Shanti Spintex Ltd Management Discussions

A REVIEW OF OUR PERFORMANCE, STRATEGY AND OUTLOOK

The Management Discussion and Analysis Report provides an overview of the Companys business environment, operational and financial performance, strategy, key risks and concerns, and future outlook.

? INDUSTRY OVERVIEW

? BUSINESS OVERVIEW

? OPERATIONAL PERFORMANCE

? FINANCIAL PERFORMANCE

? STRATEGY AND INITIATIVES

? RISK FACTORS AND CONCERNS

? OUTLOOK AND FUTURE PROSPECTS

Management Discussion and Analysis Report

INTRODUCTION:

Pursuant to Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Management Discussion and Analysis Report ("MD&A") forms part of the Annual Report of Shanti Spintex Limited ("the Company") for the financial year ended 31st March, 2026.

This report provides an overview and analysis of the Companys business performance, industry environment, financial results, operational performance, opportunities and threats, risk management framework, internal control systems and the outlook for the future. The discussion should be read in conjunction with the audited financial statements and related notes forming part of this Annual Report.

INDUSTRY OVERVIEW - DOMESTIC DENIM FABRIC MARKET:

The domestic denim fabric industry in India continued to witness structural growth during FY 2025-26, supported by the expanding Indian apparel and clothing market, a large and youthful consumer base, rising disposable incomes, increasing urbanisation and the growing preference for casual, comfortable and versatile clothing. Denim has evolved from being primarily associated with jeans to becoming an important fabric category across shirts, jackets, dresses, skirts, kidswear and other lifestyle applications.

The domestic demand environment remains favourable. A recent study released by the Ministry of Textiles in April 2026, based on the Market for Textiles and Clothing: National Household Survey 2024, noted robust growth in domestic textile demand over the past 15 years, reaffirming the importance of domestic consumption as a key growth driver for the Indian textile sector.

The Indian denim market is being supported by the increasing penetration of organised retail, branded apparel, e-commerce and digital marketplaces. The growing influence of Western fashion trends, changing consumer preferences and the increasing adoption of casual wear have contributed to the broader use of denim across urban and semi-urban markets. Industry estimates indicate that the Indian denim jeans market generated revenue of approximately US$2.62 billion in 2025 and is projected to grow at a CAGR of approximately 8.3% during 2026-2033, reflecting the continuing growth potential of the domestic denim consumption market.

The denim fabric market is also witnessing increasing focus on sustainable manufacturing, water conservation, eco-friendly dyeing and finishing processes, and the adoption of technology to improve product development and reduce environmental impact.

The domestic denim value chain, however, continues to face challenges including volatility in cotton and other raw material prices, fluctuations in energy and processing costs, intense competition and changing consumer preferences. During FY 2025-26, raw material availability and cotton price dynamics remained important considerations for textile manufacturers. The Governments measures relating to cotton imports and raw material availability also reflected the importance of maintaining a stable supply environment for the domestic textile industry.

Looking ahead, the domestic denim fabric market is expected to benefit from the continued expansion of organised apparel retail, e-commerce, branded fashion and the growing preference for casual and lifestyle clothing. Opportunities are also emerging in premium, stretch, sustainable and value-added denim products. Companies with manufacturing capabilities, product flexibility, efficient operations, strong customer relationships and the ability to respond quickly to changing market requirements are expected to be well positioned to participate in the long-term growth of the domestic denim market.

INDIAN DENIM INDUSTRY

KEY GROWTH INDICATORS (FY 2025-26)

? 8.1% Projected CAGR of Indian Denim Market 2025-2032

? 2nd Indias position globally in installed denim fabric production capacity

? 10.2% CAGR in Indias denim fabric import shipments (2020-2024)

? ?14,300 Cr Textile investment commitments announced at Bharat Tex 2026

Domestic demand continues to be supported by rising consumption of textiles and apparel, urbanisation, organised retail, e-commerce and evolving fashion preferences.

Sources: Industry Reports, Investor Presentations, Trade Data (2025-26)

For Shanti Spintex Limited, the Companys established presence in the denim and textile value chain, together with its focus on operational efficiency and forward integration through its wholly owned subsidiary, provides a platform to participate in the evolving domestic denim market and pursue sustainable, long-term growth.

COMPANY OVERVIEW:

Shanti Spintex Limited is a denim fabric manufacturing company with a presence in the textile industry since its incorporation in 2010 and commercial production commencing in 2016. The Company is engaged in the manufacture of a diverse range of denim fabrics, catering to evolving requirements across the fashion and apparel value chain. Its product portfolio includes various denim constructions, shades, weights and finishes, enabling the Company to serve a wide range of customer requirements. The Companys manufacturing operations are supported by modern air-jet weaving technology and specialised equipment, including Japanese technology-based Tsudakoma air-jet machines, advanced dobby and cam-motion systems and multi-colour weft insertion capabilities. The Company has an installed capacity of approximately 19.2 million metres per annum and a manufacturing area of approximately 46,757 square metres.

Sustainability and responsible manufacturing continue to be integral to the Companys operating philosophy. The Company has invested in renewable energy capabilities, with installed renewable energy capacity of approximately 2.85 MW, supporting its objective of reducing its environmental footprint and improving the sustainability of its manufacturing operations. The Company also continues to focus on innovation, quality, process efficiency and the development of denim fabrics that combine functionality, comfort and contemporary design.

With a combination of manufacturing expertise, technological capabilities, a diversified denim product portfolio and a growing focus on sustainable production practices, the Company continues to strengthen its capabilities as a specialised denim fabric manufacturer.

KEY FINANCIAL HIGHLIGHTS:

During the financial year ended 31st March, 2026, the Company continued to maintain a strong operating scale, with Consolidated Revenue from Operations of 70,421.36 lakhs and Consolidated Profit After Tax of 991.10 lakhs. The Companys consolidated financial performance reflects the combined operations of Shanti Spintex Limited and its 100% wholly owned subsidiary, Teesta Spintex Private Limited, acquired during the year.

The Companys Standalone Revenue from Operations stood at 68,281.66 lakhs and Standalone Profit After Tax stood at 448.76 lakhs. The Companys Basic and Diluted EPS stood at 2.66 on a standalone basis and 5.87 on a consolidated basis.

KEY FINANCIAL RATIOS:

During FY 2025-26, the Company maintained a satisfactory liquidity position, with a Current Ratio of 1.31 times. The Debt Service Coverage Ratio improved significantly to 5.97 times, indicating a strong capacity to service its debt obligations. The Inventory Turnover Ratio increased to 41.80 times, reflecting efficient inventory management. The Debt-Equity Ratio stood at 0.39 times, indicating a moderate level of financial leverage. The Net Profit Ratio stood at 0.66%, while Return on Equity and Return on Capital Employed stood at 4% and 8%, respectively, reflecting the profitability and capital efficiency during the year under review. The Companys Return on Investment stood at 7% during the year. Overall, the financial ratios reflect the Companys liquidity, operational efficiency, capital structure and profitability position during FY 2025-26.

During FY 2025-26, the Company continued to focus on maintaining operational efficiency, strengthening manufacturing processes and optimising the utilisation of its production capabilities. The Company remained focused on quality, process discipline and cost management across its operations.

The Companys operational performance was supported by its established manufacturing infrastructure and focus on efficient resource utilisation. During the year, the Company also continued to pursue its strategy of strengthening its presence across the textile value chain through the forward integration represented by its 100% wholly owned subsidiary, Teesta Spintex Private Limited.

The Company remains focused on improving productivity, enhancing operational efficiencies and strengthening its manufacturing capabilities to support sustainable business growth.

STRATEGIC INITIATIVES:

The Companys strategic focus during the year was directed towards broadening its business platform and strengthening its position across the textile value chain. In this regard, A key strategic initiative was the acquisition of Teesta Spintex Private Limited as a 100% wholly owned subsidiary marked an important step towards forward integration and expanding the Companys operational ecosystem.

The Company also continues to assess opportunities for enhancing its product capabilities, improving value creation across its business operations and developing a more integrated approach to its textile activities. Going forward, the strategic focus will remain on strengthening the Companys business foundation, pursuing appropriate growth opportunities and creating sustainable long-term value for stakeholders.

OPPORTUNITIES AND THREATS (SWOT ANALYSIS):

Strengths:

? Established presence in the denim fabric manufacturing sector.

? Integrated manufacturing infrastructure and established production capabilities.

? Diverse product portfolio catering to varied customer requirements.

? Strong industry experience and established relationships across the textile value chain.

? Focus on sustainable manufacturing, including renewable energy initiatives.

Opportunities:

? Growing domestic demand for denim and casual apparel.

? Expansion of organised retail, branded apparel and e-commerce.

? Increasing demand for value-added, stretch, premium and sustainable denim fabrics.

? Opportunities arising from forward integration through the Companys wholly owned subsidiary.

? Government initiatives supporting domestic textile manufacturing and value-chain development.

Threats:

? Volatility in cotton and other raw material prices.

? Fluctuations in energy, labour and other operating costs.

? Intense competition from domestic and international textile manufacturers.

? Changes in consumer preferences and fashion trends.

? Macroeconomic conditions, regulatory changes and disruptions in domestic or global supply chains.

The Company continues to monitor these factors closely and adopts appropriate business and operational measures to manage risks and capitalise on emerging opportunities.

CHALLENGES AND RISK MANAGEMENT:

The Company operates in a competitive and dynamic textile industry and is exposed to various business and operational risks, including fluctuations in cotton and other raw material prices, changes in energy and operating costs, market competition, evolving customer preferences and broader economic conditions. The textile industry is also subject to changes in government policies, regulations and domestic and global supply-chain conditions.

The Company adopts a proactive approach towards identifying and managing these risks through regular monitoring of business and market developments, prudent financial management, operational controls and appropriate business planning. The Company also focuses on maintaining strong customer relationships, efficient resource utilisation and operational discipline to mitigate potential business risks.

OUTLOOK:

The outlook for the Company remains focused on strengthening its position in the denim and textile value chain while responding to evolving market opportunities and industry dynamics. The Company intends to build upon its established manufacturing capabilities and industry experience, with continued emphasis on product quality, operational discipline and strong customer relationships.

The Companys forward integration provides an opportunity to further develop its business ecosystem and explore synergies across the textile value chain. The Company will continue to evaluate opportunities for growth, value enhancement and business development in line with prevailing market conditions. The Management remains cautiously optimistic about the long-term prospects of the denim and textile sector and is focused on pursuing sustainable growth while creating long-term value for all stakeholders.

CONCLUSION:

The Company remains focused on building upon its existing capabilities while adapting to the changing dynamics of the textile industry. With a disciplined approach to business, continued focus on execution and a clear strategic direction, the Company aims to convert emerging opportunities into sustainable long-term value for its stakeholders.