Cravatex Ltd Management Discussions

(a) Industry Structure and Development

The Textiles trading and manufacturing, especially the cotton textiles, is largely concentrated in south India apart from western parts of India. The Textile trading activity picked up during the first half of the year and continued up to the 3rd quarter. However, the activity slowdown in the last quarter of the year post festive season. As regards the offices lease segment, there was substantial increase in supply, especially in Mumbai. However, the rentals were stable due to increased demand for leasing of offices.

(b) Opportunity and Threats

With economic recovery post Covid related setback, the Company would explore any new opportunity in the business where it has expertise. 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 the financial year 2025-26 is expected to be unchanged as previous year without drastic change.

(d) Risks and concerns

Risk is an inherent part of a business which needs to be monitored and mitigated. Risk management is a continuous process needing a regular review and updation. Although the Company do not perceive significant risk impacting its operations, the existing robust risk management process for identification and mitigation of risks are considered as adequate. The internal audit process and the top management review monitor the risks and its effectiveness at regular intervals.

(e) Internal control system and their adequacy

Internal control system is the backbone of efficient running of business. Adherence to appropriate procedures, internal controls and monitoring procedures are very important. 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

The companys major revenue comes from lease income and textile trading. Income from lease has been steady and 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 31^st March 2025.

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:

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

2. The current ratio has improved on account of increase in current assets vs current liabilities on account of short term investments in Mutual funds funded by dividend from foreign subsidiary.

3. The operating profit margin has reduced due to lower profit margin in garment trading.

4. The net profit margin was under pressure due to lower margin on trading of garments during the year.

5. Return on networth has marginally improved on account of higher other income.