SPL Industries Ltd Management Discussions

The Board of Directors is pleased to share with you the Management Discussion and Analysis Report for the Financial Year ended on March 31, 2026.

COMPANY SYNOPSIS

SPL has a leading Apparel Export House and has one of the largest vertically integrated knitwear plants in India, leading manufacturer & exporter of Knitted fabric and Knitted garments. SPL offers innovative designs that incorporate the latest trends and employs only high-quality fabrics to build trust with stakeholders and attract a strong clientele. The company is reputed for excellent Product Development and Design Capability. The Company strives to cater its products to both domestic and international markets, aligning with its objective of becoming a leading global manufacturer. It is committed to being a resilient organization with a clear vision, focusing on strengthening its core and emerging stronger.

During FY 2025-26, the company has altered its Memorandum of Association by inserting real estate-related activities in its object clause. The alteration aimed to undertake real estate-related activities as a part of its long-term business diversification strategy. However, the Company did not commence any real estate operations during the financial year, and no revenue or income was generated from such activities. Accordingly, the Companys operations during FY 2025-26 continued to be entirely related to its textile business.

Factors Fuelling the Companys Growth

Abundant Raw Material Availability

India continues to be the worlds largest cotton producer55, which enables SPL to source quality raw materials domestically, ensuring cost-efficiency and supply stability.

Favourable Macroeconomic Conditions

Indias GDP grew at 6.5% in FY 2024-25 and accelerated further through FY 2025-26, with real GDP growth of 7.8% in Q1 and 8.2% in Q2 of FY 202526, prompting the RBI and MoSPI to revise their full-year growth estimates upward to around 7.3%-7.4%, well above the 6.5% initially projected. This economic expansion supports rising domestic consumption and infrastructure-driven demand across core segments.

Government Support

Initiatives such as the PLI scheme (with an overall outlay of INR 15,541 Crore across 14 sectors under the Union Budget 2026-27, alongside a dedicated Ministry of Textiles allocation of INR 5,279.01 Crore) and the new Integrated Textile Programme announced in Budget 2026-27 · comprising the National Fibre Scheme, Textile Expansion and Employment Scheme, National Handloom and Handicraft Programme, Tex-Eco Initiative and Samarth 2.0 · are creating a conducive environment for growth in textiles.

Growing Export Opportunities

Indias trade agreements · including the India-EU Free Trade Agreement (offering zero-duty access across all textile and clothing tariff lines) and the India-UK and India-EFTA agreements · together with enhanced competitiveness have opened access to new markets, allowing SPL to diversify geographically, particularly in textiles. This diversification has become increasingly important given continued United States tariff-related headwinds on Indian textile and apparel exports during the year.

Annual Financial Performance

SPL has leveraged its strengths, team cohesion, and talented workforce to deliver high-quality products and consolidate its position as a responsible organization. Despite the unprecedented challenges faced by the Indian economy.

During the year under review, the Company has operated in single segment i.e. Garment and marked total income (revenue from operations and other income) of Rs. 8,878.11 Lakhs and achieved a standalone net profit of Rs. 706.10 Lakhs as compared to Rs. 979.15 Lakhs in previous financial year. The lower income and profit during the year were largely on account of challenging market conditions for the textile industry, including subdued domestic and export demand and pricing pressures arising from steep US tariffs on Indian textile and apparel exports. The earnings per share of the Company was INR 2.43 in the year under review.

In FY 2025-26, the Company has not declared any dividend on the equity share of the company.

Balance Sheet

Paid-up Capital

The total equity share capital remained unchanged at INR 2900.00 Lakhs as of March 31, 2026 (the same as March 31, 2025).

Net Worth

Net Worth as of March 31, 2026 INR 21,604.62 Lakhs likely a modest increase over INR 20,894.80 Lakhs (March 31, 2025) given retained net profit of Rs. 709.87 Lakhs and no dividend outflow, compared to INR 20,894.80 Lakhs (as of March 31, 2025).

OPPORTUNITIES AND THREATS

Opportunities:

• Global Shift towards Sustainable Textiles: Increasing demand for eco-friendly and ethically produced products aligns with SPLs sustainability agenda.

• Expansion into New Geographies: Growing opportunities in emerging markets for textiles.

• Government Incentives: Benefiting from Production Linked Incentive (PLI) schemes and textile parks under Make in India.

• Innovation in Functional Textiles and Speciality Paper: Scope to develop antimicrobial, organic, and smart fabrics, and expand value-added paper offerings.

• Green Energy Integration: Strengthening energy division with renewable projects enhances long-term cost savings and ESG positioning.

Threats:

• Global Market Volatility: Economic slowdowns, geopolitical tensions, and trade barriers can impact exports and input costs.

• Intense Industry Competition: Price and quality pressures from global players, especially in textiles and paper.

• Raw Material Price Fluctuations: Cotton, pulp, and chemicals are subject to price volatility, affecting margins.

• Regulatory and Environmental Compliance Risks: Stricter norms, particularly in water-intensive sectors, can lead to cost and operational pressures.

• Currency Fluctuations: Affects export competitiveness and profitability.

• United States Tariff Actions: During FY 2025-26, the United States imposed steep tariffs on Indian textile and apparel exports, peaking at a combined 50% (25% reciprocal plus a 25% penal duty linked to Indias crude oil trade with Russia) between 27 August 2025 and 7 February 2026, before the penal component was withdrawn. Even after this partial rollback, India continues to face a 25% reciprocal tariff, higher than the 20% faced by competing sourcing hubs such as Bangladesh and Vietnam, compressing order volumes and margins for Indian exporters, including SPL, particularly in the crucial US market.

Key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

The Company has identified the following ratios as key financial ratios:

Particular	31st March 2026	31st March 2025	Variance*
Current Ratio	5.74	10.22	-43.86%
Debt- Equity Ratio	-	-	-
Debt Service Coverage Ratio	-	-	-
Return on Equity (ROE) / Return on Networth	3.32%	4.80%	-30.75%
Inventory turnover ratio	13.20	13.14	0.46%
Trade Receivables turnover ratio	3.37	4.54	-25.89%
Trade Payables turnover ratio	7.35	33.81	-78.26%
Net capital turnover ratio	1.07	1.63	-34.21%
Net profit ratio	10.15%	7.02%	44.58%
Return on capital employed (ROCE)	2.82%	6.20%	-54.46%
Return on Investment (ROI)	8.18%	9.11%	-10.21%
Interest Coverage Ratio	4.55%	8.74%	-47.93%
Operating Profit Margin	-16.43%	0.61%	-2786.55%

*For variance in ratios more than 25%

(1) Debt includes long-term Provisions and Other long- term debt.

(2) Includes Net Profit after taxes, Depreciation & Amortization and Finance cost.

(3) Debt Service Includes Interest on USL.

(4) Revenue includes credit sales only

(5) Includes tangible net worth, total debt and deferred tax liability

(6) Reflects Cost of Investment as on Closing of Financial Year

Abbreviations used

(1) EBIT - Earning Before Interest and Taxes

*Notes to ratios

1. Current Ratio: The variation in the Current Ratio is primarily on account of an increase in trade payables (total outstanding dues of creditors other than micro and small enterprises) and reduction in other current financial assets (Receivables from revenue authorities) as compared to the previous year.

2. Return on Equity (ROE): The variation in return on equity (ROE) is primarily attributable to a decrease in profit during the year and increase in other equity as compared to the previous year.

3. Trade Receivables turnover ratio: The variation in trade receivables turnover ratio is primarily attributable to a decrease in sales during the year as compared to the previous year.

4. Trade Payables turnover ratio: The variation in trade payables turnover ratio is primarily attributable to decrease in purchase during the year and increase in trade payables (total outstanding dues of creditors other than micro and small enterprises) as compared to the previous year.

5. Net capital turnover ratio: The variation in net capital turnover ratio is primarily attributable to a decrease in sales during the year and increase in the current liabilities under trade payable as compared to the previous year.

6. Net profit Ratio: Increase in the net profit ratio during the year was mainly attributable to reduced power and fuel consumption, which led to lower operating expenses and higher net profit.

7. Return on capital employed (ROCE): The variation in return on capital employed ratio is primarily attributable to a decrease in earnings before interest and tax during the year and increase in other equity as compared to the previous year. And Earnings before interest and taxes decreases due to decrease in sales and decrease in expenses.

8. Interest Coverage Ratio: The variation in Interest Coverage Ratio due to lower operating earnings resulting from a significant decline in revenue from operations.

9. Operating Profit Margin ratio: The variation in operating profit margin is due to decline in revenue from operation arising from adverse market conditions in Indian textile industry, due impact of tariffs.

Global economic overview

The global economy remained resilient during 2025 despite heightened geopolitical uncertainties, evolving trade policies and persistent financial market volatility. According to the International Monetary Fund (IMF), global economic growth is estimated at around 3.0% in 2025, reflecting a moderation from the previous year. Growth remained uneven across major economies, with the United States continuing to demonstrate relative resilience, while the Euro Area recorded modest expansion amid weak industrial activity and subdued consumer demand.

The global manufacturing sector witnessed a gradual recovery during the year, although performance remained mixed across regions. Manufacturing activity improved in several emerging markets, supported by stabilising demand and easing input costs, while production in some advanced economies continued to face challenges from weak external demand, higher financing costs and ongoing trade uncertainties.

Commodity prices remained relatively stable during the year, albeit with intermittent volatility arising from geopolitical developments and changing global trade dynamics. Cotton prices remained range-bound at comparatively moderate levels, supported by adequate global inventories and balanced demand-supply conditions. Lower volatility in raw material prices, coupled with improving supply chain efficiencies, provided a relatively favourable operating environment for the global textile industry. However, uncertainties relating to international tariffs, regional conflicts and currency fluctuations continued to influence global trade flows and business sentiment.

Indian Economy

Indias economy remained remarkably resilient in the face of global disruptions. Strong domestic consumption, higher government spending on infrastructure and an accommodative monetary policy powered this growth. Retail inflation eased to 4.6% in FY 2024-25, the lowest since FY 2018-19, and eased further through FY 2025-26 to multi-year lows (CPI inflation fell to around 0.25% in October 2025, its lowest level in the current CPI series, before edging up to 0.71% by November 2025). Building on its first rate cut in five years to 6% during FY 2024-25, the Reserve Bank of India (RBI) maintained an accommodative stance through FY 2025-26 amid this benign inflation environment, thereby supporting continued growth.

The financial services sector remained stable, supported by well-capitalised banks and a solid regulatory framework. Government initiatives, such as Make in India spurred domestic manufacturing growth, while long-term prospects in manufacturing and technology attracted strong foreign investment. The expansion of Indias digital economy, including e-commerce and digital payments, further boosted economic activity.

Imported commodity prices in India eased in FY 2024-25, with the World Banks Commodity Markets Outlook projecting a 5.1% decline in 2025 driven largely by falling crude oil and metals prices, which kept domestic inflationary pressures anchored. Cotton prices in India averaged around INR 7,800 per quintal in FY 2024-25, supported by lower production and an INR 589 MSP increase in May 2025 that set prices at INR 7,710-8,110 per quintal.

Indias manufacturing sector grew at 4.8% in FY 2024-25, up from 4.7% in FY 2023-24, and continued to expand through FY 2025-26 · the secondary sector (including manufacturing) recorded real GVA growth of 8.1% in Q2 FY 2025-26, while the Index of Industrial Production registered 4.0% year-on-year growth in September 2025, led by a 4.8% expansion in manufacturing. The government increased budget allocations to support manufacturing, with FDI in the sector reaching USD 184 Billion (cumulatively, a 90.5% rise over the past decade) fuelled by production-linked incentive schemes, and gross FDI inflows into India growing a further 19.4% to USD 51.8 Billion during April-September 2025-26 (up from USD 43.4 Billion in the same period a year earlier).13 Over the past six financial years, total FDI inflows amounted to USD 464.54 Billion.14 With robust physical and digital infrastructure, India is now well-positioned to expand the share of the manufacturing sector in the economy and strengthen its role in global supply chains.

Outlook

The prospects for the Indian economy remain promising. A growing population, the governments continued thrust on infrastructure and a decade of digital transformation position Indias GDP for accelerated growth in the coming years.

Despite global tariff pressures and geopolitical tensions, Indias GDP growth for FY 2025-26 has significantly exceeded the RBIs initial 6.5% projection, with the RBI progressively revising its estimate upward to 7.3% and the Governments first advance estimate placing growth at 7.4%, aided by strong quarterly outturns of 7.8% (Q1) and 8.2% (Q2).15 Moreover, retail inflation, initially expected to hover around 4.0% in FY 2025-26, has come in well below that projection · easing to multi-year lows during the year · providing continued scope for monetary accommodation if needed.

India has strong potential to grow its presence in global markets, supported by economic growth, long-term employment prospects and skill development opportunities for millions. Building on the National Manufacturing Mission announced in the Union Budget 2025-26, the Government of India used the Union Budget 2026-27 to place textiles at the centre of its growth strategy, announcing a new Integrated Programme for the Textile Sector (comprising the National Fibre Scheme, Textile Expansion and Employment Scheme, National Handloom and Handicraft Programme, Tex- Eco Initiative and Samarth 2.0), Mega Textile Parks under a challenge-mode process, and an extension of the export obligation period for textile garment exporters from 6 to 12 months. Overall PLI allocations across 14 sectors stood at INR 15,541 Crore in Budget 2026-27 (against a revised estimate of INR 16,072 Crore for FY 2025-26), with the Ministry of Textiles separately allocated INR 5,279.01 Crore for FY 2026-27.

The country is steadily advancing towards Industry 4.0, adopting best-in-class technologies in manufacturing. This is further supported by government initiatives such as the National Manufacturing Mission, which aims to raise the manufacturing sectors contribution to GDP to 25% by 2025.

Key Initiatives and Policy Support

During the FY 2025-26, the Government of India focused to the implementation of scheme that were introduced in earlier years for textile and apparels sector.

Following new developments have made during the year:

Research and Development (R&D)

Research and Development (R&D) remains a key driver for improving product quality, operational efficiency and sustainability in the textile sector. The Government continues to encourage innovation through collaboration between industry, research institutions and academia, with emphasis on advanced fibres, technical textiles, sustainable manufacturing processes, automation and digital technologies. Increased focus on innovation is expected to enable the industry to develop value-added products, improve resource efficiency and strengthen its competitiveness in global markets. Trade Agreements

During FY 2025-26, India continued to expand its global trade footprint through key trade agreements aimed at enhancing export competitiveness and market access. The conclusion of the India-United Kingdom Comprehensive Economic and Trade Agreement (CETA), India-Oman Comprehensive Economic Partnership Agreement (CEPA), and India-New Zealand Free Trade Agreement (FTA), together with the operationalisation of the India-EFTA Trade and Economic Partnership Agreement (TEPA), is expected to create new opportunities for Indian exporters. These agreements provide preferential tariff access across several markets and are particularly relevant for labour-intensive sectors such as textiles and apparel, thereby supporting Indias integration with global value chains and strengthening the long-term growth prospects of the textile industry.

PM MITRA Parks

The PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme continued to witness implementation progress during FY 2025-26. The Government of India, in collaboration with participating State Governments, advanced the development of the seven approved PM MITRA Parks through land acquisition, infrastructure planning, appointment of master developers and initiation of on-ground development activities. The scheme aims to create world-class integrated textile manufacturing ecosystems with modern infrastructure, plug-and-play facilities, common utilities and efficient logistics connectivity, covering the entire textile value chain from fibre to finished products. Once operational, these parks are expected to attract significant domestic and foreign investments, reduce logistics and production costs, promote economies of scale, generate employment and enhance the global competitiveness of Indias textile and apparel industry.

PLI Scheme

The PLI Scheme continued to be implemented by the Ministry of Textiles with a total outlay of 10,683 crore. The scheme focuses on Man-Made Fibre (MMF) apparel, MMF fabrics; and technical textile products. During the FY 2025-26, capacity expansion and commercial production progressed across several approved projects. The scheme is intended to enhance Indias share in global exports of MMF and technical textiles while attracting domestic and foreign investment.

Kasturi Cotton Bharat

The Kasturi Cotton Bharat initiative continued to strengthen the branding and global positioning of premium Indian cotton during FY 2025-26. The programme focuses on establishing a robust ecosystem for quality assurance, certification and traceability of Indian cotton through scientific testing and digital traceability mechanisms. During the year, efforts were directed towards expanding stakeholder participation across the cotton value chain, promoting the adoption of quality standards and enhancing the visibility of the Kasturi Cotton Bharat brand in domestic and international markets.

Bharat Tex 2025

Bharat Tex 2025, one of Indias largest global textile events, reinforced the countrys position as a preferred sourcing and manufacturing destination for textiles and apparel. With the support of the Ministry of Textiles and industry bodies, the initiative brought together manufacturers, exporters, global buyers, investors, policymakers, technology providers and other stakeholders from across the textile value chain. This also highlighted the Governments continued focus on promoting "Make in India", strengthening global value chain integration and enhancing the international competitiveness of the Indian textile industry.

National Technical Textiles Mission (NTTM)

The National Technical Textiles Mission (NTTM) continued to drive the development of Indias technical textiles sector during FY 2025-26 through sustained focus on research and innovation, market development, standardisation, skill development and export promotion. The Mission is expected to enhance domestic manufacturing capabilities, promote innovation and facilitate the production of high-value technical textile products, thereby improving Indias competitiveness in the global technical textiles market.

Quality Control Orders (QCOs)

During FY 2025-26, the Government continued to strengthen the quality ecosystem for the textile sector through the phased implementation of Quality Control Orders (QCOs) for selected textile products. These measures are aimed at promoting adherence to prescribed quality standards, improving product reliability, and enhancing the global competitiveness of Indian textile manufacturers.

Sustainability Initiatives

During FY 2025-26, the Government continued to encourage sustainable manufacturing practices across the textile value chain through initiatives promoting resource efficiency, renewable energy adoption, waste reduction and circular economy principles.

SPLS APPROACH TO RISK MITIGATION AND STRATEGIES

The Companys Board of Directors has implemented a comprehensive risk management strategy, which includes a framework for identifying, analysing and mitigating risks. This framework involves continuously scanning the Companys business environment and monitoring both internal and external risk factors to ensure a proactive approach to risk management.

Nature of Risk	Impact	Mitigation Strategy
Raw material risk	Risk arising from non-availability/ delayed availability of key raw materials like cotton disrupting operations.	The company maintains robust relationships with vendors to ensure timely availability of raw materials.
Customer and regional concentration risk	Risk arising from customer concentration and regional concentration- risk of loss of revenue in event of loss of a key customer, slowdown in the key region.	The company is focusing on penetrating new markets and nurturing relationship in existing markets such as EU/UK and ROW to improve region wise revenue mix.
Cyber security risk	Risk arising from inadequate cyber security controls leading to loss of data.	The company has conducted Cyber Security assessment and is working to continuously strengthen its cyber security controls.
Foreign exchange Risk	Risk arising from inability to manage forex rate fluctuations.	The company undertakes hedging of foreign currency to manage foreign exchange risk.

INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY

The Company has implemented financial reporting controls that are commensurate with its scale and the nature of its industry. These controls and protocols are designed to safeguard assets, enhance operational efficiency and ensure accuracy in both operational processes and financial disclosures. A dedicated internal team, in coordination with the Audit Committee, continuously monitors business activities and promptly notifies the Management Board of any discrepancies. Insights from these reviews inform the Companys risk-assessment strategies, which identify, evaluate and mitigate potential threats. These internal controls support regulatory compliance, deter fraud and maintain transparency factors that help attract investment bolster stakeholder confidence and drive sustainable growth.

During the year under review, M/s Vatss & Associates, Firm of Chartered Accountants in Practice were engaged as Internal Auditors of the Company. They carried out the internal audit of the Companys operations and reported its findings to the Audit Committee. Internal auditors also evaluated the functioning and quality of internal controls and provided assurance of its adequacy and effectiveness through periodic reporting. Internal audit was carried out as per risk-based internal audit plan, which was reviewed by the Audit Committee of the Company. The Audit Committee periodically reviewed the findings and suggestions for improvement and was apprised of the implementation status in respect of the actionable items. Cautionary Statement

This Management Discussion and Analysis Report may contain forward-looking statements, such as goals, estimates, projections and expectations of the Company, as defined under applicable laws and regulations. Actual results may differ materially from those expressed or implied in such statements due to various factors, including but not limited to changes in governmental regulations, tax laws, foreign exchange fluctuations, raw- material availability and pricing, cyclical demand and pricing in key markets and broader economic conditions in India and other jurisdictions where the Company operates. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. The Company assumes no obligation to update any forward-looking statements, except as required by law.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

SPL is committed to its Environment, Health and Safety (EHS) initiatives, which aim to promote long-term sustainability and value for the Company and its stakeholders. It understands that EHS-related incidents can have significant regulatory and reputational consequences. Therefore, it organizes awareness workshops to ensure the safety of personnel involved in the Companys production operations. Alongside, the Company takes various measures to avoid any unforeseen incidents that could jeopardize its EHS objectives. As a responsible corporate citizen, SPL is proactive in addressing environmental issues and acknowledges its social responsibilities. It is dedicated to achieving environmental and economic benefits by promoting energy efficiency, water conservation, chemical usage reduction, and waste management. The Company ensures compliance with all obligations related to its products, with a focus on environmental and occupational health and safety. Preserving the natural environment and promoting community well-being are integral components of its corporate social responsibility. SPL recognizes that acting responsibly and sustainably can create new business and social opportunities, increase shareholder value, enhance its brand and reputation with multiple stakeholder groups, and protect the environment and natural resources for their immeasurable value.

HUMAN RESOURCE MANAGEMENT

SPL considers its team, comprising the total employee count of the Company stands at 257 as of March 31, 2026, to be its most valuable and indispensable asset. The Company undertakes various measures to improve the productivity of its employees. The teams collective competencies, skills and knowledge are essential for driving the Company forward and creating an agile and performance-oriented organization. It strives to create a supportive environment that fosters employee engagement and enables them to find meaning in their work, while contributing to the Companys success. Additionally, the Company also focuses on building transparent, safe and inclusive workplaces that will motivate its employees to enhance their productivity. Moreover, the existing HR policies of the Company also help in recruiting and retaining the right employees in the organisation. The Companys human resource policies align closely with the overall business strategy and play an integral role in executing business operations. Various initiatives undertaken by the Company in HR space include:

• Right people in the right positions, to ensure maximum Organisation Structure efficiency

• Making employees Partners in Prosperity, through Variable Pay

• Role Rotation

• New Joinee Assimilation

• Incentivising Innovation

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 read with Section 133 of the Companies Act, 2013.