Amarjothi Spinning Mills Ltd Management Discussions

1. ECONOMIC SCENARIO

The global economy showed steady progress, despite facing a challenging and uncertain environment. According to the IMF World Economic Outlook, April 2025, the world economy grew by 3.3 percent in 2024, and is projected to grow by 2.8 percent and 3.0 percent in 2025 and 2026 respectively. While these figures reflect a stable trend, they also signal that the pace of growth is more moderate compared to the past. Sectorwise, the global services sector continued to expand, while manufacturing showed signs of weakness, particularly in Europe. Trade policy uncertainty remains high, with more protectionist measures being adopted by major economies. This could impact investment flows and global trade if such trends continue.

Looking ahead, risks from geopolitical tensions and climaterelated events persists. As the global economy adjusts to new realities, businesses are focusing more on resilience, diversification, and longterm value creation.

Market Size & Growth: The global textile and apparel market is projected to reach US$ 2.9 trillion in 2025, with an expected growth to US$ 3.9 trillion by 2032, reflecting a Compound Annual Growth Rate (CAGR) of 4.3%.

Apparel Market: The global apparel market is valued at US$ 1.84 trillion in 2025, accounting for 1.65% of global GDP. It is projected to grow at a CAGR of 2.61% from 2025 to 2029, reaching US$ 2.04 trillion by 2029.

Textile Market: The broader textile market, encompassing fibers, yarns, fabrics and finished products, is valued at US$ 774.33 billion in 2025, with an expected CAGR of 3.52% to reach US$ 920.55 billion by 2030.

The textile market has witnessed strong growth in recent years, expanding from US$ 640.43 billion in 2024 to an estimated US$ 696.16 billion in 2025, at a CAGR of 8.7%. Looking ahead, the market is expected to maintain its upward trajectory, reaching US$ 915.96 billion by 2029, with a projected CAGR of 7.1%.

2. INDUSTRY SCEANARIO AND DEVELOPMENT:

The global textile industry had grown consistently since CY2018, barring CY2020, which saw a decline due to Covid19. The growth has continued and the global textile market size attained a value of around USD 988 Billion in 2024. Going ahead, the industry is expected to grow by around 34 percent driven by increasing demand from the apparel industry, newer trends in fast fashion segment coupled with the growth of ecommerce platforms. However, the industry may face challenges due to ongoing tariff situation.

The Indian Textile Industry is one of the largest in the World, enjoying its presence in the entire value chain i.e. cotton, yarn, fiber and apparel. This Company being a major supplier of melange yarn to the Tirupur market with its local presence, there is good scope for improved turnover and profitability. The Company has been improving its share of value added yarn in the market in the form of Cotton, Viscose,Polyester, Slub, Neps, Fancy , Grindle, Cut thread melange yarns etc. The Company offers competitive price due to low power cost through windmills, low interest cost, low processing cost, etc. The Company has obtained ISO 9001:2000 Certification, MGMT.SYS RVA C 216 Certification for quality

management and systems and OEKO TEX STANDARD 100 Certification for not using harmful substances in the product.

The textile industry in India is diversified with handwoven and handspun textile at one end and sophisticated textile mills on the other end of the spectrum. Presence of players across the value chain starting from production of raw material to production of yarn, fabric and garments in the country makes the Indian textile industry well placed at a global level.

Between fiscals 2019 to fiscal 2024, the total Indian textile and apparel industry had grown at a CAGR of 4.5 percent. Within the total industry, the domestic Indian textile and apparel industry had grown at a higher pace of 5.8 percent, while exports have grown at a CAGR of 2.1 percent.

The cotton yarn accounts for more than 50 percent share of the Indian textile yarn market. Cotton yarn market registered a CAGR of 1.5 percent between fiscals 2019 and 2024 to reach Rs 960 billion.

The future growth in Indian textile and apparel market will be led by various economic factors such as increase in discretionary income and rising urban population. Further, the demand is poised by increase in online retailing, shift from cotton to manmade fibre, fast fashion, and robust growth of technical textiles segment. Additionally, global industry expanding outside of China would aid the Indian export markets in the growth trajectory. Bangladesh is the second largest exporter of readymade garments. However, the sociopolitical disturbances erupting in Bangladesh during 2024 have shifted some RMG orders to India and this trend may continue on the future thus benefitting the Indian textile industry. The cotton yarn market is expected to grow at a 4.55.5% CAGR between fiscals 2024 and 2028 driven by recovery in global trade.

The ongoing tariffs imposed by the USA will have consequences on the Indian textile industry as it creates uncertainty and volatility for the business and may adverse impact the Indias GDP growth, decline in export volumes and export revenue and supply chain disruptions. However, India has a competitive advantage due to higher tariffs imposed on other competing countries in the textile sector.

3. OPPORTUNITIES AND THREATS:

The Indian textile industry is one of the largest and most dynamic sectors in the world. With its rich cultural heritage and diverse production capabilities, India is poised to become a global textile leader by 2025. As we move into the future, several key trends and innovations are shaping the trajectory of the industry.

Opportunities:

Shift to ManMade Fibres (MMF):

Global fibre consumption is tilting towards MMF, especially polyester. MMFs offer better durability, functionality, lower cost, and versatility across applications. Dopedyed coloured yarns and recycled polyester cater to ecoconscious buyers.

Technical Textiles Growth:

Increasing demand in automotive applications, industrial applications, and medical applications for functional yarns. Product innovation (anti microbial, flameretardant, high tenacity yarns) is rising. Government support and separate recognition of technical textiles in policy frameworks.

Policy dnu cxpun Incentives:

PLI scheme offers capital support for MMF investments and scaleup. PMMITRA Textile parks promote integrated clusters with shared infrastructure. Indias strong cotton and growing polyester base improves export competitiveness.

Strength:

Core to the Textile Value Chain:

Yarn is the foundational input for all fabric manufacturing, ensuring steady demand. It serves diverse applicationsfrom apparel and home furnishing to technical textiles. Its role is critical in value addition and determines the quality of end products.

Diverse Product Offerings:

Industry spans natural fibres (cotton, jute, wool) and synthetic yarns (polyester, viscose, nylon). Allows manufacturers to cater to a wide array of marketsfashion, automotive, medical, etc. Enables customization and development of performancebased yarns for specific needs.

Scale and Process Efficiency:

Large integrated players benefit from economies of scale in production and procurement. Adoption of automation and advanced machinery ensures consistency and throughput. Integrated Polymerization Spinning and texturizing reduce handling costs and lead times.

Threats :

Global Competition Pressure:

Indian yarn producers face pricing pressure in international and domestic markets. Delay in modernisation may erode global market share.

Trade and Regulatory Risks:

Antidumping duties and QCOs affect import/ export flows. Changes in labour laws, GST structure, or power tariffs can disrupt cost planning. Delays in policy implementation may hinder investment momentum.

Environmental and Sustainability Mandates:

Pressure to reduce water usage, emissions, and chemical discharge. Buyers increasingly demand traceability, certifications, and green compliance. Noncompliance can lead to loss of large institutional and export orders.

Weaknesses :

Capital and Infrastructure Intensive:

Requires significant upfront investment in plant, machinery, and utilities. High fixed costs necessitate consistent capacity utilisation for profitability. Smaller players struggle to match quality and efficiency standards of larger firms.

Raw Material Price Volatility:

Synthetic yarns depend on crude oil derivatives (PTA, MEG), whose prices are unpredictable. Cotton yields are susceptible to climate variation and global supply trends. Fluctuations impact temporary demands, working capital and pricing strategy.

Environmental Footprint:

Traditional dyeing processes are waterintensive and generate effluents. Energy consumption in spinning and heating processes adds to the carbon footprint. Growing need for compliance with environmental regulations adds cost and complexity.

4. SEGMENTWISE PERFORMANCE:

The Company operates only in one segment and the operational results are mentioned elsewhere in this report.

TRADE CONDITIONS COTTON

As a primary raw material, cotton accounts for a substantial portion of Indias textile production, influencing the sectors overall output and economic viability. The countrys abundant cotton cultivation and favourable climatic conditions ensure a steady domestic supply, fostering selfsufficiency and reducing import dependency. Additionally, cottons versatility allows for diverse applications across the textile value chain, from yarn spinning to fabric weaving. This ensures its crucial role in driving innovation and meeting domestic and global demand for highquality textiles.

The consumption of imported cotton or the financial year was 147393 in Kgs. The volume of imported cotton consumption for the financial year 202425 has increased by 95.85% as compared to the last financial year.

YARN PRODUCTION

The production volume of yarn has decreased to 60.86 Lakhs Kgs during the financial year 202425 as against 62.96 Lakhs Kgs of last year.

SALE OF YARN

The Companys focus on new product development, innovation and costeffective production has started yielding results. The sale volume for the FY 202425 of Yarn has increased to 66.82 Lakh Kgs as compared to 60.09 Lakh Kgs of last year, registering a increase of 11.19 %. The Company is taking various steps to expand its market presence both in domestic and international markets and hope to achieve higher volume of sales in value added yarns in the forthcoming years.

EXPORTS

The Company has made export of Cotton Yarn (including merchant exports) for a value of Rs.2.56 lakh kgs as against Rs.1.40 lakh kgs of the previous year, registering an increase of 82.85%.

POWER COST

During the financial year 202425, the Company was able to consume power from its own wind farms to the extent of 90% of total power requirement. The power cost has increased during the financial year 202425 to Rs.0.26 Crores as compared to Rs.9.28 Crores incurred during previous year due to revision in tariff rates.

FINANCE COST

The Finance cost has increased to Rs.7.85 Crores during the financial year 202425 from Rs.6.81 Crores of previous financial year.

5. OUTLOOK:

The coming year will be challenging with respect to pricing. We have to focus more on offering new products and meeting customer retail price points. Overall, the textile market is sombre and expected to take around one quarter to stabilize. Further, we must navigate the challenging period by differentiating ourselves through innovation and quality. The manufacturers, who will be able to address these challenges, while also differentiating themselves through innovation and quality, are likely to be successful in times to come.

We expect that in this challenging period, Government will support the Spinning industry in the form of favorable Textile policies, incentives and other benefits which are of paramount importance for the future growth of the Industry. The Company will continue to perform well in the domestic market. The Company is in the process of implementing several cost saving measures, which will make the product more competitive.

6. RISKS AND CONCERNS:

Risks are integral part of the growth of a business. However, the Company frames the effective risk management which helps to mitigate the risks effectively and ensures business sustainability. The Effective risk management comprises the Standard policy to pass the cost increases with its premium quality, Consciously upkeep of equipment and implementing the cost control methods, Strengthen and widen the customer base with timely supplies.

7. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The SEBI LODR (Listing Obligation and disclosure requirements) (Amendment) Regulations, 2018 has mandated that Company should provide detail of Significant Changes in Key Sector Financial ratios. We would like to inform you that in the following key financial ratios, there has been Significant Change as compared to the last year:

S.	PARTICULARS	Standalone		CHANGE	EXPLANATION FOR CHANGE
NO		31.03.2025	31.03.2024	(%)	OF 25% OR MORE
1.	Current Ratio	6.32	3.22	96.37%	Company has utlised less working capital at the year end.
2.	DebtEquity Ratio	0.44	0.56	(21.11)%	The Debt Equity Ratio improved due to repayment of term liabilities
3.	Debt Service Coverage Ratio	21.86	12.88	69.69%	Company has repaid its bank loans to the maximum extent.
4.	Return on Equity Ratio	5.82	4.44	1.38%
5.	Inventory turnover ratio	0.42	0.46	(9.20)%
6.	Trade Receivable turnover ratio (Times)	4.70	4.16	(13.06)%
7.	Trade Payable turnover ratio (Times)	11.32	8.54	32.53 %	11.32 days Trade Payables are at its minimum level
8.	Net capital turnover ratio	1.78	1.94	(8.55)%
9.	Net profit ratio	5.19	4.23	0.96 %
10.	Return on Capital employed	9.57	8.84	0.73 %
11.	Return on investment	0.00	0.00	0.00	NA

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control systems and procedures commensurate with its size and nature of its business for the purchase of raw materials, plant and machinery, components and other items and for sale of goods. The adequacy of the internal control system is also periodically reviewed by the Audit Committee.

9. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial performance of the Company has been discussed at length in the directors report to the members.

10. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT :

The Company has good HR Policies for employees in place. The Company provides skill building trainings to employees internally. The hiring of experienced employees fromoutside is the last priority and first opportunity is provided to employees in line function or cross function as well.

The Management has developed very good cordial Industrial relations and has been able to carry out operations successfully despite continued challenges of market down turn, fierce competition having high input cost by achieving flexibility in operations suitable to the requirements of business.

11. HEALTH AND SAFETY MEASURES :

As a responsible corporate citizen, the Company is fully dedicated to human health and safety. Our factories follow Occupational Health and Safety management standards that integrate occupational health, hygiene and safety responsibilities into everyday business. We give highest priority to our employees health and safety and conduct comprehensive safety inspections and audits at every plant and project sites. At each location, we promote health and safety among all employees and organize different awareness and training programs.

Further, the Company had taken all precautionary and safety measures for its employees during pandemic and continue to ensure all preventive and protective safeguards for all employees against such threats.

12. CAUTIONARY STATEMENT :

Statements made in this report regarding the Companys objectives, projections, expectations and predictions may be forward looking statements under the applicable securities law and regulations. Actual results could differ materially from those expressed or implied. Some of the important factors that could make a difference to the Companys operations include global and domestic demand supply conditions, finished goods prices, raw material costs and availability, interest rates, fuel prices, fluctuations in exchange rates, changes in government regulations and tax structure, economic developments in the domestic and overseas market and other incidental factors.

By Order of the Board

Place : Tirupur Date : 07.08.2025

(Sd/) R.PREMCHANDER

Managing Director DIN:00390795

(Sd/) R.JAICHANDER

Whole Time Director DIN:00390836