Mohini Health & Hygiene Ltd Management Discussions

Global Economy

The global economy is at a critical juncture. Signs of stabilization were emerging through much of 2024, after a prolonged and challenging period of unprecedented shocks. Inflation, down from multidecadehighs, followed a gradual though bumpy decline toward central bank targets. Labor markets normalized, with unemployment and vacancy rates returning to prepandemic levels .Growth hovered around 3 percent in the past few years, and global output came close to potential However, major policy shifts are resetting the global trade system and giving rise to uncertainty that isonce again testing the resilience of the global economy.

Outlook

The global economy in 2024-25 is to expected to experience a slowdown in growth, with a projected deceleration from 3.3% in 2024 to 2.9% in both 2025 and 2026. This slowdown is particularly noticeable in the United States, Canada, Mexico, and China, while other economies are experiencing smaller downward adjustments. However, India is a bright spot, with strong growth driven by infrastructure investment and domestic demand.

Indian Economy

The Indian economy is on a steady growth path. The macroeconomic health checklist looks good. As the country aims to accelerate its economic growth rate in the coming years, it has the tailwind of strong balance sheets in the domestic corporate and financial sectors. But, globalisation is on the retreat. Hence, raising the growth average in the next two decades will require reaping the demographic dividend through a deregulation stimulus. As the Spartans apparently believed, "the more you sweat in peace, the less you bleed in war".

(Source: Indian Economic Survey January 31,2025)

Outlook

India has been showing both resilience as well as progress despite all risks and uncertainties in the global economic landscape. Through timely and effective policy actions aimed at achieving macro stability and repairing the balance sheets of financial and non-financial sectors, as well as by investing significantly in building world-class physical and digital

public infrastructure, India has been able to withstand the challenges, both domestic and global, and ensure that the economy continues to progress on a steady path. With the policy reforms that the government has already rolled out and which are on the anvil, there is significant optimism and confidence in the Indian economy and its prospects today. India embarks on her Amrit Kaal with confidence and the attitude that challenges to growth and inclusive development are stepping stones and not obstacles

Cotton Industry Overview

Cotton is one of the most important commercial crops cultivated in India and accounts for around 24% of the total global cotton production. It plays a major role in sustaining the livelihood of an estimated 6 million cotton farmers and 40-50 million people engaged in related activities such as cotton processing & trade. The Indian Textile Industry consumes a diverse range of fibres and yarns and the ratio of use of cotton to non - cotton fibres in India is around 60:40 whereas it is 30:70 in the rest of the world.

Apart from being the provider of a basic necessity of life i.e. clothing which is next only to food, cotton is also one of the largest contributor to Indias net foreign exchange by way of exports in the form of raw cotton, intermediate products such as yarn and fabrics to ultimate finished products in the form of garments, made ups and knitwear,hospital . Due to its economic importance in India, it is also termed as "White- Gold".

Surgical Cotton Demand:

The demand for surgical cotton, including absorbent cotton, is increasing due to factors like rising awareness of hygiene and expanding healthcare infrastructure.

Import and Export of cotton:

Indias total production of cotton in the 2024-25 season have been estimated at 302.25 lakh bales of 170 kgs. Total production of cotton in the year 2023-24 (provisional) is 32.5 million bales (bales of 170 kg each). Total production of cotton in the year 2022-23 was 33.6 million bales and in 2021-22, it stood at 31.1 million bales. The total cotton supply till end of the cotton season 2024-25 (i.e. upto 30th September 2025) is estimated at 357.44 lakh bales of 170 kgs. The cotton exports for 2024-25 crop year are estimated to be at 18 lakh bales of 170 kgs. The cotton textiles industry

is the second largest employer in the country after agriculture, while also sustaining the livelihoods of an estimated 6.5 million cotton farmers and driving a large export market.

(Source: IBEF.org)

The Union Budget 2025-26 has announced a five-year Cotton Mission to increase cotton productivity especially extra-long staple varieties. Science & Technology support will be provided to farmers under this Mission. The Mission is in keeping with the 5 F principle and will increase income of the farmers and augment a steady supply of quality cotton. By boosting domestic productivity, this initiative will stabilise raw material availability, reduce import dependence and enhance the global competitiveness of Indias textile sector, where 80% of capacity is driven by MSMEs.

Company Overview

Founded in 2009 in Indore, Mohini Health & Hygiene Limited began as a pioneer in the cotton processing sector, innovating by recycling cotton waste to recover and supply cotton fiber to spinning units. The company initially operated with a modest capacity of 3,000 tonnes of bleached cotton annually, targeting the cotton-based health and hygiene market.

Over time, Mohini expanded its offerings and now manufactures a diverse range of products including surgical cotton, cotton balls, zig-zag cotton, and gamjee rolls. The companys production capacity has grown significantly, with an annual output of 10,800 tonnes of bleached cotton and 2,400 tonnes of surgical cotton products.

With a strategic distribution network of dealers across India, Mohini effectively markets its medical consumables throughout the country. Its manufacturing facilities are strategically situated near raw material sources and are well- connected to major ports and markets. The companys commitment to world-class technology, ongoing growth, product excellence, customer satisfaction, and timely delivery forms the cornerstone of its operations.

Financial Performance

Revenues

Total Revenue for FY 2024-25 stood at Rs. 16777.14lakhs (Rs. 19961.41lakhs for FY 2023-24) during the period under review.

EBDITA

EBITDA for FY2024- 25 stood at Rs. 1645.75 lakhs.

Net Profit

Net profit for FY 2024-25stood at Rs. 593.06 lakhs translating to EPS of Rs. 3.25.

Finance Cost

Finance cost in FY 2024-25 decreased by 25.28% to Rs. 316.5 lakhs.

Paid up capital

The total equity share capital for FY 2024-25 stood at Rs. 1823.59 lakhs. There has been no change in the equity share capital of the company over last fiscal.

Net Worth

Net worth for FY 2024- 25 stood at Rs. 10546.89 lakhs from Rs. 10045.02 lakhs in FY 2023-24. The increase was mainly on account of increased profitability of the company.

Borrowings

The companys borrowings have reduced by 68.67% to Rs. 174.85 lakhs in FY 2024-25from Rs. 558.24 Lakhs in FY 2023- 24lower debt levels improve the companys overall financial health and reduce financial risk.

Key Financial Ratios

A detailed Note on key financial ratios has been provided to Financial Statements.

Risk Management

Risk management measures are essential to a governance system. Therefore, it contributes to its strategic goals and safeguards its value, assets, and reputation.

Here are some of the risks and mitigation strategies of Mohini:

• Competition Risk: Mitigated through robust currency hedging, export pricing, a strong brand image, long-term customer relationships, and constant innovation.

• Foreign Currency Exchange Rate Risk: Managed by continuous currency tracking and measured hedging to protect margins.

• Raw Material Price Inflation Risk: Addressed by maintaining strong vendor relationships, monitoring cotton prices, and employing a strategic stocking policy.

• Reputation Risk: Mitigated by adhering to stringent quality control procedures and striving to meet stakeholder expectations.

• Customer Concentration Risk: Managed by diversifying the customer base and strengthening relationships to reduce dependence on any single customer.

• Regulatory Change Risk: Mitigated through close monitoring of policy changes and adapting company strategies accordingly.

• Risk from Low-Cost Imports: Addressed by leveraging economies of scale, advanced technology, and strategic partnerships to maintain competitive pricing.

Environment and Safety

Clean and safe environmental operations form Mohinis key priorities. The Company conducts all its operations, ensuring the safety of everyone concerned, compliance with statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

Human Resources

Human resource is a crucial asset for a Company to achieve sustained growth. To attract, retain and develop its talent pool, the Company has consistently recognised talent, imparted training, and followed the golden principle of rewarding performance.

Besides, it is committed to individual well-being and safety at the workplace and it is proud to attract the talent that it needs for future growth.

Most importantly, it places great emphasis on eliminating all forms of discrimination in terms of employment and professional activities (gender, age, race, political affiliation, religion, among others). It pays special attention to professional equality, gender equality, the employment of seniors and young people, the employment of people with disabilities.

Internal Control Systems and Their Adequacy

Mohini Health & Hygiene Limited has established robust internal

control systems that are continuously updated to align with

business conditions and regulatory requirements. Key aspects

include:

• Management Information System: Integral to the control mechanism.

• Audit Committee: Regularly reviews and enhances internal control efficiency. No material weaknesses were found in the past year.

• Monitoring: Business operations are closely supervised by the internal team and Audit Committee, with the Management Board promptly informed of any deviations.

The internal control systems ensure efficiency, safeguard assets, and maintain high accuracy in financial reporting, supporting effective risk management and operational growth.

Cautionary Statements

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions, may be forward-looking statements within the meaning of applicable 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 raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.