Siddhi Cotspin Ltd Management Discussions

Pursuant to regulation 34(2)(e) read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and amendments thereof.

Industry Structure and Developments

India is the worlds second-largest producer of textiles and garments and the third- largest exporter, covering apparel, home textiles, and technical textile products. The country holds a 4.6% share of global trade and features among the top five exporters in several categories. The industry contributes around 2% of Indias GDP and about 11% of manufacturing GVA (Gross Value Added) as of February 2026. Its role in employment is also significant, with over 45 million people engaged and about 22,000 million garments produced annually. By 2030, the textile industrys share in GDP is expected to more than double, reaching close to 5%.

The domestic market is valued at US$ 225 billion in 2025 and is growing at a brisk pace of 10-12% CAGR. Rising incomes, e-commerce penetration, and evolving consumer preferences are expected to push the market size to US$ 350 billion by 2030. This expansion will be further supported by Indias rising per capita income, which is projected to increase from US$ 2,812.62 in FY26F to US$ 4,000 by FY30.

On the export front, Indias textiles and apparel exports, including handicrafts, stood at US$ 37.8 billion in FY25, with the government targeting US$ 100 billion in exports by 2030, supported by policy initiatives and improving global demand.

India is the worlds largest producer of cotton. In FY25-26, the production of cotton in India have been estimated at 292.15 lakh bales of 170 kgs.

Production of yarn stood at 5,481 million kgs in FY24 and 2,752 million kgs in FY25 (April-September).

Indias cotton yarn sector is poised for substantial revenue growth, with Crisil Ratings forecasting a 7-9% increase in FY26.

Indias home textile sector is known for its rich traditions and craftsmanship, with various regions specializing in unique textile techniques and patterns. Gujarat is renowned for its vibrant and intricate embroidery, while Kashmir is famous for its luxurious woollen shawls and rugs. This diversity reflects Indias extensive heritage and expertise in textile production.

Indias textile sector is poised for a transformative decade, driven by strong domestic demand, rising global opportunities, and supportive government initiatives. With expanding technical textiles, growing export potential, and sustained innovation, the industry is set to play an even greater role in powering Indias economic growth and strengthening its position as a global textile leader.

The textile industry continues to play a significant role in the Indian economy by contributing to employment, exports and industrial growth. Government initiatives aimed at promoting manufacturing, technical textiles, infrastructure development and exports have provided growth opportunities to the sector.

References: Industry data and information have been sourced from the India Brand Equity Foundation (IBEF).

Position of Company

The Indian textile industry remains one of the key pillars of the countrys manufacturing sector and continues to contribute significantly to economic growth, employment generation and exports. India is the worlds second-largest producer of textiles and garments and the third-largest exporter of textile and apparel products, with a strong presence across cotton textiles, yarn, fabrics, garments, home textiles and technical textiles. The sector contributes around 2% to Indias Gross Domestic Product (GDP) and approximately 11% of the manufacturing Gross Value Added (GVA), while providing employment to over 45 million people.

The domestic textile market continues to witness robust growth, supported by rising disposable incomes, increasing urbanisation, expanding e-commerce penetration and changing consumer preferences. At the same time, government initiatives promoting textile manufacturing, infrastructure development, technical textiles and exports are expected to further strengthen the industrys long-term growth prospects. Indias leadership in cotton production and its well-established textile value chain provide a strong foundation for sustainable industry expansion.

Within this favourable industry environment, Siddhi Cotspin Limited is engaged in the manufacturing of cotton and polyster yarn, catering to the requirements of the textile industry. The Company remains committed to delivering quality products, maintaining operational efficiency and strengthening customer relationships while continuously exploring opportunities for sustainable growth.

During the year under review, the Company achieved a significant milestone by successfully listing its equity shares on the SME Platform of the Stock Exchange. The listing has enhanced the Companys corporate profile, strengthened its governance framework and provided greater visibility among investors and other stakeholders. It also reflects the Companys commitment to transparency, regulatory compliance and long-term value creation.

Going forward, the Company intends to leverage the opportunities arising from the growing domestic and international demand for textile products by focusing on operational excellence, quality improvement, customer satisfaction and prudent financial management. With a favourable industry outlook and a strengthened capital market presence following its listing, the Company is well positioned to pursue sustainable and long-term growth.

However, the industry continues to face challenges arising from fluctuations in raw material prices, changing global demand, inflationary pressures and geopolitical developments.

Opportunities and Threats

Opportunities

The successful completion of the Companys Initial Public Offering (IPO) during the year marks a significant milestone in its growth journey. The listing of the Companys equity shares has enhanced its visibility, strengthened its corporate governance framework and broadened access to capital markets, thereby creating opportunities for future growth and expansion.

The proceeds from the IPO are expected to support the Companys strategic objectives, including strengthening its financial position, meeting working capital requirements, and enhancing operational capabilities. The Company also expects to benefit from increased stakeholder confidence, improved brand recognition and greater market presence following its listing.

The Company remains committed to leveraging these opportunities by expanding its customer base, improving operational efficiencies, optimising costs and delivering consistent value to all stakeholders.

Threats

The Company operates in a competitive business environment and is exposed to various external and internal risks, including fluctuations in raw material prices, changing market demand, competitive pricing pressures, inflationary trends, foreign exchange fluctuations, evolving regulatory requirements and changes in government policies.

During the year under review, the Company experienced a decline in revenue from operations, which affected overall profitability. As a listed entity, the Company is also subject to enhanced regulatory compliance, disclosure obligations and increased stakeholder expectations. The management remains focused on prudent financial management, cost optimisation, strengthening internal controls and improving operational efficiency to address these challenges while creating sustainable longterm value.

Segment-wise or product-wise performance.

The Company operates in a single business segment, namely Cotton, Polyster and value-added yarn. Accordingly, separate segment-wise financial reporting is not applicable.

The Companys product portfolio comprises a wide range of Cotton and Polyster yarns catering to the requirements of the hosiery, weaving and value-added textile segments. Its principal products include Compact Carded Hosiery Yarn, Compact

Combed Hosiery Yarn, Compact Carded Weaving Yarn, Compact Combed Weaving Yarn, Carded and Combed Weaving Yarns, Carded and Combed Hosiery Yarns, Eli Yarns, Slub Yarn, Siro Slub Yarn, CSY (Lycra-Core Spun/Spandex) Yarn and TFO Double Yarn. This diversified product portfolio enables the Company to cater to a broad customer base across different applications and market segments.

During the financial year under review, the Company achieved revenue from operations of Rs.47,814.00 lakh as against Rs.72,454.45 lakh in the previous financial year. The decline in revenue was primarily attributable to prevailing market conditions and industry-wide challenges. Despite this, the Company remained profitable by focusing on operational efficiency, prudent cost management and maintaining product quality.

The Company continues to strengthen its product mix, enhance manufacturing capabilities and focus on value-added yarns with the objective of improving margins, meeting evolving customer requirements and sustaining long-term growth.

Outlook

The Indian textile industry continues to offer long-term growth opportunities, supported by increasing domestic consumption, growing export potential, favourable Government initiatives and a rising preference for quality and value-added textile products. The demand for value-added yarns is expected to remain steady, driven by evolving customer requirements and the expanding textile and apparel industry.

The successful completion of the Companys Initial Public Offering (IPO) during the year has strengthened its financial position and enhanced its market presence. The Company intends to leverage the benefits of its listed status to improve operational capabilities, strengthen customer relationships and pursue sustainable growth opportunities.

While the textile industry continues to face challenges such as volatility in cotton prices, fluctuations in demand, inflationary pressures, global economic uncertainties and intense competition, the Company remains focused on improving operational efficiencies, optimising costs, enhancing product quality and increasing the share of value-added products in its portfolio.

With a diversified product portfolio, experienced management team and continued emphasis on operational excellence and prudent financial management, the Company is well positioned to capitalise on emerging opportunities and create sustainable longterm value for its stakeholders.

Risks and concerns

The Company operates in a dynamic business environment and is exposed to various internal and external risks that may impact its operations and financial performance. The key risks and concerns include fluctuations in cotton and other raw material prices, volatility in yarn prices, changes in customer demand, intense competition, inflationary pressures, supply chain disruptions, foreign exchange fluctuations and changes in government policies and regulatory requirements.

The textile industry is also influenced by domestic and global economic conditions, export demand and geopolitical developments, which may affect the Companys business performance. During the year under review, the Company witnessed a moderation in revenue from operations, reflecting the challenging market environment. The management continues to closely monitor market developments and adopt appropriate measures to mitigate the impact of such challenges.

Following the successful completion of the Initial Public Offering (IPO), the Company is also subject to enhanced regulatory compliance, corporate governance requirements and disclosure obligations applicable to listed entities. The Company has strengthened its governance framework, internal control systems and compliance processes to ensure adherence to the applicable laws and regulations.

The Company remains committed to prudent risk management through efficient procurement practices, cost optimisation, product diversification, continuous improvement in operational efficiencies, effective internal controls and a customercentric approach. The management regularly reviews potential risks and implements appropriate mitigation strategies to safeguard the interests of all stakeholders.

Internal control systems and their adequacy

The Company has established an adequate system of internal controls commensurate with the size, scale and nature of its business. The internal control framework is designed to safeguard the Companys assets, ensure the accuracy and reliability of financial and operational information, promote operational efficiency and ensure compliance with applicable laws, regulations and internal policies.

The Company has implemented appropriate policies and procedures for the authorization, recording and reporting of transactions, along with defined delegation of authority and periodic review mechanisms. Internal controls are regularly evaluated to ensure the effective conduct of business operations, efficient utilization of resources and timely identification and mitigation of risks.

The Audit Committee of the Board periodically reviews the adequacy and effectiveness of the internal control systems, the observations of the internal auditors and the status of corrective actions taken by the management. The Statutory Auditors also evaluate the adequacy of internal financial controls over financial reporting as part of their audit.

The management believes that the existing internal control systems are adequate and effective and provide reasonable assurance regarding the reliability of financial reporting, the safeguarding of assets and compliance with applicable statutory and regulatory requirements. The Company remains committed to continuously strengthening its internal control framework in line with evolving business needs and regulatory expectations.

Material developments in Human Resources / Industrial Relations front, including number of people employed

The Company firmly believes that its employees are its most valuable asset and continues to focus on fostering a safe, healthy and productive work environment. The Company promotes a culture of professionalism, teamwork, integrity and continuous learning, with emphasis on employee engagement, skill development and welfare.

Industrial relations remained cordial and harmonious throughout the year, and there were no significant industrial disputes or disruptions affecting the Companys operations. The Company continues to comply with all applicable labour laws and statutory requirements and remains committed to maintaining a healthy and positive work culture.

As on 31 March 2026, the Company had 354 employees on its rolls.

Key Financial Ratio

Sr. No. Ratios Name	FY 2025-26	FY 2024-25	% Change	Reason for the variance of 25% or more
1. Current Ratio	7.29	1.61	352.82%	The significant improvement in the Current Ratio is primarily driven by a substantial reduction in Current Liabilities. During the current financial year, the company utilized proceeds from its Initial Public Offering (IPO).
2. Debt-Equity Ratio	0.20	0.85	-76.14%	The significant decrease in the Debt-to-Equity Ratio is attributable to the companys recent capital restructuring by fresh capital through an Initial Public Offering (IPO), which substantially augmented Total Equity (Net Worth). Concurrently, the IPO proceeds were utilized to repay existing long-term and short-term borrowings, resulting in a material reduction in Total Debt. However which is also offset-by a New Term Loan taken by the company.
3. Debt Service Coverage Ratio	5.49	1.57	249.09%	The significant improvement in the Debt Service Coverage Ratio is a direct consequence of the companys recent debt retirement strategy. By utilizing the proceeds from the Initial Public Offering (IPO) to repay existing long-term and short-term borrowings, the company has materially reduced its ongoing debt obligations. Consequently, the interest expense for the period (and future scheduled principal repayments) has decreased substantially. However which is also offset-by a New Term Loan taken by the company.
4. Return on Equity (ROE)	8.94	17.66	-49.38%	During the year the company has raised fund through IPO hence overall increase in the equity capital lead to reduction in ROE.
5. Inventory Turnover Ratio	9.99	19.89	-49.78%	Decrease in Inventory Turnover Ratio is primarily attributable to the combination of lower consumption and relatively higher closing inventory has resulted in slower inventory movement, thereby reducing the inventory turnover ratio in FY 202526.
6. Trade receivables turnover ratio	8.55	10.95	-21.92%	NA
7. Trade payables turnover ratio	27.73	34.88	-20.49%	NA
8. Net capital turnover ratio	14.85	6.14	141.87%	The Net Working Capital Turnover Ratio increased during the current financial year. This variance is primarily driven by a sharp decline in Current Liabilities, resulting from the substantial repayment of short-term borrowings utilizing IPO proceeds. This significant reduction in current obligations materially altered the net working capital base, driving the ratio higher
9. Net Profit Ratio	2.02	1.78	13.39%	NA
10 Interest Coverage Ratio	5.28	3.92	34.69%	The significant improvement in the interest Service Coverage Ratio is a direct consequence of the
				companys recent debt retirement strategy. By utilizing the proceeds from the Initial Public Offering (IPO) to repay existing long-term and short-term borrowings, the company has materially reduced its ongoing debt obligations. Consequently, the interest expense for the period (and future scheduled principal repayments) has decreased substantially. This sharp reduction in the debt service denominator, measured against the earnings available for debt service, has generated a highly favorable variance in the ratio.
11 Operating Profit Margin	3.45	3.24	6.48%	NA
12. Return on capital employed	7.43	12.39	-40.06%	During the year the company has raised fund through IPO hence overall increase in the Capital employed lead to reduction in ROCE.

Disclosure of Accounting Treatment:

The financial statements of the Company have been prepared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, as amended from time to time, and other generally accepted accounting principles in India. There has been no material departure from the prescribed accounting standards in the preparation of the financial statements.

Cautionary Statement

Statements made in this Managements Discussion and Analysis Report describing Siddhi Cotspin Limiteds objectives, projections, estimates, expectations and outlook may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in this report. Important factors that could make a difference to Siddhi Cotspin Limiteds operations include economic conditions affecting demand and supply in domestic and overseas markets, changes in Government regulations and tax laws, raw material prices, foreign exchange movements, and other incidental factors.

For Siddhi Cotspin Limited
Sd/-	Sd/-
Navin Saraogi	Aansh Bindal
Managing Director	Whole Time Director
[DIN: 00623331]	[DIN: 10432834]
Date: 4th August, 2026
Place: Ahmedabad