Indian Terrain Fashions Ltd Management Discussions

Management discussion and analysis report

GENERAL ECONOMIC CLIMATE

In FY 2024-25, the global economy showed remarkable fortitude in the face of numerous difficulties. Inflationary pressures and declining external demand were among them, as were escalating geopolitical tensions and ongoing supply chain interruptions. The overall trajectory remained uneven and susceptible to external shocks, even if some sectors showed signs of recovery. Global commerce and energy flows were severely disrupted by geopolitical conflicts, which increased uncertainty, reduced investment activity, and presented serious hazards to global economy.

In summary, despite ongoing structural and geopolitical challenges, the global economy demonstrated its resilience during FY 2024-25. Coordinated governmental responses, improved supply chain flexibility, and a revitalized India that continues to be a ray of stable economic growth in the face of this unstable environment are all necessary for the future. Indias economy continued to demonstrate resilience in FY 2024-25, maintaining a stable growth trajectory amid global volatility. With a projected real GDP growth of 6.5%, India remained among the fastest-growing major economies.

But as FY 2024-25 draws to a close, the United States intensification of trade tensions especially through tariff measures has alarmed international markets. Though it may be slightly unclear on how this can affect Indias export competitiveness and trade dynamics, therefore a careful observation is necessary.

INDIAN APPAREL INDUSTRY - OUTLOOK, OVERVIEW, STRUCTURE AND DEVELOPMENTS

(A) Apparel Industry:

Though hard to predict even in the best of times, the fashion industry was tumultuous and uncertain during 2024-25. There was a slight cyclical slowdown and consumers, scarred by the recent period of high inflation, are increasingly price sensitive. The apparel industry in India is poised for substantial growth, with a projected revenue increase of around 10.5% in FY26. This growth is primarily driven by the rise of fast fashion, shaped by social media trends and Gen Zs demand for stylish, on-trend apparel. The growing popularity of ethnic wear and the luxury segment has also contributed to this positive trajectory. This expansion is fueled by a transformative approach, with a strong emphasis on innovation and scalable solutions to effectively meet evolving consumer needs.

Indian e-commerce in the apparel industry is expected to reach US$ 63 billion by 2030 with (CAGR) of 24%. With this remarkable growth, the sector presents immense opportunities for innovation and expansion. The apparel industry is known for its ability to adapt to change, with new trends and styles emerging regularly. Change has always been the wardrobe essential of this industry, happening almost every quarter of each year. This constant need for adaptation also brings its own set of challenges for the industry.

(B) Indian Apparel - Market insights:

Consumer preference and regional diversity have changed the apparel market of India, together with some key emerging trends for sustainability, athleisure, and the influence of digital platforms. Increased demand for sustainable fashion: Heightened environmental sensitivity is promoting increased demand for sustainable fashion. A trend can be seen in which people prefer eco-friendly materials and ethical production methods. Online shopping has increased manifold, whereby a wide choice of domestic and international brands is easily availed. It becomes even more striking in Tier-II and III cities, where the e-commerce boom has democratised access to fashion and driven demand for versatile clothing.

India is ready-structurally and culturally-for a new wave of brands. Consumers across segments are actively seeking new propositions, wardrobes are expanding across occasions, and pricing and trend-orientation are emerging as key decision drivers. At the same time, distribution is formalising rapidly, with online, exclusive brand outlets, and multi-brand retail projected to account for over 60% of apparel purchases by 2030. The scale is there, but unlocking it requires precise choices around price positioning, entry model, launch sequencing, localisation, distribution, and marketing. Global brands that move now are best placed to lead.

From value-conscious millennials to status-seeking Gen Z, Indian consumers are more open to new brands than ever before, actively seeking unique, occasion-led fashion and Comfortable buying through organised retail and digital channels. These are structural trends that will redefine the market in both the short and long-term, and brands that capitalise on shifting consumer preferences have the opportunity to make significant inroads in emerging market niches. India is not a copy-paste market. Fit, fabric, and aesthetic preferences vary widely by region, climate, and occasion. Even globally consistent design systems need to flex for Indias cultural context. Localisation levers include-Fit and fabric, Design sensibility and Manufacturing model. Standard lines benefit from local sourcing, while fashion-forward collections often require imported cycles for agility and control.

(C) Current Trends in Apparel Industry:

• Fashioning the Future with Sustainability:

Consumers are becoming increasingly conscious of the environmental impact of the clothing they purchase. As a result, sustainable fashion, also known as eco-fashion or ethical fashion, is becoming an increasingly important trend in the industry. As consumers become more conscious about their purchasing power and environmental impact, it is expected that sustainable fashion production will become increasingly important.

• Revolutionizing Fashion with Athleisure:

Athleisure has been a game-changer in the fashion industry, with its versatility and functionality driving the demand for athletic wear. As the trend continues to evolve, its likely that well see more innovations in the design, materials, and technology of athletic wear, making it even more appealing to consumers. Another aspect of athleisure is the use of technology, such as moisture-wicking fabric and UV protection, to enhance the functionality of athletic wear. A trend that combines athletic and leisure wear, has been revolutionizing the fashion industry in recent years. This trend has been driven by the increasing popularity of comfortable, functional clothing worn both in and out of the gym.

• Style and Functionality are Key to Modern Consumers Wardrobe

Consumers are looking for comfortable, durable, and versatile clothing that can be worn for different occasions and meet different needs. Functionality is especially important for activewear and athleisure, as consumers seek clothing that can keep up with their busy lifestyles and support their physical activities. Fashion, on the other hand, fashion is essential in creating a unique and personal style.

• The Growing Era of Digital First Brands with quick commerce

One of the biggest advantages of digital-first brands is their ability to reach a global audience through e-commerce. These brands can sell directly to consumers, bypassing traditional retail channels and cutting down on costs. This allows them to offer a wide range of products at competitive prices. With the advancement in technology and more people turning to the internet for fashion inspiration and shopping, digital-first brands will have a significant opportunity to thrive in the industry.

(D) Future of the Indian textile market:

The Indian apparel market is poised for continued growth, driven by a dynamic interplay of economic, technological, and social forces. By embracing sustainable practices, leveraging technology, and catering to the evolving demands of a diverse consumer base, stakeholders can capitalize on the numerous opportunities and solidify Indias position as a global leader in the apparel industry.

GLOBAL APPAREL INDUSTRY - OUTLOOK, OVERVIEW, STRUCTURE AND DEVELOPMENTS:

(A) Global Apparel market size:

The global apparel market is valued at approximately $1.84 trillion in 2025, accounting for around 1.6% of the worlds GDP. It is projected to reach $1.78 trillion by 2030, growing at a CAGR of about 4.3% between 2025-2030. Other sources suggest a market size of $1.47 trillion in 2025 and $1.66 trillion by 2030, with a CAGR of 2.53% between 2025 and 2030. The Apparel Manufacturing Market is predicted to grow by $127.9 billion between 2025-2029, expanding at a CAGR of 4.4%. The global second hand apparel market is valued at $260.24 billion in 2025 and is projected to reach $522.81 billion by 2030, at a CAGR of 15.07%. The global apparel industry is navigating a complex yet exciting phase of transformation. Brands that embrace technology, prioritize sustainability, understand the evolving consumer needs, and adapt their business models will be well-positioned for success in 2025 and beyond.

(B) Innovation and Emerging Technologies in Global Fashion Retail

• Fashion companies integrating AI could experience a 118% cumulative increase in cash flow by 2030

• Businesses hesitant to embrace digital advancements may face a 23% relative decrease in performance

• 71% of shoppers are more likely to shop frequently when using AR-powered applications

• Companies are allocating between 1.6% and 1.8% of revenues to technology

• Technology investments are projected to rise to between 3.0% and 3.5% by 2030 Video commerce is proving essential for brands seeking to boost engagement and conversion

• Live shopping events deliver conversion rates up to 10 times higher than traditional eCommerce

• Shoppable videos reduce the path to purchase and enhance product discovery

(C) Global Apparel Market Segmental Analysis:

The market is divided into Clothing, Footwear, and Accessories. Clothing Market is dominated due to several key factors. The clothing segment dominated the market in 2025 and continues its dominance during the forecast period serving as a fundamental aspect of self-expression and identity for consumers, making it a cornerstone of the fashion industry. Premium apparel brands capitalize on this by offering high-quality garments that not only fulfill functional needs but also reflect the wearers individual style, status, and taste.

This emphasis on craftsmanship, design, and exclusivity distinguishes premium clothing from mass-market alternatives, attracting discerning consumers who seek superior quality and unique fashion experiences. It covers a wide range of product categories and styles, catering to diverse consumer preferences and occasions. From haute couture gowns to tailored suits, casual wear, and accessories, premium clothing brands offer a comprehensive selection of garments to suit various lifestyles, occasions, and aesthetic preferences. This versatility allows premium apparel brands to appeal to a broader audience and capture a larger share of the market. The enduring appeal of clothing as a form of personal expression and social status ensures its dominance in the premium apparel market. Unlike other categories such as footwear or accessories, clothing has a universal appeal and relevance across different cultures, age groups, and demographics. As such, premium clothing brands command significant influence and visibility in the fashion industry, setting trends, shaping consumer preferences, and driving consumer behaviour.

Moreover, the abundance of information available on the internet presents another restraining factor for premium apparel brands. The digital age has democratized access to fashion information, challenging the perception of scarcity and exclusivity that premium brands have traditionally relied upon. As consumers have access to a wealth of product information, reviews, and pricing comparisons online, the aura of mystery and allure surrounding premium apparel diminishes. Those brands carefully manage their online presence to maintain an air of exclusivity while engaging with consumers transparently and authentically.

Overexposure on social media platforms can erode the perceived value of premium apparel items, as consumers become familiarised to seeing these products in everyday contexts. Therefore, premium apparel brands need to strike a delicate balance between leveraging social media for brand awareness and maintaining an aura of exclusivity to preserve their desirability and aspirational appeal.

(D) Globals Fashion Landscape:

Unlocking the full potential in this industry requires rigour across price, positioning, product, and go-to-market. Globals fashion landscape is changing in fast paced manner on:

• Rapid brandification: Branded spend is outpacing unbranded, driven by urbanisation and aspirational consumption

• Brand boom: Over 800 homegrown D2C brands launched in the last decade. Consumers are hungry for choice.

• Trend-first mindset: Style is a top purchase driver, but must be balanced with pricing and quality expectations.

• Wardrobe evolution: Occasion-led demand (from partywear to activewear) is expanding the share of wallet.

• Channel disruption: E-commerce and organised retail are breaking old barriers for new entrants.

THE WAY FORWARD:

The Indian textile industry is on a strong growth trajectory, driven by innovations, government support, and increasing global demand. By 2025, India is expected to be a major player not only in textiles but also in the emerging markets of smart and technical textiles. Sustainability will remain a key focus, and companies that embrace eco-friendly practices will lead the way in the global market. However, the industry must continue to innovate, improve infrastructure, and address environmental concerns to fully realize its potential. As India continues to scale its textile industry, theres no doubt that it will remain at the forefront of textile manufacturing, exporting high- quality products to the world and catering to an ever-growing domestic market. The next few years will be transformative for the industry, making India a central hub for textile innovation and sustainable production.

RISKS, OPPORTUNITIES AND THREATS:

Risks	Opportunities	Threats
• Entry and expansion of global fashion retailers having intensified competition	• Global buyer sustainability demands prioritizing supply chain traceability	• Broader range of products with lower volumes
• Inadequate infrastructure and low labour productivity with competing nations	• Rising disposable incomes and internet penetration (e-commerce) in rural areas as untapped consumer base	• Supply chain inefficiency matching with evolving trends, shifting customer habits and market dynamics
• Slowdown in revenue generation on increase in counterfeit products	• Adopting advanced technologies by enhancing efficiency, product customization, and improving the customer experience	• Economic uncertainties leading to reduced consumer spending

THE INDIAN TERRAIN FASHIONS LIMITED STORY

Indian Terrain Fashions Limited (ITFL) is a well-established apparel retailer in India, specializing in the mens smart casual category under the brand name "Indian Terrain". With a sharp focus on providing comfortable clothing that caters to the needs of millennial consumers, Indian Terrains brand philosophy of "Makes You Feel Good" resonates well with a younger generation of audiences, further strengthening its visibility in the markets it operates in. The company distributes its products through various channels, including multi-branded outlets, exclusive brand outlets, large format stores, and e-commerce platforms.

With the apparel segment in India presenting a significant growth opportunity, Indian Terrain recognises this potential and has strategically chosen a minimal capital investment approach, leveraging the availability of apparel manufacturers in India. This decision not only aids profitability but also aligns with the interests of shareholders and stakeholders. The companys commitment to providing premium fabrics, superior tailoring, and comfortable fits has made Indian Terrain a preferred choice for cosmopolitan, upwardly mobile young Indian men seeking affordable yet stylish smart-casual clothing.

Indian Terrains commitment to sustainability, as evidenced by its Fairtrade Label certification, further enhances its brand reputation. As the company continues to evolve and engage with consumers, its brand promise of creating clothing that combines elegance, style, and comfort remains at the forefront of its mission to provide customers with a satisfying shopping experience.

The company is actively investing in building a stronger brand presence by adopting social media and digital marketing strategies, as well as engaging directly with end consumers. This approach allows Indian Terrain to stay relevant and aligned with upcoming fashion trends.

STRATEGIC STORE FORMATS:

The Company retails across 250+ cities of different formats in the country through 208 Exclusive Outlets, 700+ Multi Brand Outlets, 230+ doors of Large Format Stores and 5+ key e-commerce platforms.

Store Format	As on 31st March, 2025
COCO (Company Owned Company Operated)	13
COFO (Company Owned Franchise Operated)	58
FOFO (Franchise Owned Franchise Operated)	115
EFO (Exclusive Factory Outlet)	21
Out of India	1
Total	208

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Board has devised systems, policies and procedures/frameworks, which are currently operational within your Company for ensuring the orderly and efficient conduct of its business, which includes adherence to policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with best practices, the Audit Committee and the Board reviews these internal control systems to ensure they remain effective and are achieving their intended purpose. Where weaknesses, if any, are identified as a result of the reviews, new procedures are put in place to strengthen controls. These controls are in turn reviewed at regular intervals. There were no different treatment in preparation of financial statements from that prescribed in an Accounting Standard and accordingly the disclosure of facts in the financial statements and the managements explanation does not arise.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Performance Metrics	FY 2024-25	FY2023-24	Change %
Revenue from Operations	340.60	456.01	(25.31)
Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA)	(2.11)	33.99	(106.21)
Depreciation and Amortisation Expense	17.94	22.28	(19.48)
Earnings Before Interest and Tax (EBIT)	(20.05)	11.71	(271.22)
Finance Costs (Interest)	20.96	21.81	(3.89)
Earnings After Tax (EAT)	(42.66)	(14.93)	(185.73)
Shareholders Fund	182.82	196.88	(7.14)
Earnings Per Share (EPS)	(9.48)	(3.37)	(181.31)
Net Fixed Assets	17.59	19.65	(10.48)

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Your Company believes that its employees are the main force in driving performance and developing competitive advantage. ITFL maintains good employer-employee relationship. In a competitive economy, proper utilization of human resource plays a crucial role. It begins with best practices in recruiting people and moves through learning and development, engagement, employee feedback and recognition. To keep the Company and its human resource competitive, the Company organizes training programs to train employees at various levels to enhance workers knowledge and application skills. The employer-employee relations continued to remain cordial and harmonious during the year. ITFL being an equal opportunity employer and has a well-defined and progressive diversity, equity and inclusion approach embracing all diversity parameters which includes gender, marital status, religion, race/caste, colour, age, ancestry, nationality, language, ethnic origin, socio-economic status, physical appearance, disability, gender identity and/or expression and any other category protected by applicable law. The Company has a strength of 256 employees as on 31^st March 2025 (273 employees as on 31^st March 2024).

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG-WITH DETAILED EXPLANATIONS:

Key Financial Ratios	FY 2024-25	FY 2023-24	Change %	Remarks
Debtors Turnover (in times)	1.33	1.70	(22.26)	Due to decrease in Revenue from Operations
Inventory Turnover (in times)	4.05	4.07	(0.51)	Due to decrease in Inventory & Revenue from Operations
Interest Coverage Ratio (in times)	(0.10)	1.55	(106.45)	Due to proportionate reduction in Revenue from Operations
Current Ratio (in times)	1.72	1.59	8.38	Due to increase in current Assets over the increase in current Liabilities
Debt Equity Ratio (in times)	0.47	0.48	1.08	There has been no significant change in the debt-equity ratio
Operating Profit Margin (%)	(0.62)	7.45	(108.32)	Due to reduction in Revenue from Operations
Net Profit Margin (%)	(0.13)	(3.27)	(103.98)	Due to loss during the current financial year
Return on Net- worth (%)	(23.33)	(7.58)	(407.78)	Due to loss during the current financial year

CAUTIONARY STATEMENT:

Statements in this Annual Report on describing our objective, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable laws, rules, regulations, etc. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets, in which we operate, in addition to changes in government regulations, tax laws and other statutes and incidental factors.

	For and on behalf of Board of Directors
	Indian Terrain Fashions Limited
sd/-	sd/-
Venkatesh Rajagopal	Charath Ram Narsimhan
Chairman & Whole-time Director	Managing Director & CEO
DIN:00003625	DIN: 06497859
Date: 12th August, 2025
Place: Chennai