Shanti Spintex Ltd Management Discussions

Pursuant to Regulation 34(2)(e) of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, the Management Discussion and Analysis Report of Shanti Spintex Limited provides a comprehensive overview of the Companys financial performance, industry environment, key developments, opportunities, threats, risks, and future outlook for the financial year ended March 31, 2025. It aims to offer insights into the strategic direction and operational achievements of the Company during the year under review. This analysis should be read in conjunction with the Companys audited financial statements, notes, and other disclosures forming part of the Annual Report.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The denim fabric industry continues to evolve as a dynamic segment within the global textile value chain, marked by resilient growth, innovation, and a sharpened focus on sustainability. In FY 2024 25, the industry witnessed renewed momentum supported by a post-pandemic stabilization in global demand, rising export opportunities, and a growing shift toward circular and responsible fashion. Key players across the value chain have increasingly aligned with environmental, social, and governance (ESG) benchmarks, influencing sourcing and manufacturing decisions worldwide.

India has maintained its position as one of the worlds leading denim fabric producers, benefiting from strong backward integration, cost-competitive manufacturing, and a skilled workforce. The domestic denim landscape is rapidly modernizing, with manufacturers embracing automation, digital production tools, and environmentally conscious techniques to meet both regulatory standards and evolving consumer expectations.

Denim consumption in India is also on the rise, driven by a younger demographic, increased urbanization, and the adoption of denim in workwear, ethnic fusion wear, and lifestyle apparel. Moreover, international brands sourcing from India are placing greater emphasis on traceability, compliance, and eco-label certifications, presenting both opportunities and challenges for manufacturers.

Sustainable production practices such as laser finishing, ozone washing, and reduced water usage are becoming industry norms rather than differentiators. Indian manufacturers are responding by investing in low-impact dyeing technologies, alternative raw materials like hemp and recycled fibres, and closed-loop systems.

With global denim revenues projected to grow steadily through 2029, and India playing a pivotal role in the global supply chain, the industry outlook remains positive. Continued focus on innovation, compliance, and value-added offerings will be key for denim fabric manufacturers to sustain growth and remain globally competitive.

COMPANY OVERVIEW AND PERFORMANCE:

Established in 2010 and commencing commercial production in 2016, Shanti Spintex Limited has rapidly emerged as a leading manufacturer of high-quality denim fabrics in India. With a firm foundation in technical expertise and innovation, the Company is known for delivering sustainable, performance-driven denim solutions to fashion-forward markets.

Based in Gujarat, India, Shanti Spintex operates with a clear vision to integrate cutting-edge technology and environmentally responsible manufacturing practices. The Company has invested in advanced spinning and weaving infrastructure, coupled with efficient finishing processes that ensure consistent quality and operational excellence.

Sustainability is a core pillar of Shanti Spintexs business model. The Company actively harnesses renewable energy through a 2 MW Wind Turbine and 0.86 MW of installed Solar Energy, with plans to expand solar capacity to 1.5 MW. These efforts are designed to meet up to 90% of the Companys power requirements, significantly reducing its carbon footprint and aligning operations with global ESG standards.

Shanti Spintex places strong emphasis on innovation and R&D to develop denim fabrics with enhanced functionalities such as stretchability, moisture-wicking, and long-lasting durability. These differentiated offerings enable the Company to cater to niche and premium segments, expanding its customer base and driving value-added growth.

With a future-focused approach, ethical practices, and a commitment to sustainable progress, Shanti Spintex Limited continues to reinforce its position as a trusted and progressive name in the global textile industry.

KEY FINANCIAL HIGHLIGHTS (STANDALONE):

Revenue Growth: Revenue from operations grew by 40.36% year-on-year, reaching

70,994.01 lakhs, driven by increased market demand and expanded customer base in both domestic and international segments.

Profitability: Net Profit After Tax (PAT) declined by 21.63%, totalling 1,020.01 lakhs, primarily due to margin pressures and higher input costs despite strong top line growth.

Operational Efficiency: Total expenses increased in line with the scale of operations, but overall cost efficiency was maintained, helping to sustain healthy EBITDA margins.

Earnings Per Share (EPS): EPS stood at 6.04 compared to 8.71 in the previous year, reflecting the decrease in net profit.

Return on Capital Employed (ROCE): ROCE metrics, while slightly moderated due to higher capital utilization, continue to reflect prudent capital deployment and sustainable business expansion.

KEY RATIOS:

OPERATIONAL PERFORMANCE:

In FY 2024 25, Shanti Spintex Limited delivered strong operational performance, driven by higher capacity utilization, improved process efficiency, and robust demand. Strategic cost control and process automation helped maintain consistent production quality and output.

The Company also made notable progress toward its sustainability objectives by expanding the use of renewable energy and adopting resource-efficient manufacturing practices. Operational enhancements led to better working capital efficiency, while a continued focus on R&D and digital process integration enabled innovation and timely execution. These collective efforts strengthened overall productivity, operational resilience, and customer satisfaction.

STRATEGIC INITIATIVES:

During FY 2024 25, Shanti Spintex Limited undertook several strategic initiatives to strengthen its market position, enhance operational resilience, and drive sustainable growth:

Capacity Expansion: The Company optimized plant operations and evaluated opportunities for capacity enhancement to meet growing demand across domestic and export markets.

Sustainability Integration: Accelerated adoption of renewable energy sources and water-efficient processing methods to align with global ESG expectations and reduce environmental impact.

Product Innovation: Focused R&D efforts led to the development of advanced denim fabrics with differentiated features such as high durability, stretch, and eco-friendly blends.

Strengthening Governance: Enhanced internal controls, compliance frameworks, and reporting structures to ensure transparency, accountability, and long-term stakeholder value creation.

Record Financial Performance:

Achieved 710 crores revenue - highest ever annual revenue with 102 crores PAT

Demonstrates strong market position and operational efficiency

Debt Reduction:

Significantly improved debt-equity ratio from 0.74 to 0.26

Enhanced financial stability and reduced interest burden

High-Capacity Utilization:

Operating at 89% capacity with 96 air-jet looms producing 19.2M metres annually

Efficient use of manufacturing infrastructure

Working Capital Efficiency:

Debtor days improved from 55.5 to 35.3 days

Better cash flow management and collection efficiency

Renewable Energy:

Wind farm and rooftop solar plant for sustainable operations

Reduced operational costs and environmental impact

Product Diversification:

Various denim types including power stretch, knit, lightweight, and rigid denim

Ability to cater to diverse market segments

WEAKNESSES: Small Market Cap:

117 crores market cap limits financial resources compared to larger competitors

Restricts access to capital markets for expansion

Geographic Concentration:

Heavy dependence on Gujarat-based customers creates regional risk

Limited geographic diversification increases vulnerability No Dividend Distribution:

Despite strong profits, conservative cash management approach

May affect investor attraction and stock performance Single Location Risk:

Operations concentrated in Ahmedabad creating operational vulnerability

Risk of business disruption from local issues

OPPORTUNITIES: Industry Growth:

Indian textile industry expected to reach $190 billion by FY 2026

Strong domestic market expansion potential Vertical Integration:

Opportunities to invest in finishing and dyeing units for better margins

Enhanced value addition and profit margins Capacity Expansion:

Scope to increase production capacity to meet growing demand

Current utilization at 89% provides room for growth Sustainable Fashion:

Growing consumer preference for eco-friendly textiles

Companys renewable energy initiatives align with market trends Geographic Expansion:

Expansion beyond Gujarat to serve pan-India markets

Diversification of customer base and market reach

THREATS: Intense Competition:

Highly competitive denim manufacturing industry with established players

Pressure on pricing and market share Economic Sensitivity:

Vulnerability to economic downturns affecting textile consumption

Cyclical nature of the textile industry Labour Availability and Cost Escalation:

Increasing wages and statutory obligations are putting pressure on operational expenses, impacting cost structures.

Limited availability of trained textile workers may constrain production scalability and affect quality consistency.

CHALLENGES AND RISK MANAGEMENT:

Shanti Spintex Limited operates in a dynamic environment where various internal and external factors can impact performance. The Company proactively identifies and mitigates key risks through strategic planning, operational controls, and governance frameworks.

OUTLOOK:

Shanti Spintex Limited enters FY 2025 26 with cautious optimism and a clear growth trajectory, backed by its strong operational foundation, consistent financial performance, and ongoing investments in sustainability and innovation.

The Indian denim fabric market continues to show promising signs of expansion, supported by rising domestic consumption, global demand for sustainable textiles, and favourable government policies. With increasing acceptance of denim across lifestyle segments and export markets, the Company is well-positioned to leverage this momentum.

Shanti Spintex aims to strengthen its market share through capacity optimization, product innovation, and vertical integration. Strategic focus will remain on geographic expansion, customer diversification, and enhancing value-added offerings to improve profitability.

The Company also recognizes the importance of responsible manufacturing. It will continue to invest in green technologies, renewable energy, and water-efficient practices, aligning business objectives with global ESG expectations.

While macroeconomic uncertainties, input cost volatility, and competitive pressures remain key risks, the

Companys agile business model, efficient cost structures, and prudent risk management practices provide a resilient platform for sustainable growth.

With its clear strategic priorities and a robust execution framework, Shanti Spintex Limited remains committed to delivering long-term value to all stakeholders in the upcoming fiscal year and beyond.

CONCLUSION:

Shanti Spintex Limited has demonstrated resilient performance in FY 2024 25, underpinned by strategic clarity, operational efficiency, and a commitment to sustainability. The Company has strengthened its financial position, streamlined operations, and made significant progress in innovation and ESG alignment.

As the textile industry evolves, Shanti Spintex remains focused on seizing emerging opportunities while effectively managing associated risks. With a strong foundation, disciplined execution, and forward-looking strategies, the Company is well-positioned to sustain its growth trajectory and deliver long-term value to all stakeholders.