Mohit Industries Ltd Management Discussions

This Management Discussion and Analysis (MDA) provides a comprehensive overview of Companys performance for the fiscal year ended March 31, 2025. It delves into the companys financial results, operational advancements, and strategic initiatives. The important factors that would make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic and overseas markets, raw material prices, changes in the Governmental regulations, labour negotiations, tax laws and other statutes, economic development within India and the countries within which the Company conducts business and incidental factors. This report is prepared on the basis of public information available on website / report / articles etc. of various institutions. The following discussion and analysis should be read in conjunction with the Companys financial statements included herein and the notes thereto.

The global economy showed steady progress, despite facing a challenging and uncertain environment. According to the IMF World Economic Outlook, April 2025, the world economy grew by 3.3 percent in 2024, and is projected to grow by 2.8 percent and 3.0 percent in 2025 and 2026 respectively. While these figures reflect a stable trend, they also signal that the pace of growth is more moderate compared to the past. Sector-wise, the global services sector continued to expand, while manufacturing showed signs of weakness, particularly in Europe. Trade policy uncertainty remains high, with more protectionist measures being adopted by major economies. This could impact investment flows and global trade if such trends continue.

Indias economy remained on a steady growth path in FY 2024-25, demonstrating resilience amid global headwinds and geopolitical uncertainties. As per the first advance estimates released by the Ministry of Statistics

& Programme Implementation (MoSPI), real GDP is projected to grow by 6.4 percent for the year, reaffirming Indias status as one of the fastest-growing major economies globally. Importantly, Indias growth has been supported by macroeconomic stability, with controlled inflation, a manageable fiscal position, and a stable balance of payments. These factors have contributed to building resilience in the domestic economy and bolstering investor confidence. At Mohit Industries, we continue to monitor these developments closely. While several economic uncertainties remain, opportunities are emerging and we well positioned to capture these.

The textile and apparel industry are a highly globalized, multitrillion-dollar sector. Today, production networks are dominated by low-cost Asian countries with very large labour-pools, which has made it increasingly difficult for other producers around the world to compete. To increase the competence, the Governments Key policies should focus on developing human capital through Industry-specific training initiatives; intensifying investment attraction efforts; and aggressively investing in both hard and soft Infrastructures to reduce barriers to trade and enhance lead time responsiveness. Going ahead, the industry is expected to grow by around 3-4 percent driven by increasing demand from the apparel industry, newer trends in fast fashion segment coupled with the growth of e-commerce platforms. However, the industry may face challenges due to ongoing tariff situation.

India is the second largest producer of cotton globally, which provides a significant competitive advantage.

Indias exports of textiles & apparel have attained a growth of 6.32 percent during the current financial year ended on 31^st March, 2025, as compared to the previous year with the apparel segment being the main growth driver. The robust performance in apparel exports and steady growth in textiles amid global headwinds highlight the resilience, adaptability and global competitiveness of the Indian Textile and Apparel Industry.

The industry remains optimistic about maintaining this growth trajectory, especially in light of evolving global trade dynamics. The ongoing trade tensions appears to present a strategic opportunity for India, particularly in textile and apparel trade. The increased tariff announced by US presents an opportunity for India compared to its competitors in terms of better market access.

Financial Performance of the Company

The Company is backed by strong management model and experienced mission driven leadership team, we are facilitated a smooth mechanism to sell products to the clients. During the year, your company recorded total revenue of 11239.58 Lakhs against 13161.16 Lakhs in the previous year, resulting into profit before tax of (328.23) Lakhs during the year as compared to profit before tax (256.61) Lakhs in previous year. Total Comprehensive Income during the year was (1117.95) Lakhs as compared to 652.23 Lakhs in the previous year. This downturn was primarily due to several factors impacting our operations and financial results. Volatility in raw material prices, particularly cotton and synthetic fibers, led to higher production costs, which we were unable to fully pass on to customers amid price-sensitive markets. Despite these challenges, the company has taken proactive steps to address the underlying issues, including cost rationalization, process improvements, and exploring new market opportunities.

To inflate business of the Company, Board of Directors have borrowed funds from banka and prmoters. With effect of that debt to equity ratio of the Company have gone up from 1.97 to 2.55. These borrowings include unsecured loans taken from promoters of the Company to meet productivity requirement.

The Company has exported Polyester Draw Texturized Yarn (DTY) with a Premium and in its Brand Name to South Korea, Thailand, Czech Republic, Denmark, Bangladesh, Egypt, Nepal and many more Countries. During the year under review, your company has recorded export turnover of 1433.88 lakhs, against last years figure of 2483.76 lakhs.

The textile industry heavily depends on raw materials like cotton, polyester, and other fibers. Prices of these commodities are highly volatile due to factors such as monsoon dependency, global supply-demand imbalances, and international trade policies. Sudden price hikes can significantly impact production costs and profitability. Cotton production in India is largely dependent on monsoon rains. Poor monsoon seasons can lead to reduced cotton yield, thereby increasing raw material scarcity and prices, which adversely affect the textile manufacturing sector. The Indian textile sector faces stiff competition from both domestic players and international manufacturers, particularly from countries like Bangladesh, Vietnam, and China, which often benefit from lower labor costs and government subsidies. Rapid advancements in textile machinery and manufacturing technology require continuous investments. Companies unable to upgrade may lose competitiveness in terms of efficiency and quality. Global and domestic consumers are increasingly demanding sustainable and ethically produced textiles. Failure to adapt to these trends can result in loss of market share and brand value. Macroeconomic factors such as inflation, interest rate changes, or political instability can affect investment climate, consumer spending, and export demand.

Facing above challenges, India is one of the largest textile exporters globally. With ongoing trade agreements and government initiatives like the Merchandise Exports from India Scheme (MEIS), Indian textile companies have significant opportunities to expand their footprint in key markets such as the US, EU, and Middle East. Investment in research and development for advanced textile materials (such as smart textiles, nano-textiles, and functional fabrics) opens new avenues for product diversification and higher margins. The governments "Make in India" campaign encourages manufacturing growth domestically, including textiles, creating opportunities for expansion and export-led growth. Development of textile parks, improved transportation networks, and logistics infrastructure are making manufacturing and distribution more efficient, reducing costs, and enhancing supply chain reliability.

The Company has installed Solar panels in the month of March, 2025. By way of this, Company will be setting off energy consumption at plant by supplying energy to the Government. The Company has made capital investment for these panel installation around 917.61 Lakhs. These kind of initiatives by the Company drives to environment friendly business with Company expansion plans.

Future Outlook while the textile industry faces challenges, the Company is strategically positioned to leverage government initiatives, technological advancements, and market trends to pave the way for recovery and sustainable growth. Overall, the Company is navigating a period of strategic transformation. While the long-term outlook for business appears promising, driven by distinct growth strategies, market opportunities, and a commitment to operational efficiency.

The Company maintains robust internal control systems commensurate with the nature of its business and the size and complexity of its operations. These systems are designed to ensure the accuracy and completeness of accounting records and the timely preparation of reliable financial information. The Company continues to strengthen its cybersecurity infrastructure. While the audit trail feature was enabled at the application level, it was not enabled at the database level for certain accounting software, which the Company is addressing. The Company has put in place adequate, strong and effective internal control systems with best processes commensurate with its size and scale of operations which ensures that all the assets are safeguarded and protected and that the transactions are authorized recorded and reported correctly. The internal audit covers a wide variety of operational matters and ensures compliance with specific standard with regards to availability and suitability of policies and procedures. During the year no reportable material weakness in the design or operation were observed.

The Company recognizes its human capital as a critical asset. Employee benefits expenses were higher in FY 2025, reflecting commitments towards its workforce. The Company continues to invest in employee development and welfare to ensure a skilled and motivated team.

Forward-Looking Statements:

This MDA contains forward-looking statements based on managements current expectations and beliefs. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Factors include, but are not limited to, economic conditions, consumer sentiment, market competition, regulatory changes, successful integration of acquisitions, and the effective execution of demerger plans.