Atvo Enterprises Ltd Management Discussions

Your directors are pleased to present the Management Discussion and Analysis Report for the year ended 31^st March, 2026.

ECONOMIC AND INDUSTRY OVERVIEW GLOBAL ECONOMY

Global Economic Overview FY 2025-26

The global economy maintained a stable growth trajectory during the year, despite ongoing macroeconomic challenges, including the imposition of higher US tariffs on key traded goods, which have weighed on global trade flows. Global GDP growth stood at 3.3% in 2025, improved marginally from 3.2% in 2024. Growth in advanced economies remained subdued, moderating from 1.8% to 1.7%, reflecting tighter financial conditions and weaker demand. In contrast, emerging economies continued to drive global growth, expanding by 4.4% in 2025, supported by strong domestic demand, increasing infrastructure investments, and improving manufacturing activity. Additionally, ongoing geopolitical tensions, including in the Middle East, have contributed to some volatility in energy prices, adding to the uncertainty in global energy markets. Overall, the global outlook remains uncertain due to geopolitical developments which continue to pose risks to sustained economic growth.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

Outlook

The global economy is expected to moderate over the next two years amid continued geopolitical tensions, trade disruptions, inflationary pressures, and heightened energy-market uncertainty. The outbreak of the US Iran conflict in February 2026 has added a further layer of risk to the global outlook, contributing to volatility in oil prices, disruptions to trade routes, and increased uncertainty across financial markets. Global growth is projected at 3.1% in 2026 and 3.2% in 2027, while inflation is expected to remain elevated before gradually easing. Although policy support and supply chain adjustments may help stabilize markets, the external environment is likely to remain uncertain and volatile. Businesses may therefore continue to face pressure from cautious consumer demand, fluctuating input costs, and evolving trade dynamics.

Emerging Markets and Developing Economies are expected to sustain relatively stronger momentum, projected at around 3.9% in CY 2026 and improving to 4.2% in CY 2027, supported by domestic demand and policy support across the major economies.

Indias Economy and Industry Overview

India retained its position as the worlds fastest-growing major economy in FY 2025 26. According to the Provisional Estimates released by the National Statistics Office, real Gross Domestic Product grew by 7.7%, up from 7.1% in FY 2024 25, taking real GDP to 323.12 lakh crores. Ngominal GDP expanded by 8.9%, while real Gross Value Added grew by 7.9%. Momentum was sustained through the year, with fourth-quarter real GDP growth at 7.8%.

What distinguished the year was the character of that growth. It was led decisively by domestic demand. Private Final Consumption Expenditure, the single largest component of GDP, accelerated to 7.7% from 5.8% in the preceding year, while Gross Fixed Capital Formation grew 8.2% against 6.4%. Government consumption and exports, by contrast, moderated. Growth in FY 2025 26 was therefore anchored in the Indian household and the domestic investment cycle rather than in fiscal or external stimulus. On the supply side, manufacturing was a standout, growing 10.7% against overall Gross Value Added growth of 7.9%.

Several policy conditions underpinned this performance. Headline inflation eased to 1.7% during April December 2025, improving real purchasing power, while a cumulative 125 basis point reduction in the policy repo rate since February 2025 lowered borrowing costs across the economy. The rationalisation of GST rates in September 2025 and the restructuring of personal income tax supported consumption demand, while sustained public capital expenditure anchored the investment cycle. Banking sector balance sheets strengthened, with gross non-performing assets at a multi-decade low of 2.2%.

The external environment was less accommodating. Elevated tariffs imposed by the United States created stress for Indian manufacturers, particularly exporters, and weighed on business confidence.

Global Textile Industry

The global textile industry is estimated at approximately USD 2,123.72 billion in CY 2025 and is projected to reach nearly USD 4,016.50 billion by CY 2034. The Asia Pacific region accounts for nearly 54% of the market, while North America and Europe contribute around 22% and 19% respectively

Asia Pacific held the largest revenue share of 49.9% in the textile market in 2025 and is expected to maintain its dominance, driven by consumer awareness and demand for eco-friendly fabrics. Global sustainability goals, investments in sustainable practices, and technological advancements in textile manufacturing are significant drivers. The increasing demand for performance fabrics, smart textiles, and bio-synthetics is also contributing to market expansion.

The textile market is moderately fragmented, featuring a mix of large multinational corporations and numerous small and medium-sized enterprises, particularly in the Asia-Pacific region. Companies are increasingly focusing on sustainable solutions such as recycled fibers, waterless dyeing technologies, and circular production models to address environmental concerns and meet consumer demand.

Companies are increasingly focusing on sustainable solutions such as recycled fibers, waterless dyeing technologies, and circular production models to address environmental concerns and meet consumer demand.

INDUSTRY OVERVIEW

Indian textile industry

Indias textiles sector is one of the oldest and most diverse industries in the country, with roots stretching back centuries. It spans from traditional hand-spun and handwoven clusters to sophisticated capital-intensive mills, supported by a robust base of fibres and yarns ranging from cotton, jute, silk, and wool to polyester, viscose, and acrylic. The decentralised power loom, hosiery, and knitting segment remains the largest component, reflecting the industrys ability to cater to multiple consumer markets.

Its close linkage with agriculture, reliance on natural resources like cotton, and strong cultural heritage give the Indian textiles industry a unique identity compared to other manufacturing sectors.

Over the years, India has built the capacity to serve a wide spectrum of demand, from affordable mass-market apparel to niche high-value categories, both domestically and internationally. The industry today employs more than 45 million people, underlining its role as one of the countrys largest generators of livelihoods.

To sustain competitiveness and attract investment, the government has been actively supporting the sector through targeted initiatives such as the Scheme for Integrated Textile Parks (SITP), the Technology Upgradation Fund Scheme (TUFS), and the Mega Integrated Textile Region and Apparel (MITRA) Park scheme. These measures, along with new investments in technology, innovation, and design, are positioning the textiles sector not only as one of Indias oldest industries but also as one of its most future-ready.

The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 2.3 billion by 2030. India ranks among the top five global exporters in several textile categories, with exports expected to reach US$ 100 billion.

The textiles and apparel industry contributes approximately 2% of Indias GDP and about 11% of manufacturing GVA (Gross Value Added) as of February 2026. The textile industry in India is predicted to double its contribution to the GDP to approximately 5% by the end of this decade. Global fiber demand is expected to reach around 149 million tons in 2030, with increasing population and growth in per capita consumption.

The Indian Technical Textiles market is the fifth largest in the world. The technical textiles industry is projected to grow to US$ 45 billion by 2026, US$ 123 billion by 2035, and US$ 309 billion by 2047. The India mobil tech textile market (a division of technical textiles for automotive use) is projected to grow from US$ 2.32 billion in FY25 to US$ 4.57 billion by FY33, at a CAGR of 8.84%. This growth is driven by rising demand for advanced materials, electric vehicles, and sustainability focus.

India saw a 36.4% increase in industrial design applications, particularly in textiles, accessories, tools, machines, health, and cosmetics. The global apparel market was valued at US$ 1.9 trillion in 2025 and is expected to grow at a CAGR of 4.1% from 2026 to 2034. Growth is driven by rising demand for casualwear and athleisure, social media trends, higher disposable incomes, and e-commerce expansion.

In FY26 (April February 2026), the total exports of textiles and apparel (including handicrafts) stood at US$ 32.63 billion. The Ready Made Garments (RMG) category, with exports of US$ 14.53 billion, accounted for the largest share (45%) of total exports, followed by Cotton Textiles (29%, US$ 9.36 billion) and Man-Made Textiles (15%, US$ 4.82 billion). The sector employs over 45 million people and produces approximately 22,000 million pieces of garments annually

Outlook

The future of Indias textiles industry looks promising, supported by rising domestic demand, growing exports, and policy interventions that are strengthening competitiveness. The sector, which already contributes around 2% to GDP and employs over 45 million people, is expected to see its share in the economy nearly double by the end of the decade. Technical textiles will play a pivotal role in this growth.

Sustainability and innovation are emerging as defining themes for the industry. Companies are increasingly adopting eco-friendly processes and recyclable fibres to align with global trends, while government schemes like MITRA Parks and support for integrated textile hubs are encouraging value addition and modernization.

With household incomes rising, urbanisation expanding, and demand from sectors like housing, healthcare, and hospitality growing steadily, Indias textile and apparel market is projected to reach US$ 350 billion by 2030. This positions India not only to strengthen its domestic market but also to expand its global footprint in textiles and apparel.

INDIAN TEXTILE INDUSTRY

1. MARKET SIZE

Textiles and Apparel Industry (US$ Billion)

Year	Market Size
2025	US$ 167 Billion
2030P	US$ 222 Billion

CAGR: 5 6%

Key Facts

- Contribution to Indias GDP: 2.3%

- Largest Employment Provider: 45+ Million People

- Contribution to Indias Exports: 11 12%

2. SECTOR COMPOSITION

Share of Indias Textile Exports FY26

Segment	Share
Ready Made Garments (RMG)	40%
Cotton Yarn / Fabrics / Made-ups / Handloom Products	28%
Man-made Yarn / Fiber / Fabrics / Made-ups	16%
Handicrafts (incl. Hand-made Carpet)	8%
Carpet and Floor-covering	6%
Others (Wool, Silk, Jute, Technical Textiles etc.)	2%

Total: 100%

Source: DGCI&S, Ministry of Textiles

KEY TRENDS

Textiles Trade (US$ Billion)

Financial Year	Exports (US$ Billion)	Imports (US$ Billion)
FY16	25	14
FY17	27	16
FY18	30	17
FY19	30	18
FY20	27	17
FY21	34	21
FY22	44	26
FY23	44	25
FY24	41	24
FY25	38	24
Financial Year	Exports (US$ Billion)	Imports (US$ Billion)
FY26	39	25

Source: DGCI&S, Ministry of Textiles

3. Key Trend

Indias textile trade has demonstrated substantial growth over the years, with textile exports increasing from US$25 billion in FY16 to US$39 billion in FY26, while imports increased from US$14 billion to US$25 billion during the same period.

4. GOVERNMENT INITIATIVES

The key government initiatives supporting Indias textile sector include:

1. National Technical Textiles Mission (NTTM)

2. PM MITRA Parks

3. Amended Technology Upgradation Fund Scheme (ATUFS)

4. Export Promotion Initiatives

5. PLI Schemes for MMF & Technical Textiles

5. ADVANTAGE INDIA Robust Demand

Indias overall per capita fiber consumption stands at approximately 13 kg per capita, lower than the global average, indicating significant headroom for future growth.

Unmatched Advantage

India possesses a unique mix of raw materials and availability of skilled manpower across the value chain.

Policy Support

The availability of a National Mission on Apparel and Home Textiles (NMAHT), identified under the 12th Five-Year Plan, along with the ICHAT identified under the 10th Five-Year Plan, provides support towards product value chain optimization.

Strong Policy Ecosystem

Initiatives such as PLI Schemes, PM MITRA Parks, NTTM and ATUFS provide strong support across the textile value chain and enhance Indias global competitiveness.

Increasing Investments

Ongoing investments in the sector, including capacity expansions, technology upgrades and sustainability initiatives, are expected to strengthen Indias position as a global textile hub.

Note: Market size for 2025 is estimated; 2030 is projected (P). Source: Industry reports, Ministry of Textiles, DGCI&S.

The role of Government support Policy support operates on two fronts, both material to yarn manufacturers. Externally, the free trade agreements concluded during the year improve preferential access, reduce tariff disadvantages and support integration into global value chains for Indian yarn and downstream products. Domestically, the Production Linked Incentive Scheme, the National Technical Textiles Mission, the PM MITRA Parks programme, the Mission for Cotton Productivity, and the export remission schemes RoSCTL and RoDTEP collectively address raw material availability, infrastructure, scale and export competitiveness.

Notably, the Ministry of Textiles has observed that while the PLI Scheme is directed at downstream man-made fibre fabrics and apparel, the sectors growth and global competitiveness will depend on ensuring the availability, accessibility and affordability of man-made fibre through capacity expansion at the fibre and yarn stage, particularly for PET.

OPPORTUNITIES AND THREATS AND FUTURE OUTLOOK GLOBAL ECONOMIC CONDITIONS

Opportunities: The global narrative has decisively shifted towards sustainability. As global buyers and regulators increasingly mandate lower carbon footprints and ethical sourcing, Indian companies investing in renewable energy, closed-loop water systems, and certified fibres like rPET are unlocking a distinct and highly profitable competitive advantage.

China Plus One Strategy and Free Trade Agreements Geopolitical realignments and the push for resilient supply chains are driving brands to diversify sourcing beyond a single geography. India is emerging as a key beneficiary, further supported by expanding Free Trade Agreements (FTAs) that help neutralize historical tariff disadvantages.

Technological Advancements and Digitalisation Digital integration, predictive AI in supply chains, and advanced factory automation over significant opportunities. Notably, payback periods for modernization capex have reduced to an attractive 3-4 years.

Rising Domestic Consumption and Premiumisation - A young, digitally native, and increasingly affluent population is driving premiumisation across categories. Rising demand for branded casualwear, activewear, and luxury home textiles offers a large, de-risked growth runway.

Greater Investment and FDI opportunities are available. Elimination of Quota Restriction leads to greater Market Development.

Threats:

Raw Material Volatility

The industry remains exposed to global commodity cycles. Fluctuations in domestic cotton yields and volatile crude oil prices continue to challenge pricing strategies and pressure margin stability.

Intense Global Competition

Competition from Bangladesh, Vietnam, and Cambodia remains intense. These countries benefit from lower labour costs, port logistics, and long-standing duty-free access to key Western markets.

Geopolitical Disruptions and Supply Chain Fragility

Global supply chains remain fragile. Regional conflicts, shipping disruptions, sudden policy shifts, and geopolitical flare-ups can quickly disrupt logistics.

Stringent ESG Compliance and Non-Tari Barriers

Rapidly evolving ESG regulations, including carbon border taxes and traceability laws, are emerging as significant non-tariff barriers.

Risks and Concerns

The broader trends in the economy are expected to have a direct impact on your Companys growth prospects as well. Inflation is expected to remain elevated for the foreseeable future, driven by war induced commodity price increases and broadening price pressures. In addition, the anticipated increase in interest rates by Central Banks in the coming year are also expected to lower growth and exert pressure on economies particularly those in emerging markets. In these circumstances, the ability to successfully navigate cost pressures would have a significant bearing on the overall performance of your Company. Diminishing purchasing power and demand due to the economic circumstances could result in fundamental shifts in consumer behaviours and adversely impact the market for textiles and apparel. Migration to value for money options could also lead to reduced growth and profitability for your Company.

Risk management is embedded in your Companys operating framework. Your Company believes that managing risks helps in maximizing returns. The companys approach to addressing business risk is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit committee. Some of the risks that the company is exposed to are:

1. COMPETITIVE RISK:

The apparel industry is subject to rapidly evolving fashion trends, and we must continuously offer innovative and upgraded products to maintain and grow our existing businesses. Investments in the industries have started picking up with no barriers for entry of new players. Your Company continues to focus on increasing its market share and focusing more on R&D, Quality, Cost and Timely delivery that help create differentiation and provide optimum service to its customers to expose competition risk.

2. FINANCIAL (FUNDING RISK):

Any increase in interest rate can affect the finance cost. The Companys policy is to borrow long term borrowing in Indian Rupee to avoid any rate variation risks. The Company has adopted a prudent and conservative risk mitigation strategy to minimize interest costs. The textile industry faces various financial risks, from having lenient payment terms to negotiating weak contracts. You must practice caution to ensure prompt payments for items delivered, which is possible through various strategies, including placing requirements for advanced payments, leveraging invoice factoring, seeking bank guarantees, and insuring trade credit. Furthermore, be sure to evaluate the risk scores of your current and potential customers to minimize the likelihood of non-payment.

3. FOREIGN EXCHANGE RISK:

Foreign exchange risks are quantified by identifying contractually committed future currency transactions. The Companys policy is to hedge all long-term foreign exchange risk as well as short term exposures within the defined parameters. The long-term foreign exchange liability is hedged and hedging reserve is maintained as per requirement of Ind-AS.

4. COMPLIANCE AND CONTROL RISK:

The evolution of the global regulatory environment has resulted into increased regulatory scrutiny that has raised the minimum standards to be maintained by BSL Limited. This signifies the alignment of corporate performance objectives, while ensuring compliance with regulatory requirements. The Company is regularly monitoring and reviews the changes in regulatory framework and also monitoring its compliance mechanism so as to ensure that instances of non-compliance do not occur.

5. RAW MATERIAL PRICE RISK:

The Company is exposed to the risk of raw material prices of Polyester, Viscose, P/V blended yarn, Silk and Wool. The Company hedges this risk by purchasing the required raw material at the time of booking of sales contracts. Also, this risk is being managed by way of inventory management and forward booking.

6. HUMAN RESOURCES RISK:

Retaining the existing talent pool and attracting new manpower are major risks. The Company hedges this risk by setting benchmark of the best HR practices and carrying out necessary improvements to attract and retain the best talent. The Company has initiated various measures such as rollout of strategic talent management system, training and integration of learning activities.

RISK MANAGEMENT

The Company considers risk management a vital aspect of its operations and has established a comprehensive framework to identify, evaluate and mitigate risks across all functional areas. This framework involves periodic risk assessments, continuous monitoring of key indicators and the formulation of appropriate mitigation strategies. Oversight is provided by a dedicated Risk Management Committee composed of Directors and senior leadership, which routinely reviews relevant policies and advises management on risk-related matters. The Audit Committee has additional oversight in the area of financial risks and controls. Additionally, a third-party organisation has benchmarked the Companys risk management practice with various companies in India and globally and pronounced it as a leader in FMCG category.

DISSCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements have been prepared in accordance with the requirements of the Companies Act, 2013 and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Accounts and other financial statements forming part of this annual report.

SEGMENT WISE OR PRODUCT-WISE PERFORMANCE

The Company has only One Reportable Segment i.e. Knitting Job work as per IND AS 108 Operation Segments and so therefore separate disclosure on reporting by business segments not required.

INTERNAL CONTROL SYSTEM

The Company has implemented a robust internal control system to ensure the efficiency and effectiveness of operations, accurate financial reporting and compliance with laws and regulations. The Company has established comprehensive policies and procedures for all major business processes, including management, human resources, procurement and inventory management. Regular audits are conducted by internal auditors to monitor compliance with these policies and procedures and to identify areas for improvement. The Company also maintains a system of checks and balances, including the segregation of duties and clear lines of authority and responsibility. Through these measures, the Company aims to minimise the risk of fraud, errors and other financial irregularities, to foster transparency and accountability throughout the organisation.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen them.

HUMAN RESOURCE DEVELOPMENT

The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potential of its employees attracting and retaining the best manpower available by providing high degree of motivation.

Your Company believes in trust, transparency & teamwork to improve employees productivity at all levels.

DISCLOSURE OF ACCOUNTING TREATMENT

While preparation of financial statements, a relevant Accounting Standard treatment has been followed.

CAUTIONARY STATEMENT

This report on Management Discussion and Analysis includes forward-looking statements, which are predictions, expectations, projections, or estimates about the Companys objectives. These statements are based on certain assumptions and expectations of future events. However, actual results may differ from these statements due to various factors such as changes in government regulations, tax laws and other statutes. Additionally, unforeseen events such as force majeure could affect the actual result. It is important for readers to understand the context in which these statements are made and that they may not reflect future outcomes accurately.

By Order Of the Board For ATVO Enterprises Limited (Formerly Known as Vandana Knitwear Limited)

Date: 02-07-2026

Place: Bhilwara Naresh Kumar Gattani

DIN: 00125231 Chairman & Managing Director