1. Industrial Structure and Developments

PBM Polytex Limited, established in 1919, commenced manufacturing operations in 1922 at Petlad, Gujarat. After facing near- terminal financial distress, the Company was revived by the current management in 1978 through phased modernisation. Between 1980 and 1998, capital was raised through internal accruals, public and rights issues, and the private placement of debentures, transforming the Company into a consistent dividend- paying entity. Its shares were listed on the Bombay Stock Exchange in 1986, and bonus shares were issued twice. A second spinning unit was established in 1990 at Borgaon, District Chhindwara (Madhya Pradesh). The Company also invested in renewable energy by installing four windmills of aggregate capacity 1,600 KWA in Jamnagar and Kutch, Gujarat, during 2006- 07.

The Company has continued to expand its sustainability footprint. Following the Phase I Solar Plant (1.82 Crores; approximately 9.19 lakh units per annum; annual savings of about 56 Lakhs), the Phase II Solar Plant was commissioned in May 2025 at a cost of 54 Lakhs, expected to generate approximately 9.95 lakh units per annum with projected savings of about 10 Lakhs per year. A further solar installation of approximately 250 KVA at the Petlad Unit is under evaluation, subject to space availability.

2. Market Analysis

Cotton Price Disparity: Domestic cotton prices remained elevated through the year following a 7.6% MSP hike, well above international benchmarks.

Global Benchmark: International cotton prices remained subdued, creating a significant and sustained cost gap for domestic spinners.

Import Duty: The 11% import duty on raw cotton continued to distort competitiveness, with only a temporary waiver during August - December 2025 offering short-term relief.

Export Headwinds: U.S. tariffs on Indian textile exports escalated to 50% with effect from 27 August 2025, sharply reducing export viability, particularly for cotton yarn.

3. Opportunities, Threats, Risks and Concerns

Opportunities

Continued renewable-energy investment (solar) to structurally reduce power costs.

Policy advocacy for permanent removal of the cotton import duty to align domestic input costs with global benchmarks.

Diversification of export markets to mitigate concentration and tariff risk.

Modernisation of the Open-End line to improve product quality and per-kg realisation.

Threats and Risks

Cotton remains a rain-dependent crop, vulnerable to climatic and policy shifts.

Rising MSP and import duties continue to inflate input costs.

Escalating international trade barriers, notably U.S. tariffs, threaten export demand.

Persistent shortage of skilled manpower and high absenteeism constrain capacity utilisation.

4. Segment-wise Performance

Cotton Yarn: The Companys core product continued to face margin pressure during the year, owing to weak export demand and elevated domestic cotton prices. Demand showed a positive trend towards the close of the year, providing a more constructive base for FY 2026- 27.

Wind Energy: The four windmills continued to operate at average efficiency, reflecting the age of the installed infrastructure.

Solar Power: The commissioned solar plants continued to reduce energy costs and improve the Companys sustainability metrics, with a further installation under evaluation.

5. Internal Control Systems and their Adequacy

The Company maintains internal control systems commensurate with its scale and complexity. To enhance compliance and transparency, two independent firms of Chartered Accountants conduct internal audits at the Petlad and Borgaon units. The Internal Control function regularly monitors asset protection, transaction accuracy, and legal and statutory compliance.

6. Financial and Operational Performance

FY 2025- 26 was characterised by high volatility in cotton and yarn markets, tepid domestic demand, and limited pricing power, all of which compressed margins during the first half of the year. Operational performance was further affected by the fire incident at the Petlad Unit and by continued manpower constraints. Performance improved in the latter part of the year, aided by firmer demand and the resolution of several long- pending matters, including the BLP labour settlement, the sale of the Saoner land, and the full recovery of the inter- corporate loan extended to the sister concern.

7. Human Resources and Industrial Relations

Industrial relations remained stable across both units during the year, and the out- of- court settlement of the long- pending labour dispute at the BLP Unit - duly filed and accepted by the Honble High Court - is expected to further strengthen industrial harmony. Both units nonetheless continue to face a shortage of skilled workers and high absenteeism, resulting in production losses; industry- wide, absenteeism in spinning mills ranges from 11 - 20% 11 - 20% daily, driven by strenuous working conditions and low job satisfaction. The HR Department remains actively engaged in recruiting and training apprentices, counselling workers, and implementing attendance- improvement initiatives to stabilise manpower and restore production efficiency.

8. Outlook

The near- term outlook for cotton yarn is expected to improve gradually, supported by firmer demand observed towards the close of the year and the benefits anticipated from the Open- End modernization. Elevated domestic cotton prices and international trade barriers remain key risks. The Companys renewable- energy and cost- efficiency initiatives are expected to support cost competitiveness and long- term profitability.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONGWITH DETAILED EXPLANATIONS THEREOF:

The following key financial ratios in FY 2025- 26 has witnessed a significant change i.e. a change of 25% 25% or more as compared to the FY 2024- 25 :-

Sr. No.	Key Financial Ratios	FY 2025-26	FY 2024-25	Change in % as compared to previous year	Reason
1.	Current Ratio	5.12 times	5.87 times	-12.73%	No major Variation
2.	Net Profit Margin (%)	-0.91%	-2.69%	66.25%	Current year loss decreased as compared to previous year
3.	Return on Net Worth (%)	-1.20%	-4.89%	75.36%	Current year loss decreased as compared to previous year
4.	Debtors Turnover Ratio	13.87 times	14.58 times	-4.82%	No major variation
5.	Inventory Turnover Ratio	3.41 times	3.34 times	1.91%	No major variation
6.	Interest Coverage	7.26 times	-11.29 times	164.30%	Current year loss decreased as compared to previous year
7.	Operating Profit Margin	1.16%	-1.39%	183.45%	Current year loss decreased as compared to previous year
8.	Debt Equity Ratio	0.01%	0.003%	221.76%	Due to higher working capital fund utilization.

FINANCIAL PERFORMANCE OF CURRENT AND PREVIOUS TWO YEARS BASED ON DIFFERENT INDICATORS

Year	2023-24	2024-25	2025-26
Capital	688	688	688
Free Reserves	10443	10443	10443
Effective Capital	12046	11660	11577
Exports	4656	4191	5000
Total Sales & other Income	19600	17820	17516
Profit Before Depreciation & Tax	-473	-262	163
Dividend Per Share (Rs.)	NIL	NIL	NIL

CAUTIONARY STATEMENT

Any changes in applicable laws, regulations and Government policies and the present epidemic leading to reduction / stoppage of production are beyond the control and anticipations of the management and may adversely affect the profitability of the Company.

	For PBM POLYTEX LIMITED	For PBM POLYTEX LIMITED
	GOPAL PATODIA	CHIRAYUSH INDRAJITBHAI PATEL
Place: Vadodara	Managing Director	Independent Director
Date: 13.08.2026	(DIN: 00014247)	(DIN: 08690998)