Vishal Fabrics Ltd Management Discussions

In CY 2024, the world economy faced several headwinds but still managed to grow steadily by 3.3%. This expansion was largely driven by emerging and developing markets, which grew by 4.3%, while advanced economies recorded more modest growth of 1.8%. The US economy grew by 2.8%, supported by strong consumer spending and a resilient labour market. In contrast, the European Union experienced a slower recovery, hindered by weak domestic demand and persistent structural issues. Chinas growth also decelerated, primarily due to ongoing stress in its property sector.

Despite these challenges, global economic output reached approximately USD 110.5 trillion, or USD 196.1 trillion in Purchasing Power Parity (PPP) terms, reflecting the resilience of the global economy. Inflation declined to 5.7% worldwide, with emerging markets showing signs of price stabilisation. Global trade volumes increased overall, although selective US tariffs caused disruptions in some sectors. Nevertheless major economies demonstrated adaptability, contributing to macroeconomic stability and moderate growth.

Looking ahead, global growth is expected to moderate to 2.8% in 2025, before recovering to around 3.0% in CY 2026. Emerging and Developing Economies (EMDEs) will remain key growth drivers, with projections of 3.7% in CY 2025 and 3.9% in CY 2026. This will be supported by steady domestic demand, ongoing investments and prudent policy management. Growth in advanced economies, however, is predicted to remain subdued, at around 1.4% in CY 2025 and 1.5% in CY 2026, as they continue to navigate tighter monetary policies and shifting global trade scenarios.

Global inflation is expected to continue declining, reaching about 4.3% in CY 2025 and further down to 3.6% by CY 2026. This drop is mainly due to commodity price stabilisation and improvements in global supply chains. Inflation rates will likely be lower in advanced economies compared to emerging markets, due to differences in monetary policy frameworks and central bank strategies. Overall, the global economic outlook remains cautiously optimistic, with emerging markets leading the way in growth and inflationary pressures expected to ease over the next couple of years.

India has emerged as the worlds fourth-largest economy, surpassing Japan, with a GDP of about USD 4 trillion.³ In the Fiscal Year (FY) 2024-25, the Indian economy maintained a robust growth rate of 6.5%, positioning it among the fastest- growing large economies in the world. This expansion has been driven by strong domestic consumption, increased infrastructure improvement, key structural reforms and rapid growth in the digital sector. Core areas such as manufacturing, agriculture and services showed good progress, contributing to rising rural and urban spending.

Inflation eased from 5.4% to 4.6%,⁴ strengthening consumer confidence and supporting a rebound in spending. To ensure sufficient liquidity in the financial system, the Reserve Bank of India (RBI) injected Rs.1.5 trillion, thereby encouraging lending and economic activity.⁵ Rural consumption remained stable due to steady agricultural production and government support schemes, while urban areas benefitted from rising incomes and evolving consumption patterns.

Indias ascent to the fourth-largest economy reflects its resilience and social progress. Despite global challenges, the outlook remains positive, supported by strong domestic investments, expanding manufacturing activities and improvements in trade and finance. GDP growth is expected to stay steady at 6.5%, supported by supportive government policies and accommodative monetary conditions. Important reforms such as the revision of the income tax exemption limit to Rs.12.75 lakh⁶ and the recommendations of the 8th Pay Commission are likely to boost disposable income and stimulate domestic consumption. The RBIs anticipated reduction in the repo rate will make borrowing cheaper, increase liquidity and improve market confidence.

Additionally, the government is pursuing cautious trade policies to safeguard national interests amid global uncertainty. The upcoming Free Trade Agreement (FTA) between India and the UK aims to reduce tariffs, streamline customs procedures and promote bilateral investments. These developments, along with declining inflation, are expected to support consumer spending, ensure economic stability, broaden market access and contribute to Indias sustainable growth.

Indias textile industry is a cornerstone of the national economy and global trade, ranking among the top five textile markets worldwide. Valued at USD 174 billion in 2025, the sector is projected to reach USD 350 billion by 2030, highlighting its robust growth trajectory. This expansion is fuelled by Indias comprehensive textile value chain, spanning from the cultivation of natural fibres such as cotton and silk to manufacturing and exporting garments to over 100 countries. Employing over 45 million people, the industry is one of the largest employment generators in the country after agriculture and it produces approximately 22,000 million pieces of garments annually.

Government support has played a key role in this momentum. Flagship initiatives such as the Production Linked Incentive (PLI) scheme and the PM MITRA Parks are promoting integrated textile hubs with world-class infrastructure. Branding efforts of Kasturi Cotton aim to position Indian cotton as a high-quality, globally recognised commodity. The sector is also undergoing a significant transformation through trends such as sustainable manufacturing, increased automation and digitisation often referred to as Textiles 4.0. These innovations, along with a growing emphasis on ecofriendly practices, are shaping the industry landscape.

Looking ahead, the Indian textile sector holds an optimistic outlook. Rapid urbanisation, rising disposable incomes, a young and skilled workforce and favourable policy frameworks are expected to accelerate both domestic consumption and exports. Notably, the Union Budget for 2025-26 has allocated Rs.5,272 crores to the Ministry of Textiles, marking a 19% increase from the previous years budget estimate of Rs.4417.03 crores. This increased funding is poised to support ongoing initiatives in modernisation, technical textiles and global market expansion. With continued government backing, a strong manufacturing base and growing focus on innovation and sustainability, India is well-positioned to reinforce its stature as a leading global hub for textiles and apparel.⁸

Indias denim industry has emerged as a global powerhouse, currently ranking as the third-largest producer of denim worldwide. Driven by a steady annual growth rate of 8-9%, the market is projected to rise from USD 6.15 billion in FY2023 to USD 9.15 billion by FY2026. Gujarat spearheads the sector, producing up to 70% of the countrys denim fabric, earning its title of Denim Capital of India. Rising disposable incomes, evolving fashion preferences among younger consumers and increasing demand from rural as well as urban centres fuel market expansion.

However, the sector contends with challenges, including high raw material costs, particularly for cotton, spandex and polyester. The industry also faces the impact of volatile trade dynamics and rising buyer demands for faster production cycles. In response, the industry is undergoing a significant transformation. There is a marked shift toward sustainable manufacturing practices, along with increased emphasis on product innovation and investments in research and development. These initiatives are essential for maintaining competitive advantage and responding to evolving consumer preferences. With global demand for denim rebounding and the industry embracing new technologies, India is well-positioned to consolidate and expand its leadership in denim manufacturing.

Founded in 1985, Vishal Fabrics Limited (VFL) has evolved into a global leader in textile processing, with a clear mission to make denim an essential part of everyday style. As the flagship company of the Chiripal Group, VFL specialises in dyeing, printing and finishing a wide range of fabrics, from pure cotton to sustainable blends such as modal and Tencel.

Headquartered in Gujarat, the Company operates advanced facilities with an impressive annual processing capacity of over 100 million metres. Its advanced infrastructure, including high- efficiency machinery and a 6MW captive power plant, supports sustainable and smart manufacturing practices that meet the evolving demands of global markets.

VFLs reach spans continents, with a growing presence in regions such as South Africa to Sri Lanka. Through a commitment to innovation, quality and inclusive fashion, Vishal Fabrics goes beyond manufacturing to shape global textile trends that resonate across cultures and communities worldwide.

Vishal Fabrics Limited (VFL) operates an advanced manufacturing facility with an annual processing capacity of over 100 million metres of processed fabric. This includes an 80 Million Metres Per Annum (MMPA) denim fabric processing line and an additional 105 MMPA capacity for processing a diverse range of fabrics such as 100% cotton, cotton-spandex blends, polyester, modal and Tencel. The facility employs advanced technology including 464 weaving looms, multiple warping units, dyeing machines, singeing machines, mercerising units and finishing equipment. This comprehensive setup enables VFL to produce diverse products from shirting fabrics and dress materials to home furnishings and high demand stretch denim, appealing to consumers across age groups.

Committed to promoting sustainability, VFL integrates eco-friendly practices such as water recycling and operates a 6MW captive power plant to ensure energy efficient production. Its skilled engineering team focuses on continuous innovation and process improvement, maintaining stringent quality benchmarks. VFLs quality management is certified to ISO 9001, with environmental compliance certified to ISO 14001. The Company also holds globally recognised textile certifications including OEKO-TEX, BCI and GOTS.

To ensure consistent quality, VFL conducts rigorous fabric testing at multiple stages of production. Its quality standards are comparable to those of international brands such as Levis. By utilising an asset- light model and benefitting from vertical integration within the Chiripal Group, VFL sources up to 90% of its yarn from in-group spinning mills, ensuring superior consistency and quality. The Company caters to both domestic and international markets, supplying a broad client base including major fashion brands and e-commerce platforms. With its high production capacity, advanced infrastructure, eco-conscious operations, robust quality assurance and strategic market reach, Vishal Fabrics Limited continues to be a prominent player in the global textile industry.

During the year under review, your Company has achieved a Turnover of Rs.1519.83 Crore. The Profit before depreciation and tax was Rs.77.10 Crore. The profit after tax for the year Rs.23.83 Crore.

The Performance of the Company has been comprehensively discussed in the Management Discussion and Analysis Report (forming part of the Annual Report) based on the reports of the each of the units of Company.

The Indian textile industry significantly contributes to the national economy, with its output including both domestic production and exports. The industrys output is a key factor in Indias GDP, industrial production, and employment. The textile sector is also a major contributor to export earnings, with significant exports of apparel, raw materials, and finished goods.

As per the analysis, the industry is expected to record positive growth in the coming years. The Indian Government is actively drafting strategies to improve the contribution of textiles in the export. Additionally, by 2030, the Indian textile industry is anticipated to reach a total production size of USD 250 billion and export of USD 100 bn8. This growth is projected to be driven by leveraging technology, enhancing product innovation, fostering strategic partnerships and utilising data-driven decision-making processes. Moreover, factors including increasing Government support, recovery in textile export, rising disposable income and a growing middle-economic population are expected to further support the growth of the industry in coming years.

Vishal Fabrics Limited continues to regard its workforce as one of its most invaluable assets, recognising that sustained success is rooted in skilled, motivated and engaged employees. As of this year, the total workforce stands at 434, reflecting the Companys commitment to growth and talent acquisition.

To support continuous development, the Company offers targeted training and leadership development programmes aimed at enhancing professional capabilities and nurturing future leaders across all functions. These initiatives are strategically aligned with organisational objectives to ensure mutual growth.

In pursuit of a vibrant and performance-driven workplace culture, the Company has implemented structured employee engagement programmes that have proven instrumental in elevating productivity and strengthening morale. These efforts have amplified job satisfaction as well as played a significant role in talent retention.

Maintaining open and transparent communication remains a top priority. Through clearly defined channels, the Company encourages dialogue, collaboration and cross-functional synergy, enabling a workplace culture that thrives on trust and shared success.

Vishal Fabrics has established robust internal control systems that are proactively enhanced to align with evolving business dynamics and to comply with statutory and accounting standards. A sophisticated Management Information System forms the backbone of its control infrastructure, enabling precise and timely decision-making. Oversight by the Audit Committee of the Board of Directors ensures continuous evaluation of these systems efficacy and efficiency. Throughout the year, the internal controls underwent comprehensive testing, which confirmed their structural integrity and operational soundness, with no significant deficiencies identified. Strategic recommendations from the committee contribute to ongoing reinforcement and optimisation.

The MDA section contains forward-looking statements highlighting the Companys potential future prospects. These statements are subject to inherent risks and uncertainties, which may cause actual outcomes to differ significantly. Furthermore, macro-environmental shifts and the unpredictable character of global events, such as the pandemic, pose unexpected obstacles to the Company and its operational environment. The information in the report is based on assumptions derived from both internal and external sources, which may vary over time, resulting in revisions to the estimations provided. It is crucial to note that these forward-looking statements reflect the Companys current objectives, beliefs, or assumptions and are accurate as of the date they were made. The Company is under no responsibility to update or alter these statements in light of new information or future events unless required by relevant regulations.