Blue Pearl Texspin Ltd Management Discussions

A. OVERALL REVIEW:

The global economy began its modest recovery in FY 2023-2024. While the trend is expected
to accelerate in the current year, emerging markets like India faced multiple challenges
capital outflows, intense exchange rate pressures and volatile current account movement. A
combination of persistent inflation, fiscal imbalances, external sector vulnerabilities and low
investments resulted in sluggish domestic demand growth. Fiscal and monetary initiatives
taken by the Indian government and the Reserve Bank of India (RBI) helped stabilize
financial market conditions, but the domestic macro-economic environment still remains
challenging.

The overall performance of textile industry is badly affected due to lower realization both in
export and domestic market. Disturbed power supply and skilled labor shortage in the region
has worsened the position.

B. INDUSTRY STRUCTURE AND DEVELOPMENT:

Raw material costs have been increasing globally, coupled with a shortage of skilled workers.
While a shift is taking place of textiles industries from China and Bangladesh to India, the
industrial climate in India has also become adverse due to regular increases in input costs.
Any further appreciation of the Rupee will adversely affect exports from India.

The major sub-sectors that comprise the textiles sector include the following:

• Cotton/Man-Made Fibre Textiles Mill Industry

• The Man-Made Fibre/Filament Y am Industry

• The Wool and Woolen Textiles Industry

• The Sericulture and Silk Textiles Industry

• The Handlooms Textiles Industry

• The Handicrafts Textiles Industry

• The Jute and Jute Textiles Industry

• The Textiles Exports

Indias textiles and clothing industry is one of the mainstays of the national economy. It is
also one of the largest contributing sectors of Indias exports worldwide.

C. OPPORTUNITIES AND THREATS:

There is good scope for growth for the textile industry as Indias share in the global trade in
textiles is weak compared to other countries. The free trade environment is a great
opportunity for the Indian textile industry to increase its share in the global market. Chinese
exports are slowing down on account of various factors inclusive of increase in domestic
demand and rising costs. This is a good opportunity of which our textile industry should

make use but smaller countries like Bangladesh, Sri Lanka, Pakistan, Turkey and Vietnam
etc. are becoming formidable challengers.

Lack of uninterrupted power, increased power costs, higher transaction costs, high cost of
labor are hindering the progress. However, we are making all out efforts to cope with all
these challenges by continuous efforts at cost reduction, process improvements,
diversification of products and improving productivity by improving efficiencies.

D. RISKS AND CONCERNS:

The fluctuation in the currency especially against the dollar is becoming problematic for long
term booking of orders. Cotton prices are increasing regularly as are other input costs
including power and logistics. Natural Gas has become so much costlier that its use as a
source of power has become prohibitive.

E. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a well-established framework of internal controls in all areas of its
operations, including suitable monitoring procedures and competent and qualified personnel.
In addition to statutory audit, the financial controls of the Company at various locations are
reviewed by the Internal Auditors, who report their findings to the Audit Committee of the
Board. The Audit Committee is headed by an Independent Director and this ensures
independence of function and transparency of the process of supervision and oversight. The
Committee meets to review the progress of the internal audit initiatives, significant audit
observations and planning and implementation of follow up action required. The Company
conducts its business with integrity and high standard of ethical behavior and in compliance
with the laws and regulations that govern its business.

F. HUMAN RESOURCES POLICIES:

Your Company considers its human resources as its most valuable assets, among all other
assets of the Company. It has been the policy of the Company to actuate the talent by
providing opportunities to develop themselves within the organization. The Company
continued to have maintained very cordial & harmonious relations with its employees.

G. CAUTIONARY STATEMENT:

Statements in this report on Management Discussion and Analysis, describing the Companys
objectives, projections, estimates, expectations or predictions may be forward looking,
considering the applicable laws and regulations. These statements are based on certain
assumptions and expectation of future events. Actual results could, however, differ materially
from those expressed or implied. Important factors that could make a difference to the
Companys operations include global and domestic demand-supply conditions, finished
goods prices, raw materials costs and availability, fluctuations in exchange rates, changes in
Government regulations and tax structure, economic developments within India and the
countries with which the Company has business contacts.

The Company assumes no responsibility in respect of the forward looking statements herein,
which may undergo changes in future on the basis of subsequent developments, information
or events.

RATIO ANALYSIS:

* Increase in liability, decrease in profitability