CLC Industries Ltd Management Discussions

ECONOMIC OVERVIEW Global Economy

The global economy continued to demonstrate resilience during 2026 despite heightened geopolitical tensions, trade policy uncertainties and persistent inflationary pressures. According to the International Monetary Fund (IMF) - World Economic Outlook Update (July 2026), global GDP growth is projected at 3.0% in 2026, improving to 3.4% in 2027. While the outlook remains positive, growth is expected to be uneven across regions owing to geopolitical conflicts, energy market disruptions and changes in global trade patterns.

The continuing US-Iran conflict and instability in the Middle East have significantly impacted global energy markets. Concerns over disruptions to oil supplies through the Strait of Hormuz have resulted in elevated crude oil prices, higher freight and logistics costs, and renewed inflationary pressures across many economies. These developments have adversely affected consumer confidence and demand in major textile and apparel importing markets, particularly Europe and North America.

Global trade also remains influenced by evolving tariff policies and bilateral trade negotiations. The IMF expects world trade growth to moderate in 2026 due to tariff-related uncertainties and supply chain realignments, although diversification of sourcing and technology-led investments continue to support international trade. Export-oriented sectors, including textiles, continue to operate in a highly competitive environment marked by volatile raw material prices, currency fluctuations and changing sourcing strategies of global brands.

Indian Economy

Despite global headwinds, the Indian economy continues to remain one of the fastest- growing major economies in the world. The IMF has projected Indias GDP growth at 6.4% in 2026, supported by strong domestic consumption, robust services sector growth, increasing public infrastructure investment and resilient private demand.

The Reserve Bank of India (RBI) has maintained a balanced monetary policy with its policy Repo Rate at 5.25%, while closely monitoring inflationary pressures arising from higher crude oil prices and geopolitical developments. Retail inflation has remained broadly within the RBIs tolerance band, although recent increases in food and energy prices warrant continued vigilance. The RBI has prioritized maintaining macroeconomic stability while supporting economic growth and ensuring adequate liquidity in the financial system.

India continues to strengthen its global trade relationships through ongoing bilateral and regional trade agreements aimed at improving market access and enhancing export competitiveness. Government initiatives such as PM MITRA Parks, the Production Linked Incentive (PLI) Scheme, National Technical Textiles Mission, and sustained investment in infrastructure and logistics are expected to improve the competitiveness of Indias textile

industry. The countrys stable macroeconomic fundamentals, expanding manufacturing base and favorable demographic profile continue to position India as an attractive global sourcing destination for textiles and apparel.

Indian textile and apparel industry:

The Indian Textile and Apparel (T&A) industry continues to be one of the largest contributors to the countrys manufacturing output, exports and employment, accounting for nearly 2.3% of GDP, around 13% of industrial production and approximately 12% of Indias merchandise exports, while providing direct and indirect employment to over 45 million people. Despite a challenging global environment marked by geopolitical tensions, volatile raw material prices and subdued demand in key export markets, the industry demonstrated resilience during FY 2025-26 through stable export performance and sustained domestic demand.

During FY 2025-26, Indias textile and apparel exports (including handicrafts) increased to approximately Rs.3.25 lakh crore, registering a growth of about 1.8% over the previous year, with export growth recorded across more than 100 countries. Cotton yarn, fabrics, made- ups and handloom products maintained stable export performance, while ready-made garments continued to remain the largest export segment.

The Government of India continues to accord high priority to the textile sector through several policy initiatives aimed at enhancing global competitiveness and strengthening the

entire textile value chain. Key initiatives include the PM MITRA Mega Textile Parks, Production Linked Incentive (PLI) Scheme, National Technical Textiles Mission, SAMARTH Scheme, RoSCTL, RoDTEP, and the recently approved Mission for Cotton Productivity with an outlay of Rs.5,659 crore to improve cotton productivity, quality, traceability and long-term raw material security for the industry.

The industry is also expected to benefit from Indias expanding network of Free Trade Agreements (FTAs), particularly the India-United Kingdom Comprehensive Economic and Trade Agreement (CETA), the recently concluded India-European Union FTA negotiations, and the India-New Zealand FTA, which are expected to improve preferential market access, reduce tariff disadvantages and create new export opportunities for Indian textile manufacturers.

However, the sector continues to face several challenges, including increased freight costs arising from geopolitical tensions in the Middle East, volatility in cotton prices, intense competition from Bangladesh, Vietnam and China, fluctuations in foreign exchange rates, and evolving sustainability and traceability requirements of global brands. The recent US- Iran conflict has further increased logistics costs and supply chain uncertainties, impacting export competitiveness. Nevertheless, Indias integrated textile value chain, abundant raw material base, growing domestic consumption, improving infrastructure and strong government support continue to position the industry favorably for long-term growth.

The long-term outlook for the Indian Textile and Apparel industry remains positive, supported by favorable demographics, increasing value-added manufacturing, diversification of export markets, digital transformation, sustainability initiatives and continued policy support. These factors are expected to strengthen Indias position as a reliable global sourcing destination and enhance the competitiveness of the Indian textile industry in the years ahead.

Segment Reporting:

Your Company deals only in one segment i.e. Yarn is the core of all fabrics- be it garments. The Company Produces Cotton Yarn using Cotton as raw material. Our yarns do not deplete the earth s resources. As the Company is manufacturing only the one product i.e. Cotton Yarn, Therefore, segment/ product-wise details are not applicable.

Opportunities:

The Indian textile industry is entering a phase of structural transformation driven by increasing

global diversification of sourcing, supportive government policies and rising domestic consumption. CLC Industries Limited is well positioned to capitalize on these emerging opportunities.

1. China Plus One Strategy

Global apparel and textile brands continue to diversify their sourcing base beyond China to reduce supply chain risks. India is emerging as a preferred sourcing destination due to its integrated textile ecosystem, abundant cotton availability and strong manufacturing capabilities.

2. Growing Domestic Consumption

Rising disposable incomes, rapid urbanization, increasing middle-class population and higher consumer spending on apparel and home textiles are expected to drive sustained demand for cotton yarn in the domestic market.

3. Free Trade Agreements (FTAs)

Indias expanding network of Free Trade Agreements with key economies is expected to improve market access, enhance export competitiveness and create new opportunities for Indian textile manufacturers in global markets.

4. Government Support

Government initiatives such as PM MITRA Mega Textile Parks, the Production Linked Incentive (PLI) Scheme, National Technical Textiles Mission, RoDTEP, RoSCTL and infrastructure development are expected to strengthen the competitiveness of the Indian textile sector.

5. Increasing Demand for Sustainable Textiles

Global customers are increasingly preferring environmentally responsible and sustainably manufactured textile products. This creates opportunities for manufacturers investing in energy efficiency, renewable energy, traceability and responsible sourcing practices.

j6. Value-added Products

Growing demand for compact yarn, contamination-free yarn, melange yarn, slub yarn, organic cotton yarn and other specialty yarns provides opportunities for higher realizations and improved profitability.

7. Integrated Supply Chain

Indias well-established textile value chain, from cotton cultivation to finished garments, provides significant operational advantages and enhances supply chain reliability.

8. Strength of the Promoter Group

Being part of the Manjeet Group, one of Indias leading integrated cotton business groups, provides CLC Industries with strategic advantages in raw material procurement, industry expertise, customer relationships and operational synergies.

9. Operational Improvement

The Company continues to focus on improving capacity utilization, operational efficiency, cost optimization and quality enhancement, which are expected to strengthen profitability over the medium term.

10. Export Market Expansion

Diversification into new geographical markets and strengthening relationships with international customers provide additional avenues for sustainable growth.

Threats:

While the long-term outlook remains positive, the Company continues to operate in an environment characterized by several external and industry-specific risks.

1. Raw Cotton Price Volatility

Fluctuations in cotton prices due to weather conditions, crop production, procurement policies and international market movements may adversely impact production costs and operating margins.

2. Geopolitical Uncertainties

Global conflicts, trade disputes and disruptions in international shipping routes may increase freight costs, affect supply chains and reduce demand in export markets.

3. Intense Global Competition

Competition from textile manufacturing countries such as Vietnam, Bangladesh, China, Pakistan and Turkey continues to exert pressure on pricing and export competitiveness.

4. Demand Slowdown

Economic slowdown, inflationary pressures and changing consumer preferences in major international markets may affect demand for cotton yarn and textile products.

5. Rising Energy Costs

^Increases in electricity tariffs, fuel prices and other energy costs directly impact manufacturing expenses and profitability.

6. Interest Rate and Working Capital Risk

The spinning industry is working-capital intensive. Higher interest rates and limited liquidity may increase finance costs and impact profitability.

7. Labour Availability

Shortage of skilled manpower, increasing labour costs and evolving labour regulations remain significant operational challenges.

8. Climate Change

Erratic weather conditions affecting cotton production and increasing environmental regulations may impact raw material availability and manufacturing costs.

9. Regulatory Changes

Changes in taxation, environmental regulations, export-import policies, labour laws and other statutory requirements may influence business operations and compliance costs.

Company Overview

The manufacturing facility of the company is situated at, D-48, Baramati MIDC, Baramati Pune Maharashtra-413133 and spreads over 70,000 square meters. The Company has 32,400 spindles for cotton yarn having capacity to produce approx. 15.00 metric tons per day of high-quality yarn.

Performance:

The Company has recorded total revenue from operations during the financial year 2025-26 of Rs.401.96 Crores,(including other income 6.15 cr) as compared in the previous financial year 2024-25.

Financial Review: ( Rs. in Lakhs)

Particulars	FY 2025-2026	FY 2024-2025	Change (%)
Revenue from Operation	39581.15	6,162.30	542.31
Operating Profit/Loss (EBITDA)	50.68	-3945.09	-101.28
Finance Cost	565.44	329.20	71.76
Depreciation Cost	361.73	350.53	3.20
Profit/Loss before Tax	-876.49	-4,624.82	-81.05

Financial Ratios:

Particulars	2025-2026	2024-2025	Change (%)	Remark
Debtor Turnover Ratio (Days)	5.58	122.89	(95.46)	Due to timely collection of outstanding receivables
Current Ratio (Times)	1.00	1.09	(8.44)	No explanation is required The debts are increased to meet business losses and
Debt- Equity Ratio (Times)	55.96	5.46	925.76	working capital requirements.
*EBIDTA Margin (%)	0.13	12.38	(98.97)	Due to operating loss
Inventory Turnover Ratio	16.78	4.95	238.72	Due to increase turnover particularly trading business.
Interest Coverage Ratio	(0.55)	1.25	(144.08)	Due to operating loss
*Net Profit Margin (%)	(0.02)	(0.75)	(97.05)	Due to operating loss
Return on Net Worth (%)	(7.02)	(4.62)	51.90	Due to operating loss

Human Resources:

Human resource is considered as the most valuable of all resources available to the Company. The Company continues to lay emphasis on building and sustaining an excellent organization climate based on human performance. Its human resource division plays a crucial role to build a strong and talented workforce. It provides opportunities for professional and personal development and implements comprehensive employee engagement and development programmers to enhance the productivity and skills of its employees. The number of permanent employees on the rolls of Company are 21.

We are really proud of our HUMAN RESOURCES . We believe that our employees make a key difference to our business success. Employees are one of our key stakeholders and needless to mention that managing our human capital has been our key strength and pride. It is our firm belief that nurturing and strengthening the human resource capital is of utmost importance to Jsrun the organization effectively and smoothly. Therefore, the HR function takes pride in managing the human capital both with warmth and care as a hallmark of a caring organization. The Human Capital is managed in a structured manner with key focus areas being Talent Management, Organizational capability Development, Employee Engagement and harmonious Industrial Relations.

WRisks and Concerns:

The Company has a robust Enterprise Risk Management framework for the timely and effective identification, assessment and mitigation of key Business and operational risks. The Company s processes for risk identification, assessment, mitigation, and reporting are supported by an effective i framework for risk management. Indian Textile Industry continues to face stiff competition from China, Bangladesh, Taiwan and other emerging economies.

The relative competitiveness of Industry is dependent upon the raw cotton prices, exchange rates and prevalent interest rates regime. The primary raw material for the manufacturing of yarn is cotton which is an agriculture produce. Its supply and quality are subject to forces of nature i.e. Monsoon. Any increase in the prices of raw cotton will make the things difficult for the Textile Industry resulting weak demand and thin margins. Thus, availability of raw cotton at the reasonable prices is crucial for the spinning industry. Any significant change in the raw cotton prices can affect the performance of the industry.

Internal control systems and their adequacy:

The Company has in place a well-established framework of internal control systems which are commensurate with the size and complexity of its business. The Company has an independent internal audit function covering major areas of operations and the same is carried out by an external Chartered Accountant firm engaged for this purpose

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Company s objectives, projections, estimates, expectations or predictions may constitute forwardlooking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including, but not limited to, economic conditions, Government policies, regulatory developments, market demand, price fluctuations, competitive conditions and other incidental factors and risks beyond the control of the Company.

	On behalf of the Board
Date: 07.08.2026	Sd/-
Place: Chhatrapati Sambhajinagar	Bhupendra Singh Rajpal Chairman