Amit Spinning Industries Ltd Management Discussions

The global textile and apparel industry is undergoing a structural transformation, driven by changing consumer behaviour, increased focus on sustainability, digitization of supply chains, and a growing preference for fast and flexible production models. While the industry has recovered from pandemic-induced disruptions, ongoing geopolitical tensions, inflationary pressures, and rising compliance costs continue to challenge global players.

However, markets in Asia, especially India, Bangladesh, and Vietnam, are gaining ground as preferred sourcing destinations, owing to cost competitiveness, skilled workforce, and government support. The global demand for sustainable, traceable, and ethical textile production is also leading to increased investments in green technologies and integrated operations

b. Indian Textile Industry Outlook

India remains one of the worlds largest producers of textiles and garments, contributing over 2% to the national GDP and employing more than 45 million people directly. The country has a robust value chain from fibre to finished products and is well-positioned to benefit from shifting global sourcing trends. Key developments in the Indian textile industry include:

Rising demand for value-added products such as technical textiles, performance fabrics, and organic garments. Growth in e-commerce and D2C brands, leading to increased demand for agile, integrated textile solutions. Government initiatives like PLI (Production Linked Incentive) Scheme, PM MITRA Parks, and interest subsidies under TUFS, which are encouraging modernization and capacity expansion. Increased focus on sustainability and circular economy principles, with greater emphasis on renewable energy, water conservation, and waste reduction.

c. Spinning Sector Trends

The spinning segment, while foundational to the textile industry, is characterized by high dependence on raw material prices particularly cotton and global demand fluctuations. In FY 2023 24, the spinning industry experienced price volatility due to erratic cotton availability and subdued export demand from key markets such as China, Europe, and the US.

India continues to be one of the top producers and exporters of cotton yarn; however, commoditized products are facing margin pressures. As a result, spinning mills are increasingly exploring diversification into blended yarns, value-added products, and forward integration into fabrics and garments to mitigate risks and enhance profitability.

d. Composite Units and Fibre to Fashion Model

Composite textile units which integrate spinning, weaving/knitting, processing, and garmenting under one roof are gaining prominence in India. These integrated operations offer significant advantages in terms of: Cost efficiency and reduced lead times, Better quality control across the value chain,

Flexibility to serve fashion and export markets with agility,

Stronger value realization and margin improvement.

This “Fibre to Fashion” approach also aligns with increasing global demand for traceability, sustainability, and speed-to-market. Companies transitioning to composite models are better positioned to meet the evolving needs of fashion retailers, lifestyle brands, and institutional buyers.

e. Strategic Positioning of Girnar Spintex

Recognizing these industry trends, Girnar Spintex Industries Limited is undergoing a strategic shift from being a pure spinning company to a fully integrated composite textile unit. The Company aims to capitalize on opportunities across the textile value chain by expanding into weaving, processing, and garmenting activities. This transition will allow Girnar Spintex to better serve the end-consumer, reduce dependency on cyclical yarn markets, and establish itself as a vertically integrated and agile textile player.

Opportunities

As Girnar Spintex Industries Limited moves forward with its transformation into a composite textile unit, focused solely on cotton-based products, the Company is well positioned to capitalize on several emerging opportunities:

Forward Integration into Fabric Manufacturing

With the strategic shift from a standalone spinning operation to a composite textile unit, the Company is poised to enhance value addition by integrating forward into fabric manufacturing. This will allow better utilization of yarn, improved cost control, and increased realization.

Strong Demand for Cotton-Based Textiles

Cotton continues to be a preferred natural fibre globally, especially in apparel and home textile segments. Rising consumer preference for breathable, biodegradable, and skin-friendly textiles creates sustained demand for cotton yarns and fabrics.

Government Policy Support

Policy frameworks such as the PLI scheme, interest subsidies, and infrastructure investments under PM MITRA Parks provide significant support to domestic textile units focused on integrated operations and exports.

Indias Position in Global Cotton Trade

Indias status as one of the largest producers of cotton offers a strategic raw material advantage. The Company is well positioned to leverage this strength for stable supply and competitive pricing in both domestic and international markets.

Operational Efficiency through Modernization

Investment in modernization of spinning and processing infrastructure can help improve productivity, reduce power consumption, and enhance product quality leading to better margins and customer satisfaction.

Threats and Risk Factors

While the Company is focused on growth and transformation, it remains exposed to various external and operational risks, particularly due to the commodity nature of the spinning business:

Raw Material Price Volatility

The Companys operations are highly dependent on cotton, which is subject to seasonal availability and price fluctuations influenced by monsoon, global demand-supply factors, and government procurement policies. Sharp increases in cotton prices can adversely impact margins if not matched by yarn price realization.

Demand Slowdown in Domestic and Export Markets

A slowdown in consumer demand either due to economic conditions or reduced orders from downstream fabric or garment manufacturers can affect offtake of yarn and processed fabric, leading to inventory build-up and lower capacity utilization.

Exchange Rate Risk

As part of the Companys sales are export-oriented, volatility in the Indian Rupee against foreign currencies (particularly USD and EUR) may impact revenue realization and profitability.

Interest Rate Fluctuations

The Company has availed term loans and working capital facilities on a floating rate basis. Any increase in interest rates will lead to higher finance costs and affect the bottom line.

Policy and Regulatory Risks

Changes in government policies related to cotton procurement, export-import regulations, GST rates, export incentives, or power subsidies may have a direct impact on operations and competitiveness.

Labour and Infrastructure Risks

Availability of skilled labour, increasing compliance requirements, and challenges in uninterrupted power supply (especially in rural textile belts) remain operational concerns. Any disruption in these areas can affect production planning and cost efficiency.

The company operates in only one segment i.e. Spinning Mill Segment.

PRESENT SCENARIO AND OUTLOOK

Year 2024-25 was average. The Financial Performance of the company is given below

(Rs. in Lakhs)

The Company recognises that risk is inherent in every business activity. However, managing it with efficacy is vital in order to achieve strategic objectives and long-term sustainable growth. The major risk areas are periodically and systematically reviewed by the management and risk management committee. Some of the major risks have been entailed below:

The management has cordial and harmonious relations with its employees. It considers manpower as its assets and that the people had been the driving force for the growth of the company. The Companys HR policy aims to develop and train each individual to perform to his fullest capacity, achieving individual excellence and at the same time achieving the Companys Goals. As on 31.03.2025 company is having 84 employees.

The Companys well-articulated internal control systems ensure the achievement of its operational, compliance and reporting objectives. It has adequate policies and procedures in place, for its current size as well as the future growing needs. These policies and procedures play a pivotal role in the deployment of internal controls. They are regularly reviewed to ensure both, relevance and comprehensiveness, and compliance is ingrained into the management review process. The audit committee regularly reviews the adequacy of controls of the key processes. It makes note of the audit observations and takes corrective actions, if necessary. It maintains a constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

7. KEY FINANCIAL PARAMETERS (Rs. Lakhs)

Statements in this report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, raw materials cost, availability and prices of finished goods, foreign exchange market movements, changes in government regulations, tax structure, economic and political developments within India and the countries where the Company conducts its business and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward-looking statements herein which may undergo changes in future based on subsequent developments, information or events.