Bannari Amman Spinning Mills Ltd Management Discussions

COMPANYS BUSINESS

The Companys principal line of business is manufacturing and marketing of Cotton Yarn, Woven and Knitted fabrics, Home Textiles products and Processing of fabrics. The Company has two spinning units near Dindigul, Tamilnadu with an installed capacity of 164016 spindles, Weaving and Home Textiles units at Karanampettai near Palladam with an installed capacity of 156 looms, Processing unit at SIPCOT, Perundurai with an installed capacity to process 4200 tonnes of fabric per annum, Knitting unit near Dindigul with installed capacity to produce 4700 tonnes of knitted fabric per annum, 27 Windmills with an installed capacity of 23.40 MW green power and 9.74 MW (DC) Solar Power plant installed within the Spinning unit II premises both of which are entirely used for captive consumption.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Indias textile and apparel industry functions as a vital economic engine, employing millions across the value chain from cotton farmers to garment workers while generating substantial foreign exchange through exports to global markets. The sector uniquely balances traditional handloom heritage with modern manufacturing technologies, serving diverse market segments from basic commodity fabrics to premium fashion textiles. Regional manufacturing clusters have developed specialized expertise, with Maharashtra focusing on integrated mill production, Gujarat excelling in synthetic textiles, Tamil Nadu dominating cotton spinning, and Uttar Pradesh maintaining strong handloom traditions that preserve cultural textile arts while meeting contemporary market demands.

The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030 with exports expected to reach US$ 100 billion. India is the Worlds 2nd largest producer of Textile & Apparel and 6the largest exporter. India is the Worlds largest cotton producer and ranks highly in silk, wool and jute production. India possesses a complete, strong supply chain from raw material to finished goods.

The textiles and apparel industry now contributes approximately 2% of Indias GDP and about 11% of manufacturing GVA (Gross Value Added). The textile industry in India is predicted to double its contribution to the GDP to approximately 5% by the end of this decade.

OPPORTUNITIES

The fundamental strength of Indian textile industry is its strong production base with wide range of fibers/yarns. These are natural fibers such as cotton, jute, silk and wool and synthetic/man-made fibers like polyester, viscose, nylon and acrylic. India is well poised to capture the increasing Global demand for Textiles & Clothing. The availability of key Rawmaterials, labour, boomimg domestic E-commerce coupled with various Government initiatives and support are key factors in the evolving of the Indian Textile Industry.

The India-UK FTA, offers duty-free access to 99% of goods, boosting Indias competitiveness. It is expected to benefit labor-intensive sectors like home textiles, which currently face a 12% UK tariff. India could double its home textiles market share in the UK within three years.

The India-UK Comprehensive Economic Trade Agreement (CETA) is expected to boost Indias technical textile exports to the UK to US$ 1 billion by 2030, from the current US$ 240 million. The agreement grants 100% duty-free access for Indian exports, giving India a competitive advantage over China.

India and the European Union officially concluded negotiations on a historic Free Trade Agreement (FTA) on January 27, 2026, marking a major milestone after nearly two decades of talks. The landmark pact slashes duties on over 90% of tariff lines for both regions, significantly boosting market access for bilateral trade. India has concluded agreements with few other Countries and also engaging with certain others in response to global trade challenges such as recent tariffs imposed by the US.

OUTLOOK

Indias textile and apparel sector is positioned for sustained expansion driven by domestic consumption growth, manufacturing capacity additions, export competitiveness improvements, and product portfolio diversification toward higher-value segments. The demographic dividend of a young population entering peak consumption years, accelerating urbanization patterns shifting households toward organized retail purchasing behaviors, and digital commerce platforms expanding market access beyond traditional distribution networks collectively strengthen demand fundamentals across product categories.

Sustainability and innovation are emerging as defining themes for the industry. Companies are increasingly adopting eco-friendly processes and recyclable fibres to align with global trends, while government schemes like the Production Linked Incentive (PLI) Scheme for Textiles, MITRA Parks and support for integrated textile hubs are encouraging value addition and modernisation. Hence the future of the Indian textiles industry looks quite promising.

RISKS AND CONCERNS

Availability of Cotton, the main raw material for manufacture of Cotton Yarn, is subject to the vagaries of nature and the prices also fluctuate wildly based on supply/demand in the World market and Government policies. The prices of man made fibres depends on the prices of crude and hence subject to volatility. Evolving tariff structures are prompting manufacturers and brands to revisit supplier mix, consider nearshoring options, and adopt automated compliance processes. Fluctuations in duty regimes directly influence landed costs, requiring procurement leaders to conduct risk assessments and consider tactics like bonded warehousing and revised bill-of-materials strategies

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control procedures and systems commensurate with its size and nature of its business for purchase of raw materials, plant and machinery, components and other items and sale of goods. The checks and controls are reviewed by the Audit Committee for improvement in each of these areas on a periodical basis. The internal control systems are improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company has been discussed at length in Directors Report to the Members.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS FOR THE FINANCIAL YEAR 2025-26 AND 2024-25.

S.No.	Ratios	31.3.2026	31.3.2025
1	Debtors Turnover	5.33	5.46
2	Inventory Turnover	5.42	2.95
3	Interest coverage	1.51	1.87
4	Current Ratio	0.84	1.13
5	Debt Equity Ratio	0.73	1.11
6	Operating Profit margin	7.44%	9.93%
7	Net Profit margin	1.58%	4.14%

DETAILS OF ANY CHANGE IN RETURN ON NETWORTH AS COMPARED TO IMMEDIATELY PREVIOUS

FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

Return on Networth 31.3.2026 - 3.24%

Return on Networth 31.3.2025 - 8.47%

The RONW has reduced during FY 26 as the same for the previous year FY 25 included gains from discontinued operations though the operating performance of the Company has improved as compared to previous year.

MEDIUM TERM AND LONG TERM STRATEGIES

The Company currently manufactures Cotton yarn, Polyester & Cotton blended yarn, Knitted fabric, Grey and bleached woven fabric, made ups and Processed knit fabric. The medium and long term strategies that will be initiated by the Company are discussed below.

Cotton Yarn :

The Spinning units continue to produce medium as well as fine counts of Yarn for different applications. New product mix varieties are introduced to broad base product profile viz. Tencel, modal etc. Production of Polyester and cotton blended yarn commenced during the previous year and in this segment also different varieties are produced to meet market requirements.

Knitted fabric :

Knitted fabric production is against orders and emphasis will be on producing value added fabric (Lycra).Opportunity for export of knitted fabric to well known manufacturers is being evaluated.

Woven fabric :

Production of fabric is generally against orders. A portion of fabric produced is transferred to Home Textile division for manufacture of value added products.

Home Textiles :

The main products are bleached fabric and madeups like bed linen products meant mainly for exports. Home textiles is one of the focus areas for the Company and efforts are underway to increase the share of Home Textiles products. The Company is setting up offices in major Home Textiles centres to improve the volume of business in the segment.

Processed Knitted fabric :

The processing division produces dyed fabric for Hosiery segment applications and the production is against orders. Surplus capacity is utilized for job work order.

(Disclosure with limits set by competitive position, medium term and long term strategies as approved by Board of Directors)

	By Order of the Board
	S V ARUMUGAM
Coimbatore	CHAIRMAN & MANAGING DIRECTOR
th
29 May, 2026	DIN 00002458