Simplex Mills Company Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS Indian Economy

The Indian economy continues to demonstrate resilience despite global geopolitical uncertainties, inflationary pressures and volatile economic conditions. Supported by strong domestic demand, increased infrastructure spending, digital transformation and policy reforms, India remains one of the fastest-growing major economies in the world.

Indias GDP growth continues to be driven by robust consumption, government capital expenditure, manufacturing growth and expanding services sectors. The countrys focus on infrastructure development, ease of doing business, digitisation and manufacturing- led growth is expected to provide sustained momentum to economic activity.

Indian Textile Industry

The Indian textile industry is one of the oldest and most significant sectors of the Indian economy. It encompasses a diverse range of products and activities, including fibre, yarn, fabrics, garments, technical textiles and handicrafts. The industry benefits from a strong raw material base comprising cotton, jute, silk, wool and man-made fibres.

The sector continues to play a crucial role in employment generation, export earnings and industrial production. Government initiatives such as PM MITRA Parks, Production Linked Incentive (PLI) Scheme, Technology Upgradation initiatives and various export promotion measures are expected to strengthen the competitiveness of the Indian textile sector.

The growing preference for sustainable and environmentally responsible textile products, increasing global sourcing opportunities and expanding domestic consumption are expected to support long-term growth of the industry.

OUTLOOK AND OPPORTUNITIES

India continues to be one of the largest textile manufacturing and exporting nations globally. The textile and apparel sector offers significant growth opportunities due to:

• Growing domestic demand driven by rising disposable incomes and urbanisation.

• Increasing opportunities in export markets.

• Expansion of organised retail and e-commerce channels.

• Rising demand for value-added and technical textile products.

• Government support through various policy initiatives and infrastructure development.

• Growing preference for sustainable and ecofriendly textile products.

The Company remains focused on leveraging these opportunities through product quality, operational efficiency, customer relationships and market expansion initiatives.

THREATS

The textile industry continues to face certain challenges, including:

• Volatility in prices and availability of raw materials.

• Intense competition from domestic and international manufacturers.

• Fluctuations in foreign exchange rates.

• Changes in global demand patterns and consumer preferences.

• Rising energy, logistics and labour costs.

• Regulatory and environmental compliance requirements.

• Geopolitical developments and global trade uncertainties.

The Company continuously monitors these developments and undertakes appropriate measures to mitigate their impact on its operations.

OUTLOOK FOR FY 2026-27

The Company maintains a positive outlook for the coming years based on the long-term growth prospects of the Indian textile industry. The Company will continue to focus on operational excellence, cost optimisation, product quality and customer satisfaction. The management remains committed to exploring new business opportunities, strengthening operational efficiencies and creating long-term value for stakeholders.

RISKS AND CONCERNS

In todays challenging and competitive environment, risks are inherent in all businesses. The Companys risk management strategy encompasses the proper and indepth identification, assessment and prioritization of risks, followed by speedy mobilization of resources to minimize, monitor and control the probability of unfortunate events.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has proper and adequate system of internal control system to ensure maintenance of proper accounting records, their accuracy and that all the assets are safeguarded from loss or damages.

FINANCIAL PERFORMANCE

During the financial year ended 31st March, 2026, the Company continued to focus on operational efficiency, cost optimization and strengthening of internal processes.

The financial performance of the Company is discussed in detail in the Financial Statements forming part of this Annual Report.

KEY FINANCIAL RATIOS

The Key Financial Ratios for the financial year 31st March, 2026 are as under:

There was no change in inventory during the current as well as the previous year. The current ratio improved due to better working capital position. EBITDA margin, net profit margin and return on net worth declined mainly on account of higher losses during the year. Interest coverage ratio remain low due to lower operating profitability. Debt-equity ratio continued to be negative on account of negative net worth.

CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking, considering the applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results, could, however differ materially from those expressed or implied.