Tuni Textile Mills Ltd Management Discussions

GLOBAL ECONOMY AND OUTLOOK

The global economy demonstrated measured resilience in 2025, navigating a challenging landscape defined by geopolitical tensions, elevated interest rates, and persistent supply-side pressures. According to the IMF World Economic Outlook, April 2026, world GDP grew by 3.4 percent in 2025 and is projected to expand by 3.1 percent and 3.2 percent in 2026 and 2027 respectively. These projections, which assume a limited-scale conflict in the Middle East, reflect a broadly stable growth trajectory as the global economy transitions beyond the initial shocks of high inflation.

In the advanced economies, central banks have begun pivoting toward monetary easing as inflationary pressures recede. U.S. inflation, however, remains slightly above target, sustaining complexity in global capital flows and currency markets. Energy costs and supply chain stability continue to command boardroom attention worldwide. Sustained hostilities in the Middle East have periodically amplified geopolitical risk premiums, pushing energy prices higher and straining traditional trade routes. Against this backdrop, the global industrial sector is embracing what we see as a defining strategic shift of "resilience through diversification", characterised by the regionalisation of supply chains and a deliberate effort to reduce exposure to volatile logistics costs. For a manufacturer with our international footprint, this recalibration of global trade presents both risk managing and opportunity to capture.

INDIAN ECONOMIC OVERVIEW & OUTLOOK

India stands apart. In a world of tepid recoveries and uncertain outlooks, India continues to affirm its position as the fastest-growing major economy globally. As per the First Advance Estimates released by the National Statistics Office for FY 2025-26, Indias Real GDP is estimated to reach ^201.90 lakh crore, reflecting robust growth of 7.4 percent. This momentum is underpinned by a sustained infrastructure push, with government capital expenditure driving a meaningful rise in gross fixed capital formation and reinforcing the productive capacity of the broader economy.

The "Make in India" initiative has evolved from a policy aspiration into a powerful structural catalyst. As per the Economic Survey 2025-26, Manufacturing Gross Value Addition (GVA) grew by 9.13 percent in Q2 FY 2025-26, buoyed by targeted Production Linked Incentive (PLI) schemes and a strategic shift toward medium and high technology manufacturing. Complementing this, Indias retail inflation averaged a benign 1.7 to 2.6 percent during the fiscal year, and foreign exchange reserves reached a historic high of USD 701.4 billion, providing macroeconomic stability and a robust buffer against external shocks.

TEXTILE INDUSTRY

The global textile market, valued at approximately USD 988 billion in 2024, continues its long-term growth trajectory, propelled by e-commerce expansion and the structural dynamics of fast fashion. FY 2025-26, however, introduced tangible headwinds that tested the sectors agility. Traditional trade routes faced disruption due to the US-Iran conflict, resulting in shipment delays and a sharp escalation in logistics and shipping costs, all of which exerted pressures that resounded across the global supply chain.

Yet, within these headwinds lie compelling tailwinds for India. Socio-political instability in competing garment manufacturing nations, particularly Bangladesh, has meaningfully accelerated the shift of Readymade Garment orders toward Indian suppliers. Further, the progressive execution of Free Trade Agreements (FTAs) with the UK, the EU, and other key markets is expected to deliver a sustained demand tailwind for Indian exporters, improving market access and competitive positioning on a structural basis.

Indias inherent advantages in textiles are well established. As the worlds second largest producer of cotton, India commands a significant raw material advantage. The textile sector is also among the most consequential for the Indian economy, second only to agriculture as an employer, providing direct employment to approximately 45 million people and supporting an additional 60 million through allied activities. This scale underscores the sectors strategic importance to the national growth.

The Indian textile industry is distinguished by its remarkable diversity, spanning from handwoven and hand-spun traditions at one end to sophisticated, technology-driven mills at the other. The presence of integrated players across the full value chain, from raw material production through yarn, fabric, and garments places India in a uniquely competitive position on the global stage. Within this chain, yarn manufacturing converts raw fibres into yarn through a defined sequence of processes, beginning with spinning, followed by weaving and knitting. Yarns may be derived from natural fibres such as cotton and wool, or from man-made fibres (MMF) including polyester, viscose, nylon, acrylic, and polypropylene, a segment that is growing rapidly in relevance and value.

On the cotton front, domestic arrivals reached 281 lakh bales by March 2026, up from 273 lakh bales in the prior year. Despite this increase in supply, domestic prices surged from ^55,000 per candy in December 2025 to ^62,000 per candy by

March 2026, mirroring trends in international NY futures, a dynamic that reinforces the importance of disciplined raw material procurement and inventory management.

Looking ahead, the Indian textile and apparel market is well positioned for sustained growth. Rising discretionary incomes, rapid urbanisation, and the adoption of fast-fashion consumption patterns will drive domestic demand. Simultaneously, structural forces including increased online retailing, an accelerating shift from cotton to man-made fibre, strong growth in technical textiles, and the ongoing migration of global textile production outside of China will collectively bolster Indias export opportunity.

OPPORTUNITIES & CHALLENGES

We remain firmly committed to a strategy of sustainable, value-accretive growth. Our capital investment in knitting machine capacity has forward-integrated our operations into higher-value fabric products and positions us well for medium-term earnings growth. Going forward, we intend to expand our product basket, grow our value-added segment, realign our customer base toward more strategic relationships, deepen our penetration of the fabric market, and continue driving operational excellence across our manufacturing facilities. Sustainability remains a parallel priority. We will continue deploying renewable energy assets, targeting a minimum of 75 to 80 percent of our total energy requirements from green sources.

We also acknowledge, with transparency, the market challenges that create uncertainty in our operating environment. Global economic uncertainty, evolving tariff conditions, changing weather patterns adversely affecting cotton crop yields, cotton price volatility, and constraints on the availability of high-quality cotton, all of these factors introduce a degree of unpredictability that we monitor closely and manage proactively.

To navigate these challenges and sustain long-term business resilience, we have embedded a set of core operating principles into our management framework. These principles of disciplined cash conversion, deep in-house expertise in cotton market dynamics, supply chain resilience, investment in value-added processing, a culture of product and process innovation, and an unwavering focus on customer satisfaction, are the differentiators that set Tuni Textiles apart. They are not merely operational practices; they are the competitive foundations upon which we intend to grow, adapt, and prosper in the years ahead.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. Your Company has an Internal Audit team that is responsible for independently evaluating the adequacy and effectiveness of all internal control designs and implementation, risk management, systems and processes. Internal Audit team is manned by appropriately skilled, experienced and qualified personnel. The Internal Audit plan is also aligned with the business objectives of the Company which is reviewed and approved by the Audit Committee.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year under review, the Company earned revenue from operations of t 11,468.24 lakh, along with other income of t 16.02 lakh, taking the total income for the year to t 11,484.26 lakh. While the Companys total income exceeded its total expenses, resulting in a net profit for the year, the revenue generated from operations played a meaningful role in meeting the day-to-day operational and financial requirements of the Company. This, in turn, helped reduce the Companys dependence on additional borrowings from the Directors and from banks/financial institutions to fund its working capital and other requirements.

The management remains focused on improving operational efficiency, expanding revenue streams and exercising tighter control over costs, with the objective of strengthening the Companys overall financial performance in the coming years. These efforts are also aimed at progressively reducing the Companys reliance on external sources of finance and building a more self-sustaining operational and financial structure going forward.

RISKS AND CONCERNS

The broader economic trends are poised to directly affect a companys growth potential. Persistent inflation has resulted in increase in commodity prices worldwide. Furthermore, the anticipated rise in central bank interest rates in the coming year may dampen growth and strain economies, especially in emerging markets. It is thereby important to manage cost pressures to sustain the Companys overall performance in these conditions.

Reduced purchasing power and increased demand could result in significant shifts in consumer behavior, negatively impacting the textile and apparel market. Consumers might seek more budget-friendly options, potentially leading to reduced growth and profitability for the Company.

LIQUIDITY AND INTEREST RATE RISK

The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility.

The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

HUMAN RESOURCES

The Company takes pride in the commitment, competence and dedication of its employees in all areas of the business. The Company has a structured induction process and management development programs to upgrade skills of managers.

Your Company believes in the potential of people to go beyond and be the game-changing force for business transformation and success. This potential is harnessed by fostering an open and inclusive work culture that enables breakthrough performance and comprehensive development of employees through the three pillars of Leading Self, Leading Teams and Leading Business.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

There is no material development in Human Resources, Industrial Relations front etc. during the year under review.

KEY FINANCIAL RATIOS AND RETURN ON NET WORTH

Under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to disclose significant changes (i.e. change of 25% or more as compared with the immediately previous financial year) in financial ratios, including debtors turnover, inventory turnover, interest coverage ratio, current ratio, debt equity ratio, operating profit margin and net profit margin or sector-specific equivalent ratios, as applicable and details of any change in Return on Net Worth as compared with the immediately previous financial year along with a detailed explanation thereof.

Financial ratios shows significant changes i.e. a variation of 25% or more compared with the immediately preceding financial year, have been provided in Note 48 of Notes to Accounts.

Return on Net Worth improved during the year, primarily on account of increase in sales and turnover.

OTHER DISCLOSURES IN TERM OF SCHEDULE V OF SEBI LODR REGULATIONS, 2015

Disclosures in regard to following aspects, have been provided in Notes to Account, forming part of Annual Report -

a. Debtors Turnover

b. Inventory Turnover

c. Interest Coverage Ratio

d. Current Ratio

e. Debt Equity Ratio

f. Operating Profit Margin (%)

g. Net Profit Margin (%) or sector-specific equivalent ratios, as applicable.

h. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.]

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

Mumbai, August 27, 2026	By order of the Board
	For TUNI TEXTILE MILLS LIMITED
	S/d-
Registered Office :	Narendra Kumar Sureka
Unit No. 207, 2nd Floor, Building No. 3A, Mittal Industrial Estate,	DIN : 01963265
Andheri Kurla Road, Andheri (E), Mumbai 400 059	Chairman & Managing Director