Zenith Fibres Ltd Management Discussions

1. Industry Structure and Development:

During the year under review, there was a healthy increase in the Company’s top line on account of the commercialisation of some niche products in the international and domestic markets. Though the domestic fibre products’ margins have taken an overall hit due to increasing competition, the overall performance of the Company was satisfactory, given the increase in demand for the newly developed products and establishment of supply chains at better margins. The Company also noted an increase in overall expenses due to sudden and unforeseeable costs such as repairs to the wind turbine generator caused by mechanical failure, increase in employee benefit expenses and repairs to various old plant and machinery.

2. Opportunities and Threats: Opportunities:

The Company is in the process of developing niche products and is at advanced stages of trials with customers and is likely to see commercial realization in the coming financial year.

Threats:

We face intense competition domestically and from Chinese suppliers due to which margins are getting eroded as well hit in volume offtake. This is likely to continue in the years to come. Additionally, the Company’s 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.

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 operates in the manufacturing of Manmade Fibres and power generation through Wind Turbine.

Manmade Fibre:

(Quantity in MT)

Particulars	2024-25	2023-24
Production	3232.17	2054.85
Sales
- Domestic	1109.91	1094.71
- Export	1816.86	656.50

(Rs. in Lakhs)

Particulars	2024-25	2023-24
Sales	5219.70	3428.11
Profit Before Tax	239.71	173.43
Profit After Tax	180.13	131.75

During the year under review, sales of yarn was 293.50 MT as compared to 333.38 MT in the previous year.

Windmill:

The Company’s 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 Company’s 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 14,60,155 KWH, a decline from 25,13,176 KWH generated in the previous year. Correspondingly, the revenue realized from wind power operations stood at Rs. 142.45 Lakhs, compared to Rs. 177.34 Lakhs in the previous year.

The decline in power generation and associated revenue was primarily attributable to an unforeseen mechanical failure of the wind turbine’s generator on September 13, 2024, which temporarily disrupted operations. The Company acted promptly to address the issue and successfully completed the required repairs. The turbine was fully restored to operational status as of March 1, 2025 and has filed its claim for the repairs with the Insurance Company which is pending final assessment.

With operations now fully normalized, the Company expects power generation to return to expected levels in the upcoming financial year. This incident has been managed effectively with minimal long-term impact and appropriate measures have been implemented to strengthen monitoring and maintenance protocols, ensuring greater operational resilience.

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 Company’s broader environmental, social and governance (ESG) objectives.

4. Quality and Future Outlook:

The outlook for the Polypropylene Staple Fibre is encouraging and at the time challenging overall. 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 Company’s 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 Board’s 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 70 (seventy) as on March 31, 2025. 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. 36.10 to the Financial Statements with the reasons for major variations, if any.

10. Cautionary Statement:

Statement in this Report describing the Company’s 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.

Place: Vadodara	For and on behalf of the Board
Date: 02.08.2025	For Zenith Fibres Limited
	Sd/-
	Sanjeev Rungta
	Executive Chairman
	DIN: 00053602