Zenith Fibres Ltd Management Discussions

1. Industry Structure and Development:

During the year under review, there was a decrease in the Companys top line on account of closure of one of the Companys leading customers largest units based in USA due to unviability given the increase in US Import Tariffs. The domestic fibre products margins remained steady despite increasing competition, the overall performance of the Company was satisfactory. The Company also noted an increase in expenses in employee benefit expenses and repairs to various old plant and machinery and Factory Building.

2. Opportunities and Threats:

Opportunities:

The Company has successfully developed some niche products and is working on commercializing the same with multiple potential customers globally. The company is also in the process of buying new machinery which shall definitely increase the Companys product portfolio and yield good volume sales in coming years.

Threats:

We face intense competition domestically and from Chinese suppliers due to which margins are getting eroded as well hit in volume offtake. This will continue in the years to come. Additionally, the Companys machinery is over three decades old and from time to time suffers breakdowns and the Company incurs exponential costs for repair and maintenance. Similarly, the factory building is quite old and requires substantial repairs.

Additionally, the Companys basic raw material - Polypropylene is a petroleum derivative product; derived from the processing of crude oil and therefore, its price is directly affected by increase/decrease in crude oil prices. The War in Middle East led to the sharpest increase in raw material prices in the last month of the Financial Year and also led to dip in products demand. Lastly, one of the key threats for the Company to sell and establish sales in the export market is the highly volatile freight costs, sudden surges in the same lead to drop in fibre offtake as it leads to products becoming unviable.

3. Segment wise Operational Performance:

The Company is engaged in the manufacturing of manmade fibres and in power generation through a wind turbine and rooftop solar power, classified as renewable energy, which supports its sustainability initiatives and captive energy requirements. Manmade Fibre: (Quantity in MT)

Particulars	2025-26	2024-25
Production	2737.81	3232.17
Sales
- Domestic	1974.21	1109.91
- Export	480.21	1816.86

(Rs. in Lakhs)

Particulars	2025-26	2024-25
Sales	4007.77	5219.70
Profit Before Tax	387.73	239.71
Profit After Tax	292.24	180.13

During the year under review, sales of yarn were 302.17 MT as compared to 293.50 MT in the previous year. Renewable Energy: Windmill

The Companys windmill continues to play a pivotal role in supporting the energy needs of its Fibre Division through captive consumption, significantly reducing dependency on conventional power sources and aligning with the Companys sustainability goals. Any surplus power generated beyond internal consumption is sold to the power grid in accordance with predefined commercial arrangements.

During the year under review, the windmill generated a total of 20,20,850 kWh, compared to 14,60,155 kWh generated in the previous year.

Rooftop Solar Power

During the year under review, the Company successfully commissioned a 300 KW rooftop solar power system at its manufacturing facility for captive consumption. This initiative reflects the Companys continued commitment towards sustainability, energy efficiency and the adoption of renewable energy sources.

The solar power generated is completely utilized within the Fibre Division for captive purposes, thereby reducing reliance on conventional energy and improving operational efficiency.

Revenue from Renewable Energy

Revenue from renewable energy operations for the financial year ended March 31, 2026 stood at Rs. 154.86 Lakhs. The Company remains steadfast in its commitment to the efficient management and long-term sustainability of its renewable energy assets. This focus not only reinforces operational reliability but also supports the Companys broader environmental, social and governance (ESG) objectives.

4. Quality and Future Outlook:

The outlook for the Polypropylene Staple Fibre is encouraging yet challenging and extremely competitive globally. The Company is making great strides to develop niche products having good demand in the international market wherein substantial potential exists. The product quality of the Company is in consonance with international standards and all efforts are made to adhere to the same.

5. Risk and Concerns:

The Company is committed to manufacturing and deliver quality products strictly as per requirement of the customer. The constant feedback from customers is received and efforts are made for continuous improvement in process performance and product quality, wherever required. With established production base of almost three decades, the Company is in a position to maintain production and supply of quality products smoothly. This testifies to the fact that there are virtually nil rejections/ returns of the Companys products. The Company has the benefit of its long-standing association with its customers and can match the prices suitably as per pricing policy as and when required. The Company has experienced some pressure on profit margins due to increase in operational costs, market competition and other industry related factors, given it is operating in a highly competitive industry with numerous organized and unorganized players both domestically and overseas, however, the Company is confident to tackle all such risks/concerns/threats. The Company is also maintaining healthy liquidity to meet any unforeseen exigencies.

6. Internal Control Systems and their adequacy:

The Company has appropriate Internal Control Systems for business processes, financial reporting & controls, compliance with applicable laws, regulations etc. The Company has appointed Statutory Auditors to evaluate Internal Control System. Regular internal audits and checks ensure that system and procedures are continuously improved. The Audit Committee reviews the adequacy and effectiveness of Internal Control Systems and suggests ways of further strengthening them from time to time.

7. Financial Performance:

The Financial performance with respect to operational performance are provided in the Boards Report.

8. Human Resources and Industrial Relations:

The Company has adequate and qualified human resources and enjoys cordial relations with its employees. Total number of employees were 76 (seventy-six) as on March 31, 2026. The Board of Directors wishes to place on record its appreciation for the contribution made by all the employees at all levels during the year. The Company continued to generally maintain harmonious and cordial relations with its workers in all its businesses.

9. Key Financial Ratios:

Key financial ratios are provided in the Note No. 35.10 to the Financial Statements with the reasons for major variations, if any.

10. Cautionary Statement:

Statement in this Report describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those either expressed or implied.

For and on behalf of the Board
For Zenith Fibres Limited

Sd/-
Sanjeev Rungta
Executive Chairman
DIN: 00053602