VTM Ltd Management Discussions

Global Economic Overview

Global Economy: Navigating Growth Amid Trade Realignment and Geopolitical Uncertainty

The global economy entered 2026 with resilient underlying fundamentals, although growth continued to moderate amid heightened geopolitical tensions, evolving trade policies and elevated uncertainty surrounding global supply chains. While inflationary pressures eased across several advanced economies, renewed energy market volatility, protectionist trade measures and regional conflicts continued to weigh on business confidence and investment decisions.

According to the International Monetary Fund (IMF), global economic growth is projected at approximately 3.3% in 2026, supported by resilient labour markets, continued technology-led investments and improving financial conditions. However, the IMF cautions that increasing trade fragmentation and geopolitical risks remain key downside factors that could affect global growth prospects. The OECD, in its latest Economic Outlook, presents a more cautious assessment, projecting global GDP growth of around 2.8 2.9% in 2026, reflecting the impact of persistent trade uncertainities, higher energy prices and disruptions arising from geopolitical conflicts. The report notes that while artificial intelligence, digital investments and easing monetary conditions continue to support economic activity, prolonged geopolitical disruptions could significantly weaken global demand and investment. Global manufacturing activity remained uneven across regions. Advanced economies continued to experience slower industrial production amid subdued consumer demand and higher financing costs, whereas emerging economies - particularly India and several ASEAN nations benefited from supply chain diversification, manufacturing investments and expanding domestic consumption.

International trade is undergoing structural realignment as multinational corporations diversify sourcing strategies beyond traditional manufacturing hubs. This shift has accelerated the adoption of the "China+1" strategy, creating opportunities for countries such as India, Vietnam and Indonesia to strengthen their role in global manufacturing and exports. Commodity markets remained volatile throughout the year. Energy prices fluctuated sharply due to geopolitical developments in the Middle East and disruptions to global shipping routes, while agricultural commodities and industrial raw materials also witnessed increased price volatility. These factors continued to influence production costs across manufacturing industries, including textiles.

For the global textile and home furnishing industry, inventory levels across major retailers largely normalised during the year, leading to a gradual recovery in procurement activity. Nevertheless, buyers remained focused on supply chain resilience, sustainability, shorter lead times and reliable manufacturing partners. Increasing emphasis on responsible sourcing, product traceability and ESG compliance continued to reshape global procurement practices. Against this backdrop, India further strengthened its position as a preferred global sourcing destination, supported by its integrated textile ecosystem, competitive manufacturing base, expanding trade partnerships and favourable demographic profile. These structural advantages continue to create long-term opportunities for export-oriented textile manufacturers.

Indian Economic Overview

India: Sustaining Growth Through Domestic Resilience

India continued to reinforce its position as the worlds fastest-growing major economy during FY2025 26, demonstrating remarkable resilience despite heightened geopolitical uncertainities, evolving global trade dynamics, and intermittent commodity price volatility. Strong domestic consumption, sustained public capital expenditure, healthy corporate balance sheets, expanding manufacturing activity, and a resilient financial system collectively underpinned the countrys growth trajectory.

According to the Ministry of Statistics and Programme Implementation (MoSPI), Indias real

GDP is estimated to have grown by 7.7% in FY2025 26, compared with 7.1% in FY2024

25, while real Gross Value Added (GVA) expanded by 7.9%, reflecting broad-based growth across manufacturing, construction and services. Robust private consumption and investment remained the principal demand-side drivers, with Gross Fixed Capital Formation (GFCF) registering double-digit growth during the fourth quarter. The manufacturing sector continued to benefit from government initiatives such as Make in India, the Production Linked Incentive (PLI) Scheme, the PM Gati Shakti National Master

Plan, and ongoing investments in logistics and industrial infrastructure. Simultaneously, easing inflationary pressures and supportive monetary conditions strengthened consumer confidence and supported discretionary spending across sectors. For Indias textile industry, these macroeconomic fundamentals translated into improving domestic demand, expanding export competitiveness through new trade agreements, and continued policy support for manufacturing-led growth. The countrys integrated textile ecosystem, abundant cotton availability, skilled workforce, and growing emphasis on sustainability further enhanced its attractiveness as a preferred global sourcing destination.

Key Government Initiatives Supporting the Textile Industry

Outlook

Despite global economic uncertainties, the structural outlook for India remains favourable. Continued investments in infrastructure, manufacturing competitiveness, logistics and export promotion are expected to strengthen Indias role in global supply chains. These macroeconomic tailwinds provide a supportive environment for textile manufacturers to expand capacity, enhance value addition and strengthen their presence across domestic and international markets.

Industry Overview

Global Textile Industry Overview

A Structural Transformation Creating New Opportunities for Integrated Manufacturers The global textile industry is navigating one of its most significant structural transformations in recent decades. Once driven primarily by cost competitiveness and production scale, the industry is increasingly being shaped by supply chain resilience, sustainability, digitalisation, product innovation and evolving consumer preferences. While macroeconomic uncertainties, geopolitical tensions and inflationary pressures influenced global demand during FY2025 26, the industrys long-term fundamentals remain robust, supported by rising population, urbanisation, increasing disposable incomes and expanding middle-class consumption across emerging economies. According to Grand View Research, the global textile market was valued at approximately US$1.16 trillion in 2025 and is expected to reach US$1.61 trillion by 2033, growing at a CAGR of 4.2%. Asia-Pacific continues to dominate the industry, accounting for nearly 50% of global textile revenues, supported by its integrated manufacturing ecosystem, abundant labour availability and strong export capabilities. Cotton remains the largest raw material segment, while household textiles, apparel and technical textiles continue to drive industry growth. Beyond market expansion, the industrys competitive landscape is also evolving. Global brands are no longer evaluating suppliers solely on pricing but increasingly prioritising quality consistency, manufacturing reliability, ESG compliance, traceability, shorter lead times and supply chain resilience. This transition is encouraging manufacturers to invest in automation, digital manufacturing, sustainable production practices and product innovation, enabling them to move up the value chain and build long-term customer partnerships.

Changing Global Trade Dynamics

Global sourcing patterns continued to evolve during FY2025 26 as geopolitical developments, tariff changes and supply chain disruptions prompted international retailers and brands to diversify procurement strategies. The "China+1" sourcing model has transitioned from a risk-mitigation strategy to a long-term structural shift, with India, Vietnam, Bangladesh and Turkiye emerging as key alternative manufacturing destinations.

At the same time, buyers are increasingly favouring suppliers capable of offering vertically integrated operations, flexible production capabilities and consistent quality while maintaining compliance with evolving environmental and social standards. Rather than relying on a single sourcing geography, multinational retailers are building diversified supplier networks to enhance resilience against geopolitical risks and logistics disruptions. Recent geopolitical events have further reinforced the importance of visibility, inventory planning and supplier diversification across global textile supply chains. For export-oriented manufacturers, these developments present opportunities to strengthen long-term customer relationships by offering reliability, operational flexibility and value-added solutions instead of competing purely on cost.

Outlook

The global textile industry is transitioning from a volume-driven model to one centred on value creation, resilience and responsible manufacturing. Manufacturers that combine operational excellence, product innovation, sustainability and strong customer relationships will be better positioned to capture emerging opportunities in an increasingly competitive marketplace.

For integrated textile manufacturers, this evolving landscape presents an opportunity not only to expand global market presence but also to strengthen their position as trusted long-term partners within international supply chains.

Global Home Textile Industry

Elevating Everyday Living Through Design, Comfort and Sustainability

The global home textile industry has evolved from a functional household necessity into a lifestyle-driven market shaped by changing consumer preferences, urbanisation, premiumisation and sustainability. Rising disposable incomes, increasing residential construction, hospitality expansion and growing consumer focus on home aesthetics have transformed home textiles into an essential component of modern living. Consumers today seek products that combine comfort, durability, design, functionality and environmental responsibility, driving demand for high-quality bedding, bath linen, curtains, blankets and decorative furnishings.

According to Grand View Research, the global home textile market was valued at US$137.8 billion in 2025 and is projected to grow to US$231.4 billion by 2033, registering a CAGR of 6.9% during 2026 2033. Asia-Pacific accounted for the largest share of the global market at 43.6% in 2025, reflecting the regions strong manufacturing base, expanding consumer markets and growing export capabilities. The industrys growth is being supported by multiple structural drivers, including rising home ownership, increasing renovation activity, expanding organised retail, rapid e-commerce penetration and greater consumer spending on premium home decor. At the same time, hotels, healthcare institutions, serviced apartments and commercial real estate continue to generate steady demand for institutional-grade home textile products, broadening the industrys addressable market.

Evolution of Consumer Preferences

Consumer buying behaviour has undergone a significant transformation over the past decade. Purchasing decisions are increasingly influenced by product quality, comfort, design aesthetics and sustainability credentials rather than price alone. Premium bedding collections, coordinated home decor solutions, organic cotton products and eco-friendly materials continue to gain popularity across developed and emerging markets. Digital commerce has further accelerated this shift by enabling consumers to access wider product assortments, compare brands and make informed purchasing decisions. International retailers are responding by expanding premium product portfolios and strengthening relationships with manufacturers capable of delivering differentiated products with shorter lead times and consistent quality.

Another defining trend is the growing preference for certified and responsibly manufactured products. Global consumers increasingly value products carrying certifications such as OEKO-TEXR, Better Cotton and other sustainability standards, reflecting heightened awareness of environmental and social considerations throughout the textile value chain.

Key Growth Drivers

The long-term outlook for the home textile industry continues to be supported by several structural growth drivers:

Urbanisation and Housing Development

Rapid urbanisation, rising home ownership and increasing investments in residential construction continue to stimulate demand for bedding, bath linen, curtains and decorative furnishings.

Premiumisation of Living Spaces

Consumers are increasingly investing in premium home furnishings that offer superior comfort, aesthetics and durability. This trend is particularly evident in developed markets and among middle-income households in emerging economies.

Growth in Hospitality and Tourism

Expansion of hotels, serviced apartments, resorts and healthcare infrastructure continues to drive institutional demand for hospitality linen, towels, bed linen and specialised textile products.

Rise of E-commerce

Online retail platforms have expanded product accessibility while enabling manufacturers to reach broader customer segments across domestic and international markets.

Sustainability and Responsible Consumption

Growing awareness of environmental issues is encouraging demand for responsibly sourced, recyclable and sustainably manufactured home textile products, prompting manufacturers to adopt cleaner production processes and greater supply chain transparency.

Sources

Grand View Research Home Textile Market Report (June 2026)

Indian Textile Industry

Strengthening Indias Position as a Global Textile Powerhouse

India is one of the worlds largest textile manufacturing economies, supported by a fully integrated value chain spanning fibre, yarn, fabric, garments and home textiles. The sector plays a pivotal role in the countrys economic development, contributing significantly to manufacturing output, exports and employment while serving as one of the largest sources of livelihood after agriculture.

According to the Ministry of Textiles, the industry contributes approximately 2.3% to Indias GDP, around 13% to industrial production, and nearly 12% to the countrys merchandise exports, while providing direct employment to over 45 million people. Indias strong cotton ecosystem, abundant skilled workforce and diversified manufacturing capabilities continue to reinforce its position as a preferred sourcing destination for global buyers.

The Indian textile industry is undergoing a structural transformation driven by policy support, infrastructure development, technology adoption and increasing global supply chain diversification. Initiatives such as PM MITRA Parks, PM Gati Shakti, the National Logistics Policy, RoDTEP, and expanding Free Trade Agreements (FTAs) are enhancing manufacturing competitiveness, improving logistics efficiency and strengthening export potential. Alongside exports, domestic demand remains a key growth driver. Rising disposable incomes, urbanisation, organised retail expansion and increasing consumer preference for premium home furnishings and lifestyle products continue to support demand across the textile value chain. At the same time, investments in automation, digital manufacturing and sustainable production practices are enabling Indian manufacturers to improve productivity and meet evolving global quality standards.

As international brands increasingly diversify sourcing strategies beyond traditional manufacturing hubs, India is well positioned to capture a larger share of global textile trade through its integrated manufacturing ecosystem, reliable supply chains and growing focus on value-added products.

Indian Home Textile Industry

Capitalising on Lifestyle Evolution and Global Sourcing Opportunities

India has established itself as one of the worlds leading manufacturers and exporters of home textile products, supported by a well-integrated textile ecosystem, abundant cotton availability, competitive manufacturing capabilities and strong relationships with global retailers. The country is among the largest suppliers of bed linen, bath linen, kitchen linen and made-ups to key international markets, including the United States, Europe and the Middle East.

The Indian home textile industry is witnessing sustained growth, driven by rising urbanisation, increasing disposable incomes, premiumisation of living spaces and expanding hospitality and real estate sectors. Growing consumer preference for quality, comfort and aesthetically designed products has accelerated demand for value-added home furnishings across both domestic and international markets.

Indias competitive advantage lies in its vertically integrated manufacturing base, skilled workforce and ability to offer a diverse product portfolio across cotton-based home textiles. Coupled with supportive government initiatives, improving logistics infrastructure and increasing adoption of sustainable manufacturing practices, the industry is well positioned to benefit from global supply chain diversification and rising demand for responsibly manufactured products.

The hospitality sector also continues to be a significant growth catalyst. Expansion of hotels, serviced apartments, healthcare facilities and wellness centres is driving demand for institutional-grade linen, while organised retail and e-commerce platforms are creating new avenues for branded home textile products in the domestic market.

Growth Opportunities

The Indian home textile industry is expected to benefit from several structural trends:

At the same time, manufacturers continue to focus on product innovation, design differentiation, sustainable production and operational excellence to strengthen competitiveness in global markets.

Outlook

Indias home textile industry is well positioned for long-term growth, supported by favourable demographics, evolving consumer lifestyles and expanding global sourcing opportunities. Manufacturers with integrated operations, consistent quality standards, diversified product offerings and a focus on responsible manufacturing are expected to be key beneficiaries of this evolving market landscape.

Greige Fabric Industry Overview

Greige Fabrics: The Foundation of the Textile Value Chain

Greige fabric, commonly referred to as grey fabric, represents the primary woven fabric produced directly from yarn before undergoing bleaching, dyeing, printing or finishing. It forms the foundation of the textile value chain and serves as a critical intermediate product for a wide range of downstream applications, including apparel, home textiles, industrial textiles and technical textiles.

As global textile consumption continues to evolve, demand for high-quality greige fabrics is increasingly being driven by manufacturers seeking consistent quality, dimensional stability, weaving precision and faster turnaround times. Buyers are placing greater emphasis on suppliers capable of delivering customised fabric constructions, superior weaving standards and dependable supply chain execution.

India has established itself as one of the worlds largest producers of woven cotton fabrics, supported by an integrated textile ecosystem, abundant cotton availability, advanced weaving infrastructure and a skilled workforce. The countrys strong weaving base, particularly in cotton fabrics, positions it as a preferred sourcing destination for international processors, home textile manufacturers and garment exporters.

For VTM Limited, greige fabrics represent a strategic pillar of its integrated business model. The Companys weaving capabilities, supported by advanced Air Jet, Sulzer, Rapier Leno and Jacquard looms, enable it to manufacture premium-quality greige fabrics catering to both domestic and international markets. During FY2025 26, greige fabrics contributed approximately 162 crore to the Companys revenue, reaffirming their importance within the overall product portfolio.

Global Woven Fabric Industry

The global woven fabric industry continues to benefit from growing demand across apparel, home furnishings, hospitality, healthcare and industrial applications. Although macroeconomic uncertainities temporarily affected textile demand in several developed economies, inventory normalisation and improving consumer spending supported a gradual recovery in woven fabric consumption during FY2025 26.

Increasing emphasis on sustainable sourcing, premium fabric quality and shorter lead times has encouraged international buyers to diversify procurement towards reliable manufacturing destinations such as India.

VTM at a Glance

For nearly eight decades, VTM Limited has established itself as a trusted manufacturer of premium woven fabrics and home textile products, serving customers across domestic and international markets. Rooted in a legacy of craftsmanship and manufacturing excellence, the Company has continuously evolved its capabilities to meet the changing requirements of global buyers while preserving its unwavering commitment to quality, reliability and customer satisfaction.

With an integrated manufacturing platform and a diversified product portfolio, VTM caters to a wide spectrum of end-use applications spanning home textiles and woven fabric solutions. Its offerings include greige fabrics and an extensive range of made-up home textile products, manufactured to meet the exacting standards of global retailers, institutional buyers and export markets.

Over the years, the Company has strengthened its competitive position through continuous investments in modern weaving technology, operational efficiency and process improvements. This focus on manufacturing excellence enables VTM to deliver consistent quality, optimise productivity and respond effectively to evolving customer requirements in an increasingly competitive marketplace.

VTMs business is built on enduring relationships with customers who value quality and reliability, employees whose craftsmanship drives operational excellence, suppliers who strengthen its value chain and shareholders who continue to support its long-term vision. Guided by disciplined execution and responsible governance, the Company remains focused on creating sustainable value while reinforcing its position as a trusted participant in Indias textile manufacturing ecosystem.

Business Snapshot

What Differentiates VTM

• Decades of Manufacturing Expertise built on a strong legacy in woven fabrics and home textiles.

• Integrated Manufacturing Capabilities ensuring quality, flexibility and operational efficiency.

• Diversified Product Portfolio serving multiple customer segments across domestic and export markets.

• Customer-Centric Approach focused on long-term partnerships, product quality and timely delivery.

• Continuous Modernisation through investments in advanced weaving infrastructure and productivity enhancement.

• Commitment to Responsible Manufacturing supported by disciplined governance and sustainable business practices.

KEY RATIO ANALYSIS

Business Model

An Integrated Manufacturing Model Focused on Quality, Agility and Long-Term Value VTM Limited operates an integrated manufacturing model that combines decades of weaving expertise with a disciplined approach to quality, operational efficiency and customer-centric execution. The Company transforms raw materials into premium woven fabrics and home textile products through a well-established manufacturing ecosystem designed to deliver consistency, flexibility and value across domestic and international markets.

Its business model is centred on creating long-term value through operational excellence rather than volume-driven growth. Every stage of the manufacturing process from raw material procurement and weaving to quality assurance and final dispatch is managed with a strong emphasis on process control, product reliability and timely execution. The Companys diversified product portfolio enables it to cater to multiple customer segments while reducing dependence on any single product category. Simultaneously, its focus on continuous modernisation, capacity enhancement and manufacturing efficiency supports improved productivity, greater operational flexibility and the ability to respond to evolving customer requirements.

Strong customer relationships, prudent capital allocation and disciplined operational management continue to form the foundation of VTMs long-term growth strategy, enabling the Company to strengthen its market position while maintaining financial resilience.

Product Portfolio

A Diversified Portfolio Serving Multiple Customer Requirements

VTM has developed a comprehensive portfolio of woven fabrics and home textile products that address the requirements of residential, hospitality and institutional customers. By combining manufacturing expertise with product development capabilities, the Company delivers solutions that meet evolving market preferences for quality, comfort, durability and aesthetics.

Its product portfolio spans the textile value chain, beginning with high-quality greige fabrics and extending to a broad range of finished home textile products. This diversified offering enables the Company to serve multiple customer segments while enhancing operational flexibility and reducing concentration risk.