Cedaar Textiles Ltd Management Discussions

Management Discussion & Analysis Report highlights a period of strategic transition and signifiicant growth, positioning the company for future expansion. The analysis focuses on key financial performance, operation ef iciency, and future strategy funded by the Initial Public Offer (“IPO”) proceeds.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian textile industry is worlds second largest textile industry, driven by innovations in sustainable fabrics, digital printing, and technical textiles. With the governments focus on initiatives like "Make in India" and the Production Linked Incentive (PLI) scheme, there has been robust growth in domestic manufacturing, export opportunities, and demand for eco-friendly textiles. Increasing efforts in quality improvement, innovations through R&D programs, and other preferential value-added features have helped Indias home textile products become more popular in the global market. The superior quality of Indian home textiles makes companies in India a leader and enjoys a comparative advantage in terms of skilled manpower and in cost of production, relative to major textile producers. The SME segment in India is also increasingly adopting automation and digital supply chain solutions, opening new avenues for integrated textile manufacturers. Cedaar Textile Limited, with has industry experience and a portfolio focused on high-quality yarn, fabrics, and inished garments, is strategically positioned to leverage these macro trends. The Company is focused on production of high end melange and dyed yarns to increase its margins.

COMPANY OVERVIEW

We, Cedaar Textile Limited is an integrated player in the textile value chain, with a core focus on manufacturing, trading, and distribution of various textile goods. The Companys Objective is to cater the Top Line Customers Overseas and in India, who produce Garments for renowned Fashion Brands. The Company leverages its operational setup to handle diverse ibres types and product categories: Core Products and Materials: The Companys primary operational focus is on materials such as cotton, silk, art silk, polyester, acrylic, modal, rayon, and nylon. This diversi ied material base allows the company to serve both traditional and modern segments of the clothing and home furnishing markets. Key Focus areas: With sustainability as the prime focus, the goal is to make global presence in faishon oriented garments by offering value added yarns, go for organic growth in safety wear segment, suppy of ire retardant and sustainable proudcts and to increase supply of companys produts as per customer demnds and preferences. Operational Integration: The business activities encompass the entire lifecycle of textiles-from buying raw materials to manufacturing inished or semi- inished goods, and selling, importing, and exporting them. The ability to import and export indicates a well-established international trading network and a comprehensive approach to global sourcing and market access. Market Strategy: The Companys strategy is cantered on maintaining operational ef iciency and product quality to effectively compete in the high-volume and price-sensitive textile industry. All

Yarns are being offered with sustainability as the prime focus, in 100% Organic, Recycle Fibers (Polyester & Cotton) for a Green Environment and Conservation of natural resources. By engaging in both manufacturing and trading, the company can quickly adapt its product mix and inventory levels to meet shifting market demands and seasonal peaks, ensuring timely delivery and supply chain resilience.

IPO AND CAPITAL MARKET DEVELOPMENTS

In June 2025, Cedaar Limited launched its SME IPO on NSE Emerge, offering 43,50,000 fresh equity shares at a price of Rs. 140/- per share, raising a total amount of Rs. 6090 lakhs. The issue was oversubscribed nearly 12 times, re lecting strong investor demand. The Company received approval from the National Stock Exchange of India Limited (NSE) for the listing of its equity shares under the SME IPO on the NSE Emerge Platform. The equity shares of Cedaar Textile Limited is listed w.e.f. 07th July, 2025. This transition to a publicly listed SME entity is a signifiicant milestone that is expected to enhance the Companys visibility in financial markets, improve access to capital, and strengthen its corporate governance and compliance framework.

OPPORTUNITIES

The growing global shift toward sustainable and eco-friendly textiles offers signifiicant potential for Cedaars certi ied product portfolio. Additionally, government initiatives such as the PLI scheme and export incentives provide strong support for expansion and international competitiveness. Rising demand in export markets, particularly in Bangladesh, Egypt, Portugal, Korea, Europe and the Middle East, further enhances growth prospects. The installation of a 2000 KWP Solar Power Plant presents companys sustainability credentials, making it more attractive to environmentally conscious global brands.

THREATS

Key challenges include volatility in raw material prices, especially cotton and silk. The Company also faces intense competition from low-cost manufacturing hubs such as Bangladesh and Vietnam, requiring continuous investment in efficiency and innovation to maintain an edge.

HUMAN RESOURCES AND INTERNAL CONTROLS

We believe that our employees are key contributors to our business success. The Company maintains a team of skilled and semi-skilled employees across manufacturing and operations and continues to invest in training and skill development to enhance productivity and quality standards. We focus on attracting and retaining the best possible talent. Our Company looks for speci ic skill sets, interests and background that would be an asset for business. With planned capacity expansion, the workforce will be scaled up in line with operational requirements. We have an adequate robust system of internal controls in place. We have documented policies and procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance regarding maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, and protecting assets from unauthorized use or losses, compliances with regulations. We have continued our efforts to align all our processes and controls with global best practices

RISKS AND CONCERNS

Cedaar Textile Limited recognizes that effective risk management is fundamental to achieving sustainable business performance and protecting stakeholder value. The Company has established a structured and proactive risk management framework to identify, assess, and mitigate potential risks across operational, financial, strategic, regulatory, and environmental domains. Given its domestic market orientation, Cedaars primary risks relate to raw material price volatility (especially cotton and polyester) and changing consumer demand trends. The Company closely tracks market conditions and adopts timely procurement strategies to reduce the impact of cost luctuations. To tap the available domestic and international market opportunities, the Company is heading for major expansion in yarn cone dyeing and hank dyeing in the coming year. In addition, Cedaar places strong emphasis on regulatory compliance and operational risks. It has made continuous efforts to optimize production processes, reduce waste, manage fixed overheads and work towards sustainable environment. Further, regular internal controls, statutory audits, and adherence to quality certi ications (ISO, GOTS, OEKO-TEXR) ensure business continuity, transparency, and sustainability of operations.

KEY FINANCIAL RATIOS

The Company has identified the following ratios as key financial ratios

FUTURE OUTLOOK

Management is committed to sustaining the momentum achieved in improving the ef iciency of capital deployment. Efforts will be concentrated on further enhancing operational returns, which saw a healthy improvement during the last iscal year. This includes investing in technology and process improvements that maximize output from the existing asset base, ensuring sustained improvement in pro itability relative to the capital employed. The Company is planning yarn dyeing expansion two to three times in next two years. The Company is determined to decrease its carbon foot print and subsequent carbon emission. With the execution of the solar plant projects and sustainability as prime focus, the company is dedicated to reduce the production cost of the product and accommodate the future growth requirements. The company will strategically utilize its expertise across a wide material portfolio (cotton, silk, synthetics) to innovate and introduce value-added products. The goal is to capture higher margins by moving up the value chain. Furthermore, the established import/export infrastructure will be leveraged to systematically increase market share in identi ied, high-potential international markets.

CAUTIONARY STATEMENT

This Management Discussion and Analysis Report may contain certain forward-looking statements that are based on current expectations, assumptions, and forecasts regarding future events. These statements are subject to known and unknown risks, uncertainties, and market conditions, which may cause actual results, performance, or achievements to differ materially from those expressed or implied. Readers are advised not to place undue reliance on these statements, as the Company undertakes no obligation to publicly update or revise them in light of subsequent developments.