H P Cotton Textile Mills Ltd Management Discussions

OVERVIEW

The objective of this report is to convey the Managements perspective on the external environment and textile industry, as well as the Companys strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities, and internal control systems and their adequacy during the Financial Year 2025-26.

ECONOMY REVIEW Global Economy & Outlook

The global economy during FY 2025-26 operated in a relatively stable yet evolving macroeconomic environment, characterised by easing inflationary pressures, gradual normalisation of monetary policies, and ongoing geopolitical developments. Demand conditions across key developed markets remained measured, particularly in discretionary consumption segments such as textiles and apparel.

Global growth is projected to be 3.1% in 2026 and 3.2% in 2027, slower than its recent pace of about 3.4% in 202425, and to settle at about that rate in the medium term, slower than its historical (2000-19) average of 3.7%. Global headline inflation is expected to increase to 4.4% in 2026 and decline to 3.7% in 2027. According to the International Monetary Fund (IMF), global growth is expected to remain moderate in the near term, supported by improving inflation dynamics, albeit with continued downside risks arising from geopolitical uncertainties and financial market conditions. (Source: IMF - World Economic Outlook - April 2026).

Indian Economy & Outlook

The Indian economy continued to demonstrate resilience during FY 2025-26, supported by strong domestic demand, stable macroeconomic fundamentals, and sustained government focus on infrastructure and manufacturing. India remains one of the fastest-growing major economies globally.

In India, recorded a growth of 7.6% in 2025, reflecting the better-than-expected outturn in the second and third quarters of the fiscal year and sustained strong momentum in the fourth quarter. For 2026, growth is expected to be 6.5%, led by positive contributions from the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods. (Source: IMF - World Economic Outlook - April 2026).

Government initiatives such as "Make in India", Production- Linked Incentive (PLI) schemes, and export promotion measures are expected to further strengthen Indias manufacturing ecosystem, including the textile sector.

Going forward, continued policy support, improving investment activity, and robust consumption trends are expected to sustain Indias growth momentum, thereby providing a supportive environment for industrial growth.

INDUSTRY REVIEW Global Textile Industry

The global textile market size is estimated at USD 2,123.72 billion in 2025 and is predicted to increase from USD 2,281.51 billion in 2026 to approximately USD 4,273.09 billion by 2035, expanding at a CAGR of 7.24% from 2026 to 2035. The rising demand for natural fibers globally is driving the growth of the textile market. The market is supported by government initiatives, changing lifestyle, increased use of protective clothing, and advances in fabric manufacturing. (Source: www.precedenceresearch.com )

The India textile market reached USD 152.40 Billion in 2025 and is projected to reach USD 213.75 Billion by 2034, growing at a CAGR of 3.83% during 2026-2034. Rising consumer demand for diverse fabric varieties, increasing preference for eco-friendly textiles, and strong government support through the PLI scheme are driving sustained expansion. Urbanization, growing middle-class spending, and e-commerce proliferation are broadening market reach across urban and rural India alike. (Source: www.imarcgroup . com)

Sales

During FY 2025-26, the sale of Sewing Threads increased by 3% over the previous year and stood at Rs. 12,405.34 lacs as compared to Rs. 12,076.41 lacs in FY 2024-25. No Hosiery Yarn was sold by the Company during the year under review due to captive consumption.

HP MMF Textiles Limited (HP MMF)

HP MMF is a wholly owned subsidiary company of H.P. Cotton Textile Mills Limited. The Company is yet to commence its operations.

FINANCIAL REVIEW

The Audited Financial Statements of your Company as on March 31,2026, are prepared in accordance with the relevant

applicable Indian Accounting Standards and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the provisions of the Companies Act, 2013.

On a standalone basis, the Companys total income for FY 2025-26 increased by 4%, as compared to the previous year. The profit before finance cost, depreciation and tax for FY 2025-26 increased by 3% as compared to the previous year. The Profit After Tax for FY 2025-26 increased by 13% as compared to the previous year.

On a consolidated basis, the total income for FY 2025-26 increased by 4%, as compared to the previous year. The profit before finance cost, depreciation and tax for FY 202526 increased by 3% as compared to the previous year. The Profit After Tax attributable to shareholders and noncontrolling interests for FY 2025-26 increased by 15% as compared to the previous year.

KEY FINANCIAL RATIOS

HUMAN RESOURCES

The Company is dedicated to fostering a professional work environment that empowers employees and supports their career growth. Enhancing workforce productivity remains a key priority to maintain competitiveness. The Company continuously aligns its human resources with business requirements and actively engages employees through a variety of initiatives and engagement programs. The number of permanent employees on the Companys rolls as on March 31,2026, stood at 1,641.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has established robust internal controls and risk management systems, which are continuously reviewed and enhanced through updated standard operating procedures. These systems are designed to be appropriate to the Companys size and complexity and provide reasonable assurance that transactions are properly authorised and accurately recorded, enabling the preparation of financial statements in accordance with applicable accounting standards. They also ensure that the Companys assets are adequately protected against significant loss or misuse. An independent Internal Audit function forms a key component of the internal control framework. The Audit Committee of the Board of Directors actively monitors the adequacy and effectiveness of these systems and is regularly apprised of internal audit findings and the implementation of corrective measures.

CAUTIONARY STATEMENT

Statements in the Management Discussion & Analysis Report describing the projections, estimates, and expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws, and other statutes and incidental factors.