Aastha Spintex Ltd Management Discussions

OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

You should read the following discussion in conjunction with the Restated Financial Information. The Restated Financial Information has been prepared by our management as required under the SEBI ICDR Regulations read with the ICAI Guidance Note. For more information, see "Risk Factors Risk Factor 73- Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which may be material to the financial statements prepared and presented in accordance with SEBI ICDR Regulations contained in this Draft Red Herring Prospectus" on page 63.

Our Financial Year commences on April 1 and ends on March 31 of the following year, so all references to a particular Financial Year or a Fiscal are to the twelve months ended March 31 of that year.

This Draft Red Herring Prospectus also contains forward-looking statements that involve risks, assumptions, estimates and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to the considerations described below.

For details, see "Forward-Looking Statements" beginning on page 19.

Unless otherwise indicated or the context otherwise requires, the financial information as at and for the financial years ended March 31, 2025, March 31, 2024 and March 31, 2023, ("Restated Financial Information") included herein is derived from the Restated Financial Information included in this Draft Red Herring Prospectus.

Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance have been included in this section and elsewhere in this Draft Red Herring Prospectus. Such non-GAAP financial measures should be read together with the nearest GAAP measure. See "Risk Factors

Risk Factor 74 In this Draft Red Herring Prospectus, we have included certain Non-GAAP ("Generally Accepted Accounting Principles") financial measures and certain other industry measures related to our operations and financial performance." on page 63. These Non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the Textile industry. Certain assumptions and estimates are relied upon to calculate such measures, therefore such measures may not be comparable with financial, operational or industry-related statistical information of similar nomenclature computed and presented by other similar companies.

The industry-related information contained in this section is derived from the industry report titled "Outlook for Textile Industry 2025" issued on September 29, 2025, prepared by Infomerics Analytics & Research Private

Limited (the "Informerics Report"). We have exclusively commissioned and paid for the Infomerics Report for the purposes of confirming our understanding of the industry exclusively in connection with the Offer. We officially engaged Infomerics Analytics & Research Private Limited in connection with the preparation of the Infomerics Report pursuant to an engagement letter dated May 28, 2025. The Infomerics Report will form part of the material documents for inspection and is available on the website of our Company at www.aasthaspintex.com/investor-corner. Unless otherwise indicated, the industry-related information contained in this section is derived from the Infomerics Report (extracts of which have been appropriately incorporated as part of "Industry Overview" beginning on page 129). For further details and risks in relation to the Infomerics Report, see "Risk Factors- Risk Factor 67 This Draft Red Herring Prospectus contains information from third parties, including an industry report prepared by an independent third-party research agency, Infomerics

Analytics & Research Private Limited ("Infomerics Analytics & Research"), which we have commissioned and paid for purposes of confirming our understanding of the industry exclusively in connection with the Issue." on page 61.

BUSINESS OVERVIEW

We are engaged in the business of manufacturing and trading of carded, combed and compact combed cotton yarns and cotton bales. In Fiscal 2025, our Company has achieved the highest ROCE and RONW amongst its selected peers. Our cotton bales are utilized both for captive production of cotton yarns and for supply to other spinning units and the cotton yarns produced are used in both knitting and weaving applications, catering to a wide spectrum of end-use segments and products including denim, terry towels, shirting, sheeting, sweaters, socks, bottom wear, home textiles, and industrial fabrics.

We have a semi-automated and integrated spinning and ginning Manufacturing Facility situated at Halvad, Morbi, Gujarat. We produce 100% cotton yarns in counts ranging from Ne 26 to Ne 40 which includes carded, combed and combed compact varieties ("Ne" refers to the English Cotton Count System, which is a standard way to measure the fineness or thickness of yarn. The higher the Ne, the finer the yarn).

The product wise bifurcation of revenue from operations from manufacturing and trading of our products for last three fiscals is set out below:

Our operation	For financial year ended March 31, 2025		For financial year ended March 31, 2024		For financial year ended March 31, 2023
	Revenue from sale of Products ( In Lakhs)	% of Revenue from Operations from sales of products	Revenue from sale of Products ( In Lakhs)	% of Revenue from Operations from sales of products	Revenue from sale of Products ( In Lakhs)	% of Revenue from Operations from sales of products
Sale of Product
Cotton Yarn	18,383.84	53.49%	20,883.39	70.55%	19,443.67	82.76%
Cotton Bales	11,529.26	33.55%	5,812.14	19.63%	1,308.74	5.57%
Sale of Cotton waste
Cotton Waste by-products	4,456.40	12.97%	2,906.84	9.82%	2,740.42	11.66%
Total	34,369.50	100.00%	29,602.37	100.00%	23,492.83	100.00%

We have more than a decade of operational experience in the textile industry, we presently operate through our manufacturing facility which is strategically located at Halvad, Morbi (Gujarat) in proximity to high quality cotton growing area of Gujarat and spans a built-up area of approximately 65,762 sq. m ("Manufacturing Facility").

As on date of this Draft Red Herring Prospectus, we have a spindle count capacity of 25,920 spindles through 15 compact ring spinning machines and an annual 12,000 MT production capacity of cotton bales through 28 ginning machines. We have a cotton yarn production capacity of 7,700 MT per annum. Our Manufacturing Facility operates 24 hours per day on a 3-shift basis to maximize output and ensure uninterrupted operations and usually operates for 365 days a year.

We have a quality control and product development team ("Quality Team") at our Manufacturing Facility that undertakes testing of raw materials, unfinished product at different stages of production, and finished products before dispatch. We have set up an in-house laboratory to undertake such tests on the intermediate and finished products. Additionally, standard operating procedures are adopted for controlling each step of our manufacturing process to ensure compliance with the quality specifications provided by our customers. In order to ensure uniformity in our products and minimize errors, we have implemented a semi-automated manufacturing process that regulates key stages of production, thereby helping maintain consistent quality and standards while reducing the scope for error. We believe these quality measures improves the effectiveness of the manufacturing process, thereby improving the quality of our products.

Our Promoters Divyang Jashwantbhai Patel (Chairman and Managing Director), Vivek Rasik Gothi (Whole-time Director), Jashwant Valjibhai Patel (Executive Director) and Rasiklal Valjibhai Patel (Administrative Head), play a pivotal role in strategic business development and driving the growth of our Company. With deep industry knowledge and strong entrepreneurial skills, their emphasis on product quality and integration of advanced technology in our manufacturing process, continue to guide our expansion and define our core values. All our Promoter Directors remain actively involved in our operations. Their vision, business acumen, and leadership have been instrumental in sustaining our operations and driving consistent growth. They are supported by an experienced team of Key Managerial Personnel and Senior Management, who have consistently demonstrated the ability to adapt to changing market conditions, scale operations, and maintain customer relationships. For further details, see "Our Promoters and Promoter Group" and "Our Management" on page 212 and 189, respectively.

We are also an environmentally conscious organization committed to promoting the use of renewable energy. As part of our sustainability efforts, we installed a rooftop solar power plant, ground-mounted solar power plant and wind power plant, which became operational in 2023, 2023 and 2024 respectively to source captive power thereby substantial cost effectiveness on power cost. The installed capacity of this rooftop solar power plant, ground-mounted solar power plant and wind power plant stands at 1 MW, 4 MW and 2.7 MW respectively. This initiative supports our shift toward clean energy, contributing to our daily power requirements and resulting in a generation of average 37,692 units per day collectively during the period in between April 2024 to March 2025 resulting in reduction of monthly electricity expenses. This green initiative not only helps reduce operational costs but also reinforces our commitment to eco-friendly and energy-efficient manufacturing practices by lowering our overall carbon footprint.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED PERIOD BEGINNING

FROM APRIL25:

1. The company vide Special Resolution Dated 11^th July, 2025 and Special Resolution Dated 30^th August, 2025 has increased its authorized share capital as follows:

Year	As on March 31, 2025		As on September 29, 2025
Particulars	Authorized Share Capital ( In lakhs)	Number of Shares (Face value 10)	Authorized Share Capital ( In lakhs)	Number of Shares (Face value 10)
Equity Share Capital	3000.00	3,00,00,000	4500.00	4,50,00,000
Preference Share Capital	225.00	22,50,000	-	-
Total	3225.00	3,22,50,000	4500.00	4,50,00,000

2. Acquisition of Falcon Yarns Private Limited by Aastha Spintex Limited through execution of

Shareholders Agreement and Share Purchase Agreement:

Pursuant to the applicable provisions of Companies Act, 2013, other applicable laws, The Company has entered into definitive agreements to acquire a controlling stake in Falcon Yarns Private Limited.

The Company executed:

Share Purchase Agreement (SPA): with the existing shareholders of Falcon Yarns Private Limited for the acquisition of 100% of the issued and paid-up share capital of the company executed on September 22, 2025.

Shareholders Agreement (SHA): between the Company and the continuing shareholders of Falcon Yarns Private Limited, setting out the rights and obligations of the shareholders, governance structure, and other customary provisions executed on September 22, 2025.

3. Passing of Resolution for Initial Public Offering (IPO) Post Balance Sheet Date:

Pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations and 2015, Companies Act, 2013 /other applicable laws and rules, the Board of Directors of The Company at its meeting held on 16^th July, 2025 and meeting of the members held on 08^th August, 2025 has approved a special resolution to initiate the process for an Initial Public Offering (IPO) of the equity shares of the Company.

4. Conversion of Compulsorily Convertible Preference Shares to Equity Shares at Face Value of 10/- Each and Securities Premium of 72.5/- each:

Pursuant to the Board resolution passed on 14^th July 2024 for conversion of 2,00,000 shares and Board resolution passed on 22/09/2025 for conversion of 19,73,670 shares, Compulsorily Convertible Preference

Shares were converted to Equity Shares at Face Value of 10/- Each and Securities Premium of 72.5/- each post receipt of remaining payment of 61.875/- per share post balance sheet date. This resulted into increase of Equity Share Capital post 31^st March, 2025 as follows:

Particulars	Equity Share Capital ( In lakhs)	Preference Share Capital ( In lakhs)	Securities Premium ( In lakhs)
As on 31/03/2025	2946.85	46.77	1904.06
As on 22/09/2025	3164.22	-	3140.91
Increase	217.37	(46.77)	1236.86

The table below shows our key financial and operational metrics for the financial years indicated below:

Particualrs	Fiscal 2025	Fiscal 2024	Fiscal 2023
Revenue from Operations(1) ( Lakhs)	35,116.02	30,486.16	23,926.50
PAT for the year/ period (2) ( Lakhs)	2,349.83	1,628.76	105.83
Cash Flow from Operations(3) ( Lakhs)	(1,871.62)	1,293.13	1,547.49
EBITDA(4) ( Lakhs)	4,694.39	3,424.59	1,160.02
Particualrs	Fiscal 2025	Fiscal 2024	Fiscal 2023
EBITDA Margin (5) (%)	13.37%	11.23%	4.85%
PAT Margin(6) (%)	6.69%	5.34%	0.44%
Net Worth(7) ( Lakhs)	12,163.43	7,637.83	6,000.94
Current Ratio (8)	1.64	1.29	1.23
Total Debt / Equity(9)	0.78	1.08	1.35
Debt Service Coverage Ratio (10)	2.37	1.35	0.65
ROE(11) (%)	23.73%	23.88%	1.78%
ROCE(12) (%)	19.12%	18.95%	4.58%
Inventory turnover ratio(13)	3.15	4.31	4.01
Trade Receivables turnover ratio(14)	6.28	6.96	18.00
Trade payables turnover ratio(15)	6.19	4.97	8.31
Working Capital Turnover Ratio (16)	6.41	12.29	12.14
Fixed Assets Turnover Ratio (17)	4.17	3.79	3.68
Installed Capacity in M.T. (Ginning Division) (18)	12,000	12,000	12,000
Installed Capacity in M.T. (Spinning Division) (18.1)	7,700.00	7,700.00	6,400.00
Utilised Capacity M.T. (Ginning Division) (19)	9,897.00	9,526.00	8,531.00
Utilised Capacity M.T. (Spinning Division) (19.1)	7,436.00	7,361.00	6,137.00

Note:

(1) Revenue from Operations is defined as sales.

(2) PAT for the period/year is defined as profit for the year.

(3) Cash flow from operations as per Restated Cash Flow Statement

(4) EBITDA is defined as profit before non-operating income, tax, interest, depreciation and amortisation. (5) EBITDA Margin is calculated as EBITDA/revenue from operation

(6) PAT margin is calculated as "PAT"/revenue from operation.

(7) Net Worth" means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the Restated Financial Information (8) Current ratio means current assets divided by current liabilities. (9) Total debt /Equity is calculated as total debt /net worth. (10) Debt service coverage is defined as profit after tax + non-cash expenses + finance cost/interest expenses +principal repayment +lease payment. (11) ROE is calculated as profit after tax /average total net worth. (12) ROCE is calculated as profit before tax plus Interest cost /Capital Employed. Capital employed will be calculated as sum of Net Worth and Total Debt reducing Deferred Tax liability. (13) Inventory Turnover Ratio is calculated by dividing cost of goods sold during the period with average inventory. Inventory will exclude Packing material and stores & spares. (14) Trade Receivables Turnover Ratio is calculated by dividing Credit Sales during the period with average receivables. (15) Trade Payables Turnover Ratio for calculated by dividing Credit purchases during the period with average payables. (16) Working capital turnover ratio defined as revenue from operations divided by average working capital. Working capital will be calculated as Current Assets -Current liabilities. (17) Fixed Asset Turnover is calculated as total revenue from operations divided by average net fixed assets excluding Capital work in Progress. (18) Installed Capacity in M.T. (Ginning Division) is calculated as total production capacity of (Ginning Division). (18.1) Installed Capacity in M.T. (Spinning Division) is calculated as total production capacity of (Spinning Division). (19) Utilized Capacity in M.T. (Ginning Division) is calculated as total production of (Ginning Division). (19.1) Utilized Capacity in M.T. (Spinning Division) is calculated as total production of (Spinning Division).

PRINCIPAL FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our business, results of operations and financial condition are affected by a number of factors, including:

A. Macro-economic conditions affecting the textile market

The demand for our products such as carded, combed and compact combed cotton yarns and cotton bales is closely linked to trends in the domestic and international textile industries. Our yarns are used in both weaving and knitting applications, catering to a broad range of end-use segments including denim, shirting, home textiles, terry towels, sweaters, socks, and industrial fabrics. The consumption of cotton yarn is influenced by macroeconomic conditions, growth in apparel and home textile industries, urbanisation, household income levels, and export demand from global buyers. Any slowdown in economic growth, reduction in disposable incomes, or contraction in consumer spending could adversely affect demand for downstream textile products, which in turn may reduce demand for our yarns and bales.

In international markets, our sales are exposed to factors such as global cotton price movements, exchange rate fluctuations, changes in trade policies of importing countries, tariff or non-tariff barriers, and shifting customer preferences toward man-made fibres. Geopolitical tensions, regulatory restrictions, or global trade disruptions could also impact export volumes routed through our reseller.

Given the concentration of our revenues in cotton yarn and bales, any sustained downturn in demand whether due to economic slowdown, consumer preference shifts, policy changes, or adverse global trade developments may materially and adversely affect our growth prospects, revenues, profitability, cash flows, and overall financial condition.

B. Dependency on Suppliers and Customers

Raw cotton and cotton bales are the principal raw material used in our manufacturing operations and constitute the single largest component of our production costs. Our ability to remain cost competitive and operationally efficient is closely linked to the procurement of raw cotton and cotton bales in adequate quantities, of consistent quality, and at commercially viable terms. Our factory is located within major cotton growing area of Gujarat and hence, we procures raw cotton from farmers and traders for processing at our ginning unit into cotton bales. In addition, we source cotton bales for our spinning unit from other ginning mills and traders across Gujarat, which helps reduce transportation costs, shorten lead times, and support timely production. Over the years, we have built relationships with the farmers and a network of reliable suppliers; during the last three Fiscals, we procured cotton bales from more than 125 Suppliers out of which 8 suppliers are in top 10 suppliers where 6 Suppliers are associated with us over 5 years and top 10 suppliers contribute 73.05 %, 79.62 % and 44.30% of the total purchase during the last three fiscals.

Consumption of cotton bales in spinning unit is much higher in value term than raw cotton in ginning unit and purchase of raw cotton is relatively scattered among large numbers of farmers and traders and hence, all of our Top 10 suppliers are involved in supplying of cotton bales to us. The details of our top 05 (five) and top 10 (ten) raw material suppliers vis-a-vis our total purchases as per our Restated Financial Statements are set out below:

Particulars	Fiscal 2025		Fiscal 2024		Fiscal 2023
	in Lakhs	% of total purchases	in Lakhs	% of total purchases	in Lakhs	% of total purchases
Top (5) suppliers	20,027.02	59.06%	14,962.58	58.82%	5,904.29	31.44%
Top (10) suppliers	24,770.21	73.05%	20,252.10	79.62%	8,320.64	44.30%
Total Purchase	33,909.72		25,435.79			18,780.51

C. Fluctuations in market prices for our major Products

Product s	Fiscal 2025			Fiscal 2024			Fiscal 2023
	Qty (in Tonne)	Revenu e ( in Lakhs)	Rate/Ton ne ( in Lakhs)	Qty (in Tonne)	Revenu e ( in Lakhs)	Rate/Ton ne ( in Lakhs)	Qty (in Tonne)	Revenu e ( in Lakhs)	Rate/Ton ne ( in Lakhs)
Cotton Yarn	6,964.64	18,383.8 4	2.64	8,465.66	20,883.3 9	2.47	6,385.7 9	19,443.6 7	3.04
Cotton bales	7,314.40	11,529.2 6	1.58	3,243.85	5,812.14	1.79	665.07	1,308.74	1.97
Cotton seeds	6,309.71	2,183.69	0.35	1,000.00	279.48	0.28	127.15	47.63	0.37
Cotton waste	2,577.16	2,272.71	0.88	2,588.46	2,627.36	1.02	2,419.6 0	2,692.79	1.11
Total	23,165.9 1	34,369.5 0	NA	15,297.9 7	29,602.3 7	NA	9,597.6 1	23,492.8 3	NA

Certain Non-GAAP Measures

Certain non-GAAP measures like EBITDA, EBITDA Margin, Return on Capital Employed, PAT Margin and

Debt to Equity Ratio ("Non-GAAP Measures") presented in this Red Herring Prospectus are a supplemental measure of our performance and liquidity that are not required by, or presented in accordance with, Ind AS, Indian GAAP, or IFRS. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, or IFRS and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the year or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, or IFRS. In addition, these Non-GAAP Measures are not a standardised term, hence a direct comparison of similarly titled Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although the Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See "Risk Factors Risk Factors 74- In this Draft Red Herring Prospectus, we have included certain Non-GAAP ("Generally Accepted Accounting Principles") financial measures and certain other industry measures related to our operations and financial performance." on page 63.

MATERIAL ACCOUNTING POLICIES

For details, please see "Restated Financial Statement" on page 220

PRINCIPAL COMPONENTS OF STATEMENT OF PROFIT AND LOSS

Set forth below are the principal components of statement of profit and loss from our continuing operations:

Income

Our total income comprises of (i) revenue from operations and (ii) other income.

Revenue from Operations

Revenue from operations comprises of Income generated from (i) sale of manufactured and Traded products domestically (ii) VAT/SGST Reimbursement (iii) Commission and Brokerage (GST) (iv) Job Work Income (GST), (v) Settlement of Bales Contract and (vi) Insurance Claim Against Damage Material.

Other Income

Other income includes (i) Interest Income from FDR & Others, (ii) Other Miscellaneous Income, (iii) Profit on Sale of Asset, (iv) Sundry Balances Written Off, (v) MTM Gain on Fair value of Mutual Fund/ Quoted Equity Shares (FVTPL), (vi) Provision for Expected Credit Loss Reversed, (vii) Interest Income on financial instruments at amortised cost, and (viii) Deferred Income on Financial instruments carried at amortised cost.

Expenses

Our expenses comprise of: (i) Cost of material consumed; (ii) Purchase of Stock-in-Trade (iii) Changes in the inventories of Finished Goods and Work-In Progress; (iv) Manufacturing Expenses; (v) Employee benefits expense; (vi) Finance costs; (vii) Depreciation and amortisation expense; and (viii) Other expenses.

Cost of Material Consumed

Cost of material consumed the purchase of various raw material adjusted with opening and closing stock of Raw material.

Purchase of Stock-in-Trade

Purchase of Stock-in-Trade Comprises of purchase of goods for trading.

Changes in the inventories of Finished Goods and Work-In Progress

Change in inventory includes difference between opening and closing balance of Finish Goods, Ginning Division goods, WIP Goods and Waste Goods as at the beginning and end of the year.

Manufacturing Expenses

Manufacturing expenses comprise of (i) Stores, Spares and Repairs, (ii) Packing Materials, (iii) Repair & Maintenance (iv) Power & Fuel Expenses and (v) Other Manufacturing Expenses.

Employee Benefits Expense Employee benefits expenses primarily include (i) Salary, wages & labour charges, (ii) Directors remuneration,

(iii) Contribution to PF, ESI and other fund, (iv) Employee Gratuity and leave encashment expenses, (v) Government Subsidy for PF and Pension Fund, (vi) Other allowances & expenses, and (vii) Staff welfare expenses.

Finance Cost

Finance cost includes (i) Interest expenses to Bank/FI, (ii) Bank Charges (incl. Commission on Bank Guarantee) & Loan Processing Charges, (iii) Interest on Late Payment Statutory Dues, (iv) Other Interest Expenses, and (v) Interest on financial instruments at Amortised Cost.

Depreciation and Amortisation expenses

Depreciation and amortisation expenses primarily include depreciation expenses on our property, plant and equipment.

Other Expenses

Other expenses include Postage, telephone , internet & web charges, Transport Charges, Computer Expense, Travelling, conveyance & vehicle expenses, Legal & professional charges, Insurance, Stationery & Printing, Rent, rates & taxes, Auditors remuneration, Other expense, Provision for Expected Credit Loss, (Profit)/Loss on Sale/Disposal of Asset, Deferred Expenses on Financial instruments carried at amortised cost, Corporate Social Responsibility, Advertisement expenses, Clearing & Forwarding, Commission expenses, Business promotion expenses and Quality/Quantity Discount.

RESULTS OF OPERATIONS BASED ON OUR RESTATED FINANCIAL INFORMATION

The following table sets forth select financial data from our statement of profit and loss for Fiscals 2025, 2024 and 2023, from our Restated Financial Information, the components of which are also expressed as a percentage of total income for such periods.

Particulars	Standalone
	As at and for Fiscal 2025		As at and for Fiscal 2024		As at and for Fiscal 2023
	(In Lakhs)	(As a % of total income)	(In Lakhs)	(As a % of total income)	(In Lakhs)	(As a % of total income)
Revenue from operations	35,116.02	99.71%	30,486.16	99.74%	23,926.50	99.82%
Other income	101.04	0.29%	80.92	0.26%	42.72	0.18%
Total income (A)	35,217.06	100.00%	30,567.08	100.00%	23,969.22	100.00%
Cost of Materials	30,199.76	85.75%	21,890.91	71.62%	19,449.66	81.14%
Purchase Stock in Trade	1,565.97	4.45%	3,747.43	12.26%	888.84	3.71%
Changes in inventories	(3,842.31)	(10.91)%	(1,291.62)	(4.23)%	(496.20)	(2.07)%
Manufacturing Expenses	1,027.49	2.92%	1,396.80	4.57%	1669.17	6.96%
Employee benefits expense	810.45	2.30%	728.90	2.38%	750.65	3.13%
Finance Cost	1,015.06	2.88%	1,050.86	3.44%	739.34	3.08%
Depreciation and amortization
	805.21	2.29%	626.95	2.05%	579.92	2.42%
expense
Other expenses	368.55	1.05%	294.11	0.96%	257.87	1.08%
Total expenses (B)	31,950.17	90.72%	28,444.34	93.06%	23,839.26	99.46%
Profit before tax (A-B)	3,266.89	9.28%	2,122.74	6.94%	129.96	0.54%
Income tax expense / (credit)
Current Tax	(570.79)	(1.62)%	(370.89)	(1.21)%	(21.69)	(0.09)%
MAT Credit Reserve	(281.14)	(0.80)%	117.11	0.38%	21.69	0.09%
Deferred Tax	(65.13)	(0.18)%	(240.20)	(0.79)%	(24.13)	(0.10)%
Total tax expense (C)	917.06	2.60%	493.98	1.62%	24.13	0.10%
Profit for the year (D)	2,349.83	6.67%	1,628.76	5.33%	105.83	0.44%

COMPARISON OF THE RESULTS OF OPERATIONS

Fiscal 2025 compared to Fiscal 2024

Total Income

Our total income increased by 15.21% to 35,217.06 Lakhs in Fiscal 2025 from 30,567.08 Lakhs in Fiscal 2024, primarily on account of the factors discussed below.

Revenue from operations

Our revenue from operations increased by 15.19% to 35,116.02 Lakhs in Fiscal 2025 from 30,486.16 Lakhs in Fiscal 2024, mainly due to higher sales volumes, Commission & Brokerage Income.

Our sales from ginning unit has increased from 32,43,853 Kgs in Fiscal 2024 to 73,14,401.50 Kgs in Fiscal 2025 which in terms of value has increased from 5,812.14 lakhs in Fiscal 2024 to 11,529.26 lakhs in Fiscal 2025. Over and above that sales from cotton seeds has increased from 279.48 lakhs in Fiscal 2024 to 2183.69 Lakhs in Fiscal 2025. Cotton seeds are by-product of ginning unit and with increase in ginning activity during the Fiscal 2025, further sale of cotton seeds has also increased.

Our Number of customers has increase from 78 in Fiscal 2024 to 231 in Fiscal 2025.

This was partially offset primarily by decrease in sale of traded goods amounting to 1767.73 Lakhs in Fiscal 2025 from 4011.62 Lakhs in Fiscal 2024 increase in VAT & GST reimbursement to 372.83 Lakhs in Fiscal 2025 from 331.21 Lakhs in Fiscal 2024;

Other income

Our other income increased by 24.87% to 101.04 Lakhs in Fiscal 2025 from 80.92 Lakhs in Fiscal 2024, largely due to reversal of provision for expected credit loss of 37.74 Lakhs in Fiscal 2025 from 8.47 Lakhs in Fiscal 2024. This was partially offset by reduction in interest income from FDR and others to 9.69 lakhs in Fiscal 2025 from 22.54 lakhs in Fiscal 2024;

Expenses

Our total expenses increased by 12.33% to 31,950.17 Lakhs in Fiscal 2025 from 28,444.34 Lakhs in Fiscal 2024, on account of the factors discussed below.

Cost of Materials

Our material cost increased to 30,199.76 Lakhs in Fiscal 2025 from 21,890.91 Lakhs in Fiscal 2024, primarily due to increase in ginning activity.

Our raw material purchase increased to 2,49,71,058.15 Kgs in Fiscal 2025 from 1,35,594,17.32 Kgs in Fiscal

2024 resulting in increase in purchase of 10.655.07 Lakhs. Our closing stock of raw materials increased to 3,273.55 Lakhs in Fiscal 2025 from 1,098.86 lakhs in Fiscal 2024 due to reasons explained below under head

"Changes in Inventories".

Purchase of Stock in Trade

Our Purchase of Stock in Trade decreased by 58.21% to 1,565.97 Lakhs in Fiscal 2025 from 3,747.43 Lakhs in Fiscal 2024 as we were able to fulfil orders from customers through own manufacturing due to better management of inventory as a result of which we were able to suffice needs of our customers. We also need to trade goods if we get orders for cotton yarns of different quality from customers. As a result, in order to fulfil the orders, we buy certain required finished products from other suppliers.

Changes in inventories

Our changes in inventories increased by 198.10% to 3,842.31 Lakhs in Fiscal 2025 from 1,291.62 Lakhs in

Fiscal 2024, primarily due to higher purchases of cotton bales (or raw cotton as the case may be) in the 4^th quarter of Fiscal 2025 due to higher volume of orders received from customers during the period. Similarly, during 1^st quarter of Fiscal 2026 stood at 9,104.94 lakhs as compared to sales of 6,412.42 lakhs in 1^st quarter of Fiscal 2025. Due to increased order book resulting in to increased production activity in last quarter of Fiscal 2025, inventory holding of the company was higher at the end of year 31^st March, 2025;

Manufacturing Expenses

Declined substantially by 26.44% to 1,027.49 Lakhs in Fiscal 2025 from 1,396.80 Lakhs in Fiscal 2024. It primarily decreased due to reduction in power charges to 735.58 Lakhs in Fiscal 2025 from 933.06 Lakhs in

Fiscal 2024. This was due to full year captive power generation from solar power plant and windmill purchased by us. Also, Repairs, Maintenance and spares & stores reduced to 140.43 Lakhs in Fiscal 2025 from 229.94

Lakhs in Fiscal 2024.

Employee Benefits Expense

Our employee benefits expense Increased by 11.19% to 810.45 Lakhs in Fiscal 2025 from 728.90 Lakhs in Fiscal 2024, mainly due to increase in salary paid to the employees and labour. There was increase in director remuneration from 77.40 Lakhs in Fiscal 2024 to 80.80 Lakhs in Fiscal 2025;

Finance Costs

Declined marginally by 3.41% to 1,015.06 Lakhs in Fiscal 2025 from 1,050.86 Lakhs in Fiscal 2024. There was increase in Bank Charges & Loan Processing Charges to 32.03 Lakhs in Fiscal 2025 from 9.71 Lakhs in

Fiscal 2024. There was decrease in interest expenses paid to bank due to decline in outstanding term loans with regular repayment of the loans, late payment of statutory dues and interest to others to 939.35 Lakhs in Fiscal 2025 from 1004.91 Lakhs in Fiscal 2024.

Depreciation and Amortization expense

Increased by 28.43% to 805.21 Lakhs in Fiscal 2025 from 626.95 Lakhs in Fiscal 2024, primarily due to full year depreciation on windmill amounting having WDV of 1,913.52 Lakhs which was installed in Fiscal 2024.

Other Expenses

Other Expenses Increased by 25.31% to 368.55 Lakhs in Fiscal 2025 from 294.11 Lakhs in Fiscal 2024, primarily due to increase in:

i. Selling & Distribution expenses to 48.16 Lakhs in Fiscal 2025 from 36.82 Lakhs in Fiscal 2024; and

ii. Admin & other expenses to 320.38 Lakhs in Fiscal 2025 from 257.29 Lakhs in Fiscal 2024. There was increase in rent, rates & taxes to 23.78 Lakhs in Fiscal 2025 from 6.16 Lakhs in Fiscal 2024 primarily due to full year rent of leasehold land on which windmill is built. We had also incurred CSR of 26.75 Lakhs in

Fiscal 2025.

Profit before tax

As a result of the above, our profit before tax increased significantly to 3,266.89 Lakhs in Fiscal 2025 compared to 2,122.74 Lakhs in Fiscal 2024, reflecting increased profitability due to improved operational performance.

Tax Expense

Our total tax expense increased to 917.06 Lakhs in Fiscal 2025 from 493.98 Lakhs in Fiscal 2024, in line with increased profit before tax due to higher profitability.

Profit after tax for the period

Consequently, our profit after tax increased to 2,349.83 Lakhs in Fiscal 2025 compared to 1,628.76 Lakhs in Fiscal 2024, reflecting a substantial improvement in overall earnings

Fiscal 2024 compared to Fiscal 2023

Total Income

Our total income increased by 27.53% to 30,567.08 Lakhs in Fiscal 2024 from 23,969.22 Lakhs in Fiscal 2023, primarily on account of higher revenue from operations.

Revenue from Operations

Our revenue from operations increased by 27.42% to 30,486.16 Lakhs in Fiscal 2024 from 23,926.50 Lakhs in Fiscal 2023, largely attributable to higher sales volumes, settlement income and commission & brokerage income.

Our sales from spinning unit has increased from 19,443.67 lakhs in Fiscal 2023 to 20,883.39 lakhs in Fiscal

2024.

Our sales from ginning unit has increased from 6,65,068 Kgs in Fiscal 2023 to 32,43,853 Kgs in Fiscal 2024 which in terms of value has increased from 1308.74 lakhs in Fiscal 2023 to 5812.14 lakhs in Fiscal 2024.

We have received income of 491.47 Lakhs in Fiscal 2024 towards settlement of Bales Contract. Our revenue from operations includes trading sales of 4011.62 lakhs in Fiscal 2024 which was only 876.03 lakhs in Fiscal

2023.

Other Income

Other income increased by 89.42% to 80.92 Lakhs in Fiscal 2024 from 42.72 Lakhs in Fiscal 2023, primarily due to higher interest income from FDR & others, MTM Gain on Fair value of Mutual Fund/ Quoted Equity Shares (FVTPL), Deferred Income, & Interest income of financial instruments

Expenses

Our total expenses increased by 19.32% to 28,444.34 Lakhs in Fiscal 2024 from 23,839.26 Lakhs in Fiscal 2023, due to the following factors:

Cost of Materials

Increased by 12.55% to 21,890.91 Lakhs in Fiscal 2024 from 19,449.66 Lakhs in Fiscal 2023. The costs increased primarily due to increase in purchase of raw materials to 21,688.69 Lakhs in Fiscal 2024 from 17,891.67 Lakhs in Fiscal 2023 in correlation to higher orders resulting into increased sales during fiscal 2024 as compared to Fiscal 2023.

This shows that input cost of the company in % terms has reduced with increase in production and sales in Fiscal 2024 which in turn has led to higher gross profit in Fiscal 2024 as compared to Fiscal 2023.

Changes in inventories

Inventory level increased by 160.30% to 1,291.62 Lakhs in Fiscal 2024 from 496.20 Lakhs in Fiscal 2023, primarily due to higher stock purchases on account of increased orders position from the customers and visibility of higher sales. Finished goods inventory at the end of Fiscal year 2024 was 3,781.06 Lakhs as compared to

2,436.97 Lakhs in Fiscal year 2023. With increase in production and higher demand at the end of Fiscal Year 2024, the company had higher inventory of finished goods;

Manufacturing Expenses

Declined substantially by 16.32% to 1,396.80 Lakhs in Fiscal 2024 from 1,669.17 Lakhs in Fiscal 2023. It primarily decreased due to reduction in power charges to 933.06 Lakhs in Fiscal 2024 from 1,345.67 Lakhs in

Fiscal 2023. This was due to full year captive power generation from solar power plant installed by us.

Employee Benefits Expense

Decreased slightly by 2.90% to 728.90 Lakhs in Fiscal 2024 from 750.65 Lakhs in Fiscal 2023, mainly due to cost optimisation in salaries & wages, govt subsidy for PF, and a reduction in other allowances & expenses.

Finance Costs

Increased by 42.13% to 1,050.86 Lakhs in Fiscal 2024 from 739.34 Lakhs in Fiscal 2023, driven by higher borrowings mainly towards acquisition of wind mills and enhancement in working capital finance, bank charges and other interest expenses.

Depreciation and Amortization expense

Increased by 8.11% to 626.95 Lakhs in Fiscal 2024 from 579.92 Lakhs in Fiscal 2023, on account of asset additions of wind mills during Fiscal 2024 and full year depreciation on Solar power plant in Fiscal 2024. Solar power plant was installed in Fiscal 2023.

Other Expenses:

Increased by 14.05% to 294.11 Lakhs in Fiscal 2024 from 257.87 Lakhs in Fiscal 2023, primarily on account of higher administrative and selling & distribution expenses corresponding to higher business activity reflected in sales growth.

Profit before tax

As a result of the foregoing factors, our profit before tax increased significantly to 2,122.74 Lakhs in Fiscal 2024 from 129.96 Lakhs in Fiscal 2023 registering growth of 1533.33%.

Tax Expense

Our tax expense increased to 493.98 Lakhs in Fiscal 2024 from 24.13 Lakhs in Fiscal 2023, corresponding to higher taxable income during the year.

Profit after tax for the period

Consequently, our profit after tax increased substantially to 1,628.76 Lakhs in Fiscal 2024 from 105.83 Lakhs in Fiscal 2023, reflecting a sharp improvement in profitability with increase in business vis-?-vis achieving increased operational efficiencies.

LIQUIDITY AND CAPITAL RESOURCES

Historically, our primary liquidity requirements have been to finance the working capital needs of our operations. We have met these requirements through cash flows from operations and borrowings.

As of March 31, 2025, we had 11,870.19 Lakhs in inventories, 5,252.49 Lakhs in financial assets (including trade receivables of 3,907.27 Lakhs, cash and cash equivalents of 1,111.37 Lakhs, and other financial assets of 233.85 Lakhs), and 2,161.98 Lakhs in other current assets.

Our total outside liabilities, based on our Restated Financial Information, amounted to 11,735.60 Lakhs, 11,810.65 Lakhs, and 6,650.63 Lakhs as of Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively.

Our Current Ratio, which is reflection of the liquidity position of the company remained 1.64, 1.29 and 1.23 as of Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively.

Our Debt to Equity Ratio, which is reflection of the leverage position of the company remained 0.78, 1.08 and 1.35 as of Fiscal 2025, Fiscal 2024, and Fiscal 2023, respectively.

CASH FLOWS BASED ON RESTATED FINANCIAL INFORMATION

The table below summarizes the statement of cash flows, as per our cash flow statements, for the periods indicated:

Particulars	Fiscal 2025	Fiscal 2024	Fiscal 2023
Net cash generated from / (used in) operating activities	(1,871.62)	1,293.13	1,547.49
Net cash generated from / (used in) investing activities	(35.97)	(393.83)	(2,783.89)
Net cash generated from / (used in) financing activities	2,370.83	(865.56)	1,422.14
Cash and cash equivalents at the end of the year	1,111.37	648.13	614.39

Operating Activities

Fiscal 2025

Our net cash used in operating activities was 1,871.62 Lakhs in Fiscal 2025. Our operating profit before working capital change was 5,107.63 Lakhs in Fiscal 2025. The movements in working capital in Fiscal 2025 primarily consisted of (i) increase in inventories of 6,224.16 Lakhs, (ii) decrease in trade receivables of 3,380.03 Lakhs, (iii) increase in other current assets, non-current financial assets and other financial assets of 1,088.80 Lakhs, (iv) decrease in trade payables of 2,560.49 Lakhs and (v) increase in other current liabilities, provisions and other financial liabilities of 63.22 Lakhs.

Fiscal 2024

Our net cash generated from operating activities was 1,293.13 Lakhs in Fiscal 2024. Our operating profit before working capital change was 3,844.08 Lakhs in Fiscal 2024. The movements in working capital in Fiscal 2024 primarily consisted of (i) increase in trade payables of 4,291.32 Lakhs, (ii) increase in other current liabilities of 190.61 Lakhs, (iii) increase in other current assets and financial assets of 130.34 Lakhs, (iv) decrease in trade receivables of 5,810.08 Lakhs and (v) decrease in other financial liabilities and provisions of 153.48 Lakhs.

Fiscal 2023

Our net cash generated from operating activities was 1,547.49 million in Fiscal 2023. Our operating profit before working capital change was 1,493.07 million in Fiscal 2023. The movements in working capital in Fiscal 2023 primarily consisted of (i) decrease in inventories of 839.57 Lakhs, (ii) increase in trade receivables of 326.61 Lakhs, (iii) increase in other current assets, other non current assets and financial assets of 250.71 Lakhs, (iv) increase in trade payables of 124.16 Lakhs and (v) decrease in other financial liabilities and provisions of 79.19

Lakhs.

Investing Activities

Fiscal 2025

Our net cash used in investing activities was 35.97 Lakhs in Fiscal 2025. This was primarily due to purchase of fixed assets including CWIP and capital advances of 134.98 Lakhs, partially offset by loans repaid of 89.32 Lakhs and interest received of 9.69 Lakhs.

Fiscal 2024

Our net cash used in investing activities was 393.83 Lakhs in Fiscal 2024. This was primarily due to purchase of fixed assets including CWIP and capital advances of 369.14 Lakhs and loans given of 47.24 Lakhs, partially offset by interest received of 22.54 Lakhs.

Fiscal 2023

Our net cash used in investing activities was 2,783.89 Lakhs in Fiscal 2023. This was primarily due to purchase of fixed assets including CWIP and capital advances of 2,762.13 Lakhs and loans given of 42.08 Lakhs, partially offset by proceeds from sale of fixed assets of 5.00 Lakhs and interest received of 15.33 Lakhs.

Financing Activities

Fiscal 2025

Our net cash generated from financing activities was 2,370.83 Lakhs in Fiscal 2025. This was primarily due to proceeds from short-term borrowings of 2,393.51 Lakhs, proceeds from share capital of 262.63 Lakhs, and proceeds from securities premium of 1,904.06 Lakhs partially offset by repayment of long-term borrowings of

1,174.30 Lakhs and financial expenses of 1,015.06 Lakhs.

Fiscal 2024

Our net cash used in financing activities was 865.56 Lakhs in Fiscal 2024. This was primarily due to repayment of long-term borrowings of 253.54 Lakhs and financial expenses of 1,050.86 Lakhs, partially offset by proceeds from short-term borrowings of 438.85 Lakhs.

Fiscal 2023

Our net cash generated from financing activities was 1,422.14 Lakhs in Fiscal 2023. This was primarily due to proceeds from long-term borrowings of 1,205.46 Lakhs and short-term borrowings of 956.02 Lakhs, partially offset by financial expenses of 739.34 Lakhs.

FINANCIAL INDEBTEDNESS

As of March 31, 2025, we had term loans (excluding deferred payment liabilities) of 9,505.12 lakhs*, with a debt to equity ratio of 0.78 as per the Restated Financial Information. Some of our financing agreements include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. We cannot assure you that we will be able to obtain these consents and any failure to obtain these consents could have significant adverse consequences for our business. For further information on our agreements governing our outstanding indebtedness, see "Financial Indebtedness" on page 280.

*Debt comprises non-current borrowings and current borrowings.

CONTINGENT LIABILITIES

The following table sets forth the principal components of our contingent liabilities as of March 31, 2025, as per the Restated Financial Information:

Particulars	As of March 31, 2025
Bank guarantees given to PGVCL from Bank of Baroda	239.31
Total	239.31

For further information see "Restated Financial Information" on page [?].

OFF-BALANCE SHEET ARRANGEMENTS.

As of the date of this Draft Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

RELATED PARTY TRANSACTIONS

For details of our related party transactions, see "Summary of the Issue Document - Summary of related party transactions" and "Restated Financial Statements - Related Party Transactions" on pages 27 and 260, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various types of market risks during the normal course of business. Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk and commodity risk. We are exposed to commodity risk, interest rate risk and inflation risk in the normal course of our business.

Commodity risk

We are exposed to the price risk associated with purchasing our raw materials, which form the highest component of our expenses. We typically do not enter into formal arrangements and long-term contract with our suppliers. Therefore, fluctuations in the price and availability of raw materials may affect our business, cash flows and results of operations. We do not currently engage in any hedging activities against commodity price risk.

Interest rate risk

We are exposed to interest rate risk primarily as a result of term loans from banks. As at March 31, 2025, we had all of our loans that are subject to floating rates of interest, which exposes us to market risk as a result of changes in interest rates. Upward fluctuations in interest rates would increase the cost of new debt and interest cost of outstanding variable rate borrowings. In addition, any increase in interest rates could adversely affect our ability to service long-term debt, which would in turn adversely affect our results of operations. Interest rates are highly sensitive to many factors beyond our control, including the monetary policies of the RBI, domestic and international economic and political conditions, inflation and other factors. Upward fluctuations in interest rates increase the cost of servicing existing and new debts, which adversely affects our results of operations and cash flows.

Credit Risk

We are exposed to credit risk on amounts owed to us by our clients. If our clients do not pay us promptly, or at all, it may impact our working capital cycle, and/or we may have to make provisions for or write-off on such amounts.

Inflation

India has experienced high inflation in the recent past, which has contributed to an increase in interest rates. High fluctuation in inflation rates may make it more difficult for us to accurately estimate or control our costs.

Capital Expenditures

Our historical capital expenditures were, primarily for setting up additional operating facilities. For the Fiscal Years 2025, 2024 and 2023 and, our capital expenditures outflow (including Capital Work in Progress) were

131.98 lakhs, 2,051.50 lakhs and 2,226.61 lakhs, respectively as per our Restated Financial Information.

Change in accounting policies

Other than as disclosed in the Restated Financial Information, there have been no changes in accounting policies during Fiscals 2025, 2024 and 2023.

Segment Reporting

Both the units of the company are integrated and functioning in same premises. Product manufactured in ginning unit is captively consumed and hence segment reporting is not applicable to the company.

Significant Economic Changes.

Other than as described above under the heading titled "Principal Factors Affecting Our Financial Condition and Results of Operations," to the knowledge of our management, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations.

Unusual or Infrequent Events of Transactions

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".

Known Trends or Uncertainties

Apart from the risks as disclosed under Section titled "Risk Factors" on page __, to our knowledge there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

Future Relationship Between Cost and Income

Other than as described "Risk Factors", "Our Business", "Managements Discussion and Analysis of Financial Position and Result of Operations" on Pages 33, 156 and 288 respectively, to our knowledge, there are no known factors that might affect the future relationship between expenditure and income which may have a material adverse impact on our operations and finances.

New products, Services or Business Segments

Other than as described in "Our Business" on page 156 of this Draft Red Herring Prospectus, there are no new products or business segments in which we operate

Seasonality of Business

For details please see "Risk Factor Risk Factor 11- Our ginning operations are seasonal in nature, which may result in variability in production, inventory management challenges, and lower in-house consumption of cotton bales, thereby exposing us to operational and financial risks." on page 40

Suppliers or Customer Concentration

For details please see "Risk Factor Risk Factor 3- We are dependent on a limited number of suppliers for procurement of raw cotton and cotton bales, our principal raw material, and any disruption in supply or adverse movement in cotton prices may materially affect our business, results of operations and financial condition." on page 34

Competitive Conditions.

We operate in a competitive environment. Our Business operations are affected by competition from domestic as well international Competitors. For details, see "Our Business", "Industry Overview" and "Risk Factors" on page

156, 129 and 33 respectively.

Reservations, Qualifications and Adverse Remarks Included by Auditors

There are no reservations, qualifications and adverse remarks included by Auditors in the Restated Financial Information.

Significant Developments After March 31, 2025

Other than as disclosed in this chapter there are no significant events after March 31, 2025.