Paramount Syntex Ltd Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled “Financial Information of the Company” beginning on page 208. You should also read the section titled “Risk Factors” on page 20 and the section titled “Forward Looking Statements” on page 19 of this Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated Financial Statements.

Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated April 23, 2026, which is included in this Red Herring Prospectus under “Financial Statements”. The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

Our Company was originally incorporated on March 08, 1996 as a Private Limited Company as “Paramount Syntex Private Limited" via Registration No. 11-97972 under the provisions of the Companies Act, 1956 with the Registrar of Companies, Mumbai. Our Company converted from a Private Limited Company to Public Limited Company, pursuant to a Special Resolution passed by the Shareholders at their Extra Ordinary General Meeting held on May 23, 2024. Consequently, the name of our Company was changed to “Paramount Syntex Limited" and a Fresh Certificate of Incorporation consequent to Conversion was issued on July 18, 2024, by the Registrar of Companies, Central Processing Centre. The Corporate Identification Number of our Company is U17110MH1996PLC097972.

Our Companys registered office is in Mumbai, Maharashtra, and our Factory is situated at Khasra No. 22//19, 22//21, 22//22 Khata No. 264/312 Jamabandi Year- 2019-20 Situated at Village Mangarh, Machiwara Road, Kohara 141 112, Ludhiana, Punjab, India (Factory Unit-1) (Area 4,139.23 Sq Yard) and Plat No. 15, 16, 17, 18, 19 Village Mangarh, Machiwara Road, Kohara 141 112, Ludhiana, Punjab, India (Area 3,129.50 Sq Yard) (Factory Unit-2) combined approx. 7,268.73 Sq yard factory land (Hereinafter Factory Unit-1 and Unit-2 referred as Factory)*. We are engaged in production of Yarn manufacturing and has in house facility for fiber processing, Tow Dyeing Processes, Hank Dyeing Process, Complete Yarn Spinning unit. The Unit is commenced under Commercial Production. Our management combine experience of over 25 years in the textile industry. The Company was incorporated in the year 1996 as a Private Company which was later converted into “Paramount Syntex Limited". For further details of our promoters please refer the chapter titled “Our Promoters and Promoter Group"" beginning on page 194 of this Red Herring Prospectus.

*For further details kindly refer to “Our Business- Details of immovable property” beginning on page no. 149 of this Red Herring Prospectus.

Our Company is managed by Mr. Punit Arora and Mrs. Kumkum Arora. Our promoters have a combined experience of 30 years in the field of cotton textile industry.

Paramount Syntex Limited is engaged in the manufacturing of Synthetic Fibres and different kinds of yarns and textile products. The companys products are mainly supplied to the textile industry. With time, the company has kept improving its processes. The manufacturing process of the company is systematic and covers all key stages such as raw material selection, cleaning, drying, blending, spinning, winding, and quality checking. The company also has its own research team which works to improve the quality of products and meet the requirements of customers.

In addition to yarn production, Paramount Syntex Limited has facilities to produce acrylic fiber from waste fiber. The waste fiber is procured from both domestically and imported from Thailand. The companys operations include production of acrylic fiber, dyed fiber, and yarn, supported by its in-house dyeing unit, spinning, bulking, and packing facilities.

The company has been awarded certifications like ISO 9001:2015 (Quality Management), ISO 45001:2018 (Occupational Health & Safety), and ISO 14001:2015 (Environmental Management).

After the date of last Balance sheet i.e. March 31, 2026, there have been no material events have occurred after the last audited period.

Our business is subjected to various risks and uncertainties, including those discussed in the section titled “Risk Factor” beginning on page 20 of this Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

• Regulatory Framework

We have secured all the necessary regulatory approvals to operate our business. Some of these approvals are time-bound and need to be renewed periodically as part of our routine operations. However, changes in regulations can occur unexpectedly, and we cannot predict when this may happen. We cannot guarantee that future changes in regulations wont affect our business operations.

• Market & Economic conditions

India is one of the largest and fastest-growing economies. However, in todays globalized world, businesses face uncertainty due to unexpected events like pandemics, wars, climate changes, and supply chain disruptions. These events can shift economic conditions and affect customers ability to purchase. During a market slowdown, demand decreases, which negatively impacts our business.

• Ability of Management

Our success depends on the continued services and performance of the members of our management team and other key employees. Competition for senior management in the industry is intense, and we may not be able to retain our existing senior management or attract and retain new senior management in the future. The loss of any member of our senior management or other key personnel may adversely affect our business, results of operations and financial condition.

• Competition

We operate in a highly competitive environment, with competition varying by market, region, and product type. Our company faces strong competition both domestically and internationally as market conditions evolve. Some competitors may have greater resources than us. While factors like service quality, technical expertise, and performance play a role in client decisions, price and quality are often the main deciding factors. There has been no change in the Accounting policy for the financial years ended March 31, 2026, March 31, 2025, and March 31, 2024.

The industry is fragmented, with many small and medium-sized companies manufacturing similar products, which could impact our business and financial performance. With no significant entry barriers, an increase in manufacturing capacity by competitors could further intensify competition. As we expand into new markets, we face competition from both Pan-India companies and strong regional players. Rapid changes in the industry, along with technological advances and consolidations, are expected to increase competition. This may lead to reduced demand for our products, higher costs, lower margins, and a potential loss of market share, all of which could negatively affect our business and financial health.

• Our ability to successfully implement our strategy, our growth and expansion, technological changes.

• Our ability to successfully allotment of new orders/ tenders.

• Failure to adapt to the changing needs of industry and in particular government policies and regulations may

• adversely affect our business and financial condition.

The Directors confirm that there have been no other events or circumstances since the date of the last financial statements as disclosed in the Prospectus which materially or adversely affect or is likely to affect the business or profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

Key Performance Indicators of our Company

(Rs. In Lakhs except percentages and ratios)

Particulars	Financial Year ended March 31, 2026	Financial Year ended March 31, 2025	Financial Year ended March 31, 2024
Revenue from operations (1)	12,202.99	11,241.79	9,277.86
Growth in Revenue from Operations (2)	8.55%	21.17%	13.22%
EBITDA(3)	2,358.66	1,316.91	945.44
EBITDA (%) Margin(4)	19.33%	11.71%	10.19%
PAT(5)	1,386.82	672.83	134.72
PAT Margin (%)(6)	11.36%	5.99%	1.45%
Net Worth (7)	4,266.83	2,880.01	1,404.71
ROE/ RONW(8)	32.50%	23.36 %	9.59 %
ROCE (%)(9)	29.18%	19.19%	17.06%
Current Ratio(10)	1.73	1.59	1.25
EPS (Basic & Diluted)(11)	11.60	5.69	1.27

Notes:

1. Revenue from operations is the total revenue generated by our Company.

2. Growth in Revenue in percentage, Year on Year.

3. EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses-Other Income.

4. EBITDA Margin is calculated as EBITDA divided by Revenue from Operations.

5. PAT is mentioned as PAT for the period

6. PATMargin=PAT/Revenue from operations.

7. Net Worth = Equity share capital + Reserves and surplus

8. ROE/RoNW is calculated PAT divided by shareholders equity.

9. ROCE: Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total debt

10. Current Ratio : Current Assets over Current Liabilities.

11. EPS is mentioned as EPS for the period.

Discussion on our Result of Operations

Restated Financial Statements financial years ended on March 31,2026 March 31, 2025 and March 31, 2024.

Particulars	Year Ended 31st March 2026	% of Total revenue	Year Ended 31st March 2025	% of Total revenue	Year Ended 31st March 2024	% of Total revenue
Revenue
Revenue from operations	12,202.99	99.61%	11,241.79	99.73%	9,277.86	99.82%
Other income	48.35	0.39%	30.63	0.27%	16.59	0.18%
Total Revenue (A)	12,251.34	100.00%	11,272.42	100.00%	9294.45	100.00%
Expenses
Changes in Inventory	-1,302.58	-10.63%	-116.50	-1.03%	-1248.41	-13.43%
Cost of Raw Material Consumed	10,450.84	85.30%	9,422.68	83.59%	8,382.97	90.19%
Employee Benefits Expense	364.83	2.98%	272.50	2.42%	257.81	2.77%
Finance Costs	300.47	2.45%	276.62	2.45%	273.09	2.94%
Depreciation and amortisation Expense	206.34	1.68%	161.19	1.43%	170.20	1.83%
Other Expenses	316.89	2.59%	337.80	3.00%	936.36	10.07%
Total Expenses (B)	10,336.78	84.37%	10,354.30	91.86%	8,772.02	94.37%
PROFIT BEFORE TAX	1,914.56	15.63%	918.12	8.14%	522.44	5.63%
Tax Expense
Current tax	440.59	3.60%	196.96	1.75%	305.22	3.28%
Earlier Period Tax	54.88	0.45%	0.00	-	253.71	2.73%
Deferred tax (credit)/charge	32.27	0.26%	48.34	0.43%	-171.21	-1.84%
Total Tax Expenses	527.74	4.31%	245.30	2.18%	387.72	4.17%
Profit for the period / year	1,386.82	11.32%	672.83	5.96%	134.72	1.46%

Overview of Revenue & Expenditure

Revenue from operations: Revenue from operations mainly consists of engaging in the manufacturing of Synthetic Fibres and different kinds of yarns and textile products.

Other Income:

Other income primarily comprises of interest on FDR.

Total Expenses:

Total expenses consist of operating cost like Cost of Material consumed, Employee benefits expense, Finance costs, Depreciation and amortization expenses and other expenses.

Cost of Material consumed

Cost of Material consumed expenses primarily comprises of Purchase of raw material and change in stock of raw material.

Employee benefits expense:

Employee benefits expense primarily comprises of Salaries, wages & bonus expenses to Staff and Directors, Staff welfare expenses, labour welfare fund and Employers Contribution to PF and Gratuity.

Finance Costs:

Our finance cost includes Interest expenses, Loan Processing Charges and Bank charges.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on Plant & machinery, Computers, furniture and fixtures, Vehicles and office equipment.

Other Expenses:

Other Expenses consists of Rates and Taxes, Legal and Professional fee, Insurance expenses, Business Promotion Expense, Travelling and Conveyance Expenses, and Repair maintenance.

Total Income:

Total income for the financial year 2025-26 stood at Rs. 12,251.34 Lakhs whereas in Financial Year 2024-25 the same stood at Rs. 11,272.42 Lakhs representing an increase of 8.68%. The main reason of increase was increase in the volume of business in FY 2025-26 business operation of the company.

Revenue from Operations

During the financial year 2025-26 the net revenue from operation of our Company increased to Rs. 12,202.99 Lakhs as against Rs. 11,241.79 Lakhs in the Financial Year 2024-25 representing an increase of 8.55%.

Other Income:

During the financial year 2025-26 the other income of our Company is Rs. 48.35 Lakhs as against Rs. 30.63 Lakhs in the Financial Year 2024-25 representing an increase of 57.83 % which was due to reduction of interest on FDR and interest on FDR.

Total Expenses:

The total expense for the financial year 2025-26 increased to Rs. 10,336.78 Lakhs from Rs. 10,354.30 lakhs in the Financial Year 2024-25 representing a marginal decrease of 0.17%. Such decrease was majorly due to decrease in Cost of Raw Material Consumed, Depreciation during the year.

Cost of material consumed:

The Cost of material consumed for the financial year 2025-26 decreased to Rs. 9,148.25 lakhs from Rs. 9,306.18 lakhs in the Financial Year 2024-25 representing a decrease of 7.81%. Such decrease is due to improvement in cost structure in the business operations of the Company. Major contributor for such decrease is due to decrease in Purchases of Raw materials and its effective utilization.

Employee benefits expense:

Our Company has incurred Rs. 364.83 Lakhs as Employee benefits expense during the financial year 2025-26 as compared to Rs. 320.50 Lakhs in the financial year 2024-25.

The increase of 13.83% was due to increase in overall employee costs to the employees in the financial year 2025-26. Finance Cost:

Our Company has incurred ^300.47 Lakhs as finance cost during the financial year 2025-26 as compared to Rs. 276.62 Lakhs in the financial year 2024-25. The increase of 8.62 % was due to increase in term loan during the of FY 2025- 2026.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2025-26 stood at Rs. 206.34 Lakhs as against Rs. 161.19 Lakhs during the financial year 2024-25. The increase in depreciation was around 28.01%.

Other Expenses:

Our Company has incurred Rs. 316.89 Lakhs during the Financial Year 2025-26 on other expenses as against Rs. 289.80 Lakhs during the financial year 2024-25. There was an increase of 9.35 % mainly due (i) increase in Legal & Professional Expenses by 103.59% from Rs. 40.85 lakhs in financial year 2024-25 to Rs. 83.18 lakhs in financial year 2025-26, (ii) increase in CSR Expense by 28.44% from 18.83 lakhs in financial year 2024-25 to Rs. 24.18 lakhs in financial year 2025- 26, (iii) increase in Other Establishment expenses by 242.17% from Rs. 7.42 lakhs in financial year 2024-25 to Rs. 25.39 lakhs in financial year 2025-26.

Restated profit before tax:

Net profit before tax for the financial year 2025-26 increased to Rs. 1,914.56 Lakhs as compared to Rs. 918.12 Lakhs in the financial year 2024-25. The increase of 108.53 % was majorly due to factors as mentioned above.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax for the year 2025-26 increase by 106.12% from net profit of ^672.83 Lakhs in financial year 2024-25 to net profit Rs. 1,386.82 lakhs in financial year 2025-26.

Total Income:

Total income for the financial year 2024-25 stood at Rs. 11,272.42 Lakhs whereas in Financial Year 2023-24 the same stood at Rs. 9,294.45 Lakhs representing an increase of 21.28%. The main reason of increase was decrease in the work completion percentage is less in FY 2023-24 business operation of the company.

Revenue from Operations

During the financial year 2024-25 the net revenue from operation of our Company increased to Rs. 11241.79 Lakhs as against Rs. 9277.86 Lakhs in the Financial Year 2023-24 representing a increase of 21.17%.

Other Income:

During the financial year 2024-25 the other income of our Company is Rs. 30.63 Lakhs as against Rs. 16.59 Lakhs in the Financial Year 2022-23 representing an increase of 84.62 % which was due to increase of interest on FDR.

Total Expenses:

The total expense for the financial year 2024-25 increased to Rs. 10354.30 Lakhs from Rs. 8772.02 lakhs in the Financial Year 2023-24 representing a increase of 18.04%. Such increase was majorly due to increase in Cost of Raw Material Consumed during the year.

Cost of material consumed:

The Cost of material consumed for the financial year 2024-24 increased to Rs. 9422.68 lakhs from Rs. 8382.97 lakhs in the Financial Year 2023-24 representing a increase of 12.40%. Such increase was due to increase in business operations of the Company. Major contributor for such increase is due to increase in Purchases of Raw materials.

Employee benefits expense:

Our Company has incurred Rs. 320.50 Lakhs as Employee benefits expense during the financial year 2024-25 as compared to Rs. 305.81 Lakhs in the financial year 2023-24.

The increase of 4.80% was due to: (i) increase in Salary and Wages from Rs. 243.37 lakhs in financial year 2023-24 to Rs. 257.37 lakhs in financial year 2024-25; and (ii) increase in Staff Welfare Expenses from Rs. 4.35 lakhs in financial year 2023-24 to Rs. 7.86 lakhs in the financial year 2024-25.

Finance Cost:

Our Company has incurred ^276.62 Lakhs as finance cost during the financial year 2024-25 as compared to Rs. 273.09 Lakhs in the financial year 2023-24. The increase of 1.29 % was due to increase in term loan during the of FY 2024- 2025.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2024-25 stood at Rs. 161.19 Lakhs as against Rs. 170.20 Lakhs during the financial year 2023-24. The decrease in depreciation was around 5.29 %.

Other Expenses:

Our Company has incurred Rs. 289.80 Lakhs during the Financial Year 2024-25 on other expenses as against Rs. 888.36 Lakhs during the financial year 2023-24. There was a decrease of 67.38% mainly due (i) decrease in Rates and Taxes by 58.13% from Rs. 19.06 lakhs in financial year 2023-24 to Rs. 7.98 lakhs in financial year 2024-25, (ii) decrease in Insurance Expense by 4.31% from Rs. 5.10 lakhs in financial year 2023-24 to Rs. 4.98 lakhs in financial year 2024-25.

Restated profit before tax:

Net profit before tax for the financial year 2024-25 increased to Rs. 918.12 Lakhs as compared to Rs. 522.44 Lakhs in the financial year 2023-24. The increase of 75.74 % was majorly due to factors as mentioned above.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax for the year 2024-25 increase by 399.43% from net profit of Rs. 134.72 Lakhs in financial year 2023-24 to net profit Rs. 672.83 lakhs in financial year 2024-25.

Information required as per Item (IDlClliv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

5. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. Except as disclosed in this Red Herring Prospectus, there are no unusual or infrequent events or transactions in our Company.

6. Significant economic changes that materially affected or are likely to affect income from continuing operations.

There are no significant economic changes that may materially affect or are likely to affect income from continuing operations.

7. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, or income from continuing operations.

Apart from the risks as disclosed under Section “Risk Factors” beginning on page 20 of the Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

8. Future changes in relationship between costs and revenues

Other than as described in the sections “Risk Factors”, “Our Business” and “Managements Discussion and Analysis of Financial Condition and Results of Operations” on pages 20, 149 and 211 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

9. Segment Reporting

Our business activity primarily falls within a single business and geographical segment, other than as disclosed in “Restated Financial Statements” on page 208, we do not follow any other segment reporting

10.Status of any publicly announced New Products or Business Segment

Except as disclosed in the Chapter “Our Business” on page 149 of this Red Herring Prospectus, our Company has not announced any new product or service.

11. Seasonality of business

Our Company is engaged in the business of fibre processing and textile manufacturing and business of our company is not seasonal.

12. Dependence on single or few customers or suppliers

The details of contribution by our top 1, 3, 5 and 10 Customers to our revenue is given below:

(Rs. in Lakhs)

Particulars	For Financial Year
	Mar-26		Mar-25		Mar-24
	Rs. in Lakhs	%	Rs. in Lakhs	%	Rs. in Lakhs	%
Our Largest Customer	1,039.57	8.52%	1,088.92	9.69%	1,181.25	12.73%
Our top three Customers	2,945.07	24.13%	2,724.36	24.24%	2,773.43	29.89%
Our top five Customers	4,426.37	36.26%	4,001.70	35.60%	4,100.12	44.19%
Our top ten Customers	6,688.49	54.81%	6,175.15	54.93%	6,249.87	67.36%

The details of raw material consumption from our top 1, 3, 5 and 10 suppliers for stub period and for preceding 3 financial years is mentioned as follows:

(Rs. in Lakhs)

Particulars	For Financial Year
	March 2026		March 2025		March 2024
	Rs. in Lakhs	*%	Rs. in Lakhs	*%	Rs. in Lakhs	*%
Our Largest Supplier	1,017.90	11.84%	1,124.62	12.98%	1,377.94	16.85%
Our top three Supplier	2,777.47	32.31%	2,905.34	33.54%	3,095.61	37.85%
Our top five Suppliers	3,950.10	45.95%	4,202.73	48.52%	4,331.08	52.96%
Our top ten Suppliers	5,381.02	62.61%	5,771.82	66.63%	6,383.48	78.07%

*As a (%) of purchases & Direct Expenses and excludes GST.

13. Competitive conditions

We face competition from existing and potential competitors, which is common for any business. We have, over a period of time, developed certain competitors who have been discussed in section titles “Our Business” beginning on page no. 149 of this Red Herring Prospectus.