Padam Cotton Yarns Ltd Management Discussions

Over the course of the last decade, India has showcased a robust and resilient growth story driven by perseverance, ingenuity, and vision. In the face of unprecedented challenges such as the Covid pandemic and geopolitical conflicts, the Indian economy has demonstrated a remarkable ability to bounce back and convert challenges into opportunities while striving to achieve strong, sustainable, balanced, and inclusive growth.

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.

INDIAN TEXTILE INDUSTRY

The Indian textile and apparel market size reached US$ 197.2 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 592.7 Billion by 2032, exhibiting a growth rate (CAGR) of 12.6% during 2024-2032. The increasing demand for premium quality clothing and footwear items, rising number of schemes launched by the Government of India to empower weavers, and the growing ethically sourced sustainable materials represent some of the key factors driving the market.

Government of India is undertaking initiatives to empower domestic textile manufacturers. They are consequently providing financial assistance to the weavers by launching production-linked incentive (PLI) schemes to improve the production of textiles and apparel in the country. In addition, the easy accessibility and availability of various raw materials, such as cotton, wool, and silk, in India is contributing to the growth of the market. Apart from this, key market players are manufacturing textiles and apparel with sustainable and ethically sourced materials, such as vegan leather and plant-based faux fur, to prevent animal cruelty and reduce the implementation of unethical practices in rearing animals. They are also minimizing the use of various toxic chemicals in the textile processing and dying method to reduce water pollution in India. Additionally, the rising utilization of various silks and leather by luxury apparel brands to manufacture multiple clothing items and durable bags and footwear is propelling the growth of the market in the country. Moreover, the growing number of e-commerce businesses and distribution channels selling premium quality fabrics and apparel online is offering a favorable market outlook. Furthermore, the increasing demand for durable and long-lasting clothing and footwear items due to the rising awareness about the harmful impacts of fast fashion on the environment is bolstering the market growth in India.

BUSINESS OPERATIONS

The Company was incorporated on November 2, 1994 and has not carried any commercial activity during the year under review as the entire plant & machinery and major parts of the building had got damaged in July, 2001 due to major fire in the factory premises.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS Opportunities:

Continuous market research and development efforts have allowed us to identify emerging trends and customer preferences in the domestic market.

Rising demand for low cost, sustainable and eco-friendly products. This presents an opportunity for textile manufacturers to develop new products that are made from renewable materials and produced using sustainable manufacturing processes. Cost can be reduced by blending with cheaper man-made fibre.

Threats:

The biggest threat to cotton products is competition from other low-cost man-made fibres.

Consumers are shifting their

focus to low-cost products which has led to intense competition and pricing pressure in the global textile industry.

There is a high cost to comply with environmental, social and labour regulations which can be costly and time - consuming.

Further the textile industry is highly sensitive to global economic conditions and can be significantly impacted by global demand and pricing.

Future Outlook:

Looking ahead, we remain optimistic about the prospects of our export of yarn to the domestic trading market. We will focus on the following strategies to sustain growth and capitalize on emerging opportunities:

Demand for textiles Raw material availability and prices Technological advancements Sustainability and eco-friendly practices Global trade and geopolitical factors Online Expansion

Premiumisation and access to global brands Further Growth of Private Brands Focus on analytics

Risks and concerns:

Management recognizes the following principal risks that may influence decisions made by investors given their significant impact on business conditions as stated in the securities report, and among matters pertaining to accounting status and business performance, as well as cash flows. Our risk management system addresses the increasingly complex risks that we face in our day-to-day operations. The risk management system conducts risk analysis of economic and social changes and implements preventive measures that are best suited for the Company.

OUTLOOK

The textile industry s outlook for 2024 and beyond is characterised by a strong emphasis on sustainability, incorporating both natural and synthetic fibres, prioritising yarn quality, embracing technical textiles and digital printing, and maintaining a resolute dedication to creating a more environmentally friendly and ethical future. Looking ahead, we anticipate that the Indian textiles market will exceed a valuation of $ 209 billion by 2029. The textile sector remains resilient by evolving to meet the demands of a changing world, actively embracing innovation, sustainability, and consumer preferences to maintain its enduring relevance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company maintains an adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguard the assets of the Company and prevent misuse/ losses and legal compliances.

The internal control system includes a well-defined delegation of authority and a comprehensive Management Information System coupled with quarterly reviews of operational and financial performance, a well-structured budgeting process and internal audit. The Internal Audit reports are periodically reviewed by the management and the Audit Committee and necessary improvements are undertaken, if required.

HUMAN CAPITAL MANAGEMENT

Number of people employed by Padam Cotton Yarns Limited are only Ten (8) as on March 31, 2026 excluding Directors of

the Company.

KEY FINANCIAL RATIOS:

Sr Particular No.	2025-26	2024-25	Variance	Reason for variance
1 Debtors Turnover Ratio	1.81	2.14	-15.60%	-
2 Inventory Turnover Ratio	13.14	-	-	-
3 Interest Coverage Ratio	0.00	0.00	-	-
4 Current Ratio	1.85	2.27	-18.70%	-
5 Debt-Equity Ratio	0.00	-	-	-
6 Operating Profit Margin (%)	18.09%	14.72	3.37%	-
7 Net Profit Margin (%)	14.90%	74.55%	-80.01%	The ratio has declined as a result of higher turnover accompanied by a reduction in profit margins.
\u201e Return on Capital employed 8 ( in % )	32.72%	75.89%	-56.88%	This ratio fell because the company issued more share capital, which increased the total capital employed. As a result, the returns look lower compared to the larger capital base.

The reasons for significant changes in the ratios, where the variation is 25% or more as compared to the previous financial year, have been provided.

CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis, describing the Company s objectives, projections, estimates, expectations, or predictions may be forward looking, considering the applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could, however, differ materially from those expressed or implied. Important factors that could make a difference to the Company s operations include finished goods prices, raw materials costs and availability, global and domestic demand supply conditions, fluctuations in exchange rates, changes in Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility in respect of the forward-looking statements herein, which may undergo changes in future based on subsequent developments, information or events.

Date: 07/09/2026
Place: Ahmedabad

By Order of the Board of Directors
For, PADAM COTTON YARNS LIMITED

SD/-
Dinesh Shreevastav
Whole Time Director
(DIN: 11030609)

SD/-
Mr. Ashutosh Alaru
Director
(DIN: 07618648)