Veekayem Fashion & Apparels Ltd Management Discussions

Readymade garments

The readymade garments (RMG) industry, which involves the mass production of clothing items that are ready for sale and immediate wear, is structured through several distinct segments. Heres a breakdown of its key components. readymade garments industry is evolving rapidly, driven by technological, economic, and social changes. Here are some notable developments:

Raw Material Supply :

Textile Production : Producers of various fabrics such as cotton, polyester, wool, and blends supply the foundational materials for garment manufacturing.

Trims and Accessories : Suppliers provide buttons, zippers, labels, and other components required for garment assembly.

Manufacturing:

Fabric Mills : Transform raw fibers into textiles that can be used to make garments.

Garment Factories: These facilities cut, sew, and assemble fabrics into finished clothing items. They vary in size from large-scale factories with high production volumes to smaller workshops specializing in niche markets.

Cut, Make, and Trim (CMT) Factories : Offer services such as cutting fabric, making garments, and trimming (adding finishing details). Often work on a contract basis for various brands.

Design and Branding:

Fashion Designers : Develop designs and create collections based on current trends, seasonal changes, and brand identity.

Brands and Labels : These entities market and sell garments under their own brand names. They may oversee the entire production process or outsource manufacturing to third parties.

Retail and Distribution:

Retail Channels : Include brick-and-mortar stores (e.g., department stores, specialty shops) and online platforms (e-commerce sites, brand websites).

Wholesalers and Distributors : Facilitate the movement of goods from manufacturers to retailers and manage inventory.

End Consumers:

Individual Shoppers: The final recipients of readymade garments, whose preferences and buying behavior drive demand.

Technological Advancements:

Automation and Robotics : Increased use of automation in garment manufacturing enhances production efficiency, reduces labor costs, and improves precision.

3D Printing: Emerging technologies in 3D printing are enabling rapid prototyping and customized production of garments.

Digital Design and Prototyping : Designers are leveraging digital tools and software for more accurate and innovative garment design, reducing the time and cost associated with traditional prototyping.

Sustainability and Environmental Impact

Sustainable Materials : There is a growing emphasis on the use of eco-friendly and recycled materials to reduce the environmental impact of garment production.

Circular Economy : The industry is adopting practices such as recycling, upcycling, and designing for longevity to minimize waste and promote sustainability.

Ethical Manufacturing : Increased consumer and regulatory pressure is driving brands to adopt fair labor practices and improve working conditions in manufacturing facilities.

Changing Consumer Behavior

E-Commerce Growth : The rise of online shopping has significantly altered retail dynamics, with many brands investing heavily in their digital presence and direct-to-consumer models.

Personalization : Consumers are increasingly seeking personalized and customized clothing options, which has led to the development of made-to-order and bespoke garments.

Fast Fashion vs. Slow Fashion : The fast fashion model, characterized by rapid production and low-cost items, is being challenged by a growing movement towards slow fashion, which emphasizes quality, durability, and ethical production.

Supply Chain Dynamics

Globalization : Manufacturing is often located in low-cost countries, but rising wages and geopolitical uncertainties are leading companies to explore new production regions.

Supply Chain Resilience : Recent disruptions, such as the COVID-19 pandemic, have highlighted the vulnerabilities in global supply chains, prompting brands to seek more robust and localized solutions.

Digital Transformation :

Data Analytics : Brands are increasingly using data analytics to understand consumer preferences, optimize inventory, and enhance marketing strategies.

Virtual Try-Ons and Augmented Reality: Technologies like AR are enhancing the online shopping experience by allowing customers to visualize how garments will look on them before making a purchase.

Retail Innovations:

Omni-Channel Retailing : The integration of online and offline shopping experiences is becoming essential for meeting consumer expectations for convenience and flexibility.

Experiential Retail : Physical stores are evolving to offer unique and engaging experiences, such as interactive displays and personalized shopping assistance, to attract and retain customers.

. Regulatory and Compliance Issues:

Trade Policies : Changes in trade policies and tariffs can impact manufacturing and distribution strategies, affecting costs and market access.

Safety and Compliance : Compliance with safety standards and regulations is crucial, especially for ensuring the quality and safety of garments for consumers.

In summary, the readymade garments industry is characterized by a complex structure involving raw material suppliers, manufacturers, designers, retailers, and end consumers. It is currently undergoing significant transformations driven by technological advancements, sustainability concerns, shifting consumer preferences, and evolving global dynamics. Understanding these elements is crucial for navigating the challenges and opportunities in this vibrant and competitive sector.

Yarn

Industry Overview

The yarn industry is a pivotal segment of the textile and apparel sector, focusing on the production of yarns from various fibers, including natural (cotton, wool, silk) and synthetic (polyester, nylon) materials. Yarn serves as a fundamental input for producing fabrics used in clothing, home textiles, and industrial applications.

Market Structure

The yarn industry is characterized by a diverse and fragmented market structure:

Global and Regional Players : The industry features a mix of large multinational corporations and small to medium-sized enterprises. Major global players often have extensive production facilities and distribution networks, while regional players may focus on local markets or niche segments.

Vertical Integration : Many companies in the yarn industry engage in vertical integration, controlling multiple stages of the supply chain from fiber production to yarn spinning. This integration helps in reducing costs and ensuring consistent quality.

Concentration and Competition: The industry varies in terms of market concentration. In some regions, a few large firms dominate the market, while in others, there is a high level of competition among numerous smaller firms. The competitive landscape can influence pricing, innovation, and market dynamics.

Technological Developments

Advancements in Spinning Technology : Recent developments include the adoption of advanced spinning technologies, such as air-jet spinning and ring spinning innovations, which enhance the efficiency and quality of yarn production.

Automation and Industry 4.0 : The integration of automation, robotics, and Industry 4.0 technologies (e.g., IoT, AI) has significantly improved production processes, allowing for real- time monitoring, predictive maintenance, and optimized resource management.

Sustainable Practices : The industry is increasingly focused on sustainability, with innovations aimed at reducing environmental impact. This includes the development of eco-friendly fibers, water-efficient dyeing processes, and recycling technologies.

Market Trends

Sustainability and Eco-Friendly Products: There is a growing demand for sustainable and eco-friendly yarns, driven by consumer awareness and regulatory pressures. Companies are investing in recycled fibers, organic materials, and sustainable production practices.

Customization and Specialization: The market is seeing a shift towards customization and specialized yarns tailored to specific applications, such as performance textiles or high-fashion fabrics. This trend is driven by evolving consumer preferences and technological advancements.

Global Supply Chain Dynamics : The yarn industry is influenced by global supply chain trends, including fluctuations in raw material prices, trade policies, and geopolitical factors. Companies are increasingly looking to diversify their supply chains to mitigate risks and ensure stability.

Challenges and Opportunities

Raw Material Costs: Volatility in the prices of raw materials, such as cotton and petrochemicals, can impact production costs and profit margins. Companies must navigate these fluctuations through strategic sourcing and cost management.

Regulatory Compliance: Compliance with environmental regulations and standards is becoming more stringent, requiring investments in cleaner technologies and processes. While this poses a challenge, it also presents an opportunity for companies to differentiate themselves through sustainability.

Innovation and R&D : Continuous investment in research and development is crucial for staying competitive. Innovations in yarn properties, such as enhanced durability, elasticity, and functionality, can open new market opportunities and meet evolving consumer demands.

Future Outlook

The yarn industry is expected to continue evolving with advancements in technology, increased focus on sustainability, and shifts in consumer preferences. Companies that embrace innovation, adapt to market trends, and effectively manage supply chain challenges will be well-positioned for future growth and success. The industrys adaptability and responsiveness to these developments will play a significant role in shaping its trajectory in the coming years.

Grey Cloth

Industry Structure : The grey cloth industry, a vital part of the textile sector, involves the production of fabric that has not yet undergone dyeing, printing, or finishing processes. This sector plays a crucial role as an intermediary in the textile supply chain, providing the base material for further processing into finished textiles. The structure of the grey cloth industry can be outlined as follows:

Market Segmentation : Grey cloth is segmented based on fiber types (e.g., cotton, polyester, wool, blended fabrics), fabric construction (e.g., woven, knitted, non-woven), and end-use applications (e.g., apparel, home textiles, industrial applications). Each segment has specific production techniques and market dynamics.

Production and Processing : The grey cloth production process typically involves weaving or knitting raw fibers into fabric. This stage precedes additional treatments such as dyeing,

printing, and finishing. Key players include textile mills and weaving units that produce grey cloth in large quantities.

Supply Chain : The grey cloth supply chain includes several stages: fiber production, yarn spinning, fabric weaving or knitting, and distribution to dyeing and finishing units. Manufacturers often operate vertically integrated facilities to streamline production processes and improve efficiency.

Geographic Distribution : Grey cloth production is widespread, with significant manufacturing centers in countries like China, India, Bangladesh, and Turkey. Each regions industry structure is influenced by factors such as labor costs, technological capabilities, and proximity to raw materials.

Technological Developments

Advanced Weaving and Knitting Technologies : Innovations in weaving and knitting technologies have led to more efficient production processes and improved fabric quality. Developments such as high-speed looms and computerized knitting machines enhance precision and reduce production time.

Automation and Digitalization : The grey cloth industry is increasingly adopting automation and digital technologies. The use of automated looms, robotic handling systems, and digital quality control measures contributes to higher production efficiency and consistency.

Sustainability Innovations : Technological advancements are also focused on sustainability. Innovations include the development of eco-friendly fibers and processes, such as water- efficient dyeing techniques and the use of recycled materials. These technologies aim to reduce the environmental impact of grey cloth production.

Market Trends

Sustainability and Eco-Friendly Practices : There is a growing emphasis on sustainability within the grey cloth industry. Consumers and businesses are demanding fabrics produced with minimal environmental impact. This trend is driving the adoption of sustainable materials and practices, including organic cotton, recycled fibers, and low-impact finishing processes.

Customization and Performance Fabrics : The demand for customized and high-performance fabrics is rising. Grey cloth manufacturers are responding by producing fabrics with specific properties, such as moisture-wicking, flame resistance, or antimicrobial features. This trend caters to niche markets and specialized applications.

Global Trade Dynamics : The grey cloth industry is influenced by global trade policies, tariffs, and geopolitical factors. Trade agreements and shifts in international relations can affect the cost and availability of raw materials, as well as the flow of finished goods.

. Challenges and Opportunities

Raw Material Costs: Fluctuations in the prices of raw materials, such as cotton and synthetic fibers, impact production costs for grey cloth manufacturers. Companies must navigate these fluctuations through effective sourcing strategies and cost management.

Regulatory Compliance: Increasing regulations related to environmental standards and worker safety require manufacturers to invest in compliance measures. This includes adopting cleaner technologies and ensuring fair labor practices, which can be both a challenge and an opportunity for differentiation.

Market Competition: The grey cloth industry is highly competitive, with numerous players operating in both local and global markets. Companies must differentiate themselves through quality, price, and innovation to maintain a competitive edge.

Future Outlook The grey cloth industry is expected to continue evolving with advancements in technology, increasing sustainability demands, and changing market conditions. Key factors influencing the industrys future include:

Technological Advancements: Continued innovation in weaving, knitting, and finishing technologies will drive improvements in fabric quality and production efficiency.

Sustainability Focus: The shift towards sustainable practices will likely intensify, with more emphasis on eco-friendly materials and processes.

Market Adaptability: The ability to adapt to changing consumer preferences and global trade dynamics will be crucial for success. Manufacturers that embrace technological advancements and sustainability will be better positioned to thrive in the evolving market landscape .

Overall, the grey cloth industrys adaptability and responsiveness to these trends and challenges will shape its future trajectory and growth prospects.

Finish Cloth

Industry Structure : The finish cloth industry, a critical segment of the textile sector, involves the processing and treatment of grey cloth to produce finished textiles ready for consumer use. This stage includes various finishing processes such as dyeing, printing, and applying special treatments to enhance the fabrics appearance and functionality. The structure of the finish cloth industry is characterized by several key elements:

Market Segmentation : The finish cloth industry is segmented based on the type of finishing treatments applied (e.g., dyeing, printing, coating, embossing) and the end-use of the finished fabrics (e.g., apparel, home textiles, industrial applications). Each segment requires different technologies and processes.

Processing Stages : The finishing process typically involves several stages, including pre- treatment (e.g., scouring, bleaching), dyeing, printing, and post-treatment (e.g., coating, water- proofing). These stages transform grey cloth into high-value, market-ready textiles.

Geographic Distribution : Finishing operations are widespread, with significant centers in countries such as China, India, Bangladesh, Turkey, and Italy. Regional differences in finishing technologies and practices reflect local market demands and regulatory environments.

Supply Chain Integration : Many finishing companies operate as part of vertically integrated textile mills or as standalone finishing units. Integration with upstream grey cloth production and downstream garment manufacturing helps streamline operations and improve supply chain efficiency.

Technological Developments

Advanced Finishing Technologies : Recent advancements include innovations in dyeing and printing technologies. Digital printing, for example, allows for greater design flexibility and reduces water and chemical usage compared to traditional methods. Advances in dyeing technology, such as low-water and low-energy processes, are also becoming more prevalent.

Automation and Smart Technologies: Automation is transforming the finishing industry, with robotic systems and automated machinery enhancing production efficiency and precision. Smart technologies, such as IoT and data analytics, enable real-time monitoring and optimization of finishing processes.

Sustainability Innovations : The industry is increasingly focused on sustainability, with developments in eco-friendly finishing processes and materials. Innovations include waterless dyeing technologies, the use of natural or biodegradable dyes, and advanced waste management systems to minimize environmental impact.

Market Trends

Sustainability and Eco-Friendly Practices : There is a strong and growing emphasis on sustainability in the finish cloth industry. Consumers and regulators are pushing for greener practices, leading to the adoption of eco-friendly dyes, reduced chemical use, and energy- efficient technologies. Companies are also exploring circular economy practices, such as recycling and reusing textiles.

Customization and Design Trends : The demand for customized and high-fashion textiles is increasing. Advances in digital printing and other finishing technologies allow for greater design flexibility, enabling the production of unique and intricate patterns and textures.

Technological Integration : The integration of advanced technologies such as AI, machine learning, and blockchain is enhancing the transparency and efficiency of the finishing process. These technologies help in quality control, inventory management, and supply chain traceability.

Challenges and Opportunities

Regulatory Compliance : Stricter environmental regulations and standards are a significant challenge for the finishing industry. Compliance with regulations regarding chemical use, waste management, and energy consumption requires investment in cleaner technologies and processes.

Cost Management: Managing costs in the face of fluctuating raw material prices and increasing regulatory compliance costs is a challenge. Companies must find ways to optimize production processes and reduce waste to maintain profitability.

Innovation and Competitive Edge: Continuous innovation is crucial for staying competitive. Companies that invest in new technologies, such as sustainable finishing processes and advanced automation, can differentiate themselves and capture market share.

Future Outlook : The finish cloth industry is poised for significant transformation, driven by advancements in technology, increased sustainability demands, and evolving market trends. Key factors shaping the future include:

Technological Advancements : Continued innovation in finishing technologies will enhance fabric quality, reduce environmental impact, and offer new design possibilities. Companies that adopt cutting-edge technologies will be better positioned for growth.

Sustainability Focus: The push towards sustainability will likely intensify, with greater emphasis on eco-friendly processes and materials. Companies that successfully integrate sustainable practices will gain a competitive advantage and meet evolving consumer expectations.

Market Adaptability : The ability to adapt to changing consumer preferences, regulatory requirements, and technological advancements will be crucial for success. Companies that remain agile and responsive to these changes will thrive in the dynamic finish cloth market

.

Overall, the finish cloth industrys ability to innovate, embrace sustainability, and adapt to market and technological shifts will be key to its future success and growth.

OPPORTUNITIES

Changing consumer preferences and growing Industrial base with ever changing consumer needs and demands, today consumers are looking for a complete package with good quality product and design. With rising income and urbanization, increases consumers purchasing power.

THREATS

Competition from local and multinational players

Execution risk

Regulatory changes

Input Cost risk

Attraction and retention of human capital

Technological Advancements

E-commerce as the Company has no recent plans on that.

SEGMENT?€“WISE OR PRODUCT-WISE PERFORMANCE.

The Company is operating in three broad segments i.e., Mens wear and Kids Wear and accessories. The Company is into manufacturing of shirts, denims, trousers, business and party wear suits, t- shirts, woollen jackets, pullovers, shorts, and accessories for men sometime.

Name and Description of main products / services	% to total turnover of the Company
Cloth Sales	66.53

Garment Sales	32.61
Others	0.86

OUTLOOK

The Companys current focus is to provide input services to various established brands in fashion and apparels industry and simultaneously developing their own brands. This strategy will keep the Company funded all the time from input service revenue.

RISKS AND CONCERNS

Like every business, the company faces risks, both internal and external, in the undertaking of its day-to-day operations and in pursuit of its longer-term objectives.

A detailed policy drawn up and dedicated risk workshops are conducted for each business vertical and key support functions wherein risks are identified, assessed, analyzed and accepted / mitigated to an acceptable level within the risk appetite of the organization.

The Company faces the following Risks and Concerns:

Credit Risk

Interest Rate Risk

Competition Risk

Input Cost Risk

Liability Risk

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorized, recorded and reported correctly. The Company also implemented effective systems for achieving highest level of efficiency in operations, to achieve optimum and effective utilization of resources, monitoring thereof and the compliance with provisions all laws including the Companies Act, 2013, Listing Agreement, directions issued by the Securities and Exchange Board of India, labour laws, tax laws etc. It also aimed at improvement in financial management, and investment policy. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, information security, project appraisal, and corporate governance. A qualified and independent Audit Committee of the Board of Directors also

reviews the internal control system and its impacts on improvement of overall performance of the Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial and operational performance is at par with other entities in the segment. The Company is recording significant growth apart from disruption caused by Covid19.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity:

to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. As on March 31, 2025, Company is giving employment to 780 permanent employees. Industrial relations are cordial and satisfactory. Employees are critical to our business. The Company internally assess its employees to periodically identify competency gaps and use development inputs (such as skill up gradation training) to address these gaps. The Company has implemented staff training policies and assessment procedures and intend to continue placing emphasis on attracting and retaining motivated employees. The Company also plans to continue investing in training programmes and other resources that enhance employees skills and productivity which will continue to help our employees develop understanding of the customer-oriented corporate culture and service quality standards to enable them to continue to meet the customers changing needs and preferences.

INFORMATION TECHNOLOGY

Our deep understanding of local needs and our ability to adapt quickly to changing consumer preferences has helped our performance driven growth. We are planning to established robust ERP system and robust IT systems have significantly aided this growth by simplifying complex processes throughout our operations. Our IT systems are equipped with an array of data management tools specific to our business needs and support key aspects of our business. IT has enabled our cash management systems, in-store systems, logistics systems, human resources, project management, maintenance and other administrative functions. This implementation has contributed positively towards minimizing product shortage, pilferage, out of stock situations etc. and has increased overall operational efficiency.

DETAILS OF SIGNIFICANT CHANGES

There are significant changes in full financial statements in all respect which is clearly visible in the financial statements as the Company is recovering rapidly after damaged cause by covid 19

outbreak.

KEY FINANCIAL RATIOS

Sr. No.	Particular	Year ended March 31, 2025	Year ended March 31, 2024	% Change
1	Current ratio	1.26	1.28	-2
2	Net debt equity ratio	19.02	16.25	17
3	Debt service coverage ratio	1.83	1.58	15
4	Return on Equity	1.30	0.69	90
5	Inventory turnover ratio	3.57	2.97	20
6	Debtors turnover ratio	3.45	3.96	-13
7	Trade Payables Turnover ratio	8.62	14.98	-42
8	Net Capital Turnover Ratio	9.03	8.57	5
9	Net profit ratio	2.38	1.65	44
10	Return on Capital Employed	17.90	14.50	23
11	Return on investment (%)	20.42	86.71	-76

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

The Companys financial and operational performance is at par with other entities in the segment. The Company is recording significant growth apart from disruption caused by Covid19 since more than last 5 years.

CAUTIONARY STATEMENT

Management Discussion and Analysis detailing the Companys objectives, outlook and expectations have "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied depending upon global and Indian demand supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.

Annexure II

To,

The Members

Veekayem Fashion and Apparels Limited

Our report of even date is to be read along with this letter.

Maintenance of secretarial records is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

We have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.

For H. Maheshwari & Associates Practicing Company Secretary

Sd/-

Hemant Maheshwari

Proprietor MEM. NO. : 26145 CP NO.: 10245

Date: September 06, 2025 Place: Mumbai