COSCO India Ltd Management Discussions

This may be read in conjunction with the Directors Report Global Economy

The year 2025 was characterised by a resilient but uncertain global macroeconomic environment.

As per International Monetary Fund (IMF) World Economic Outlook update Global growth is projected to be 3.0 percent in 2026 and 3.4 percent in 2027, down from the average of 3.5 percent observed in 2024-25 and broadly unchanged on a cumulative basis compared with the forecasts in the April 2026 World Economic Outlook (WEO). The modest slowdown reflects the effects of the war in the Middle East being partly offset by accelerated demand-driven momentum in the global technology cycle thanks to advances in artificial intelligence (AI) and its adoption. The impact varies widely based on countries exposure to the war and position in the technology value chain. Energy exporters outside the conflict zone benefit from favorable terms of trade, whereas economies plugged into the technology-led upturn experience stronger activity even if they are energy importers. In contrast, activity weakens for energy importers with limited participation in the technology value chain, a group that includes many low-income countries. Global headline inflation is expected to increase from 4.1 percent in 2025 to 4.7 percent in 2026 before declining to 3.9 percent in 2027. Slightly revised upward from April, these projections indicate that the disinflation trend in place since the beginning of 2024 has stalled.

Global trade and manufacturing proved more resilient than expected in the face of trade and geopolitical uncertainty accentuated by US tariff announcements. The resilience of global growth reflects tailwinds of fiscal policy and accommodative financial conditions supported by Ailed investment. Growth trends across major economies remained uneven. Growth in advanced economies proved resilient despite rising trade tensions and policy uncertainty. The United States benefited from relative demand resilience and investment in advanced manufacturing and technology, while Europe witnessed a services-led recovery, while manufacturing competitiveness remained exposed to energy-related risks. China continued to face weak domestic demand and stress in the property sector, although exports remained resilient.

Global financial conditions remained fluid during the year. Major central banks, including the US Federal Reserve and the European Central Bank, moved towards policy easing as inflation pressures moderated from earlier peaks. Japan was an exception, with monetary tightening after a prolonged period of ultra-loose policy. Towards the end of FY 2025-26, escalation in West Asia led to a sharp rise in crude oil prices and renewed concerns around energy security, commodity inflation and supply-chain continuity. These developments brought imported input cost pressures back into focus, particularly for economies dependent on energy and commodity imports.

Indian Economy

Indias economy remained resilient through the external volatility. As per RBIs Annual Report for FY 2025-26, India remained the fastest growing major, economy, expanding at 7.6 per cent during 2025-26 (7.1 per cent a year ago), supported by strong domestic consumption, sustained investment, proactive policy initiatives and sound macroeconomic fundamentals. Inflation remained distinctly low during major part of the year. The financial sector remained resilient on the back of healthy bank and non-bank balance sheets, improved asset quality and capital buffers, enabling double-digit credit growth. A modest current account deficit (CAD) and adequate forex reserves provided resilience to the external sector even as portfolio investment exhibited net outflows.

During FY 2025-2026, India revised the base year for GDP estimates from 2011-2012 to 2022-2023 to better reflect the evolving structure of the economy. The revised series incorporates improved data sources and methodological refinements to strengthen sectoral representation, granularity and consistency of national accounts.

Recent policy measures strengthened the demand environment. The restructuring of personal income tax and GST rate rationalisation were aimed at improving disposable income, easing the tax burden on households and supporting consumption across income segments. Monetary easing and favourable financial conditions further supported economic activity. Investment activity was aided by continued government emphasis on infrastructure spending, structural reforms and improved credit flow. Bank credit growth improved and remained supportive of real economic activity, while financing from nonbank sources also increased. The consolidation of labour laws into four Labour Codes represents a structurally important reform for a labour-rich economy such as India. It is expected to support formalisation, simplify compliance, improve workforce flexibility and strengthen worker welfare, thereby improving the operating framework for manufacturing and services directed growth. Inflation conditions were largely supportive during FY 2025-26. Headline inflation rose from the historical low levels recorded in October 2025 but remained well below the RBIs target rate thereafter.

Food prices moved out of deflation as base effects normalised, while fuel inflation remained moderate and core inflation stayed contained, barring precious metals. However, imported inflation and input cost pressures increased in March, following the spike in global energy prices. High-frequency indicators were mixed towards the end of the year, with moderation in PMIs and power demand, even as broader domestic activity remained supported by consumption, investment and credit conditions. Overall, the Growth prospects are supported by Indias strong macroeconomic fundamentals, including robust domestic demand, relatively lower dependence on exports as a growth driver, and a stable policy environment.

At the same time, external volatility, commodity movements and supply-chain risks required continued discipline in demand management, cost control and execution.

The domestic economy in 2026-27 is expected to remain resilient, despite challenging external environment characterised by elevated energy and commodity prices, rising logistics costs, volatility in global financial markets and uncertainties surrounding global trade policies. Growth prospects are supported by Indias strong macroeconomic fundamentals, including robust domestic demand, relatively lower dependence on exports as a growth driver, and a stable policy environment.

Industry Structure and Developments

Indias Export of Indian Sports Goods and Toys increased during FY 2025-2026; As per data based on the export returns submitted by its members, compiled by The Sports Goods Export Promotion Council, the export of sports goods & toys for the year 2025-2026 has been recorded as 2,098 Crore as compared to 2,015 Crore during 2024-2025, showing moderate increase of about 4% in Rupee terms.

India exports a wide range of Sports Goods and athletic items including inflatable balls, tennis balls, table tennis, tennis, and badminton rackets, general exercise equipment, gymnastics articles, cricket gear, sportswear, toys, recreational games, puzzles, video games, parlour and billiard games, casino articles, festive, carnival and entertainment articles, swimming and outdoor games equipment, fishing and hunting equipment, swings, circus, shooting gallery and fairground amusement article.

"Indias sports goods exports remained broadly stable during FY 2025-26, with exports estimated at approximately US$398.6 million as compared with US$400.1 million in FY 2024-25. The United States remained the largest export market, accounting for approximately 37% of Indias sporting goods exports, followed by the United Kingdom and Australia. Indias export basket comprises a wide range of products including cricket and football equipment, inflatable balls, gymnastics and athletics requisites, general exercise equipment, protective equipment, sports nets, rackets and recreational goods." Major international brands such as Mitre, Umbro, and Wilson source their inflatable balls and other sports goods from India.

The Indian sports goods industry is an important component of the countrys manufacturing and MSME ecosystem, contributing to employment generation, industrial development and export earnings. The industry comprises a wide range of products including sports equipment, fitness equipment, athletic goods and other sports-related products. The sector is predominantly driven by MSMEs and has established major manufacturing clusters, particularly in Jalandhar (Punjab) and Meerut (Uttar Pradesh). The industry provides direct and indirect employment to a significant workforce and supports several ancillary activities such as raw material processing, packaging, logistics and distribution.

The sports goods sector also contributes to Indias merchandise exports and foreign exchange earnings. India exports sports goods to various international markets, including the United States, United Kingdom, Australia, Germany, Netherlands, United Arab Emirates and Canada. During FY 2024-25, Indias sports goods exports were approximately US$400 million, reflecting the sectors growing integration with global supply chains. Despite its relatively modest contribution to the overall Indian economy, the sector has considerable potential for expansion, supported by increasing global demand, Indias manufacturing capabilities and various government initiatives aimed at strengthening domestic production and exports.

Going forward, the Indian sports goods industry is expected to benefit from increased investments in manufacturing capacity, product diversification, technological upgradation, quality improvement and greater participation in international markets. The sector presents significant opportunities for employment generation, MSME development, import substitution and export growth, thereby contributing to Indias broader objective of strengthening its manufacturing base and enhancing its position as a global manufacturing and export hub.

The sports goods industry of India is nearly a century old and holds a prominent position in the global market. The industry has flourished, driven by a skilled workforce hence known for its role in creating employment and contributing to the countrys economy. The industry employs more than 500,000 people. India currently manufactures more than 300 sports-related goods such as toys, video game consoles and articles, festive and carnival articles, gymnastics and sportswear goods, fishing articles, outdoor games, toys, etc. Uttar Pradesh, Punjab, Maharashtra, Delhi, Tamil Nadu, Jammu, and West Bengal are among Indias top sports goods- producing states. Among these, Jalandhar City in Punjab, and Meerut City in Uttar Pradesh account for about 75-80% of the total production in the country. These two cluster cities for the manufacturing of sports products, host more than 3000 manufacturing units and 130 exporters. The majority of sports and fitness products are currently made by small and medium-sized businesses (SMEs).

The Indian sports industry is experiencing rapid growth, with a Deloitte and Google report projecting a valuation of $130 billion by 2030, driven by increased government support, digital engagement, and a growing fan base for sports like cricket, football, and kabaddi. The industry includes various segments such as sports manufacturing, media rights, sponsorships, and sports technology, all contributing to significant economic impact and job creation, with a goal to develop a strong national sports ecosystem.

The Government of India and various sports authorities continue to undertake several initiatives for the promotion and development of sports in the country. Programmes such as Khelo India, Fit India, the Target Olympic Podium Scheme (TOPS) and initiatives of the Sports Authority of India focus on grassroots participation, talent identification, development of sports infrastructure, athlete training and high-performance support. Particular emphasis is also being placed on promoting womens sports, para-sports, rural and indigenous sports and strengthening the overall sports ecosystem. The recently formulated Khelo Bharat Niti - 2025 further provides a comprehensive framework for developing India as a globally competitive sporting nation while promoting sports as a means of social and economic development.

Government is focusing on overall growth of Sports Sector and development of Infrastructure for Sports. Public Private Partnership in creating Sports Infrastructure are being encouraged. Sports Infrastructure needs further expansion and optimum utilization. The sports goods industry has potential for employment, growth and export and to become the next big industry in India.

Initiatives by Government and Authorities for Sports Promotion

For the development and exposure of Indian sporting goods, the Sports Goods & Toys Export Promotion Council (SGEPC) regularly arranges international and domestic trade events. The Market Access Initiative (MAI) scheme has been implemented to play a catalytic role in promoting and exporting Indian goods and services. The scheme for the remission of Duties and Exported Products (Rode) has also been implemented to support Indian exporters.

Market Development Assistance (MDA) Scheme

The MDA scheme works mainly to assist exporters in export promotion activities in the international markets. The scheme also assists the respective export promotion councils in undertaking export promotion activities for their products. Similarly, through this scheme, the government helps focus export promotion programs on international regions such as the LAC, Africa, CIS, and the ASEAN economies.

Market Access Initiative (MAI)

The main objective of the MAI scheme is to promote the export of Indian goods to international markets. Under this scheme, financial assistance is provided to export & trade promotion organisations, national institutes, research institutes, exporters, etc. The parameters covered under the financial aid are marketing projects, capacity enhancement, supporting statutory compliances, studies, research, project development, and supporting cottage and handicraft units in India.

To boost the sporting goods manufacturing sector, the government has established the Sports Goods Export Promotion Council (SGEPC), dedicated to promoting Indias sports goods exports. SGEPC regularly organizes both international and domestic trade events to provide Indian manufacturers with exposure to global market trends and a platform to showcase their products. The Market Access Initiative (MAI) scheme and the Remission of Duties and Exported Products (RoDTEP) scheme have been implemented to promote the export of Indian goods and services.

The Government of India and various sports authorities have undertaken several initiatives to promote sports participation, develop sporting infrastructure, identify talent and improve Indias performance at national and international levels. The major initiatives include:

• Khelo India Programme The Khelo India - National Programme for Development of Sports is the Governments flagship sports development programme. It focuses on grassroots participation, talent identification, sports infrastructure, community sports, school and university competitions, rural and indigenous sports, womens sports and sports for persons with disabilities.

• Khelo Bharat Niti - 2025 (National Sports Policy 2025) The policy provides a comprehensive framework for developing Indias sports ecosystem, with emphasis on sporting excellence, economic development through sports, social inclusion, mass participation and integration of sports with education. It also aims to strengthen the sports industry, infrastructure, talent identification and international competitiveness.

• Sports Authority of India (SAI)

SAI plays a central role in developing athletes and sports infrastructure. It operates National Centres of Excellence (NCOEs), SAI Training Centres (STCs), Extension Centres and National Sports Talent Contest (NSTC) programmes, providing coaching, equipment, accommodation, competition exposure, medical support and other facilities to athletes.

• Khelo India Athletes and Talent Development

Talented athletes identified through Khelo India receive structured training and financial support, enabling them to progress from grassroots and developmental levels towards elite competition. The programme also supports para-athletes and provides specialised training facilities.

• Target Olympic Podium Scheme (TOPS)

TOPS provides focused support to elite athletes with the objective of improving Indias performance at the Olympic and other major international competitions. Support includes high-quality training, competition exposure and other requirements for high-performance athletes. SAI identifies TOPS as part of its high-performance sports functions. ^•

• Fit India Movement

The Fit India initiative promotes physical fitness and an active lifestyle among citizens, particularly children and young people. It complements competitive sports promotion by encouraging wider participation in physical activity.

• Promotion of Women in Sports

Government programmes specifically encourage greater participation of women in sports. Initiatives such as Sports for Women and 10 Ka Dum seek to increase participation, create competitive opportunities and promote leadership among women athletes.

• Promotion of Rural and Indigenous Sports

Special attention is given to traditional and indigenous sports such as Mallakhamb, Kalaripayattu, Gatka, Thang-Ta, Yogasana and Silambam. Government support includes infrastructure,equipment, coaching and scholarships for these disciplines.

• Khelo India Youth, University, Para and Winter Games

National-level competitions provide young and emerging athletes with regular competitive exposure and opportunities for talent identification. These include the Khelo India Youth Games, University Games, Para Games and Winter Games.

• Development of Sports Infrastructure

Government programmes support the development and upgradation of playfields, training centres, sports facilities and hubs of sporting excellence, including facilities in universities and underserved regions.

• Support for Persons with Disabilities

Sports promotion programmes increasingly incorporate para-sports through specialised infrastructure, coaching, competitions and financial support, providing athletes with disabilities opportunities to participate and compete at higher levels.

• Strengthening Sports Coaching and Sports Science

Government institutions are working to improve the quality of coaching and provide scientific and technical support, including sports science, performance analysis, fitness and athlete development.

• Promotion of Sports Industry and Sports Goods

The Governments sports policy increasingly recognises sports as an economic sector, with emphasis on sports manufacturing, sports technology, tourism and related economic opportunities. The policy also seeks to strengthen the indigenous sports-goods industry.

Opportunities & Threats, Risks and Concerns:

"The Indian sports industry continues to present significant growth opportunities, supported by increasing sports participation, a growing youth population, expansion of sports infrastructure, professional sporting leagues, e- commerce and supportive government initiatives. The Governments National Sports Policy 2025 places emphasis on grassroots development, sports infrastructure, technology, private-sector participation and sports manufacturing, thereby providing a favourable environment for the sector. India also has significant potential to strengthen its position in the global sports equipment manufacturing and export market. India has considerable potential to become a global manufacturing and export hub. NITI Aayog estimates that Indias sports equipment exports could potentially increase from about US$275 million in 2024 to US$8.1 billion by 2036. There is scope to develop domestic capabilities in products currently dependent on imports and to integrate Indian manufacturers into global supply chains.

Our Company is one of the leading and most organized Indian Company in Sports Industry and has immense potential to leverage upon its brand, accreditation and quality to increase sales and profitability. with network of branches, distributors and around 700 authorized dealers in India. Our company manufactures mainly Sports Balls and deals in vide range of Sports Goods and Fitness Equipments. It has tie ups and arrangements with reputed International and Domestic manufacturers /suppliers. The Company on continuous basis upgrades the quality of its products with in-house R & D. The company The Companys Cosco Brand is well recognized in the Domestic Market. The products manufactured/traded by the company conform to International Standards.

Segment-wise product-wise performance

The Companys products segments are classified broadly into two segments viz

- Own manufactured products viz Sports Balls

- Traded Goods viz Fitness Equipments and other Sports Goods.

The Segment wise performance and relevant information is given in Notes on the Financial Statements (Refer Note No. 33 of Notes on the Financial Statements - Segment Information

Outlook

The sports and fitness industry in India has a strong long-term growth outlook, supported by rising health awareness, increasing disposable incomes, a young population, government initiatives, digital adoption and growing participation in organised sports.

Indias sports ecosystem is projected to become a major economic sector. A Deloitte-Google study estimated that the Indian sports market could reach approximately US$130 billion by 2030, with sports goods and apparel alone expected to reach around US$58 billion.

The fitness industry is expected to grow particularly strongly. Deloitte and the Health & Fitness Association estimate that Indias fitness market could increase from about 16,200 crore in 2024 to 37,700 crore by 2030, representing approximately 15% CAGR. Fitness memberships are also projected to rise substantially.

Consumers are increasingly adopting fitness as part of their lifestyle rather than treating it only as a recreational activity. The relatively low penetration of paid fitness services indicates significant room for future expansion.

While large cities currently account for a significant share of fitness revenue, Tier-II, Tier-III cities and smaller towns are expected to become important growth markets. Affordable gyms, sports academies, community fitness centres and local sporting facilities can benefit from this expansion. Government policy is increasingly focused on grassroots participation, infrastructure development, talent identification, sports science and fitness.

The recently approved revamped Khelo India Scheme and enhanced assistance to National Sports Federations have a combined outlay of 36,441 crore for 2026-27 to 2030-31. The programme also envisages greater private-sector participation, technology adoption and expansion of the Fit India Movement. The National Sports Policy 2025 also specifically seeks to strengthen sports infrastructure, sports manufacturing, startups, and sports tourism and private-sector participation.

Deloittes survey of over 3,000 Indian consumers across 40+ cities reveal a fitness market segmented into three core facility types: Value, Premium and Boutique. Value gyms dominate the landscape, contributing 56 percent of market revenue, 78 percent of the membership base and 80 percent of total fitness facilities, as of 2024. However, Boutique fitness studios, offering niche, instructor-led formats such as High Intensity Interval Training (HIIT), Yoga, Mixed Martial Arts (MMA) and Pilates, are the fastest-growing segment, with a projected CAGR of 18.8 percent through 2030. This surge underscores a decisive consumer shift towards personalised, immersive and community-driven fitness experiences.

As India moves toward becoming a US$5 trillion economy, fitness will play a central role in its wellness journey. With supportive policies, tech-led innovation and rising demand, the countrys fitness movement is only just beginning.

Your Company is well positioned with its strong management team, technology interventions and robust processes. The company sees promising future of Sports and Health & fitness in India. Looking ahead to the future of the sporting goods industry, Cosco (India) Limited expects that competition in the global market will remain severe despite global increases in health consciousness and growth in the number of people participating in sports in emerging countries. Your Company has confidence on intrinsic strengths of its brands, innovation capabilities, and strong distribution network and cost efficiency programs.

Threats

• Intense competition - Domestic manufacturers face competition from established international brands as well as low-cost manufacturers from countries such as China and Pakistan.

• Import competition - Imported products, particularly competitively priced products, can put pressure on domestic manufacturers pricing and margins.

• Raw material price volatility - Changes in the prices of rubber, plastics, EVA, PU, carbon fibre, textiles and other materials can adversely affect production costs.

• Foreign exchange fluctuations - Depreciation of the Indian Rupee against the US Dollar and other currencies can increase the cost of imported raw materials, components and finished good

• Changing consumer preferences - Consumers increasingly seek technologically advanced, fashionable and branded products, requiring continuous investment in product development and marketing.

• Global economic uncertainty - Slowdowns in major export markets, geopolitical developments and disruptions in international trade can adversely affect export demand and supply chains.

• Brand and technology barriers - Global sports brands possess significant brand recognition, technology and distribution networks, making it challenging for Indian companies to compete in premium segments.

Internal control systems and their adequacy.

Your Company has in place adequate internal control systems and procedures commensurate with size and nature of its business. The internal control systems of the Company provide for policies, guidelines, authorizations and approval procedures. All the transactions are properly authorized, recorded and reported to the Management. The Company has appointed Internal Auditors who conduct Internal Audit periodically. Audit Committee reviews Internal Audit Reports and adequacy of internal controls for ensuring checks and balances and that internal control systems are properly followed. The system of internal financial control ensures that all transactions are evaluated, authorized, recorded and reported accurately and that all assets are safeguarded and protected against losses that may arise from unauthorized use or disposition. Board has taken note of the observations of the Auditors for improvement in some areas of Internal Financial Controls and Scope of Internal Audit, which have been dealt in the main Directors Report under the head Independent Auditors Report. The company will further strengthen its Internal Financial Controls in areas observed by the Auditors. Board is of the opinion that the Companys internal financial controls were reasonably adequate and effective during the financial year 2025-2026.

The company is following the applicable Accounting Standards and has prepared financial statements for the year ended 31.03.2026 in accordance with Ind AS. The Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the Accounting Standards.

Discussion on financial performance with respect to operational performance. The relevant information is given in the Directors Report under headings Financial Results, Companys Performance and State of Affairs for Financial Year 2025-2026 read with the Financial Statements.

Material developments in Human Resources/Industrial Relations

The thrust of the Company is to create responsive and market driven organization. The Management believes in trust, transparency and teamwork. The management of the Company believes that Human Resources is the driving force towards progress of the Company and regards it as its most valuable asset. Your company has total number of permanent employees as on 31.03.2026 on the rolls of the Company is 398. The relations with employees remained cordial and satisfactory during the year under review. Your Directors are thankful for the confidence reposed by all associated with the Company and their continued support. The Company seeks to motivate and provide opportunities to its personnel to grow with the organization.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

Following are the key financial ratios:

Particulars	2025-2026	2024-2025
Debtors Turnover Ratio	6.41	6.13
Inventory Turnover Ratio	1.54	1.37
Interest Coverage Ratio	1.75	1.78
Current Ratio	1.88	1.90
Debt Equity Ratio	1.19	1.21
Operating Profit Margin (%)	2.95	3.63
Net Profit Margin (%)	0.53	0.45
Return on Net Worth (%)	1.94	1.55

Reason for significant change:

• Return on Net Worth increased as profit after tax is increased by 22.34 lakhs due to impact of Deferred tax.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, expectations or forecasts may be forward-looking statements within the meaning of applicable laws and regulations. The actual results may differ materially from those expressed in the statements due to various factors viz. market conditions, input costs, changes in the regulations, economic development within/outside country etc.