AB Cotspin India Ltd Management Discussions

We are primarily engaged in manufacturing of cotton yarn, knitted fabric, cottonseed oil and oilcakes. Our Company commenced its business in 1997 with a cotton ginning plant with cotton bales and cotton seeds being our initial products. Thereafter in the year 2000, we installed a crushing unit to extract oil from cotton and mustard seeds and expanded our product basket with the addition of cotton seed oil, mustard oil and oil cake. In the year 2011, we ventured in manufacturing cotton yarn by setting up a spinning plant. In the year 2014 we installed a knitting machine and thus forayed into manufacturing of knitted fabric. With our expansion over the years under the guidance of our management, we have been able to generate revenue from operations of Rs. 29,806.36 lakhs during the financial year 2024-25.

STRUCTURE AND DEVELOPMENTS

The textile industry in India occupies a unique and pivotal position within the nations economy. As one of the earliest industries to take root in the country, it stands as the second-largest employer, surpassed only by agriculture. By addressing a fundamental human need, the textile industry plays a crucial role in improving quality of life through its sustained development.

What distinguishes this sector is its comprehensive self-sufficiency, encompassing the entire production chain from raw materials to finished products with significant value added at each stage. This self-reliance not only strengthens economic resilience but also guarantees a consistent supply of textiles, vital for satisfying domestic demands and exploring export opportunities, thereby making a substantial contribution to the national economy.

Additionally, the textile industry has tremendous potential to generate employment across various domains, including agriculture, manufacturing, organized, and decentralized sectors, reaching both rural and urban areas. It particularly creates opportunities for women and marginalized groups, offering pathways to livelihood and advancement.

Beyond its economic impact, the textile industry is instrumental in preserving and celebrating Indias rich cultural heritage. The diverse range of traditional textiles and crafts reflects the countrys vibrant history and artistic legacy. By supporting these age-old crafts, the industry helps conserve traditional knowledge and skills, ensuring they are passed down to future generations.

Moreover, the sectors growing focus on sustainability and innovation has led to the adoption of environmentally friendly manufacturing processes and the promotion of eco-conscious consumerism. As global awareness of environmental issues increases, Indias dedication to sustainable textiles positions it as a responsible and forward-thinking player in the global market.

In essence, Indias textile industry not only plays a critical role in the economy but also serves as a custodian of cultural heritage, a proponent of sustainable practices, and a catalyst for social progress by providing diverse employment opportunities. Its ongoing growth and development are poised to enhance Indias prosperity and global reputation in the years ahead.

GLOBAL ECONOMY

The global economy continued to show resilience in 2025, building on the recovery momentum of the previous year. While lingering uncertainties remained particularly around geopolitical tensions, supply chain realignments, and central bank policies the overall outlook improved. Inflationary pressures further eased across major economies, with several countries achieving or nearing their target inflation levels.

The global economy remains under stress from persistent inflationary trends, geopolitical tensions, and climate-induced disruptions. While several advanced and emerging economies have demonstrated resilience, global growth remains subdued. According to the World Economic Situation and Prospects 2025, global GDP is expected to grow at 3.3 %, reflecting a continuation of the sluggish post-pandemic recovery.

Tight monetary policies and reduced investment flows in developing nations continue to restrain overall growth. Nevertheless, sectors such as green energy, digital transformation, and infrastructure are witnessing renewed investor interest, offering moderate optimism for medium-term recovery.

INDIAN ECONOMY

India has continued to solidify its position as one of the fastest-growing major economies in the world, maintaining economic stability and growth despite global uncertainties. With a projected GDP growth rate ranging between 6.5% and 6.7% for FY 2025-26, the country remains on a strong growth trajectory. This momentum is largely driven by resilient domestic demand, increased capital expenditure on infrastructure, and favourable demographic dynamics, which continue to support consumption and labour force expansion.

The governments ongoing emphasis on flagship initiatives such as “Make in India,” “Digital India,” and the Gati Shakti National Master Plan has significantly contributed to improving the ease of doing business, enhancing logistics efficiency, and boosting the manufacturing and industrial sectors. These initiatives have also attracted both domestic and foreign investments into key areas including electronics, defence manufacturing, semiconductors, and renewable energy.

Credit growth across both retail and industrial segments has remained robust, supported by a well-capitalised banking system and improved asset quality. High-frequency indicators like record GST collections, rising e-way bill generation, and a consistently strong Manufacturing PMI point to a broad-based expansion across sectors.

In addition, the governments commitment to fiscal consolidation and macroeconomic prudence alongside stable inflation and a calibrated monetary policy has strengthened investor confidence. Financial soundness indicators remain stable, with a low fiscal deficit target and improving public sector balance sheets contributing to a supportive environment for sustainable industrial and economic growth.

Looking ahead, India is well-positioned to harness the benefits of structural reforms, digitalisation, a young workforce, and a growing middle class, all of which serve as key pillars for long-term economic expansion.

OPPORTUNITIES AND THREATS

OPPORTUNITIES-

The textile industry is currently presented with diverse and promising opportunities. Rising global demand driven by a growing population and middle-class, coupled with increasing consumer awareness of sustainability, opens avenues for eco-friendly and innovative textiles. Technological advancements in smart fabrics and online retailing offer new market segments, while a shift towards circular economy practices and collaborations with fashion brands cater to environmentally conscious consumers. Embracing Industry 4.0 technologies and exploring technical textiles can enhance efficiency and tap into higher-value applications. The industrys adaptability and focus on research and development provide a fertile ground for expansion and innovation in the current period.

THREATS:

The textile industry faces several threats in the current period. Fluctuating raw material prices and supply chain disruptions pose challenges to cost management and production stability. Intense competition in pricing and customer base can erode profitability. Moreover, changing consumer preferences and demands require constant innovation and adaptation.

Compliance with evolving environmental regulations and geopolitical uncertainties further add to the industrys complexities.

However, we are making all our efforts to mitigate these risks and concerns, and proactively develop risk management strategies, invest in research and development, stay adaptable to market changes, foster a culture of innovation, and prioritize sustainability practices throughout the operations.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company has one segment of activity namely “Cotton Ginning”. Hence, Accounting Standard on Segment Reporting (AS - 17) issued by the Institute of Chartered Accountant of India does not apply.

RISK AND CONCERNS

The company is subject to various business risks, both internal and external, as the growth of our industries is closely tied to the overall economic conditions. The primary risk that the business encounters is the potential impact of adverse changes in the economy. Additionally, the company faces significant competition in terms of pricing and attracting and retaining customers.

OUTLOOK

Our firm conviction lies in leveraging our strengths to establish a prominent position in the global textile industry, providing us with a competitive advantage. Over the years, we have cultivated enduring relationships with our clients, and our proven track record of delivering high-quality products throughout the textile industry further reinforces these bonds, leading to an upsurge in repeat business from our existing clientele.

Moreover, our customer base is spread across numerous countries and regions, which strategically reduces our dependence on any particular country or region. This diversification in clientele enhances our resilience and positions us to adapt more effectively to market fluctuations and changes in demand.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an adequate and efficient internal control system, which provide protection to all its assets against loss from unauthorized use and for correct reporting of transactions. The Company has put in place proper controls, which are reviewed at regular intervals to ensure that transactions are properly authorized and correctly reported and assets are safeguarded. The Audit Committee of the Board addresses issue raised by Auditor. The internal control systems are implemented to safeguard the companys assets from loss and damages. To keep constant check on cost structure and to provide adequate financial and accounting controls and implement accounting standards. In addition to above, the Company has formulated a vigil Mechanism (Whistle Blower Policy) for its Directors and Employees of the Company for reporting genuine concern about unethical practices and suspected malpractices.

HUMAN RESOURCE MANAGEMENT

At our company, human capital is highly valued and regarded as a crucial asset integral to our overall success. We firmly believe that our employees are the cornerstone of our market achievements. To nurture a culture of excellence, we continuously invest in creating a work environment that enables individuals to reach their full potential and consistently exceed expectations. We are committed to ensuring a safe, secure, and healthy working atmosphere for all employees. Our pursuit of excellence drives us to not only meet but surpass industry standards and our internal benchmarks for staff productivity and performance.

Employees and teams at all levels align their professional goals with the companys broader objectives, fostering a unified sense of purpose and direction. We aspire to be recognized as one of the leading employers in our industry. Our industrial relations are marked by a harmonious and mutually respectful relationship between the company and its workforce. We deeply value the dedication, sincerity, and hard work of our employees and take pride in their contributions. Providing stable, long-term employment is a fundamental objective of our company.

As of March 31, 2025, the Company had 383 permanent employees on its payroll, reflecting our commitment to nurturing a skilled and dedicated workforce to drive our continued growth and success.

DISCUSSION ON FINANCIAL PERFORMANCE

1. The Summary of the Operating performance is given below:

2. KEY FINANCIAL RATIOS OF THE COMPANY SHOWING FINANCIAL PERFORMANCE ARE AS UNDER:

3. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

4. Disclosure of Accounting Treatment: