Classic Filaments Ltd Management Discussions

Classic Filaments Limited operates under a diversified charter encompassing core textile wholesaling alongside multi-vertical industrial, engineering, technological, and metallurgical capabilities as enabled by its Memorandum of Association. In alignment with our corporate ethos, innovation in this field will become the key to our success.

1. COMPANY OVERVIEW AND STRATEGIC HORIZON

Classic Filaments Limited operates as a diversified enterprise with an extensive operational matrix spanning traditional manufacturing, heavy engineering, precision automotive components, metallurgy, and advanced technology verticals. Guided by an expansive corporate charter, the company bridges foundational industrial sectors with next-generation digital and technological solutions.

The primary business verticals of the company comprise:

Textiles and Fibres: Manufacturing, spinning, weaving, texturizing, and processing of natural, synthetic, and man-made fibres, yarns, and fabrics.

Automotive and Engineering Components: Production, fabrication, and assembly of diverse automotive parts, gears, transmissions, springs, structural steel products, and precision aluminium components (including ADC12 aluminium blocks and engine parts).

Metallurgy and Heavy Fabrication: Processing and trading of ferrous and non-ferrous metals, steel sections, pipes, and heavy industrial structures.

Technology and Industrial Automation (IIoT & FinTech): Development of industrial software, SaaS platforms, Industrial Internet of Things (IIoT) solutions, advanced robotics, and comprehensive financial technology infrastructure.

This multi-sectoral framework provides the company with cross-industry resilience, mitigating cyclical downturns in any single market by leveraging synergies across material science, heavy manufacturing, and digital engineering.

2. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Classic Filaments Limited operates through a diverse operational matrix. The financial and operational contribution of each major business line is outlined below: Textiles & Fibres Division: Maintained steady operational output across processing, texturizing, and dyeing of synthetic and natural yarns, focusing on high-margin specialized fabric finishes. Automotive Parts & Foundry Division: Scaled up manufacturing of automotive gears, universal joints, leaf/alloy springs, and specialized ADC12 aluminium die-cast blocks, registering stable growth driven by OEM demand.

Heavy Engineering & Metallurgy Division: Executed multiple contracts for structural steel fabrication, heavy industrial structures, and non-ferrous metal processing. Software, IIoT & FinTech Division: Continued initial deployment and pilot phase testing for customized industrial automation software, SaaS infrastructure, and compliant financial technology tools.

3. OPPORTUNITIES AND THREATS Opportunities

Infrastructure and Industrial Capex: Ongoing government and private investments in heavy industries, urban infrastructure, and pre-engineered structures offer substantial long-term orders for the structural steel and engineering divisions. Lightweighting in Automotive: The global pivot toward fuel efficiency and electric vehicles creates a high-growth market for precision aluminium die-castings (ADC12 components) and specialized automotive parts. Industry 4.0 Integration: Convergence of traditional manufacturing with IIoT, automation, and custom software positions the company to offer integrated physical-digital solutions to industrial clients. Digital Transformation in Finance: Increasing enterprise demand for secure payment systems, anti-money laundering (AML) software, and blockchain solutions provides scalable revenue streams within the technology segment.

Threats and Challenges

Commodity Price Volatility: Unpredictable price swings in raw materials including crude-derived synthetic fibres, primary aluminium, and structural steel sections can exert pressure on operating margins. Intense Global Competition: Heightened competition in both traditional textile markets and standard engineering components requires continuous cost control and differentiation through quality. Technological Obsolescence: Rapid evolution in software development, robotics, and FinTech requires sustained capital expenditure in research and development to maintain competitive parity. Macroeconomic Headwinds: Global supply chain disruptions, inflationary pressures, and interest rate fluctuations can impact customer project timelines and consumer discretionary spending.

4. HUMAN RESOURCE/INDUSTRIAL RELATIONS:

Human capital is recognized as a vital driver of multi-sectoral growth. The company fosters an inclusive, safe, and performance-driven work culture.

Industrial Relations: Employee and industrial relations remained exceptionally cordial, harmonious, and peaceful throughout FY 2025-26. Skill Enhancement: Continuous training programs were conducted to upskill personnel across traditional textile handling, precision engineering workshops, and software/IIoT development domains. Headcount & Welfare: Total workforce strength was optimized to support operational requirements while prioritizing workplace health, safety standards, and employee welfare.

5. DISCLOSURE OF ACCOUNTING TREATMENT:

Financial Statements are prepared as per Ind AS duly following the principles laid in the Ind AS. Management has not adopted any other standards other than the prescribed Accounting Standards in preparing the financial statements.

6. OUTLOOK

The company remains well-positioned to capitalize on the convergence of heavy industrial manufacturing and digital transformation. Strategic priorities include optimizing plant automation, expanding foundry yields for precision aluminium components, and scaling proprietary industrial software solutions to drive long-term stakeholder value.

7. RISKS AND CONCERNS

Commodity Price Volatility: Exposure to fluctuations in raw material prices including synthetic fibres, primary aluminium, structural steel, and non-ferrous metals can impact operating margins. Mitigation involves strategic procurement, long-term vendor contracts, and dynamic inventory management.

Technological Obsolescence: Rapid shifts in software development, industrial automation, IIoT, and FinTech infrastructure require continuous R&D investment and agile engineering to maintain competitiveness.

Cybersecurity and Data Threats: Digital platforms, payment systems, and software solutions face potential cyber risks and data breaches, managed through enterprise security frameworks, encryption, and regular testing.

Regulatory and Compliance Burdens: Multi-sector operations subject the company to complex labor, environmental, data privacy, and financial regulations, addressed via proactive compliance tracking and routine audits.

Macroeconomic and Forex Fluctuations: Global economic shifts, interest rate changes, and currency exchange volatility can affect international trade and capital costs, mitigated through natural hedging and conservative leverage.

Supply Chain and Project Execution Delays: Heavy engineering and fabrication divisions are vulnerable to logistical bottlenecks and transit disruptions, countered by diversified vendor networks and localized sourcing.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains a robust internal control framework commensurate with the size, scale, and complexity of its multi-vertical operations. These controls are designed to ensure:

Accurate recording and reporting of financial transactions in compliance with applicable accounting standards. Safeguarding of company assets against unauthorized use or disposition. Strict adherence to statutory laws, SEBI regulations, and corporate policies.

The Audit Committee of the Board reviews internal audit findings, financial reporting systems, and the adequacy of internal controls on a quarterly basis to ensure continuous institutional integrity.

9. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS: The Company has identified the following ratios and key financial ratios:

Ratio	Previous Year	Current Year	Variance %	Reason
Current Ratio	1.06	0.98	-7.55%	NA
Debt Equity Ratio	0.05	0.07	40%	-
Debt Service Coverage Ratio	-	-	-	-
Return on Equity Ratio	-0.01%	-5.36%	-5.35	NA
Inventory Turnover Ratio	-	-	-	-
Trade Receivables Turnover Ratio	-	-	-	-
Trade Payables Turnover Ratio	-	-	-	-
Net Capital Turnover Ratio	-	-	-	-
Net Profit Ratio	-	-	-	-
Return on Capital Employed	-1.93%	-5.51%	11.56	NA
Return on Investment	-	-	-	-

10. CAUTIONARY STATEMENT

The statements in this section describe the Companys objectives, projections, estimates, expectations and predictions, which may be forward looking statements within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other incidental factors.

Date: 05.09.2026	For & on behalf of the Board
Place: Surat	Classic Filaments Limited
	Sd/-	Sd/-
	Vikkas Bansal	Tarun Jain
	Managing Director	Director
	DIN: 00441630	DIN: 09199801