Euro Leder Fashion Ltd Management Discussions

The Management Discussion and Analysis Report on the business of the Company for the year ended 31^st March, 2025 has been attempted to include discussion on all the specified matters to the extent relevant or within limits that in our opinion are imposed by the Companys own competitive position.

1.COMPANY AND INDUSTRY STRUCTURE:

The Company manufactures leather garments exclusively for export and has its factory at Pammal, Uttiramerur and Vadadavur. All the units are self-sufficient to perform their duties and functions. The commitment of the Company towards quality and customer orientation reflects in its well-established clientele.

The Indian Leather, Leather Products and Footwear Industry holds a prominent place in the Indian economy. This sector is known for its consistency in high export earnings and it is among the top ten foreign exchange earners for the Country.

The industry is bestowed with an affluence of raw materials as India is endowed with 20% of world cattle & buffalo and 11% of world goat & sheep population. Added to this are the strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and the dedicated support of the allied industries.

The leather industry is an employment intensive sector, providing job to about 4.42 million people, mostly from the weaker sections of the society. Women employment is predominant in leather products sector with about 40% share. India is the 2nd largest exporter of leather garments, 2nd largest exporter of Saddlery & Harness and 5th largest exporter of Leather Goods in the world

The major markets for Indian Leather & Leather Products are USA with a share of 21.65%, Germany 11.24%, UK 9.07%, Italy 6.24%, France 4.83%, Spain 5.08%, Netherlands 5.12%, Belgium 2.27%, China 2.41%, UAE 2.60%, Poland 1.95%, and Vietnam 1.90%

The major production centers for leather and leather products in India are located in the States of Tamil Nadu Chennai, Ambur, Ranipet, Vaniyambadi, Vellore, Pernambur, Trichy, Dindigul and Erode apart from other states like West Bengal, Uttar Pradesh Maharashtra, Punjab, Karnataka, Kerala, Delhi and Rajasthan.

2. REVIEW OF OPERATIONS:

During the financial year 2024 25, your Company recorded a turnover of Rs. 1769.02 lakhs and a net profit of Rs. 21.47 lakhs. Export sales stood at Rs. 1663.84 lakhs, as compared to Rs. 3130.15 lakhs in FY 2023 24. A detailed analysis of the financial performance is provided in the Directors Report. As on March 31, 2025, the Company had an outstanding term loan of Rs. 23.23 lakhs.

The Company operates in a single business segment leather garments and related products and the performance of this segment has been comprehensively discussed in the Directors Report and the accompanying Financial Statements.

In line with its short-term strategic objectives, the Company has implemented a time-bound production policy aimed at aligning output with market demand, thereby avoiding excessive inventory buildup. Focused efforts have been made to bring stock levels to their optimal range through tighter production control and inventory rationalization.

Despite these operational efficiencies, the sales and profit margins remain under pressure due to the following key factors:

1) Increase in major input costs particularly of leather.

2) Globally leather garments have registered a decline in realization and this affected India also.

3) Average price realization per garment to Rs.5566/- during the year.

4) Freight rates and selling expenses rose appreciably, further pushing the costs. These factors constitute the threats faced by the company

5) Demand for leather garments has decreased due to changing fashion trends or seasonal shifts.

6) Increased preference for synthetic, vegan, or sustainable alternatives in key markets (e.g., Europe, North America).

7) Disruptions due to COVID-19, shipping delays, or geopolitical tensions may impact timely delivery and reliability, affecting buyer confidence

8) Unfavorable exchange rate movements can reduce profit margins and make pricing uncompetitive in global markets

9) Growing awareness around animal rights and environmental impact has led to a decline in leather consumption in many countries.

10) Regulatory pressures on sustainable sourcing and carbon emissions are stricter abroad.

3. OUTLOOK:

The India Leather Market was valued at USD 6.8 Billion in 2025 and is projected to reach USD 10.3 Billion by 2031, growing at a CAGR of 7.6% during the forecast period 2025-2031. The leather industry is one of Indias oldest industries with a long heritage dating back centuries, and it plays an important role in contributing to the countrys economy both through exports and employment generation. It has been estimated that this sector employs 2.5 million people directly or indirectly across various segments such as manufacturing, tanning, retailing etc., making it one of the largest employers in India after agriculture.

Increasing Demand for Leather Goods: Rising disposable income levels among consumers coupled with changing fashion trends have propelled demand for leather-based goods globally including from countries like China; this is expected to drive growth of the market over the next few years. In addition, there are numerous initiatives taken by local as well as regional government authorities encouraging production & sales of leather goods which will further fuel growth prospects for this market in near future

The prices associated with raw materials used in production process is quite expensive which ultimately affects profitability margins resulting reduced revenue opportunities companies operating within space creating challenge them.

Consumers increasingly aware environmental problems related use natural resources manufacture commodities including animal hide, they looking eco-friendly alternatives instead of traditional methods sustain their lifestyles without harming planet - thereby boosting popularity of green leather products amongst customers.

The overall impact on revenue and profitability would have been better but for the depreciating rupee, given that sales are export-oriented, while majority of raw materials are procured domestically. Operating margins are expected to remain range bound at 6-6.5 per cent over the medium term.

The Companys strength lies in the quality of its products and the promising looks continued patronage of its buyers. However, the realization per garment is likely to be low. The peak season is due to start shortly. The order position is expected to be healthy by FY 25-26 and the Company should register a healthy improvement in its performance by end of FY 2026.

4. RISK AND CONCERNS

Risks and Concerns Economic and political factors, both national and global that are beyond control and factors force majeure may directly affect performance of the Company as well as the Leather industry. These factors include interest rates and its impact on availability of retail space, rate of economic growth, fiscal and monetary policies of governments, inflation, deflation, regulatory pressures on sustainable sourcing, consumer credit availability, consumer debt levels, geopolitical tensions, tax rates and policy, unemployment trends, terrorist threats and activities, worldwide military and domestic disturbances and conflicts, pandemics, and other matters that influence consumer confidence and spending.

The Company is subject to risks arising from material price and exchange rate fluctuations which may adversely affect our financial performance. The availability and retention of talent, product quality management, innovation and new product development, rapidly changing consumer preferences, impact of strategic and marketing initiatives, data security etc. may affect your Company.

Your Company monitors its major risks and concerns at regular intervals. Appropriate steps are taken in consultation with all the concerned including the Audit Committee and the Board to identify and mitigate such risks.

5. ENVIRONMENT AND SAFETY:

The Company is conscious of the need for environmentally clean and safe operations to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources.

6. HUMAN RESOURCES:

Over the last year, Human Resources have taken various initiatives for employee benefit and retention. The initiatives undertaken by the Human Resources

Department is always aimed at operationalizing the companys Vision and long term & short term strategy. The relationship of your Company with employees has been cordial during the year.

7. OTHER MATTERS:

There were no further or typical areas of risks or concerns outside the usual course of business foreseeable at this time. Internal control systems had been found to be adequate and are continuously reviewed for further improvement. Our team is committed to the Boards dictates on standards of conduct as well as good governance and exercise of due diligence including compliance of all relevant laws and regulations. Our appreciation is due to all employees, gratefulness to our board, shareholders and Banks.

	On Behalf of the Board of Directors
	EURO LEDER FASHION LIMITED
Place: Chennai	RM.Lakshmanan	P.Shanmathy
Date: 6 th August, 2025	Managing Director	Director
	(DIN: 00039603)	(DIN:09743522