K K Silk Mills Ltd Management Discussions

AND RESULTS OF OPERATIONS

K K Silk Mills Limited is engaged in the business of manufacturing, processing and marketing premium woven fabrics and garments. The Company manufactures a diverse range of synthetic and cotton shirting fabrics, bottom-weight fabrics, industrial fabrics and ready-made garments catering to domestic as well as international markets.

Established in 1991, the Company has built a strong reputation in the textile industry by consistently delivering quality products, innovative designs and timely deliveries. The Companys manufacturing facility located at Umbergaon, Gujarat, is equipped with modern weaving and processing infrastructure capable of producing a wide variety of fabrics in different constructions, widths and finishes to meet changing customer requirements.

The Indian textile industry continues to remain one of the largest contributors to the countrys manufacturing sector, exports and employment. Rising domestic consumption, increasing preference for branded apparel, expanding organised retail, growing exports and Government initiatives such as the PM MITRA Scheme, PLI Scheme and the Make in India initiative are expected to provide long-term growth opportunities for the textile sector. The Company remains focused on leveraging these opportunities through product innovation, quality enhancement and customer-centric operations.

K K Silk Mills Limited is a reputed manufacturer of woven fabrics with an extensive portfolio comprising cotton shirting, polyester-cotton blends, cotton lycra, cotton linen, jacquards, dobby fabrics, printed fabrics, structured fabrics, blazer fabrics and other fashion fabrics. The Company also has garment manufacturing capabilities catering to the apparel segment.

The manufacturing facility is equipped with modern weaving technology including Sulzer Projectile, Picanol, Rapier and Electronic Dobby looms. Continuous investment in modern machinery enables the Company to maintain high standards of quality and productivity.

The Company serves customers across domestic and overseas markets and remains committed to delivering innovative fabric solutions that meet evolving fashion trends and customer expectations.

COMPETITION

The textile industry is highly competitive with the presence of large integrated textile manufacturers, regional fabric producers and imported products. Competition is primarily based on product quality, design capabilities, innovation, pricing, delivery schedules, customer relationships and manufacturing efficiency. _

The Company believes that its long-standing market presence, diversified product portfolio, modern manufacturing infrastructure, consistent quality standards and strong customer relationships provide it with a competitive advantage. Continuous product development, timely deliveries and the ability to respond quickly

to changing fashion trends remain key differentiators for the Company.

FACTORS AFFECTING RESULTS OF OPERATIONS

(a) Revenue Generation

The Companys revenue is primarily generated from the manufacture and sale of woven fabrics and garments. Its diversified product portfolio catering to multiple customer segments enables it to reduce dependence on any single product category. Continuous emphasis on product quality, innovative fabric designs, customer satisfaction and timely delivery contributes significantly to revenue growth.

(b) Growth Strategy

The Company continues to focus on expanding its product portfolio, strengthening customer relationships, increasing operational efficiencies and enhancing manufacturing capabilities. Investments in modern machinery, product development and market expansion are expected to support sustainable long-term growth.

(c) Market Conditions and Demand for our Products and Services

The Companys performance is influenced by domestic and global demand for textiles and apparel, consumer spending, raw material prices, fashion trends, export demand, foreign exchange movements and government policies relating to the textile industry. Diversification across products and markets enables the Company to mitigate business risks arising from fluctuations in any particular segment.The outlook for the Indian textile industry remains positive, supported by favourable demographics, increasing disposable incomes, expanding exports and Government initiatives promoting textile manufacturing. Demand for premium fabrics and value- added products is expected to grow steadily.

The Company will continue to focus on strengthening its product portfolio, enhancing manufacturing efficiencies, improving customer service and expanding its presence in domestic and international markets. Following its successful listing on the SME Platform of BSE Limited, the Company expects to further strengthen its corporate profile, improve access to capital and accelerate its future growth plans.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal financial controls commensurate with the size and nature of its business. The internal control framework ensures safeguarding of assets, accuracy of financial reporting, compliance with statutory requirements and operational efficiency.

The Company has documented policies and procedures covering financial reporting, procurement, inventory management, production, sales and other key business processes. Appropriate segregation of duties, authorisation controls and periodic management reviews are implemented to minimise operational and financial risks.

The Internal Auditors periodically review the adequacy and effectiveness of internal controls and submit their observations to the Audit Committee. The Audit Committee reviews the internal audit findings,

monitors implementation of corrective actions and provides strategic guidance for strengthening the internal control framework. During the year under review, the internal financial control systems were found to be adequate and operating effectively.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Revenue from Operations (Standalone & Consolidated):

During the year under review, revenue from operations is Rs. 24,478.81 lakhs as against Rs. 22,077.99 lakhs in the previous financial year

Reserves and Surplus:

The reserves and surplus of the Company for the FY 2025-26 is 4781.30 lakhs as against Rs. 2,478.45 lakhs in the previous financial year.

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

Ratio	Numera tor	Denominat or	Year Ended March 31, 2026	Year Ended March 31, 2025	% of Varian ce	Reaso n for Varian ce
(a) Current Ratio	Total Current Assets	Total Current liabilities	1.53	1.27	20%	Note 1
(b) Debt - Equity Ratio	Total Debt	Shareholder s Equity	0.80	1.49	-47%	Note 2
(c) Debt Service Coverage Ratio	Earning available for debt service = Net profit after taxes+N on Cash Operatin g expenses	Debt Service=Inte rest + Loan repayment	2.05	1.54	3 3 %	Note 3
	+ Interest- Profit on sale
(d) Return on Equity Ratio (%)	Net Profits after taxes - Preferen ce Dividend (if any)	Average Shareholder \u2019 s Equity	0.09	0.13	-29%	Note 4
(e) Inventory turnover ratio	Cost of Goods Sold or Sales	Average Inventory	2.44	2.70	- 1 0 %	Note 5
(f) Trade Receivables turnover ratio	Net Credit Sales	Average Accounts Receivable	3.98	4.67	- 1 5%	Note 6
(g) Trade Payables turnover ratio	Net Credit Purchase s	Average Trade Payables	3.98	4.74	- 1 6 %	Note 7
(h) Net capital turnover ratio	Net Sales	Working Capital	4.85	8.52	-43 %	Note 8
(i) Net profit ratio (%)	Net Profit	Net Sales	0.02	0.0212	-6%	Note 9
(j) Return on Capital employed (%)	Earning before interest and taxes	Capital Employed = Tangible Net Worth + Total Debt + Deferred Tax Liability	0.01	0.02	- 3 8 %	Note 10

Note 1: The variance in the Current Ratio is primarily due to higher inventory levels and increase in trade receivables during the current year as compared to the previous year.

Note 2: The variance in the Debt-Equity Ratio is primarily due to an increase in shareholders funds following the Initial Public Offer (IPO) during the year. As a result, the Companys borrowings are lower in proportion to the increased equity base as compared to the previous year.

Note 3: The variance in the ratio is primarily due to higher earnings available for debt service on account of increase in Profit after Tax during the current year, coupled with lower debt servicing obligations as compared to

the previous year. The debt servicing obligations in the previous year were higher mainly due to higher current maturities of long-term borrowings.

Note 4: Due to increase in Net Profits after taxes the Return on Equity Ratio has increased.

Note 5: The variance in the Trade Receivables Turnover Ratio is primarily due to higher sales during the current year. Further, the average trade receivables have also increased correspondingly as compared to the previous year.

Note 6: The variance in the Trade Payables Turnover Ratio is primarily due to increase in purchases during the current year along with increase in average trade payables as compared to the previous year.

Note 7: The variance in the Net Capital Turnover Ratio is primarily due to increase in revenue from operations during the current year. Further, the working capital base has also increased as compared to the previous year.

Note 8: Due to disproportionate increase in Net Profit & Revenue compared to the previous year the Net Profit Ratio has decreased.

Note 9: Variance in Net Profit Ratio is due to increase in Net Profit & Revenue as compared to the previous year.

Note 10: The variance in the Capital on Capital Employed Ratio is primarily due to an increase in shareholders funds following the Initial Public Offer (IPO) during the year.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company firmly believes that its employees are its most valuable asset. It continues to invest in employee development, skill enhancement, workplace safety and employee welfare. The Company maintains cordial industrial relations and fosters a culture of teamwork, innovation and continuous improvement, enabling it to achieve operational excellence and sustained business growth.

CORPORATE COMMUNICATIONS

Our Companys Corporate Communications team collaborates with various business and service units, enabling them to communicate effectively with stakeholders across various platforms. Strong partnership with Corporate Advocacy teams on several key business topics with the Government of India and various associations continued to create strong positioning, along with enhancing brand visibility for our Companys products and solutions.

OPPORTUNITIES, THREATS, RISKS & CONCERNS

The Indian textile industry continues to be one of the largest contributors to the countrys manufacturing output, exports and employment generation. Increasing urbanization, rising disposable incomes, changing fashion preferences, growth in organised retail, expansion of e-commerce platforms and the growing global preference for sourcing textiles from India present significant opportunities for the Company. Government initiatives such as the Production Linked Incentive (PLI) Scheme, PM MITRA Parks, National Technical Textiles Mission and continued focus on enhancing Indias textile exports are expected to strengthen the industrys long-term growth prospects. The China Plus One sourcing strategy adopted by several global buyers has also created opportunities for Indian textile manufacturers to expand their international market presence.

K K Silk Mills Limited is well positioned to benefit from these favourable industry trends through its diversified portfolio of woven fabrics and garments, established manufacturing infrastructure, experienced management team and long-standing customer relationships. The Companys continued emphasis on product innovation, development of value-added fabrics, superior quality standards, timely deliveries and customer-centric approach is expected to support sustainable business growth. The increasing demand for premium shirting fabrics, functional textiles, fashion fabrics and customised textile solutions provides the Company with opportunities to broaden its product offerings and strengthen its presence in both domestic and export markets.

Despite these opportunities, the textile industry remains highly competitive and is exposed to several external challenges. The Company faces competition from large integrated textile manufacturers, organised players, unorganised manufacturers and imported textile products. Competitive pressures may impact pricing, margins and market share. In addition, the business is influenced by rapidly changing consumer preferences, fashion trends and customer expectations, requiring continuous product development and innovation to remain competitive.

The Companys operations are also subject to fluctuations in the prices and availability of key raw materials such as cotton, yarn, synthetic fibres, dyes and chemicals. Volatility in commodity prices, inflationary pressures, increasing energy costs, labour expenses and logistics costs may adversely affect manufacturing costs and profitability if the increased costs cannot be passed on to customers in a timely manner. Any disruption in the supply chain, shortage of raw materials or delays in procurement could impact production schedules and customer deliveries.

The Companys export business is exposed to risks arising from fluctuations in foreign exchange rates, changes in international trade policies, geopolitical developments, global economic slowdown and changing demand patterns in overseas markets. Any adverse developments in the global economy may affect export orders and overall business performance. Further, changes in environmental regulations, sustainability standards and compliance requirements imposed by domestic or international authorities may require additional investments in manufacturing processes and compliance systems.

The Company also recognises operational risks associated with manufacturing activities, including machine breakdowns, power shortages, cyber security risks, information technology disruptions, availability of skilled manpower and workplace safety. The management continuously evaluates these risks and has implemented appropriate internal controls, preventive maintenance programmes, quality assurance systems, information security measures and business continuity plans to minimise their impact on operations.

The Company follows a structured risk management framework for identifying, assessing, monitoring and mitigating business risks. Continuous focus on operational excellence, prudent financial management, customer diversification, technological upgradation, product innovation and strong corporate governance practices enables the Company to effectively address emerging risks and capitalize on growth opportunities. The management remains confident that the Companys strong operational capabilities, financial discipline and strategic initiatives will support sustainable long-term growth while maintaining resilience against evolving business challenges.

OUTLOOK

The outlook for the Indian textile industry remains positive, supported by increasing domestic consumption, growing export opportunities, rising demand for quality fabrics and garments, and continued Government initiatives to promote the textile sector. K K Silk Mills Limited is well positioned to leverage these opportunities through its diversified product portfolio, modern manufacturing facilities and customer-centric approach.

The Company remains focused on enhancing operational efficiencies, developing value-added products, expanding its market presence and strengthening customer relationships. While challenges such as raw material price volatility, changing market dynamics and global economic uncertainties may persist, the management remains confident that its strong operational capabilities and prudent business strategies will support sustainable growth and long-term value creation.

For and on behalf of the Board of Directors For K K Silk Mills Limited

Sd/-	Sd/-
Manish Kantilal Shah DIN: 00040966 Managing Director	Nilesh Kantilal Jain DIN:00040930 Wholetime Director

Place: Mumbai Date: 03/08/2026