"We see a positive future in 2025 and beyond as we consistently
strive to balance expertise and experimentaron to deliver , increasing value to our k
customers."
It is my esteemed privilege to address all of you. Despite the
challenges posed by a demanding business environment, our proactive and forward-thinking
strategies have effectively protected us from adverse market conditions. This approach has
been pivotal in shaping our journey over the years.
THE ECONOMIC CLIMATE
The global economy is presently characterised by a significant level of
uncertainty. The undeniable ongoing macroeconomic challenges, ranging from climate
emergencies and geopolitical imbalances to energy volatility, necessitate continuous
preparedness. Furthermore, the risk of trade imbalances due to protectionist policies
threatens global stability and may exacerbate ?nflationary pressures.
Despite the Indian economy's resilience, it has not remained
insulated from prevailing uncertainties. The growth momentum of the
fiscal year 2024 was not fully sustained in the fiscal year 2025. Although there was a
decline in growth during the initial half of the Fiscal Year 2025, economic growth
experienced a notable recovery in the third quarter, with the GDP growth increasing to
6.2%, supported by favourable contributions from the industrial and agricultural sectors.
Looking forward to Fiscal Year 2026, India's economic growth outlook
appears positive. This optimism is underpinned by the nation's robust economic
fundamentals, encompassing a stable external account, ongoing fiscal consolidation
efforts, and consistent strength in private consumer expenditures.
It is particularly noteworthy that India's structural long-term growth
narrative continues to be robust, supported by advantageous demographics and stable
governance. In the medium term, the
government's strategic investments in infrastructure, coupled with
asset- building initiatives, are anticipated to enhance growth multipliers and encourage
private sector involvement.
TEXTILE INDUSTRY 2024: A YEAR OF CONTRASTS
The calendar year 2024 presented a complex landscape for the textile
industry, characterised by periods of resilience and vulnerability. In the first half of
the year, domestic demand remained steady, a positive signal amidst broader economic
fluctuations. However, a slowdown was observed in several key export destinations.
Instability in Bangladesh and conflict in the Middle East, including
the Red Sea crisis, significantly impacted Indian textile exports in 2024. Disruptions in
Bangladesh diminished its manufacturing role, causing material availability delays.
Simultaneously, Middle
Eastern conflicts interrupted trade routes, worsening India's export
performance.
Despite weak demand from the EU and US, along with supply chain issues
in Bangladesh and the Red Sea challenge, India's textile exports rebounded in late 2024.
The industry reversed its underperformance by adapting to changing sourcing patterns and
logistical challenges and achieved notable growth.
The industry is increasingly focusing on sustainability, adopting eco-
friendly fabrics and manufacturing processes that align with consumer preferences. The
growth of e-commerce platforms offers manufacturers new opportunities to connect directly
with consumers, broadening their market reach and diversifying sales channels. These
domestic trends, combined with recovering exports, show an industry adapting to global
challenges by leveraging its strengths and responding to consumer demands.
OURPERFORMANCE
Stovec's 2024 results mirrored the textile industry's ups and downs as
it struggled with shifting export demands and the complexities of the global market.
• Revenue from operations was recorded at C2345 million in 2024
and C2072 million in 2023.
• Profit before tax for 2024 was C174.5 million compared to C114
million in 2023.
• Earnings per share in 2024 were C62.07 as opposed to C43.28 in
the previous year.
OUTLOOK
Despite the unpredictable global business environment in 2024, the
stable inventory levels and low order cancellations observed in the latter half of the
year provide a source of optimism.
Although Indian cotton is relatively more expensive than its
international counterparts, demand is increasing due to several factors. These include the
replenishment of inventories by global retailers, anticipated tariffs imposed by the
United States on Chinese goods, and rising labour costs in Vietnam.
Furthermore, the ongoing instability in Bangladesh presents a
significant short-term opportunity for India, which could potentially contribute an
additional US$200-250 million in monthly export revenues. While cost considerations remain
critical for apparel brands, supply reliability is paramount. This shift towards
consistent suppliers, as evidenced by the recent surge in India's ready- made garment
(RMG) exports, signifies a promising avenue for growth.
The Union Budget for the fiscal year 2025-26 aims to address the
challenges faced by the textile industry and to advance its development. Key highlights
include:
1. An investment of C600 crore over five years in India's Cotton
Mission will enhance cotton productivity. The mission will focus on extra-long staple
(ELS) varieties and provide scientific and technological assistance to farmers.
2. The budget has removed customs duties on specific Rapier and Air Jet
looms to encourage the domestic production of technical textiles by lowering costs and
promoting modernisation to produce higher- quality products.
3. To restrict inexpensive imports, the government has raised the Basic
Customs Duty on knitted fabrics to 20% or C115 per kilogram, whichever is greater.
4. To assist textile micro, small, and medium enterprises (MSMEs), the
budget provides improved
access to credit, promotes exports, and introduces the Bharat Trade
Net, a digital platform designed to streamline trade processes and enhance access to
global markets.
5. Furthermore, the budget allocates C1,148 crore to the Production
Linked Incentive (PLI) Scheme to boost domestic production and exports, alongside an
allocation of C635 crore to the Amended Technology Upgradation Fund Scheme (ATUFS) to
upgrade textile machinery.
We see a positive future in 2025 and beyond as we consistently strive
to balance expertise and experimentation to deliver increasing value to our customers.
With a clear vision for strategic growth, we continuously strengthen our foundation for
sustained achievement.
IN CLOSING
Change is the sole constant. Thus, Stovec is also undergoing such
transformation. I hereby announce my retirement as Chairman of this esteemed organisation.
It has been a distinct honour to lead. Together, we have navigated through challenging
times with resilience and composure. We have consistently endeavored to enhance the
respect and standing of this Company as a leader within the sector. For this, I shall
always remain grateful to the team for their unwavering commitment and steadfast
dedication.
Before I close, I extend my sincere gratitude to our valued clients,
shareholders, and all stakeholders for their continued trust in Stovec. Looking forward, I
am confident that the management will continue to uplift the organisation to greater
heights.
| Warm regards, |
| Khurshed M. Thanawalla |
| Chairman |