Borana Weaves Ltd Management Discussions

Your directors take pleasure in presenting the Management Discussion and Analysis Report for the year ended on 31st March 2025.

INDUSTRY OVERVIEW:

Indias textile industry is a cornerstone of the national economy, contributing approximately 14% to industrial production and employing over 35 million people, making it the second-largest employer after agriculture. The sector accounts for 27% of Indias foreign exchange earnings through exports, with a target of achieving USD 100 billion in exports by 2030, as outlined by the Ministry of Textiles. Despite global macro headwinds, the industry recorded healthy revenue growth in FY 2024-25, driven by a rebound in export demand, particularly to markets like China, and steady domestic consumption. However, challenges such as volatile cotton prices, high input costs, and competition from low-cost garment imports persisted, impacting smaller players more significantly than larger, integrated firms.

The technical textiles segment, growing at 10% annually, presents significant opportunities, supported by government initiatives like the PM Mitra Mega Textile Parks and a INR 1,000 crore allocation for R&D. The industry is also witnessing a tech-driven transformation, with MSMEs in hubs like Tiruppur adopting AI to enhance efficiency and sustainability.

The Indian textile industry remains a pivotal sector contributing significantly to the countrys industrial output, employment, and exports. Within this vast landscape, the yarn manufacturing and weaving segment serves as a foundational pillar, supporting the value chain from raw fiber to finished garment.

In FY 2024–25, the industry faced a complex environment shaped by global macroeconomic shifts, fluctuating cotton prices, rising energy costs, and changing trade policies. Despite these challenges, demand for quality yarn and woven fabrics remained strong, supported by the resurgence of apparel exports, increased domestic consumption, and government-led incentives promoting indigenous manufacturing.

ORGANISATION PROFILE:

Borana Weaves Limited is a public limited company incorporated on 28th October 2020 under the Companies Act, 2013, with its Corporate Identification Number (CIN) U17299GJ2020PLC117745. The company is registered with the Registrar of Companies, Ahmedabad, and operates as a Company Limited by Shares.

Headquartered in Gujarat, Borana Weaves Limited is engaged in the manufacturing of yarn and weaving of fabrics, serving both domestic and international markets. With a modern manufacturing setup and integrated operations, the company is focused on producing high-quality yarn and woven fabrics tailored for fashion, home textiles, and industrial applications.

Key Highlights FY 2024–25:

• Revenue Growth: 48% year-over-year growth in operational revenue.

• Profit Growth: 70% increase in profit after tax.

• EBITDA & Margin Expansion: Driven by better capacity utilization and cost control.

• Zero Stock-in-Trade Purchases: Reflecting fully in-house manufacturing strength.

• Increased Capital Efficiency: Higher earnings per share (EPS) at Rs. 20.14 v/s Rs. 11.83 last year.

The company continues to invest in modern machinery, automation, and quality enhancement systems to support its long-term growth strategy. It has also adopted prudent financial management and tax planning, contributing to stable earnings and sustainable returns to stakeholders.

INDIAN RETAIL INDUSTRY:

The Indian textile industry is one of the oldest and most significant industries in the country, forming the backbone of Indias manufacturing sector. As of FY 2024–25, the industry is valued at approximately USD 170 billion, contributing about 2.3% to Indias GDP, 13% to industrial production, and 11% to total exports. It is also the second-largest employer in India, providing direct and indirect employment to over 45 million people.

EXPANSION & FUTURE PROPOSAL:

Borana Weaves Limited has outlined a strategic growth roadmap in its Draft Red Herring Prospectus (DRHP), focused on enhancing manufacturing capabilities and operational scale. The key initiatives are:

1. New Manufacturing Unit (Unit 4) – Surat

• Planned setup of a new facility to increase production capacity for unbleached synthetic grey fabric.

• Fund Allocation: Rs.71.35 crore from IPO proceeds.

• Objective: Meet rising demand and strengthen market presence in the woven fabric segment.

2. Working Capital Enhancement

• Allocation of Rs.26.50 crore to support increased working capital needs.

• Purpose: Ensure smooth procurement of raw materials and efficient production cycles across all units.

3. General Corporate Purposes

• Additional funds reserved for strategic flexibility, including technology upgrades, product diversification, and operational efficiency improvements.

4. Operational Context

• Existing three units in Surat operating with 700+ looms and processing equipment.

• Revenue grew significantly from Rs.42 crore (FY 2022) to Rs.199 crore (FY 2024).

• High capacity utilization in Unit 1 & 3; Unit 2 offers room for optimization.

These expansion plans position Borana Weaves Limited to scale operations, improve profitability, and respond more dynamically to domestic and international market opportunities.

THREATS:

• Volatile Raw Material Prices, especially cotton and synthetic fibers.

• Power and Fuel Costs impacting production economics.

• Labour Availability and Costs in traditional textile belts.

• Geopolitical Uncertainties and trade barriers in key markets.

OUTLOOK:

Looking ahead, Borana Weaves Limited is poised to strengthen its position in the textile value chain by:

• Increasing spinning capacity to meet rising yarn demand.

• Expanding weaving capabilities with automated looms.

• Exploring export markets with a focus on quality and timely delivery.

• Investing in sustainable production processes and water-efficient technologies.

The company expects moderate revenue growth and improved profitability in FY 2025–26, driven by an efficient cost structure, product innovation, and customer-centric strategy.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial performance of the Company for the year 2024-25 is described in the Directors Report under the head Financial Result.

INTERNAL CONTROL SYSTEM:

Your Company maintains a system of internal controls designed to provide reasonable assurance regarding the following:

• Effectiveness and efficiency of operations

• Prevention and detection of frauds and errors

• Effective use of resources

• Adherence to applicable Accounting Standards and policies

• Timely preparation of reliable financial information

Internal controls and governance processes are duly reviewed for their adequacy and effectiveness on a periodical basis.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT:

Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. Industrial relations were cordial throughout the year.

DISCLAIMER:

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Statements in this Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may materially differ from those expressed or implied.

Annual Report on Corporate Social Responsibility (CSR) activities for the Financial Year 2024-25

1. Brief outline on CSR Policy of the Company:

The Company has framed Corporate Social Responsibility (CSR) Policy which encompasses its philosophy and guides its sustained efforts for undertaking and supporting socially useful programs for the welfare and sustainable development of the society.

The CSR Policy has been uploaded on the website of the Company at https://boranagroup.in/policies.

2. Composition of CSR committee as on 31.03.2025:

Name of Director	Designation / Nature of Directorship	Number of meetings of CSR Committee held during the year	Number of meetings of CSR Committee attended during the year
Rajkumar Mangilal Borana	Chairman	1	1
Ankur Mangilal Borana	Member	1	1
Nitika Abhishek Soni	Member	1	1

3. Web link on the Website of the Company for Composition of CSR Committee, CSR Policy and CSR projects approved by the Board: https://boranagroup.in/policies

4. Details of impact assessment of CSR projects carried out in pursuance of sub-rule (3) of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, if applicable:

Not Applicable for the financial year under review

5. Details of the amount available for set-off in pursuance of sub-rule (3) of Rule 7 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amount required for set-off for the financial year, if any: Nil

6. Average net profit of the Company as per Sec. 135(5): Rs. 1688.37 lakhs

7. a. Two percent of average net profit of the Company as per Section 135(5): Rs. 33.77 lakhs b. Surplus arising out of the CSR projects or programs or activities of the previous financial years: Nil c. Amount required to be set-off for the financial year, if any: Nil d. Total CSR obligation for the financial year (7a+7b-7c): . 33.77 LAKHS

8. (a) CSR amount spent or unspent for the financial year(s):

Total Amount	Related to		Amount Unspent (Rs. in lakhs)
Spent for the Financial Year (in Rs.)	which Financial Year	Total Amount transferred to Unspent CSR Account as per Section 135(6)		Amount transferred to any fund specified under Schedule VII as per second proviso to Section 135(5)n
		Amount	Date of transfer	Name of the Fund	Amount	Date of transfer
55 Lakhs	2024-25	Not Applicable			Not Applicable

(b) Details of CSR amount spent against ongoing projects for the financial year: NIL

(c) Details of CSR amount spent against other than ongoing projects for the financial year (s):

Financial Year(s)	Name of the Project	Item from the list of activities in Schedule VII to the	Local area (Yes/No)	Location of the Project		Amount spent for the project (in Rs.)	Mode of Implemen- tation - Direct (Yes/No)	Mode of Implementation -Through Implementing Agency
		Act		State	District			Name	CSR Registration Number
2024-25	Agrawal Samaj Vidhya Vihar Trust	An Environment and Human Rights organization & Charitable Trust	Yes	Gujarat		55 Lakhs	Yes		-

(d) Amount spent in administrative overheads: NIL

(e) Amount spent on impact assessment, if applicable: Not applicable (f) Total amount spent for the financial year (8b+8c+8d+8e): Rs. 55 Lakhs (g) Details of excess amount for set-off are as follows: NIL

Sl. No. Particulars	Amount (in Rs.)
(i) average net profit of the company as per section 135(5)	1688.37 lakhs
(ii) Total amount spent for the financial year 2024-25	33.55 lakhs
(iii) Excess amount spent for the financial year [(ii)-(i)]	21.23 Lakhs
(iv) Surplus arising out of the CSR projects or programmers or activities of the previous financial years, if any	NIL
(v) Amount available for set off in succeeding financial years [(iii)-(iv)]	21.23 Lakhs

9. (a) Details of unspent CSR amount for the preceding three financial years: NIL

(b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s): N.A.

Not applicable, as the concept of ongoing projects has been introduced in the CSR Amendment Rules, relevant from fiscal 2025. Details of spend on all ongoing projects during fiscal 2021 are covered under 8(b) above.

10. In the case of creation or acquisition of capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year: N.A.

No capital asset was created / acquired for fiscal 2025: N.A.

11. Specify the reason(s), if the company has failed to spend two percent of the average net profit as per Section 135(5): N.A.