and skilling institutions, reinforcing Indias position as a competitive, reliable, and forward-looking global textile and apparel hub.

Indias textile sector stands at a pivotal moment, supported by strong production fundamentals, rising exports and sustained policy backing.

Risks and concerns:

The Indian textile industry in 2026 faces major headwinds, including an 11% import duty inflating raw material costs, the suspension of preferential EU tariffs, and strict environmental compliance mandates. These factors, combined with intense competition from Bangladesh and Vietnam, are squeezing profit margins for domestic manufacturers.

There are some areas of concerns, which need to be stated here. Along-with recovery, the textile industry is also facing increase in input prices in sync with the global trends and appreciating rupee. The issues textile industry of India is facing like:

Key risks and concerns include:

1. Raw Material Costs and Import Dependencies

• High Cotton Prices: Despite initiatives like the five-year Cotton Mission, the 11% import duty on cotton continues to keep domestic prices higher than global benchmarks, hindering competitiveness.

• Reliance on Imported Synthetics: The industry remains highly vulnerable to global supply chain disruptions and freight cost fluctuations due to a structural reliance on imported chemical intermediates and man-made fibres.

2. Export and Geopolitical Challenges

• Loss of Tariff Advantages: Indias share in the $250 billion EU apparel market sits at just 3%. The European Unions suspension of preferential tariffs on Indian apparel·coupled with intense price undercutting by rivals like China, Bangladesh, and Vietnam·has significantly impacted export margins.

• Strict Compliance: Exporters are grappling with rigid EU environmental and technical compliance norms (e.g., chemical limits, detailed labelling), which are costly to implement without government support.

3. SME Vulnerability and Liquidity Crunches

• Working Capital Pressure: With weak demand in key global markets, sluggish export activity, and delayed payments, Micro, Small, and Medium Enterprises (MSMEs) are facing severe liquidity crises and pressure on working capital.

• Credit Accessibility: It remains difficult for small, localized textile units and household enterprises to secure the financial backing needed to upgrade outdated machinery or adopt sustainable manufacturing practices.

4. Sustainability and Environmental Compliance

• Stringent Regulations: There is mounting pressure to clean up the textile value chain, with the National Green Tribunal and international regulators heavily scrutinizing wastewater discharge, air pollution, and workplace safety.

• Transition Costs: Upgrading effluent treatment plants and shifting toward circular/ recycled fashion require massive capital investments that smaller players struggle to afford.

5. Slow Modernization and Infrastructure

• Execution Delays: Ambitious government infrastructure projects·such as building mega textile parks and modernized production clusters·continue to face execution risks due to land acquisition and approval delays.

• Low Labor Productivity: Despite a massive workforce, the sector suffers from comparatively low output per laborer due to fragmented operations and slow technology adoption across legacy manufacturing units

Companys Business:

The company has established its brand name “VALSON” in polyester texturised yarn since 1983. Today we are one of the leading manufacturers of Polyester Texturised & Twisted Yarn and Processors of Cotton, Polyester and other Fancy yarns in India with Customers having diverse uses its end-users comprise players from the shirting, suitings, label, upholstery, hosiery, furnishings, automative and ready-made garments industries etc. Quality Products and Services has been our top most priority and after continuous research, we have ventured into the dyeing of various qualities of yarns. We have more than 65000 shades in our data bank.

The Company is into manufacturing and exporter of Polyester Dyed Yarn and processors of Cotton and other fancy yarn. It has activities like Texturising, Twisting, Coning and Dyeing Plants to produce Quality Polyester Texturised Twisted Yarn and other fancy yarn. The Manufacturing process is as under:

The basic raw material used for texturising is Partially Oriented Yarn popularly known as POY It is fragile, weak, delicate and easily breakable. POY does not have any purposeful use as it lacks the stability, strength, and therefore it cannot be directly used for weaving or knitting.

The term texturising means the production of a permanent crimp in the initially straight fiber or filament yarn. It increases the bulk and improves the elasticity of yarn. This activity fully draws POY yarn to comply with the market requirement and therefore it is different commercial commodity. The POY after the texturising process is known as “Weft Yarn”. The twisted crimp yarn is hard, strong and not easily breakable. It gives the yarn a feel of natural like cotton or wool.

The “Weft Yarn” is further twisted for the purpose of imparting the required strength, which is necessary to withstand the high-speed run-on looms for the purpose of weaving. The twisted yarn is known in commercial parlance as “Warp Yarn”.

The Texturised and twisted yarn is properly washed and thereafter is dyed under quality parameters to get Colour Strength, Tone, Dispersion and Sublimation fastness.

The Dyed Yarn is wound around standard size cones before they are packed for dispatch.

The Company has established its brand as reputed manufacturer of quality, polyester dyed yarn and processors of cotton and other fancy yarn. It has been supplying its products through the network of agents in market. There are about 10 to 15 major agents spread over in Maharashtra, Delhi, Punjab, Northern and Southern India.

There scope of activity of agents will also include the following: -

1) To book the orders and to render various incidental services including the monitoring of the follow up of the same.

2) To obtain the general market information and acquaint the Company from time to time.

3) To receive the payment and statutory forms for and on behalf of the Company in respect of direct invoice raised on the customers for supply of material delivered as per their instruction at anywhere in India.

The Company is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East, U K, Egypt, Russia and other European markets.

We are getting incentives like duty drawback for export of our goods and have covered our products under RODTEP Scheme declared by Ministry of Commerce as an additional incentive to increase the export and capture global market.

Opportunities:

In 2026, the Indian textile industry is experiencing a structural upcycle. Key opportunities include capitalizing on global supply chain shifts away from China, leveraging government-backed PLI schemes, and meeting the demands of a domestic market projected to reach \(\$350\) billion by 2030

Indias textile sector continued to demonstrate resilience in global markets during FY 2025-26. Total textile exports, including handicrafts, increased from 3,09,859.3 crore in FY 2024-25 to 3,16,334.9 crore in FY 2025-26, registering a growth of 2.1%. This performance reflects steady global demand for Indian textile products and the continued competitiveness of the sector across major product categories.

The future of Indias textiles industry looks promising, supported by rising domestic demand, growing exports, and policy interventions that are strengthening competitiveness. The sector, which already contributes around 2% to GDP and employs over 45 million people, is expected to see its share in the economy nearly double by the end of the decade.

The global textile market size was valued at USD 1,065.45 billion in 2025. The market is projected to grow from USD 1,065.45 billion in 2026 to USD 1,955.50 billion by 2034, exhibiting a CAGR of 7.11% during the forecast period. Asia Pacific dominated the adventure tourism market with a market share of 44.17% in 2025.

Textile products mainly include flexible materials made from natural and synthetic fibers, yarns, and fabrics. The materials can be woven or knitted into different forms and are widely used in clothing, home furnishings, medical use, and other sectors. The increasing consumer shift from traditional synthetic fabric materials toward organic cotton, recycled polyester, and biodegradable fabrics is further driving the global textiles market.

The synthetic fibers segment is expected to hold the majority share of the market, accounting for 68.05% in 2026. Synthetic fibers such as polyester, nylon, and acrylic are more cost-effective to produce compared to natural fibers. Furthermore, these fibers offer superior strength, durability, and elasticity, making them highly suitable for various industrial applications, thus supporting the growth of the segment.

The natural fibers segment is expected to grow at the fastest CAGR of 8.65% during the forecast period.

Threats:

In 2026, the 15 lakh crore Indian textile industry is navigating a turbulent period. Key threats include punitive US tariffs, severe price undercutting by competitors like Bangladesh and Vietnam, domestic raw material shortages, and strict EU sustainability mandates.

The challenges facing the textile industry India are multi-layered and interconnected.

At the core of the issue is the West Asia conflict, which has significantly increased crude oil prices. Since textiles rely heavily on petroleum-based inputs such as synthetic fibres and logistics, this has led to a sharp rise in production costs.

At the same time, supply chain disruptions have made it difficult to source raw materials on time. Delays in shipments, higher freight costs, and logistical uncertainties are impacting both production schedules and delivery commitments.

Adding to this is weakening global demand. As economic uncertainty rises globally, buyers are cutting down on orders, particularly in export-driven segments.

Together, these factors have created a perfect storm for the Indian textile industry, especially for smaller players who operate on thin margins.

The issues textile industry of India is facing like:

• Rising Input Costs

• Raw Material Volatility & Supply Deficits

• Reduced profit margins

• Difficulty in pricing products competitively

• Increased risk of operational losses

• Punitive US Tariffs & Export Slump, (Payment delays and reduced international demand)

• Labour and Workforce Issues

• Production slowdowns

• Increased hiring and training costs

• Reduced operational efficiency

• Financial Stress and Liquidity Crunch

• Loss of Global Market Share

• Stringent EU Compliance & Green Regulations

Segment-wise performance:

The Companys business activity falls within a single business segment viz. Yarns and the sales substantially being in the domestic market, the financial statements are reflective of the information required by Accounting Standard 108 “Segment Reporting”, notified under the Companies (Indian Accounting Standards) Rules, 2015.

Human Resources:

Valson recognizes that nurturing and developing human resources by recruiting the best talent is vital to the long-term success of the company. Employees are provided with continues opportunities for active learning and development, which are viewed as the key drivers of our growth and thereby contributing to the success of the Company. The remuneration structure is linked directly with performance and reward.

The Company acknowledges that human resources are its biggest asset and hence who have been nurtured and strengthened over the years.

Insurance:

Valson Industries Limited has insured its assets and operations against all insurable risks including fire, earthquake, flood, and etc. as part of its overall risk management strategies.

Safety, Health and Environment:

At Valson, safety is considered a high priority and all efforts are made to ensure safe working environment for employees. All probable incidents are analyzed and corrective actions are taken. Employees are trained in safe practices to be followed at work places at all the times.

Environmental Preservation:

Quality of human life is the most important factor to sustain life and this could be achieved through preservation of natural environment. The Companys R & D Department continues to develop new shades in an environmentally sustainable manner. The Company always consumes eco-friendly dyes, colours and chemicals. The Company has also installed an Effluent Treatment plant for proper treatment of wastewater. Your companys strength lies in consistent quality consciousness and eco-friendly awareness.

Material developments in Human Resources / Industrial Relations including number of people employed:

The company has always considered human resources as the driving force for progress and success and they are the main assets of the company. Management is of the firm belief that the growth of the company is due to the continuous contribution from its manpower. The company has the required number of skilled and semi-skilled persons and it constantly tries to improve their quality and productivity and provides a congenial working environment for them. The company is committed for continual improvement in all aspects of social standard, business and employees welfare to grow as an ethical business. We believe that harmony amongst employees, employer and business leads to socio economic improvement. The industrial relations continued to be extremely cordial during the year.

Internal control systems and their adequacy:

The Company has adequate system of internal controls to ensure that all the assets are safeguarded and are productive, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Necessary checks and controls are in place to ensure that transactions are properly verified, adequately authorized, correctly recorded and properly reported. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter.

The Internal Audit department carried out audits in different areas of your Companys operations. Post audit reviews were carried out to ensure that audit recommendations were implemented and they monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented quarterly and yearly reports to the chairman of Audit Committee of the Board to maintain its objectivity and independence.

The Audit Committee reviewed the audit program and findings of the Internal Audit department and the Company when needed takes corrective actions.

Discussion on financial performance with respect to operational performance:

During the year 2025-2026, The companys topline was decrease 14.22%. The Company has successfully reduce the power cost and Finance cost.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Year Ended March	2026	2025
Operating Profit /(Loss)	3.61%	3.43%
Gross Profit / (Loss) Margin	1.00%	2.39%
Interest / Sales	2.61%	1.04%
Net Profit / (Loss) after Tax	0.43%	0.46%
Return of Net worth (RONW)	1.71%	2.19%
Return on Capital Employed	3.33%	4.15%
Debt / Equity Ratio	0.53	0.55
Current Ratio	1.60	1.51
Inventory Turnover Ratio	7.84	10.47
Interest Coverage	3.52	3.23
Debtors Period (in Days)	23.97	31.25

The highlights financial performances of your Company during the financial year 2025-2026:

1. There is a reduction of 12.1% in Texturising production (5137 MT) compared to last year (5844 MT).

2. There is an increase of 4.07% in Twisting production (2474 MT) compared to last year (2377 MT).

3. There is a reduction of 7.18% in Dyeing production (4378 MT) compared to last year (4716 MT).

4. There is an increase of 12.14% in Job work quantity (1694 MT) compared to last year (1512 MT).

5. There is a reduction of 14.12% in terms of Revenue from operations (Rs. 11,208.78 Lakhs) compared to last year (Rs. 13,038.04 Lakhs).

6. The company has managed its funds well resulting into reduction in finance cost to Rs. 111.97 Lakhs from (Rs. 135.37 Lakhs).

7. The staff cost has increased 6.04% to Rs. 1,374.64 lakhs compare to last year (Rs. 1,296.38 Lakhs).

8. The companys power cost has decreased 3.20% to Rs. 1293.38 Lakhs compared to (Rs. 1,336.18 Lakhs).

9. Depreciation has reduced to Rs. 253.79 Lakhs compare to last year (Rs. 260.39 Lakhs).

10. The Operating Profit/(Loss) (P/(L)BOIDT) before other income and Interest and Depreciation and Tax has reduced by 9.79% Rs. 361.14 Lakhs as compared to last year amount of (Rs. 400.90 Lakhs).

During the year 2025-2026 the company has procured the need base machinery and ancillaries of Rs. 113.49 Lakhs including Capital WIP out of internal accruals; the details are as under:

Rs. in Lakhs

Sr. No. Assets	Cost
1 Plant & Machinery (Indigenous) Errection, Installation charges	35.63
2 Electrical Installation	3.32
3 Utility Equipment	22.06
4 Factory Building	11.45
5 Office	4.05
6 Furniture	1.32
7 Computers	1.49
8 Capital Work in Progress - Plant & Machinery	34.17
Total CAPEX during the year	113.49

The Company shall direct all its efforts and resources towards a strong and healthy shareholders wealth creation.

	For and on behalf of the Board
	Suresh Mutreja
	Chairman & Managing Director
	DIN:00052046
	Kunal Mutreja
	Whole Time Director - CEO
	DIN:07022857
	Varun Mutreja
	Whole Time Director - CFO
	DIN: 07022832
	Ankit Mutreja
Place: Mumbai	Whole Time Director
Date: 30th May, 2026	DIN: 07022852