Credo Brands Marketing Ltd Management Discussions

Global Economy

In 2025, the global economy demonstrated resilience despite an increasingly complex backdrop of geopolitical disruptions, elevated policy uncertainty, and structural headwinds. According to the IMFs April 2026 World Economic Outlook (WEO), titled Global Economy in the Shadow of War, global growth in 2025 is estimated at 3.4%. However, the near-term outlook weakened following the outbreak of war in the Middle East, which disrupted energy markets, damaged critical infrastructure, and heightened risks of broader supply-chain and financial spillovers. Under the IMFs reference assumption that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1% in 2026 before edging up to 3.2% in 2027. These levels remain below recent outcomes and well under pre-pandemic averages. Divergence between advanced and emerging economies remained a defining feature of the global space. Advanced economies faced subdued momentum due to weak productivity gains, fiscal consolidation, and demographic pressures. Emerging market and developing economies are expected to grow faster, supported by stronger domestic demand and structural drivers. However, the IMF noted that slowdown and inflation risks are likely to be more pronounced in these economies, particularly commodity importers with existing vulnerabilities.

Higher energy, fertiliser, and transport costs, tighter financial conditions, and weaker external demand added pressure on economies with limited buffers. Private-sector adaptation, softer-than-expected US tariffs, financial support, and technology investments supported trade recovery. However, the Middle East conflict continued to threaten key energy and transport routes, raising input costs and reinforcing risks arising from trade tensions and geopolitical fragmentation.

Global inflation dynamics also became more challenging. The IMFs April 2026 World Economic Outlook projected global headline inflation to rise to 4.4% in 2026 before easing to 3.7% in 2027, reflecting upward revisions for both years. Under its reference forecast, which assumed a short-lived conflict and a moderate 19% rise in energy prices in 2026, global growth is projected to slow while inflation temporarily rises. In an adverse scenario involving deeper disruptions, higher energy prices, rising inflation expectations, and tighter financial conditions, global growth could fall to 2.5% while inflation could rise to 5.4% in 2026. In a severe scenario, where energy supply disruptions extend into the following year, global growth could decline to around 2% in both 2026 and 2027, while inflation could exceed 6%.

(Source: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026)

(Source: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026)

Outlook

The global economy faces a renewed resilience test in 2026, with the Middle East conflict emerging as a major near-term headwind. Although global activity remained stronger than expected through 2025, elevated geopolitical risks, persistent trade-policy uncertainty, tighter financial conditions, and possible inflationary pressures from energy-market disruptions have clouded the outlook.

Downside risks continue to dominate the near-term horizon. A prolonged conflict, deeper geoeconomic fragmentation, or shifting expectations around technology- and AI-led productivity could materially weaken growth. At the same time, continued fiscal support in select economies, improving private-sector adaptation, and the expanding integration of digital technologies may provide some offsets. Certain emerging markets, including India, remain relatively better positioned due to stronger structural growth drivers and resilient domestic demand. However, commodity importers continue to face exposure to higher energy costs and external financing pressures.

(Source: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026)

Indian Economy

Indias economy remained among the worlds fastest-growing major economies. Real GDP grew 6.5% in 2024-25, supported by resilient private consumption, investment activity, and strong services and construction sectors. Growth momentum accelerated in 2025-26, with GDP expanding 7.8% in Q1 and 8.2% in Q2. This reflected robust domestic demand, sustained services activity, and early support from GST rationalisation and improving consumption sentiment. The estimate for 2025-26 projected full-year real GDP growth of 7.4%, marking a meaningful increase over the previous year.

(Sources: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2212087&lang=1r=3&utm https://www.pib.gov.in/PressReleaseDetail. aspx?PRID=2221389r=6&lang=1)

India Real GDP Growth Rate (in %)

(Sources: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2219907, https://www.pib.gov.in/PressReleaseDetail. aspx?PRID=2221389r=6&lang=1)

Price conditions remained largely favourable through most of 2025-26, although recent data indicates a gradual rise in price pressures. Headline CPI inflation had eased earlier in the year, supported by food-price corrections, GST rationalisation, and favourable supply conditions.

However, the latest official CPI release showed retail inflation rising to 3.48% in April 2026, with food inflation at 4.20%, against 3.40% and 3.87%, respectively, in March 2026. Core inflation remained relatively stable. Meanwhile, the RBIs earlier policy easing continued to support consumption and investment. However, the inflation outlook could shift amid evolving geopolitical conditions. Any escalation in global conflicts, disruption in energy supply chains, volatility in crude oil prices, or pressure on imported commodities could influence domestic prices in the coming months.

(Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2260251&utm)

Indias consumption outlook continues to benefit from policy measures aimed at strengthening incomes, employment and productive capacity. The Union Budget for 2026-27 reaffirmed the consolidation and sustained capital expenditure, with infrastructure-led growth remaining a key priority. Although the Budget did not announce fresh broad-based personal income-tax relief, earlier tax-rationalisation measures and GST changes are expected to support disposable incomes and consumer sentiment. Simultaneously, continued emphasis on textile skilling, MSME support, khadi, handloom, handicrafts, village industries, and rural-linked employment further strengthens the demand environment for branded fashion across urban and semi-urban India. Indias textile and apparel sector, employing over 45 million people and contributing around 2% to GDP, continues to benefit from policy support. The Ministry of Textiles allocation for 2026-27 remains broadly stable against the previous Budget Estimate, with continued priority accorded to infrastructure, skilling, technical textiles, and cluster development. The PM MITRA mega textile parks initiative is also gaining momentum, with seven parks finalised, infrastructure work underway, and investment interest emerging across locations. Indias expanding role as a diversified textile manufacturing and sourcing hub presents a long-term opportunity for domestic brands as global buyers seek more resilient supply chains.

(Sources: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2117470r=3&lang=2 https://www.pib.gov.in/PressReleasePage. aspx?PRID=2241103&lang=1r=3)

Outlook

Resilient domestic demand and sustained momentum focus on fiscal in the services sector continue to anchor Indias economic growth outlook. This trajectory is expected to continue into 2026-27, with the IMFs April 2026 outlook projecting the economy to expand by 6.5% in CY 2026 despite a more challenging global environment. Together, these factors are expected to help India retain its position among the worlds fastest-growing major economies.

(Source: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2212087&lang=1r=3&utm)

The outlook is supported by relatively strong macroeconomic fundamentals. Inflation remained broadly contained despite some recent firming in price pressures, while the external sector continued to benefit from resilient services exports and remittance inflows. Foreign exchange reserves also remained sizeable, providing an important buffer against global volatility, although recent geopolitical tensions and rupee pressures moderated reserves from earlier peaks. Key growth drivers include sustained public capital expenditure, infrastructure-led development, deeper technology adoption, and continued structural reforms. The Union Budget 2026-27 highlighted reforms such as GST simplification, labour-code implementation, and quality-control rationalisation. Meanwhile, the Economic Survey 2025-26 emphasised private investment, MSME participation, technology adoption, and deeper integration into global value chains to improve competitiveness and sustain growth.

Private consumption is also strengthening, supported by rising incomes, improved credit access, benign inflation, and Indias favourable demographic profile. The middle class, increasing formalisation, and wider digital adoption are expected to support discretionary spending across urban and semi-urban regions.

While global uncertainties remain elevated, including geopolitical risks, trade-policy uncertainty, and energy-price volatility, Indias domestic growth engines remain resilient. A reform-oriented policy environment, resilient consumption base, diversified economic structure, and strong services sector position the country to sustain steady medium-term growth.

(Source: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026)

Industry Developments and Opportunities

Global Apparel Market

The global apparel market is projected to reach approximately USD 2.36 trillion in 2026. It is expected to grow steadily to USD 4.59 trillion by 2035, registering a CAGR of 7.61% during 2026-2035. Despite macroeconomic headwinds, the sector continues to demonstrate resilience, supported by rising demand for casual and athleisure wear, higher disposable incomes, social media-driven fashion discovery, sustainability trends, and continued e-commerce growth.

Global Apparel Market Size

* Projected

(Source: https://www.businessresearchinsights.com/market-reports/apparel-market-124451)

Global Apparel Market by Segment

(Source: https://www.uniformmarket.com/statistics/global-apparel-industry-statistics)

Indian Apparel Market

Indias textile and apparel sector, spanning fibre, yarn, fabric, garments, technical textiles, and industrial textiles, remains on a strong growth trajectory. IMARC estimates the broader sector at USD 248.70 billion in 2025 and projects it to reach USD 656.31 billion by 2034, reflecting a CAGR of 11.38% during 2025-2034. While this covers the entire value chain beyond branded apparel, the growth outlook remains supported by Indias demographic advantage, rising income levels, expanding organised retail, accelerating e-commerce adoption, technology modernisation, and proactive policy support through initiatives such as PLI schemes and textile infrastructure development.

(Source: https://www.imarcgroup.com/indian-textiles-apparel-market?utm)

* Projected

Consumer preferences in India are witnessing a qualitative shift, with shoppers increasingly moving from unbranded to branded apparel. This transition is supported by rising fashion awareness, digital discovery, and aspirational lifestyle preferences. Urban millennials and Gen Z remain

Indian Apparel Market Size

key drivers of this trend, although growth continues to be
led more by value and fashion trends than premiumisation.
Branded apparel is expected to outpace unbranded
apparel and account for a larger share of consumer
spending over time. Organised retail, including modern
trade and e-commerce, is estimated by industry sources
to approach nearly 45% of apparel sales. Meanwhile, D2C
and digital-first fashion channels continue to gain traction
(Sources: https://timesofindia.indiatimes.com/business/india-
business/cart-stars-gen-z-drives-fashion-beauty-e-sales/
articleshow/131164505.cms?utm
https://apparelresources.com/business-news/retail/gen-z-
shopper-share-reaches-nearly-50-indias-online-fashion-
market/?utm)
Policy support for India\u2019s textile and apparel sector also
remains strong. In January 2026, the Ministry of Textiles
announced the District-Led Textiles Transformation Plan
to develop export-oriented and self-reliant textile clusters.
PM MITRA mega textile parks are gaining momentum
through land allotments, infrastructure progress, and
investor commitments. The PLI scheme continues to
support high-value MMF apparel, MMF fabrics, and
technical textiles, reinforcing India\u2019s shift towards
advanced manufacturing. At the same time, targeted
trade-remedy and tariff measures are helping address
unfair import competition. Collectively, these initiatives
strengthen India\u2019s position as a diversified global sourcing
hub while creating long-term opportunities for domestic
brands.
Indian Men\u2019s Apparel Market
The Indian menswear market reached USD 21.9 billion in
2025, rising from USD 20.4 billion in 2024, according to
IMARC Group estimates. The market is projected to reach
USD 42.4 billion by 2034, growing at a CAGR of 7.24%
during 2025-2034. This growth reflects structural shifts in

Indian mens fashion, driven by rising disposable incomes, rapid urbanisation, growing fashion awareness among younger consumers, evolving style preferences and wider access to brands through e-commerce and digital platforms.

Digital commerce is extending the reach of Indias menswear market beyond metros, enabling brands to serve consumers across Tier I, II and III cities more efficiently. Recent D2C data indicates that Tier II and

III cities contributed nearly 66% of new D2C orders in 2025-26 and accounted for 60% of incremental Gross Merchandise Value (GMV), highlighting the growing depth of non-metro consumption. This broader access is improving brand discovery, supporting convenience-led purchases and helping both established and emerging fashion labels strengthen visibility across a wider consumer base.

At the same time, menswear preferences are shifting towards comfort, versatility and everyday functionality. Relaxed workwear, casual shirts, T-shirts, joggers, athleisure and smart-casual formats are gaining traction as consumers seek clothing suited for office, travel, leisure and social occasions. This trend is encouraging brands to sharpen design capabilities, improve fabric quality and expand portfolios across formal, casual, athleisure and occasion wear categories.

Meanwhile, competition is intensifying with the expansion of organised retail, digital-first brands, high streets, malls and international labels. As the category evolves, sustained growth will depend on brand recall, omnichannel reach, product relevance, quality, pricing discipline and faster response to changing consumer behaviour.

Indian Mens Apparel Market Size and Forecast

P: Projected

(Source: https://www.imarcgroup.com/india-menswear-market?utm)

Growth Drivers

Rising Disposable Incomes

As incomes rise, mens apparel spending is moving beyond basic replacement demand towards branded, occasion-led, workwear, casualwear, athleisure, and premium products. Greater income visibility is also supporting repeat purchases and broader wardrobe expansion.

(Source: https://www.imarcgroup.com/india-menswear-market?utm)

Younger, Fashion-Conscious Consumers

Urbanisation is reshaping mens fashion consumption by increasing exposure to organised retail, office wear, casualwear, athleisure, and lifestyle-led dressing. Indias population aged 20-45 years accounted for nearly 41.5% of the total population in 2025, reflecting a large youth-driven consumer base. Meanwhile, the World Bank expects urban areas to house around 600 million people by 2036, supporting demand for modern apparel formats.

(Source: https://www.populationpyramids.org/india?utm)

E-Commerce Expansion

Younger consumers, especially millennials and Gen Z, are accelerating fashion experimentation across casualwear, streetwear, athleisure, ethnic wear, and premium basics. Gen Z accounted for 40-45% of Indias e-retail shoppers and nearly half of incremental online orders in 2025. Shopping behaviour is increasingly influenced by social media, influencers, and digital discovery.

(Source: https://www.bain.com/insights/how-india-shops-online-2026/?utm)

Shift from Unbranded to Branded Apparel

E-commerce and digital platforms have widened access to brands across metros and Tier II and Tier III cities.

Indias online retail market reached approximately

USD 65-66 billion in GMV in 2025 and is projected to grow over 20% annually to USD 170-180 billion by 2030. This expansion continues to support online discovery and purchases of mens apparel through marketplaces, D2C websites, and omnichannel retail.

(Source: https://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/india-eretail-sector-crosses-65-bn-likely-to-grow-over-20-pc-annually-till-2030/130138757)

Premiumisation and Lifestyle Upgrading

The shift from unbranded to branded apparel remains a major structural driver for Indias apparel market. As incomes rise and consumers become more brand-conscious, purchase decisions are increasingly influenced by quality, fit, design, comfort, and aspirational value rather than price alone. This is accelerating premiumisation across categories, with consumers showing greater willingness to upgrade to higher-value products for workwear, casualwear, occasion wear, and lifestyle-led dressing. Indias mens apparel market is projected to reach USD 42.4 billion by 2034, with branded apparel accounting for a larger share of spending and growing faster than unbranded apparel. This trend continues to support demand for branded shirts, denim, innerwear, formalwear, ethnic wear, and casualwear.

(Source: https://redseer.com/articles/fashion-forward-winning-in-indias-fast-growth-apparel-market/?utm)

Casualisation of Wardrobes

Casualisation is also reshaping mens wardrobes.

Consumers are increasingly choosing better fits, improved fabrics, branded occasion wear, smart casuals, athleisure, and lifestyle-led products instead of purely functional clothing.

(Source: https://www.imarcgroup.com/india-menswear-market?utm)

Wedding, Festive, and Occasion Wear Demand

Wedding, festive, and occasion wear demand continues to support recurring menswear purchases, particularly across ethnic wear, formalwear, accessories, and premium apparel. Indias ethnic wear market also remains closely linked to festive and occasion-led dressing.

(Source: https://timesofindia.indiatimes.com/city/indore/wedding-season-lifts-garments-demand-but-gst-hike-make-keep-a-lid/arti cleshow/125258990.cms?utm)

Overall, Indias mens apparel market is benefiting from income growth, urbanisation, digital adoption, youth-led fashion awareness, branded apparel penetration, and organised retail expansion. Together, these factors are creating a larger and more sophisticated consumer base for branded menswear across urban and semi-urban India.

Company Overview

Credo Brands Marketing Limited (Credo or the Company) is engaged in the design, branding, marketing, and retailing of mens apparel and accessories in India. Established in

1998 by first-generation entrepreneur Kamal Khushlani, the Company has built MUFTI into one of Indias leading mid-premium to premium mens casualwear brands. Over the years, the brand and the Company have become closely synonymous, with Credo widely recognised in the market as MUFTI.

Over the past two and a half decades, the Company has built a distinctive presence in Indias fashion ecosystem through bold design, authentic self-expression and enduring quality. MUFTI was conceived with a clear vision: to offer the modern Indian man fashion choices that reflect confidence, individuality and a progressive sense of style.

MUFTIs core proposition centres on a versatile wardrobe catering to the modern man across multiple occasions, from relaxed weekends to smart-casual workplaces. Operating in the mid-premium to premium segment, the brand offers a broad portfolio encompassing shirts, T-shirts, jeans, chinos, cargos, sweatshirts, jackets, blazers, sweaters, and athleisure wear. The portfolio spans four lifestyle choices: Authentic Daily Casuals, Relaxed Holiday Casuals, Urban Party Wear, and Athleisure Lounge Wear. The Company has introduced a trend-sensitive product strategy featuring contemporary silhouettes and elevated fabric choices. Merchandise has also been restructured into a lifecycle flow aligned with specific life occasions, ensuring meaningful wardrobe solutions for every occasion in a consumers life.

2025-26 marks a watershed moment in MUFTIs brand journey with the full-scale launch of the MUFTI 2.0 transformation. Anchored in the vision to firmly position the brand within Indias premium fashion segment, the transformation encompasses a reimagined store identity with a refreshed retail design language, elevated merchandise architecture with a sharper premium focus, intensified brand-building investments across digital and traditional media, and deeper engagement through the Companys proprietary loyalty platform, Muftisphere. The platform hosts a database of over 3 million consumers.

During 2025-26, the Company successfully launched 28 stores under the MUFTI 2.0 retail identity, comprising 14 new stores and 14 renovated stores, receiving encouraging responses from consumers, trade partners, and mall operators.

A key and enduring differentiator for MUFTI is its creative boldness. Rather than following transient trends, the brand consistently nurtures a design identity centred on originality, confidence, and expressiveness. An experienced in-house

15-member design team creates an album of over 1,400 designs annually, tracking global trends to deliver innovative, high-quality products across occasions. This design-led approach has cultivated a loyal consumer community valuing the brands distinctiveness in a crowded market.

Another defining feature of the Companys operating model is its merchandise lifecycle management. Credo distributes fresh stock to EBOs, MBOs, and LFS partners every season, supports discounted end-of-season sales, and subsequently retrieves all unsold merchandise from offline channels. Returned inventory is then sold profitably This risk-free supply model, unique within the Indian branded apparel industry, ensures fresh merchandise across retail touchpoints, supports partner profitability, and preserves the brands premium positioning without margin erosion.

Operationally, the Company continues to derive strategic advantage from its asset-light model. By retaining inhouse design and product development capabilities while outsourcing manufacturing, MUFTI maintains flexibility, speed-to-market, and cost efficiency. The Company works with a network of over 50 fabric and accessory suppliers and more than 50 manufacturing partners, with top partners associated for over a decade on average. The entire supply chain is managed end-to-end on ERP Ginesys, while QlikSense supports data analytics and management reporting.

Company Outlook

MUFTI entered 2026-27 with clear strategic direction and cautious optimism. The MUFTI 2.0 transformation, anchored in premiumisation, brand reinvention and digital acceleration, represents a deliberate long-term investment towards building a more aspirational and commercially resilient brand. While this transition has created near-term profitability pressures, the Company remains confident that sustained brand investments will unlock value as consumer preferences align with MUFTIs premium repositioning. On the digital front, the D2C strategy has started delivering measurable results. Own website sales grew approximately 74% year-on-year in 2025-26, validating the Companys digital-first approach through partnerships with leading platforms, including Google and Meta. The Muftisphere loyalty ecosystem, with over 3 million registered consumers, continues to deepen engagement and improve retention, while generating valuable first-party consumer data to support collection planning and targeted marketing.

On the retail front, the Company continues to exercise disciplined selectivity in expansion, prioritising high-potential premium-format locations across metro cities, premium malls, high-street retail destinations and airports, while rationalising underperforming stores. The focus remains on strengthening network quality over scale. During 2025-26, 34 new stores were opened and 46 underperforming stores were closed, taking the year-end EBO count to 429 stores. This reflects the Companys guiding philosophy of prioritising network quality over aggressive expansion. In 2026-27, the Company plans to close approximately 20 odd stores and open 20 new stores, with continued emphasis on premium locations. It also intends to strategically add nearly 20 premium stores under the MUFTI 2.0 format to further elevate brand perception and create immersive consumer experiences. As part of the

MUFTI 2.0 transformation, the Company is redefining its retail presence through a premium store identity built on minimalist design. The refreshed outlets feature a beige-led palette with stone, wood and steel fixtures, creating a more aspirational and immersive environment for the modern man. The strategy focuses on quality of network over scale. Advertising and branding spend of 5-6% of revenue was incurred during 2025-26 and are expected to increase to 8-10% in 2026-27. This reflects the Companys conscious long-term commitment towards strengthening brand equity, despite near-term pressure on profitability. The Company estments to start inv anticipatesthebenefits ofthese materialising in two to three years.

Credos asset-light operating model, strong cash generation and debt-free balance sheet provide financial flexibility to pursue its transformation agenda confidently. Its focus on profitable growth, reflected in the consistent industry-leading

EBITDA margins and improving revenue per square foot, remains central to long-term value creation. Importantly, all brand and transformation investments continue to be funded entirely through operating profits, ensuring sustained profitability through the investment cycle.

The brands strategic shift is towards Indias premium menswear segment, supported by upgraded flagship stores, refined merchandise catering to evolving lifestyle occasions, and sharper brand storytelling through higher marketing and digital investments. By combining premium store formats, contemporary product architecture and omnichannel engagement, MUFTI aims to build a stronger growth platform for the future. The Company is also strengthening its content creator collaboration strategy as a key pillar of its digital brand-building efforts.

Product-wise Performance

MUFTIs product architecture spans four core categories: Shirts (Top wear), Bottom wear (Jeans, Chinos, Cargos), T-shirts (Top wear), and Outerwear (Jackets, Blazers, Sweatshirts). Bottom wear led the product mix at 40.8%, followed by Shirts at

38.1%, reaffirming the brands strong position in core mens casualwear categories. T-shirts contributed 12.8%, Outerwear

6.1%, and Others 2.2%.

During the year, consumer preference shifted towards basics over fashion-forward styles, affecting the performance of trend-led products across the portfolio. The Company has integrated these insights into its Spring/Summer 2026 collection through a more balanced product architecture aligned with evolving consumer demand for versatility, wearability and seasonal fashion relevance.

From an EBO performance perspective, average annual revenue per EBO stood at 75.2 lakhs in 2025-26. Average ticket value per EBO bill reached 5,232, while revenue per square foot stood at 11,719 in 2025-26, reflecting sustained productivity over previous years.

Quantity Sold (in million Units)

Financial Overview

The Companys revenue from operations for 2025-26 stood at 5,921 million, compared to 6,182 million in 2024-25. The Companys EBITDA for 2025-26 stood at

1,542 million, as against 1,798 million in 2024-25.

Profit After 474 million, compared to 684 million in 2024-25.

2025-26 was a year of deliberate brand investment and strategic transformation. The Company consciously passed on GST benefits to consumers on products priced below 2,500 while refraining from price increases on higher-priced products. This reflected a measured

Key Financial Highlights ( in million) approach to protect consumer trust. Advertising and branding spend was approximately 5-6% of revenue in 2025-26, with plans to increase to 8-10% in 2026-27, reflecting a sustained commitment to long-term brand building through the MUFTI 2.0 transformation. Cash flow from operations for 2025-26 stood at 1,324 million, while Return on Capital Employed (RoCE) and Return on Equity (RoE) as of March 31, 2026, stood at 13.8% and 11.2%, respectively. Despite near-term revenue and margin pressures, the Companys balance sheet remains robust, with no financial debt and strong operating cash generation

Key Ratios

Ratios	2025-26	2024-25	Variance (%)	Explanation (in case change is 25% or more, as compared to previous year)
Debtors\u2019 Turnover Ratio (in times)	2.49	2.74	(9.07)	NA
Inventory Turnover Ratio (in times)	5.58	5.45	2.37	NA
Debt Service Coverage Ratio (in times)	1.65	2.01	(17.98)	NA
Current Ratio (in times)	3.27	3.61	(9.37)	NA
Gross Profit Margin (in %)	58.35	57.25	1.98	NA
Net Profit Margin (in %)	8.01	11.07	(27.62)	The variance is on account of a. decrease in sales by 2.90% in 2025-26 as compared to
				2024-25 and b. increase in expenses by 1.54% in FY 2025-26 as compared to 2024-25
Debt-Equity Ratio (in times)	0.52	0.58	(9.97)	NA
Return on Net Worth (in %)	11.17	18.20	(38.60)	The variance is on account of decrease in earnings before interest and taxes by 23% in
				2025-26 as compared to 2024-25

Threats

In 2025-26, the branded apparel industry navigated a challenging environment marked by subdued consumer sentiment and weaker discretionary spending, particularly in Tier II and Tier III markets. Q3 2025-26 remained muted for the sector, with the festive season falling short of expectations and lower footfall across retail touchpoints. These pressures weighed on industry-wide revenue growth. During the year, the business also faced supply chain disruptions, including logistics delays and raw material cost pressures, affecting timely product availability and quarterly revenue performance. The Company responded by recalibrating sourcing, logistics, and inventory planning to minimise spillover impact, while delayed supplies were progressively normalised in the subsequent quarter. Raw material cost pressures and sourcing diversification risks continue to remain key monitoring areas.

Competition has intensified, with domestic brands, international entrants, and digitally native fashion platforms targeting the same consumer base. Fast fashion platforms and value retailers continue exerting price pressure in lower segments, while global premium brands are strengthening their India presence within the aspirational consumer category. Several D2C-native brands, backed by private equity, have deployed disproportionately large marketing budgets relative to their revenue base, especially across digital channels. This has intensified brand visibility competition for established offline-first players. The evolving competitive environment demands exceptional agility and strategic clarity in brand positioning.

The rapid evolution of digital retail presents both opportunities and competitive pressures. While the Companys D2C business has delivered strong growth, the channel requires sustained investment in technology, marketing, and consumer experience to remain competitive against rapidly growing digitally native D2C brands targeting the same fashion-conscious urban consumers.

Sustainability expectations from consumers, investors, and regulators are also evolving. Although sustainability awareness in India remains relatively nascent compared to Western markets, the direction remains clear. The Company continues evaluating practical and cost-effective sustainability initiatives that can be integrated into operations without adversely affecting consumer pricing.

Risk Management

MUFTI has established a comprehensive enterprise-wide risk management framework designed to proactively identify, assess, and address risks across all aspects of the business. The framework is integrated with the Companys strategic planning, operational processes, and decision-making, enabling a holistic view of potential exposures. MUFTI follows a structured risk evaluation process comprising periodic risk assessments, scenario analysis, and cross-functional inputs to evaluate both impact and likelihood. A central Risk Management Committee oversees mitigation strategy implementation, while internal audit mechanisms regularly review and strengthen the processes.

The following table details the primary risks identified and the Companys corresponding mitigation strategies

Risk Category	Specific Risks Faced	Mitigation and Response
Macroeconomic and Regulatory	oducts below pr Muted discretionary spending Taxbenefitsfor 2,500 were
	and weak consumer sentiment	passed on to consumers
	impacted demand across the
	apparel industry. GST reforms	Additional costs for premium products were
	also created temporary pressure	absorbed to support consumer traction
	on margins.	A debt-free balance sheet was maintained to
		navigate softer business cycles
Supply Chain	Supply chain disruptions in	Inventory flows were managed to enable
	Bangladesh delayed product	dispatches in subsequent quarters
	availability.
		Measures were undertaken to recover
		potential lost sales
Competitive	Intensifying competition from	MUFTI 2.0 was implemented to support
	well-funded D2C brands and	premiumisation and brand differentiation
	aggressive expansion by value
	retailers increased pressure on	Marketing investments are being increased
	market positioning and consumer	to 8-10% of revenue to strengthen brand
	acquisition.	positioning
Retail and Operational	Underperforming stores affected	The retail network is being rationalised
	overall network productivity and	through closure of underperforming stores
	operational efficiency.
		Premium stores are being introduced in
		high-impact locations
Digital Shift	The growing preference for	Digital marketing initiatives were intensified
	digitally native D2C brands	to strengthen consumer engagement
	created potential risks around
	relevance among younger	Partnerships with Google and Meta were
	consumers.	enhanced to support D2C growth

Human Resources

MUFTI firmly believes its people are the foundation of its success. The Company goes beyond conventional norms to create a workplace that is inclusive, engaging, and growth focused. By prioritising attitude over experience, MUFTI invests in employee development through hands-on learning and comprehensive training programmes, ensuring continuous skill enhancement.

The Company strives to foster an environment where employees feel valued and empowered. This is reinforced through wellness initiatives, diversity and inclusion programmes, and employee assistance efforts. An open communication culture, supported by accessible leadership, encourages continuous feedback, coaching, and meaningful performance discussions, strengthening transparency and trust across the organisation.

MUFTIs HR philosophy centres on attracting and retaining top talent, developing future leaders, and aligning the workforce with the Companys long-term strategic vision. During 2025-26, the Company strengthened the digital, retail, and analytical capabilities needed to execute the MUFTI 2.0 transformation effectively, ensuring employees remain equipped for the evolving demands of premium retail.

As of March 31, 2026, MUFTI had 245 permanent employees who continue to shape the brands vibrant and collaborative culture.

Internal Control Systems and Their Adequacy

MUFTI maintains a robust internal control framework efficiency designedtoensureoperationalintegrity, regulatory compliance. Its leadership fosters a culture of ethics, transparency, and accountability, while establishing clear expectations across the organisation.

Regular risk assessments are conducted to proactively identify and mitigate potential challenges. The control framework includes defined segregation of duties, secure physical and digital safeguards, and IT-enabled controls tailored to MUFTIs operational requirements. In 2025-26, the scope of internal controls was expanded to cover the Companys growing digital and e-commerce operations, ensuring consistent standards across all channels.

To further strengthen this framework, the Company emphasises continuous communication, targeted training, and ongoing monitoring across functions. Employees are encouraged to act responsibly and report concerns, reinforcing compliance and ethical conduct throughout the organisation. The internal audit function operates independently and reports directly to the Audit Committee, providing objective assurance on control effectiveness. MUFTIs internal controls continue to evolve in response to emerging risks, technological advancements, and industry best practices. This approach safeguards assets while supporting long-term and sustainable performance.

Cautionary Statement

This section contains statements that may be classified as forward-looking under applicable securities laws and regulations. These include projections, expectations, and estimations regarding future performance, based on certain assumptions and anticipated developments. However, such statements are inherently subject to uncertainties and external influences beyond the Companys control. As a result, actual outcomes may differ materially from those expressed or implied. The Company bears no obligation to publicly update or revise any forward-looking statements based on future events or changes in circumstances. Stakeholders are therefore advised to interpret such statements with due caution, considering the unpredictability of future business environments.