Pashupati Cotspin Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The global economy in 2025 has shown remarkable adaptability despite challenges such as geopolitical conflicts, inflationary pressures, and volatile energy prices. Following synchronized monetary tightening in previous years, inflation has eased in most major economies, allowing central banks to gradually shift toward policy normalization.

Global GDP growth is projected to moderate slightly in 2025 to 31%, compared to 3.2% in 2024 (IMF estimate). Advanced economies are witnessing a slowdown due to weaker consumption and tighter financial conditions, while emerging markets—particularly in Asia— remain resilient and continue to drive global growth.

• S upply Chain Diversification: Businesses are adopting multilocation sourcing strategies to mitigate geopolitical risks.

• Sustainabilityand Circular Economy: Environ mental concerns are accelerating adoption of green manufacturing practices.

• Technological Disruption: Digital transformation, AI-based automation, and data-driven supply chain management are becoming industry norms.

Despite positive structural shifts, uncertainties remain due to ongoing conflicts in Eastern Europe and the Middle East, trade protectionism, and climate-related disruptions.

INDIAN ECONOMIC PERSPECTIVE

India remains one of the fastest-growing major economies in 2025. As per the IMF, Indias GDP is projected to grow at 6.5% in FY 2025, supported by strong domestic demand, improved industrial output, and continued infrastructure investment by the government.

• Government Initiatives: Programs like PM MITRA Mega Textile Parks, PLI schemes, and Make in India continue to boost manufacturing.

• Export Competitiveness: FTAs with UAE, Australia, and ongoing EU negotiations create new market opportunities.

• Consumption Growth: Rising disposable incomes,

urbanization, and digital penetration drive demand for apparel and home textiles.

Inflation has moderated compared to the previous year, though core inflation remains sticky due to food and fuel volatility. Overall, Indias economy remains on a robust growth path with significant opportunities for the textile sector.

Global Textile Industry

The global textile market is anticipated to grow steadily in 2025, driven by:

• Increasing consumer spending on fashion and home furnishings.

• E-commerce penetration and digital retail growth.

• Sustainability focus, leading to demand for organic and recycled fibers.

• Adoption of digital textile printing and smart fabrics in niche markets.

Major trends:

• Rising use ofnonwoven fabrics in medical and hygiene products.

• Integration of AI and IoT in supply chain management.

• Emphasis on traceability and ESG compliance across

the value chain.

Indian Textile Industry

The Indian textile and apparel industry remains a key contributor to the economy, accounting for ~2.3% of GDP and providing significant employment. However, exports were impacted by a global demand slowdown in early FY 2024-25 and geopolitical disruptions, including higher freight costs due to tensions in the Red Sea region.

Positive drivers for FY 2025:

• Revival in US and EU demand after inventory corrections.

• Government incentives under RoDTEP and duty

remission schemes.

• Strong domestic market (75% of total demand), driven by apparel consumption growth.

COTTON

Cotton continues to be the backbone of Indias textile industry. India holds ~23-24% of global cotton acreage. However, the 2024-25 season saw a ~5% decline in production due to erratic monsoons and pink bollworm infestation.

Pashupati Cotspin Limited sources high-quality cotton (primarily Shankar-6) from leading suppliers. The cotton is processed into bales for sale or in-house yarn production, ensuring cost efficiency and consistent quality.

YARN

The global cotton yarn market is gradually recovering after last years margin pressures. Price volatility persists due to cotton price fluctuations and subdued demand in early FY 2024-25. Rising power costs remain a challenge.

Pashupati Cotspin Limited focuses on operational efficiency, cost control, and quality consistency to stay competitive domestically and internationally.

• Lower Cotton Production: Output declined ~5% YoY due to climate issues and pest attacks.

• Price Volatility: Global cotton price changes may affect competitiveness.

• Government Policy: Higher MSP for Kapas could raise procurement costs.

Market/Industry Risks

• Slow recovery in key export markets (Europe, US).

• Competitive pressure from Bangladesh and Vietnam.

• High power tariffs and interest rates strain margins.

Labour Shortage

Skill shortages remain despite employment generation. Government initiatives like ISDS and vocational training aim to mitigate this.

1. Strategic Location Advantage

Our manufacturing facility is located in Kadi, Mehsana, Gujarat, one of the prime cotton-growing regions in India. This strategic location offers multiple benefits:

• Proximity to Raw Material Sources: Being in a cotton belt ensures easy and timely access to high-quality raw cotton (Shankar-6 variety), reducing procurement costs and lead time.

• Connectivity to Ports & Markets: Excellent connectivity to major ports such as Mundra and Kandla enables smooth export operations, while proximity to industrial hubs like Ahmedabad facilitates quick domestic distribution.

• Cost Efficiency: Reduced transportation costs for both raw material procurement and finished goods dispatch enhance overall competitiveness.

2. State-of-the-Art Manufacturing Facility

Our plant is equipped with modern ginning and spinning machinery sourced from reputed manufacturers, ensuring precision and efficiency in operations.

• Automated Processes: Advanced automation for ginning and yarn production improves consistency and reduces human error.

• Cnergy Efficiency: Machinery designed to minimize power consumption, resulting in lower operating costs.

• Capacity Scalability: Infrastructure designed for future expansion to meet increasing domestic and international demand.

3. Robust Quality Control Systems

Quality is at the core of our operations. We follow stringent quality control measures across all stages of production:

• Superior Raw Material Selection: We procure cotton from trusted farmers and suppliers, ensuring the best grade for yarn manufacturing.

• Bale Management System: Maintains uniform quality in yarn by blending and managing cotton bales effectively.

• In-Process & Final Inspection: Continuous monitoring during production and thorough final quality checks before dispatch ensure defect-free yarn packages.

• International Standards Compliance: Our processes adhere to industry benchmarks, enabling us to cater to premium domestic and global clients.

4. Integrated Operations for Cost Efficiency

We operate an integrated business model covering cotton procurement, ginning, and spinning, which offers the following advantages:

• Control Over Raw Material Quality: Ensures consistency in fiber properties.

• Cost Optimization: Reduces dependence on external suppliers for intermediate processes.

• Value Addition: Enhances profitability through in-house conversion of cotton into yarn.

5. Experienced and Visionary Management

Our leadership team brings deep expertise and industry knowledge:

• Mr. Saurin Jagdish Bhai Parikh (Chairman & Managing Director) - Expert in cotton procurement and ginning operations with years of experience in selecting high-quality Kapas and cotton.

• Mr. Tushar Rameshchandra Trivedi (Whole-Time Director) - Specializes in spinning technology and day- to-day plant operations with proven ability to manage large-scale production.

KEY FINANCIAL RATIOS

FINANCIAL AND OPERATIONAL PERFORMANCE

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.