Katare Spinning Mills Ltd Management Discussions

The current economic landscape is characterized by a blend of cautious optimism and prevailing uncertainties. Globally, economies are grappling with inflationary pressures fueled by rising raw material costs and energy prices, alongside persistent supply chain disruptions. These factors have contributed to an environment of volatility, impacting operational costs for businesses across sectors, including textiles and solar energy. Geopolitical tensions and trade conflicts have further intensified market unpredictability, affecting global trade flows and potentially leading to fluctuations in demand and supply chain stability. Central banks worldwide are adjusting monetary policies in response to inflation and economic growth concerns, influencing borrowing costs and investment decisions.

In the Indian context, the economy demonstrates resilience amid these global challenges, with moderate growth projections supported by strong domestic consumption, substantial government infrastructure investments, and a burgeoning young demographic. The governments proactive measures, including stimulus packages and policy initiatives such as the Production Linked Incentive (PLI) scheme, aim to bolster industrial activity and investment. Despite this, inflationary trends driven by global commodity price shifts and supply chain constraints are closely monitored by the Reserve Bank of India (RBI) and the government.

2. Business Segment Textile Industry:

The Indian spinning mill industry is facing a number of challenges, including high production costs, low yarn prices, and a slowdown in demand. These challenges have led to many mills incurring losses and some even shutting down.

The high production costs are due to factors such as rising raw material prices, power tariffs, and labour wages. The low yarn prices are due to the increasing competition from China and other countries. The slowdown in demand is due to the weak global economy.

The Government has taken some steps to address the challenges facing the spinning mill industry. These include providing financial assistance to mills, reducing import duties on raw materials, and promoting exports. However, more needs to be done to help the industry recover. The textile industry, a pivotal segment of the global economy, continues to experience dynamic shifts influenced by evolving consumer preferences, technological advancements, and regulatory changes. The Indian textile sector, which is a major contributor to employment and economic output, is adapting to these changes with a focus on sustainability and innovation.

The outlook for the spinning mill industry in India is uncertain. If the challenges are not addressed, the industry could continue to decline. However, if the Government is able to provide effective support, the industry could rebound and become more competitive.

Solar Power Project:

The Solar industry is growing rapidly and is expected to play a major role in Indias energy future. The solar energy sector has emerged as a critical component of the global transition towards renewable energy. Driven by government policies, technological advancements and growing environmental awareness, the sector is witnessing significant expansion. India, with its ambitious solar targets and supportive policy framework, is positioned as a key player in this transformation.

Considering the involvement of power part in the cost of finished goods, the Company has set up 1 MW power project for captive consumption and additional electricity is sold to MSEB. This is the first net metering installation in the Maharashtra. During the financial year total 11,25,441 electricity units have been generated and it helps the Company to reduce the cost of productions and move ahead towards goal of sustainable growth.

Textile Industry:

The outlook for the textile industry in India is positive. The industry is expected to grow at a healthy pace in the coming years. The growth of the industry will create jobs and boost the economy.

Here are some of the specific trends that are expected to shape the textile industry in India in the coming years:

Growth of the e-commerce sector: The growth of the e-commerce sector is expected to boost the demand for textile products. This is because e-commerce platforms offer a wider range of products and convenient shopping experience.

Increased focus on sustainability: There is an increasing focus on sustainability in the textile industry. This is due to factors such as environmental concerns and the growing demand for ethical products. The textile industry is adopting sustainable practices, such as using recycled materials and water-saving technologies.

Personalization: There is an increasing demand for personalized textile products. This is due to factors such as the growing popularity of social media and the increasing affluence of consumers. The textile industry is adopting new technologies to personalize products, such as 3D printing and laser cutting.

Innovation: The textile industry is constantly innovating to develop new products and processes. This is being driven by factors such as the increasing competition and the need to meet the changing needs of consumers. The textile industry is developing new products, such as smart textiles and functional textiles.

These are just some of the trends that are expected to shape the textile industry in India in the coming years. The industry is undergoing a transformation, and it is expected to become more sustainable, innovative, and customer-centric.

Solar Power Project:

The solar industry is growing rapidly. The outlook for the solar industry is very positive. The industry is expected to grow at a healthy pace in the coming years. The growth of the industry will create jobs and help to reduce greenhouse gas emissions.

The industry is undergoing a transformation, and it is expected to become more sustainable, efficient, and affordable. In India, the solar industry is growing even faster than the global average. The countrys cumulative solar power capacity installed had significantly increased to 119.02 GW as of July 2025 as compare to 85.47 GW for June 2024. This makes India the third largest producer of solar power in the world.

The government of India has been promoting solar energy through a number of policies, such as the National Solar Mission and the Jawaharlal Nehru National Solar Mission, PM Surya Ghar: Muft Bijli Yojana. These policies have helped to reduce the cost of solar energy and make it more affordable.

The outlook for the solar industry in India is very positive. India has set a target to reduce the carbon intensity of the nations economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070. India aims for 500 GW of renewable energy installed capacity by 2030.

4. Opportunities Textile Industry:

The demand for apparel is growing globally, due to factors such as rising disposable incomes, increasing urbanization, and changing lifestyles. This is creating opportunities for spinning mills to produce more yarn to meet the demand.

There is an increasing focus on sustainability in the textile industry. This is due to factors such as environmental concerns and the growing demand for ethical products. Spinning mills can capitalize on this trend by adopting sustainable practices, such as using recycled materials and water-saving technologies.

o Sustainability Trends: Growing consumer demand for sustainable and eco-friendly textiles presents opportunities for product differentiation and market growth. o Market Expansion: Opportunities to enter new geographical markets and expand our product offerings. o Technological Advancements: Potential to leverage new technologies to enhance product quality and manufacturing efficiency.

There is an increasing demand for personalized textile products. This is due to factors such as the growing popularity of social media and the increasing affluence of consumers. Spinning mills can cater to this demand by offering customization options, such as choosing the yarn type, color, and weight.

The growth of the e-commerce sector is creating opportunities for spinning mills to reach a wider customer base. Spinning mills can sell their products online through e-commerce platforms, such as Amazon and Flipkart. India is a major exporter of textile products. Spinning mills can capitalize on this by exporting their products to countries around the world.

These are just some of the opportunities in the spinning industry in the upcoming years. The industry is undergoing a transformation, and it is expected to become more sustainable, innovative, and customer-centric. Spinning mills that are able to adapt to these changes will be well-positioned to succeed in the future.

Solar Power Project:

The global solar energy market size was valued at $94.6 billion in 2022, and solar energy industry is projected to reach $300.3 billion by 2032, growing at a CAGR of 12.3% from 2023 to 2032. This growth is being driven by factors such as government policies, falling prices of solar modules, and increasing awareness of solar energy.

There are a number of solar projects that are being deployed in India, such as solar farms, rooftop solar systems, and solar water heaters. These projects are creating opportunities for solar companies to provide engineering, procurement, and construction (EPC) services, as well as solar products and solutions.

There are a number of new solar technologies that are being developed, such as concentrated solar power and solar thermal energy. These technologies are expected to play a role in the future of solar energy, and they are creating opportunities for solar companies to develop and deploy these technologies.

These are just some of the opportunities in the solar industry in the upcoming years. The industry is undergoing a transformation, and it is expected to become more sustainable, innovative, and customer-centric. Solar companies that are able to adapt to these changes will be well-positioned to succeed in the future.

The Government policies and volatile economic environment have a bearing on the overall performance of the company. Continuous Quality Improvement is the need of hour as there are different demand pattern all over the world. Striking a balance between the quality and price of products.

The Company has generated a revenue of Rs. 53,642 (in thousand) during the reporting year from spinning segment as compared to Rs. 43,549 (in thousand) for the previous financial year. The reason for increase in revenue is the average cotton price in India during the 2024-25 season was around INR 54,000 per candy (356 kg), which was significantly lower than the previous season. This led to an increase in cotton yarn production and consumption in the domestic market. It needs to take genuine steps by the management for transparency and best judgement for the estimates made to correctly reflect the true and fair affairs of the Company and the Company is also planning for future years to come a good condition for the Company.

The Company is committed to maintaining adequate internal control systems as a part of efficient corporate governance. The system ensures that all transactions are authorized, recorded and reported correctly to safeguard assets and protect them from any loss due to unauthorized use or disposition. The operating managers make sure that all operations within their area are compliant and safeguarded against all risks whereas on the other, auditors carry out random audits to detect flaws in the system, which makes it effective and efficient. Internal audit reports are prepared to create awareness and to take corrective actions on the respective units or areas, which need rectification. These reports are then reviewed by the management team and the Audit Committee for follow-up action.

The Company places its utmost value on the human resource and contribution from the employees is always fine-tuned towards to achieve the overall organization performance by constant education, training and various incentive schemes, which are in vogue. A motivated and efficient workforce can help it attain its target in a realistic manner. Taking cognizance of that fact, the Company provides extensive training to its employees in order to develop their skill sets and keep them motivated. The Company appreciates the productive co-operation extended by its employees in the efforts of the management to carry the Company to greater heights.

The Company ensures high safety and environmental standards in all its operations at all the units. Safety needs are continuously monitored and preventive actions are initiated through departmental safety committees consisting of plant staff and workmen.

10. Significant Financial Ratios Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor

10. Cautionary Statement

Certain Statements in this report on Management Discussion may be forward looking statements and which have been issued as required by applicable Securities Laws and Regulations. There are several factors which would be beyond the control of Management and as such, may affect the actual results which could be different from that envisaged.

Comments of the Board of Directors on the observations pointed out in the Secretarial Audit Report;

By Order of the Board of Directors

KATARE SPINNING MILLS LIMITED

SD/- KISHORE KATARE MANAGING DIRECTOR (DIN- 00645013)

Add: 14/30 Ground Floor, B Wing, Katare complex, Gandhinagar, Bl. No. 10 Solapur 413006

Place: Solapur Date: 11^th August, 2025