Winsome Textile Industries Ltd Management Discussions

Amidst ongoing geopolitical tensions and evolving trade and monetary policies, the global economy demonstrated resilience in CY 2024, growing at a rate of 3.3%. Headline inflation eased from 6.6% in CY 2023 to 5.7% in CY 2024, driven primarily by the falling energy prices and the widespread adoption of tight monetary policies across many countries. Disinflationary trends were particularly evident in developed economies as they were heading towards their inflation targets, while several Emerging Markets and Developing Economies (EMDEs) registered persistently higher inflation. This divergence led to currency depreciation and supply chain challenges in those regions.

The US economy expanded by 2.8%, driven by robust domestic demand and a tight labour market. Major European economies such as Germany faced contraction, reflecting volatile and uncertain economic conditions. EMDEs maintained sustainable growth trajectories, with Chinas fiscal stimulus fuelling a 5% expansion and India posting a 6.5% growth rate. Meanwhile, growth in the Middle East and Central Asia showed modest increase, mainly influenced by production cuts from Organisation of Petroleum Exporting Countries plus (OPEC+) nations.

Outlook

Despite easing inflationary pressures, the global economy faces rising geo-economic uncertainties with growth projected at 2.8% in CY 2025 and 3% in CY 2026.

Recent US tariffs imposition on industries including steel and aluminium is most likely to elevate the price of oil and contribute to inflationary pressures. The tariffs have prompted downward revisions in global trade volume forecasts for 2025 and 2026, with potential spillover effects heightening inflation risks in the US, Europe and EMDEs.

Germany has undertaken extensive stimulus programmes to increase domestic demand and revive economic growth. The Middle East and North Africa (MENA) region is projected to remain robust, though with ongoing risks. EMDEs are, however, projected to maintain their growth paths, with manufacturing expansion outpacing that of advanced economies.

Indian Economy ²

Despite prevailing macroeconomic volatility, the Indian economy achieved a 6.5% growth in FY25. While this marked a slight moderation from the previous year, domestic consumption remained resilient, driven by rising rural demand and a favourable monsoon season. Headline Consumer Price Index (CPI) inflation averaged at 4.6%, staying within the Reserve Bank of Indias (RBI) tolerance limit. This allowed for a cumulative 100 basis-point reduction in repo rate to 5.5%, providing additional support for economic activity.

Investment picked up pace during the year under consideration, driven by increased production activity and rising export orders. Government spending on infrastructure, along with initiatives such as the Production Linked Incentive (PLI) Scheme 2.0, emerged as significant drivers of industrial growth and Foreign Direct Investments (FDIs) inflows. A surge in capital goods imports further indicated firms ongoing efforts toward capacity expansion.

Outlook

While global headwinds continue to pose challenges to Indias industry and trade, the overall growth prospect remains broadly positive. Growth will be supported by resilient consumer demand, rising private investment and supportive government policies.

Easing inflationary pressures are expected to boost consumption, while the RBIs prudent monetary stance, combined with targeted income tax benefits for salaried individuals, will likely catalyse disposable incomes. Sustained public capital expenditure, structural reforms and investor-friendly measures are expected to attract FDI inflows and support domestic production. Expedited urbanisation will further fuel demand and investment, reinforcing Indias long-term objective of becoming a developed economy by 2047.

The global textile industry navigated several headwinds during the year, demonstrating a divergent regional performance. Africa emerged as the key growth engine, while Asian markets witnessed subdued growth.

Global order intake declined during the year; however, global backlogs showed modest recovery, averaging 2.3 months. Capacity utilisation remained relatively strong, particularly in Asia, pushing global capacity utilisation at 72%. Despite these pockets of resilience, the industry faced major headwinds including weak global demand, escalating trade tensions and elevated operational costs.³

Outlook

The global textile industry holds a cautiously optimistic outlook for 2025. A rebound in North America, sustained performance in Africa and the emergence of new producers such as Uzbekistan, are expected to support recovery. After a small downturn in early 2025, that temporarily reversed gains from late 2023, the sector is projected to stabilise in CY 2025, especially in Africa and the Americas.

Garment manufacturing continues to be the most resilient segment, while producers of technical and home textiles anticipate a subdued recovery. However, recent US-imposed tariffs present a risk of disruption to global textile supply chains, potentially escalating the operational costs for exporters.

Indian Textile Industry⁴

The Indian textile industry is a longstanding and crucial part of the nations economy, valued at over USD 160 billion, contributing approximately 2.3% to national GDP and 13% of industrial output. It stands as the countrys second- largest employer after agriculture, directly employing over 45 million people and indirectly supporting another 100 million.⁵

India ranks as the worlds second- largest textile producer, with the sector accounting for 12% of the countrys export earnings. It is also the sixth largest exporter of textiles and apparel globally. In the past year, cotton yarn exports saw a decline due to reduced demand from China, though exports to Bangladesh showed growth.

Integrating circular economy principles is vital for driving sustainability and reducing waste in the textile industry. A circular economy promotes the reuse, recycling and repurposing of materials to lessen resource depletion and environmental impact. India produces about 7.8 million tonnes of textile waste annually, which is 8.5% of global textile waste. By adopting circular practices such as textile recycling, upcycling and waste reduction, manufacturers can create a closed-loop system, prolonging material life, decreasing environmental impact and improving resource efficiency.

During the 2024-25 cotton season, the Cotton Corporation of India (CCI) procured a total of H 99.41 lakh bales as of March 25, 2025, out of total arrival of 260.11 lakh bales, benefitting over 21 lakh farmers with H 37,450 Crore in payments.^{6 7} Production trends during April to September 2024 remained largely stable compared to the previous year. Cotton-spun yarn output declined marginally by 1.15%, while the production of blended and non-cotton yarn output rose by 1.91% over that period.⁸

To strengthen the global branding of Indian Textile, the Government of India has registered the Kasturi Cotton Indias brand as a trademark to give a unique identity to premium quality Indian cotton. Additionally, the successful organisation of Global Mega Textile Event BHARAT TEX 2025 in February, 2025, led byTextile Export Promotion Councils (EPCs) and supported by the Ministry of Textiles, Government of India showcased Indias prowess as a premier textile manufacturing hub. The event highlighted the countrys end-to- end value chain· from raw materials to finished products·reinforcing its role in the global textile ecosystem.

Outlook

The Indian government aims to triple textile exports by 2030, fuelling increased domestic manufacturing and processing. Demand for traditional and sustainable Indian textiles such as jute, hemp, cotton, khadi and silk, along with handmade textiles, is expected to grow significantly due to the global shift towards ecoconscious consumption. Green financing models will also play a vital role in scaling up these initiatives.

Approximately 22% of the budget is dedicated for PLI Scheme for Textiles. Out of the 74 applicants selected under the scheme, 24 are MSMEs, with a projected turnover of H 2,16,760 cr., including exports over the scheme period.⁹

The sector also perfectly aligns with the Governments overall objectives of Make in India, Skill India, Womens Empowerment, Rural Youth Employment and inclusive growth. The industry produces about 22,000 million pieces of garments per year, with the market size projected to reach $350 billion by 2030, from the current $174 billion.

Recently, the Ministry of Textiles reported a 7% increase in textile and apparel exports, including handicrafts, from April to December 2024, compared to the same period the previous year. In line with the growth roadmap, the Indian textile market currently ranks fifth globally and the government is actively working to accelerate this growth to a rate of 15-20% over the next five years.¹⁰ In addition, the Government of India is implementing Rebate of State and Central Taxes and Levies (RoSCTL) scheme and Remissions of Duties and Taxes on Exported Products (RoDTEP) across the textile value chain to enhance competitiveness by adopting principle of zero rated exports.

The Union Budget 2025-26 reflects strong government support, increasing allocation to the Ministry of Textiles by 19%, from H 4,417.03 Crore in 2024-25 to H 5,272 Crore, addressing long-standing challenges and unlocking new growth opportunities.¹¹

Government Initiatives Makein India

In the Union Budget 2024-25, the Government of India expanded support for domestic textile production by adding two more types of shuttle-less looms to the fully exempted textile machinery. This move is part of broader efforts to encourage local manufacturing, attract investments and promote exports in the textile sector.

Production Linked Incentive (PLI) Scheme

The PLI scheme, with an outlay of H 10,683 Crore, has played a vital role in incentivising manufacturing, especially in technical textiles. It plays a crucial role in strengthening domestic manufacturing and enhancing global competitiveness.

PM Mega Integrated Textile Region and Apparel (PM MITRA)

The PM MITRA initiative aims to establish world-class industrial infrastructure for textile manufacturing through developing integrated large scale and modern infrastructure facilities for entire value-chain of the textile industry such as spinning, weaving, processing, garmenting, textile manufacturing, processing and textile machinery manufacturing.

National Technical Textiles Mission

The mission targets the advancement of textiles by 2026 through focused efforts on research, innovation and development, promotion, skilling and export promotion. Out of a budget of H 1,480 Crore, 168 projects with a value of H 509 Crore have been approved in the specialty fibres and technical textiles.

Amended Technology Upgrade Funds Scheme (ATUFS)

With a budget allocation of H 17,822 Crore, ATUFS provides financial support to encourage capital investment and facilitate credit flow for technology upgrades in the textile sector, especially for MSMEs.

Scheme for Capacity Building in Textile Sector (Samarth)

The Ministry of Textiles, in partnership with the Ministry of Skill Development and Entrepreneurship, is facilitating skill training to workers in the textile industry. The Samarth portal has registered over 4.78 lakh users as of March 27, 2025. As of March 19, 2025, a total of 3.82 lakh beneficiaries have been trained and around 77.74% or 2.97 lakh have been placed in jobs.

Free Trade Agreements

India has so far signed 15 Free Trade Agreements (FTAs) including a recent agreement with the UK and six Preferential Trade Agreements (PTAs) with various trading partners. Ongoing negotiations are in place with major partners, including the US, European Union and Oman, to facilitate greater market access and export potential for Indian textiles.

Opportunities and Threats Opportunities

Sustainability in Textile Manufacturing

India is well positioned to lead in sustainable textile production amid a global push for eco-friendly practices. Initiatives such as the UNIDO-GEF Textile Project, initiated at Bharat Tex 2025, emphasises the elimination of toxic chemicals and adoption of circular manufacturing practices. Additionally, Indias climate finance taxonomy approach is channelling green investments, further enabling producers to adopt organic cotton, recycling technologies and environmentally responsible production processes.

Digital Transformation and Industry 4.0

The integration of digital tools such as of AI, IoT and advanced automation is revolutionising the textile sector by enhancing efficiency, minimising waste and providing customised production at scale. These technologies are also optimising supply chains and customer engagement, which are essential to sustain competitiveness in international markets.

Export Growth Momentum

The nations textile exports are expected to touch $65 billion by 2025, bolstered by low manufacturing costs and a skilled labour force. New opportunities are emerging through good performance in major markets such as the US, fuelled by rising demand and trade policy reforms.

Domestic expansion

The domestic home textiles market is experiencing strong growth, driven by rising disposable incomes, rapid urbanisation and a flourishing real estate sector. The segment is forecast to rise by 8-10% in FY25, offering manufacturers substantial opportunities to cater to evolving consumer preferences.¹²

Threats

Intensified Global Competition

India is under intense competition from Bangladesh, Vietnam and China in international textile markets. Vietnams textile sector benefits from high labour productivity and cost efficiencies, while Bangladesh remains a powerful competitor despite the latest political turbulence. As these nations enhance their capabilities, India must innovate and improve cost- effectiveness to retain market share.

High Raw Material Costs

Cotton, viscose and polyester are the three major raw materials for textiles and are the costliest in India, primarily because of import duties in the value chain upstream. For instance, cotton prices in India remained 10-15% above international levels for much of 2024. Similarly, polyester and viscose fibres cost up to 36% and 16% higher than in China, respectively, largely due to import duties and inefficiencies in the upstream supply chain.

Trade Barriers and Regulatory Challenges

Chinas cloth exports to India grew by 8.79% during Q1 2024, which was due to Quality Control Orders (QCOs) on raw materials that inadvertently benefitted Chinese exporters. The QCOs resulted in non-tariff barriers impeding the free movement of specialised fibres and yarns, which led to shortages and increased domestic prices. Furthermore, complex export procedures and stringent compliance demands by Western buyers particularly strain smaller players and MSMEs.

Macroeconomic Uncertainty

International economic instability, such as prolonged inflation and elevated interest rates, has restrained consumer demand for non-essential items such as apparel. Additionally, geopolitical tensions, such as the Russia-Ukraine conflict and the Middle Eastern instability, have disrupted shipping lanes and elevated freight costs. These external pressures are compelling manufacturers to build more resilient, adaptive supply chains amid rising operational expenses.

Company Overview

Winsome Textile Industries Limited is a leading manufacturer specialising in yarns designed for knitting and weaving processes and specialised Yarn Dyed Knitted Fabrics. The Companys advanced manufacturing units, located in Baddi, manufacture a wide array of high-quality products, such as 100% cotton melange yarn, cotton-synthetic blended melange yarns, speciality and dyed yarns (both carded and combed) and customised yarns tailored for downstream knitting and weaving processes. Additionally, the Company offers an extensive variety of raw white yarns, dyed yarns, fancy yarns, melange yarns, knitted fashion and striper fabrics. Trusted over 250 customers across 50 countries worldwide, Winsome Textile Industries Limited is recognised for its commitment to quality and reliability in the global textile market.

Financial Performance

The Companys financial performance witnessed improved Y-o-Y revenue from operations and net profit, amidst impact of ongoing headwinds in the textile sector. Revenue from operations surged by 5.09% from H 823.32 Crore in FY24 to H 865.23 Crore in FY25. EBITDA changed from H 87.80 Crore in FY24 to H 100.97 Crore in FY25. EBITDA margin changed from 10.66% to 11.67% over the same period. Net Profit stood at H 28.07 Crore in FY25 against H 18.69 Crore in FY24. Net Cash Flow from operations improved significantly, from H 75.98 Crore in FY24 to H 90.29 Crore in FY25. This improvement reflects the completion of major investments required for modernisation, which are expected to enhance operational efficiencies and optimise costs going forward. The Companys net worth stood at H 303.19 Crore as on 31st March, 2025 compared to 275.06 Crore as on March 31, 2024. Total debt decreased from H 286.03 Crore as on March 31,2024 to H 253.31 Crore as on March 31,2025. Consequently, the debt-equity ratio was recorded at 1.75 as on March 31,2025.

The following are analytical ratios for the year ended March 31,2025 and March 31,2024

(*) Earnings available for debts service = Profit after Tax before depreciation and interest on long term borrowings (**) Debts Service = Repayment of long term borrowings and Gross Interest on long term borrowings (#) Capital Emploted = Total book value of all assets less current liabilities

Reason of variance where the variance exceeds 25% as compared to previous years:

Return on Equity Ratio & Net Profit Ratio

Revival in domestic as well as export demand resulting in higher sales and stable raw material prices led to higher profit in current financial year as compared to last financial year.

Internal Control Systems and their Adequacy

The Companys internal audit system is continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee routinely reviews reports presented by the internal auditors. The committee notes the audit observations and takes corrective actions if necessary. It maintains a constant dialogue with the statutory and internal auditors to ensure effective operations of the internal control systems.

Human Resource

Winsomes continues to invest in its people with a strong focus on building capabilities, enhancing expertise, nurturing leadership skills and promoting a culture of continuous learning. The Company aims to position itself not only as a learning organisation but also as a delivery-oriented enterprise. Winsome shares a deep bond with a team of more than 2000 (employee strength including workers) members, many of whom have been associated with the Company for more than a decade.

Winsome organises technical, behavioural and management training programmes conducted by both internal specialists and external faculty. Additionally, employees are deputed for participation in training programmes organised by reputed institutions such as Confederation of Indian Industry (CII), PHD Chamber of Commerce and NITRA. Amid challenging market conditions, Winsome gives precedence to cost optimisation activities and process improvement, led by its robust Total Quality Management (TQM) programme and Quality Circle.

The Company remains committed to nurturing a positive and inclusive workplace culture, even during challenging times. The Company actively promotes team morale by organising employee engagement activities and celebrating festivals to reinforce team morale. Beyond day-to day motivation, Winsome places strong emphasis on the holistic wellbeing of its employees, including mental health support and personal development initiatives. In testimony to its dedication to skill building, Winsome is a Training Provider registered with the National Skill Development Corporation, providing programmes such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for new apprentices and Recognition of Prior Learning (RPL) for existing workers at its training centres at Baddi.

Risk Management

Business risk has the potential to impact prospects and performance to a considerable extent. The Company has in place an extensive, systematic risk management process to resolve this issue. Under this framework, Winsome identifies, classifies and prioritises different types of risks, such as operational, financial and strategic business risks in a systematic manner. Significant resources are devoted by the Company in mitigating and managing these identified risks in order to protect its business interests and guarantee sustainable growth.

Cautionary Statement

In this annual report, the Company has disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that it periodically makes, contain forward-looking statements that set out anticipated results based on the managements plans and assumptions. It has tried wherever possible to identify such statements by using words such as anticipates, estimates, expects, projects, intends, plans, believes and words of similar substance in connection with any discussion of future performance. The Company cannot guarantee that these forward-looking statements will be realised, although it believes it has been prudent in our assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should know or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should kindly bear this in mind. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.