MANAGEMENT DISCUSSION AND ANALYSIS

INTRODUCTION:

The following Management Discussion and Analysis (MD&A) provides an overview of the business performance, operational developments, financial performance, opportunities, risks and outlook of CPS Shapers Limited (the Company) for the financial year ended 31st March, 2026. The analysis should be read in conjunction with the audited financial statements and the accompanying notes forming part of the Annual Report.

During the year under review, the Company continued to strengthen its position in the shapewear and innerwear segment through product innovation, adoption of advanced garment manufacturing technologies, expansion of its product portfolio and development of opportunities in contract manufacturing and white-labelling. The Company remained focused on enhancing product quality, manufacturing capabilities, and distribution reach and customer engagement.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian innerwear, shapewear and intimate-wear industry is undergoing a gradual transition from a largely unorganised and price-driven market towards an organised, branded and quality-conscious market. Increasing consumer awareness, changing lifestyles, growing fashion consciousness and the increasing preference for comfort-oriented apparel are supporting the development of the category.

Consumers are increasingly looking beyond basic functionality and are seeking products that combine comfort, fit, aesthetics, quality and technology. This has resulted in greater acceptance of innovative garment construction techniques, including bonded and seamless technologies, as well as the use of diverse fabrics and material combinations.

The industry is also witnessing increasing penetration of organised retail, modern trade and e-commerce platforms. Digital commerce has enabled brands to reach a wider customer base while providing consumers with greater choice and convenience. At the same time, the emergence of private labels and contract manufacturing opportunities is creating additional avenues for established manufacturers with appropriate production capabilities and quality systems.

Product innovation continues to remain an important differentiator in the industry. The availability of cotton-based fabrics, synthetic blends, performance fabrics and other specialised materials is enabling manufacturers to develop products catering to different consumer requirements and price segments.

The industry is also witnessing increasing emphasis on product quality, responsible manufacturing, sustainability and internationally recognised quality standards. These developments are expected to favour organised players having established manufacturing capabilities, quality systems and the ability to continuously innovate.

BUSINESS OVERVIEW

CPS Shapers Limited operates in the shapewear and innerwear segment and has built its product portfolio around comfort, fit, functionality and innovative garment construction. During FY 2025-26, the Company continued to expand its product offerings and strengthen its manufacturing capabilities in line with evolving consumer requirements.

The Companys established brand, Dermawear, continues to serve the growing market for shapewear and related apparel. During the year, the Company also expanded its portfolio into additional categories of innerwear and intimate wear, thereby creating opportunities to address a broader range of consumer requirements.

The Company also continued to develop its capabilities in contract manufacturing and white-labelling. This business opportunity enables the Company to leverage its product development and manufacturing capabilities to cater to institutional, retail and brand customers seeking specialised garment manufacturing solutions.

BUSINESS AND OPERATIONAL PERFORMANCE

During FY 2025-26, the Company remained focused on strengthening its core manufacturing and product development capabilities. The Company continued to invest in modern garment manufacturing equipment and specialised machinery to improve manufacturing efficiency, consistency, productivity and product quality.

The Company expanded its product portfolio during the year with the introduction of several new and innovative products across shapewear, innerwear and intimate-wear categories. The product development initiatives included cotton-bonded products, mens trunks and briefs, high-waist and wrestler-style products, along with additional bra styles using the Companys bonding technology. The Company also introduced products such as travel panties and silicon-based saree shapewear.

The expansion of the product portfolio reflects the Companys objective of moving beyond traditional shapewear and developing a wider range of comfort-oriented and technology-enabled apparel products. The Company also continued to strengthen its contract manufacturing and white-labelling capabilities. During the year, the Company progressed discussions and product development with established customers and retail organisations, including sampling, quality evaluation and manufacturing assessments. These initiatives are expected to provide opportunities for the Company to diversify its customer base and utilise its manufacturing capabilities more effectively.

PRODUCT INNOVATION AND TECHNOLOGY

Innovation continues to be an important part of the Companys growth strategy. During the year, the Company focused on developing products that combine comfort, aesthetics and functional performance while exploring new fabrics, garment constructions and manufacturing techniques.

The Company expanded its use of bonding technology across different product categories. The technology enables the development of garments with reduced visible seams and enhanced comfort, while providing opportunities for differentiated product designs.

The Company also introduced products using cotton-based bonding technology and continued to develop products using different fabric compositions suitable for varied consumer requirements. These initiatives are intended to broaden the Companys product portfolio and create differentiated offerings in the market. The Company also invested in specialised machinery and manufacturing equipment during the year to enhance its production capabilities and support the development of advanced garment products.

CONTRACT MANUFACTURING AND WHITE-LABELLING

Contract manufacturing and white-labelling represent an important growth opportunity for the Company. The Company has been leveraging its product development, manufacturing and quality capabilities to develop products for third-party brands and retail customers.

During FY 2025-26, the Company continued to strengthen this business vertical through customer engagement, product sampling, product development and quality evaluation. The Company also progressed relationships with established retail and brand customers for potential manufacturing opportunities.

The Companys experience in shapewear, innerwear and bonded garment manufacturing provides a foundation for servicing customers seeking specialised products, product development support and manufacturing solutions.

The Company intends to continue developing this vertical in a calibrated manner, with a focus on product quality, timely execution, customer requirements and efficient utilisation of manufacturing capacity.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review, the Companys financial performance was influenced by the overall business environment, product mix, raw material prices, operating costs, investments in manufacturing capabilities and expenses associated with business development and market expansion.

The Company continued to focus on improving operational efficiencies, strengthening working capital management and maintaining adequate controls over procurement, inventory, production and receivables.

During the year, the Company also incurred expenditure towards strengthening its manufacturing capabilities, product development, sales and marketing activities and business expansion initiatives. These investments are intended to support the Companys medium-to long-term growth objectives.

The detailed financial performance, including revenue, profitability, assets, liabilities and cash flows, is provided in the audited financial statements forming part of this Annual Report.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company continues to operate in a single reportable business segment from an accounting perspective.

During FY 2025-26, the Company expanded its product portfolio across shapewear, innerwear, bonded garments and related intimate-wear categories. The expansion is aligned with the Companys strategy of addressing a broader range of consumer requirements while leveraging its existing manufacturing and product development capabilities.

OPPORTUNITIES AND THREATS

OPPORTUNITIES:

i. Growing Organised and Branded Market:

The increasing preference for branded, quality-oriented and comfortable innerwear and shapewear products provides an opportunity for organised manufacturers and established brands.

ii. Product Innovation and Technology:

The increasing acceptance of bonded, seamless and technology-enabled garments provides opportunities for the Company to develop differentiated products and expand into adjacent categories.

iii. Expansion of Product Portfolio:

The growing demand for mens innerwear, womens intimate wear, shapewear and comfort-oriented apparel provides opportunities to expand the Companys product portfolio and address different consumer segments.

iv. Contract Manufacturing and White-Labelling:

The growing preference among retailers and brands for outsourced manufacturing and private-label products provides an opportunity for the Company to leverage its manufacturing and product development capabilities.

v. E-commerce and Omni channel Distribution:

The continued growth of e-commerce, modern trade and organised retail provides opportunities for wider product availability and geographic expansion.

vi. International Opportunities:

Indias established textile and apparel manufacturing ecosystem provides opportunities for Indian manufacturers to participate in international supply chains, subject to meeting customer-specific quality, compliance and commercial requirements.

vii. Quality and Sustainable Manufacturing:

Growin awareness regarding product quality, responsible manufacturing and recognised certifications provides an opportunity for organised manufacturers with appropriate quality systems and processes.

THREATS:

i. Raw Material Price Volatility:

Fluctuations in the prices of fabrics, cotton, yarn, adhesives, chemicals and other inputs may affect manufacturing costs and margins. The Companys ability to pass on such increases may be influenced by prevailing market conditions and competitive intensity.

ii. Competitive Environment:

The Company operates in a competitive industry with the presence of organised domestic players, unorganised manufacturers, international brands and emerging digital-first brands. Continued investment in product quality, innovation, distribution and brand building is therefore important.

iii. Changing Consumer Preferences:

Innerwear and shapewear are influenced by changing fashion trends, consumer preferences and product expectations. The Company needs to continuously monitor market trends and develop products accordingly.

iv. Technology and Innovation Requirements:

The rapid evolution of garment technologies requires continuous investment in machinery, product development and employee capabilities to remain competitive.

v. Supply Chain and Import Dependence:

Certain specialised machinery, materials and components may be sourced from international markets. Changes in freight costs, foreign exchange rates, customs procedures and international supply chains may impact costs and timelines.

Market and Brand Development: Building long-term brand preference requires sustained investment in marketing, distribution, product development and customer engagement.

RISK MANAGEMENT

The Company recognises that effective risk management is essential for sustainable business growth. Business risks may arise from factors including market competition, raw material prices, changing consumer preferences, supply chain disruptions, operational requirements, technology, regulatory developments and financial conditions.

The Company continuously monitors the internal and external business environment to identify, assess and mitigate material risks. The management periodically evaluates the potential impact of identified risks and takes appropriate measures to minimise their adverse effects.

The Board of Directors oversees the Companys risk management framework and provides guidance on significant business and strategic risks. The Companys approach remains focused on identifying risks at an early stage, strengthening internal processes and controls and ensuring that available resources are utilised effectively.

OUTLOOK

The long-term outlook for the Indian shapewear, innerwear and intimate-wear industry remains encouraging, supported by increasing consumer awareness, premiumisation, changing lifestyles, fashion consciousness and the growing penetration of organised retail and digital commerce.

The Company believes that product innovation and technology-led manufacturing will remain important drivers of growth. The increasing acceptance of bonded and seamless products, together with demand for comfortable and differentiated apparel, provides opportunities for the Company to expand its offerings.

Going forward, the Company intends to focus on strengthening its Dermawear brand, expanding its product portfolio, developing new technology-enabled products and improving manufacturing capabilities. The Company also intends to pursue opportunities in contract manufacturing and white-labelling and develop relationships with established brands and retail customers.

The Company will continue to focus on quality, operational efficiency, customer service and prudent financial management while evaluating opportunities for expansion in domestic and international markets.

The Company remains conscious of the importance of responsible and sustainable business practices and intends to progressively strengthen its focus on product quality, efficient resource utilisation, waste reduction and compliance with applicable standards.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an adequate internal control framework commensurate with the size, nature and complexity of its operations. The internal control systems are designed to support effective governance, safeguard assets, prevent and detect errors and irregularities, ensure accuracy and reliability of financial reporting and promote operational efficiency.

The Companys internal controls cover key areas including procurement, inventory management, production, sales, receivables, payments, financial reporting and statutory compliance. These controls are supplemented by management reviews, internal audit processes and documented policies, procedures and authorisation mechanisms.

The Company periodically reviews the effectiveness of its internal control systems and strengthens processes wherever required. The Audit Committee and the Board of Directors oversee the adequacy and effectiveness of the Companys internal financial controls in accordance with applicable requirements.

Based on the assessment carried out during the year, the Company believes that its internal control systems are adequate and commensurate with the scale and nature of its operations.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Human resources continue to remain an important component of the Companys operations and growth strategy. The Company is focused on developing a capable and committed workforce and providing an environment that encourages productivity, learning, skill development and employee engagement.

During the year, the Company continued to strengthen its manufacturing and operational capabilities in line with the expansion of its product portfolio and business activities. The Company remains committed to providing a safe, supportive and professional working environment and to maintaining harmonious relations with its employees.

The industrial relations during the year remained cordial and satisfactory. The Company continues to focus on employee welfare, skill enhancement, training and development and compliance with applicable labour and workplace requirements.

As on 31st March, 2026, the Company had 324 employees on its rolls.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The following table sets out the key financial ratios of the Company for the financial year ended 31st March, 2026, as compared with the previous financial year. Variations exceeding 25% have been explained below:

Sr. No.	Ratios	As at March 31, 2026	As at March 31, 2025	% change	Reason for change if exceed 25%
1	Debtors Turnover Ratio	4.73	6.73	(29.72)%	Due to an increase in average trade receivables during the year, while revenue from operations remained broadly stable
2	Inventory Turnover Ratio	0.80	1.03	(22.13)%	Not applicable
3	Interest Coverage Ratio	1.39	1.06	30.77%	Due to reduction reduction in finance costs.
4	Current Ratio	3.23	2.25	43.40%	The increase is primarily attributable to an increase in current assets and a reduction in current liabilities during the year, resulting in an improvement

					in the Companys short-term liquidity position.
5	Debt-Equity Ratio	0.30	0.47	(37.30)%	The decrease is primarily attributable to an increase in shareholders funds during the year, including the impact of the preferential issue, along with changes in the Companys debt position.
6	Operating Profit Margin	0.0346	0.0345	0.29%	Not applicable
7	Net Profit Margin	0.00	0.01	(24.64)%	Not applicable,
8	Return on Net worth	0.01	0.01	(43.43)%	The decrease is primarily attributable to the change in profitability during the year relative to the Companys net worth.

CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or other forward-looking information may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on the Companys current expectations, assumptions and assessment of the business environment and are subject to various risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed or implied in such statements.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, changes in circumstances or otherwise, except as may be required under applicable laws and regulations. Accordingly, readers are advised not to place undue reliance on such forward-looking statements.

By Order of the Board

For CPS Shapers Limited

Sd/- (Bhawna Kumar) Whole-time Director DIN- 03587088

Sd/- (Abhishek Kamal Kumar) Managing Director DIN- 03513668

Date: 21-08.2026 Place: Vasai