Amarjothi Spinning Mills Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. GLOBAL ECONOMIC SCENARIO

The global economy demonstrated measured resilience in 2025, navigating a challenging landscape defined by geopolitical tensions, elevated interest rates, and persistent supply-side pressures. According to the IMF World Economic Outlook, April 2026, world GDP grew by 3.4 percent in 2025 and is projected to expand by 3.1 percent and 3.2 percent in 2026 and 2027 respectively. These projections, which assume a limited-scale conflict in the Middle East, reflect a broadly stable growth trajectory as the global economy transitions beyond the initial shocks of high inflation.

The United States, under the Trump administration, imposed broad tariff measures beginning in April 2025, including elevated duties on imports from key trading partners. This generated significant uncertainty across global supply chains, prompted retaliatory posturing from several economies, and weighed on global trade volumes.

Advanced economies grew at a subdued pace overall. The Eurozone remained sluggish, constrained by weak German industrial output and energy price pressures. Japan showed a moderate recovery aided by exports and fiscal support. Chinas growth moderated further, with domestic demand constrained despite targeted stimulus, even as it remained a key global growth contributor at approximately 4.5%.

Looking ahead, global growth is expected to moderate to approximately 3.3% in 2026 as the frontloading effect unwinds and traded goods demand softens. Emerging market economies are projected to remain the more dynamic contributors to global output, sustained by domestic consumption and ongoing structural reforms. Key risks include a re-escalation of trade tensions, geopolitical conflicts affecting commodity supply chains, and financial market volatility. The trajectory of energy prices, stability of global demand, and the pace of tariff normalisation will be the most consequential external variables in the period ahead.

2. INDIAN ECONOMIC OVERVIEW -FY 2026

India retained its position as the worlds fastest-growing major economy in FY26, delivering real GDP growth of approximately 7.4-7.6% for the full year, a meaningful reacceleration from 6.5% in FY25. This was underpinned by robust domestic consumption, sustained government capital expenditure, rapidly easing inflation, and a decisive monetary policy easing cycle by the Reserve Bank of India.Indias economy delivered an exceptional performance in FY 2025-26, cementing its position as the fastest growing major economy globally.

Indias nominal GDP is estimated to have reached approximately INR 346.36 Lakh crore (USD 3.90 trillion) in FY26, cementing its position as the worlds sixth largest economy. The Make in India initiative has evolved from a policy aspiration into a powerful structural catalyst.

As per the Economic Survey 2025-26, Manufacturing Gross Value Addition (GVA) grew by 9.13 percent in Q2 FY 2025-26, buoyed by targeted Production Linked Incentive (PLI) schemes and a strategic shift toward medium and high technology manufacturing. Complementing this, Indias retail inflation averaged a benign 1.7 to 2.6 percent during the fiscal year, and foreign exchange reserves reached a historic high of USD 701.4 billion, providing macroeconomic stability and a robust buffer against external shocks.

Elevated US tariffs, volatile commodity prices, and global trade uncertainty add further complexity, weighing on export competitiveness and business sentiment. Domestically, while consumption is expected to remain the primary growth driver, supported by the lagged effects of monetary easing, continued government capital expenditure, and strengthening rural demand, these tailwinds are unlikely to fully offset the drag from a more challenging global environment. While Indias medium- term structural growth story remains intact, navigating the external environment in FY 2026- 27 will require careful management of energy costs, currency pressures, and evolving trade dynamics.

3. GLOBAL TEXTILE MARKET

The global textile market continued its growth trajectory in FY 2025-26, valued at approximately USD 760 billion and projected to reach USD 974 billion by 2030 at a CAGR of around 5.1%. Growth was supported by rising demand for man-made and technical fibres, expanding e-commerce channels, and increasing preference for performance textiles across apparel and industrial segments. Asia Pacific retained its dominance, accounting for over 53% of global market share, underpinned by its large-scale manufacturing base, cost competitiveness, and strong domestic consumption.

FY 2025-26, however, introduced tangible headwinds that tested the sectors agility. Traditional trade routes faced disruption due to the US-Iran conflict, resulting in shipment delays and a sharp escalation in logistics and shipping costs, all of which exerted pressures that resounded across the global supply chain.

Yet, within these headwinds lie compelling tailwinds for India. Socio-political instability in competing garment manufacturing nations, particularly Bangladesh, has meaningfully accelerated the shift of Readymade Garment orders toward Indian suppliers. Further, the progressive execution of Free Trade Agreements (FTAs) with the UK, the EU, and other key markets is expected to deliver a sustained demand tailwind for Indian exporters, improving market access and competitive positioning on a structural basis.

4. INDUSTRY SCEANARIO AND DEVELOPMENT:

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.

Within this chain, yarn manufacturing converts raw fibres into yarn through a defined sequence of processes, beginning with spinning, followed by weaving and knittng. Yarns may be derived from natural fibres such as cotton and wool, or from man-made fibres (MMF) including polyester, viscose, nylon, acrylic, and polypropylene, a segment that is growing rapidly in relevance and value.

The Indian textile and apparel industry sustained strong momentum in FY 2025-26, maintaining its position as a mainstay of the domestic economy.

The sector contributes approximately 2% to Indias GDP, around 11% to manufacturing GVA, and holds a 4.6% share of global textile and apparel trade.The domestic market was valued at approximately USD 225 billion in FY 2025-26, growing at a brisk 10-12% annually and expected to reach USD 350 billion by 2030.

The global yarn, fiber, and thread market maintained its growth momentum in FY 2025-26, valued at approximately USD 122 billion in 2025 and projected to reach USD 160 billion by 2030 at a CAGR of 5.4%.

On the cotton front, domestic arrivals reached 281 lakh bales by March 2026, up from 273 lakh bales in the prior year. Despite this increase in supply, domestic prices surged from ^ 55,000 per candy in December 2025 to ^ 62,000 per candy by March 2026, mirroring trends in international NY futures, a dynamic that reinforces the importance of disciplined raw material procurement and inventory management.

Looking ahead, the Indian textile and apparel market is well positioned for sustained growth. Rising discretionary incomes, rapid urbanisation, and the adoption of fast fashion consumption patterns will drive domestic demand. Simultaneously, structural forces including increased online retailing, an accelerating shift from cotton to man-made fibre, strong growth in technical textiles, and the ongoing migration of global textile production outside of China will collectively bolster Indias export opportunity.

Export growth is anticipated to pick up meaningful pace, aided by the successful conclusion of the India-UK and India- EU Free Trade Agreements, which open preferential access to two of the worlds most significant textile and apparel markets and materially strengthen Indias competitive positioning. The recently finalised interim India-US trade framework, which has brought tariffs down to 18%, further reduces a key overhang on the sector. Sectors such as MMF textiles, technical textiles, and sustainable apparel present particularly strong medium-term growth opportunities. Companies investing in capacity expansion, technology upgradation, ESG compliance, and product innovation, while actively managing input cost volatility and logistical disruptions, will be well-placed to capture a disproportionate share of the growth that lies ahead.

OPPORTUNITIES AND THREATS:

The Indian textile, yarn, and apparel industry remains a major economic contributor but faces challenges such as high production costs, fragmented supply chains, complex export procedures, and raw material price volatility, affecting competitiveness against Vietnam, Bangladesh, and China. At the same time, growth opportunities are strong, particularly in technical textiles and man-made fibres, driven by rising global demand, government initiatives like PLI and R&D support, and adoption of modern technologies. Recent measures, such as temporary cotton import duty removal, aim to improve cost competitiveness, while policy and innovation support position Indias textile MSMEs to expand exports and capture higher-value markets.

Strengths

Innovation: Innova ti on at our company is driven by the need to offer new and sustainable quali ti es coupled with customer requirements who increasingly demand differentiated products to respond to new trends and end-user preferences.

Technology: Technology plays a vital role across all func ti ons at our company from produc ti on and quality assurance to research and development. At our sophisticated Lab, auto dispensing machines are used to obtain the required shade of fibre with different color combination of dyes. Samples are produced by Starlet Dyeing Machines and the imported FONGS Dyeing Machine. Precision weighing of samples is done by 1 Kg lab win machines.

Economies of scale: In the tex ti le industry, size ma tt ers. With a capacity advantage, we leverage aspects like sourcing of raw materials to offering the widest range of products to customers.

Integration: Inspired by the fine art of yarn making, Amarjothi brings you melange yarn thats cra ft ed to perfection. It is embedded with the right spectrum of color melange of any count/shade /quantity to cater to the exacting buyers requirement.

Range: Present across the spectrum of product categories, we have evolved into a one stop shop for textile solutions.

Global Presence: Amarjothi has established itself as house hold name in the melange yarn industry the world over. Our undisputed reputation stems from our unflinching dedication to give you the highest quality, exclusive and diverse clothing options and unmatched customer service.

Weaknesses

Overdependence on Cotton: A heavy focus on cotton makes the industry vulnerable to price fluctuations, with synthetic fibres under-utilized.

Fragmented and Competitive Market Landscape: Intense competition in a fragmented market limits pricing power and margin protection.

High Capital Expenditure Demands: Significant investment requirements constrain financial flexibility and scalability.

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 water-intensive 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.

Opportunities

Rising Demand in Technical Textiles: Growing adop ti on in automo ti ve, healthcare, and sports sectors opens high-value market opportunities.

Rising export demand: As China pivots away from low-cost manufacturing, India can capture a greater share of global apparel exports.

Policy support: Government initiatives like PLI schemes, Mega Integrated Textile Regions and Apparel (MITRA) parks encourage investment and modernization.

Sustainability shift: Rising global demand for organic and sustainable clothing presents a market differentiation opportunity.

Expanding Indian Textile Market: Accelera ti ng domes ti c growth offers significant scale-up poten ti al for synthetic yarn manufacturers.

Global Appetite for Recycled Synthetics: Rising interna ti onal demand for recycled fibers fuels compelling export growth opportunities.

Premium Segment Entry through Brand Partnerships: Strategic brand collaborations enable entry into premium segments and higher-value markets.

Digital and E-Commerce Penetration: Rapid digital growth facilitates broader market reach and direct- to-consumer engagement.

Threats

Intensifying Compe titi ve Pressures: Heightened rivalry and aggressive pricing strategies can erode margins and threaten market share.

Evolving Regulatory and Compliance Landscape: Policy shifts and tightening compliance requirements could disrupt operations and increase cost burdens.

Environmental and Reputational Scrutiny: Growing concerns over synthe ti c fibers ecological impact may pose reputational and regulatory risks.

Demand Sensitivity to Market and Economic Cycles: Shifts in fashion trends and economic cycles can affect demand consistency and revenue predictability.

4. SEGMENT-WISE 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 high-quality textiles.

The consumption of imported cotton or the financial year 2025-26 was 141155 in Kgs. The volume of imported cotton consumption for the financial year 2025-26 has decreased by 4.23% as compared to the last financial year.

YARN PRODUCTION

The production volume of yarn has decreased to 54.58 Lakhs Kgs during the financial year 2025-26 as against 60.86 Lakhs Kgs of last year.

SALE OF YARN

The Companys focus on new product development, innovation and cost-effective production has started yielding results. The sale volume for the FY 2025-26 of Yarn has decreased to 57.41 Lakh Kgs as compared to 66.82 Lakh Kgs of last year, registering a decrease of 14.08 %. 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.1.29 lakh kgs as against Rs.2.56 lakh kgs of the previous year, registering an decrease of 49.60%.

POWER COST

During the financial year 2025-26, 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 2025-26 to Rs.0.67 Crores as compared to Rs.0.26 Crores incurred during previous year due to revision in tariff rates.

FINANCE COST

The Finance cost has decreased to Rs.7.71 Crores during the financial year 2025-26 from Rs.7.85 Crores of previous financial year.

5. OUTLOOK:

We also acknowledge, with transparency, the market challenges that create uncertainty in our operating environment. Global economic uncertainty, evolving tariff conditions, changing weather patterns adversely affecting cotton crop yields, cotton price volatility, and constraints on the availability of high-quality cotton, all of these factors introduce a degree of unpredictability that we monitor closely and manage proactively.

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 up-keep 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.		31.03.2026	31.03.2025	(%)	of 25% or More
1.	Current Ratio (Times)	13.44	6.32	112.58%	Company has utlised less working capital at the year end.
2.	Debt-Equity Ratio (Times)	0.40	0.45	0.90%	The Debt Equity Ratio improved
		0.45			due to repayment of term liabilities
3.	Debt Service Coverage Ratio (Times)	33.31	21.86	52.38%	Company has repaid its bank loans to the maximum extent.
4.	Return on Equity Ratio (%)	4.75	5.82	-1.07%	-
5.	Inventory turnover ratio (Times)	0.33	0.42	-21.68%	-
6.	Trade Receivable turnover ratio ( Times)	5.22	4.70	11.09 %	-
7.	Trade Payable turnover ratio (Times)	15.95	11.32	40.91 %	Company has reduced purchases due to price fluctuations.
8.	Net capital turnover ratio	1.40	1.78	-21.08%	-
9.	Net profit ratio	4.55	5.19	-0.65 %	-
10.	Return on Capital employed	8.25	9.57	-1.31 %	-
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 trainnings to employees internally. The hiring of experienced employees from outside 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	(Sd/-) R. PREMCHANDER	(Sd/-) R. JAICHANDER
	Managing Director	Whole Time Director
Date: 27/07/2026	DIN:00390795	DIN:00390836