Elitecon International Ltd Management Discussions

Global Economic Overview ¹

The global economy in 2024 expanded moderately despite persistent headwinds. According to the IMFs July 2025 World Economic Outlook, global growth stood at 3.4% in 2024 and is projected at 3.0% for 2025 and 3.1% for 2026. These forecasts represent a slight upgrade over earlier expectations, aided by tariff rollbacks, a softer US dollar and selective fiscal interventions.

While services activity remained resilient and continued to anchor growth, manufacturing in Europe and parts of Asia was subdued, weighed down by supply chain frictions and muted external demand. Inflationary pressures eased further, with headline inflation expected to moderate to 4.2% in 2025, though core inflation remains stubbornly high in some economies, notably the US. Central banks maintained restrictive monetary policies through much of 2024, keeping financial conditions tight; however, signs of easing inflation prompted some to begin signalling a gradual pivot towards policy relaxation.

Despite these improvements, the outlook remains clouded by risks—ranging from volatile financial markets and persistent geopolitical tensions to the uneven impact of tariff adjustments. Multilateral institutions continue to stress the importance of coordinated policy action to safeguard trade flows, stabilize financial systems and enable a path toward sustained and inclusive growth.

Advanced Economies Group

For advanced economies is projected to be 1.5% in 2025 and 1.6% in 2026. In the United States, with tariff rates settling at lower levels than those announced on April 2 and looser financial conditions, the economy is projected to expand at a rate of 1.9% in 2025. This is 0.1 percentage point higher than the April reference forecast, with some offset from private demand cooling faster than expected and weaker immigration. Growth is projected to pick up slightly to 2.0% in 2026, with a near-term boost from the OBBBA kicking in primarily through tax incentives for corporate investment. This is 0.3 percentage point higher than the April reference forecast. The IMF staff estimates that the OBBBA could raise US output by about 0.5% on average over the WEO horizon through 2030, relative to a baseline without this fiscal package.

In the euro area, growth is expected to accelerate to 1.0% in 2025 and to 1.2% in 2026. This is an upward revision of 0.2 percentage point for 2025, but it is largely driven by the strong GDP outturn in Ireland in the first quarter of the year, although Ireland represents less than 5% of euro area GDP. The upward revision for 2025 reflects a historically large increase in Irish pharmaceutical exports to the United States resulting from front-loading and the opening of new production facilities. Without Ireland, the revision would be only 0.1 percentage point. The forecast for 2026 is unchanged from that in April, with the effects of front-loading fading and the economy growing at potential. Revised defense spending commitments are expected to have an impact in subsequent years, given the projected gradual increase to target levels by 2035.

Emerging Market and Developing Economies Group

Emerging and developing for China, the growth forecast is revised upward by 0.8 percentage point to 4.8 percent. This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US–China tariffs. The GDP outturn in the first quarter of 2025 alone implies a mechanical upgrade to the growth rate for the year of 0.6 percentage point. A recovery in inventory accumulation is expected to partly offset payback from front-loading in the second half of 2025. Growth in 2026 is also revised upward by 0.2 percentage point to 4.2 percent, again reflecting the lower effective tariff rates.

In the Middle East and Central Asia, growth is projected to accelerate to 3.4% in 2025 and 3.5% in 2026. Growth is expected to be relatively stable in 2025 in sub-Saharan Africa at 4.0 percent, before picking up to 4.3% in 2026. In Latin America and the Caribbean, growth is projected to slow to 2.2% in 2025 and recover back to 2.4% in 2026. Growth in emerging and developing Europe is also expected to slow and remain sluggish at 1.8% in 2025 and 2.2% in 2026.

Source: World Economic outlook update 2025

Global Economic Outlook

Tenuous Resilience amid Persistent Uncertainty

Risks to the outlook are tilted to the downside, as they were in the July 2025 WEO. A rebound in effective tariff rates could lead to weaker growth. Elevated uncertainty could start weighing more heavily on activity, also as deadlines for additional tariffs expire without progress on substantial, permanent agreements. Geopolitical tensions could disrupt global supply chains and push commodity prices up. Larger fiscal deficits or increased risk aversion could raise long-term interest rates and tighten global financial conditions. Combined with fragmentation concerns, this could reignite volatility in financial markets. On the upside, global growth could be lifted if trade negotiations lead to a predictable framework and to a decline in tariffs. Policies need to bring confidence, predictability, and sustainability by calming tensions, preserving price and financial stability, restoring fiscal buffers, and implementing much-needed structural reforms.

Global Financial Condition

US equity markets have largely rebounded, erasing losses from the April 2 tariff fallout and reaching new heights. Other global equity markets have also rallied, swayed by tariff-related announcements and releases of macroeconomic data that turned out to be better than expected. Notably, the US dollar has depreciated further, defying expectations that tariffs and larger fiscal deficits would cause the currency to appreciate. Implied paths for policy rates have flattened for advanced economies, while continued dollar weakness has provided some monetary policy space for emerging market and developing economies. Yield curves have steepened in the context of fiscal concerns, although the steepening thus far is not

Figure 1. Tariffs and Global Uncertainty

Note: US effective tariff rates include the tariffs announced April 2, until April 9, when they were paused, and additional tariffs on China announced April 8 and afterward, until May 10, when they were paused. These effective tariff rates are based on a pre-2025 United States-Mexico-Canada Agreement compliance rate. The WUI database is constructed based on methodology in Ahir, H., N. Bloom, D. Furceri. 2022. "The World Uncertainty Index." NBER Working Paper 29763. The WUI is calculated by counting the frequency of the word "uncertain" in Economist Intelligence Unit country reports and normalizing by the total number of words. The index is then rescaled by multiplying by 1,000,000 and weighted using the 5-year moving average of nominal GDP in US dollar.

Indian Economy

India has emerged as the worlds fourth-largest economy, with per capita income doubling since 2014 — a reflection of its sustained progress and resilience. Despite global headwinds and geopolitical uncertainties, the economy maintained strong momentum, recording GDP growth of 6.5% in FY 2024–25. Growth was anchored by resilient domestic demand, supported by steady private consumption and strong capital investments, alongside the governments continued focus on infrastructure development and strategic reforms.

The Production Linked Incentive (PLI) schemes, steady inflows of foreign direct investment (FDI), and rapid expansion of digital infrastructure have strengthened Indias integration into global value chains. At the same time, green energy initiatives and the China+1 strategy have enhanced competitiveness. The services sector, construction activity, and agriculture also contributed positively, benefiting from favourable monsoons and firming rural consumption, broadening the overall growth base. Inflation eased to 3.3%, comfortably within the Reserve Bank of Indias (RBI) target range, supported by stable food prices, improving supply chain efficiencies, and proactive policy measures. In line with these trends, the RBI adopted a calibrated easing stance, reducing the repo rate by a cumulative 100 basis points to 5.5% (including a 50-bps cut in June 2025) while lowering the Cash Reserve Ratio (CRR). These measures injected liquidity, lowered borrowing costs, and improved credit availability. Together with fiscal prudence, these steps strengthened financial stability and sustained growth momentum.

Indias macroeconomic performance in FY 2024–25 has laid a solid foundation for long-term growth, underpinned by structural reforms, fiscal discipline, and financial stability. This resilience reinforces confidence in the countrys ability to navigate a challenging global environment while sustaining its development path.

Outlook

Indias growth trajectory is expected to remain robust, with GDP projected to expand by 6.5% in FY 2025–26, driven by favourable monsoon conditions, sustained capital expenditure, resilient consumption and private investment revival. The Union Budget 2025–26, which introduced income tax relief for salaried individuals, is expected to bolster urban demand and discretionary spending. Retail inflation is projected to average 3.1%, staying below the RBIs target for most of the year before rising marginally in Q4.

Despite global trade uncertainties and tariff-related risks, Indias robust macroeconomic buffers, structural reforms and strategicemphasisongreenenergy,advancedmanufacturing, infrastructure expansion and financial sector reforms are expected to sustain growth momentum and strengthen its position in global value chains. With strong fundamentals, policy continuity and reform-driven resilience, the economy is well-placed to navigate global headwinds. Looking ahead, India is firmly on track to become a USD 5 trillion economy and the worlds third-largest by FY 2028.

Industrial Growth

Indias industrial activity showed resilience through early 2025, with IIP growth at 3.0% in March (up slightly from 2.9% in February) and strengthening further to 3.5% in July (vs. 1.5% in June), taking the General Index to 155.0 from 149.8 a year earlier. July momentum was led by manufacturing, up 5.4%, while mining contracted 7.2% and electricity rose 0.6%; fiscal-to-date (Apr–Jul) IIP rose 2.3% with manufacturing up 3.9%, mining down 3.9%, and electricity down 0.9%.

All India Index of Industrial Production

Use-based trends reflected robust capex and infrastructure-led demand: infrastructure/construction goods stood at 212.3 in March and surged 11.9% y/y to 201.0 by July; capital goods rose from 134.8 in March to 119.7 in July, indicating strength despite month-to-month variations; intermediates climbed from 173.1 in March to 174.1 in July (up 5.8% y/y); and consumer categories remained mixed, with durables at 138.5 in March and improving 7.7% y/y to 136.3 in July, while non-durables were stable at 147.9 in March and 147.8 in July (up just 0.5% y/y). Primary goods, however, softened, contracting 1.7% to 147.6 in July after registering 168.2 in March, underscoring strong construction and investment momentum but uneven consumer and upstream signals. [Source: MOSPI]

Consumer Price Inflation

Year-on-year inflation rate based on All India Consumer Price Index (CPI) for the month of July, 2025 over July, 2024 is 1.55% (Provisional). There is decline of 55 basis points in headline inflation of July, 2025 in comparison to June, 2025. It is the lowest year-on-year inflation rate after June, 2017. [Source: IMF]

55 basis points

Decline in headline inflation

Road Ahead

Indias economic journey over the past few years has been marked by remarkable growth and a steady rise in its position on the global stage. After overtaking the United Kingdom (UK) to become the fifth largest economy in Q1 FY23, India has continued this upward trajectory to surpass Japan in June 2025 to become the fourth largest economy in the world. With a nominal Gross Domestic Product (GDP) of Rs.3,31,03,000 crore (US$ 3.78 trillion), Indias growth reflects a combination of strong domestic demand and policy reforms positioning the country as a key destination for global capital.

Further, India is projected to reach a GDP of Rs.4,26,45,000 crore (US$ 5 trillion) by 2027 and is on course to surpass Germany by 2028. Rising employment and increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months. [Source: IBEF]

Indian Tobacco Industry

India is the second-largest tobacco producer after China. The country has around 0.45 million hectares of area under tobacco cultivation. About 10% of the total area under tobacco cultivation is in India. Globally, it accounts for 9% of the total tobacco production. The average estimated production of tobacco crops has been around 800 million kg. The country produces various types of tobacco: flue-cured Virginia tobacco, country tobacco, burley tobacco, bidi tobacco, rustica tobacco, hookah, cigar wrapped, cheroot, Burley, Oriental, chewing tobacco, etc.

The tobacco industry of India employs about 45.7 million people in farming, labour activities, manufacturing, processing, and export activities. Compared with other tobacco-manufacturing countries, India has low production, farming, and export costs, making it a popular industry. Indian-manufactured tobacco has an edge over other tobacco-producing countries in terms of lower levels of heavy metals, Tobacco-Specific Nitrosamines (TSNAs), and pesticide residues.

Indias major tobacco-manufacturing states are Gujarat, Andhra Pradesh, Uttar Pradesh, Karnataka, West Bengal, Telangana, and Bihar. Out of these, Gujarat, Andhra Pradesh, and Uttar Pradesh account for around 45%, 20%, and 15% of the countrys total production, respectively. Karnataka accounts for around 8%, and the rest of states account for about 2–3% of the countrys total tobacco production.

2^nd largest tobacco producer globally after China

9% Share in world tobacco output

Demand and supply drivers

Urban-Mix Shift

Urban consumers continue to prefer organised, branded formats with higher realisations, supported by rising disposable incomes and product innovation. This favours portfolio depth in premium SKUs, tighter inventory turns in modern trade, and packaging/format refreshes that reinforce price–value ladders.

Rural Baseline Consumption

Bidis and smokeless products remain entrenched in rural and semi-urban markets. The Companys channel design therefore leans on wholesale-led reach, micro-packs and price points that protect throughput while containing working capital in lower-ticket outlets.

Export Linkages and Quality Gates

Leaf exports remain a stable outlet, with demand concentrated in Virginia and sun-cured grades. To participate effectively, the Company keep procurement calendars aligned to auction/curing windows and sustain QA systems that meet buyer specifications and export documentation norms.

Process, Compliance and Product Assurance

Advances in processing and manufacturing—curing, flavour engineering and pack differentiation—support consistency and regulatory compliance while enabling premium extensions. Its operating focus here is on line capability upgrades, specification discipline and release controls across SKUs.

Farm-gate Support and Supply Stability

The Tobacco Boards role in price discovery and export facilitation supports grower economics and by extension, reliable crop availability. We align engagement models and purchase plans with Board processes to reduce volatility in grade mix and input costs.

Regulatory landscape (India)

Tobacco remains in the highest GST slab with compensation cess, alongside central duties including NCCD under the Finance Act; this construct keeps total incidence elevated versus most FMCG categories. The Companys pricing and pack-mix planning assumes this baseline.

Reform Watch (GST 2.0)

Government proposals under discussion would consolidate slabs to 5% and 18%, with a special 40% rate for luxury/ sin goods such as cigarettes; concurrent ideas include an additional duty to preserve current incidence if cess is rationalised. States are seeking compensation/greater shares, so timing and design remain uncertain. It monitors Council deliberations and centre–state negotiations to avoid pricing whiplash.

Tobacco Export Trend

India is the second largest exporter of tobacco behind Brazil. It exports various types of tobacco and tobacco products such as stripped, wholly stemmed, cigar cheroots, smoking tobacco, homogenised, flue-cured, sun-cured, extract and essence, FCV tobacco, unmanufactured tobacco, and various tobacco products.

India Tobacco Exports

(million US$)

Note: until February 2025

Source: RBI, Directorate General of Commercial Intelligence and Statistics, NIRYAT

In the FY24, India exported 1,43,316 tonnes of FCV tobacco valued at Rs.5,932 crore (US$ 716.15 million). From FY25 (April – October) India exported 90,773.01 tonnes of FCV tobacco valued at Rs.4,502 crore (US$ 537.86 million). In the FY24, India exported 105,372 tonnes of unmanufactured tobacco valued at Rs.2,603 crore (US$ 314.42 million). The exports of unmanufactured tobacco during FY25 (April – October) were 2,22,840 tonnes valued at Rs.9,954 crore (US$ 1.189 billion). During the financial year FY24, India exported tobacco and tobacco products worth a total of US$ 1449.54 million.

Major Market

India is the only country which produces tobacco in two seasons. It exports to 200 countries throughout the world. The country exports tobacco mainly to UAE, Belgium, Indonesia, Egypt, USA, Turkey, Republic of Korea, Russian Federation and many more countries worldwide.

Country-wise share of tobacco exports from India (FY25*)

In FY25 (until February 2025), UAE is the biggest importer of tobacco at around 21.30% of the total exports from India. Belgium and Indonesia are one of the largest tobacco export destinations for India importing around 17.62% and 7.92% of the total.

In FY24, out of these countries, UAE is the biggest importer of tobacco at around 19.76% of the total exports from India. Belgium and Indonesia are one of the largest tobacco export destinations for India importing around 18.57% and 6.09% of the total. The country also exports to Egypt, France, Russia, Korea, Sri Lanka, USA, Venezuela, Ethiopia, and Nigeria. During FY24, India exported US$ 269.22 million worth of tobacco to Belgium. UAE is among the top importers of tobacco from India, with FY24 imports valued at US$ 286.44 million. The value of exports to Singapore and the US during the same period was US$ 33.57 million and US$ 46.32 million, respectively. Some of Indias other tobacco export destinations, i.e., Russia and Egypt, imported US$ 72.11 million and US$ 48.06 million worth of tobacco from India during FY24, respectively.

Government Bodies

Tobacco Board

The Tobacco Board was formed in 1976 and is headquartered in Andhra Pradesh. The board is a facilitator to the tobacco growers, traders and exporters. The functions of the board include the promotion of all categories of tobacco and allied products, overseeing the production and distribution of the products for domestic as well as exports and regulating the Flue-cured Virginia (FCV) tobacco. Some of the other roles of the Tobacco Board are advising the central government, propagating information, and sponsoring & encouraging scientific and technological research related to tobacco promotion.

Government Initiatives

Duty Draw Back Scheme

The goal of the scheme is to cut the duty and tax chargeable on imported products that will be used to manufacture exported goods from India. Under this scheme, unmanufactured tobacco, cigars, cheroots, cigarettes, manufactured tobacco, products containing tobacco, reconstituted tobacco, nicotine, tobacco substitutes, etc. will receive a 0.15% drawback rate.

Interest Equalisation Scheme (IES)

The scheme originally came into effect in 2015 and has received an extension till 2024. The interest equalization will be provided pre and post-shipment rupee export credit. As per the extension, the rates for IES will be 3% for MSMEs, and 2% for manufacturers and merchant exporters of 410 tariff-specified lines.

Tobacco Growers Welfare Scheme

The scheme is aimed at the welfare of the FCV tobacco growers and their dependent families. A Tobacco Boards Growers Welfare Fund has been approved by the Ministry of Commerce and Industry of India under this scheme. The total corpus approved is Rs.25 crore (US$ 3.14 million).

Source - https://www.ibef.org/exports/tobacco-industry-india

Company Overview

Elitecon International Limited (hereinafter referred as to as "EIL" or "Elitecon") was established in the year 1987. Erstwhile it was known as Kashiram Jain and Company Limited. Elitecon is listed on Bombay Stock Exchange (BSE) and the Calcutta Stock Exchange (CSE). Since 2021, it has been currently producing and trading cigarettes, smoking mixture, sheesha, and other related tobacco industry products on both domestic and international markets. Elitecon currently conducts business in the UAE, Singapore, Hong Kong, and other countries in Europe, including the UK, and it has additional goals for products including chewing tobacco, snuff grinders, match lights, matches, match boxes, pipes, and other items. Elitecon has introduced brands like INHALE in the cigarette sector and Al Noor in the sheesha category. In the next month of 2022, the production plant is especially planned to grow. The companys human resource strength is currently 100, but by the end of the fiscal year, that strength is expected to reach about 500.

EIL has made investments in modern machinery to support the automation of its facility. Our ability to provide a seamless and effective production flow is made possible by their cutting-edge characteristics. On a regular basis, these machines go through extensive upgrades to determine whether all of its parts are in efficient working state. The ability to store the majority of the items in the most effective way possible in a large warehouse provides us an advantage over our rivals and allows us to satisfy various market demands.

The manufacturing procedure is clearly defined and was created by highly skilled professionals while taking into consideration the delicate balance that must be achieved to produce wide and varied flavors with various types of tobacco mix. To suit contemporary and international demands for tobacco products, our companys research and development department is continually working to create new product lines. We have the capabilities to manufacture any kind of tobacco product in accordance with this specification and requirements of the customer.

Subsidiary Companies

The Companys subsidiaries play a pivotal role in driving its growth and innovation, each contributing distinct value through specialised expertise and regional insights. Operating as an integral part of the broader ecosystem, these subsidiaries enhance the Companys ability to respond swiftly to evolving market demands. With a diverse portfolio across key markets, they bring a unique blend of local knowledge and global perspective, enabling the Company to scale effectively while maintaining agility. Its strategic focus on nurturing these subsidiaries ensures continuous innovation, empowering them to lead within their respective sectors and reinforce the Companys competitive edge on the global stage.

Financial Performance and Analysis

(Rs In Lakhs)

Particulars	For the year ended 31-03-2025	For the year ended 31-03-2024
Revenue from operations	54875.71	5682.35
Other Income	260.57	8.78
Total Revenue	55136.28	5691.13
Earnings before interest, taxes depreciation and amortization	7160.81	735.03
Earnings before interest and taxes	6981.06	513.65
Profit before Taxation	6957.12	464.92
Current tax	0.00	0.00
Deferred Tax	(7.77)	(13.09)
Net Profit/ (Loss) For the Year	6964.89	478.01

Following are important ratios showing better performance in FY 2025:

Particulars	Units	FY 2023	FY 2024	FY 2025
Profitability Ratios
EBITDA Margin	%	8.91%	12.92%	12.99%
EBIT Margin	%	4.33%	9.03%	12.66%
Net Profit Margin	%	2.22%	8.40%	12.69%
Growth Ratios
Net worth	%	0.27	-6.48%	-331.02%
Return Ratios
Return on Equity	%	0.11	(0.07)	0.43
Return on Capital Employed	%	0.03	0.07	0.30
Return on Assets	%	0.01	0.04	0.28
Leverage Ratios
Debt to Equity	Times	7.00	(20.51)	0.125
Debt to EBITDA	Times	15.96	19.36	0.03
Interest Coverage	Times	3.20	10.54	291.61
Debt to Assets	Times	0.33	1.19	0.01
Efficiency Ratios
Asset Turnover	Times	0.44	0.48	0.38
Receivable Turnover	Times	31.69	4.29	7.87
Receivable Days	Days	12.00	100.00	82

Revenue from Operation: The Revenue rose from

Rs. 5682.35 in the financial year 2023-2024 to Rs.54875.71 lakhs in the financial year 2024-2025 and the company was able to generate more revenue than its average revenue in last 4 years. The growth in revenue can be attributed to the change in market scenario, opening up of the economy and trade resumptions.

Other Income: Other income for the financial year 2024-2025 increase by 2868.11% at Rs.260.57 lakhs as compared to Rs.8.78 lakhs in the previous year due to increase in other non-operating income and exchange fluctuation gain.

Operating Cost and EBITDA: The EBITDA before exceptional items increased to Rs.7160.81 lakhs for the financial year 2024-2025 as compared to Rs.735.03 lakhs for the financial year 2023-2024. This was mainly due to increase in revenue. On the other hand, the EBITDA Margin increase from 12.92% for the financial year 2023-24 to 12.99% for the financial year 2024-25. The operating cost decreased from Rs.4956.10 lakhs for the financial year 2023-24 to Rs.47,975.47 Lakhs for the financial year 2024-25.

Debt and Finance cost: There has been decrease in total debt which includes long term & short term from Rs.14233.73 for the financial year 2023-24 to Rs.200.28 for the financial year 2024-25. Thus, finance cost for the financial year 2024-25 at Rs.23.94 lakhs in comparison to 48.73 for the previous year.

Profit after Tax: Profit after Tax (PAT) at Rs.6964.89 lakhs for the financial year 2024-25 increased by -1357.06% as compared to Rs.478.01 lakhs in the previous year majorly due to cost of materials consumed

Growth Ratios: The Net-worth has increased by (331.02%) for the financial year 2024-25 from (6.48%) for the financial year 2023-24 mainly due to huge growth in cogs and mainly due to following reasons discussed above.

Leverage Ratios: Leverage ratio provides an indication of how the companys assets and business operations are financed (using debt or equity). Looking at the leverage ratios it could be concluded that the company has increased its debt leverage but at the same time it has sufficient interest coverage and have been able to generate enough profits to meet its interest expenses. Hence, performed well on solvency front.

Efficiency Ratios: Efficiency ratio is used to evaluate how effectively a company manages its assets and liabilities. The company has been performing well in terms of industry parameters.

Liquidity: Cash balances increased to Rs.266.63 Lakhs in the financial year 2024-25 as compared to Rs.182.32 Lakhs in the previous year.

Particulars	For the year ended 31-03-2024	For the year ended 31-03-2025
Net Cash Generated from Operating Activities(A)	(7863.56)	(2.57)
Net Cash used in Investing Activities (B)	364.15	(2000.72)
Net Cash Generated from Financing Activities (C)	7661.81	2086.97
Net increase/decrease in cash (D=A+B+C)	162.40	83.68
Cash and Cash Equivalents at the beginning (E)	19.92	182.32
Cash and Cash Equivalents at the end (F=D+E)	182.32	266.63

*Particulars mentioned above are in line with year ended 31^st March, 2024

Risk Management

The Company is exposed to specific risks that are particular to its business and environment within which it operates, including Foreign Exchange Risk, Interest Rate Risk, Commodity Price Risk, Risk of Product Concentration and other Business Risk. While risk is an inherent aspect of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measure for its mitigation including business portfolio risk, financial risk and legal risk and internal process risk.

Risk Management Culture at Elitecon

Risk Identification

Assessment and Evaluation

Response and Mitigation

Risk Monitoring and Reporting

The list of the potential risks the industry is exposed to domestically/internationally are given below:

Business Operational Risk: The business operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events like economic and market conditions, cut throat competitions at local as well as at international level, even events which are not directly connected with the organization like natural disasters, political and military turmoil etc. It can be minimized by decreasing labor turnover, power cost, logistics, balancing demand & supply risks, implementing latest technologies, Un-interrupted availability of raw material at competitive prices so as to avoid production loss, maintenance of quality and harmonizing production for completing the orders in time as well. Fluctuations of prices in international market which can impact the price / cost of a particular product(s) and its blend(s) is also a part of business operational risk.

Raw material risk: There is always a risk of inadequate or non-availability of raw materials in the market due to volatility in the prices of cotton, transportation cost etc. which could impede business profits and prospects.

Supplier Risk: We rely heavily on third parties to source our raw materials. Our primary raw materials come from third-party suppliers, and while we wont have any trouble finding new ones if we do, there is no assurance that our current or potential suppliers, as well as our on-the-job personnel, will continue to provide us with the necessary volume of raw materials and services.

CORPORATE OVERVIEW

Manufacturing Risk: Our manufacturing facility has operational risks such as machinery unavailability, breakdown, obsolescence, or failure, disruption in power supplies or processes, performance below projected levels of efficiency, and labour disputes. Our machines have finite lifespan as well as annual over hauled maintenance. We have signed into technical support service agreements to ensure the proper operation and maintenance of our equipment and machinery.

Quality Risk: Our products are influenced by consumer expectations, customer preferences and trends. Failure to maintain our product quality standards may have an impact on our business. Even though we have strict quality control methods in place, we have deployed lab testers to ensure that our products will always meet our clients quality standards.

Foreign Exchange / Currency risk: We are certainly vulnerable to foreign currency exchange rates, which could have a major unfavourable effect on our operating results and financial situation. Our company has recently expanded into international markets and now sells products both domestically and internationally. Exporting our goods allows us to acquire foreign exchange gains and outgo in terms of FOB value. The exchange rate between the Rupee and other currencies fluctuates and may continue risk in our revenue. Any adverse or unexpected swing in the exchange rate of any foreign currency to Indian Rupees for businesses in order to correctly hedge their positions with international institutions may have an impact on our Companys results of operations.

Competition Risk: We confront competition in our industry from both organised and unorganised companies, which could have a negative impact on our business operations and financial situation. We largely compete based on quality, client happiness, and marketing. We think that to compete effectively, we must preserve our reputation, be flexible and timely in responding to quickly changing market demands and consumer preferences and provide customers with a diverse range of textiles at competitive rates.

Political Risk: Political risk may be defined as the probability that a political event will impact adversely on a firms profit. It represents the financial risk that a countrys government will suddenly change its policies.

Technological risk: Technology can response corporate culture and facilitate innovative procedures. In this industry, the firm is constantly required to make changes and transformations in the production process over time, upgrade their machinery besides creating new facilities and additional capacities in order to survive in the highly competitive market.

Human Resource Development/ Industrial Relation

The Company rely that the health and safety of the workers and the persons residing in the vicinity of its plants is fundamental to the business. Commitment to the identification and elimination or control of the workplace hazards for protection of all is utmost importance. The manufacturing operations are conducted to ensure sensitivity towards the environment and minimize waste by encouraging "Green" practices. The Company continued to enjoy healthy industrial relations during the year.

Health & Safety

The company considers health and safety to be an essential province. The company has provided appropriate facilities for all workers and employees, such as adequate lighting, ventilation, and lack of congestion, as well as medical kits, stretchers, and fire extinguishers, among other things, at prominent locations. Personnel at supervisory level have been trained in basic life support techniques. The safety measures taken by the company has resulted in improving the conditions under which workers are employed and work, consequently increasing the productivity.

Infrastructure

The company is equipped with modern infrastructure facilities which assist in smooth production. The companys manufacturing unit is outfitted with advanced machines and equipment and a trained staff, who have years of experience behind them. To sell products to the clients, the company has facilitated a smooth transportation mechanism through a strong base of transporters and traders.

Cautionary Statement

The above Management Discussion and Analysis contain certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding a fluctuation in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time on behalf of the Company.