VIP Clothing Ltd Management Discussions

CAUTIONARY STATEMENT:

The statements in the "Management Discussion and Analysis Report" describe the Companys objectives, projections, estimates and expectations which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

ECONOMIC OVERVIEW

Global textile industry:

The global textile industry, valued at around USD 1.4—1.5 trillion in FY 2024-25, remains a key pillar of global manufacturing and trade. It plays a vital role in the economic development of countries such as China, India, Bangladesh, Vietnam, and Turkey, contributing significantly to employment, exports, and GDP. The market is expected to grow at a CAGR of 4.5% to 5.5% over the next few years, driven by rising global population, increasing urbanization, and evolving consumer preferences in fashion, lifestyle, and technical applications.

Demand drivers include the rapid expansion of e-commerce, growing interest in athleisure and innerwear, and increasing applications of technical textiles across sectors like automotive, healthcare, and construction. Additionally, global consumers are increasingly shifting toward sustainable and functional products, prompting innovation in eco-friendly fabrics, digital printing, and circular production models.

However, the industry faces several economic and structural challenges. These include raw material cost volatility, rising labour and energy expenses, and supply chain disruptions caused by geopolitical tensions and regulatory shifts. Moreover, there is growing pressure on manufacturers to comply with environmental and social governance (ESG) standards, which has increased compliance and production costs—particularly for small and medium enterprises in developing nations.

Despite these challenges, the global textile sector is poised for continued resilience and transformation. Companies are investing in automation, digitalization, and sustainability to future-proof their operations. Emerging markets, especially in Asia and Africa, are expected to drive the next phase of growth, making the textile industry a crucial area of focus for global economic and industrial strategy.

Financial Year 2024 has seen dynamic shifts and surprising resilience in the global textile sector. Despite facing numerous challenges, the industry demonstrated an impressive ability to adapt and innovate. Here is a look at the key trends, challenges, and triumphs in the textile sector and outlook for 2025.

Factors that dominated year 2024

Several factors played a crucial role in shaping the global textile landscape in 2024:

Economic slowdown: The global economic slowdown significantly impacted consumer spending, leading to decreased demand for apparel and textiles. This was particularly evident in major markets like the US and Europe.

Inflation and rising costs: Inflationary pressures and increased raw material costs, especially cotton, squeezed profit margins for textile manufacturers.

Geopolitical tensions: Ongoing geopolitical tensions and trade disputes, particularly those involving China, disrupted supply chains and created uncertainty in the market.

Sustainability concerns: Growing consumer awareness of environmental and social issues pushed sustainability to the forefront of the textile industry.

Technological advancements: Automation, AI, and 3D printing continued to transform textile manufacturing processes, improving efficiency and enabling new possibilities.

Shifting consumer preferences: Consumers are increasingly seeking personalized, sustainable, and ethically produced clothing. This trend will compel brands and manufacturers to adapt their offerings.

Technological disruption: Further advancements in automation, AI, and data analytics will continue to reshape textile manufacturing, leading to increased efficiency and customization.

Circular economy: The concept of a circular economy, where resources are reused and waste is minimized, is gaining traction in the textile industry. This will drive innovation in recycling, upcycling, and sustainable material development.

Regionalization of supply chains: The pandemic and geopolitical tensions have exposed the vulnerabilities of global supply chains. Companies are increasingly seeking to diversify their sourcing and manufacturing operations, leading to a more regionalized approach.

Opportunities

Sustainable and ethical fashion: Brands and manufacturers that prioritize sustainability and ethical practices are well-positioned for growth.

Technical textiles: The demand for technical textiles, used in various industries like healthcare, automotive, and construction, is expected to surge.

E-commerce and digitalization: The rise of e-commerce and digital platforms presents new opportunities for textile businesses to reach consumers directly and expand their market reach.

The global textile sector in 2024 has been a testament of resilience and adaptability. Despite facing economic headwinds and geopolitical challenges, the industry has continued to innovate and evolve. Looking ahead, the sector is poised for further transformation, driven by shifting consumer preferences, technological advancements, and a growing focus on sustainability. By embracing these changes and seizing the opportunities that lie ahead, the textile industry can ensure its continued growth and success in the years to come.

Sources: https://aecegy.com/Page/news.asp

INDIAN ECONOMY OVERVIEW

The Indian textile and apparel industry is one of the largest contributors to the countrys economy, accounting for approximately 2.3% of GDP, 7% of industry output, and around 12% of total export earnings as of FY 2024-25. Valued at approximately USD 165 billion, the sector is expected to grow to USD 250 billion by 2030, driven by both domestic consumption and export demand. India is also the second-largest textile producer globally, with a strong presence across the entire value chain—from fiber to garments and home textiles.

India enjoys several structural advantages including abundant availability of raw materials like cotton (India is the largest producer) and jute, a large skilled workforce, and growing demand for ready-made garments and technical textiles. The domestic market is projected to grow steadily, supported by rising incomes, changing lifestyles, and increased penetration of organized retail and e-commerce. Segments like innerwear, athleisure, and womens ethnic wear are experiencing double-digit growth, especially in Tier 2 and Tier 3 cities.

However, the industry faces challenges such as high dependency on cotton, raw material price volatility, infrastructure constraints, and inconsistent power supply in certain manufacturing hubs. Moreover, compliance costs, particularly with regard to sustainability and labor laws, are rising due to global buyer expectations. The unorganized sector, which still forms a large portion of the domestic textile base, also limits productivity and scalability.

To address these challenges and support growth, the Indian government has introduced key initiatives such as the Production Linked Incentive (PLI) Scheme, the PM MITRA Parks, and export promotion schemes under RoDTEP and RoSCTL. These are expected to enhance manufacturing competitiveness, attract FDI, and promote India as a global sourcing hub. With the right policy support and industry adaptation, Indias textile sector remains a major pillar of its industrial and export-led growth strategy in the years ahead.

Men innerwear industry:

The Indian mens innerwear market is undergoing a significant transformation, driven by evolving consumer preferences, rising disposable incomes, and the expansion of online retail. Once considered a utilitarian necessity, innerwear is now seen as an extension of personal style and an embodiment of comfort and well-being. The market is projected to grow significantly, with one report estimating a compound annual growth rate (CAGR) of 4.80% between 2025 and 2033, reaching a market size of USD 16.30 Billion by 2033., the premium segment within this market is also experiencing strong growth, with a CAGR of 6.20% anticipated over the same period, reaching USD 1,379.78 Million by 2033. This indicates a clear shift towards higher quality and branded innerwear among Indian men.

Source: https://www.imarcgroup.com/india-premium-male-innerwear-market

Women innerwear industry

The Indian womens innerwear market is experiencing a dynamic transformation, driven by evolving cultural perspectives, rising female disposable income, and the increasing adoption of e-commerce. Once a discreet purchase, innerwear has emerged as a category driven by comfort, style, and individual expression. The market is projected to reach approximately $12 billion by 2032, expanding at an estimated Compound Annual Growth Rate (CAGR) of around 8.4% during the period of 2024 to 2032. Growing awareness about body positivity and selfexpression, coupled with rising disposable income, especially in urban areas, are key drivers that the penetration of e-commerce and organized retail has significantly boosted accessibility and diversified the product offerings available to consumers.

Source: https://www.kenresearch.com/industry-reports/india-women-innerwear-market

Kids wear industry:

The Indian kids innerwear market is undergoing a significant transformation in FY 2024-25, driven by a confluence of rising disposable incomes, increased awareness among parents regarding the quality and comfort of innerwear, and the burgeoning influence of e-commerce platforms. The market reached an estimated size of USD 2.56 Billion in 2024 and is projected to reach USD 5.08 Billion by 2033, exhibiting a growth rate (CAGR) of 7.30% during the 2025-2033 period. Parents, especially those with increased disposable incomes (approximately INR 2.14 lakh per capita in India for FY 2023-24, an 8% YoY increase), are demonstrating a greater willingness to invest in branded and high-quality options, prioritizing comfort and skin-friendly materials. This is leading brands to innovate in terms of style, fit, and functionality to cater to evolving consumer preferences. The convenience and wider selection offered by online retail are also significantly boosting sales, with online innerwear sales witnessing a surge of over 80% in FY 2024.

Source: https://www.imarcgroup.com/india-kids-innerwear-market

INDIAN TEXTILE AND APPAREL INDUSTRY OVERVIEW

The Indian textile and apparel industry continued its trajectory of growth and transformation in FY 2024-25, positioning itself as a key contributor to the Indian economy and a significant player in the global market. The industry contributed nearly 2% to Indias GDP, 10% to industrial production, and 8.21% to total exports in FY 2023- 24.

The sector provides direct employment to over 45 million people, including a large proportion of women and rural populations, making it the second-largest employment generator in the country, next only to agriculture. The Indian textile and apparel market size is estimated at US$ 184 billion in 2024-25, with domestic demand accounting for approximately 80% and apparel being the dominant segment at 75%. Exports reached US$ 37 billion in 2024-25, showing a CAGR of 2% since 2019-20, with apparel representing the largest share at 45%. IBEF states that India is the 6th largest exporter of textiles & apparel globally, holding a 3.9% share of global trade.

The industrys growth in FY 2024-25 was driven by robust domestic demand, fuelled by rising disposable incomes, evolving fashion trends, and a growing population. Technological advancements like automation, AI-driven solutions, and sustainable practices are increasing efficiency and reducing costs within the industry. The expanding e-commerce sector and the rise of D2C brands are increasing market accessibility and consumer engagement. Government initiatives like "Make in India", Production Linked Incentive (PLI) scheme, and PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks scheme are catalyzing growth and attracting investments. However, challenges like intense global competition from countries like Bangladesh and Vietnam, raw material price volatility, and infrastructure bottlenecks need to be addressed to realize the industrys full potential.

Sources: https://www.ibef.org/industry/textiles

Domestic Intimate Industry

The Indian intimate wear industry is experiencing a dynamic transformation, moving beyond its traditional image as a functional necessity to become a significant segment within the fashion industry. Fuelled by factors such as increasing disposable incomes, evolving consumer preferences, and the rapid expansion of e-commerce, the market is poised for significant growth in the coming years. The overall innerwear market size reached USD 10.24 Billion in 2024, with projections to reach USD 19.25 Billion by 2033, exhibiting a compound annual growth rate (CAGR) of 6.70% from 2025 to 2033. Within this, the womens innerwear market is particularly dynamic, valued at USD 5.4 Billion in 2024 and projected to reach USD 12.0 Billion by 2033 at a CaGr of 8.40%. This growth is driven by increasing awareness of body positivity, self-expression, and the accessibility offered by online platforms. Similarly, the mens innerwear market is witnessing a shift towards premium and branded products, with rising fashion consciousness and demand for comfort fuelling its growth.

Key trends shaping the industry include a strong emphasis on comfort and functionality, leading to the adoption of advanced fabrics and ergonomic designs. Brands are increasingly incorporating breathable materials like organic cotton, bamboo, and microfibers, and embracing features like seamless construction and wire-free options to cater to evolving consumer demands for all-day comfort. The industry is also witnessing a surge in premiumization, with consumers willing to invest in higher-quality and branded intimate apparel that reflects their personal style and values. E-commerce and Direct-to-Consumer (D2C) brands are playing a pivotal role in democratizing access to a wider range of products, especially in Tier 2 and Tier 3 cities, and offering a more private and convenient shopping experience for consumers. Sustainability is emerging as a critical trend, with brands focusing on using eco-friendly materials and ethical manufacturing practices to cater to the growing number of environmentally conscious consumers.

Despite the promising outlook, the Indian intimate wear market faces challenges such as intense competition from both organized and unorganized players, price sensitivity in the economy segment, and logistical hurdles in reaching consumers in remote areas. However, these challenges are also fuelling innovation and pushing brands towards a more consumer-centric approach. Leading players are driving innovation, expanding their product portfolios, and leveraging digital marketing strategies to cater to the evolving needs of Indian consumers. The industry is set to continue its growth trajectory, driven by strong consumer demand, a shift towards premiumization, and the increasing penetration of organized retail and e-commerce platforms, offering significant opportunities for both domestic and international brands.

Source: https://www.marketresearchfuture.com/reports/india-lingerie-market-46602

Indian Intimate Wear Scenario - Manufacturing & Retail Perspective

The Indian intimate wear market in FY 2024-25 is characterized by a dynamic interplay between a burgeoning manufacturing sector and an evolving retail landscape. On the manufacturing front, the industry is seeing a shift from traditional, basic innerwear production towards more sophisticated and diverse product offerings, catering to a range of consumer preferences and price points. The "Make in India" initiative is encouraging domestic manufacturing, reducing reliance on imports, and boosting the overall textile sector, including intimate wear. However, challenges persist for Indian manufacturers, including the lack of large-scale manufacturing setups, limited access to skilled labour for high-end womens intimate wear, unavailability of high-quality raw materials within the country, and intense competition from both domestic and international brands in the economy to midsegment. Investment in research and development, design capabilities, and skilled workforce development are crucial to enable India to compete effectively with countries like Sri Lanka, which have gained an edge in intimate wear manufacturing due to such focus.

The retail landscape for intimate wear in India is experiencing a significant transformation, driven by the increasing penetration of organized retail and the explosive growth of e-commerce. Organized retail, which includes mass merchandisers, specialized stores, and department stores, offers a structured supply chain and a wider range of branded products, especially in urban areas like Mumbai, Delhi, and Bangalore. E-commerce has emerged as a game-changer, overcoming the privacy concerns associated with traditional offline intimate wear shopping and offering unparalleled convenience, a vast selection of styles and sizes, and competitive pricing. Online sales are experiencing robust growth, with over 20 million women purchasing innerwear online in 2024 alone, the omni channel approach, combining both online and offline strategies, is gaining importance as it allows brands to engage with consumers at multiple touchpoints, gather feedback, and offer a seamless shopping experience. This evolving retail ecosystem presents significant opportunities, particularly in expanding into Tier 2 and Tier 3 cities, where rising disposable incomes and increasing digital penetration are driving demand for premium and fashionable intimate wear.

Source: https://www.kenresearch.com/industry-reports/india-women-innerwear-market

THE EVOLUTION & GROWTH OF INNERWEAR MARKET IN INDIA

The Indian innerwear market has undergone significant evolution and growth over the years, driven by changing consumer preferences, increasing disposable incomes, and rising awareness about personal hygiene and comfort. Heres an overview of the evolution and growth of the innerwear market in India:

Evolution:

• Traditional to Modern: Shift from traditional loincloths (dhotis) and undershirts to modern innerwear like briefs, bras, and panties.

• Cotton to Synthetic: Transition from cotton to synthetic fibers like polyester, nylon, and spandex for better comfort and durability.

• Basic to Fashionable: Innerwear evolved from basic, functional products to fashionable, trendy, and stylish offerings.

Growth Drivers:

• Increasing Disposable Incomes: Rising incomes led to increased spending on personal care and hygiene products, including innerwear.

• Growing Awareness: Greater emphasis on personal hygiene, comfort, and health drove demand for good- quality innerwear.

• Changing Lifestyle: Busy lifestyles, increasing participation in sports and fitness activities, and growing acceptance of Western wear fueled innerwear sales.

• Demographic Changes: Growing young population, urbanization, and increasing number of working women contributed to market growth.

Trends and Opportunities:

• Digitalization: Online sales and e-commerce platforms are gaining traction.

• Sustainability: Growing demand for eco-friendly and sustainable innerwear.

• Innovation: Introduction of new products, fabrics, and technologies like moisture-wicking and antimicrobial properties.

• Premiumization: Increasing demand for premium and luxury innerwear.

OPPORTUNITIES

The Indian innerwear market presents significant growth opportunities in FY 2024-25, driven by evolving

consumer preferences, rising disposable incomes, and the increasing penetration of modern retail and e-

commerce. As the market shifts from a focus on basic functionality to encompassing comfort, style, and fashion,

several avenues for growth are emerging:

1. Expanding into premium and luxury segments

• Growing demand for high-quality products: Consumers, particularly in metropolitan areas and increasingly in Tier 2 and Tier 3 cities, are willing to spend more on innerwear that offers superior comfort, better fit, and aesthetics.

• Focus on innovation: Brands that can offer innovative designs, advanced materials (like organic cotton, bamboo, and microfiber), and incorporate features like seamless construction and wire-free options will find a ready market.

• Premium Innerwear Sales: In 2024, premium innerwear sales accounted for 3,000 crore, with demand growing in metropolitan cities such as Delhi, Mumbai, and Bangalore. Brands like Enamor and Amante, focusing on the premium segment, experienced nearly 20% year-on-year growth in this category.

2. Leveraging e-commerce and D2C channels

• Increased accessibility and convenience: Online platforms provide consumers with greater privacy, a vast selection of styles and brands, and the convenience of shopping from home.

• Reaching new demographics: E-commerce is particularly effective in reaching consumers in Tier 2 and Tier 3 cities, where traditional retail presence may be limited. In 2024, these cities accounted for over 25 million consumers purchasing innerwear annually, and e-commerce platforms reported an 18% rise in innerwear sales from non-metro cities.

• Personalized shopping experiences: E-commerce platforms allow for personalized recommendations, virtual fitting services, and tailored marketing campaigns, enhancing customer engagement and loyalty.

3. Catering to specific consumer needs and preferences

• Size inclusivity and body positivity: Theres a growing demand for innerwear that caters to diverse body shapes and sizes, reflecting an increasing awareness of body positivity. Brands that offer expanded size ranges and inclusive designs will resonate with a broader customer base.

• Focus on comfort and functionality: Consumers are increasingly prioritizing comfort, opting for breathable fabrics, ergonomic designs, and features like moisture management and anti-odor technology.

• Sustainability and ethical practices: Growing environmental consciousness is driving demand for innerwear made from eco-friendly materials like organic cotton, bamboo, and recycled fabrics, as well as brands that prioritize ethical manufacturing processes.

• Athleisure-inspired innerwear: The athleisure trend is influencing the innerwear market, with consumers seeking styles that combine comfort, style, and functionality for both everyday wear and active pursuits. By 2029, an additional 15 million units of athleisure-inspired innerwear are expected to be sold.

4. Expanding into emerging categories and regions

• Growth in categories like shapewear and sleepwear: These segments are gaining popularity as innerwear becomes more integral to fashion and self-care. The nightwear and underwear market in India is projected to generate a revenue of US$9.69bn in 2025, and reach 2.8bn pieces by 2029.

• Tapping into Tier 2 and Tier 3 cities: Rising disposable incomes and increasing internet penetration in these regions present significant growth opportunities for brands willing to invest in localized strategies and distribution networks. Leading brands are expected to open over 1,000 new stores in Tier 2 and Tier 3 cities by 2029.

By focusing on these opportunities and understanding the evolving dynamics of the Indian intimate wear market, brands can achieve sustainable growth and capture a larger share of this burgeoning sector.

5. Online Retails Expansion: The rapid growth of e-commerce provides a vast opportunity for innerwear brands to reach to a wider customer base. Brands can leverage digital platforms to expand their online presence, enhance customers engagement, and personalised shopping experiences.

Source: https://www.kenresearch.com/industry-reports/india-women-innerwear-market

https://markwideresearch.com/innerwear-market/

USEFUL MEASURES TAKEN BY THE GOVERNMENT FOR THE INDIAN TEXTILE INDUSTRY

1. PM MITRA: Pradhan Mantri Mega Integrated Textile Region and Apparel

2. Production-Linked Incentive Scheme

3. Reduction in Custom Duties and Tax Exemptions

4. Textile Cluster Development Scheme

5. Samarth Scheme for Capacity Building in Textile Sector

6. Minimum Support Price (MSP) Operations

7. National Technical Textiles Mission (NTTM)

RISK AND CONCERNS

The Company is exposed to various types of risks associated with business of the Company, which will be internal as well as external risk. One of the key risks faced by the Company in todays scenario is the fluctuations in the price of raw material. Any increase in prices of raw materials could create a strain on the operating margins of the Company. We operate in a highly competitive market with competitors who may have better ability to spend more aggressively on advertisement and marketing and more flexibility to respond to changing business and economic conditions.

Further, there are regional or smaller competitors who have certain advantages over us. An increase in the amount of competition that we face could have a material adverse effect on our market share and sales.

The Company has in place Risk Management procedure to identify and evaluate the risk on a regular basis. The Company has the Risk Management committee, who brain-storm on the various risks associated with the Company. The details of risk committee have been mentioned in the Corporate Governance report.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has implemented adequate procedure and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statement. The Company has a regular check on expenses including capital expenditure. The Management considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Company.

In addition, the software solutions such as SAP, Distributor Management System, field assistance and number of other robust system provides the Company to control over various business processes, increases productivity, better inventory management, promotes quality, reduced material cost, effective human resources management, reduced overheads boosts profits, plan its sales, production and monitor and control the processes in case any deviation.

HUMAN RESOURCE & INDUSTRIAL RELATIONS

As on March 31, 2025 the Company had 974 people (362 Employees and 612 Workers) working directly and indirectly with the Company. The industrial relations in all units of the Company continue to be cordial. The skills, experience and passion of our people facilitate deeper customer understanding and engaging relationships and strengthen our brand value as a preferred employer. We continue to step up efforts to accelerate our value-based growth strategy and the overall development of human capital. We nurture our people by investing in their empowerment through learning and development, wellness, and safety besides providing contemporary workplace facilities.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE.

The Company operates in single segment i.e., Hosiery. The results of the Company under review depict business growth during the period.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Particulars	2024-25	2023-24
Revenue from operation	23,688.69	18,327.55
Profit before Interest & finance charge, Depreciation & Income Tax	1,800.88	(432.23)
Less : Finance Cost	804.65	908.83
Less : Depreciation	293.95	271.78
Add : Other Income	136.03	43.12
Profit/(Loss) Before exceptional item and Tax	702.28	(1,612.84)
Profit /(Loss) for the year (excluding OCI)	545.65	(1,265.12)
Profit/(Loss) for the year (including OCI)	540.15	(1,284.87)

Details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year):

Particulars	2024-25	2023-24	Change (%)
Return on Net Worth (%)	2.93%	(9.29%)	131.51%
Return on Capital Employed (%)	8.00%	(5.00%)	260.00%
Basic EPS (after exceptional items) in	0.63	(1.53)	141.45%
Debtors Turnover	3.02	2.92	3.42%
Inventory Turnover	1.65	1.31	25.95%
Interest Coverage Ratio	1.87	(0.77)	341.76%
Current Ratio	1.66	1.36	22.06%
Debt Equity Ratio	0.42	0.54	(22.22%)
Operating Profit Margin (%)	7.60%	(2.36%)	422.35%
Net Profit Margin (%)	0.02%	(6.90%)	128.57%

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Financial year	2024-25	2023-24
Return on net worth (%)	2.93%	(9.29%)

Change in Return on Net Worth as compared to the immediately previous financial year is due to Increase in net profit during the year.