Market & News

TO THE MEMBERS

The Directors are pleased to present herewith the Annual Report of Loyal Textile Mills Limited ('the Company') along with the Audited Financial Statements for the Financial Year ('FY') ended 31^st March 2025.

FINANCIAL HIGHLIGHTS

PERFORMANCE OF THE COMPANY

During the financial year 2024-25, your Company produced 103.43 lakh kg of yarn (198.72 lakh kg in FY 2023-24), 218.86 lakh meters of woven fabric (447.24 lakh meters in FY 2023-24), 51.68 lakh kg of knitted fabric (40.76 lakh kg in FY 2023-24), and 32.27 lakh pieces of garments (29.04 lakh pieces in FY 2023-24). The reduction in yarn and fabric output reflects a deliberate and strategic decision to optimize capacity utilization and exit low-margin product lines in response to ongoing industry headwinds.

Despite continued challenges in the domestic textile market, export revenues showed encouraging growth, increasing to Rs 383.89 crore in FY 2024-25 from Rs 340.21 crore in the previous year. This improvement was driven by sustained demand in key international markets and a sharpened focus on servicing higher-value customers. The Company's commitment to product quality, reliability, and customer engagement continues to reinforce its position in the global textile value chain.

On the domestic front, revenues declined to Rs 249.30 crore from Rs 542.22 crore in FY 2023-24. This contraction was largely the result of a conscious effort to consolidate operations and discontinue non-viable and commoditized product lines. The restructuring is expected to yield greater operational focus, better resource allocation, and improved long-term business sustainability.

Total revenue from operations stood at Rs 682.15 crore, compared to Rs 939.19 crore in the previous year. The Company incurred a net loss of Rs 54.68 crore (after taxes) during the year, primarily on account of lower price realisation in yarns & woven fabric, restructuring-related costs, inventory revaluation, and underutilization of capacity. Restructuring and consolidation of the business are necessary steps in repositioning the Company for future growth, resilience, and profitability.

Throughout the year, the Company upheld operational discipline, with strong emphasis on cost control, supply chain optimization, and alignment of production volumes with market demand. In parallel, investments were made in workforce development through targeted training programs, especially in the garmenting division, to enhance skill levels and productivity across core operational areas.

Outlook

Looking ahead, the Company remains optimistic about its growth prospects, with a strong strategic focus on the technical textile segment, particularly in personal protective wear. This high-value, niche segment continues to gain momentum, supported by heightened global emphasis on workplace safety standards and rising institutional demand across both domestic and export markets.

To meet the increasing demand, the Company is actively enhancing production capacity in the garmenting division. One of the key operational challenges being addressed is the shortage of skilled tailors, which has temporarily constrained output. In response, targeted recruitment drives, and structured skill development programs are being rolled out to strengthen and expand the tailoring workforce.

As part of its comprehensive transformation strategy, the Company has undertaken the following initiatives:

Product Portfolio Realignment: The business has been strategically restructured to focus on the profitable garments segment·particularly technical textiles·while significantly reducing exposure to commodity-driven products like yarn, which are subject to intense price volatility and margin pressure.

Asset Monetization for Debt Reduction: To further reduce debt and lower interest costs, the Company has initiated plans to monetize select non-core assets. These efforts are expected to improve financial flexibility and strengthen the balance sheet.

Cost Optimization and Efficiency Enhancement: A series of cost control and operational efficiency initiatives are underway to further streamline operations, optimize resource utilization, and boost overall productivity.

With these strategic actions firmly in place, the Company is confident of executing a successful turnaround in the upcoming fiscal year. By focusing on high-margin segments, maintaining operational rigor, and investing in workforce capabilities, the Company is well-positioned to enhance competitiveness, improve profitability, and deliver sustained shareholder value in the years ahead.

DIVIDEND

As the Company has incurred loss due to consolidation of operations and pruning down unviable operations no dividend is proposed.

SHARE CAPITAL

As on 31^st March 2025, the paid-up share capital of the Company was Rs.4,81,64,460/- comprising 48,16,446 equity shares of Rs.10/- each. There has been no change in the share capital of the Company during the year under review.

During the year, the company has not issued any shares or any convertible instruments.

TRANSFER TO RESERVES

During the year under review, the Company has not transferred any amount to General Reserve.

MATERIAL CHANGES OCCURED AFTER THE END OF FINANCIAL YEAR

No material changes and commitments which could affect the company's financial position have occurred between the end of the financial year and the date of this report.

MANAGEMENT DISCUSSIONS ON THE INDUSTRY SCENARIO & OUTPUTS

The global Textile and Apparel (T&A) trade continues to navigate a complex environment shaped by evolving macroeconomic, geopolitical, and social dynamics. While FY 2024-25 remained challenging for the sector, the latter part of the year signaled early signs of recovery. Key drivers of this gradual rebound include improved consumer sentiment, a modest uptick in demand for casual and athleisure wear, and the easing of supply chain disruptions that had plagued the industry since 2023.

Nevertheless, certain global disruptions continued to exert pressure. The prolonged Russia-Ukraine conflict sustained inflationary trends and dampened consumer demand in major European markets. Additionally, the Red Sea shipping crisis in early 2024 contributed to elevated freight costs and transit delays, further complicating logistics. Civil unrest in Bangladesh, a major textile-exporting country, also affected regional supply chains. Further, the recent trade actions initiated by the United States, including the imposition of higher tariffs on select textile and apparel categories, have introduced addtiional uncertainty in global markets. These shifts in trade policy may impact compeptitiveness, pricing and demand dynamics in the exporting grographies.

Despite these setbacks, the outlook for Global T&A trade remains cautiously optimistic. With recessionary fears in the West subsiding and hopes for a geopolitical thaw in Eastern Europe, global demand is expected to gradually revive. The stabilization of freight routes and normalization of inventory cycles could further support the industry's path to recovery.

INDIAN TEXTILE INDUSTRY

The Indian Textile and Apparel industry holds a vital position in the national economy, contributing approximately 2.3% to GDP, 13% to industrial output, and 12% to export earnings. It is also the second-largest employer in the country, offering direct employment to 45 million individuals and supporting 60 million more in allied sectors.

India accounts for nearly 4% of global textile and apparel trade, with the USA, EU, and UK collectively representing around 50% of the country's exports in this segment. After a period of sluggish performance, Indian exports demonstrated tentative signs of recovery in FY 2024-25 . However, the long-term growth rate remains modest, with a five-year compounded annual growth rate (CAGR) of just 2%. Structural inefficiencies and competitive pressures have intensified the financial strain on the industry prompting a wave of consolidation across the sector. The recent protectionist stance adopted by the US administration, through tariff increases and import scrutiny, poses additional challenges for Indian exporters. These measures, may indirectly affect export momentum in select categories. The industry's resilience will hinge on adaptability, innovation, and a shift toward higher-value and less price- sensitive segments.

Going forward, vertically integrated, innovation-driven, and cost-efficient companies and those offering value-added high and products are expected to lead industry growth and profitability.

Outlook for the Company

Against this backdrop, your Company has proactively undertaken several strategic initiatives aimed at repositioning itself for long-term success. While FY 2024-25 was marked by lower capacity utilization and a net loss·primarily due to restructuring and realignment efforts·these decisions were crucial in laying a stronger foundation for the future.

Looking ahead, the Company will focus on:

• Accelerating Growth in Technical Textiles: The Company is prioritizing its presence in the fast-growing technical textile segment, especially in personal protective wear, which is witnessing rising demand from institutional buyers and export markets due to increasing focus on workplace safety and compliance standards.

• Strategic Product Realignment: To improve profitability, the Company has restructured its product mix, reducing dependence on low-margin commodity segments such as yarn, and shifting its emphasis to higher-value garments and specialized textiles. Growing garments segment will support utilisation and efficiency of the downstream capacities in spinning, weaving & knitting.

• Monetizing Assets to Strengthen Financials: As part of its financial turnaround strategy, the Company has initiated plans to monetize certain non-core assets. Proceeds will be directed toward reducing debt and lowering interest costs, enhancing overall financial stability.

• Improving Operational Efficiency: A series of measures are underway to optimize production costs, streamline supply chains, and enhance workforce capabilities, particularly within the garmenting division where targeted training programs are addressing skill shortages.

While the US market poses fresh challenges due to evolving tariff regimes, a large part of the Company's future export business is derived from Europe, the Middle East, Australia, and other regions, which currently remain unaffected by such restrictions. As a result, the overall impact on Loyal's export momentum is expected to be limited.

In alignment with broader industry trends, especially the shift toward technical garments Company is confident of navigating current headwinds and achieving a meaningful turnaround in the coming fiscal year.

RENEWABLE ENERGY

During the year, the company generated 4.82 crore units of wind power against 6.18 crore units in the previous year and solar power 0.74 crore units against 1.17 lakh units in the previous year. The wind power generation during the year has reduced compared to the previous year.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is furnished in Annexure I to this Report.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 and Regulations 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a separate statement containing the salient features of the financial performance of the Joint Venture(s) is attached to the financial statements in the prescribed format.

BOARD MEETING

The Board met six times during the year on 29^th May, 2024, 9^th August, 2024, 17^th October, 2024, 12^th November, 2024, 12^th February, 2025 and 18^th March, 2025.

PASSING OF RESOLUTIONS BY CIRCULATION

During the financial year, certain resolutions of the Board their approved by circulations. The Board confirms that, these circulation are in complianace with provisions of Section 175 of the Companies Act, 2013 along with the applicable rules and amendments thereto.

DIRECTORS / KEY MANAGERIAL PERSONNEL Apointment / Re-appointment

1. Ms.Vishala Ramswami (DIN:06967899) resigned from the position of Executive Director of the Company with effect from 27^th December, 2024. The Board places its sincere appreciation for the valuable services rendered by Ms.Vishala Ramswami during her tenure as Executive Director.

2. Ms.Vishala Ramswami (DIN:06967899) was appointed as Non- Executive Non- Independent Director of the Company with effect from 17^th January, 2025 by the Board of Directors and her appointment as Non- Executive Non- Independent Director was approved by the shareholders of the Company through postal ballot process on 25^th February, 2025.

3. Mr.Gokul S Dixit (DIN: 00357170) appointment as NonExecutive Independent Director for additional period of one year from November 04, 2025 to November 03, 2026 (both days inclusive) is placed in the Notice convening the AGM for approval of the Shareholders of the Company by way of a Special Resolution.

4. In accordance with provisions of the Act and the Articles of Association of the Company, Mr.B.Vaidyanathan (DIN: 00263983), Non-Executive Non-Independent Director is liable to retire by rotation at this AGM and is eligible for reappointment.

Disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations and the Secretarial Standards on General Meeting (‘SS-2') are given in the Notice of AGM, forming part of the Annual Report in respect of the appointment and reappointment of Directors at the ensuing AGM.

INDEPENDENT DIRECTORS

In terms of Section 149 of the Act and the SEBI Listing Regulations, Mr.Lakshmi Narayanan, Mr.K Kumaran, Mrs. Vijayalakshin Rao, Mr.Gokul S Dixit and Mr.R.Kannan are the Independent Directors of the Company as on the date of this Report.

All Independent Directors of the Company have submitted declarations under Section 149(7) of the Act, confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. In terms of Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors have further confirmed that they are not aware of any circumstance or situation, which exists or may be reasonable be anticipated, which could impair or impact their ability to discharge their duties with objective independent judgement and without any external influence. The Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

KEY MANAGERIAL PERSONNEL

Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel (KMP) of the Company during the financial year 2024-25 comprised the following:

• Mr. A. Velliangiri - Chief Executive Officer

• Mr. N. Srinivasan - Chief Operating and Strategy Officer

• Mr. U. Thenappan - Chief Financial Officer

• Mr. S. Muthukrishnan - Company Secretary and Compliance Officer

Changes in Key Managerial Personnel during the Year

During the year under review, the following changes occurred in the composition of Key Managerial Personnel:

1. Mr. K. Ganapathi resigned as Chief Financial Officer with effect from 29^th June 2024.

2. Mr. N. Srinivasan was appointed as Chief Financial Officer and Chief Strategy Officer with effect from 9^th August 2024.

3. Mr. P Mahadevan resigned as Company Secretary and Compliance Officer with effect from 23^rd September 2024.

4. Mr. N. Srinivasan stepped down from the position of Chief Financial Officer and was re-designated as Chief Operating and Strategy Officer with effect from 12^th November 2024.

5. Mr. S. Muthukrishnan was appointed as Company Secretary and Compliance Officer with effect from 12^th November 2024.

6. Mr. U. Thenappan was appointed as Chief Financial Officer with effect from 12^th November 2024.

7. Mr. A. Velliangiri retired from the position of Chief Executive Officer with effect from 31^st March 2025.

Changes Post Financial Year-End

Subsequent to the close of the financial year:

• Mr. N. Srinivasan was appointed as the Chief Executive Officer with effect from 1^st April 2025 for a period of two years, up to 31^st March 2027.

• Mr. R. M. Shanmugam was appointed as Chief Operating Officer with effect from 6^th March 2025.

• Mr. R M Shanmugam resigned as the Chief Operating Officer with effect from 12^th June, 2025.

CORPORATE GOVERNANCE

The Company has in place a system of Corporate Governance. Corporate Governance is about maximizing shareholder value legally, ethically, and sustainably. The company has taken adequate steps to adhere to all the conditions laid down in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time with respect to Corporate Governance. A report on Corporate Governance is included as part of this annual report as Annexure VII.

A Certificate from the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual report as Annexure VIII.

COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following Committees constituted by the Board function according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders' Relationship Committee

Details of composition, terms of reference and number of meetings held in FY25 for the aforementioned committees are given in the Report on Corporate Governance, which forms a part of this Report. Further, during the year under review, all recommendations made by the various committees have been considered and accepted by the Board.

BOARD EVALUATION

As required under the provisions of Section 134(3) (p) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has carried out a formal annual evaluation of its own performance, and that of its committees and individual directors based on the guideline formulated by the Nomination & Remuneration Committee.

The performance evaluation of the Directors was completed during the year under review. The performance evaluation of the Chairperson and the Non-Independent Directors was carried out by the Independent Directors and Non-Executive Director. The Board of Directors expressed their satisfaction with the evaluation process.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has adopted a policy on Familiarisation Programme for Independent Directors of the Company.

The Policy on Familiarisation Programme as approved can be viewed on the Company's website.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, the company has framed a Vigil Mechanism / Whistle Blower Policy. The Vigil Mechanism Policy has been posted on the website of the Company. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. No complaint has been received from any employee during this year.

SECRETARIAL STANDARDS

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013 the Annual return as on 31^st March 2025 is available on the Company's website at www.lovaltextiles.com.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the provisions of Section 135 of the Companies Act, 2013 and the applicable Rules, the Company has constituted a Corporate Social Responsibility (CSR) Committee. The Committee comprises three Directors, consisting of two Independent Directors and one Whole-time Director.

The Company continues to allocate 2% of the average net profit of the preceding three financial years toward CSR activities, in alignment with the mandates of Schedule VII of the Act. CSR efforts during the year were primarily focused on Education and Healthcare, with specific attention to supporting underprivileged communities and improving access to essential services.

During the financial year 2024-25, the Company contributed Rs 45.62 lakhs towards CSR initiatives, in line with its statutory obligation. The Annual Report on CSR activities, including a detailed account of the projects undertaken, the composition of the CSR Committee, and related disclosures as per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, is attached as Annexure III to this Report.

The Company's CSR Policy is available on the Company website at: www.loyaltextiles.com

AUDIT

STATUTORY AUDIT

M/s. Brahmayya & Co., Chartered Accountants (Firm Registration No. 000511S), were appointed as the Statutory Auditors of the Company for a period of five years at the 76^th Annual General Meeting held on September 22, 2022. Their term continues until the conclusion of the 81^st Annual General Meeting, scheduled for the year 2027.

The Statutory Auditor's Report for the financial year ended 31^st March 2025 does not contain any qualifications, reservations, adverse remarks, or disclaimers. However, the auditors have included an Emphasis of Matter paragraph, which is reproduced below:

“We draw attention to Note No. 45 of the financial statements, which outlines the Company's financial and operational position, including recurring losses, suboptimal utilization of production capacity, and prevailing market conditions affecting liquidity. These circumstances indicate uncertainties in relation to the Company's ability to achieve operational profitability.

However, having regard to the Company's initiatives to raise funds through various means, optimize operations including improved capacity utilization, and rationalize costs aimed at achieving the desired operational profitability, the financial statements have been prepared on a going concern basis. The Company's ability to achieve operational profits is dependent upon successful implementation of the aforementioned plans. Our opinion is not modified in respect of this matter."

Management's Response to the Emphasis of Matter

The Board acknowledges the Auditors' observations and affirms that appropriate corrective measures are being actively implemented.

The Company's losses during the year were primarily driven by a prolonged global demand slowdown and suboptimal capacity utilization, which adversely impacted liquidity. In response, operations have been restructured with a strategic focus on high-margin technical textile garments. In parallel, cost optimization and productivity improvement initiatives are underway to enhance efficiency and operational discipline.

To further support liquidity and financial stability, the Company is also progressing with plans to monetize select non-core assets. Management remains confident that these efforts will enable a return to operational profitability in the second half of the upcoming fiscal year.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amended Regulation 24A of the SEBI Listing Regulations, the Board has based on the recommendation of Audit Committee approved appointment of Messrs. Mohan Kumar Associates, Company Secretaries, Chennai, a peer reviewed firm of Company Secretaries in Practice as Secretarial Auditors of the Company for a period of five years, i.e., from April 1, 2025 to March 31, 2030, subject to approval of the Shareholders of the Company at the ensuing AGM. The Report of the Secretarial Auditor - M/s. BP & Associates, Company Secretaries, Chennai for FY 2024-25 is annexed herewith as Annexure - II. The said Secretarial Audit Report does not contain any qualification, reservations, adverse remarks or disclaimer.

COST AUDIT & COST RECORDS

Mr.B.Venkateswar, Practicing Cost Accountant was appointed as Cost Auditor for auditing the cost accounts of the Company for the year ended 31^st March, 2025. The Cost Audit Report for the financial year 2024-25 will be submitted to the Central Government before due date.

The Board of Directors of the Company have appointed Mr.B.Venkateswar, Practicing Cost Accountant, holding Membership No.27622 as Cost Auditor for the year ending 31^st March 2026.

In accordance with the provisions of Section 148(3) of the Companies Act 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the Shareholders. Accordingly, resolution seeking ratification for the remuneration payable to Cost Auditors is included as one pf the items in the Notice convening the AGM.

INTERNAL AUDITORS

The company has appointed M/s. Capri Assurance and Advisory Services, as External Internal Auditors for the period ending 30^th September 2025.

OTHER DISCLOSURES

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions entered into by the Company during the financial year 2024-25 were carried out in the ordinary course of business and at arm's length. These transactions were reviewed and approved by the Audit Committee, which comprises independent directors. Where applicable, repetitive transactions were approved through the omnibus approval route, in accordance with the SEBI Listing Regulations and the Company's related party transaction policy.

As per Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, any related party transaction that exceeds either Rs. 1,000 crore or 10 percent of the Company's annual consolidated turnover, whichever is lower, is considered as material related party transactions and requires shareholder approval. The Company confirms that no material related party transactions, as defined under the applicable regulations, were entered into during the financial year 2024-25.

Disclosures pursuant to Section 188(1) of the Companies Act, 2013 are provided in Form AOC 2, which forms part of this Report as Annexure IV. Additional details of related party transactions, including their nature, value, and terms, are set out in Note 42 to the standalone and consolidated financial statements.

Transactions with persons or entities belonging to the promoter group holding 10% or more of the shareholding in the Company are also disclosed in the financial statements.

During the year under review, non-executive directors had no pecuniary relationships or transactions with the Company other than receipt of sitting fees, commission, and reimbursement of expenses, as applicable.

The Board of Directors, based on the recommendation of the Audit Committee, has adopted a policy to regulate related party transactions in accordance with the applicable provisions of the Companies Act, 2013 and the SEBI Listing Regulations. The Policy is available on the Company's website at: https://lovaltextiles.com/wp-content/uploads/2025/02/LTM-Related-Partv-Transcation- Policy. pdf

Further, during the financial year 2025-26, the Company proposes to enter into related party transactions with Gruppo P& P Loyal S.P.A, the joint venture partner of the Company, which are expected to exceed the materiality threshold of 10% of the Company's annual consolidated turnover as of March 31,2025. Accordingly, a special resolution seeking shareholder approval for entering into these material transactions is included in the Notice convening the Annual General Meeting.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During FY 2024-25, the Company has not given loans, advances made investments, guarantee to any of its, joint venture Companies and other body corporates and persons.

DEPOSITS FROM PUBLIC

During the year under review, the Company did not accept any deposits from the public in terms of Section 73 of the Companies Act, 2013. Accordingly, there were no outstanding public deposits, whether principal or interest, as on the date of the balance sheet.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

In order to comply with provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, the Company has formulated and implemented a policy on prevention, prohibition and redressal of complaints related to sexual harassment of women at the workplace. All women employees either permanent, temporary or contractual are covered under the above policy. An Internal Committee (IC) has been set up in compliance with the said Act. During the year under review, there were no cases filed pursuant to the provisions of the Act. Necessary annual returns have been filed with respective collectorate. Details of status of complaints as below:

DISCLOSURE UNDER MATERNITY BENEFITS ACT, 1961

During the FY 2024-25, the Company had complied with the relevant applicable provisions of Maternity Benefits Act, 1961.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors hereby confirms that:

a. In the preparation of the annual financial statements for the year ended 31^st March 2025, the applicable accounting standards have been followed, along with proper explanations relating to material departures, if any.

b. The Directors have selected appropriate accounting policies and applied them consistently and have made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company and the loss for the financial year ended 31st March 2025.

c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. The Directors have prepared the annual accounts on a going concern basis.

e. The Directors have laid down adequate internal financial controls to be followed by the Company and such internal financial controls are operating effectively.

f. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

In accordance with the provisions of Section 124 of the Companies Act, 2013 and the applicable rules made thereunder, the Company has transferred a sum of Rs. 15,89,970/- to the Investor Education and Protection Fund (IEPF) during the year. This amount represents dividends that remained unclaimed and unpaid for a period of seven consecutive years.

As per statutory requirements, any dividend that remains unclaimed or unpaid for seven years from the date of transfer to the unpaid dividend account is required to be transferred to the IEPF

Due dates for transfer of Unclaimed Dividends to the IEPF is given below:

Members who have not yet encashed their dividend warrants for the above financial years are advised to submit their claims

to the Company's Registrar and Transfer Agent (RTA) at the earliest by quoting their folio number or DP ID and Client ID

CREDIT RATING

During the financial year 2024-25, CARE Ratings Limited revised the Company's credit ratings for its bank facilities, citing near-term operational and financial pressures. The revised ratings are as follows:

Management Outlook

Despite the temporary challenges, the Company is undertaking comprehensive measures to improve its financial profile. These include:

• Strategic realignment toward high-value technical textiles and garments.

• Monetization of non-core assets to reduce debt and strengthen liquidity.

• Cost rationalization and operational efficiency initiatives to enhance margins.

With these steps underway, the Company expects improvements in operating performance and credit metrics in the upcoming fiscal period. The management remains confident of regaining an improved rating trajectory once these initiatives translate into measurable financial outcomes.

LISTING

The Company's equity shares are listed on National Stock Exchange India Limited (NSE) and Bombay Stock Exchange (BSE).

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, it is confirmed that no employee of the Company received remuneration of Rs. 1.02 crore or more during the financial year, or Rs. 8.50 lakhs or more per month during any part of the year under review.

RATIO OF REMUNERATION OF DIRECTOR

Pursuant to Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the statement disclosing the ratio of the remuneration of each Director to the median employee's remuneration is provided in Annexure V to this Report.

CEO / CFO CERTIFICATION

In accordance with Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a certificate certifying the accuracy and completeness of the financial statements and cash flow statement for the year ended 31^st March 2025, duly signed by the Chief Executive Officer and Chief Financial Officer, was submitted to the Board of Directors. The certificate is annexed to this Report as Annexure VI.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has in place an adequate internal control system designed to ensure the orderly and efficient conduct of its business, including the safeguarding of assets, the prevention and detection of fraud and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

All transactions are properly authorised, recorded, and reported to the management. The Company adheres to applicable accounting standards and statutory requirements in maintaining its books of accounts. The internal audit function, carried out by an independent firm of auditors, regularly evaluates the effectiveness of internal controls and ensures their compliance with the policies approved by the Board.

RISK MANAGEMENT

The company takes utmost care in managing the risks and it helps to improve operations and production. Risk management framework has been formulated. The Board members are regularly informed of the risk assessment and risk mitigation measures. The forex exchange risk is actively managed within the framework laid down by the Forex management policy approved by the Board.

GENERAL

In accordance with the applicable provisions of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014, the Board confirms the following disclosures for the year under review:

• No significant or material orders were passed by any regulators, courts, or tribunals, other than those already considered in the financial statements and disclosed under the Statement on Contingent Liabilities and Commitments in the notes to the financial statements, that would impact the going concern status of the Company or its future operations.

• No instances of fraud were reported by the statutory auditors under Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.

• There was no change in the nature of the business of the Company during the financial year. The Company continues to operate in the textile industry, with a strategic focus on value-added offerings, particularly technical textiles and protective wear.

• No proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.

• The Company did not enter into any one-time settlement with any bank or financial institution during the financial year.

ENHANCING SHAREHOLDERS' VALUE

The company believes in the importance of its Members who are among its most important stakeholders. Accordingly, the company's operations are committed to the goal of achieving high levels of performance and cost effectiveness, growth building, enhancing the productive asset and resource base and nurturing overall corporate reputation. The company is also committed to creating value for its stakeholders by ensuring that its corporate actions have positive impact on the socioeconomic and environmental growth and development.

ACKNOWLEDGEMENT

The Board has pleasure in recording its appreciation for the assistance, cooperation and support extended to the company by the banks and the government departments.

The Board also places on record its sincere appreciation of the response received from the company's valuable customers and thank them for their continued support.

The company is grateful to all the employees for their continued co-operation extended to the company. Their contribution has been outstanding and the Directors place on record their appreciation for the same.

The Directors also thank the shareholders for their support and for the confidence they have reposed in the company.

CAUTIONARY STATEMENT

This report, including the Management Discussion and Analysis, contains forward-looking statements that reflect the Company's current expectations regarding future performance. These statements are subject to inherent risks and uncertainties, and actual results may differ materially from those expressed or implied. Key factors that may impact performance include market demand, raw material availability and pricing, changes in government policies, regulatory developments, tax laws, economic conditions, and other operational or legal matters.