Euro Leder Fashion Ltd Management Discussions

The Management Discussion and Analysis Report for the financial year ended 31st March, 2026 has been prepared in compliance with applicable statutory requirements and provides an overview of the Companys business environment, industry developments, operational performance, opportunities, risks, and future outlook.

1. INDUSTRY STRUCTURE DEVELOPMENTS:

Your Company is engaged in the manufacture and export of leather garments and operates manufacturing facilities at Pammal, Uttiramerur and Vadadavur in Tamil Nadu. The Company caters exclusively to export markets and has established long-standing relationships with reputed international customers through its commitment to quality, timely delivery, and customer satisfaction.

The Indian leather and leather products industry continues to be one of the countrys significant export-oriented sectors and a major contributor to employment generation. India enjoys a competitive advantage owing to the availability of raw materials, a skilled workforce, an integrated value chain, and a well-developed manufacturing ecosystem. Tamil Nadu continues to remain the largest leather manufacturing hub in India, accounting for a substantial share of the countrys leather exports.

During FY 2025-26, the global leather industry operated in a challenging environment marked by economic uncertainties in key export destinations, inflationary pressures, evolving consumer preferences, and increasing demand for sustainable and ethically sourced products. Demand from major markets such as Europe and North America showed gradual recovery; however, buying patterns remained cautious due to weak consumer sentiment and inventory rationalization by international brands.

Despite these challenges, Indias leather exports demonstrated resilience supported by diversification of export markets, government initiatives under the Foreign Trade Policy, and increasing focus on value-added products. The growing preference for premium leather fashion products and improved market access through international trade initiatives are expected to support long-term industry growth

2. REVIEW OF OPERATIONS:

During the financial year 2025-26, the Company achieved a turnover of Rs.2,733.80 lakhs as against Rs.1,700.43 lakhs in the previous year and recorded a net profit of Rs.54.47 lakhs. Export sales increased significantly to Rs.2,676.78 lakhs from Rs 1,663.84 lakhs in the previous financial year, reflecting improved order execution and enhanced customer demand across key export markets. As on 31st March, 2026, the outstanding term loan of the Company stood at Rs 42.27 lakhs.

The Company continued to focus on operational efficiency through disciplined production planning and inventory management. Production schedules were aligned with customer requirements to minimize excess inventory and optimize working capital utilization. These measures helped improve inventory turnover and operational productivity.

However, profitability remained under pressure owing to higher leather prices, elevated freight costs, increased selling expenses, and pricing pressure in international markets. In addition, growing consumer preference for synthetic and vegan alternatives, heightened sustainability expectations, and geopolitical uncertainties continued to influence demand dynamics in the global leather apparel segment.

The Company operates in a single business segment, namely leather garments and related products, and its performance is closely linked to developments in the global fashion and apparel industry.

3. OUTLOOK:

The long-term outlook for the Indian leather industry remains positive. India continues to be among the worlds leading producers and exporters of leather products and is expected to benefit from increasing global sourcing diversification, growing demand for premium products, and enhanced focus on sustainable manufacturing practices.

Industry reports indicate that the Indian leather market is expected to witness steady growth over the medium term, supported by rising disposable incomes, expanding global fashion markets, increasing demand for quality leather products, and supportive government policies promoting exports and manufacturing.

For FY 2026-27 and beyond, the Company expects demand conditions in its key export markets to improve gradually as inflationary pressures moderate and consumer spending recovers. The Companys established customer base, quality-focused manufacturing capabilities, and flexible production infrastructure position it favourably to capitalize on emerging opportunities.

The Company will continue to focus on:

Strengthening relationships with existing customers and expanding its global customer base. Enhancing operational efficiencies and productivity. Maintaining strict quality standards and timely deliveries. Exploring new export markets and product categories. Improving cost competitiveness through better resource utilization and process optimization. Adopting sustainable manufacturing practices in line with evolving international buyer requirements.

While challenges relating to raw material costs, pricing pressure, sustainability compliance, and changing consumer preferences are expected to persist, management remains cautiously optimistic about achieving improved operational and financial performance during FY 2026-27.

4. RISK AND CONCERNS

The Company operates in a highly competitive global environment and is exposed to various business risks, including:

Economic slowdown in major export markets. Fluctuations in foreign exchange rates. Volatility in leather and other raw material prices. Changes in international trade policies and tariffs. Geopolitical tensions and supply chain disruptions.

Increasing regulatory requirements relating to environmental sustainability and traceability.

Competition from synthetic and alternative materials. Changes in fashion trends and consumer preferences. Talent acquisition and retention challenges.

The Company has established risk management processes to identify, assess, monitor, and mitigate business risks on a continuous basis. The Audit Committee and Board of Directors periodically review key risks and the effectiveness of mitigation measures

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls commensurate with the size and nature of its business. The internal control framework ensures safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The effectiveness of internal controls is periodically reviewed by management, internal auditors, the Audit Committee, and the Board of Directors, and necessary improvements are implemented wherever required.

6. ENVIRONMENT, HEALTH 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.

7. 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 company s Vision and long term & short term strategy. The relationship of your Company with employees has been cordial during the year.

8. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various economic, business, competitive, regulatory, and other factors beyond the Companys control. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

Annexure E

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

(Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

To,

The Members of

Euro-Leder Fashion Limited

No. 11, 1 st Floor, K.M. Adam Street, Nagelkeni, Chromepet, Chennai-600044

I have examined the relevant registers, records, forms, returns and disclosures received from the Directors of EURO-LEDER FASHION LIMITED (CIN:L18209TN1992PLC022134) having its registered office at No. 11, , 1 st Floor, K.M. Adam Street, Nagelkeni, Chromepet, Chennai,-600044(hereinafter referred to as

the Company ), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company and its officers, I hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31 st March, 2026 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

Sr.	Name of Directors	DIN	Date of appointment
No.			in Company
1	Shanmathy Periyasamy	09743522	26/09/2022
2	Varadarajan Ravindran	10378006	10/11/2023
3	Kesavalu Ashitha	07233606	06/08/2025
4	Ramanathan Lakshmanan	00039603	28/06/2021
5	Iyyanuservai Murugan Kavinesan	10378006	06/03/2024

Ensuring the eligibility of for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. My responsibility is to express an opinion on these based on my verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.