Avi Ansh Textile Ltd Management Discussions

1. OVERVIEW

The objective of this report is to convey the Managements perspective on the external environment and Textile industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the FY2025-26. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this 21 st Annual Report of the Company for FY2025-26. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

2. EXTERNAL ENVIRONMENT

2.1 GLOBAL ECONOMY

According to the International Monetary Fund (IMF), global economic growth was estimated at 3.0% in 2025, which was 0.2 percentage points

higher than projected in the reference forecast of the April 2025 World Economic Outlook (WEO). The improvement was primarily driven by stronger-than-expected front-loading of trade in anticipation of higher tariffs, lower effective US tariff rates than initially announced in April 2025, improved financial conditions supported by a weaker US dollar, and fiscal expansion in certain major economies.

Looking ahead, global growth is projected at 3.1% in 2026, supported by relatively resilient economic activity despite persistent global uncertainties. Global headline inflation declined to an estimated 4.2% in 2025 and is expected to moderate further to 3.6% in 2026, broadly in line with the projections made in the April 2025 WEO. However, inflationary trends continue to vary across economies, with inflation expected to remain above central bank targets in the United States while remaining comparatively subdued in several other major economies.

The US economy was a key reason the slowdown wasnt deeper. It avoided the recession many expected and was revised up to 2.1% in 2025 and 2.2% in 2026 thanks to stronger demand, easier financial conditions, and less severe tariffs than initially feared. Advanced economies overall remained sluggish - Japan at 0.7% in 2026 and

Europe around 0.8%. Emerging markets did better. China was forecast at 4.5% in 2026, though its expected to slow further to 4.0% in 2027. India stood out as a bright spot with growth of 6.3% in FY26, even after the IMF trimmed its outlook to 6.2%. The rest of EMDEs averaged about 3.7-3.9%. Inflation continued to ease but slowly. Global headline inflation was projected at 4.2% in 2025 and 3.6% in 2026.

Risks stayed tilted to the downside. The biggest drag was trade policy uncertainty - US tariff hikes and retaliation prompted both the IMF and World Bank to warn that a further escalation could cut 0.4-0.5% from global growth in 2025-26. Other headwinds included geopolitical tensions, slower productivity, and AI-driven disruption in labor markets. The world avoided a sharp downturn, but growth remained tepid, uneven, and heavily dependent on how trade tensions played out. India and a handful of EMs carried most of the momentum while advanced economies cooled.

Sources:

1. https://www.imf.org/-/media/files/ publications/weo/2025/update/july/ english/text.pdf

2. https://www.imf.org/-/media/files/ publications/weo/2026/update/july/ english/text.pdf

2.2 INDIAN ECONOMY

The Indian economy remained one of the fastest- growing major economies in FY 2025-26, though growth moderated slightly amid global uncertainty. The World Bank projected Indias GDP growth at 6.3% for FY26, while the IMF in its July 2025 update trimmed the outlook to 6.2%, citing trade policy uncertainty and weaker external demand. Even with the revision, India outpaced China at 4.5% and the US at 1.4% for 2026.

Domestic demand and government capex continued to support growth, but exports faced pressure. The US, which takes nearly 29% of Indias $38 billion annual textile exports, doubled tariffs to as high as 50% effective August 2025, forcing many textile units in southern India to scale back operations.In agriculture, challenges persisted. Cotton production for 2025-26 was pegged at 290.91 lakh bales, down from 297.24 lakh bales in 2024-25. Crop damage from untimely rainfall in key states pushed mills to rely more on imports.

To address this, the Union Budget 2025-26 announced a 5-year National Mission for Cotton

Productivity with Rs. 500 crore allocated to boost yields and promote extra-long staple varieties.The World Bank noted that risks to the global outlook, including India, remain tilted to the downside due to high trade policy uncertainty. Still, domestic consumption and services helped India retain its position as a relative bright spot in an otherwise slow global economy growing at 2.6-3.1%.

Sources: World Bank Global Economic Prospects, IMF World Economic Outlook Update July 2025, PIB - India Cotton Production 2025-26, Reuters - India Cotton Imports Hit Record

2.3 GLOBAL TEXTILE

The global textile and apparel industry entered FY 2025-26 at a critical inflection point, shaped by tariff disruptions, supply-chain diversification, and steady demand growth. The global textile market was estimated at USD 1,160 billion in 2025 and is projected to reach USD 1,210 billion in 2026, growing at a CAGR of about 4.2% through 2033.

Overall textile and apparel trade was estimated at US$ 900 billion in 2025, growing at 3% CAGR since 2020, with apparel accounting for nearly 60% of it.Growth in 2025-26 was modest at 2-5% for garments and textiles, as buyers front-loaded orders earlier to cushion US tariff impacts and then paused. The US imposed higher, country-specific tariffs in 2025, which sharply cut US apparel imports from China and pushed Vietnam to over 21% US market share.

China remained the largest exporter with a 32% global trade share, but lost competitiveness. India also saw export momentum slow after August 2025 due to the same tariff shocks, though it continued to benefit from the China-Plus-One sourcing strategy. Demand fundamentals were supported by restocking in the US, UK, and EU from Q3 FY25, and by structural shifts toward manmade fibre (MMF) products like athleisure and technical textiles used in healthcare, automotive, and construction. Asia Pacific dominated with a market size of USD 470.61 billion in 2025, projected at USD 489.63 billion in 2026, led by China, India, and Bangladesh. Sustainability also became a core driver, with rising demand for recycled polyester and eco-friendly fabrics. For India specifically, total textile exports including handicrafts grew 2.1% YoY to ^3,16,334.9 crore in FY 2025-26. Readymade garments rose 2.9% to Rs. 1,39,349.6 crore, while MMF exports grew 3.6%.

Domestic demand in India stayed strong at 9-10% YoY growth. Key challenges for FY26 included rising cotton prices, higher freight costs, and

supply chain disruptions. Industry analysts expect the next decade to focus on digital B2B trade, diversified production across countries, and sustainability, with the market potentially reaching $1.5-2 trillion+ by 2030.

Sources:Grand View Research - Textile Market Size 2025-2026Wazir Advisors via Textile Insights

- Global T&A Industry 2026BusinessWorld Online

- 2-5% growth in 2026 amid tariff hopesThe Hindu / India Ratings - Textile exports to improve in FY26PIB Delhi - India Textile Exports FY 2025-26Fortune Business Insights - Asia Pacific Textile Market 2025-2026Medium - Global Textile Trade Outlook 2026IndexBox - Global Textiles Market CAGR 3.2% 2026-2035

2.4 COTTON OUTLOOK

Global Early projections for the 2026/27 season indicate that global cotton lint production will decline by 4% to 24.9 million tonnes, while world consumption is expected to remain stable at approximately 25 million tonnes, according to the April 2026 issue of Cotton This Month.

The anticipated production decline is driven primarily by lower cotton prices, weak demand, and reduced planting intentions, particularly in major producing countries such as Brazil and Australia. In the United States, early planting surveys also suggest a shift away from cotton toward competing crops such as corn and soybeans. Global cotton production in 2026/27 will continue to be led by China, followed by India, Brazil, and the United States.

World cotton lint trade is projected to decline by 2.5% to 9.6 million tonnes, reflecting lower production levels and evolving global demand. Trade flows are expected to remain highly sensitive to tariffs, trade agreements, and geopolitical developments, including recent disruptions to global shipping routes.

On the import side, Bangladesh is projected to remain the worlds largest cotton importer at 1.8 million tonnes, followed by Vietnam, China, Pakistan, Turkiye, and India, together accounting for approximately 80% of global imports.

Sources : https://icac.org/global-production-

expected-to-decline-in-2026-27-as-policy-shifts- and-weak-demand-reshape-trade

2.5 INDIAN TEXTILE

Indias textile sector continued to demonstrate resilience in global markets during FY 2025-26. Total textile exports, including handicrafts, increased from ^3,09,859.3 crore in FY 2024-25

to T3,16,334.9 crore in FY 2025-26, registering a growth of 2.1%. This performance reflects steady global demand for Indian textile products and the continued competitiveness of the sector across major product categories.

Among the major segments, Ready-Made Garments (RMG) of all textiles remained the largest contributor to textile exports, rising from T1,35,427.6 crore to T1,39,349.6 crore, an increase of 2.9%. Cotton yarn, fabrics, made-ups and handloom products recorded exports of T1,02,399.7 crore in FY 2025-26 as against T1,02,002.8 crore in FY 2024-25, reflecting stable growth of 0.4%. Man-made yarn, fabrics and made-ups posted a stronger growth of 3.6%, with exports increasing from T41,196.0 crore to T42,687.8 crore.

Among value-added segments, handicrafts excluding handmade carpets recorded the highest growth among major categories, rising by 6.1% from T14,945.5 crore to T15,855.1 crore.

Export growth was registered in more than 120 destinations during April 2025 to February 2026 over the corresponding period of the previous year, indicating broad-based geographical expansion in Indias textile export basket. A notable growth has been observed in key markets such as UAE (22.3%), UK (7.8%), Germany (9.9%), Spain (15.5%), Japan (20.6%), Egypt (38.3%), Nigeria (21.4%), Senegal (54.4%), and Sudan (205.6%) etc.

Sources:https://www.pib.gov.in/PressReleasePage.

aspxRsPRID=2254367&lang=2®=3&utm

2.6 INDIAN COTTON OUTLOOK

The outlook for cotton quality in FY 202526 indicates a mixed picture. While the Cotton

3. FINANCIAL REVIEW

Association of India (CAI) has raised its cotton production estimate to 317 lakh bales, it has also cut down its cotton consumption estimate to 305 lakh bales, signaling a weakening domestic demand. This suggests caution over the quality of the cotton being produced, as the market may be prioritizing quality over quantity. Additionally, the CAI has kept its cotton import estimate unchanged at 50 lakh bales, indicating a preference for securing quality fibre from imports. The forecast for cotton exports has also been lowered to 15 lakh bales, reflecting a struggle to compete on price in the global market. Overall, the cotton market is expected to be cautious, focusing on securing quality fibre and managing domestic supply and demand effectively.

www.in-cai.in

Heavy, untimely rainfall in Oct 2025 damaged crops in Maharashtra, Gujarat, Andhra Pradesh and Telangana - states that account for over 70% of Indias cotton. Because of this damage, textile mills are turning to higher-quality imported cotton.

Low output, crop damage, and weaker yields are pushing mills to import more, specifically to get better quality fiber for blending. fibre2fashion.com

The Union Budget 2025-26 announced a 5-year National Mission for Cotton Productivity to promote ELS varieties with T500 crore allocated. medium.com

India imports ELS mainly from US to meet demand for premium yarn. More than 47% of US exports to India by value is ELS. The mission aims to cut this import reliance. paradigmfutures. netthehindubusinessline.com

(Amount in lakhs)

Particulars	2025-26	2024-25	Change	Reason
Revenue From Operations	14,128.58	13424.32	5%	There is an exponential increase in sale of Garmenting unit by 227% and 8% in Knitting unit. Although due to poor quality of raw cotton received in current year led to decrease in production and sale of Spinning unit by 10-12%.
Operating Profit (EBITDA)	695.66	772.89	-10%
Finance Cost	211.82	198.68	7%	The finance cost has increased due to increase in loans during the current year, taken for the purchase of solar panels and machinery, as well as an ad hoc loan for short-term financing
Depreciation Cost	313.64	330.62	-5%
Profit Before Tax	170.2	243.59	-30%	The net profit margin has decreased in the current financial year, due to multiple factors affecting the profitability. In FY 25-26 the quality of raw material cotton received was poor which reduced the production and sale of spinning unit both by 10-12%, Also in the garmenting unit the stock was prepared but the same was picked for sale after the year end which led to non booking of profit margin in FY 25-26. Further electricity cuts and Labour shortage has also collectively impacted the Margins.
Profit after Tax	129.69	179.6	-28%	The net profit margin has decreased in the current financial year, due to multiple factors affecting the profitability. In FY 25-26 the quality of raw material cotton received was poor which reduced the production and sale of spinning unit both by 10-12%, Also in the garmenting unit the stock was prepared but the same was picked for sale after the year end which led to non booking of profit margin in FY 25-26. Further electricity cuts and Labour shortage has also collectively impacted the Margins.

4. SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE

Particulars	Yarn	Fabric	Garment
Sale	85.89cr	32.18 cr	23.20 Cr
Production	4726511 Kg	1422147 kg	3652857 pieces

5. FINANCAIL RATIOS

S.No Particulars	2025-26	2024-25	% age Change	Reason
Debtor 1 Turnover Ratio (in days)	46 Days	35 Days	30.44%	The fabric unit operates on a 30-60 day payment cycle, while the garment unit has an even longer cycle of 6090 days, with the increase in the sale of these two unit this year they are collectively contributing to the rise in debtor turnover days as well.
Inventory 2 Turnover (in days)	126 Days	113 Days	11.38%	The inventory turnover ratio has increased due to strategic stock accumulation to meet anticipated demand and ensure uninterrupted supply to customers.
3 Interest Coverage Ratio	1.8	2.23	-19.28%	The interest coverage ratio has decreased in the current year due to higher finance costs associated with additional borrowings undertaken for expansion and capital expenditure purposes, which are expected to generate future benefits.
4 Current Ratio	1.89	2.37	-20.27%	The current ratio has declined due to an increase in upcoming short-term borrowing repayments, as reflected under current liabilities
5 Debt-Equity 5 Ratio	0.84	0.61	37.89%	The debt-to-equity ratio has increased due to increase in loans during the current year, taken for the purchase of solar panels and machinery, as well as an ad hoc loan for short-term financing.
6 EBITDA Margin (%)	4.92%	5.76%	-0.84%	The net profit margin has decreased in the current financial year, due to multiple factors affecting the profitability. In FY 25-26 the quality of raw material cotton received was poor which reduced the production and sale of spinning unit both by 10-12%, Also in the garmenting unit the stock was prepared but the same was picked for sale after the year end which led to non booking of profit margin in FY 25-26. Further electricity cuts and Labour shortage has also collectively impacted the Margins.
7 Net Profit Margin (%)	0.92%	1.34%	-42.49%	The net profit margin has decreased in the current financial year, due to multiple factors affecting the profitability. In FY 25-26 the quality of raw material cotton received was poor which reduced the production and sale of spinning unit both by 10-12%, Also in the garmenting unit the stock was prepared but the same was picked for sale after the year end which led to non booking of profit margin in FY 25-26. Further electricity cuts and Labour shortage has also collectively impacted the Margins.
8 Return on Net Worth (%)	2.97%	4.24%	-29.99%	A decrease in profit growth with no corresponding increase in net worth of the company has led to this decrease in return on Net worth. Poor quality of raw material received, electricity cuts and Labour shortage are impacting the net profit.

6. HUMAN RESOURCES/INDUSTRIAL RELATIONS

At Avi Ansh Textile, we continuously strengthen a culture where performance, fairness, and opportunity drive every decision. During the year, we expanded initiatives to support womens participation by enhancing workplace safety measures, improving employee amenities. We also invested in targeted learning and development programs that combined practical, hands- on training with skill enhancement, enabling employees to take on greater responsibilities and contribute more effectively to the Companys growth.

Reflecting the Companys continued growth and expansion, the total employee strength increased from 371 employees as on March 31, 2025, to 459 employees as on March 31, 2026, demonstrating our commitment to creating employment opportunities while building a skilled and engaged workforce.

7. INTERNAL CONTROL SYSTEM AND ADEQUACIES

The Company maintains an internal control framework designed to safeguard assets, ensure accurate financial reporting, and support sustainable business growth. Our control systems are continuously refined to align with evolving industry benchmarks, regulatory requirements, and operational realities.

Senior management keeps an eye on the internal audits suggestions for ongoing system updates. The infrastructure of IT system is upgraded frequently to facilitate improved controls and corporate decision making to make sure that the company is not lagging in technology and is at par with the industry.

8. OPPORTUNITIES AND THREATS

8.1 OPPORTUNITIES

Indias textile industry has emerged as one of the countrys key growth engines, expanding to nearly Rs. 16.66 lakh crore (US$ 190 billion) in 2025-26 and setting its sights on achieving a market size of Rs. 33.10 lakh crore (US$ 350 billion) by 2030. The domestic textile market has increased significantly from about Rs. 6 lakh crore (US$ 93.63 billion) in 2014-15 to over Rs. 16 lakh crore (US$ 170.4 billion), reflecting rising consumption, expanding manufacturing capabilities and stronger value- chain integration. According to Textiles Minister Mr. Giriraj Singh, the sector currently provides direct employment to more than 5.3 crore people and is expected to create nearly 2 crore additional jobs over the next three years. Guided by the Prime Minister Mr. Narendra Modis 5F vision- Farm to Fibre, Fibre to Factory, Factory to Fashion and Fashion to Foreign, the industry has evolved into a comprehensive ecosystem connecting farmers, weavers, artisans, manufacturers and exporters.

The Government has introduced several initiatives to strengthen the sectors competitiveness, including PM MITRA Parks, the Production Linked Incentive (PLI) Scheme, the National Technical Textiles Mission (NTTM), the Textiles Export Promotion Mission (TEEM), the National Fibre Mission and the Raw Material Support Scheme (RMSS). Measures such as the Cotton Productivity Mission and the removal of import duty on cotton are supporting raw material availability and farmer incomes. Export competitiveness has been further enhanced through RoSCTL and RoDTEP schemes, while Indias FTA network has expanded from 10 agreements covering 19 countries in 2014 to 18 agreements covering 56 countries. India has also emerged as a global leader in technical textiles, with the market growing from about Rs. 55,734 crore (US$ 6 billion) to Rs. 2.32 lakh crore (US$ 25 billion) under NTTM. Source:https:/ /www.ibef.org/news/india-s- textile-industry-poised-to-achieve-us-350-bilkon- target-by-2030

8.2 THREATS

Domestic cotton production to dip by 1.7% YoY in 2026 (October 2025 to September 2026) amid uneven rainfall and acreage shifts by farmers. Amid low cotton output, dependance on imports rose sharply in FY 2025-2026 (up 85% YoY) with the United States being the key supplier with 22% share. Import duty exemption on cotton imports from August 19, 2025, till December 31, 2025 and the relatively subdued demand for cotton yarn has kept cotton prices soft despite a contraction in output over the last two cotton seasons.

Following a relatively flat first half (H1), the spillover impact of U.S. tariffs on cotton spinners is expected to moderate domestic cotton yarn realizations during the second half (H2) of FY2026. Consequently, revenues of cotton spinning companies are projected to decline by 4-6% in FY2026, while operating margins are likely to contract by 50-100 basis points (bps). However, the anticipated moderation in cotton prices is expected to partially offset this impact. Additionally, any positive outcome from the ongoing tariff-related negotiations with the United States could help mitigate the adverse effects to some extent.

Sources:

1. https: / / www.icra.in/Research/ ViewResearchReport/acreage-compression- to-cap-cotton-output-in-cotton-year-2026- import-dependence-to-continue/6724

2. https://w w w . icr a. in / Re s e ar ch / ViewResearchReport/us-tariffs-deter-the- recovery-of-cotton-spinners/6689

9. DISCLOSURE OF ACCOUNTING TREATMENT

During the period under review, the financial statements were prepared in accordance with the applicable Accounting Standards, and no treatment differing from that prescribed in any Accounting Standard has been followed. Accordingly, the disclosure required under Clause B (2) of Schedule V of the SEBI (LODR) Regulations, 2015 is not applicable to the Company for the financial year ended 31 March 2026.

On Behalf of the Board of Directors
Avi Ansh Textile Limited

Place: New Delhi
Date: 26/08/2026

Sd/-
Anil Kumar Jain (Managing Director)
DIN : 00150070

Sd/-
Geeta Jain (Director)
DIN : 00153074