Valson Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Economy Overview:

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, several investments and developments have been made across various sectors of the economy. According to World Bank, India must continue to prioritise lowering inequality while also putting growth-oriented policies into place to boost the economy.

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/ yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic.

The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

According to Crisil Ratings, the organised retail apparel sector is projected to achieve revenue growth of 8-10% in FY25, driven by rising demand from a normal monsoon, easing inflation, and the festive and wedding seasons.

The increasing preference for affordable, trendy fashion clothing that mimics high-fashion designs is expected to be the primary revenue driver. In order to attract private equity and employee more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme.

During FY24, the total exports of textiles (including handicrafts) stood at US$ 35.9 billion. Exports of textiles (RMG of all textiles, cotton yarns/fabs/made-ups/handloom products, man-made yarns/fabs/made-ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 35.90 billion in FY24. In FY24, exports of readymade garments including accessories stood at US$ 14.23 billion. Indias textile and apparel exports to the US, its single largest market, stood at 32.7% of the total export value in FY24.

In FY25 (April- June) the total exports of textiles stood at US$ 9.17 billion

In FY25 (April-June), exports of readymade garments including accessories stood at US$ 2,244 million.

Indias textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country.

Investment and key Development :

• Total FDI inflows in the textiles sector stood at US$ 4.56 billion between April 2000 - September 2024.

• The textile sector has witnessed a spurt in investment during the last five years.

• The Textile Ministrys allocation increases by 19%, rising from Rs. 4,417.03 crore (US$ 512 million) in 2024-25 to Rs. 5,272 crore (US$ 611 million) in 2025-26, reflecting the governments commitment to addressing long-standing challenges and unlocking new growth opportunities.

• The Union Budget 2025-26 allocates Rs. 1,148 crore (US$ 133.1 million) for the PLI Scheme to boost domestic manufacturing and exports, and Rs. 635 crore (US$ 73.6 million) for the Amended Technology Upgradation Fund Scheme to modernize textile machinery.

Government Initiatives :

The Indian government has come up with several export promotion policies for the textile sector. It has also allowed 100% FDI in the sector under the automatic route.

Other initiatives taken by the Government of India are:

• Secretary of the Ministry of Textiles, Ms. Rachna Shah, announced that Indias technical textiles market has great potential, with a notable growth rate of 10% and ranking as the 5th largest in the world.

• A tripartite Memorandum of Understanding (MoU) was signed by the Textiles Committee under the Ministry of Textiles, the Government e Marketplace (GeM) under the Ministry of Commerce and Industry, and the Standing Conference of Public Enterprises (SCOPE) to promote upcycled products made from textile waste and scrap.

• Mr. Piyush Goyal also discussed the roadmap to achieve the target of US$ 250 billion in textiles production and US$ 100 billion in exports by 2030.

• In July 2023, 43 new implementing partners were empanelled under the SAMARTH scheme and an additional target of training around 75,000 beneficiaries has been allocated.

• 1,83,844 beneficiaries trained across 1,880 centres under Samarth.

• In June 2023, the Government approved R&D projects worth US$ 7.4 million (Rs. 61.09 crore) in the textile sector.

• In February 2023, the union government approved 1,000 acres for setting up a textile park in Lucknow.

• In February 2023, according to the Union Budget 2023-24, the total allocation for the textile sector was Rs. 4,389.24 crore (US$

536.4 million). Out of this, Rs. 900 crore (US$ 109.99 million) is for Amended Technology Upgradation Fund Scheme (ATUFS), Rs. 450 crore (US$ 54.99 million) for National Technical Textiles Mission, and Rs. 60 crore (US$ 7.33 million) for Integrated Processing Development Scheme.

• In December 2022, a total of 44 R&D projects were started, and 23 of them were successfully completed. 9777 people were trained in a variety of activities relating to the silk industry.

• The establishment of 7 (seven) PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks with a total investment of US$ 541.82 million (Rs. 4,445 crore) for the years up to 2027-28 was approved by the government.

• Under the National Technical Textile Mission (NTTM), 74 research projects for speciality fibre and technical textiles valued at US$ 28.27 million (Rs. 232 crore) were approved. 31 new HSN codes have been developed in this space.

• Minister of Textiles, Commerce and Industry, Consumer Affairs & Food and Public Distribution, Mr. Piyush Goyal, announced a mega handloom cluster in Manipur and a handloom and handicraft village at Moirang in Bishnupur. The mega cluster will be set up at an estimated cost of Rs. 30 crore (US$ 4.03 million) under the National Handloom Development Programme (NHDP).

Outlook:

India is one of the fastest growing economies of the world and is poised to continue on this path, with aspirations to reach high middle income status by 2047, the centenary of Indian independence. It is also committed to ensuring that its continued growth path is equipped to deal with the challenges of climate change, and in line with its goal of achieving net-zero emissions by 2070.

The Indian textile industry is projected to continue its growth trajectory in 2025, driven by increasing global demand and government initiatives to support domestic manufacturing and exports. While some sectors like man-made yarn and fabrics saw a slight decline in exports in March 2025, cotton yarn, fabrics, and handloom products showed positive growth. The overall outlook remains positive, with the industry aiming to reach a market value of $350 billion by 2025

The future of the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. India is working on various major initiatives to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on the rise. The government is supporting the sector through funding and machinery sponsoring.

Top players in the sector are achieving sustainability in their products by manufacturing textiles that use natural recyclable materials With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. The growth in textiles will be driven by growing household income, increasing population, and increasing demand by sectors like housing, hospitality, healthcare, etc.

The technical textiles market for automotive textiles is projected to increase to US$ 3.7 billion by 2027, from US$ 2.4 billion in 2020.

Risks and concerns:

In 2025, the Indian textile industry faces challenges like volatile raw material costs, labor shortages, and increasing global competition, alongside the need to adapt to stricter environmental regulations. These factors could hinder the industrys growth and potentially impact the job market.

As the global textile industry enters 2025, it continues to grapple with an array of challenges that threaten to reshape its landscape. From economic shifts and evolving consumer demands to technological advancements and mounting environmental concerns, the industry finds itself navigating a complex and uncertain future. As textile production and consumption evolve, businesses must adapt or risk falling behind in a competitive and rapidly changing environment

As the global textile industry looks toward 2025, it faces a range of challenges that threaten to disrupt its established business models. From supply chain issues and economic pressures to environmental concerns and shifting consumer preferences, the sector must navigate a rapidly evolving landscape. Companies that embrace technological innovation, sustainable practices, and ethical production are likely to emerge stronger, while those that resist change may struggle to keep pace.

The next few years will be pivotal for the textile industry. Adaptation and resilience will be key to overcoming the challenges ahead, and those who succeed in this period of transformation will not only survive but thrive in an increasingly complex and competitive global marketplace.

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:

• Fluctuation in the cost of raw materials

• Shortage of laborers due to a mass return

• Environmental Concern

• Infrastructure bottlenecks (Gap)

• Impact of GST

• Supply Chain Disruptions

• Technological Advancement

• Trade Policies and Economic Factors.

• India has disadvantage in terms of Geographic Locations. Because of this there is Global Logistic Disadvantage as shipping cost is higher.

• There is uneven supply chain model and inbound freight traffic is low which affects cost of shipping.

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 2025, the Indian textile industry is poised for significant growth, driven by increasing demand and government support. Key opportunities include expanding exports to emerging markets like Africa, Southeast Asia, and the Middle East, focusing on sustainable and eco-friendly textiles, and leveraging technology for innovation.

The Indian textile industry is one of the largest and most dynamic sectors in the world. With its rich cultural heritage and diverse production capabilities, India is poised to become a global textile leader by 2025. As we move into the future, several key trends and innovations are shaping the trajectory of the industry. This article explores the Indian textile industrys outlook for 2025, focusing on growth prospects, emerging trends, and the role of sustainability and technology.

Increasing Global Demand for Textiles India is positioned as a leading supplier of textiles globally. By 2025, the industry is expected to see significant growth in exports, driven by increasing demand in key markets such as the United States, Europe, and the Middle East. Indias textile exports are projected to reach $45 billion by 2025, up from the $38 billion mark in 2020. This growth is driven by Indias competitive manufacturing costs, skilled labor force, and the push to strengthen its export-friendly policies.

Sustainability and Eco-friendly Practices As the world moves toward sustainability, the Indian textile industry is embracing ecofriendly manufacturing practices. Sustainable textiles, organic fibers, and eco-friendly dyes are expected to become standard by 2025. The rise of sustainable brands and an increase in consumer awareness around eco-conscious products are prompting Indian manufacturers to adopt green technologies. Moreover, India is focusing on circular economy principles, recycling, and waste reduction in textile production.

Smart Textiles The future of textiles is moving toward functionality. Smart textiles, which can respond to external stimuli such as heat, light, or moisture, are expected to be a major trend by 2025. These textiles can be used in medical, sports, and fashion applications, such as garments that monitor health parameters or adapt to environmental conditions.

Technical Textiles Technical textiles, which include products used in industrial, medical, and aerospace applications, are rapidly growing in India. The government is promoting technical textiles as part of its focus on high-value-added products. By 2025, India aims to become a key player in the global technical textiles market, which is expected to grow substantially in the coming years. Digital and 3D Printing Digital printing and 3D textile printing are emerging as game-changers in the Indian textile industry. These technologies enable faster and more customized production, reducing waste and allowing for greater design flexibility. As fashion trends change quickly, digital and 3D printing will allow manufacturers to keep up with demand and produce limited-edition, high- quality textiles.

Threats:

In 2025, the Indian textile industry faces threats related to fluctuating raw material costs, global competition, labor shortages, and the need for sustainable practices. Specifically, the high cost of raw materials like cotton and synthetic fibers, coupled with supply chain disruptions, can impact profitability. Increased competition from countries like Bangladesh and Vietnam, with lower labor costs and favorable trade agreements, also poses a challenge. Furthermore, the need for skilled labor in advanced manufacturing processes and the rising pressure to comply with stricter environmental regulations globally are additional hurdles.

Indian textile exporters are facing stiff competition and they lack policy and labour law reforms. But the Company through its quality production upgradation of technology (automation) work hard to competes and do well with other players in this sector.

The issues textile industry of India is facing like:

• Low Export Competitiveness: India lags behind China, Vietnam, and Bangladesh due to higher production costs, fragmented supply chains, and a lack of vertical integration.

• Vietnam exported $40 billion worth of apparel in 2023, surpassing India.

• Supply Chain & Cost Issues: Indias fragmented cotton supply chain increases logistical costs, reducing competitiveness.

• High raw material costs in MMF:

• Polyester in India is 33-36% costlier than in China.

• Viscose fibre is 14-16% more expensive than in China.

• Complex Regulations & Trade Barriers: Cumbersome export procedures (e.g., excessive documentation on fabric, buttons, zippers).

• India lacks free trade agreements (FTAs) with major consumer markets, unlike competitors like Vietnam.

• Impact of Sustainability Norms: Global brands now demand sustainable sourcing, renewable energy use, and material recycling.

• The EUs strict environmental regulations (covering 20% of Indias textile exports) pose challenges for MSMEs adapting to green standards.

• Slow Post-Pandemic Recovery: The pandemic disrupted production and exports, with MSME textile hubs in Tamil Nadu, Maharashtra, and Gujarat suffering the most.

• Shortage in supply of raw materials with rising the cost of raw materials

• Heavy Noise Pollution and Rising Environmental Concerns

• Inadequate Attention Paid to Technology Upgradation and Regular R&D

• Fragmentation and Skill Shortage

• Market Volatility and uncertainty

• Despite export growth in cotton textiles, apparel exports fell from $15.5 billion in FY20 to $14.5 billion in FY24.

• Threat of Fast Fashion & Textile Waste: Fast fashion waste is rising globally, expected to reach 148 million tonnes by 2030.

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:

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 2024-2025, The company has performed very well the topline was marginally increase 4.66%. The company has started selling new products Nylon and Highbulk it has changed the product mix and try to optimize the Installed capacity. The Company has successfully reduce the staff cost and power cost

The hiqhliqhts financial performances of your Company during the financial year 2024-2025:

Year Ended March	2025	2024
Operating Profit /(Loss)	3.43%	3.50%
Gross Profit/(Loss) Margin	2.39%	2.42%
Interest/Sales	1.04%	1.08%
Net Profit/(Loss) after Tax	0.46%	0.79%
Return of Net worth (RONW)	2.19%	3.65%
Return on Capital Employed	4.15%	3.81%
Debt/Equity Ratio	0.55	0.67
Current Ratio	1.51	1.48
Inventory Turnover Ratio	10.27	10.49
Interest Coverage	3.23	2.85
Debtors Period (in Days)	31.25	23.36

1) There is a reduction of 2.58% in Dyeing production (4716 MT) compared to last year (4841 MT).

2) There is a reduction of 0.05% in Sales quantity (6611 MT) compared to last year (6614 MT).

3) There is an increase of 12.18% in Job work quantity (1512 MT) compared to last year (1349 MT).

4) There is an increase of 4.66% in terms of Revenue from operations (Rs. 13038.03 Lakhs) compared to last year (Rs. 12457.64 Lakhs).

5) During the year there is marginally increase in finance cost to Rs. 135.37 Lakhs from (Rs. 134.18 Lakhs).

6) The staff cost to has decreased 8.98% to Rs. 1296.38 lakhs compare to last year (Rs. 1424.22).

7) The companys power cost has decreased 3.23% to Rs. 1336.18 Lakhs compared to (Rs. 1380.72 Lakhs.

8) The Operating Profit/(Loss) (P/(L)BOIDT) before other income and Interest and Depreciation and Tax has increased marginally by 5.29% Rs. 401.15 Lakhs as compared to last year amount of (Rs. 380.99 Lakhs).

9) Earnings before Interest, Tax, Depreciation (EBITDA) has decreased marginally by 2.66% Rs. 447.00 Lakhs as compared to last year amount of profit (Rs. 435.41 Lakhs).

10) Earning Before Tax has increased 12.09% to Rs. 51.09 Lakhs as compared to last year (Rs. 45.73 Lakhs)

During the year 2024-2025 the company has procured the need base machinery and ancillaries of Rs. 121.79 Lakhs out of internal accruals; the details are as under:

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: 13th August, 2025	DIN: 07022852