Angel Fibers Ltd Management Discussions

COMPANYS BUSINESS

The Companys principal line of business is manufacturing and marketing of Cotton Yarn, The Company has spinning units located near Rajkot, a well-developed cotton-growing region of Gujarat with an installed capacity of 39648 spindles.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The global textile industry is undergoing transformation driven by sustainability trends, automation, and shifting trade dynamics. Demand for cotton yarn remains strong, particularly from Asia, Europe, and the U.S., where Indian spinners continue to maintain a competitive edge.

India is the second-largest producer and exporter of textiles globally, with cotton yarn forming a key segment. The country benefits from a large cotton-growing base, low-cost skilled labour, and an integrated textile value chain.

The domestic market is also growing, driven by rising disposable incomes, urbanization, and increased demand for garments and home textiles. Government support through schemes like PLI and PM-MITRA is fostering growth and modernization.

Gujarat, as the leading cotton-producing state, plays a pivotal role in cotton yarn manufacturing. Its well-established infrastructure, port connectivity, and cotton availability make it an ideal hub for spinning units. Technological upgrades and policy incentives have further strengthened Gujarats position in the textile value chain.

Challenges persist in the form of raw material price fluctuations, international competition, and logistics costs. However, with continued investments and policy support, the sector remains poised for sustainable growth.

In FY 2024-25, Indias cotton yarn exports rose to approximately USD 12.04 billion, up by 3.1% from USD 11.68 billion in FY 2023-24.

This growth followed robust demand from key markets such as Bangladesh, China, and Vietnam, which together contribute around 60% of Indian cotton yarn export volumes.

Export-led growth was supported by competitive cotton yarn pricing and a 25% decline in domestic fiber prices in FY24, making Indian yarn globally attractive

Though export growth in FY25 was modest compared to FY24, it reflects sustained global demand and improved competitiveness amid geopolitical shifts, such as sourcing away from Xinjiang cotton

Cotton yarn exports account for nearly 30% of the industrys revenue, underscoring their importance in driving sectoral performance

Source Livemint, smartinfoindia, textiletradebuddy, theuttamhindu

OPPORTUNITIES

Indias cotton yarn industry is expected to register a 7 9 % revenue growth in FY 2025 26, driven by a rebound in exports especially to China and steady domestic demand, underpinned by improved cotton availability through Cotton Corporation of India interventions. A recovery in exports to China projected to grow 9 11 % is significant, as China accounts for around 14 % of Indias cotton yarn export revenues. Additionally, favorable domestic market growth with 6 8 % volume gains and mild realization upticks is expected to support profitability and bottom-line recovery. Robust procurement by CCI is ensuring raw material stability, reducing inventory risk and improving operating margins by 50 100 basis points. The evolving China-Plus-One trade realignment presents export expansion possibilities to key markets like Bangladesh, Vietnam, and emerging Asian destinations. Trade agreements such as the India UK FTA are expected to open new markets with reduced tariffs, boosting export competitiveness of cotton yarn and related textile sectors. Rising global demand for sustainable and technical cotton yarns including anti-microbial and specialty variants offers entry into higher-value market segments. Lastly, moderate capex and improved credit profiles across the sector suggest spinners can expand selectively without over-leveraging, making growth more sustainable.

Source crisilrating, The Economic Times, linseed, The Times of India

THREATS

The cotton yarn industry faces multiple threats impacting its global competitiveness and sustainability. One major concern is the volatility in raw cotton prices, which affects profit margins, as raw materials make up nearly 70% of production costs (Indian Textile Journal). The industry also grapples with rising energy and input costs, which reduce overall profitability (Times of India). Environmental concerns, including high water usage and pollution, are drawing increased regulatory scrutiny and demand for sustainability (Business Research Insights). Furthermore, health hazards like byssinosis, caused by cotton dust exposure in mills, raise both ethical and compliance challenges (Wikipedia).

SEGMENTAL REVIEW AND ANALYSIS

Company is engaged in manufacturing of only one product i.e. cotton yarn and hence there is single segment reporting. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

RISKS AND CONCERNS

The yarn industry faces volatile raw material costs, especially in cotton and synthetics, which impact pricing stability and profitability. Frequent supply chain disruptions, due to shipping delays and geopolitical tensions, have further strained delivery timelines and raised costs. Increasing environmental and regulatory pressures, including emissions and wastewater norms, are inflating compliance and operational costs. Strong global competition from low-cost regions like Vietnam and

Bangladesh is eroding traditional producers market share. Finally, economic and political uncertainties like tariff shifts and energy price volatility challenge long-term planning and profitability.

Source P Market Research, Textile Trade Buddy, Fortune Business Insights, Accio

The global yarn market is on a steady growth trajectory, projected to grow from around

USD 14.98 billion in 2025 to USD 18.70 billion by 2030 at a CAGR of approximately 4.5%. The cotton yarn segment is particularly strong, expected to reach USD 117.79 billion by 2032 with a CAGR of approx. 4%, and potentially up to USD 149.61 billion by 2034 at a higher CAGR of around 7.5%. Growth is being driven by rising demand for sustainable and eco-friendly fibers, technological innovations in spinning, and expanding e-commerce and emerging market consumption.

The global cotton yarn market expanded from USD 69.05 billion in 2023 to USD 73.93 billion in

2024, reflecting a strong CAGR of 7.1%. Growth is expected to continue, with projections placing the market at USD 78.52 billion in 2025, representing a 6.9% annual increase. The broader yarn, fiber, and thread market followed suit, rising from USD 97.13 billion in 2024 and projected to reach USD 133.42 billion by 2029 at a CAGR of 6.55%. These trends are propelled by surging demand for sustainable fibers, technical and recycled yarns, and the rise of e-commerce-driven consumption, especially in Asia-Pacific the dominant regional hub with 70%+ market share. The yarn industrys growth outlook remains robust, anchored by innovation, sustainability, and rising consumption in emerging markets.

Source Mordor Intelligence, Fortune Business Insights, Market Research Future, The Business Research Company. Globe News Wire.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The company has established a robust internal control system designed to ensure the accuracy and reliability of financial reporting, safeguard assets, and promote operational efficiency. These controls are aligned with statutory requirements and are regularly reviewed to adapt to the evolving business environment. Internal audits are conducted periodically by an independent audit team to assess the effectiveness of controls and identify any areas for improvement. The audit committee, comprising members of the Board, reviews audit findings and ensures timely corrective actions. Standard operating procedures and authorization protocols are in place to prevent fraud and unauthorized transactions. Adequate checks and balances exist across departments, ensuring transparency and accountability. Continuous monitoring and automation of key control processes further strengthen the system. Overall, the internal control framework is adequate and provides a sound foundation for risk management and compliance.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company operates in a Single Segment of Textiles; brief of the financial performance is here-in-below.

Particulars	FY 2024-25	FY 2023-24
Revenue from operations	2,00,91,41,654.00	189,26,44,330.00
Other income	4,71,38,616.00	4,52,57,784.00
Total revenue	2,05,62,80,271.00	1,93,79,02,114.00
EBITDA	12,57,94,612.00	11,47,46,375.00
Less:
Finance Costs	4,26,99,803.00	4,14,59,419 .00
Depreciation	6,36,57,076.00	7,58,47,246.00
Profit before tax, exceptional and extraordinary items	1,94,37,733.00	(25,60,290.00)
Add/(Less): Exceptional/Extraordinary income/(expense)	0.00	0.00
Profit before tax	1,94,37,733.00	(25,60,290.00)
Less: Taxes on income	10,56,659.00	(30,34,976.00)
Current Tax	35,00,000	-
Deferred tax	(24,43,341)	(30,34,976)
Profit after tax	1,83,81,074.00	4,74,686.00
EPS Basic	0.74	0.02
EPS Diluted	0.74	0.02

For financial performance concerning operational performance, please refer to the Boards Report.

DETAILS OF SIGNIFICANT CHANGES

i.e. change of 25% or more as compared to the immediately previous financial year, in key financial ratios, along with detailed explanations, thereof :

Ratio		FY 2024-25	FY 2023-24	% Change	Reason For Change
					The reduction in the average
					collection period indicates
Debtors Turnover
		20.48 days	22.14 days	7.50%	improved receivables management
Ratio
					and faster cash collection without
					negatively impacting sales.
Inventory Turnover
		0.10	0.10	-	-
Ratio
					Due to Increase in earnings before
Interest Coverage					interest and tax in the year under
		1.60 times	0.93 Times	-72.04%
Ratio					consideration as compared	to
					previous year.
					Due to Increase in Current Assets
Current Ratio		1.32 times	1.24 Times	-6.45%
					as compared to previous year
					Due to Decrease in debt during the
Debt-Equity Ratio		1.59	1.81	12.15%	year under considerations.
					Due to increase in profit in the
Net Profit Ratio		0.91%	0.02 %	4450.00%	year under consideration	as
					compared to previous year.
Operating Profit					Due to Increase in turnover	&
		7.61%	7.25%	-4.97%
Margin	Ratio				Operating profit
					Revenue grew by 6.2%,
					supported by efficient employee
Return on Net
		7.04%	0.18%		benefit expenses and reduced
Worth				100.00%
					capital expenditure, which
					resulted in lower depreciation.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company has maintained cordial and harmonious relations with its employees, recognizing that its workforce is one of its most valuable assets. It considers its people to be the driving force behind its growth and expansion. The Company acknowledges that its employees are its principal asset and has consistently invested in their development. To support this, it has undertaken extensive initiatives in both formal and informal training to enhance skills, boost productivity, and foster long-term engagement.

The total number of on roll office employees in the Company was 25, while factory workforce consist approx. 275 employees for the reporting financial year. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy. Industrial relations were quite pleasant throughout the year.

HEALTH, SAFETY AND SECURITY MEASURES

The Company continues to place the highest priority on the health and safety of its employees and the communities in which it operates. It remains fully committed to complying with all applicable laws and regulations, while upholding the highest standards of Occupational Health and Safety. To ensure a safe working environment, the Company regularly conducts safety audits, risk assessments, and periodic safety awareness campaigns, along with comprehensive training programs for employees. We firmly believe that the well-being of our employees is fundamental to our success.

SECRETARIAL AUDIT REPORT FORM NO. MR-3

FOR THE FINANCIAL YEAR ENDED 31^ST MARCH, 2025 [Pursuant to section 204(1) of the Companies Act, 2013 and

Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members, Angel Fibers Limited

(CIN: L17200GJ2014PLC078738)

Survey no. 100/1, Plot No.1, Haripar, Jamnagar-361112, Gujarat

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Angel Fibers Limited (hereinafter called ‘the Company) for the Financial Year ended March 31, 2025. Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Companys books, papers, minutes books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that, in our opinion, the Company has, during the audit period covering the financial year ended on March 31, 2025, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

We have examined the books, papers, minutes books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2025 according to the provisions of:

i. The Companies Act, 2013 (‘the Act) and the rules made there under as applicable;

ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made there under;

iii. The Depositories Act,1996 and the Regulations and Bye-laws framed there under; iv. Foreign Exchange Management Act, 1999 (FEMA) and the rules and regulations made there under to the extent of Foreign

Direct Investment;

v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI

Act): -

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and circulars/ guidelines/Amendments issued there under;

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and circulars/ guidelines/Amendments issued there under;

c) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and circulars/ guidelines/Amendments issued there under; and

d) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and circulars/ guidelines/Amendments issued there under.

e) The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 (to the extent applicable) vi. Revised Secretarial Standards issued by the Institute of Company Secretaries of India.

During the period under review, the Company has complied with the provisions of the Act, Rules made there under, Regulations, guidelines etc. mentioned above except:

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During Financial year 2024-25, Two E-forms MGT 14, MGT-7 were filed delayed along with additional fees.

During the year, BSE imposed a fine for late submission of modified audit report relating to one observation, which in view of the auditor was unmodified opinion and was also not marked as modified opinion in the audit report issued by the auditor for March 31, 2024. The results were initially filed within due time with an unmodified opinion in accordance with the auditors report. However, later resubmitted with the modified opinion upon receipt of notice from the Exchange. The Company had applied for a waiver of the fine as there was no late submission in actual which is presently under consideration by BSE.

Further, the company being engaged in the business of Manufacturing of varied Cotton Yarn from raw cotton, there are few specific applicable acts to the Company, we have relied on the representation made by the Company and its officers for system and mechanism framed by the Company for compliances of the following law specifically applicable to company: -

1. The Gujarat Textile Policy, 2012

2. The textile Committee Act, 1963

3. Textile (Development & Regulation) Order, 2001 (Textile Order)

We have relied on the representation made by the Company and its officers for system and mechanism framed by the Company for compliances of the said laws.

Further, during the period under review, provisions of the following Acts, Rules, Regulations and Standards were not applicable to the Company,

i. The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and circulars/ guidelines/Amendments issued there under; ii. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client with respect to issue of securities; - the Company is not registered as Registrar to an Issue & Share Transfer Agent. However, the Company has appointed Bigshare Services Private Limited as Registrar & Share Transfer Agent as per the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. iii. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021; iv. Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts)

Regulations, 2008; v. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018; vi. The Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021; and vii. Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of External Commercial Borrowings.

We further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Director, Independent Directors and Woman Director. The changes in the composition of the Board of Directors / appointment / re-appointments of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Since none of the members have communicated dissenting views in the matters / agenda proposed from time to time for consideration of the Board and Committees thereof, during the year under the report, hence were not required to be captured and recorded as part of the minutes.

We further report that -

There are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

There was no event/action which had major bearing on the Companys affairs in pursuance to the above referred laws, rules, regulations, guidelines, standards, etc.

We further report that during the period under review

1. Major fire accident took place at one of the raw material warehouses along with the Factory of the company on Saturday, February 03, 2024 at around 09:00 P.M. On September 04, 2024 the Insurance Company i.e. SBI General Insurance Company Limited granted partial payment of Rs.3,59,70,788 (Three Crore Fifty Nine Lakhs Seventy Thousand Seven Hundred Eighty-Eight Rupees only) and Company is further following the procedure for the remaining claim amount.