Bhilwara Technical Textiles Ltd Management Discussions

GLOBAL ECONOMY

A turning point is emerging for the global economy, driven by resilient growth amid persistent uncertainty. The World Economic Outlook (April 2025) reports a 3.3% growth in 2024. The global manufacturing sector also improved in 2024, with the index for output increasing from about 122 in Q1 to 126 in Q4. However, industrialising economies grew more slowly than industrial ones, influenced by monetary policy changes, including the recent U.S. Federal Reserve rate cut.

The Federal Open Market Committee lowered its key overnight borrowing rate to 4.25%-4.5%, returning it to the levels seen in December 2022. This affects global borrowing costs and capital flows, influencing economic activity, currency values, and international investment. These monetary actions occur within a complex global landscape, reflected in the mixed performance of the labour market in 2024.

Despite a seemingly stable global unemployment rate of 5% in 2024, achieved through employment growth aligning with labour force expansion, deeper issues were apparent. Youth unemployment, in particular, remained a significant concern, showing little progress, with a high rate of 12.6%. Furthermore, low-income countries struggled to create enough decent jobs, resulting in a return to pre-pandemic levels of informal work and working poverty.

Outlook: The global economy is projected to grow at 2.8% in 2025 and 3.0% in 2026. This outlook is characterised by intensifying downside risks amid escalating trade tensions and adjustments in financial markets.

INDIAN ECONOMY

The Indian economy grew 6.5%, driven by robust contributions from agriculture and services, along with steady domestic demand.

Simultaneously, the manufacturing sector rebounded in FY25, with the Purchasing Managers Index (PMI) showing an upward trend at the end of the fiscal year, indicating a widespread recovery in domestic momentum after mid-year fluctuations.

Indias exports reached a record US$824.9 billion in FY 2024-25, representing a 6.01% increase from US$778.1 billion in the previous year. This growth primarily stemmed from services exports, which rose 13.6% to US$387.5 billion, from US$341.1 billion in FY 2023-24. For the week ending March 28, 2025, Indias foreign exchange reserves increased to US$658.8 billion, up US$4.5 billion. This rise followed a US$2.8 billion increase in gold reserves to US$77.2 billion, alongside a US$1.6 billion decline in foreign currency assets to US$558.86 billion.

Outlook: Projections indicate a 6.5-6.7% growth rate for the Indian economy, with budget tax incentives likely to boost domestic demand. The outlook is somewhat restrained by recent volatility in tariffs and financial markets.

GLOBAL MARKET

In 2024, global capacity utilisation fell to 72%, as manufacturers operated at reduced capacity due to low demand. Geopolitical risks caused instability, disrupted supply chains, and eroded consumer confidence, while high energy and raw material prices squeezed the profitability of the textile industry.

Major consumer markets, such as the United States and the European Union, su_ered from high import prices and rising shipping costs. The textile market faced significant challenges due to US retailers reliance on Asian suppliers. Similarly, EU retailers faced increased delivery costs and extended shipping delays, which were exacerbated by the threat of US tariffs.

Despite a challenging performance in 2024, optimism prevails for the textile industry, fuelled by expectations of recovering demand. While 2024 was weak, outlooks for 2025 are positive. This optimism stems from the anticipated easing of economic pressures, a potential rebound in consumer spending on textiles, and the possible resolution of geopolitical uncertainties that hampered growth last year.

INDIAN MARKET

The Indian textile industry experienced mixed results in 2024, largely due to several challenges. Elevated domestic cotton prices compared to international levels affected the competitiveness of cotton yarn exports, while a moderation in global demand hindered export-oriented segments.

Despite these challenges, certain sectors demonstrated resilience, particularly the ready-made garment segment, which experienced a notable increase. Furthermore, the demand outlook remains strong, supported by the normalisation of channel inventories among global retailers.

Bangladeshs political instability disrupted its garment industry, impacting the Indian textile sector. As a key supplier of cotton yarn and fabrics, India hosts many garment manufacturing bases. These disruptions have led global buyers to seek alternatives in India and Southeast Asia, providing India with an opportunity to capture a greater market share. Reports indicate that billions of dollars in orders have shifted from European and American buyers to Indian textile firms.

Vietnam and India have significant potential for textile cooperation. As a leading garment exporter, Vietnams exports were valued at US$44 billion in 2024, while India provides essential raw materials. Indias diverse production of _bres complements Vietnams heavy reliance on China for textile inputs (65%). By importing cheaper Indian cotton and yarn through the ASEAN-India Free Trade Agreement, Vietnam could reduce costs by 22% to 27%.

Indias annual demand for premium polyester fabric (valued at US$1.2 billion) aligns with Vietnams interest in importing affordable shuttle-less looms from India, helping both nations create more efficient supply chains.

INDIAS YARN EXPORTS

The Indian cotton yarn industry recorded modest revenue growth of 2–4% in FY25. Despite a 5–7% drop in overall yarn exports due to decreased demand from Chinas large domestic cotton production, cotton yarn exports increased by 3.1% to US$12.04 billion.

In the latter half of FY25, the industry recovered due to improving credit profiles for spinners, aided by a balanced supply-demand scenario after capacity rationalisation. Export volumes stabilised at 9 to 10 crore kilograms per month, suggesting potential stabilisation or a slight rebound in export activity after initial challenges in the Chinese market.

INDIAN TECHNICAL TEXTILES

Unlike conventional textiles, technical textiles prioritise specific performance attributes for applications in sectors like construction, agriculture, aerospace, automotive, healthcare, protective gear, and home care.

To promote this sector, the Indian governments National Technical Textiles Mission (NTTM), with a budget of H1,480 crore, aims to achieve US$10 billion in technical textile exports by 2025. Launched in 2020-21 and extended to 2025-26, the mission seeks to position India as a global leader in this sector.

In addition to its core components, NTTM has introduced multiple initiatives to enhance innovation, skill development, and indigenous production, which are:

• The Grant for Internship Support for Technical Textiles (GIST 2.0) was launched to bridge the gap between industry and academia by offering hands-on learning experiences, fostering local innovation, and supporting the ‘Make in India initiative.

• Another significant initiative, the Grant for Research & Entrepreneurship Across Aspiring Innovators in Technical

Textiles (GREAT) Scheme, launched in August 2023, provides funding for the commercialisation of innovative prototypes.

Eight startups have already received H50 lakh each for developments in medical, industrial, and protective textiles. At the same time, three academic institutions, including IIT Indore and NIT Patna, have been granted H6.5 crore to introduce specialised courses in geotextiles, geosynthetics, and sports textiles.

Recognising the growing demand for skilled professionals in the sector, NTTM aims to train 50,000 individuals, including students, unskilled workers, and professionals. Collaborating with institutions like SITRA, NITRA, and SASMIRA, the initiative offers specialised courses in medical, protective, mobile, and agricultural textiles.

THE COTTON SCENARIO

The Cotton Association of India (CAI) estimates the 2024-25 cotton pressing at 302.25 lakh bales (170 kg each, equivalent to 317.18 lakh running bales of 162 kg). The CAI also maintains its projection for total cotton supply through September 30, 2025, at 357.44 lakh bales (170 kg each, or 375.09 lakh running bales of 162 kg).

Indias cotton production for the 2024-25 season is expected to decline by approximately 7% from the previous year, primarily due to reduced cultivation areas and significant crop losses resulting from excessive rainfall during critical growth stages.

AN OVERVIEW

Established in 2007 under the Companies Act of 1956, following the de-merger of RSWM Ltd.s ‘Strategic Investment Division, Bhilwara Technical Textiles Limited (BTTL) operates primarily in the trade of 100% Cotton Raw White, Dyed, and M?lange yarns across both domestic and international markets.

The Companys core purpose is to engage in the full spectrum of activities related to fabrics and textiles. This includes manufacturing, production, trading (as buyers, sellers, importers, exporters, dealers, brokers, agents, stockists, distributors, and suppliers) of automotive and home furnishing fabrics, made-ups, apparel, and various other products made from cotton, nylon, silk, polyester, acrylic, and other _bres. While exports have primarily been directed towards countries like Belgium and Mauritius, the commodity nature of these products results in modest trading margins.

Significantly, BTTL holds a substantial equity stake in BMD Private Limited, a prominent manufacturer specialising in high-performance automotive seating fabrics, furnishings, _ame-retardant fabrics, and air-texturised yarn. BMD Private Limiteds diversification into Wind and Solar Power Generation also provides BTTL with exposure to the growing renewable energy sector. With a consistent history of strong performance, BMD Private Limited maintains a leading position in the Original Equipment (OE) segment for its products.

FINANCIAL PERFORMANCE

Your Company achieved a turnover of H819.50 lakh for the financial year ended 31st March, 2025, against H1437.07 lakh in the previous financial year ended 31st March, 2024. Furthermore, the Company achieved an operational profit of H140.38 lakh for the financial year ended March 31, 2025, as compared to H168.44 lakh in the previous financial year. The Company recorded a Net Profit of H87.22 lakh for the financial year ended 31st March, 2025, as against a Net Profit of H132.10 lakh reported in the previous financial year.

Change in Return on Net Worth in comparison to the previous year: The management utilised business liquidity to invest in strategic decisions that promise to sustain growth over the medium term. During FY25, the Net worth increased from H2,336.88 lakh as of 31st March 2024 to H2,424.74 lakh as of 31st March 2025. The return on net worth was 3.66% in FY25, compared to 5.82% in FY24.

Significant changes i.e., a change of 25% or more in the key financial ratios: In accordance with the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of significant changes i.e., change of 25% or more in key financial ratios as compared to the immediate previous financial year, along with detailed explanations are reported hereunder.

KEY RATIOS

INTERNAL CONTROL AND ITS ADEQUACY

The Company maintains appropriate internal control systems, including monitoring procedures, to ensure that all assets are safeguarded against unauthorised use or disposition loss. Significant issues are brought to the audit committees attention for periodic review and evaluation.

The Companys policies, guidelines, and procedures provide adequate checks and balances to ensure that all transactions are authorised, recorded, and reported correctly. The Audit Committee approves and reviews audit plans for the year based on internal risk assessment. Audits are conducted on an ongoing basis, and sufficient deviations are brought to the notice of the Audit Committee of the Board, following which corrective action is recommended for implementation.

The internal audit function is further strengthened through consultation with statutory auditors to monitor statutory and operational issues. Adherence to statutory compliance is a key focus area for the entire leadership team at the Company.

HUMAN RESOURCE

The Company maintains a professional and supportive work environment, where the commitment and expertise of its team contribute significantly to operational efficiency and customer engagement. It places importance on fostering positive employee relations and encouraging continuous development. This approach strengthens the work culture and supports the Companys long-term objectives.

RISK MANAGEMENT

The Companys drive for excellence requires a robust risk mitigation strategy as it is crucial for addressing both internal and external vulnerabilities. Effective risk management protects it from external incidents and minimises the impact of internal issues.

This commitment to risk management is a core aspect of our operations, diligently overseen by our team. By proactively identifying risks, sharing updates and mitigation plans, we strengthen our resilience through our plan. This proactive approach enhances our ability to navigate challenges, thereby sustaining trust and confidence in our brand within the competitive marketplace.

Cautionary Statement

CERTAIN STATEMENTS IN THIS MANAGEMENT DISCUSSION AND ANALYSIS DESCRIBING THE COMPANYS OBJECTIVES, PROJECTIONS, ESTIMATES AND EXPECTATIONS MAY BE ‘FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF APPLICABLE LAWS AND REGULATIONS. FORWARD-LOOKING STATEMENTS ARE IDENTIFIED IN THIS REPORT BY USING WORDS LIKE ‘ANTICIPATES, ‘BELIEVES, ‘EXPECTS, ‘INTENDS AND SIMILAR EXPRESSIONS IN SUCH STATEMENTS. SUCH STATEMENTS, HOWEVER, INVOLVE KNOWN OR UNKNOWN RISKS, SIGNIFICANT CHANGES IN THE POLITICAL AND ECONOMIC ENVIRONMENT IN INDIA OR KEY MARKETS ABROAD, EXCHANGE RATE FLUCTUATIONS AND OTHER COSTS THAT COULD CAUSE ACTUAL OUTCOMES AND RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED. THE COMPANY TAKES NO RESPONSIBILITY IN RESPECT OF FORWARD-LOOKING STATEMENTS HEREIN WHICH MAY UNDERGO CHANGES IN FUTURE BASED ON SUBSEQUENT DEVELOPMENTS, INFORMATION OR EVENTS.