Kesoram Industries Ltd Management Discussions

Performance Overview

The Companys Business-wise performance during the year is shown below:

Rs. / crore

During the year under review, the Company completed the demerger of its Cement business, which was transferred to UltraTech Cement Limited ("UTCL") under a Composite Scheme of Arrangement between the Company and UTCL with the Appointed Date being April 01, 2024 and effective from March 01, 2025. Following the demerger, the Company ceased standalone manufacturing operations and it will continue to focus on the remaining business including business operations of Rayon, Transparent Paper & Chemicals under its wholly owned subsidiary, Cygnet Industries Limited.

Industry Overview : in relation with business of the subsidiary

India is the second largest producer of man-made fibres after China. Globally Man-Made Fibres consumption is dominant whereas India has been traditionally focusing on Cotton textiles. Hence, in order to move towards higher Global MMF share, it has become important to focus on man-made textiles along with cotton textiles. Indias export of MMF textiles and apparel was USD 8.19 bn for FY: 2023-24 and have further potential to grow. Ministry is constantly engaging with the industry (both manufactures and users) and taking appropriate actions on need basis. (Source: Ministry of Textiles Annual Report 2023-24).

The Subsidiary also manufactures Transparent Paper. The cellulose is regenerated from well researched mix of soft and hardwood pulp which is also used in production of viscose for producing Rayon. Cellulose transparent film (Kesophane), being made from wood pulp, is a true bio-degradable and non-toxic packaging solution for a greener future. It is suitable for packaging of any farm produce, from vegetable to fruits which helps to keep the produce fresh for a longer period of time. It is also widely used for packaging fire crackers.

Risks and Concerns

• The Rayon and Transparent Paper business faces significant competition from imports of high volume low cost alternative from China. Recent imposition of higher tariffs by newly formed US Government on China will further boost dumping of Chinese produce in the India.

• The cost of compliance is ever rising with increasing number of compliances related environmental, social and labour regulations which are not only costly but also time consuming.

• Pace of adoption to alternatives of plastic or BOPP is slow in the country. Implementation of effective and stricter government policies is taking its time.

• The Textile Industry remain sensitive to the global economic environment impacting global demand, pricing, foreign exchange and interest rates.

• The business remains impacted due to lower capacity utilisation for want of funds for capex and working capital. The ability of Holding Company to extend necessary fund support is limited post demerger.

Growth Drivers

• India remains in an advantageous position with the world going towards China plus one policy.

• Shift in Consumer preferences to low cost, sustainable and eco-friendly products will fuel fast adoption of plastic alternatives by consumer product manufacturers.

• Indias Directorate General of Trade Remedies has announced the initiation of an anti-dumping investigation concerning imports of Viscose Rayon Filament Yarn above 75 deniers originating in or exported from China causing injury to domestic industry which is a welcome move.

Business going forward

Rayon is marketed under the brand name "Kesoram Rayon", while our transparent paper is branded under the brand name "Kesophane". Both the brands are well established and sought for its premium quality. The operations remain subdued post Covid-19 due to want of funds for modernization and working capital needs. However, with positive outcome from above noted Growth Drivers, continuous initiatives for brand positioning and brand extension and strong costumer connect will lead the business to meet its untapped potential.

The "General Review" incorporated in the Directors Report sets out a brief resume of performance of the Companys remaining business including subsidiary.

The following critical ratios have changed beyond the 25% indicative threshold specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Sustainability

Sustainability remains Companys key focus area and continuously working towards addressing challenges around issues of climate and energy, environment, circular economy and community. The Company is diligently working towards the goals set for reducing carbon emissions, replacing traditional fuel sources with renewable energy, mindful management of water and waste and conservation of biodiversity.

Internal Control Systems and their adequacy This has been covered in the Directors Report.

Material Developments in Human Resources

Employees constitute the Companys most important assets. This belief has been instilled in the Company to further amplify its people practices especially in the area of talent management.

The number of people employed as on 31^st March, 2025 is separately covered under Annexure VII to the Directors Report.