Anand Rayons Ltd Management Discussions

GLOBAL ECONOMY

The past year commenced with elevated global uncertainty, shaped by evolving trade policies, geopolitical tensions and uneven economic growth across regions. The world GDP grew at a rate of 3.4% in 2025. While moderating inflation and continued digital investments provided pockets of resilience, global GDP growth remained subdued, with enterprises exercising greater caution in discretionary spending. Technology spending faced sharper scrutiny, with decisions tied to clear business outcomes, productivity gains, and cost optimisation.

In recent months, new geopolitical tensions have emerged as a significant source of uncertainty for the global economy, particularly through disruptions to energy markets and global trade flows. The conflict has led to volatility in oil and gas prices due to supply risks and logistical constraints in critical transit routes, which has translated into higher input costs across industries and contributed to renewed inflationary pressures in several economies. Elevated energy prices have weighed on consumer purchasing power and corporate margins, while heightened geopolitical risk has increased financial market volatility, tightened financial conditions, and dampened investment sentiment globally. The broader global economy has experienced slower growth momentum and increased downside risks to the medium-term outlook, prompting IMF to lower its 2026 global growth projection by 0.2% to 3.1%.

FY 2026 marked a pivotal year for enterprise AI adoption across industries, as organisations increasingly transitioned from experimentation to scaled deployment for the first time since the emergence of generative AI in late 2022. AI increasingly became integral to customer engagements and solution design, shaping demand conversations during the year. At the same time, organisations sought to fund AI programmes through savings generated from cost optimisation and vendor consolidation initiatives, placing greater emphasis on delivering measurable returns on investment.

INDIAN ECONOMY

Indias economy continued to demonstrate resilience amid global macroeconomic challenges, consistently outperforming the global average on the back of strong domestic demand, GST rationalization, and resilient policy push. Despite external pressures such as supply chain disruptions and inflation, the country has maintained relative economic stability. In 2024–25, Indias real GDP is estimated at 299.89 lakh crore, grown by 7.1%, supported by sustained growth across manufacturing, services, and infrastructure sectors, reflecting the economys ability to adapt to evolving global conditions. Nominal GDP has reached 318.07 lakh crore, underscoring Indias expanding presence in the global economy. Going forward, continued investments, rapid digitalization, and a favourable demographic profile are expected to further strengthen Indias growth outlook.

As of December 2025, Indias overall Index of Industrial Production (IIP) recorded a growth of 7.8% YoY, indicating a gradual stabilization in manufacturing activity despite continued global trade headwinds. However, the textile and apparel sectors experienced a visible slowdown, with the textile manufacturing index declining marginally from 113.8 to 111.4, while apparel manufacturing contracted sharply by nearly 8%, falling from 119.2 to 109.5 during the same period. This decline reflected a combination of factors including fluctuating export demand, elevated US import tariffs, inventory rationalization by global brands, and prevailing global macroeconomic uncertainty.

The industry outlook for FY27 remains uncertain, with growth drivers intact but near-term performance constrained by demand uncertainty, input cost volatility, and geopolitical disruptions. A broad-based recovery will depend on revival in global consumption and export markets. Recent Free Trade Agreements (FTAs) with the EU and UK, currently under discussion, are likely to enhance market access and improve export competitiveness for Indian players.

INDIAN TEXTILE INDUSTRY

Indias textile and apparel market is estimated to be worth US194billionin2025-26. This market has demonstrated consistent growth over time, driven primarily by strong domestic demand. The industry is largely driven by the domestic market, which accounts for US194 billion in 2025-26. This market has demonstrated consistent growth over time, driven primarily by strong domestic demand. The industry is largely driven by the domestic market, which accounts for US 157 billion (81%), while exports contribute US$ 37 billion (19%), indicating a strong internal consumption base alongside a significant export presence.

In recent times, the Iran-Israel-US conflict has significantly impacted Indias textile and apparel sector, creating pressures across logistics, input costs, and overall operations. Disruptions in key maritime routes, particularly the Red Sea and the Strait of Hormuz, have led to shipment rerouting, increasing transit times, and raising freight and insurance costs, thereby affecting exporters margins and delivery timelines. Concurrently, energy supply constraints have intensified the situation, as Indias LPG imports, of which majority pass through the Strait of Hormuz, have been disrupted. Overall, the industry is witnessing an additional cost burden due to war-related surcharges, adversely impacting global competitiveness.

Further, the extension of the PLI Scheme with revised, more accessible thresholds and PM MITRAs transition into mission mode are expected to catalyse fresh capital investment in textile manufacturing, expand domestic production capacity, and strengthen Indias competitiveness across the value chain.

OUR BUSINESS OVERVIEW

The Company is in the business of yarn trading/Authorized dealer of various companies. It is a leading company offering various types of yarn to national markets. However, Competition in the industry is continuously increasing, but overall Performance of the Company is good.

Financial Performance of Company:

Turnover: Company has achieved a turnover of Rs. 43297.14 Lacs in the year 2025-26 as against Rs. 31375.16 Lacs during the previous year.

Other Income: Other income for the year 2025-26 is amounting to Rs. 237.32 Lacs against Rs. 10.26 Lacs in the previous year.

Consumption of Raw material: Consumption of raw materials decreased from Rs. 30075.18 Lacs to Rs. 41251.09 Lacs.

Employee Cost: Employee costs were increased from Rs. 144.65 Lacs to Rs. 178.89 Lacs due to increase in expenditure for employee benefits.

Interest Cost: Interest costs were decreased from Rs. 265.85 Lacs to Rs. 230.45 Lacs.

The Company delivered moderate performance despite of headwinds and made consistent progress in strengthening the established business segments through high value products.

Opportunities & Threats

Synthetic Yarn has good share in total yarn production; Indias growing population has been a key driver of textile consumption growth in the country. It has been complemented by a young population which is growing and at the same time is exposed to changing tastes and fashion. Rising incomes has been a key determinant of domestic demand for the sector; with incomes rising in the rural economy as well, the upward push on demand from the income side is set to continue.

Further, the technology element plays a crucial role in the growth of the Indian textile industry. Technology has reshaped the textile industry to meet the rising demands and trends by providing data-driven customer operations. The Advanced Technology machinery with high quality cotton enables the company to manufacture superior quality yarn.

Manpower: Company is mainly in trading of Synthetic Yarn, company does not require any technical personnel, other than marketing personnel.

High Competition and Law Profitability: The yarn Industry has entered into the orbit of the high competition. Various brands and various quality yarn are available in the market. Due to high competitions in market, we have to fluctuate the profit margin to maintain the turnover of the company.

New Entrants: More and more new organized and unorganized players are entering into market which will increase competition in our business sector also.

Risk and concerns:

Stiff competition from the organized and unorganized players as well as from the imported yarns resulting in lower margins or losing out the customers. However, due to strong and stable relationship with clients, the company has at its own penetrated markets and maintained its offerings and sales revenues.

Internal Financial Control Systems and their adequacy:

The Company has aligned its current systems of internal financial control with the requirement of Companies Act 2013. The Internal Control is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The Company has successfully laid down the framework and ensured its effectiveness. The Company has in place a well-defined system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information.

Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal checks and control systems are to be implemented by the Company on various activities in the organization to ensure that business operations are systemized in achieving the best performance.

M/s M. R. Bombaywala & Co., Chartered Accountants, the statutory auditors of the Company has audited the financial statements included in this annual report for the year 2025-26 and has issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act, 2013).

The audit committee meets the statutory auditors of the Company to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major-observations periodically. Based on its evaluation (as defined in section 177 of Companies Act 2013), our audit committee has concluded that, as of March 31, 2026, our internal financial controls were adequate and operating effectively.

Material Developments in Business activities, Human Resources / Industrial Relations Front, including number of people employed:

The Company always recognizes the importance of manpower. Company promotes employees and encourages them to make contribution toward company, family and nation at large. Company also encourages the employees to offer their creative suggestions for development in their respective areas which are thoroughly discussed in periodical meetings. The company enjoyed excellent relationship with staff during the last year as on March 31, 2026 the company has 30 employees at its Surat Office. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.

Environment, Health and Safety (EHS)

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of guidelines in force by local authorities, environmental regulations and preservation of natural resources.

Human Resources

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve with ongoing technological advancements. During the year, the Company organized training programmes in different areas such as technical skills, behavioural skills, business excellence, general management, advanced management, leadership skills, customer orientation, safety, values and code of conduct.

Cautionary Statement:

Statement in this Management and Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be forward looking statement and within the meaning of applicable laws and regulations. Actual results may or might differ materially from those either expressed or implied.

For and on behalf of Board of Directors

Anand Rayons Limited

Place: Surat

Date: August 31, 2026

Anand Bakshi

Managing Director

(DIN: 01942639)

Shilpa Bakshi

Whole time Director

(DIN: 07986896)