Acrow India Ltd Management Discussions

(a) Industry Structure and Development:

Supply-Demand Fundamentals: India s domestic cotton production reached 290.91 339.00 lakh bales.

However, robust local industrial consumption outpaced supply, reaching 328.00 348.00 lakh bales. Trade Balance & Imports: Total national inventory buffer (opening stocks and imports) ranged between 50.00 62.00 lakh bales, while exports moderated to 15.00 lakh bales. This shift reflects a maturing domestic market absorbing more raw material locally rather than shipping raw fiber abroad.

Export Market Impact: India s cotton exports hit USD 10,655.51 million, representing 4.42% of total national textile and apparel exports.

Strategic Position: Cotton accounts for roughly 75% of India s overall fiber consumption. Supported by 23.80% of global cotton acreage, India retains a dominant structural advantage in raw material sourcing.

(b) Opportunities and Risks:

1. Opportunities and Strengths:

End-to-End Value Chain: Strong domestic spinning capacity and presence across all processing stages.

Government Support: Tailwinds from the Production-Linked Incentive (PLI) Scheme and dedicated PM

MITRA textile parks.

Acreage Advantage: Access to the worlds largest cultivated cotton footprint.

2. Risks:

Supply Chain & Input Costs: Increasing reliance on imported cotton could expose margins to foreign exchange fluctuations and higher landing costs.

Agrarian Dependency: Cotton yield remains heavily reliant on monsoon regularity and farm-gate government policies.

Operational Bottlenecks: Structural fragmentation in scaling up facilities, stringent international quality standards, and inflation across raw material, energy, and labor overheads.

(c) Segment-Wise Performance:

The Company operates in a single primary business segment:

Cotton, Clothing, and Yarn.

(d) Business Outlook:

While man-made synthetic fibers are capturing market share in technical fabrics, natural cotton remains irreplaceable in core export segments and traditional wear. Management is focused on boosting operational efficiency, expanding higher-value yarn trading, and selectively exploring synergistic real estate opportunities to deliver long-term shareholder value.

(e) Risks and Concerns:

Supply Chain & Input Costs: Increasing reliance on imported cotton could expose margins to foreign exchange fluctuations and higher landing costs.

Agrarian Dependency: Cotton yield remains heavily reliant on monsoon regularity and farm-gate government policies.

Operational Bottlenecks: Structural fragmentation in scaling up facilities, stringent international quality standards, and inflation across raw material, energy, and labor overheads.

(f) Internal Control Systems and their Adequacy:

The Company maintains an internal financial control framework fully aligned with the scale of its operations. Operational testing conducted during the year confirmed that these controls are operating effectively, with no design flaws or material weaknesses identified.

(g) Operational Performance and Financial Performance:

(h) Human / Industrial Relations:

Internal Financial Controls: Internal control systems were rigorously audited during the year. No material weaknesses or design deficiencies were found, confirming strong financial reporting integrity. Industrial Relations: Employee relations remained harmonious with zero strike-related losses, securing uninterrupted productivity