Siddhi Cotspin Ltd Management Discussions

OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 29, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources.

Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year" or "FY") are to the twelve-month period ended March 31 of that year.

The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated which is included in this Red Herring Prospectus under the section titled "Restated Financial Information" beginning on page 172 of this Red Herring Prospectus. The restated financial statements have been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on pages 29 and 19 respectively, and elsewhere in this Red Herring Prospectus Accordingly, the degree to which the financial statements in this Red Herring Prospectus will provide meaningful information depend entirely on such potential investors level of familiarity with Indian accounting practices. Please also refer to section titled "Presentation of Financial, Industry and Market data" beginning on page 17 of this Red Herring Prospectus.

BUSINESS OVERVIEW

Our company is benefited from the extensive experience of our Promoter and Managing Director, Mr. Navin Saraogi who is associated with our company since the incorporation and having experience of more than 20 (Twenty) years in the textile industry. Our Board of Directors and other Key Managerial Personnel has also provided significant contribution in the growth of our company. Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery.

We have set up a Greenfield project of manufacturing value added and specialty cotton yarn at Unit No.13, Sub Plot No. 18, Survey No. 279 & 280, Village Dholi, Taluka Dholka, District Ahmedabad, Gujarat 382240, with a total spinning capacity of 29,376 spindles. The installed unit is capable of producing cotton yarn including value added yarns. Our current capacity of production is 90,11,850 Kgs for Cotton Yarn and 90,11,850 Kgs (can be used multiple times) for Value added yarn. We are manufacturing various value-added cotton yarns like Compact Carded Hosiery, Compact Combed Hosiery, Compact Carded Weaving, Compact Comb Weaving, Carded Weaving, Combed Weaving, Carded Hosiery, Combed Hosiery, Eli KW, Eli CW, Slub Yarn, Siro Slub Yarn, CSY-Lycra-Core Spin Yarn (Spandex), TFO Yarn - Double etc. We also source high-quality, ready-made yarn from trusted suppliers, in our conditioning facility, we meticulously adjust the yarns moisture content, ensuring optimal workability, vibrant colors, and flawless stitching.

This revitalized yarn is then offered at competitive prices to discerning crafters, budget-conscious businesses, and eco-conscious consumers who value both quality and sustainability. By extending the lifespan of existing yarn, we empower creativity while minimizing our environmental footprint, one perfectly conditioned skein at a time. The cotton yarn is used by many textile industries and has a good demand in the market. The yarn produced by us is mainly used in Denim industries.

Our main customers are located in the Gujarat Geographical area. Though we are not exporting directly, we export the cotton yarn to many countries through Merchant Exporters.

OUR BUSINESS MODEL

We derive our revenue from following business verticals:

FINANCIAL KPIS OF OUR COMPANY

The financial performance of the company for last three years as per restated consolidated financial Statement:

( in lakhs)

	For the financial year ended
Particulars	31-Mar-25	31-Mar-24	31-Mar-23
Revenue from Operations ( in Lakhs)	72,454.45	58,088.75	19,932.60
Growth in Revenue from Operations (YoY %)	24.73%	191.43%	-
Gross Profit ( in Lakhs)	4,472.89	4,599.03	3,325.43
Gross Profit Margin (%)	6.17%	7.92%	16.68%
EBITDA ( in Lakhs)	3,286.69	3,471.90	2,510.30
EBITDA Margin (%)	4.54%	5.98%	12.59%
Profit After Tax ( in Lakhs)	1,308.41	1,218.29	601.56
PAT Margin (%)	1.81%	2.10%	3.02%
RoE (%)	17.95%	20.21%	11.76%
RoCE (%)	14.88%	14.84%	8.46%
Net Fixed Asset Turnover (In Times)	11.57	8.10	2.51
Operating Cash Flows ( in Lakhs)	2,895.82	1,866.14	2,841.40

Source: The Figure has been certified by our Peer Review Auditors, M/s. JPMK and Company, Chartered Accountants vide their certificate dated August 26, 2025 SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LAST AUDITED BALANCE SHEET: After the date of last audited financial statements i.e. March 31, 2025, the Directors of our Company confirm that, there have not been any significant material developments except mentioned below:

Nil

FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS:

Our Companys future results of operations could be affected potentially by the following factors:

Sourcing and Supplier Relationships;

Inventory Management;

Cotton Price Risk;

Credit worthiness of our customers;

Customer spending, demographics and general economic and market conditions in India;

Competition;

COVID-19 Pandemic;

Natural Calamities e.g., Tsunami;

Political Stability of the Country;

Our dependence on limited number of customers for a significant portion of our revenues;

Any failure to comply with the financial and restrictive covenants under our financing arrangements;

Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;

Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;

Conflicts of interest with affiliated companies, the promoter group and other related parties;

The performance of the financial markets in India and globally;

Our ability to expand our geographical area of operation;

Concentration of ownership among our Promoters.

OUR SIGNIFICANT ACCOUNTING POLICIES:

For Significant accounting policies please refer Significant Accounting Policies and Notes to accounts, Annexure 4 beginning under Chapter titled "Restated Financial Information" beginning on page 172 of this Red Herring Prospectus.

RESULTS OF OUR OPERATION

The following table sets forth detailed total income data from our restated Statement of profit and loss for the Financial Year ended on March 31, 2025, 2024 and 2023, the components of which are also expressed as a percentage of total Income for such period.

( in Lakhs)

	March 31, 2025		March 31, 2024		March 31, 2023
Particular	in Lakhs	% of Total Income	in Lakhs	% of Total Income	in Lakhs	% of Total Income
Revenue from operations	72,454.45	99.98	58,088.75	99.95	19,932.60	99.72
Other Income	11.49	0.02	28.90	0.05	55.61	0.28
Total Income	72,465.94	100.00	58,117.65	100.00	19,988.21	100.00
Expenses
Cost of material consumed	68,232.06	94.16	51,079.36	87.89	16,389.65	82.00
Purchase of stock-in-trade	670.51	0.93	966.82	1.66	0.00	0.00
Changes in inventories of Stock- in-Trade	-2,623.47	-3.62	-57.35	-0.10	-781.39	-3.91
Employee benefits expense	795.96	1.10	690.01	1.19	499.21	2.50
Finance Costs	600.27	0.83	838.82	1.44	752.86	3.77
Depreciation and amortization expenses	935.77	1.29	933.53	1.61	919.60	4.60
Other Expenses	2,092.70	2.89	1,938.01	3.33	1,314.83	6.58
Total Expenses	70,703.80	97.57	56,389.20	97.03	19,094.76	95.53
Profit/(Loss) Before Extra- Ordinary Items and Tax	1,762.14	2.43	1,728.45	2.97	893.45	4.47
Exceptional Items	0.00	0.00	0.00	0.00	0.00	0.00
Profit before Tax	1,762.14	2.43	1,728.45	2.97	893.45	4.47
Total tax expense	453.73	0.63	510.16	0.88	291.89	1.46

 

	March 31, 2025		March 31, 2024		March 31, 2023
Particular	in Lakhs	% of Total Income	in Lakhs	% of Total Income	in Lakhs	% of Total Income
Profit and Loss for the Year as Restated	1,308.41	1.81	1,218.29	2.10	601.56	3.01

COMPARISON OF FY 2024-25 WITH FINANCIAL YEAR 2023-24:

TOTAL INCOME:

Revenue from operations (RFO)

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. We have set up a Greenfield project of manufacturing value added and specialty cotton yarn at Unit No.13, Sub Plot No. 18, Survey No. 279 & 280, Village Dholi, Taluka Dholka, District Ahmedabad, Gujarat 382240. Our Revenue from Operation has increased from 58,088.75 Lakhs in FY 2023-24 to 72,454.45 Lakhs in FY 2024-25 showing an increase of 24.73% from previous year i.e. FY 2023-24. Revenue from operations increased primarily on account of increase in actual production of value-added yarn i.e. from 1,74,51,672 Kgs in FY 2023-24 to 2,54,93,046 Kgs in FY 2024-25 Details of product-service wise bifurcation of revenue and geography wise revenue bifurcation is as follows:

Product-wise Revenue from operations:

( in Lakhs)

Particulars	For the year ended March 31, 2025	% of RFO	For the year ended March 31, 2024	% of RFO
(A) Sale of Goods
Cotton Yarn	20,339.84	28.07	20,264.35	34.88
Value Added Yarn	50,911.58	70.27	36,551.88	62.92
(B) Trading of
Cotton	-	-	3.73	0.01
Fabric	792.30	1.09	799.50	1.38
(C) Cotton Waste	410.73	0.57	469.29	0.81
Total	72,454.45	100.00	58,088.75	100.00

Geography-wise Revenue from operations:

Particulars	For the year ended March 31, 2025	% of RFO	For the year ended March 31, 2024	% of RFO
Domestic Sales
Gujarat	70,940.11	97.91	57,568.10	99.10
Andhra Pradesh	16.02	0.02	30.80	0.05
Dadra and Nagar Haveli	72.46	0.10	-	-
Delhi	-	-	164.62	0.28
Haryana	-	-	10.00	0.02
Karnataka	10.18	0.01	74.49	0.13
Madhya Pradesh	-	-	-	-
Maharashtra	19.09	0.03	7.36	0.01
Punjab	-	-	53.93	0.09
Rajasthan	657.58	0.91	9.50	0.02
Tamil Nadu	97.42	0.13	-	-
Telengana	-	-	2.51	0.00
Uttar Pradesh	56.23	0.08	33.77	0.06
West Bengal	-	-	6.59	0.01
Sales through Merchant Exporter (Deemed Export)	585.36	0.81	127.08	0.22
Total	72,454.45	100.00	58,088.75	100.00

Other Income:

Other income of the company decreased to 11.49 lakhs in FY 2024-25 from 28.90 Lakhs in FY 2023-24 showing a decrease of 60.25% from previous year i.e. FY 2023-24. Other Income mainly includes Interest Income Other income decreased mainly on account of decrease in Deposits.

EXPENDITURE:

Cost of materials consumed

Our Cost of materials consumed were 51,079.36 lakhs in FY 2023-24 as compared to 68,232.06 lakhs in FY 2024-25 showing an increase of 33.58% from previous year i.e. FY 2023-24. Cost of materials consumed includes opening balance of Raw material, Purchase of Raw Material and Closing balance of Raw material. Raw Material mainly includes Purchase of Raw Cotton, Cotton Yarn, Polyester Staple Fiber and Lycra. Increase in Cost of Material consumed was in proportion of increase in Revenue from Operation. Price of Raw material was based on prevailing prices in the market.

Purchase of stock-in-trade

Our Purchase of stock-in-trade were 966.82 lakhs in FY 2023-24 as compared to 670.51 lakhs in FY 2024-25 showing decrease of 30.65% from previous year i.e. FY 2023-24. Stock-in-trade mainly includes Purchase of Fabric.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Our opening Inventory was 2,114.36 lakhs as at April 01, 2024, while it was 2,057.01 lakhs as at April 01, 2023. Our closing Inventory was 4,737.83 lakhs as at March 31, 2025, while it was 2,114.36 lakhs as at March 31, 2024. The changes in Inventory of finished goods, work-in-progress and stock-in-trade decreased to (2,623.47) lakhs in FY 2024-25 from (57.35) lakhs in FY 2023-24. Finished goods and stock-in-trade mainly includes Cotton, Fabric, Cotton Yarn, Waste related to it and Stores. Decrease in Inventory level in FY 2024-25 is primarily attributable to a higher inventory of finished goods and stock-in-trade at the end of FY 2024-25.

Employee Benefit Expenses

Employee Benefit expenses were 795.96 Lakhs in FY 2024-25 as compared to 690.01 Lakhs in FY 2023-24 showing an increase of 15.36% from previous year i.e. FY 2023-24. Employee Benefit Expenses mainly includes Salaries, Wages and Bonus, Directors Remuneration, Contribution to Employee Welfare Fund and other funds. Increase is mainly attributable to annual increase in salaries and wages.

Finance Cost

Finance expenses decreased to 600.27 Lakhs in FY 2024-25 as against 838.82 Lakhs in FY 2023-24 showing a decrease of 28.44%. Finance costs include interest expense on Term Loans and Cash credit availed from Bank & others. Decrease in finance cost is mainly attributable to decrease in Term Loans i.e. repayment in the year March 31, 2025.

Depreciation and amortization expense

The Depreciation and amortization expense increased to 935.77 Lakhs in FY 2024-25 as against 933.53 Lakhs in FY 2023-24 showing an increase of 0.24% from previous year i.e. FY 2023-24. Depreciation mainly includes depreciation on our Plant & Machinery, Factory Building, Furniture and Fixtures, Vehicles, Computer, Office Equipment and Leasehold Land.

Other Expenses

Other Expenses increased to 2,092.70 Lakhs in FY 2024-25 from 1,938.01 Lakhs for FY 2023- 22 showing an increase of 7.98% from previous year i.e. FY 2023-24. Other expense mainly includes Operating Expenses i.e. Packing Material Consumed, Power & Fuel Expenses, General Freight Expenses, Repairs & Maintenance; Administrative Expense i.e. Insurance Expense, Legal & Professional Charges, Repairs & Maintenance, Security Service Charges, Rent, Rates & Taxes; Selling And Distribution Expenses i.e. Transportation Expenses, Commission Expense, Business Promotion Expenses.

Profit before Exceptional Items and Tax

As a result of the reasons mentioned above, we recorded increase in our profit before tax by 1.95% from previous year i.e. FY 2023-24, which amounted to 1,762.14 Lakhs in FY 2024-25, as compared to 1,728.45 Lakhs in FY 2023-24. The Profit before Tax for the FY 2024-25 was 2.43% of the total Income as compared to 2.97% of total Income in FY 2023-24.

Profit after Tax (PAT)

As a result of the reasons mentioned above, we recorded increase in our profit after tax from 1,218.29 Lakhs in the FY 2023-24 to 1,308.41 Lakhs in the FY 2024-25. The Profit after Tax for the FY 2024-25 was 1.81% of the total income as against 2.10% of total income for the FY 2023-24.

COMPARISON OF FY 2023-24 WITH FINANCIAL YEAR 2022-23:

TOTAL INCOME:

Revenue from operations (RFO)

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. We have set up a Greenfield project of manufacturing value added and specialty cotton yarn at Unit No.13, Sub Plot No. 18, Survey No. 279 & 280, Village Dholi, Taluka Dholka, District Ahmedabad, Gujarat 382240. Our Revenue from Operation has increased from 19,932.60 Lakhs in FY 2022-23 to 58,088.75 Lakhs in FY 2023-24 showing an increase of 191.43% from previous year i.e. FY 2022-23. Revenue from operations increased primarily due to increase in sale of Value Added Yarn. Actual production of Cotton Yarn increased from 70,99,541 Kgs in FY 2022-23 to 84,21,574 Kgs in FY 2023-24 and Value Added Yarn decreased from 1,74,51,672 Kgs in FY 2022-23 to Nil in FY 2023-24. Details of product-service wise bifurcation of revenue and geography wise revenue bifurcation is as follows:

Product-wise Revenue from operations:

( in Lakhs)

Particulars	For the year ended March 31, 2024	% of RFO	For the year ended March 31, 2023	% of RFO
(A) Sale of Goods
Cotton Yarn	20,264.35	34.88	19,553.84	98.10
Value Added Yarn	36,551.88	62.92	-	-
(B) Trading of
Cotton	3.73	0.01	14.65	0.07
Fabric	799.50	1.38	-	-
(C) Cotton Waste	469.29	0.81	364.11	1.83
Total	58,088.75	100.00	19,932.60	100.00

Geography-wise Revenue from operations:

( in Lakhs)

Particulars	For the year ended March 31, 2024	% of RFO	For the year ended March 31, 2023	% of RFO
Domestic Sales
Gujarat	57,568.10	99.10	18,894.51	94.79
Andhra Pradesh	30.80	0.05	-	-
Delhi	164.62	0.28	-	-
Haryana	10.00	0.02	17.20	0.09
Karnataka	74.49	0.13	-	-
Madhya Pradesh	-	-	0.75	0.00
Maharashtra	7.36	0.01	45.84	0.23
Punjab	53.93	0.09	-	-
Rajasthan	9.50	0.02	10.55	0.05
Telengana	2.51	0.00	-	-
Uttar Pradesh	33.77	0.06	-	-
West Bengal	6.59	0.01	-	-
Sales through Merchant Exporter (Deemed Export)	127.08	0.22	963.75	4.84
Total	58,088.75	100.00	19,932.60	100.00

Other Income:

Other income of the company decreased to 28.90 lakhs in FY 2023-24 from 55.61 Lakhs in FY 2022-23 showing a decrease of 48.03% from previous year i.e. FY 2022-23. Other Income mainly includes Interest Income and Profit on Sale of Asset. Other income decreased mainly on account of decrease in interest income from decrease in fixed deposits.

EXPENDITURE:

Cost of materials consumed

Our Cost of materials consumed were 16,389.65 lakhs in FY 2022-23 as compared to 51,079.36 lakhs in FY 2023-24 showing a increase of 211.66% from previous year i.e. FY 2022-23. Cost of materials consumed includes opening balance of Raw material, Purchase of Raw Material and Closing balance of Raw material. Raw Material mainly includes Raw Material mainly includes Purchase of Raw Cotton, Cotton Yarn, Polyester Staple Fiber and Lycra. Increase in Cost of Material consumed was in proportion of increase in Revenue from Operation. Price of Raw material was based on prevailing prices in the market.

Purchase of stock-in-trade

Our Purchase of stock-in-trade were 966.82 lakhs in FY 2023-24 as compared to Nil in FY 2022-23. Stock-in-trade mainly includes Purchase of Fabric.

Changes in inventories of finished goods and work-in-progress

Our opening Inventory was 2,057.01 lakhs as at April 01, 2023, while it was 1,275.62 lakhs as at April 01, 2022. Our closing Inventory was 2,114.36 lakhs as at March 31, 2024, while it was 2,057.01 lakhs as at March 31, 2023. The changes in Inventory of finished goods and work-in-progress increased to (57.35) lakhs in FY 2023-24 from (781.39) lakhs in FY 2022-23. Finished goods mainly includes Cotton, Fabric, Cotton Yarn, Waste related to it and Stores. increase in Inventory level in FY 2023-24 is primarily attributable to a lower inventory of finished goods at the end of FY 2023-24.

Employee Benefit Expenses

Employee Benefit expenses were 690.01 Lakhs in FY 2023-24 as compared to 499.21 Lakhs in FY 2022-23 showing an increase of 38.22% from previous year i.e. FY 2022-23. Employee Benefit Expenses mainly includes Salaries, Wages and Bonus, Contribution to Employee Welfare Fund and Directors Remuneration. The increase was mainly attributable to increase in scale of our business during the FY 2023-24.

Finance Cost

Finance expenses increased to 838.82 Lakhs in FY 2023-24 as against 752.86 Lakhs in FY 2022-23 showing an increase of 11.42%. Finance costs include interest expense on Term Loans and Cash credit availed from Bank & others. Increase in finance cost is mainly attributable to Increase in Cash Credit and Unsecured loan while the term loan has been repaid as at the end of the year March 31, 2024.

Depreciation and amortization expense

The Depreciation and amortization expense increased to 933.53 Lakhs in FY 2023-24 as against 919.60 Lakhs in FY 2022-23 showing an increase of 1.51% from previous year i.e. FY 2022-23. Depreciation mainly includes depreciation on our Plant & Machinery, Factory Building, Vehicles, Furniture and Fixtures, Computer, Office Equipment and Leasehold Land.

Other Expenses

Other Expenses increased to 1,938.01 Lakhs in FY 2023-24 from 1,314.83 Lakhs for FY 2022- 23 showing an increase of 47.40% from previous year i.e. FY 2022-23. Other expense mainly includes Operating Expenses i.e. Power & Fuel Expenses, Packing Material Consumed, General Freight Expenses, Repairs & Maintenance; Administrative Expense i.e. Repairs & Maintenance, Insurance Expense, Legal & Professional Charges, Security Service Charges, Corporate Social Responsibility, Rent, Rates & Taxes; Selling and Distribution Expenses i.e. Transportation Expenses, Commission Expense, Hotel & Business Promotion Expenses. Increase in Other expense was mainly due to increase in Repairs & Maintenance.

Profit before Exceptional Items and Tax

As a result of the reasons mentioned above, we recorded increase in our profit before tax by 93.46% from previous year i.e. FY 2022-23, which amounted to 1,728.45 Lakhs in FY 2023-24, as compared to 893.45 Lakhs in FY 2022-23. The Profit before Tax for the FY 2023-24 was 2.97% of the total Income as compared to 4.47% of total Income in FY 2022-23.

Profit after Tax (PAT)

As a result of the reasons mentioned above, we recorded increase in our profit after tax from 601.56 Lakhs in the FY 2022-23 to 1,218.29 Lakhs in the FY 2023-24. The Profit after Tax for the FY 2023-24 was 2.10% of the total income as against 3.01% of total income for the FY 2022-23.DISCUSSION ON THE STATEMENT OF CASH FLOWS

The following table sets forth certain information relating to our Companys statement of cash flows for the periods indicated:

(Amount in Lakhs)

	For the Financial Year Ended
Particulars	March 31, 2025	March 31, 2024	March 31, 2023
Net cash flows generated/ (used) from operating activities	2,895.82	1,866.14	2,841.40
Net cash flows generated/ (used in) investing activities	50.19	(5.27)	(83.44)
Net cash flows generated/ (used in)/generated from financing activities	(2,947.29)	(3,158.51)	(3,277.33)
Net increase/(decrease) in cash and cash equivalents	(1.28)	(1,297.64)	(519.37)

Operating activities:

For Financial Year 2024-25

Net cash generated from operating activities was 2,895.82 Lakhs. This comprised of the profit before tax of 1,762.14 Lakhs, which was primarily adjusted for Depreciation & Amortization Expense of 935.77 Lakhs, Finance Cost of 600.27 lakhs and Interest Income of (11.49) lakhs. The resultant operating profit before working capital changes was 3,286.69 Lakhs, which was primarily adjusted for an increase in inventories of 2,709.47 lakhs, decrease in Trade Receivable by 906.03 lakhs, increase in Trade Payable of 1,275.34 lakhs, decrease in other current liability amounting by 21.90 Lakhs, decrease in Provision by 66.32 lakhs, decrease in Short Term Loans and Advances by 675.20 lakhs, increase in other Current assets of 5.14 lakhs, and income tax paid of 444.59 Lakhs.

For Financial Year 2023-24

Net cash generated from operating activities was 1,866.14 Lakhs. This comprised of the profit before tax of 1,728.45 Lakhs, which was primarily adjusted for Depreciation & Amortization Expense of 933.53 Lakhs, Finance Cost of 838.82 lakhs and Interest Income of (28.46) lakhs. The resultant operating profit before working capital changes was 3,472.78 Lakhs, which was primarily adjusted for an increase in inventories of 72.48 lakhs, increase in Trade Receivable by 2,261.38 lakhs, increase in Trade Payable of 497.42 lakhs, increase in other current liability amounting by 80.81 Lakhs, increase in Provision by 499.45 lakhs, decrease in Short Term Loans and Advances by 246.34 lakhs, Other Current assets of 33.98 lakhs, and income tax paid of 630.22 Lakhs.

For Financial Year 2022-23

Net cash generated from operating activities was 2,841.40 Lakhs. This comprised of the profit before tax of 893.45

Lakhs, which was primarily adjusted for Depreciation & Amortization Expense of 919.60 Lakhs, Finance Cost of 752.86 lakhs and Interest Income of 54.57 lakhs. The resultant operating profit before working capital changes was 2,511.34 Lakhs, which was primarily adjusted for a decrease in inventories of 672.73 lakhs, increase in Trade Receivable by 454.33 lakhs, increase in Trade Payable of 465.68 lakhs, decrease in other current liability amounting by 99.20 Lakhs, decrease in Provision by 130.54 lakhs, increase in Short Term Loans and Advances by 55.54 lakhs, Other Current assets of 14.17 lakhs, and income tax paid of 54.49 Lakhs.

Investing Activities

For Financial Year 2024-25

Net cashflow from investing activities was 50.19 Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of 8.54 Lakhs, proceeds from other income of 11.49 Lakhs and change in Non-Current Assets of 47.25 Lakhs.

For Financial Year 2023-24

Net cash used in investing activities was 5.27 Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of 33.73 Lakhs, proceeds from Interest income of 28.46 Lakhs.

For Financial Year 2022-23

Net cash used in investing activities was 83.44 Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of 273.37 Lakhs, proceeds from Interest income of 54.57 Lakhs and change in Non-Current Assets of 135.36 Lakhs.

Financing activities

For Financial Year 2024-25

Net cash outflow from financing activities was 2,947.29 Lakhs, which predominantly comprised repayment of short-term borrowings of 735.28 Lakhs and long-term borrowings of 1,611.74 Lakhs, and Interest paid of 600.27 Lakhs.

For Financial Year 2023-24

Net cash outflow from financing activities was 3,158.51 Lakhs, which predominantly comprised increase of short-term borrowings of 640.95 Lakhs, repayment of long-term borrowings of 2,960.64 Lakhs, and Interest paid of 838.82 Lakhs.

For Financial Year 2022-23

Net cash outflow from financing activities was 3,277.33 Lakhs, which predominantly comprised decrease of short-term borrowings of 22.98 Lakhs, repayment of long-term borrowings of 2,501.49 Lakhs, and Interest paid of 752.86 Lakhs.

INDEBTNESS

As at March 31, 2025, we had total outstanding indebtedness of 6,711.11 Lakhs, which comprises of long-term borrowings amounting to 2,299.65 Lakhs and Short term borrowing of 4,411.46 Lakhs. The following table sets out our indebtedness as of March 31, 2025, 2024 and 2023.

(Amount in Lakhs)

	For the Financial Year Ended on
Particulars	March 31, 2025	March 31, 2024	March 31, 2022
Long term borrowing (excluding current maturity)	2,299.65	3,911.38	6,872.03
Short term borrowings (Current maturity of long- term borrowing)	4,411.46	5,146.74	4,505.79
Total	6,711.11	9,058.13	11,377.82

RELATED PARTY TRANSACTIONS

For further information please refer "Annexure 33 - Related Party Disclosure" under section "Restated Financial Information" beginning from page no. 172 of this Red Herring Prospectus.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the course of undertaking our business, we are exposed to the following risks arising from financial instruments, which include credit risk, liquidity risk and market risk. Our primary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on our financial performance.

Credit Risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss. The potential activities where credit risks may arise include from cash and cash equivalents, security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount. Our exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which our Company grants credit terms in the normal course of business.

Liquidity Risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. Our financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. We have practiced financial diligence and syndicated adequate liquidity in all business scenarios.

Market Risk

Market risk is the risk that results in changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect our income or the value of our holdings of financial instruments. Our operations result in us being exposed to foreign currency risk on account of trade receivables, trade payables and borrowings. The foreign currency risk may affect our income and expenses, or our financial position and cash flows. The objective of our management of foreign currency risk is to maintain this risk within acceptable parameters, while optimizing returns.

EFFECT OF INFLATION

We are affected by inflation as it has an impact on the operating cost, staff costs etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.

INFORMATION REQUIRED AS PER ITEM (11) (II) (C) (iv) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS, 2018:

1) Unusual or infrequent events or transactions

Except as described in this Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "unusual" or "infrequent".

2) Significant economic changes that materially affected or are likely to affect income from continuing operations. Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page no. 29 of the Red Herring Prospectus. To our knowledge, except as we have described in the Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3) Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page no. 29 in this Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4) Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page no. 29 in this Red Herring Prospectus, there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

5) Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. Further, increases in revenues are by and large linked to increase in sales of products sold by our company and also dependent on capacity utilization and on the price realization of our products.

6) Total turnover of each major industry segment in which the offeror company operated.

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. Relevant Industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 107 of this Red Herring Prospectus.

7) Status of any publicly announced new products or business segment.

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. Otherwise as stated in the Red

Herring Prospectus and in the section "Business Overview" appearing on page no. 116, our company has not publicly announced any new business segment till the date of this Red Herring Prospectus.

8) The extent to which business is seasonal.

Our Company is primarily engaged in manufacturing and selling of Cotton Yarns. Our manufacturing process adheres to stringent quality standards and is backed by advanced technology and machinery. Business of our company to that extent is not seasonal in nature. Hence, our business is not subject to seasonality or cyclicality.

9) Any significant dependence on a single or few suppliers or customers.

The percentage of contribution of our Companys customer vis-?-vis the total revenue from operations for the year ended on March 31, 2025, March 31, 2024 and March 31, 2023 is as follows:

	% contribution to revenue from operations
Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Top 1 Customer	20.64%	28.62%	18.80%
Top 3 Customers	51.52%	61.71%	42.73%
Top 5 Customers	69.64%	74.91%	57.82%
Top 10 Customers	88.36%	85.55%	82.68%

Note that Name of Customers are not mentioned since Company has not received written consent from its Customers till filing of Red Herring Prospectus to include their name in this Red Herring Prospectus.

	% contribution to Purchases
Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Top 1 Supplier	32.38%	45.50%	55.37%
Top 3 Suppliers	71.36%	80.07%	72.93%
Top 5 Suppliers	88.92%	90.42%	80.99%
Top 10 Suppliers	95.72%	94.62%	89.05%

Note that Name of Suppliers are not mentioned since Company has not received written consent from its Suppliers till filing of Red Herring Prospectus to include their name in this Red Herring Prospectus.

10) Competitive conditions:

We face competition from existing and potential competitors which is common for any business. We have, over a period, developed certain competitors who have been discussed in section titles "Business Overview" beginning on page no. 116 of this Red Herring Prospectus

CAPITALISATION STATEMENT

	Pre-Offer
Particular	31.03.2025	Post Offer
Borrowings:
i Long Term Debt	2,299.65	[?]
ii Short Term Debt	4,411.46	[?]
	6,711.11	-
Shareholders funds:
i Equity share capital	1,946.25	[?]
ii Reserve and surplus - as restated	5,998.22	[?]
	7,944.47	-
Long term debt / shareholders funds	0.29	[?]
Total debt / shareholders funds	0.84	[?]