Paramount Dye Tec Ltd Management Discussions

2025-26

TEXTILES • SYNTHETIC YARNS • RECYCLING • SUSTAINABILITY

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

CORE BUSINESS	REPORTABLE SEGMENT	FY 2025-26 EMPLOYEES
Recycled synthetic yarn, acrylic fibre	Textiles	48 employees as at 31 March 2026
yarns, hand-knitting yarn and fancy
yarn

India is one of the worlds leading textile and garment producers, supported by a strong manufacturing base across both natural fibres and synthetic/man-made fibres. The industry contributes significantly to the Indian economy in terms of employment generation, industrial output, and export earnings. India enjoys a competitive advantage owing to a large pool of skilled and semi-skilled manpower, cost-efficient production and a rapidly evolving supply chain ecosystem.

Over the years, the textile sector has witnessed a major transition with increasing demand for sustainable, innovative and value-added products. In particular, the synthetic and recycled fibre segment is emerging as a key growth driver, due to rising environmental awareness, global commitments towards circular economy, and the shift from conventional fibres to durable and performance-oriented materials. Demand for recycled synthetic yarns is expanding in both domestic and export markets, supported by stronger compliance expectations from global brands and consumers.

Like the broader industry, the synthetic textile value chain also faces certain challenges, such as volatility in prices of raw materials (including polymers), high energy costs, and working capital requirements. Small and mid-sized manufacturers often face pressure on margins when raw material availability tightens or global pricing becomes inflationary. However, the segment continues to remain resilient owing to technology-driven efficiencies, diversified end-use applications, and sustainability-focused demand.

Your Company operates within this evolving business landscape with a strategic focus on recycling synthetic waste fibres and producing high-quality, cost-efficient and environmentally responsible yarns. With an emphasis on innovation, quality assurance and customer satisfaction, the Company is well-placed to leverage emerging opportunities in the sustainable textile space and contribute to the growth of the Indian textile industry.

Industry Structure and Development

Indias textile exports witnessed a modest recovery in the fiscal year 2025-26 compared to 2024-25, reflecting a mixed performance influenced by both positive developments and persistent challenges. Total textile exports reached $33.50 billion, registering a year-on-year growth of approximately 2.1%. While this reflects a positive trajectory, the growth has not been as robust or consistent as expected, primarily due to global geopolitical tensions that continue to impact the broader economic environment.

A key area of strength within the textile sector was the segment comprising cotton yarn, fabrics, made-ups, and handloom products, which experienced a modest increase of approximately 0.4%, reaching around US$12.02 billion in 2025-26. This stable performance reflects the resilience of the cotton textile segment despite the challenging global environment.

However, the overall growth in textile exports remained relatively subdued compared to the growth in total exports from India. The major driver of the countrys export growth continued to be the services sector, rather than textiles.

On the Other hand, high raw material costs have significantly hampered competitiveness, resulting in increased input prices that have restricted further growth. At the same time, low demand has kept yarn prices depressed, adversely affecting profitability. This imbalance between rising input costs and suppressed end- product pricing has led to underutilization of capacity across the textile manufacturing sector.

In summary, while the textile industry has shown signs of recovery and sectoral resilience in areas like cotton yarn and handloom products, structural challenges such as high raw material costs, weak global demand, and low - capacity utilization continue to hinder sustained, high-paced growth.

Investments and Key Developments

In the financial year 2025-26, the textile and yarn industry continued to remain a vital pillar of the Indian economy, driven by strong manufacturing capabilities, abundant skilled manpower and increasing demand from both domestic and international markets. India remains one of the worlds largest producers of textiles and garments, offering a wide range of fibre options - from natural fibres like cotton, jute, silk and wool to synthetic and man-made fibres such as polyester, acrylic, viscose and nylon.

A major structural transformation continued in FY 2025-26, with the textile value chain increasingly shifting towards sustainability and recycled fibre-based manufacturing. Demand from global buyers has increasingly favoured environmentally responsible products, encouraging the adoption of recycled fibres, resource- efficient production processes and circular-economy principles. These developments continued to support growth momentum in the man-made fibre (MMF), sustainable textile and recycled yarn segments during the year.

Industry research for FY 2025-26 indicates the following:

Simultaneously, the cotton value chain continued to face cost and supply-side pressures during FY 2025-26, driven by fluctuations in domestic cotton availability, elevated input costs and volatility in global cotton prices.

This resulted in:

• Increased input costs for spinning units

• Working-capital pressure on smaller mills

• Compression of margins in conventional cotton-yarn businesses

These challenges contributed to subdued demand in some sub-segments and under-utilisation of capacity in parts of the textile ecosystem.

However, the synthetic and recycled yarn segments demonstrated greater resilience owing to:

• Lower dependency on agricultural cycles

• Versatile applications in both apparel and technical textiles

• Cost competitiveness and product consistency

• Sustainability-driven procurement from global brands

As textile exports continued to witness a gradual recovery during FY 2025-26, the industrys growth trajectory remained supported by improving global demand, while continuing to be influenced by geopolitical developments, input-cost trends, global trade dynamics and the pace of revival in international consumption.

The Company

Your Company is a distinguished manufacturer of recycled synthetic yarn, acrylic fibre yarns, hand-knitting yarn and fancy yarn, catering to a wide spectrum of textile applications. With a strong focus on sustainability, product innovation and quality excellence, the Company has positioned itself as a reliable partner to reputed textile brands and industrial users.

Backed by modern technology and skilled industry professionals, the Company has developed efficient production capabilities that enable the manufacture of high-performance yarns with consistent quality standards. The Company emphasizes environmentally responsible operations, by recycling synthetic waste fibres into valuable textile inputs, thus contributing to the circular economy and reducing landfill waste.

The Company continues to strengthen its market presence by:

• Expanding its product range in specialty and value-added yarns

• Enhancing production efficiencies and process automation

• Improving customer service and delivery capabilities •

Deepening relationships with both domestic and export customers

During FY 2025-26, the Company operated in a dynamic textile market characterised by raw-material price volatility, competitive pressures, evolving customer requirements and higher working-capital needs across the sector. Despite these challenges, the Company remained focused on operational efficiency, quality consistency, strategic sourcing, cost optimisation and strengthening customer relationships

Looking forward, the Company aims to leverage:

• Growing global demand for sustainable and recycled yarns

• Increasing awareness among brands and consumers regarding green textiles

• Opportunities arising from diversification into new end-use segments

• Strengthening of sales, marketing and supply-chain capabilities

Your Company is confident that its core strengths - sustainability, innovation, operational discipline and customer-centricity - will support long-term growth and create value for all stakeholders.

Companys Performance:

During the year under review, the Company recorded Revenue from Operations of ?7,379.55 Lakhs. In addition, Other Income amounted to ?114.91 Lakhs, resulting in a Total Income of ?7,494.46 Lakhs for the financial year 2025-26. Total Expenditure during the year stood at ?6,818.23 Lakhs, while Depreciation & Amortisation amounted to ?100.85 Lakhs. Accordingly, the Profit before Exceptional Items and Tax was ?676.22 Lakhs. During the year, the Company had Exceptional Items amounting to ?448.27 Lakhs, resulting in a Profit before Tax after Exceptional Items of ?227.95 Lakhs. After making a provision for Taxes of ?13.72 Lakhs, the Profit from Continuing Operations, as well as the Profit for the Period, stood at ?214.23 Lakhs. The Total Comprehensive Income for the year was also ?214.23 Lakhs. The financial performance during FY 2025-26 reflects the Companys focus on driving operational efficiency, strengthening market presence, and maintaining a disciplined approach towards costs and working capital. The Company is functioning in only one Reportable Segment i.e. Textiles, hence Segment Reporting is not applicable.

Dividend

No dividend has been declared for the financial year 2025-26.

Outlook:

Opportunity, Threats, Risks & Concerns: The textile industry is in a phase of transition, with sustainability, innovation and global compliance becoming key drivers of growth. This creates meaningful opportunities for companies like ours that operate in the recycled synthetic yarn segment. At the same time, certain macroeconomic and industry-specific risks continue to impact operating conditions.

Opportunities

• Growing global demand for recycled fibres & sustainable yarns driven by environmental mandates and circular-economy goals.

• Increasing preference of international brands for traceable, eco-friendly textile materials, opening doors for export expansion.

• Diversified end-use applications of synthetic yarns including apparel, home textiles, industrial fabrics and technical textiles, reducing dependence on a single market segment.

• Technology-driven enhancements in production processes enabling consistent quality, cost efficiency and scalability.

Threats

• Intense competition from both domestic manufacturers and low-cost international players in synthetic yarn markets.

• Demand volatility in end-user textile products influenced by global economic conditions and consumption cycles.

• Pricing pressure due to commoditisation of certain yarn categories.

Risks

• Raw material price fluctuations (polymer-based and synthetic inputs) can impact margins due to unpredictable commodity trends.

• Working capital requirements continue to remain high in the yarn industry due to inventory cycles and credit needs in the value chain.

• Dependence on continuous upgrades in technology to stay competitive with evolving buyer expectations.

Concerns • Rising power and fuel costs directly affect manufacturing cost structures in spinning and extrusion operations.

• Labour availability and retention, particularly skilled technical manpower, is critical for maintaining productivity and quality.

• Increasing regulatory compliance and sustainability documentation may lead to higher operational costs in the near term.

The future of the Indian textile industry

The Indian textile industry continues to evolve rapidly, supported by strong domestic consumption, export potential and rising demand for sustainable and value-added textile products. India remains a key global hub for textiles due to its skilled workforce, improving infrastructure and growing technological capabilities.

In recent years, there has been a decisive shift from traditional textile manufacturing to innovationled and environmentally responsible production. Global apparel brands and buyers are increasingly prioritizing recycled materials, traceable supply chains and reduced carbon footprints, which directly benefits companies operating in the recycled synthetic yarn segment.

Government initiatives such as the Production Linked Incentive (PLI) Scheme, Textile Park Development, and focus on technical textiles are expected to accelerate industry growth and attract large-scale investments in modern textile technologies. These initiatives support MSME expansion, employment generation and skill development across the textile ecosystem.

At the same time, the industry faces increasing expectations related to:

• Advanced R&D in fibre engineering and innovative yarn properties

• Enhanced product quality, consistency, and compliance with global standards

• Digitalisation and automation across manufacturing processes

• Sustainable manufacturing practices aligned with international norms

Manufacturers investing today in recycling infrastructure, quality systems and product differentiation are likely to emerge as key beneficiaries of the next growth cycle. With its focus on high-quality recycled synthetic yarns, strong technical capabilities and customer-centric approach, your Company is well-positioned to leverage these opportunities and contribute to Indias rising presence in the global textile market.

Principal operating strategies

The Companys operating strategy is centered on sustainable growth, product excellence and value creation for all stakeholders. The key strategic priorities of the Company are as follows:

• Strengthening Market Presence:

Expand domestic and international customer base by offering high-quality recycled synthetic yarns that meet global standards and evolving consumer preferences.

• Focus on Sustainability & Circular Economy:

Enhance recycling capabilities to convert synthetic waste fibres into innovative and environmentfriendly yarns, contributing to a greener textile ecosystem.

• Quality Leadership Through Technology:

Invest in advanced manufacturing technologies, automation and process improvements to deliver consistent product quality and operational efficiency.

• Customer-Centric Growth:

Prioritize customer satisfaction through reliable deliveries, customised product solutions and continuous engagement with key buyers and channel partners.

• Innovation & Value-Added Products:

Develop specialty and fancy yarns with enhanced performance characteristics to strengthen product differentiation and move up the value chain.

• Operational Excellence & Cost Competitiveness:

Optimise resource utilisation, implement lean practices and improve productivity to remain competitive in a price-sensitive market.

• Talent Development & Work Culture:

Build a skilled and empowered workforce, fostering a culture of integrity, innovation and safety across all levels of the organisation.

The Company will continue to execute these strategies with a disciplined approach to ensure long term growth, stability and profitability.

(e) Internal Control System and their adequacy

The Company has established a robust internal control framework that is commensurate with the size, scale and nature of its operations. The internal control systems are designed to ensure the efficient conduct of business, reliability of financial reporting, safeguarding of assets, and adherence to applicable laws, regulations and internal policies.

The Company believes that an effective internal control environment is built on a strong culture of accountability, ethics and transparency. Accordingly, employees at all levels are encouraged to understand the importance of controls and actively participate in strengthening internal processes. The management continually promotes high ethical standards and integrity among the workforce.

The internal control mechanisms in place provide reasonable assurance with regard to:

• Accuracy and completeness of accounting records

• Timely preparation of reliable financial and operational information

• Compliance with applicable statutory requirements

• Safeguarding and optimal utilisation of Company assets

• Prevention and detection of frauds and irregularities

• Proper implementation of corporate policies and procedures

The adequacy and effectiveness of internal controls are reviewed periodically and enhanced wherever necessary, ensuring that the Company remains aligned with best governance practices and supports its longterm sustainability goals.

(f) Human Resources:

The Company is committed to fostering an inclusive, safe and growth-oriented workplace that attracts, develops and retains talented professionals. We believe that our workforce is a key driver of operational excellence and plays a vital role in achieving our strategic objectives.

The HR philosophy of the Company focuses on:

• Building a skilled and competent workforce through continuous learning and development

• Encouraging innovation, performance and accountability at all levels

• Promoting a culture of integrity, teamwork and mutual respect

• Ensuring a healthy and motivating work environment to enhance productivity and employee satisfaction

• Strengthening leadership capabilities and technical expertise to meet evolving industry needs

The Company continues to invest in modern technology and training programs to enhance employee capability, adaptability and process knowledge, especially in areas of quality, safety and operational efficiency.

As on 31st March 2026, the Company had 48 employees on its rolls. Industrial relations remained cordial and harmonious throughout the year, supported by progressive employee policies and constructive engagement with the workforce.

The Company recognizes that its people are its greatest strength and remains committed to their professional growth, welfare and overall well-being.

(g) Operational and Financial Performance Overview (FY 2025-26)

During the financial year 2025-26, the Company achieved a significant scale-up in operations and delivered strong financial results. The Company recorded Revenue from Operations of ?7,379.55 lakhs and Other Income ?114.91 lakhs, resulting in a Total Income of ?7,494.46 lakhs for the year.

The Total Expenses stood at ?6,818.23 lakhs, which includes purchase of traded goods, operational manufacturing expenditures, employee benefits, finance costs, depreciation and other administrative expenses. After accounting for these expenses, the Profit before Tax amounted to ?676.22 lakhs.

The Total Tax Expense for the year was ?13.72 lakhs comprising current tax, deferred tax, and an adjustment of tax relating to the previous year. Consequently, the Profit for the year stood at ?214.23 Lakhs, which is also recognized as the Total Comprehensive Income for FY 2025-26. Earnings per equity share (Basic & Diluted) for the year was ? 3.09, reflecting improved operational efficiency and value creation for shareholders. The overall financial performance showcases a positive business turnaround, supported by higher revenue generation, better cost control and optimal utilization of operational capacity. The Company continues to enhance its productivity, strengthen customer relationships and pursue sustainable growth initiatives to support future expansion.

Cautionary Statement

Statements in Management discussion and analysis report with regard to projections, estimates and expectations have been made in good faith. Many unforeseen factors may come into play and affect the actual results, which could be different from what the management envisages in terms of performance and outlook. Market data and product information contained in this report have been based on information gathered from various published and unpublished reports and their accuracy, reliability and completeness cannot be assured.

Textile & Synthetic Yarn Market Snapshot

Market	FY 2025-26 Positioning
Global Synthetic Yarn Market	Estimated at USD 229.91 billion in 2025, with a projected CAGR of approximately 5.0% through 2032
Global Recycled Yarn Market	Estimated at USD 4.48 billion in 2025, expected to reach USD 6.93 billion by 2032, growing at approximately 6.43% CAGR
India Synthetic Fibres Market	Estimated at 4.52 million MT in 2024, projected to reach 6.21 million MT by 2030, at approximately 5.64% CAGR.