Digjam Ltd Management Discussions

ECONOMICS OVERVIEW

GLOBAL ECONOMIC OVERVIEW AND OUTLOOK

The global economy remained resilient during FY 2025-26, achieving a growth rate of 3.4% despite persistent geopolitical tensions, elevated trade policy uncertainty, supply-chain disruptions and volatile commodity prices. While global economic activity demonstrated greater-than-anticipated resilience, the outlook continued to be shaped by downside risks arising from geopolitical conflicts, higher energy prices, inflationary pressures, tighter financial conditions and fragmentation in international trade.

According to the International Monetary Fund (IMF), global growth is projected at 3% in 2026 and 3.4% in 2027, assuming that the conflict in the Middle East remains limited in duration and scope. The IMF expects global inflation to rise modestly in 2026 before resuming its declining trend in 2027. However, the outlook remains subject to significant downside risks, including prolonged geopolitical conflicts, renewed trade tensions, higher commodity prices and weaker-than-expected productivity gains.

The World Banks June 2026 outlook presents a more cautious assessment, projecting global growth to slow to 2.5% in 2026, from 2.8% in 2025, before improving to 2.8% in 2027. The World Bank has highlighted the impact of the Middle East conflict, higher energy prices, rising inflation and increased borrowing costs as key factors weighing on global activity. Under a more adverse scenario involving prolonged energy disruptions and financial stress, global growth could weaken further.

The OECD, in its June 2026 Economic Outlook, similarly projects global growth to moderate in 2026 before recovering in 2027, with the trajectory dependent on the duration of current geopolitical and energy-related disruptions. Under its time- limited disruption scenario, global growth is projected at 2.8% in 2026 and 3.1% in 2027. The OECD has also cautioned that a prolonged disruption could result in materially weaker growth and persistent inflationary pressures.

Overall, the global economy enters the period ahead with a combination of resilience and heightened uncertainty. The evolving geopolitical environment, energy prices, trade policy changes, supply-chain realignments and inflation dynamics will continue to influence business confidence and consumer demand. For the textile and apparel industry, these factors may affect international demand, raw material costs, freight costs and sourcing decisions. At the same time, continued diversification of global supply chains and Indias growing integration into international markets could create opportunities for Indian textile businesses.

INDIAN ECONOMIC OVERVIEW AND OUTLOOK

The Indian economy continued to demonstrate resilience during FY 2025-26 and remained among the fastest-growing major economies globally. Strong domestic demand, improving infrastructure, policy support, diversification of supply chains and continued structural reforms have supported economic activity despite global uncertainties.

The World Bank has projected Indias growth at 6.6% in FY 2026-27, noting that higher energy prices and supply-chain disruptions could weigh on economic activity, while strong macroeconomic fundamentals, foreign exchange reserves, a relatively healthy financial sector and trade diversification provide resilience against external shocks.

The OECD, in its June 2026 outlook, projects Indias real GDP growth at 6.3% in FY 2026-27, followed by 6.4% in FY 202728. The OECD expects higher energy and input costs, weaker global demand and inflationary pressures to create near-term headwinds, while continued reforms and investment could support medium-term growth.

The Indian textile and apparel sector remained an important contributor to Indias manufacturing and export ecosystem during FY 2025-26. Indias total textile exports, including handicrafts, increased from approximately Rs.3,09,859 crore in FY 2024-25 to Rs.3,16,335 crore in FY 2025-26, representing a growth of approximately 2.1%. Within the sector, exports of man-made yarn, fabrics and made-ups increased by approximately 3.6%, from Rs.41,196 crore in FY 2024-25 to Rs.42,688 crore in FY 2025-26, reflecting continued demand for man-made and value-added textile products.

The sector also benefited from broad-based geographical diversification. During April 2025 to February 2026, export growth was recorded across more than 120 destinations, with notable growth in markets including the UAE, United Kingdom, Germany, Spain and Japan. Developments in Indias trade agreements, including the India-EFTA TEPA entering into force, the India-UK CETA and the conclusion of the India-EU FTA, are expected to strengthen market access and create additional opportunities for Indian textile and apparel businesses over the medium term.

Government initiatives such as the Production Linked Incentive (PLI) Scheme for Textiles, PM MITRA Parks, National Technical Textiles Mission and SAMARTH continue to support the development of the textile ecosystem. The PLI Scheme remains particularly relevant to the growth of man-made fibre fabrics, man-made fibre apparel and technical textiles, while the PM MITRA Parks initiative seeks to strengthen integrated textile infrastructure and supply chains.

Against this backdrop, Indias textile sector is expected to benefit from growing domestic consumption, increasing demand for man-made and value-added fabrics, diversification of global sourcing and expanding international market access. However, fluctuations in raw material prices, geopolitical uncertainty, energy costs, global demand conditions and evolving trade policies will remain important considerations for businesses operating across the textile value chain.

MACROECONOMIC ENVIORNMENT

FY 2025-26 was characterised by a combination of domestic economic resilience and heightened global uncertainty. While Indias domestic economic fundamentals remained relatively strong, the operating environment for the textile sector

continued to be influenced by geopolitical tensions, trade-policy developments, commodity-price volatility and changes in global consumer demand.

The textile trading business remains sensitive to fluctuations in the prices of cotton, wool, polyester, viscose and other man-made fibres. Changes in raw material prices can influence procurement costs, inventory valuations, selling prices and trading margins. During FY 2025-26, the global energy shock and geopolitical developments also contributed to uncertainty in freight, logistics and input costs.

At the same time, Indias textile export sector demonstrated resilience. The increase in total textile exports during FY 202526 and the relatively stronger performance of man-made textile exports indicate continued demand for diversified and value- added textile products. The geographical expansion of Indias export markets also reflects the industrys efforts to reduce dependence on individual markets and strengthen its global presence.

For textile trading businesses, the changing global environment presents both challenges and opportunities. While subdued global growth and cost volatility may affect demand and margins, Indias growing integration with global supply chains, trade agreements and increasing demand for man-made and specialised fabrics provide opportunities for businesses with strong sourcing capabilities, efficient inventory management and diversified customer relationships.

The Company continues to monitor these macroeconomic developments closely and remains focused on maintaining operational flexibility, prudent inventory management and cost efficiency to navigate the evolving business environment.

INDUSTRY OVERVIEW

The Indian textile trading business forms an important link between textile manufacturers, brands, retailers, apparel manufacturers and institutional customers. The sector is undergoing structural changes driven by evolving consumer preferences, increasing demand for quality and value-added products, digitalisation of distribution channels and greater integration with global supply chains.

During FY 2025-26, the Indian textile sector demonstrated resilience in international markets. Total textile exports, including handicrafts, increased by approximately 2.1%, while exports of man-made yarn, fabrics and made-ups registered growth of approximately 3.6%. This trend is relevant to the Companys business, given its focus on PV (Polyester Viscose) and PW (Pure Wool) fabrics.

The industry is witnessing increasing demand for manmade fibres, performance fabrics, technical textiles and other specialised products. At the same time, consumers are becoming increasingly conscious of quality, sustainability, traceability and product differentiation. These trends are encouraging businesses across the textile value chain to strengthen sourcing capabilities and develop stronger relationships with manufacturers, brands and end customers.

The Governments continued policy support through initiatives such as the PLI Scheme for Textiles, PM MITRA Parks, National

Technical Textiles Mission and other sectoral programmes is expected to strengthen the competitiveness of the Indian textile ecosystem. The continued expansion of Indias trade relationships and FTAs also provides opportunities for greater market access and export diversification.

The industry, however, remains exposed to global demand fluctuations, currency movements, raw material price volatility, changing trade policies and intense competition from major textile-producing countries. The ability to manage inventory, maintain competitive pricing, identify emerging product categories and respond quickly to changing market conditions will remain critical to sustainable growth.

BUSINESS OVERVIEW

DIGJAM is engaged in the textile business in India, specialising in the PV (Polyester Viscose) and PW (Pure Wool) fabrics. The Companys textile operations are conducted from its unit located at Bhiwandi, Maharashtra.

The business is structured around the following key activities:

- Specialty and Premium Fabrics: The Company focuses on premium and value-added fabrics, catering to the evolving requirements of the apparel, fashion and institutional markets.

- Customer-Centric Approach: The Company remains focused on product quality, timely delivery, customer relationships and service standards, supported by its established and recognised brand, DIGJAM.

The Company continues to leverage its supplier relationships and distribution capabilities to support efficient procurement and delivery of textile products. The Companys focus remains on strengthening its trading operations, maintaining prudent inventory levels and responding effectively to changing customer preferences and market conditions.

PERFORMANCE REVIEW (FINANCIAL AND OPERATIONAL)

The Company continued to focus on its textile operations during FY 2025-26 in an operating environment characterised by global economic uncertainty, volatility in input costs and evolving market demand.

The Companys financial and operational performance for the year ended March 31, 2026, compared with the previous financial year, is summarised below:

Financial Performance Highlights (Consolidated, YoY):

Particulars	March 31, 2026	March 31, 2025	YOY CHANGE
Total Income	3,350.79	1,839.92	82.11%
EBITDA	341.71	333.32	2.52%
EBITDA Margin (%)	10%	18%	-
Profit Before Tax (PBT)	232.55	197.91	17.50%
PBT Margin (%)	7%	11%	-

Note: The company has discontinued its operations in Jamnagar, and any financial activity relating to that is shown separately as a discontinued operation. The above table represents only the continued operations of the textile business of Digjam.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS:

Particulars	F.Y. 26	F.Y.25	Variation
Trade Receivables Turnover	4.33	2.99	45%
Inventory Turnover	2.69	1.49	81%
Interest Coverage Ratio	0.00	-1.56	-100%
Current Ratio	0.50	0.82	-40%
Debt Equity Ratio	13.61	10.96	24%
Net Profit Margin	0.07	0.11	-57%

OPPORTUNITIES AND THREATS Opportunities:

- Expansion in Premium, Man-Made, and Specialized Fabrics: Growing demand for value-added fabrics, technical textiles, and man-made fabrics (MMF) is creating opportunities for textile companies to cater to premium and niche segments.

- Market Penetration & Distribution Networks: Increasing organized retail, e-commerce growth, and omnichannel platforms are enabling textile companies to reach Tier 2/3 cities and expand their client base.

- Government Support: Policies like the PLI Scheme for Textiles, PM MITRA Parks, and import duty exemptions on raw materials—including synthetic and MMF inputs— are enhancing competitiveness and facilitating smoother operations for textile businesses.

- Global Sourcing Diversification (China Plus One):

International brands seeking alternative suppliers due to geopolitical tensions and tariffs are opening avenues for Indian traders to capture a larger share of global textile trade, particularly in man-made fibers and technical textiles. Free Trade Agreements (FTAs), such as the India- UK FTA, could further accelerate export opportunities.

Threats & Challenges:

The Indian textile industry continues to operate in a dynamic environment, with several structural and market-related challenges influencing its growth and performance. Some of the key challenges are outlined below:

- Variations in the availability of key textile inputs continue to influence production economics across the industry. The comparatively higher cost of certain synthetic fibres and specialised yarns in India may also place domestic manufacturers at a disadvantage against some global production centres.

- The international business environment remains challenging due to uneven demand across major consuming markets and aggressive pricing by overseas suppliers. Tariff disadvantages in certain geographies can further affect the ability of Indian manufacturers to compete effectively, particularly where competing countries enjoy preferential access through bilateral or regional trade arrangements.

- Competition from established and emerging textile- producing nations continues to intensify. Several competing countries benefit from efficient manufacturing ecosystems, competitive production costs and favourable access to important export destinations. In the domestic market as well, availability of competitively priced imported textile and apparel products may influence realisations and market share in certain categories.

- Consumer demand for textiles and apparel is closely linked to disposable income, inflation and overall economic sentiment. During periods of cautious discretionary spending, consumers may increasingly favour affordable products and promotional purchases. Such changes in buying behaviour can affect product mix, pricing flexibility and profitability, particularly in price-sensitive categories.

- The regulatory framework governing the textile sector continues to evolve across areas such as taxation, product standards and compliance requirements. Changes in applicable regulations may require businesses to modify processes, systems or sourcing practices and could consequently result in additional expenditure and greater complexity in business planning.

- Environmental considerations are becoming increasingly important in purchasing and sourcing decisions across global textile markets. Customers are placing greater emphasis on responsible sourcing, product traceability and environmentally efficient manufacturing. Meeting these expectations may require continuing investment in technology and infrastructure, particularly in processing activities involving significant consumption of water, energy and chemicals.

- The working capital requirements of textile businesses can be affected by fluctuations in order volumes, inventory holding periods and delays in customer collections. Longer operating cycles may increase dependence on external funding, while changes in lending appetite, borrowing costs or credit availability could impact liquidity and the ability of industry participants to fund their operations efficiently.

SEGMENT- WISE OR PRODUCT- WISE PERFORMANCE

The Company is engaged in the business of selling of Fabrics.

The Company is dealing only in this single segment and hence segment wise performance is not applicable to the Company.

RISKS, CONCERNS, AND MITIGATIONS

The textile trading business is exposed to several risks:

- Macroeconomic Risks: Changes in global and domestic economic growth, inflation, interest rates and currency movements may influence consumer demand and business activity.

- Market Risks: The Company operates in a competitive industry characterised by changing consumer preferences, evolving fashion trends and increasing demand for specialised and value-added fabrics.

- Raw Material and Price Risks: Volatility in prices of wool, polyester, viscose and other textile inputs may impact procurement costs, inventory values and trading margins.

- Supply Chain and Logistics Risks: Disruptions in transportation, availability of materials, freight costs and delivery schedules may affect business operations and customer servicing.

- Inventory Risks: Changes in market demand and product preferences may result in inventory accumulation, price erosion or slower inventory turnover.

- Trade and Geopolitical Risks: Changes in tariffs, trade restrictions, geopolitical developments and international supply-chain conditions may affect the textile industry.

The Company seeks to mitigate these risks through prudent inventory management, supplier diversification, close monitoring of market trends, maintaining strong customer and supplier relationships and exercising discipline in procurement and working capital management. The Company also continues to evaluate opportunities in premium, value-added and specialised textile products to improve product mix and reduce concentration risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an internal control framework commensurate with the size and nature of its operations. The internal control systems are designed to safeguard the Companys assets, ensure accuracy and reliability of financial reporting, promote operational efficiency and ensure compliance with applicable laws, regulations and internal policies.

The internal control framework includes appropriate processes relating to procurement, inventory management, sales, receivables, payments, financial reporting and statutory compliance. The adequacy and effectiveness of internal controls are reviewed periodically by the management and, where applicable, through the internal audit function.

The Audit Committee of the Board reviews significant internal audit observations and the status of corrective actions, as applicable. The Company continues to strengthen its internal control environment to support effective risk management, operational discipline and good corporate governance.

HUMAN RESOURCES

The Companys employees continue to be an important contributor to its operational effectiveness and long-term success. The Company remains committed to maintaining a professional, inclusive and performance-oriented work environment.

The Company focuses on attracting, developing and retaining capable personnel and encourages continuous learning and skill development. Employees are provided with appropriate opportunities to enhance their knowledge and capabilities in line with the evolving requirements of the business.

The Company believes that a committed and capable workforce is essential for maintaining operational efficiency, strengthening customer relationships and supporting sustainable business growth.

SUSTAINABILITY AND ESG HIGHLIGHTS

The Company recognises the growing importance of sustainability and responsible business practices across the textile value chain. The Company continues to remain mindful of the environmental and social considerations associated with textile sourcing and trading activities.

Key areas of focus include:

- Sustainable Sourcing: Encouraging the sourcing of quality products and, where commercially and operationally feasible, exploring eco-friendly, recycled and certified textile materials.

- Environmental Responsibility: Promoting efficient use of resources and encouraging responsible practices across the Companys operations and supply chain.

- Social Responsibility: Supporting fair labour practices, workplace safety and responsible sourcing standards among business partners and suppliers.

- Product Quality and Traceability: Maintaining appropriate quality standards and strengthening transparency in product sourcing and supply-chain relationships.

- Governance and Compliance: Maintaining appropriate governance systems, ethical business practices, regulatory compliance and oversight of material business risks.

The Company continues to monitor evolving ESG expectations and industry practices and will seek to integrate relevant sustainability considerations into its business operations in a manner appropriate to the nature and scale of its business.

OUTLOOK

The Indian textile industry enters FY 2026-27 with a combination of opportunities and challenges. While global economic growth is expected to remain moderate and geopolitical and energy- related risks continue to create uncertainty, Indias resilient domestic economy, expanding trade relationships and continued policy support provide a favourable foundation for the medium- term development of the textile sector.

The growth recorded in Indias textile exports during FY 202526, together with the stronger performance of man-made textile exports, indicates opportunities for businesses operating in value-added and man-made textile categories. The Companys focus on PV and PW fabrics provides a platform to participate in evolving customer preferences and market opportunities.

The Companys key focus areas for FY 2026-27 will include:

- Strengthening the Business: Continuing to build the Companys presence in PV and PW fabrics and other commercially viable value-added textile categories.

- Product and Market Diversification: Exploring opportunities to broaden the product portfolio and customer base in response to evolving market requirements.

- Customer and Supplier Relationships: Strengthening long-term relationships with customers and suppliers to ensure product availability, competitive pricing and consistent service.

- Working Capital and Inventory Management: Maintaining disciplined inventory and receivables management to improve liquidity and operational efficiency.

- Operational Efficiency: Continuing to focus on cost optimisation and efficient business processes to support sustainable profitability.

- Market Opportunities: Evaluating opportunities arising from Indias expanding trade relationships, global supply- chain diversification and increasing demand for man-made and specialised textiles.

While the operating environment remains subject to global economic and geopolitical uncertainties, the Company remains focused on strengthening its core textile operations, improving operational efficiency and pursuing sustainable growth opportunities.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and other forward-looking statements may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Factors that may affect the Companys operations include global and domestic economic conditions impacting textile demand and supply, fluctuations in raw material and finished fabric prices, changes in trade policies and tariffs, geopolitical developments, supply-chain disruptions, exchange-rate movements, changes in government policies and regulations, and other factors beyond the Companys control.