Visagar Polytex Ltd Management Discussions

In this Management Discussion and Analysis Report (MDAR), we provide an insightful overview of M/s. Visagar Polytex Limiteds performance, operations, and key developments during the reporting period. This section serves as an essential part of our annual report, offering stakeholders valuable insights into your Companys strategic direction and performance.

FORWARD-LOOKING STATEMENTS

Before delving into the MDAR, it is imperative to acknowledge the presence of certain "forward-looking statements" contained within this document. These forward-looking statements appear throughout this report, including under chapters titled "Risk Factors," "Our Business", "Managements Discussion and Analysis of Financial Position and Results of Operations", "Industry Overview" etc.

Forward-looking statements encompass projections, expectations, and insights into our Companys plans, objectives, strategies, future events, financial performance, and various other aspects of our business. These statements may include words or phrases such as anticipate, believe, continue, estimate, expect, intend, may, plan, potential, project, will, and similar expressions. While these statements offer valuable insights, its important to note that they are not guarantees of future performance.

Factors Affecting Forward-Looking Statements

Forward-looking statements, by their nature, are subject to various known and unknown risks, uncertainties, and assumptions. These uncertainties and factors can cause actual results, performance, or achievements to differ materially from what is expressed or implied by these statements.

Cautionary Note

While we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that they will materialize as anticipated. Given these uncertainties, stakeholders are urged not to place undue reliance on these statements.

These forward-looking statements reflect our Companys position as of the date of this report and the respective dates indicated herein. We, our Directors, our Promoter, and affiliates have no obligation to update or revise these statements to reflect circumstances arising after the date hereof or to account for events that may not align with our assumptions.

INDIAN ECONOMIC OVERVIEW

Indias real Gross Domestic Product (GDP) recorded a growth of 6.5% in FY25, indicating sustained economic momentum despite ongoing global uncertainties. The international economic environment remains fragile, with persistent geopolitical tensions, conflicts, and volatile trade policies continuing to pose significant challenges. On the domestic front, retail inflation has moderated, easing from 5.4% in FY24 to 4.9% during the April-December 2024 period, signalling improved price stability. Reflecting Indias expanding role in the global

74 : Annual Report 2024-25

economy, the country now holds the seventh-largest share in global services exports. Additionally, merchandise exports, excluding petroleum and gems & jewellery, recorded a 9.1% growth in the same period, underscoring the sectors resilience and adaptability amid a complex global trade landscape.

For FY26, GDP was initially projected to grow at 6.7%; however, due to the impact of tariff- related factors, the Reserve Bank of India has revised the forecast downward to 6.5%. The Union Budget 2025-26 unveils a range of bold reforms and targeted initiatives focussed on strengthening Indias textile sector, MSMEs, exports, and agriculture. It also introduces tax relief measures designed to boost disposable income and drive overall economic growth.

Importantly, Indias growth has been supported by macroeconomic stability, with controlled inflation, a manageable fiscal position, and a stable balance of payments. These factors have contributed to building resilience in the domestic economy and bolstering investor confidence.

INDIAS TEXTILE MARKET Introduction

The textile industry contributes approximately 2.5% to the national GDP, around 7% to industrial output, and nearly 12% of the countrys total export earnings. It is also one of the largest employment-generating sectors, providing livelihoods to over 45 million people, both directly and indirectly, across the entire value chain - from cotton cultivation and yarn production to garment manufacturing and retail.

With the global apparel market expected to reach USD 2.37 trillion by 2030, a CAGR of 8% and the global textile and apparel trade projected to grow to USD 1.2 trillion, opportunities for international expansion are set to increase. Domestically, the Indian textile and apparel market is anticipated to grow at a strong CAGR of 10%, reaching USD 350 billion by 2030, with exports contributing USD 100 billion - offering a significant boost to companies with global ambitions. Additionally, the technical textiles sector is poised for substantial expansion, with the global market projected to hit USD 309 billion by 2047. Specifically, the Indian medical textiles segment, expected to grow at 15% annually, signals rising demand in high-value, specialised applications. For companies in the textile industry, this growth trajectory highlights an ideal environment for scaling operations, diversifying product lines, and tapping into both traditional and emerging high-margin markets.

The future growth in Indian textile and apparel market will be led by various economic factors such as increase in discretionary income and rising urban population. Further, the demand is poised by increase in online retailing, shift from cotton to man-made fibre, fast fashion, and robust growth of technical textiles segment. Additionally, global industry expanding outside of China would aid the Indian export markets in the growth trajectory. Bangladesh is the second largest exporter of readymade garments.

Industry Structure and Development

The key players of textile industry are concentrated in India, China, the European union and the United States. Vietnam and Bangladesh have also emerged as significant contributors to the industry. India is estimated to have the worlds third largest textile industry.

India benefits from multitude of factors such as abundant availability of raw materials including cotton polyester, recycled polyester, nylon, silk and jute along with large pool of skilled manpower and large ancillary industry. It also enjoys benefit of being a cost effective compared to other large textile producing industries.

New technologies and state-of-the-art equipment have enabled the Indian textile industry to become more efficient and productive over the years.

During FY 2024-25, there was an increase of about 10% export of readymade garments and other textiles over previous year.

The rise in export of textile is likely to grow due to lowest increase in tariffs for India compared to other competing countries. Textile industry is the second largest employer of manpower after infrastructure. This rise in export of textile will result in more creation of jobs.

In Union budget of FY 2024-25, 19% increase in allocation from previous year has been marked for ministry of textiles. This substantial rise in allocation underscores several strategic initiatives such as launch of the "cotton mission", support for technical textiles, supporting MSME which comprises 80% of textile industry and promote exports.

• Opportunities:

India has started exporting electronic components to China and Vietnam for the first time for manufacturing Apple products like mac books, iPad, watches, pencil and iPhone. All these parts barring iPads are exported to the assembling locations to be utilised in making the final products. "Make in India" efforts have thus borne fruit and provided good opportunity to enhance exports. Export target of $35-40 billion is set to be achieved by 2030. The government is soon to come out with a production linked incentive (PLI scheme) of more than $3 billion for this project.

Indias textile exports are estimated at $33.2 billion in April 2024 to February 2025 period of which 30% were dispatched to United States. Following lower tariff rates than competing China, Vietnam and Bangladesh, the export revenues are likely to grow. Given the intrinsic strength of Indian apparel sector and availability of entire chain, there is an opportunity for India to work for contract manufacturers of global brands to export business.

Also India has an opportunity to take advantage of lower tariff rate in American markets to export chemicals, plastic and rubber goods etc. India exports many products to America which work as raw material for getting converted into finished goods of their very popular and prestigious brands after brilliant packaging. For example, Americas Levis jeans acknowledged as one of the worlds biggest clothing companies, Denim cloth, one basic ingredient for Levis is purchased from India in bulk. Besides, other European brands like Zara and H&M also purchase denim cloth from India.

Also majority of Nike shoes are not made in USA. In fact, India has a role here too as it is home to extensive shoe making skills. There are many more such products exported to America as raw materials.

India can convert some such raw materials into finished goods with latest equipment, skillful labour and innovative packaging and sell it in domestic markets or export to America with

India benefits from multitude of factors such as abundant availability of raw materials including cotton polyester, recycled polyester, nylon, silk and jute along with large pool of skilled manpower and large ancillary industry. It also enjoys benefit of being a cost effective compared to other large textile producing industries.

New technologies and state-of-the-art equipment have enabled the Indian textile industry to become more efficient and productive over the years.

During FY 2024-25, there was an increase of about 10% export of readymade garments and other textiles over previous year.

The rise in export of textile is likely to grow due to lowest increase in tariffs for India compared to other competing countries. Textile industry is the second largest employer of manpower after infrastructure. This rise in export of textile will result in more creation of jobs.

In Union budget of FY 2024-25, 19% increase in allocation from previous year has been marked for ministry of textiles. This substantial rise in allocation underscores several strategic initiatives such as launch of the "cotton mission", support for technical textiles, supporting MSME which comprises 80% of textile industry and promote exports.

• Opportunities:

India has started exporting electronic components to China and Vietnam for the first time for manufacturing Apple products like mac books, iPad, watches, pencil and iPhone. All these parts barring iPads are exported to the assembling locations to be utilised in making the final products. "Make in India" efforts have thus borne fruit and provided good opportunity to enhance exports. Export target of $35-40 billion is set to be achieved by 2030. The government is soon to come out with a production linked incentive (PLI scheme) of more than $3 billion for this project.

Indias textile exports are estimated at $33.2 billion in April 2024 to February 2025 period of which 30% were dispatched to United States. Following lower tariff rates than competing China, Vietnam and Bangladesh, the export revenues are likely to grow. Given the intrinsic strength of Indian apparel sector and availability of entire chain, there is an opportunity for India to work for contract manufacturers of global brands to export business.

Also India has an opportunity to take advantage of lower tariff rate in American markets to export chemicals, plastic and rubber goods etc. India exports many products to America which work as raw material for getting converted into finished goods of their very popular and prestigious brands after brilliant packaging. For example, Americas Levis jeans acknowledged as one of the worlds biggest clothing companies, Denim cloth, one basic ingredient for Levis is purchased from India in bulk. Besides, other European brands like Zara and H&M also purchase denim cloth from India.

Also majority of Nike shoes are not made in USA. In fact, India has a role here too as it is home to extensive shoe making skills. There are many more such products exported to America as raw materials.

India can convert some such raw materials into finished goods with latest equipment, skillful labour and innovative packaging and sell it in domestic markets or export to America with

hiking prices to luxury level. The business for India will grow significantly. There are many affluent people in India having high disposable income who will patronize such final products if the quality is approved.

Free trade agreement (FTA) between India with UAE, Australia and Switzerland has already made. Such agreement with UK and European union are at final stage (FTA with UK is finalized on 6 th May, 2025).

Threats:

If border tensions around India continues or escalates, that may impact the projection of economy. Import duty of 10.6% still continues, despite many discussions. This is making India incompetent on price level.

If India is to increase exports to reputed brands, more skillful operators are required and need right type of training at manufacturing level.

In India, many factories use spun polyester yarn in place of cotton yarn for inner wear apparel.

Since the Polyester yarn is cheaper, in local markets innerwear polyester textiles are posing big price threat to cotton textiles.

FINANCIAL OVERVIEW & COMPANY OUTLOOK

Given the prevailing circumstances, where the companys sales have reached a standstill, it is imperative for your Company to implement stringent cost-cutting measures and diligently manage operational and inventory efficiency. These actions are of paramount importance in light of the ongoing challenges that continue to impede the companys business operations.

FACTORS THAT MAY AFFECT THE RESULTS OF OPERATIONS

Several factors may affect our result of operations that may make it difficult to predict the future financial results. Such factors are:

• Natural Calamities & Disasters and other unforeseen/ unavoidable circumstances

• Development / Innovation / Emergence of any substitute for our products

• Breakdown of machinery or plant

• Disrupted power supply from state electricity board

• Strike by laborers

• Government policies, rules and regulations affecting textile industries

• Competition

• Operating cost & Efficiency

• Exchange Rates

• Movement in Price of Fabric & Raw materials

• Product and Market Mix

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• Availability of Government Benefits & Subsidies

• Ability to organize funds for projects

• Availability of skilled human forces

• Debtor Issues

• Creditworthiness

• Banking Risks

DEVELOPMENT, EXPANSION & FUTURE OUTLOOK

Amidst the ever-changing business environment, your company is strategically treading through a complex landscape fraught with challenges. The textile industry is known for its volatile demand patterns, influenced by seasonal trends, changing consumer preferences, extended payment cycles and varying creditworthiness of customers, which can strain working capital, hence balancing inventory levels and debtors while ensuring free cash flow lingers as an issue. The industry is currently in the midst of a profound transformation, marked by a series of obstacles that have exerted substantial influence on your companys operations. In the face of substantial hurdles and complexities inherent to the industry, your management remains resolute. Despite these challenges, we maintain a forward looking perspective. We patiently await the right moment for the textile business to once again thrive profitably.

FUTURE PLANS AND OUTLOOK

• Cost-Cutting Measures: Implementing stringent cost-cutting measures to optimize expenses and improve cost-efficiency across all aspects of operations.

• Operational Efficiency: Focusing on enhancing operational efficiency by streamlining processes, reducing wastage, and improving resource allocation.

• Inventory Management: Prioritizing effective inventory management strategies to minimize holding costs and ensure a lean and agile supply chain.

• Adapting to Industry Changes: Continuously monitoring and adapting to the ongoing paradigm shifts and challenges within the industry to remain competitive and resilient.

• Business Resilience: Developing strategies to navigate through challenges and uncertainties, ensuring the companys ability to withstand market fluctuations.

• Reigniting Revenue: Exploring avenues for sales recovery and growth, considering innovative approaches to reinvigorate the business.

• Market Positioning: Evaluating market positioning and identifying opportunities to strengthen the companys presence in the industry.

• Sustainable Practices: Embracing sustainability practices that align with evolving market trends and customer expectations.

• Financial Prudence: Maintaining financial prudence and liquidity to support future growth and investment opportunities.

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TECHNOLOGY ABSORPTION

Efforts made towards technology Absorption. Your Company tries to stay abreast with the latest technology in the market. Your Company has a mix of the latest machinery with various value addition capabilities, all under a single setup. During the year, there was no import of machinery by the Company. Benefits Derived: Having machinery with different capabilities helps your Company provide an umbrella solution to its clients as they do not need to go anywhere else for any kind of value addition requirements. This helps retain clients and is beneficial in the long term.

COMPANY OVERVIEW

Visagar Polytex Limited was incorporated on 16^th June, 1983 with the name of Barasia Holding & Trading Co Ltd under the Companies Act, 1956. Thereafter, passing necessary resolutions, the Company has changed its name to Visagar Polytex Limited. The company is mainly engaged in the textile business.

The management has been actively considering restructuring and revival of Companys business operations, reduction of debt. Accordingly, during the Financial Year 2024-25, the Board of Directors, at its meeting on 5th March, 2025, in reference to an earlier meeting dt 6th February, 2025, approved and filed a revised draft Scheme of Arrangement, with the aim of restructuring the companys capital framework, debt reduction and revival of business.

Ratio	FY 2024-25 FY 2023-24		Remarks
Current Ratio	0.60	84.35	Current liabilities > current assets
Debt-Equity Ratio	(72.10)	4.17	Negative net worth
Net Profit Ratio (%)	0	(188.9%)	Nil Revenue
Return on Equity (%)	(6%)	(985%)	Negative due to loss
Trade Receivables Turno	ver 0.00	2.63	No sales in FY 2025
EPS (?)	(0.06)	(0.53)	Negative

Risk Management

The Company has established a risk management framework to identify, manage and mitigate risks arising from external and internal factors. A risk identification exercise is carried out periodically to identify various strategic, operational, financial and compliance-related risks. These risks are evaluated for their likelihood and potential impact. A few risks and uncertainties that can affect the business include an accelerated shift in consumer preferences towards digital propositions, attraction and retention of the right talent in a new environment post the pandemic, adverse macroeconomic conditions, including the impact of geopolitical tensions influencing revenue growth and risk of newsprint price volatility & supply constraints resulting in higher direct costs. Further, an intense competitive landscape along with the risk of cyber threat and data breach remain some of the key concerns faced by the Company.

Internal Control System & Adequacy

The Company has an effective system of internal controls corresponding with its size, nature of business and complexity of operations. The internal controls mechanism comprises a well- defined organizational structure with a clearly laid out authority and responsibility matrix and comprehensive policies, guidelines and procedures governing the operations of respective functions. These controls have been designed to safeguard the assets and interests of the Company and its stakeholders and also ensure compliance with the Companys policies, procedures and applicable regulations. The Company has an established Code of Conduct (CoC) framework and Whistle-blower mechanism, which is duly approved by the Board of Directors in compliance with the regulatory requirements.

By Order of the Board of Directors

For Visagar Polytex Limited

Sd/-

Tilokchand Kothari

DIN:00413627 Managing Director

Place: Mumbai Date: 08/09/2025