Pashupati Cotspin Ltd Management Discussions

• INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economic Overview

The global economy has demonstrated considerable resilience amid continuing geopolitical tensions, inflationary pressures, volatile energy prices and trade-related uncertainties. Following the synchronised monetary tightening undertaken in previous years, inflationary pressures have moderated in several major economies, enabling central banks to gradually move towards policy normalisation.

Global economic growth is expected to remain moderate, with advanced economies experiencing relatively slower growth owing to subdued consumption and tighter financial conditions. Emerging markets, particularly in Asia, continue to demonstrate resilience and remain important contributors to global economic growth.

Key themes influencing the global economic environment include:

• Supply Chain Diversification: Businesses are increasingly adopting diversified and multi-location sourcing strategies to mitigate geopolitical and supply chain risks.

• Sustainability and Circular Economy: Growing environmental awareness is accelerating the adoption of sustainable manufacturing practices and circular economy initiatives.

• Technological Transformation: Digitalisation, AI-based automation and data-driven supply chain management are increasingly becoming integral to business operations.

Despite these positive structural developments, uncertainties continue to persist due to geopolitical conflicts, trade protectionism, volatility in commodity prices and climate- related disruptions.

Indian Economic Perspective

India continues to remain among the fastest-growing major economies, supported by strong domestic demand, improving industrial activity, infrastructure development and continued policy support from the Government.

Key growth drivers include:

• Government Initiatives: Programmes such as PM MITRA Mega Textile Parks, Production Linked Incentive (PLI) Schemes and the Make in India initiative continue to support manufacturing growth.

• Export Opportunities: Indias trade agreements and ongoing negotiations with key global markets are expected to create new opportunities for Indian manufacturers and exporters.

• Consumption Growth: Rising disposable incomes, urbanisation and increasing digital penetration continue to support domestic demand for apparel and home textiles.

While inflationary pressures have moderated, volatility in food and energy prices continues to remain a factor. Nevertheless, the Indian economy continues to demonstrate resilience and offers significant growth opportunities for the textile and manufacturing sectors.

• OPPORTUNITIES AND THREATS

Opportunities

The textile industry offers significant growth opportunities driven by increasing domestic consumption, Government initiatives supporting the textile sector, expanding e-commerce and improving access to international markets. The growing focus on sustainable manufacturing, textile recycling and the circular economy also presents new opportunities for the industry.

Threats

The industry continues to face challenges from volatility in cotton and other raw material prices, intense competition from global textile-producing countries, rising energy and labour costs, supply chain disruptions and changing regulatory requirements. Increasing sustainability and ESG compliance requirements may also result in higher operating and compliance costs.

The Company continues to focus on operational efficiency, cost optimisation, quality improvement and effective risk management to address these challenges and capitalise on emerging opportunities.

• SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Cotton

Cotton continues to form the backbone of Indias textile industry. India remains one of the worlds largest cotton- producing countries and has a significant presence in global cotton cultivation.

Cotton production and prices are influenced by several factors, including monsoon conditions, pest infestations, acreage, minimum support prices and global demand and supply dynamics.

The Company sources high-quality cotton, primarily including the Shankar-6 variety, from established suppliers. The cotton is processed through its integrated operations for sale as cotton bales and for captive consumption in yarn manufacturing. This integrated approach supports improved cost efficiency, quality consistency and better control over raw material procurement.

Yarn

The cotton yarn industry continues to experience fluctuations in demand and margins due to volatility in cotton prices, changing export demand and variations in power and other operating costs.

The Company remains focused on improving operational efficiency, maintaining cost discipline and ensuring consistent product quality to strengthen its competitive position in domestic and international markets.

• OUTLOOK

The Company remains cautiously optimistic about the long-term prospects of the textile industry. While the industry continues to face challenges arising from volatility in raw material prices, global demand conditions, energy costs and geopolitical uncertainties, the long-term fundamentals of the Indian textile sector remain encouraging.

The Companys strategic location, integrated operations, focus on quality, modern manufacturing capabilities and experienced management provide a strong foundation for addressing industry challenges and pursuing growth opportunities.

The Company will continue to focus on operational efficiency, cost optimisation, quality enhancement, customer relationships and sustainable growth while remaining responsive to evolving market conditions.

• RISKS AND CONCERNS

The textile industry is exposed to various risks and challenges, including the following:

Raw Material Risk

• Variations in cotton production due to adverse weather conditions and pest infestations;

• Volatility in domestic and international cotton prices;

• Changes in Government policies, including minimum support prices and export-import policies; and

• Availability and quality of raw cotton.

Market and Industry Risks

• Fluctuations in demand in key domestic and export markets;

• Competitive pressure from other textile-producing countries;

• Changes in consumer preferences and global trade conditions;

• Volatility in freight, energy and financing costs; and

• Margin pressure arising from fluctuations in raw material and finished product prices.

Labour and Skill Availability

The manufacturing sector continues to face challenges relating to the availability and retention of skilled manpower. The Company focuses on employee development, training and operational efficiency to address such challenges.

• INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains an efficient internal control system commensurate with the size, nature and complexity of its business. The internal control system is responsible for addressing the evolving risks in the business, reliability of financial information, timely reporting of operational and financial transactions, safeguarding of assets and stringent adherence to the applicable laws and regulations. The internal auditors of the Company are responsible for regular monitoring and review of these controls. The Audit Committee periodically reviews the audit reports and ensures correction of any variance, as may be required. Key observations are communicated to the management who undertakes prompt corrective actions.

• FINANCIAL AND OPERATIONAL PERFORMANCE

Particulars for the year ended	Standalone	Consolidated
	March 31, 2026	March 31, 2025	March 31, 2026	March 31, 2025
Revenue from Operations (Sales)	65,589.22	63,670.28	68,781.21	63,749.09
Other Income	999.25	1,411.65	942.31	1323.13
Total Income	66,588.47	65,081.93	69,723.52	65,072.22
Expenditure other than Depreciation and Finance cost	63,144.69	61,105.13	66,178.75	61,072.66
Less: Depreciation	877.21	886.51	887.03	918.38
Less: Finance cost	1,059.42	1,324.40	1,147.59	1,315.19
Total Expenditure	65,081.32	63,316.04	68,213.37	63,306.23
Profit Before Extra-ordinary Items and Tax	1,507.15	1,765.89	1,510.15	1,765.99
Extra Ordinary Items	0.00	0.00	0.00	0.00
Profit Before Tax	1,507.15	1,765.89	1,510.15	1,765.99
Tax Expense
- Current Tax	264.07	_	264.07	—
Less: MAT Credit Receivable	_	—	_	—
- Deferred Tax	204.20	377.94	204.20	377.93
- Short/(Excess) provision of tax	_	(23.02)	—	(23.02)
Profit After Tax	1,038.88	1,410.97	1,041.88	1,411.08
EPS (Basic) (In )	0.66	0.89	0.66	0.89
EPS (Diluted) (In )	0.66	0.89	0.66	0.89

• HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company considers its employees as the most important asset and integral to its competitive position. It has a well-designed HR policy that promotes a conducive work environment, inclusive growth, equal opportunities, and competitiveness and aligns employees goals with the organizations growth vision. Its human resource division plays a crucial role in nurturing a strong and talented workforce. It provides opportunities for professional and personal development and implements comprehensive employee engagement and development programmes to enhance the productivity and skills of its employees. The Companys employee strength stood at 486 as on March 31 2026. Further, industry relations remained peaceful and harmonious during the year.

• KEY FINANCIAL RATIOS

Particular	2025-26	2024-25	Variance
1 Debtors Turnover Ratio	7.24	6.14	17.93%
2 Inventory Turnover Ratio	7.18	7.63	-5.91%
3 Interest Coverage Ratio	2.42	2.33	3.83%
4 Current Ratio	2.14	1.67	28.41%
5 Debt-Equity Ratio	0.55	0.64	-13.92%
6 Operating Profit Margin	3.91%	4.85%	-19.38%
7 Net Profit Margin (%)	1.58%	2.22%	-28.53%
8 Return on Net worth (%)	6.33%	9.14%	-30.74%

CAUTIONARY STATEMENT

Statements in this report describing the Companys objectives, projections, and expectations may be forward-looking statements under applicable laws. Actual results could differ materially due to raw material price fluctuations, demand-supply dynamics, government policies, economic conditions, and unforeseen events.