Iris Clothings Ltd Management Discussions

Management Discussion and Analysis Report.

Executive Overview

FY 2025-26 was another year of steady progress for Iris Clothings Limited, driven by sustained growth in the organised kidswear segment, continued focus on brand building and disciplined execution of its business strategy. During the year, the Company strengthened its market position through its diversified product portfolio, expanding distribution network and continued emphasis on quality, innovation and customer satisfaction.

The Company recorded Revenue from Operations of ?19,086.94 lakhs during FY 2025-26 as against ?14,608.89 lakhs in the previous year, reflecting healthy growth in its core business operations.

Despite a business environment characterized by volatility in raw material prices, inflationary pressures and intense competition, the Company remained focused on operational efficiency, prudent cost management and strengthening its retail presence. Continuous investments in product development, supply chain optimisation and brand visibility enabled the Company to improve its competitive positioning in the organised kidswear market.

The management remains confident that favourable demographic trends, increasing disposable incomes, growing penetration of organised retail and rising consumer preference for branded apparel will continue to provide long-term growth opportunities for the Company.

Global Economic Overview

The global economy continued to demonstrate resilience during 2025 despite geopolitical uncertainties, supply chain disruptions and evolving trade policies. Inflation moderated across several advanced economies, allowing central banks to gradually ease monetary policies and support economic activity. While growth remained uneven across regions, improving consumer sentiment and stabilising commodity prices contributed to a gradual recovery in global demand.

Emerging economies continued to outperform developed markets, supported by strong domestic demand, infrastructure investments and expanding manufacturing activities. However, geopolitical conflicts, currency volatility and trade-related uncertainties continued to pose challenges to global businesses.

For the textile and apparel industry, evolving sourcing strategies, increasing focus on sustainability and digital transformation continued to reshape global supply chains. Companies with strong brands, efficient manufacturing capabilities and agile supply chains remained better positioned to respond to changing market dynamics.

Indian Economy

India continued to remain one of the fastest-growing major economies during FY 2025-26, supported by robust domestic consumption, sustained public investment, expanding manufacturing activity and stable macroeconomic fundamentals. Government initiatives aimed at improving infrastructure, logistics and manufacturing competitiveness continued to strengthen the countrys long-term growth prospects.

Increasing disposable incomes, favourable demographics, rapid urbanisation and growing digital adoption continued to support consumer spending across discretionary categories, including apparel and lifestyle products. Expansion of organised retail and e-commerce further accelerated the shift towards branded consumer products.

The long-term structural drivers of the Indian economy continue to provide a favourable environment for companies operating in the organised apparel sector.

Industry Structure & Developments

Indias textile and apparel industry continues to be one of the largest contributors to manufacturing output, employment and exports. Supported by a strong domestic consumption base, integrated textile value chain and favourable demographic profile, the sector remains well positioned for long-term growth.

Within the apparel industry, the organised kidswear segment continues to witness higher growth than the overall apparel market. Rising disposable incomes, increasing awareness regarding product quality and safety, changing fashion preferences and growing demand for branded products are driving the transition from unorganised to organised players.

Expansion of organised retail, digital commerce and omnichannel distribution has further enhanced accessibility of branded kidswear across metropolitan as well as Tier-II and Tier-III markets. Consumers are increasingly seeking products that combine quality, comfort, affordability and contemporary designs, creating significant opportunities for established brands.

Government initiatives aimed at promoting domestic manufacturing, improving logistics infrastructure and encouraging investments in the textile sector are expected to further enhance the industrys competitiveness.

Business Overview

Iris Clothings Limited is engaged in the design, manufacture, branding and marketing of childrens apparel through its established brand portfolio. The Company has built a strong presence in the organised kidswear segment by offering quality products across multiple categories catering to infants, toddlers and children.

Its diversified product portfolio, supported by continuous product development and contemporary designs, enables the Company to cater to evolving consumer preferences across different price segments. The Company continues to focus on delivering quality, comfort and value while strengthening customer loyalty through consistent brand positioning.

The Companys business model is supported by an extensive distribution network, manufacturing capabilities, strategic sourcing and efficient supply chain management. Continuous investments in product innovation, retail expansion and operational excellence continue to strengthen its competitive advantage.

Going forward, the Company intends to further strengthen its market presence through expansion of its distribution network, enhancement of retail reach, digital initiatives and continued investment in brand development.

Operational Performance

FY 2025-26 was a year of strong operational execution for Iris Clothings Limited as the Company continued to strengthen its presence in the organised kidswear segment through sustained focus on product innovation, brand building, distribution expansion and operational efficiency. The Companys performance reflects its ability to respond effectively to evolving consumer preferences while maintaining its commitment to quality, affordability and customer satisfaction.

During the year, the Company reported Revenue from Operations of ?19,086.94 lakhs as compared to ?14,608.89 lakhs in the previous year, reflecting healthy growth in its core business operations. The increase in revenue was primarily driven by higher sales of manufactured garments, supported by improved market penetration and continued acceptance of the Companys branded product portfolio.

The Company continued to strengthen its market presence through its diversified product portfolio catering to infants, toddlers and children across various categories. Emphasis on contemporary designs, quality products and value-based offerings enabled the Company to effectively address changing consumer preferences in the organised kidswear market.

Operational excellence remained a key management priority during the year. The Company continued to focus on optimising procurement, production planning, inventory management and supply chain coordination to improve operational efficiency and ensure timely availability of products across its distribution network. These initiatives supported better resource utilisation, enhanced customer service levels and improved business responsiveness.

The Company also continued to strengthen its distribution reach through its established network of distributors, retailers and other organised sales channels, while leveraging technology and process improvements to enhance operational effectiveness. Continuous focus on product development and efficient merchandising enabled the Company to remain competitive in a dynamic business environment.

Quality assurance continued to remain an integral part of the Companys operations. Robust quality control processes across sourcing, manufacturing and finished products helped maintain consistent product standards and reinforced customer confidence in the Companys brands.

The management remains committed to further enhancing operational capabilities through process automation, technology adoption, supply chain optimisation and disciplined working capital management. These initiatives are expected to improve operational efficiencies, support future growth and strengthen the Companys competitive position in the organised kidswear market.

Financial Performance

The Company delivered a strong financial performance during FY 2025-26, reflecting the effectiveness of its business strategy, brand strength and disciplined operational execution. Healthy growth in revenue, supported by increased sales of manufactured products, coupled with prudent cost management, enabled the Company to strengthen its overall financial performance during the year.

PARTICULARS (RS. IN LAKHS)	FY 2025-26	FY 2024-25
Revenue from Operations	19,086.94	14,608.89
Other Income	18.46	49.03
Total Income	19,105.40	14,657.92
Profit or Loss before tax	2,211.01	1,781.54
Profit or Loss after Tax	1,619.24	1,312.23
Total Comprehensive Income	1,619.24	1,312.23

Overall, the Company delivered a resilient financial performance during FY 2025-26, supported by robust revenue growth, sustained profitability and disciplined financial management. The management remains focused on maintaining operational efficiencies, prudent capital allocation and long-term value creation while pursuing sustainable business growth.

Revenue Performance

Revenue from operations increased to ?19,086.94 lakhs during FY 2025-26 from ?14,608.89 lakhs in the previous year, registering a robust year-on-year growth. The increase was primarily driven by higher sales of manufactured garments, which continued to constitute the principal source of the Companys operating revenue. Revenue from job work remained relatively insignificant in comparison with the core apparel business, reaffirming the Companys strategic focus on branded products.

The growth in revenue reflects continued acceptance of the Companys product portfolio, strengthening market presence and sustained demand across its distribution channels.

Profitability

During the year, the Company continued to focus on improving operational efficiencies through better production planning, effective procurement practices and disciplined cost management. Continuous monitoring of manufacturing costs, inventory levels and supply chain efficiencies helped mitigate the impact of fluctuations in input costs.

The management remained focused on maintaining a balanced product mix and improving operational productivity while preserving product quality and customer satisfaction. These initiatives supported the Companys profitability despite a competitive business environment.

Working Capital Management

Efficient working capital management continued to remain a key management priority during the year. The Company focused on maintaining optimum inventory levels, improving inventory rotation, effective receivable management and prudent utilisation of short-term borrowings.

The management continued to closely monitor debtor collections, inventory planning and supplier relationships to ensure adequate liquidity for business operations while supporting future growth initiatives.

Capital Structure

The Company maintained a disciplined approach towards capital management with emphasis on preserving financial flexibility and supporting long-term business expansion. Post the close of FY 2024-25, the Company completed a rights issue and subsequently issued bonus shares, further strengthening its capital base. These developments are disclosed in the Annual Report.

The management remains committed to maintaining a prudent balance between growth, liquidity and capital efficiency.

Cash Flow and Liquidity

The Company continued to maintain adequate liquidity to meet its operational requirements and capital expenditure commitments. The management closely monitors cash flows, working capital cycles and financing requirements to ensure timely availability of funds for business growth.

Strong internal accruals, coupled with disciplined financial management, continue to support the Companys expansion strategy and operational requirements.

Financial Discipline

The Company remains committed to maintaining robust financial controls, disciplined capital allocation and efficient utilisation of resources. Management continues to evaluate opportunities for improving productivity, optimising costs and enhancing shareholder value while maintaining a healthy financial position.

Segment-wise / Product-wise Performance

The Company primarily operates in a single business segment, namely the design, manufacture and marketing of childrens apparel. Accordingly, there are no separate reportable business segments requiring disclosure under the applicable Indian Accounting Standards.

During FY 2025-26, the Companys product portfolio continued to cater to infants, toddlers and children through a diverse range of garments marketed under its established brands. Demand across the Companys product categories remained encouraging, supported by continued consumer preference for quality, comfortable and value-for-money branded kidswear. The Companys emphasis on product innovation, contemporary designs and efficient merchandising enabled it to strengthen its market presence and support growth in revenue from operations during the year.

The management continues to focus on expanding its product offerings in line with changing consumer preferences while maintaining high standards of quality, affordability and customer satisfaction. This customer-centric approach is expected to further strengthen the Companys competitive position in the organised kidswear market.

Opportunities and Threats

Opportunities

Indias demographic profile, rising disposable incomes, increasing urbanisation and growing preference for branded apparel continue to provide a favourable environment for the organised kidswear industry. Parents are increasingly prioritising quality, comfort, durability and design while purchasing apparel for children, resulting in a gradual shift from unorganised players to established brands.

The Company is well positioned to capitalise on these structural opportunities through its established brand presence, diversified product portfolio and extensive distribution network. Increasing penetration into Tier-II and Tier-III cities, expansion of Exclusive Brand Outlets (EBOs), wider acceptance of organised retail and continued growth of e-commerce platforms are expected to support the Companys future growth.

The growing demand for licensed apparel, premium product offerings and innovative designs also presents significant opportunities for the Company to strengthen customer engagement and improve brand visibility. Continued investments in product development, technology adoption and supply chain optimisation are expected to further enhance operational efficiency and support sustainable growth.

Threats

The apparel industry remains highly competitive, with the presence of organised national brands, regional manufacturers, international labels and unorganised players. Competitive pricing, frequent product launches and changing consumer preferences continue to exert pressure on market share and profitability.

The Companys operations are also exposed to fluctuations in the prices of cotton, yarn and other textile inputs, which may impact manufacturing costs and operating margins. Inflationary pressures, volatility in logistics costs, supply chain disruptions and changing regulatory requirements may also affect business performance.

Rapidly evolving fashion trends and shorter product life cycles require continuous innovation and efficient inventory management. Failure to anticipate consumer demand or effectively manage inventory may adversely affect profitability.

The Company continues to mitigate these risks through product innovation, prudent procurement practices, efficient inventory management, brand building initiatives and continuous strengthening of its distribution network.

Risk Management

Risk management is an integral part of the Companys business strategy and governance framework. The Company has established appropriate systems to identify, assess, monitor and mitigate business risks with the objective of safeguarding stakeholder interests and ensuring sustainable long-term growth.

The management periodically reviews the Companys risk profile and implements appropriate mitigation measures across operational, financial and strategic functions.

KEY RISK	POTENTIAL IMPACT	MITIGATION MEASURES
Raw Material Price Volatility	Increased manufacturing costs and pressure on margins	Strategic procurement, supplier diversification and inventory planning
Changing Consumer Preferences	Reduced demand and inventory obsolescence	Continuous product innovation, market research and faster product development
Intense Competition	Pressure on pricing and market share	Brand strengthening, product differentiation and wider distribution
Supply Chain Disruptions	Production delays and higher logistics costs	Multiple sourcing arrangements, supply chain optimisation and inventory monitoring
Credit Risk	Delayed collections and impact on liquidity	Robust credit evaluation, periodic monitoring of receivables and disciplined collection mechanisms
Information Technology & Cybersecurity	Operational disruption and data security concerns	Strengthening IT infrastructure, access controls, periodic system reviews and data protection measures
Regulatory & Compliance Risk	Financial and reputational impact	Continuous monitoring of regulatory changes and strengthening compliance systems

The Board of Directors and senior management periodically review significant business risks and the effectiveness of mitigation measures to ensure that the Companys risk management framework remains robust and responsive to emerging business challenges.

Internal Control Systems and Their Adequacy

The Company has an adequate system of internal financial controls commensurate with the nature, size and complexity of its operations. The internal control framework is designed to ensure orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

The Companys internal control environment covers all major functional areas, including procurement, production, inventory management, sales, finance, information technology and statutory compliance. Well-defined policies, standard operating procedures and delegation of authority support effective execution of business processes.

An independent Internal Auditor conducts periodic audits based on an approved audit plan. The findings and recommendations are reviewed by the Audit Committee, which monitors the implementation of corrective actions. The Audit Committee also periodically evaluates the adequacy and effectiveness of the Companys internal financial controls and governance framework.

Based on the reviews carried out during the year, the management believes that the existing internal control systems are adequate and operating effectively.

Human Resources

The Companys employees continue to be its most valuable asset and play a critical role in achieving its strategic objectives. Iris Clothings remains committed to fostering a work environment that promotes innovation, collaboration, integrity and continuous learning.

The Company focuses on attracting, developing and retaining talented professionals through structured performance management systems, capability development programmes and employee engagement initiatives. Continuous investments in skill enhancement and leadership development support organisational effectiveness and operational excellence.

The Company also places significant emphasis on employee welfare, workplace safety and maintaining a culture of mutual respect and equal opportunity. It believes that a motivated and engaged workforce is fundamental to delivering sustainable business growth and superior customer value.

Industrial relations remained cordial throughout the year, and the Company continued to maintain a harmonious work environment across its operations.

Business Strategy

The Company remains committed to strengthening its position as a leading player in the organised kidswear segment through a balanced strategy focused on sustainable growth, operational excellence and enhanced customer engagement. The strategic priorities for FY 2026-27 are aligned with evolving consumer preferences and long-term industry opportunities.

The Company will continue to strengthen the DOREME brand by introducing contemporary designs, expanding its product portfolio and reinforcing its value proposition of quality, comfort and affordability. Continued emphasis will be placed on licensed merchandise and product innovation to enhance customer appeal and brand differentiation.

Expanding the Companys retail footprint through Exclusive Brand Outlets (EBOs), increasing penetration in Tier-II and Tier-III cities and strengthening relationships with distributors and multi-brand outlets will remain key priorities. The Company also intends to enhance its presence across e-commerce and digital platforms to improve customer reach and brand visibility.

Operationally, the Company will continue to focus on improving manufacturing efficiencies, optimising inventory levels, strengthening supply chain resilience and adopting technology-driven processes to improve productivity and customer responsiveness.

The management remains committed to prudent capital allocation, disciplined working capital management and maintaining a strong balance sheet to support future growth opportunities while delivering sustainable value to all stakeholders.

Outlook

The long-term outlook for the Indian kidswear industry remains positive, supported by favourable demographic trends, rising disposable incomes, increasing urbanisation and growing consumer preference for branded apparel. The organised segment is expected to continue gaining market share as consumers increasingly prioritise quality, safety, comfort and value, creating significant opportunities for established brands.

Iris Clothings is well positioned to capitalise on these favourable industry dynamics through its established brand portfolio, diversified product range and expanding distribution network. The Companys continued focus on product innovation, customer-centric offerings, operational excellence and disciplined financial management is expected to strengthen its competitive position and support sustainable long-term growth.

Going forward, the Company intends to further strengthen its market presence by expanding distribution across existing and emerging markets, enhancing brand visibility, broadening its product portfolio and leveraging digital platforms to improve customer engagement. The management also remains focused on improving manufacturing efficiencies, optimising inventory management, strengthening supply chain resilience and enhancing productivity through technology-driven initiatives.

While the Company remains mindful of external challenges such as fluctuations in raw material prices, inflationary pressures, evolving consumer preferences and competitive intensity, it believes that its strong brand equity, experienced management team and prudent financial discipline provide a resilient foundation for future growth.

The Board and the management remain committed to creating sustainable value for all stakeholders by pursuing profitable growth, maintaining sound corporate governance practices and continuously improving operational excellence.

Key Financial Ratios

The Company regularly monitors key financial and operational ratios to evaluate business performance, capital efficiency, liquidity and profitability. These indicators assist the management in assessing operational effectiveness and formulating strategies for sustainable growth.

During FY 2025-26, the Company witnessed a significant increase in Revenue from Operations to ?19,086.94 lakhs from ?14,608.89 lakhs in the previous year, reflecting continued momentum in its core business.

Management continually reviews profitability, working capital utilisation, inventory management, receivable collections and capital structure to ensure efficient utilisation of resources and long-term financial stability.

The key financial ratios as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, together with explanations for significant changes compared to the previous financial year, are provided in the Financial Statements forming part of this Annual Report. Management believes that the overall financial position of the Company continues to remain healthy and supports its future growth plans.

Cautionary Statement

Statements contained in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events and are therefore subject to various risks and uncertainties.

Actual results may differ materially from those expressed or implied in such statements due to factors including, but not limited to, changes in economic conditions, consumer demand, competitive intensity, regulatory developments, fluctuations in raw material prices, supply chain disruptions, foreign exchange movements and other risks beyond the control of the Company.

Readers are advised not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable laws.

For and on behalf of the Board

Iris Clothings Limited

Santosh Ladha

Managing Director - (DIN: 03585561)

Geeta Ladha

Whole-time Director - (DIN: 03585488)

Place: Howrah

Date: 27.07.2026