Laxmi Cotspin Ltd Management Discussions

1. OVERALL REVIEW / INDUSTRY STRUCTURE AND DEVELOPMENT

Company engaged in the business of cotton yarn manufacturing; our production facilities located
in cotton growing areas of Marathwada region at Samangaon which is situated in the Jalna district
of State of Maharashtra. We are manufacturer of yarn and we have an existing Ring spinning &
open-end unit to cater to the yarn markets in Maharashtra and Gujarat. Our business is spread
among home textiles, weaving sector, Denim Manufactures and hosiery manufacturers through
open end yarn and ring spun yarn. we are manufacturing premium quality 100% cotton combed
and carded hosiery/ warp conventional, organic and BCI yarn in count range of 10s Ne to 40s Ne
for the purpose of exporting to Asian and European countries.

Company was established in year 2008 with a capacity of 13200 spindles. Over the years we have
expanded upto 16800 spindels with compact, lycra and slub attachment. We believe that we have
established a strong customer base and good marketing setup. In the financial year 2025-26 the
commercial production of surgical cotton will be started and company will move towards new
segment that is healthcare industry.

Our plant is equipped with state-of-art latest machineries of international repute. The plant is
equipped with fully automatic, dust and pollution, modern colour contamination removal and
yarn conditioning systems. Our technical team in spinning is well equipped with modern spinning
technology and processing techniques by virtue of which we are able to ensure quality yarn.
Operators are committed and they are trained in European training methods for efficient and
quality work.

Companys operations are supported by modern testing instruments installed in its quality
assurance laboratory, includes UT- 5 (Uster Switzerland), HVI, Single Yarn Tester, Aqura Process
Control Management (Premium India). Beside of these basic instruments from Statex, Online
Contamination Removal System SIRO facility at Autowinder maintains the contamination free
world class premium quality cotton, yarns and garments.

We enjoy accreditations, such as the ISO 9001: 2008 certification for Quality Management System
from Moody International, Certificate of Global Organic Textile Standards (GOTS) issued by
Control Union Certification (Netherlands). Ginning & Spinning unit is certified by Control Union,
for organic processing and Trading. Ginning & Pressing unit, 4 Star rating which is certified by
Textiles Committee, BCI (Better Cotton Initiative) certified, by Better Cotton Initiative,
Switzerland & star export house status. In this year we also got OEKO-TEX certificate to cater
European customers.

2. OPPORTUNITIES AND THREATS

There is good scope for growth for the textile industry as Indias share in the global trade textiles
is weak compared to other countries. The free trade environment is a great opportunity for the
Indian textile industry to increase its share in the global market. Chinese exports are slowing
down on account of various factors inclusive of increase in domestic demand and rising costs. This
is a good opportunity of which our textile industry should make use but smaller countries like
Bangladesh, and Vietnam etc. are becoming formidable challengers.

I. Market access through bilateral negotiation

The trade is growing between regional trade blocs due to bilateral agreements between
Participating countries.

II. Integration of Information technology

‘Supply Chain Management and ‘Information Technology has a crucial role in textile
Manufacturing. Availability of EDI (Electronic Data Interchange), makes communication fast, easy,
transparent and reduces duplication.

III. Opportunity in High Value Items

India has the opportunity to increase its UVRs (Unit Value Realization) through moving up the
value chain by producing value added products and by producing more and more technologically
superior products.

THREATS

Competition among spinners as the expansion is going on throughout industry, International
trade war, etc However, we are making all out efforts to cope with all these challenges by
continuous efforts at cost reduction, process improvements, diversification of products and
improving productivity by improving efficiencies, and searching PAN India customers and also
export market for selling of yarn.

3. SEGMENT REVIEW AND ANALYSIS

The entire operations of the Company relate to viz Textiles includes cotton lint, cotton yarn,
therefore, segment/product-wise details are not applicable.

4. RISK AND CONCERNS

Although cotton textile is one of the most important industries of India, it suffers from many
problems. The fluctuation in the currency especially against the dollar is becoming problematic
for long term booking of orders. Cotton prices are too much volatile etc.

5. STRENGTH AND WEAKNESS
1.STRENGTH

I. Established marketing set-up

We are engaged in the processing of textiles since incorporation. Over the years we believe that

we have established a strong customer base and good marketing setup. Further, our group has
sufficient marketing expertise and wide marketing network, which is and would be channelled for

our business and future expansion, if any. We have dedicated divisions for marketing different
types of products and for different geographical locations. The sales division and export division
are responsible for marketing of our products and fabrics. All the divisions have well trained and
adequate teams to handle daily activities and are supervised regularly.

II. Locational advantage of our manufacturing unit

Our factory is located in the middle of cotton growing areas of Marathwada and Vidarbha region
at Samangaon, 12 km away from Jalna. About seventy-five (75%) of the State of Maharashtras
raw cotton production i.e., 50 lakh bales area production is in this zone out of which Jalna district
accounts to approx. 5-6 lakh bales. Thus, procurement of these raw materials is less time
consuming and comparatively cheaper due to savings on freight. Jalna is connected to various
railway station and roads throughout India. Also, ICD Maliwada, Aurangabad is the nearest depot
through which export containers are loaded and is directly linked to JNPT and Navasheva ports at
Mumbai, which are only 400 km from Jalna. The Central government has recently approved the
dry port for handling the export containers located near Jalna, this will reduce the cost of logistics
for exporting the yarn.

III. Scalable business model

Our business model is order driven, and comprises of optimum utilization of our resources
processing facilities, maximum capacity utilization, developing linkages with quality raw material
suppliers and achieving consequent economies of scale. We believe that this business model has
proved successful and scalable for us in the last few financial years. We have been successful in
scaling up our business mainly due to the development of new markets, by adopting aggressive
marketing of the product, innovation in the product range and by maintaining consistent quality
of our products.

IV. Management expertise

Our management has adequate and rich experience in the textile business for more than a decade.
Our Company is managed by a team of experienced personnel. The team comprises of personnel
having operational and business development experience. We believe that our management
teams experience and their understanding of the textile industry will enable us to continue to
take advantage of both current and future market opportunities. Our Managements experience
and knowledge enables us in addressing and mitigating various risks inherent in our business,
including competition, reliance on independent contractors, the global economic crisis related
effects and fluctuations in the prices.

WEAKNESS:

I) Fluctuation in prices of cotton.

II) Volatility in the currency