Cravatex Ltd Management Discussions

(a) Industry Structure and Development

The Textile trading activity increased during the year which enabled the company to record around 48% growth over previous year turnover. The contracted offices lease income was stable. The disturbance in West Asia is expected to impact the trading activity due to challenging logistic issues.

(b) Opportunity and Threats

Though the company would continue to explore any new opportunity in the business where it has expertise, considering the geopolitical situation, the opportunities are very limited. No significant threat is perceived in the existing line of business.

(c) Segment wise performance and outlook

The companys financial performance is covered in detail in the annual report. The outlook for FY 2026-27 is expected to be unchanged as previous year without drastic change.

(d) Risks and concerns

The company does not perceive immediate significant risk impacting its operations. However, the West Asia war is expected to impact the revenue in the medium term. The Trading and lease income may be affected to a certain extent. Although, the existing robust risk management process for identification and mitigation of risks are considered as adequate, the external situation is under watch and reviewed by top management supported by internal audit process.

(e) Internal control system and their adequacy

Adherence to appropriate procedures, internal controls and monitoring procedures are very important. The company believes in effective control and compliance process. The Internal Audit carried out by external firm of Chartered Accountants evaluate the functioning and quality of companys internal controls. The present control system and its monitoring is considered as adequate to take care of the current business of the company.

(f) Discussion on financial performance with respect to operational performance

Income from lease continues to be steady matching with the current market trend. As regards the textile trading the revenue from trading recorded a significant increase during the year over the previous year. The growth momentum is expected to continue in the ensuing year.

(g) Material developments in Human Resources/Industrial Relations front, including number of people employed

There is no material development impacting the company in Human Resources/Industrial Relations front. The overall industrial relations had been satisfactory. The company has 8 employees on its rolls as at 31st March 2026.

The details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios and change in return on net worth along with detailed explanations therefor are as follows:

* Debtors are reckoned on average basis.

** Inventory is reckoned on average basis.

Reasons for significant change in ratios as on 31st March 2026 vis a vis the previous year are as follows:

1. The debtors on account of sales on the balance sheet date were realised almost entirely. Hence due to marginal outstanding of debtors the ratio appears higher as compared to the previous year.

2. There was marginal variation in the current ratio due to IND AS adjustment in current liabilities.

3. The operating profit margin continues to be at the previous year level due to tight margins on trading business.

4. There was marginal variation in the net profit margin due to lower interest income.

5. Return on networth has improved as a result of higher retained earnings.

Disclosure of Accounting Treatment

The Company had adopted the Indian Accounting Standards (IND AS) and accordingly, the financial statements including the consolidated financial statements have been prepared in accordance with the recognition and measurement principles in IND AS interim financial reporting and those prescribed under the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles issued by the Institute of Chartered Accountants of India.