Reliance Chemotex Industries Ltd

Dear Shareholders,

In the journey of enduring success, the essence lies in the ability to adapt, evolve and embrace change. A company's survival hinges on its capacity to not only grow, but also redefine its horizons, reimagine its potential, and ultimately reinvent itself. This principle resonates deeply with us at RCIL, as we stand at the crossroads of transformation.

Our industry, much like the world around us, is in constant flux. To thrive in this dynamic landscape, we've grappled with two pivotal inquiries: "What trajectory should our company chart?" and "What strategic measures are imperative to realize this trajectory?" We recognize that challenging times offer the chance not just for incremental adjustments, but for profound reinvention. This philosophy underpinned our endeavors over the past year.

Amidst escalating geopolitical tensions, inflationary pressures, and fluctuating interest rates, our results remained robust. Your Company has reported a turnover of Rs. 371.04 crores (Rs. 368.36 crores in FY22) and an EBITDA of Rs. 40.40 crores (Rs. 48.02 crores in FY22). This resilience can be attributed to our ability to nimbly adapt to market dynamics and our three-pronged strategy: a steadfast focus on technical textiles, continuous enhancement of our value-added product mix, and strategic cost containment. These efforts have allowed us to navigate the global downturn with remarkable efficacy.

While our performance metrics have demonstrated our resilience, it's imperative to address the dip in PAT (down by 31.5%) and EBIDTA (down by 15.9%) compared to the previous year. This decline was largely driven by the Ukraine conflict, resulting in sanctions imposed on Russia by the USA, and the economic downturn in the USA, which caused a reduction in overall textile exports from India, high inflation, and recessionary pressures in major export markets. This context explains the shift from exports constituting 71% of our total turnover in 2021-22 to 57% in 2022-23.

Yet, within this turbulence, a silver lining emerged from the Indian government's path-breaking initiatives. The Union Budget 2022-23 bore testament to these efforts, with increased allocations to schemes like RoDTEP, RoSCTL, and ATUFS. Amid global demand fluctuations, India's determination to foster its textile industry signals an environment ripe for innovation and rejuvenation.

From the crucible of pandemic-induced challenges and global upheavals, a renewed RCIL has emerged. This notion encapsulates the essence of our annual theme, "Reinvention," and echoes the broader spirit to Redefine, Reimagine, and Reinvent. The new normal demands a fresh approach to business; strategies that once guaranteed success warrant reevaluation. This process of reevaluation is the essence of our reinvention, embodying how companies like ours evolve and align with contemporary market dynamics.

Our pursuit of reinvention was exemplified through several strategic initiatives:

• We embarked on a transformative INR 100 crore expansion, slated to increase our capacity by 12,480 spindles (an additional 3,000 MTPA).

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This growth trajectory allows us to leverage economies of scale, broaden our product offerings, and enhance profitability.

• Our fiber-dyeing facility is being upgraded. This will allow us to expand our offering of dyed yarns, which command a premium.

• Modernization of 16,000 spindles and debottlenecking initiatives were pursued, bolstering our operational efficiency and productivity. These initiatives began

in 2020, were delayed by the pandemic, and were completed in April 2022. The adoption of cutting-edge technology through machinery upgrades revolutionized our operations, enhancing flexibility, efficiency, and reducing maintenance costs and manpower dependence.

• Our commitment to sustainable practices saw the installation of rooftop solar panels, with our solar power capacity reaching 3.5 MW. This will be scaled up further to 5MW by April 2024.