Craftroot Retail Ltd Management Discussions

OVERALL REVIEW, INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Government has undertaken several strategic initiatives to drive industrial development and attract investment, including: Start-up India, Make in India, Ease of Doing Business reforms, FDI liberalisation across sectors. These initiatives have helped India improve its global competitiveness, with the country ranking 63rd out of 190 countries in the World Banks Doing Business Report, 2020, marking a significant improvement in ease of doing business.

1. Infrastructure and the Role of Gujarat

A well-developed and resilient infrastructure is essential to support the growth of manufacturing and industrial activities. Infrastructure development not only facilitates smooth supply chains and market access but also contributes significantly to productivity and economic efficiency.

The State of Gujarat, where Craftroot Retail Limited is headquartered, has historically enjoyed superior industrial infrastructure compared to many other Indian states. With a robust network of roads, ports, and industrial parks, Gujarat remains an attractive destination for manufacturing and logistics operations. The state government continues to invest in upgrading existing road networks, developing multi-lane highways and expressways, and implementing smart urban planning to cater to growing traffic and business demands.

As an enterprise engaged in handloom weaving and the manufacturing of high-quality, entirely handmade textile products, Craftroot Retail Limited benefits significantly from this infrastructure-led growth. The expansion of retail networks, e-commerce logistics, and growing consumer access across the country creates rising demand for authentic, handmade handloom textiles—thereby providing a solid foundation for the Companys continued growth.

The Companys handloom operations are built on close collaboration with skilled weaver clusters, using traditional handloom techniques passed down through generations. The product range includes sarees, dress materials, stoles, dupattas, and home furnishing textiles, woven primarily from cotton and silk yarns. Each product is entirely handmade, with no mechanised power involved in the weaving process, ensuring a distinctive quality, texture, and finish that differentiates the Companys offerings in the market. The Company remains focused on continuously improving product quality and expanding its market presence through active participation in exhibitions and trade fairs across the country.

2. Handloom Sector in India

The handloom sector is one of Indias oldest and largest cottage industries, providing livelihood to a large number of weavers across the country, particularly in rural and semi-urban areas. The Government of India continues to support the sector through initiatives such as the National Handloom Development Programme, the Handloom Weavers Comprehensive Welfare Scheme, and the India Handloom Brand, aimed at promoting quality, design innovation, and market linkages for genuine handloom products. Several traditional weaves also enjoy Geographical Indication (GI) protection, reinforcing their authenticity and premium positioning in domestic and export markets. These developments provide a supportive and growing ecosystem for the Companys continued expansion in the handloom segment.

OPPORTUNITIES AND THREATS

1. Expanding Market Size in the Handloom Sector: Indias growing middle class, rapid urbanization, and rising disposable incomes have significantly increased demand for authentic, handmade, and culturally rich handloom textiles—both for domestic consumption and international exports. The demand spans across apparel, home furnishings, lifestyle accessories, and customised gifting items. This trend offers an attractive opportunity for the Company to strengthen its product portfolio and tap into a fast-growing segment driven by superior craftsmanship and sustainable production.

2. Infrastructure and Retail-Led Growth Fuelling Demand for Handloom Products

With large-scale investments in infrastructure, smart cities, affordable housing, and commercial real estate, there is rising demand for aesthetically pleasing interiors and culturally rooted d?cor elements. Handloom products such as furnishings, upholstery, and home textiles are increasingly finding their way into residential, hospitality, and retail design projects, further expanding market opportunities for the Company.

3. Housing, Real Estate, and Retail Expansion: The growth of malls, multiplexes, townships, and hospitality chains has led to an increased focus on interior styling, curated spaces, and decorative themes. This enhances the demand for high-quality, entirely handmade handloom products, such as sarees, dress materials, stoles, and home furnishings. Craftroot Retail is well-positioned to serve this intersection of d?cor and cultural utility.

4. Sustainability and Eco-Friendly Craftsmanship: Consumers globally are shifting toward eco-conscious and ethically produced goods. Handloom textiles, woven from cotton, silk, and other natural fibres without dependence on mechanised power, align perfectly with this trend. With continued investment in weaver collaborations and quality improvement, the Company is committed to sustainable production models that ensure minimal environmental impact while preserving traditional weaving practices.

5. Export Potential for Indian Handloom Products: India remains one of the worlds largest producers and exporters of handloom textiles, with strong demand from countries in Europe, North America, Southeast Asia, and the Middle East. Craftroot Retail Limited is exploring opportunities to scale its export footprint through active participation in exhibitions and trade fairs, e-commerce partnerships, and government-backed export promotion schemes focused on handloom and handmade goods.

6. Government Schemes and Institutional Support: Various government initiatives, such as the National Handloom Development Programme, Handloom Mark certification, weaver credit and welfare schemes, and support for GI-tagged traditional weaves, provide financial assistance, marketing support, and skill-development opportunities for handloom enterprises. Continued participation in government-supported exhibitions, trade fairs, and craft melas offers the Company a cost-effective platform to showcase its products, build brand visibility, and expand its customer base.

Threats

While the Companys continued focus on the handloom sector brings exciting prospects, it remains mindful of several risks and challenges that need to be addressed for successful execution:

1. Intensifying Competition: The handloom industry is fragmented and highly competitive, with numerous unorganised players, small weaver clusters, power-loom substitutes, and online marketplaces offering similar products. Differentiation through superior quality, design innovation, and branding will be essential to establish a unique identity in this space.

2. Volatility in Input Costs and Weaver Availability: The availability and cost of quality raw materials (such as cotton, silk, and natural yarns) and skilled handloom weavers are subject to regional and seasonal fluctuations. Maintaining consistency in supply, fair trade practices, and productivity will be critical for scaling operations.

3. Regulatory, Cultural, and Compliance Concerns: Handloom exports require compliance with a variety of regulations including intellectual property rights (for traditional weaves and designs), export licenses, quality certifications, and labour laws. The Company will need to continue investing in a robust compliance framework and sustainable sourcing mechanisms.

4. Changing Fashion Trends and Low-Cost Alternatives: Consumer preference is increasingly influenced by fast fashion and lower-priced, machine-made or power-loom alternatives that are more widely available. The Company must continue to emphasise the authenticity, craftsmanship, and superior quality of its entirely handmade products to sustain customer preference and maintain its premium positioning in the market.

The broader economic landscape and consumer sentiment continue to support Indias position as a hub for traditional handloom artistry, sustainable living, and creative enterprise. As Craftroot Retail Limited continues its focus on the handloom segment, carrying forward its legacy of quality manufacturing, supply chain discipline, and market understanding, and remains committed to expanding its participation in exhibitions to grow market reach and sales.

This continued focus reflects the Companys vision of building on the evolving aspirations of Indian handloom craftsmanship, sustainability, and design excellence. All of the Companys products are entirely handmade and reflect the highest standards of quality. Backed by strong leadership, efficient resource management, and market-driven strategies, the Company remains confident in its ability to deliver sustainable growth, increase profitability, and achieve constant, long-term growth for all stakeholders.

SEGMENT WISE PERFORMANCE

The Company has identified its activities as single segment containing more than 50% of the total income. Hence, the Companys performance is to be viewed as a single segment company operating in handloom activities, encompassing the weaving and sale of sarees, dress materials, stoles, and home furnishing textiles. The Company continues to focus on strengthening this segment, with a strategic plan to grow through wider participation in exhibitions, sustained emphasis on high-quality, entirely handmade products, deeper engagement with weaver clusters, and a consistent focus on increasing profitability and achieving constant growth.

INTERNAL CONTROL SYSTEM

In any industry, the processes and internal control systems play a critical role in the health of the Company. Companys well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. Moreover, the Company continuously upgrades these systems in line with the best available practices. Internal Auditors independently evaluate the adequacy of internal control systems. Their observations and recommendations are discussed by the Audit committee to ensure effective corrective action. The internal control system is supplemented by extensive internal audits, regular reviews by management and adherence to standard policies and guidelines to ensure reliability of financial and other records. The management information system provides timely and accurate information for effective control. Rigorous business planning as well as expense, capital and manpower budgeting processes ensure that progress is monitored against targets, and control is exercised on all major expenses.

HUMAN RELATIONS

Human Resources (HR) are an integral and important part of any organisation. The Company has put in place sound policies for the growth and progress of its employees. Individual performance management systems are being implemented to encourage merit and innovative thinking. Roles and responsibilities are clearly defined at all levels. It has a well-drawn recruitment policy and a performance-based compensation policy to enable the employees to develop a sense of ownership with the organisation. Company recognises the importance of providing training and development opportunities to its people to enhance their skills and experience, which in turn enables the Company to achieve its business objectives.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

As mentioned in clause B (i) of Schedule – V read with Regulation 34(3) and 53(f) of the SEBI (Listing and Disclosure Requirements) Regulations, 2015 specifying requirement of additional disclosure as inserted by the SEBI (Listing and

Disclosure Requirement (Amendment) Regulations, 2018 applicable w.e.f. 01.04.2019, it is confirmed that, there is no significant change in any ratios for more than 25% as compared to previous financial year 2023-24.

DETAILS OF KEY FINANCIAL RATIOS:

Sr. No.	Particulars	Year ended 31.03.2026	Year ended 31.03.2025
1.	Debtors Turnover	Nil	Nil
2.	Inventory Turnover	Nil	Nil
3.	Interest Coverage Ratio	Nil	Nil
4.	Current Ratio	1.12	1.08
5.	Debt Equity Ratio	8.42	8.90
6.	Operating Profit Margin (%)	Nil	Nil
7.	Net Profit Margin (%)	0.26	0.03

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis Report describing the Companys projections, estimates and expectations may be interpreted as "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply, price conditions in the domestic markets in which the Company operates, changes in Government regulations, tax laws and other statutes. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

CONCLUSION

The Directors place on record their sincere appreciation for the cooperation and support received from investors, our dear shareholders, customers, business associates, vendors as well as regulatory and governmental authorities. The Directors appreciate the invaluable contribution of the management team in performing an outstanding job in taking the Company to greater heights and also thank the employees for the significant contribution made by them to the Companys progress.

We would like to specifically thank your chairman for the untiring work in the re-organization of our company.

Date: 31/08/2026	By Order of the Board of Directors
Place: Ahmedabad	For Craftroot Retail Limited
	(Formerly Known As "Nirbhay Colours India Limited")
	Sd/- Anar Jayeshbhai Patel, Managing Director, DIN: 02588388
	Sd/- Dakshesh Rameshchandra Shah, Director, DIN: 00561666
	Sd/- Maheshkumar Patel, Company secretary