Shri Techtex Ltd Management Discussions

In this Management Discussion and Analysis Report, the Directors present a detailed overview of the companys performance, accomplishments, and future prospects for the financial year ended March 31, 2026. The report is intended to offer stakeholders valuable insights into the companys operations, key financial indicators, risk management strategies, opportunities, challenges, and overall outlook.

COMPANY SYNOPSIS

Shri Techtex Limited ("the Company" or "STL") is engaged in the business of manufacturing Polypropylene (PP) Non-Woven Fabric of different sizes and density, depending upon client requirement. The practical use of non-woven fabric is more ecological for certain applications, especially in fields and industries where disposable or single use products are important, such as organic farming, hospitals, health care, nursing homes, home furnishing, vehicle upholstery seat fabrication, Mattress & furniture covering, ecological packaging, industrial and consumer goods. We manufacture PP non-woven fabric in variety of sizes and density.

The Companys manufacturing facility is situated at Simej, Dholka Taluka, in Ahmedabad District of Gujarat, and remains well connected to major transport hubs, supporting both domestic dispatch and export logistics.

The Companys business continues to be export-oriented, while it also caters to the domestic market. During FY 2025-26, the Company continued to strengthen its relationships with international clients and focused on consolidating its presence in its existing export markets, in line with its long-standing strategy of diversified and quality-led global market penetration.

Alongside core manufacturing, the Company continues to offer job-work services, providing customised and efficient solutions tailored to client-specific needs, which broadens the application of its technical know-how across projects and industries.

GLOBAL ECONOMY OVERVIEW:

The global economy entered FY 2025-26 on a steady growth trajectory, but momentum was disrupted during the year by the outbreak of conflict in the Middle East. According to the International Monetary Funds World Economic Outlook (April 2026), global growth is now projected to slow to approximately 3.1% in 2026 (down from an earlier projection of around 3.3%), with global headline inflation expected to rise to about 4.4% in 2026 before resuming its decline in 2027. The IMF has flagged downside risks including a longer or wider conflict, deeper geopolitical fragmentation, renewed trade tensions, and a possible reassessment of AI-driven productivity expectations.

Energy and commodity prices have been volatile through the year on account of the Middle East conflict, with knock-on effects on shipping, freight, and input costs for manufacturers with global supply chains. Advanced economies have generally been less affected than emerging market and developing economies, particularly commodity-importing countries with limited fiscal buffers. Global trade also continued to be shaped by shifting tariff policies among major economies, even as services trade and technology-related investment provided some offsetting support to overall growth.

For an export-oriented manufacturer such as Shri Techtex Limited, these global dynamics underline the continued importance of diversified end-markets, prudent input-cost management, and operational agility in navigating a more volatile external environment than in the preceding year.

INDIAN ECONOMY AND INDIAN TECHNICAL TEXTILES OVERVIEW AND OUTLOOK:

Indias economy continued to outperform most major economies in FY 2025-26. As per the National Statistical Office (NSO), Indias real GDP growth for FY 2025-26 is estimated at 7.6% (Second Advance Estimates), an acceleration from 7.1% recorded in FY 2024-25 under the revised base-year (202223) series, with nominal GDP estimated at approximately Rs345.47 lakh crore. Manufacturing recorded double-digit growth during the year, and the secondary and tertiary sectors both grew in excess of 9%, reinforcing Indias position as the worlds fastest-growing major economy even amid a more turbulent global backdrop.

Indias technical textiles market remains among the fastest-growing segments of the textile economy. The domestic technical textiles market is projected to reach approximately US$ 34.44 billion by 2033, growing at a CAGR of around 6.1% between 2026 and 2033. India remains among the fastest growing and largest technical textiles markets globally, ranked fifth largest as per independent industry estimates.

Note: The above market estimates are based on industry reports and independent research available at the time of publication. As these estimates are subject to periodic revisions and evolving market conditions, the actual figures may vary.

(Source: Grand View Research, Horizon Databook ? India Technical Textiles Market Outlook)

Indias overall textile and apparel exports (including handicrafts) grew by approximately 2.1% year- on-year in FY 2025-26 to reach Rs3,16,334.9 crore (US$ 33.01 billion), against Rs3,09,859.3 crore in FY 2024-25 ? a more moderate pace than in recent years, reflecting global demand headwinds, even as exports expanded across more than 120 destination markets. Notably, several of the Companys own key export markets recorded strong growth during the year, including the UAE (+22.3%), the UK (+7.8%), Germany (+9.9%), and Japan (+20.6%).

A series of trade agreements concluded or brought into force during FY 2025-26 is expected to materially improve market access for Indian technical textile exporters over the medium term: the India-UK Comprehensive Economic and Trade Agreement (signed July 2025), the India-Oman Comprehensive Economic Partnership Agreement (December 2025), the India-New Zealand Free Trade Agreement (announced December 2025), and the conclusion of the India-EU Free Trade Agreement (January 2026), which is expected to offer significantly improved duty conditions across textile tariff lines. These developments are particularly relevant to Shri Techtex Limited given its existing export relationships with the UK and several EU markets, including Portugal, the Netherlands, Denmark and Lithuania.

GOVERNMENT INITIATIVES TO BOOST THE TECHNICAL TEXTILES SECTOR:

The Union Budget 2026-27 continued the Government of Indias strong policy focus on the textile sector as a driver of manufacturing, employment and exports:

• Budget Allocation: The Ministry of Textiles has been allocated Rs5,279.01 crore for FY 202627, broadly in line with the FY 2025-26 revised estimate of Rs5,766.68 crore, with continued dedicated funding of approximately Rs405 crore for the PLI Scheme covering man-made fibre apparel, fabrics and technical textile products.

• Integrated Textile Programme: The Budget introduced a new Integrated Programme for the textile sector comprising five components ? a National Fibre Scheme (covering natural, manmade and new-age fibres), a Textile Expansion and Employment Scheme (capital support for machinery, technology upgradation and testing infrastructure), a National Handloom and Handicraft Programme, a Tex-Eco Initiative promoting sustainable and globally competitive textiles, and Samarth 2.0 for skilling.

• Mega Textile Parks: New Mega Textile Parks are to be established in "challenge mode" under the PM MITRA framework, with a specific focus on strengthening value addition in technical textiles.

• PLI Scheme for Textiles: The scheme, operative up to FY 2029-30, continues to promote scale and competitiveness in MMF apparel, fabrics and technical textile products; the application window for new PLI participants was extended up to March 31, 2026.

• Trade & Export Support: Export-linked schemes such as RoDTEP and RoSCTL remain in place, and the export-realisation period for textile and leather product exporters has been extended from six months to one year, easing working-capital pressure for exporters such as the Company.

Collectively, these measures reinforce the Ministry of Textiles Vision 2030 objective of scaling Indias overall textile exports toward approximately Rs9 lakh crore, with technical textiles positioned as a key value-added growth driver within that vision.

ROAD AHEAD

The Indian technical textiles industry remains at a pivotal growth phase. Rising demand across infrastructure, healthcare, agriculture, automotive and defence continues to make technical textiles

? valued for durability, functionality and specialised performance rather than comfort or style alone

? an increasingly indispensable category within the broader textile economy.

Indias competitive position rests on a skilled, cost-effective workforce, an expanding manufacturing ecosystem centred in hubs such as Gujarat and Tamil Nadu, and continued policy support through NTTM, PLI and PM MITRA. Notwithstanding a more uncertain global trade and geopolitical environment during FY 2025-26, the medium-term outlook for Indian technical textile exporters remains constructive, supported by new trade agreements, sustained government investment, and Indias positioning as a credible alternative in global "China-plus-one" sourcing strategies.

REVIEW OF FINANCIAL PERFORMANCE

During the financial year ended March 31, 2026, the Company delivered a strong improvement in profitability, supported by a stable topline, lower finance costs following substantial debt reduction, and higher other income, including government subsidies.

Particulars	FY 2025-26 (Audited)	FY 2024-25 (Audited)	% Change
Revenue from Operations	8,412.82	8,267.03	+1.76%
Other Income	552.49	410.28	+34.67%
Total Income	8,965.31	8,677.31	+3.32%
Total Expenses	6,384.47	6,686.91	-4.52%
Profit Before Tax	2,580.84	1,990.40	+29.67%
Tax Expenses	652.23	523.37	+24.62%
Profit After Tax	1,928.61	1,467.03	+31.47%
Basic & Diluted EPS (Rs.)	7.73	5.88	+31.46%

Revenue from Operations grew to Rs8,412.82 Lakhs in FY 2025-26 from Rs8,267.03 Lakhs in FY 202425, an increase of 1.76%. Other Income rose to Rs552.49 Lakhs from Rs410.28 Lakhs, up 34.67%. Total Income increased to Rs8,965.31 Lakhs from Rs8,677.31 Lakhs, a growth of 3.32%. Total Expenses declined to Rs6,384.47 Lakhs from Rs6,686.91 Lakhs, a reduction of 4.52%.

Profit Before Tax increased by approximately 29.67% to Rs2,580.84 Lakhs (from Rs1,990.40 Lakhs), and Profit After Tax increased by approximately 31.47% to Rs1,928.61 Lakhs (from Rs1,467.03 Lakhs). Basic and diluted EPS improved to Rs7.73 from Rs5.88 in the previous year. The audited financial results for the half year and full financial year ended March 31, 2026, were approved by the Board on May 16, 2026, with an unmodified audit opinion from the Companys statutory auditor, M/s Jain K S & Associates, Chartered Accountants.

BALANCE SHEET HIGHLIGHTS

Particulars	As at 31.03.2026	As at 31.03.2025
Shareholders Funds	11,783.90	9,855.29
- Share Capital	2,495.00	2,495.00
- Reserves & Surplus	9,288.90	7,360.29
Long-term Borrowings	Nil	286.21
Short-term Borrowings	286.19	835.76
Total Equity & Liabilities	13,404.11	11,518.18
Inventories	2,835.85	369.60
Trade Receivables	1,964.78	2,522.53
Cash & Cash Equivalents	313.27	1,212.52

The Companys balance sheet strengthened materially during FY 2025-26. Shareholders funds increased to Rs11,783.90 Lakhs from Rs9,855.29 Lakhs, driven by retained profits. Long-term borrowings were reduced to Nil (from Rs286.21 Lakhs) and short-term borrowings were reduced to Rs286.19 Lakhs (from Rs835.76 Lakhs), reflecting the Companys continued deleveraging. Inventories increased significantly to Rs2,835.85 Lakhs (from Rs369.60 Lakhs), reflecting a build-up of stock; cash and cash equivalents reduced to Rs313.27 Lakhs (from Rs1,212.52 Lakhs) as funds were deployed toward working capital and continued capital investment.

IPO PROCEEDS UTILISATION

The Company raised Rs4,514.00 Lakhs through its Initial Public Offer in August 2023. As of March 31, 2026, Rs4,452.94 Lakhs of the IPO proceeds stood utilised across factory shed construction, machinery purchase, solar plant commissioning, working capital and general corporate purposes, with the balance of Rs61.06 Lakhs (earmarked for the solar plant) held in a fixed deposit pending final utilisation. The statutory auditor has confirmed there is no deviation in the utilisation of IPO proceeds from the objects stated in the Prospectus.

EXPORTS PERFORMANCE

- In the financial year 2025-26, the Companys total sales stood at Rs 8412.82 Lakhs, of which Rs1,851.76 Lakhs were from export sales.

- In the financial year 2024-25, the Companys total sales stood at Rs8,267.03 Lakhs, of which Rs 6,113.45 Lakhs were from export sales.

This indicates that export sales decreased from Rs6,113.45 Lakhs in FY 2024-25 to Rs1,851.76 Lakhs in FY 2025-26, registering a decline of approximately 69.7%.

SEGMENT-WISE PERFORMANCE

The Companys main business activity continues to be the manufacturing of Technical Textiles, and it accordingly operates in a single reportable primary segment.

OUTLOOK FOR FY 2026-27

As Shri Techtex Limited enters FY 2026-27, the Companys outlook is shaped by continuing strategic investment, evolving global trade dynamics and the technical textile sectors underlying growth drivers. The global technical textile market continues to see robust demand from automotive, healthcare, construction and sports applications, and the Companys strategic focus on expanding and upgrading its product range positions it to capture a growing share of this demand, notwithstanding near-term global macroeconomic uncertainty stemming from the Middle East conflict and its impact on energy and freight costs.

Growth Strategies

1. Expansion of Product Range: The Company remains committed to broadening its product portfolio with advanced materials and technologies, including textiles offering enhanced durability, moisture resistance and high-performance characteristics, to meet the evolving needs of its international clientele.

2. International Market Penetration: The Companys FY 2026-27 export strategy focuses on strengthening distributor networks, deepening existing customer relationships, and pursuing new high-demand markets, aided by the improved market access expected from recently concluded trade agreements including the India-UK CETA and the India-EU FTA.

3. Sustainability Initiatives: The Company remains committed to responsible manufacturing practices and environmental stewardship. During FY 2025-26, it continued to focus on optimizing resource utilization, minimizing process waste, and ensuring compliance with applicable environmental, health, and safety regulations. The Company will continue to explore initiatives aimed at improving operational efficiency and promoting sustainable business practices.

Risk Management

The Company remains mindful of key risks, including fluctuations in raw material (polypropylene) prices, volatility in global energy and freight costs arising from the ongoing Middle East conflict, currency fluctuations affecting export realisations, regulatory changes (including the recently effective New Labour Codes, which came into force from November 21, 2025 and, based on managements assessment, have had no material incremental impact on the Companys gratuity liability), and broader geopolitical and trade-policy uncertainty. The Company continues to mitigate these risks through strategic sourcing, diversification of supply chains and export markets, prudent working-capital and debt management, and proactive compliance measures.

Financial Projections

For FY 2026-27, the Company anticipates a continued positive trajectory supported by operational efficiency improvements, innovation and product development, and a diversified product range. Net profit margins are expected to benefit from the full-year impact of the Companys lower debt levels, subject to prevailing global commodity and freight price trends.

Conclusion

The Company enters FY 2026-27 with a stronger balance sheet, materially reduced leverage, and improving profitability, well positioned to build on its strengths in the technical textile sector. Its continued commitment to innovation, capacity utilisation, export diversification and sustainability is expected to remain central to delivering value to stakeholders, even as the Board remains watchful of global macroeconomic and geopolitical headwinds.

OPPORTUNITIES AND THREATS ? SWOT ANALYSIS

Strengths: Installed manufacturing capacity of 3,600 MT per annum experienced management team; locational advantage of the Dholka (Ahmedabad) facility; strengthened, largely debt-free balance sheet following FY 2025-26 deleveraging.

Weaknesses: Exposure to raw material (polypropylene) price volatility; capital-intensive nature of the industry; elevated inventory levels as at year-end requiring active working-capital management.

Opportunities: Expansion into new geographical export markets aided by recently concluded FTAs (India-UK CETA, India-EU FTA); introduction of new, higher-value technical textile products; continued government policy support (PLI, PM MITRA, National Technical Textiles Mission).

Threats: Prevailing global economic and geopolitical uncertainty, including the Middle East conflict and its impact on energy and freight costs; currency volatility; emergence of new domestic and international competitors.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human resources remain central to the Companys operational excellence and long-term growth. Industrial relations continued to remain cordial throughout FY 2025-26, supported by a culture of mutual trust, cooperation, and employee engagement. The Company remains committed to fostering a safe, inclusive, and performance-driven work environment while focusing on employee development and well-being. As on March 31, 2026, the Company had 41 employees on its rolls.

INTERNAL CONTROL

The Company has an adequate internal control system for safeguarding its assets and financial transactions. The internal control systems have been designed to prevent fraud and misuse of the Companys resources while protecting shareholders interests and are supported by the work of the Internal Auditor and the Audit Committee.

ACCOUNTING POLICIES

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis, in accordance with the applicable Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI). The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgments used therein.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENTS

The Company has followed all relevant Accounting Standards laid down by the ICAI while preparing its financial statements for FY 2025-26.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (i.e. change of 25% or more as compared to the immediately previous financial year)

Sr. No. Ratio	Numerator	Denominator	FY 202526	FY 202425	% Variance	Reason for Variance
1 Current Ratio	Current Assets	Current Liabilities	4.99	4.68	6.70%
2 Debt-Equity Ratio	Total Debt	Total Equity	0.02	0.11	-78.67%	Refer -A
3 Debt Service Coverage Ratio	EBIT	Current maturity of LT debt + Interest	7.82	3.23	142.49%	Refer -B
4 Return on Equity (ROE) (%)	Profit after tax	Average Net Worth	17.83%	16.08%	10.84%
5 Inventory Turnover Ratio	COGS	Average Inventory	2.69	4.22	-36.29%	Refer -C
6 Trade Receivables Turnover Ratio	Revenue from Operations	Average Trade Receivable	3.75	3.73	0.65%
7 Trade Payables Turnover Ratio	Purchases	Average Trade Payable	31.97	11.74	172.33%	Refer -D
8 Net Capital Turnover Ratio	Revenue from Operations	Average Working Capital	1.71	1.94	-11.85%
9 Net Profit Ratio (%)	Profit after tax	Revenue from Operations	22.92%	17.75%	29.19%	Refer -E
10 Return on Capital Employed (ROCE) (%)	EBIT	Capital Employed	21.89%	21.99%	-0.49%
11 Return on investment s (%)	Net Profit	Equity+Reserves & Surplus	16.37%	14.89%	9.95%

Reasons for Variations

A. Debt-Equity Ratio: The ratio has decreased on account of reduction in borrowed capital in comparison with the companys own funds or equity during the year.

B. Debt Service Coverage Ratio: The ratio has improved on account of reduction in debt and increase in net opertating income as compared to previous year.

C. Inventory Turnover Ratio: The ratio has decreased due to an increase in the year-end inventory levels as compared to previous year

D. Trade payables turnover ratio: The ratio has improved, indicating that the company is paying its suppliers faster and managing its short-term obligations more efficiently.

E. Net profit ratio (%): The ratio has improved due to an increase in net profit as compared to previous year.

CAUTIONARY STATEMENT

Certain statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied therein, including on account of global macroeconomic and geopolitical developments, raw material price volatility, and other factors beyond the Companys control.

For and on behalf of the Board of Directors
	Shri Techtex Limited
Sd/-	Sd/-
Shradha Hanskumar Agarwal	Hanskumar Ramakant Agarwal
Managing Director and Chief Financial Officer	Executive Director
(DIN: 02195281)	(DIN: 00013290)
Date: 20.08.2026
Place: Ahmedabad