Kamadgiri Fashion Ltd Management Discussions

GLOBAL ECONOMY AND OUTLOOK

During 2024, the global economy showed stability despite navigating economic, international relations, and governmental challenges. The World Economic Outlook report by the International Monetary Fund (IMF) indicated global GDP growth at 3.3%. While expansion slowed in more established nations, developing economies, particularly in Asia, generally sustained stable growth.

Real GDP Growth	2024	2025 (P)	2026 (P)
World Output	3.3	2.8	3.0
Advance Economies	1.8	1.4	1.5
Emerging Markets and Developing Economies	4.3	3.7	3.9

The global economic landscape in 2024 was characterized by persistent difficulties. Key among these were ongoing geopolitical tensions, including the conflict in Ukraine and disruptions impacting shipping in the Red Sea. Additionally, complications in international supply chains and trade disputes between major economies presented continued challenges.

Global inflation is showing a positive trend, with the estimated rate for 2024 projected at 5.7%, down from 6.7% in the previous year. Developed economies are expected to reach their inflation targets sooner, averaging 2.6% in 2024, while emerging markets will experience a slower decline in price increases. In response to these economic pressures, leading central banks made significant cuts to interest rates to stimulate economic activity.

The global economic landscape in 2024 was characterized by persistent difficulties. Key among these were ongoing geopolitical tensions, including the conflict in Ukraine and disruptions impacting shipping in the Red Sea. Additionally, complications in international supply chains and trade disputes between major economies presented continued challenges.

United States growth is forecast at 1.8% in 2025 and 1.7% in 2026, influenced by expected labour market changes and potential lower consumer spending. The Eurozone predicts a recovery, with growth reaching 0.8% in 2025 and improving to 1.2% in 2026, linked to increased consumer spending and reduced inflation.

While global price increases are generally slowing, some regions face stagnant conditions. Global inflation is projected to decline to 4.3% in 2025 and 3.6% in 2026. Developed economies should hit inflation targets sooner. Monetary policies will vary regionally, reflecting diverse economic situations.

INDIAN ECONOMY AND OUTLOOK

Indias real Gross Domestic Product (GDP) recorded a growth of 6.5% in FY25, indicating sustained economic momentum despite ongoing global uncertainties. The international economic environment remains fragile, with persistent geopolitical tensions, conflicts, and volatile trade policies continuing to pose significant challenges. On the domestic front, retail inflation has moderated, easing from 5.4% in FY24 to 4.9% during the April-December 2024 period, signalling improved price stability. Reflecting Indias expanding role in the global economy, the country now holds the seventh-largest share in global services exports.

Additionally, merchandise exports, excluding petroleum and gems & jewellery, recorded a 9.1% growth in the same period, underscoring the sectors resilience and adaptability amid a complex global trade landscape. For FY26, GDP was initially projected to grow at 6.7%; however, due to the impact of tariff-related factors, the Reserve Bank of India has revised the forecast downward to 6.5%. The Union Budget 2025-26 unveils a range of bold reforms and targeted initiatives focussed on strengthening Indias textile sector, MSMEs, exports, and agriculture. It also introduces tax relief measures designed to boost disposable income and drive overall economic growth.

Indian Textile and Apparel Industry

The textile industry contributes approximately 2.5% to the national GDP, around 7% to industrial output, and nearly 12% of the countrys total export earnings. It is also one of the largest employment-generating sectors, providing livelihoods to over 45 million people, both directly and indirectly, across the entire value chain - from cotton cultivation and yarn production to garment manufacturing and retail.

With the global apparel market expected to reach USD 2.37 trillion by 2030, a CAGR of 8% and the global textile and apparel trade projected to grow to USD 1.2 trillion, opportunities for international expansion are set to increase. Domestically, the Indian textile and apparel market is anticipated to grow at a strong CAGR of 10%, reaching USD 350 billion by 2030, with exports contributing USD 100 billion - offering a significant boost to companies with global ambitions. Additionally, the technical textiles sector is poised for substantial expansion, with the global market projected to hit USD 309 billion by 2047. Specifically, the Indian medical textiles segment, expected to grow at 15% annually, signals rising demand in high-value, specialised applications. For companies in the textile industry, this growth trajectory highlights an ideal environment for scaling operations, diversifying product lines, and tapping into both traditional and emerging high-margin markets.

OPPORTUNITIES AND THREATS OPPORTUNITIES

• Growth potential in the Indian market.

• Government thrust on infrastructure and development expected to boost demand.

• Rising urbanization and youthful demographic supporting casual wear consumption.

• Technological advancement and digitization offer new market access.

THREATS

• Competitive manufacturing costs affecting margins.

• Volatility in raw material prices and global supply chains.

• Changes in government regulatory norms.

• Rising labour costs and operational expenses.

• Market uncertainty and geopolitical tensions.

PERFORMANCE REVIEW & OUTLOOK

Our Company continues to strengthen its presence in the casual wear segment, aligning with youth preferences and evolving fashion trends. This strategic focus has fueled our growth and market penetration.

The weaving division maintained its strong performance, reflecting our dedication to quality and consistent innovation. Similarly, the finished fabric unit, a key supplier to major garment manufacturers and brands, has enhanced our industry position through dependable supply and quality excellence.

In the upcoming financial year, we aim to:

• Enhance operational efficiency by eliminating redundancies.

• Leverage advanced technologies to upgrade production capabilities.

• Focus on cost optimization and process improvement.

• Expand market reach, both domestically and internationally.

These initiatives will drive sustainable growth, ensure profitability, and create long-term value for our stakeholders. Our strategic roadmap positions the Company well to navigate evolving market dynamics.

RISK MANAGEMENT

Risk is inherent to all businesses. Our Company employs a proactive approach to identify, assess, and mitigate risks—be they operational, regulatory, financial, or industry-specific.

A comprehensive crisis management plan is in place to ensure preparedness and resilience. Regular audits and assessments are conducted to monitor emerging risks, enabling swift responses when necessary.

INTERNAL CONTROL SYSTEMS

The Company has a robust internal financial control system, aligned with the complexity and scale of its operations. These controls ensure:

• Protection of assets,

• Accuracy in transaction recording,

• Prevention of frauds and errors, and

• Compliance with statutory requirements.

The Internal Auditors conduct thorough reviews of key functions and submit quarterly reports to the Audit Committee, which oversees implementation of corrective actions. No material weaknesses in the internal controls were reported during the year.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE SALES

The Companys Sales were at 17,750.26 Lakhs for the financial year ended March 31,2025 as against 21,760.03 Lakhs in the previous financial year.

PROFIT/ LOSS BEFORE TAX

Profit Before Tax of the Company for the financial year ended March 31, 2025 stood at Rs 160.00 Lakhs as against Loss before tax of Rs 177.12 Lakhs in the previous financial year.

INTEREST

Interest & other borrowing cost outflow is 388.74 Lakhs for the financial year ended March 31, 2025 as against 742.90 Lakhs in the previous financial year.

NET PROFIT/ LOSS

Net Profit of the Company for the financial year ended March 31,2025 stood at Rs 119.93 Lakhs as against Loss of Rs 140.90 Lakhs in the previous financial year.

DIVIDEND

The Board of Directors have not proposed any dividend for the year.

CAPITAL EMPLOYED

The capital employed in the business is 12,105.11 Lakhs as at March 31,2025 Return on Capital employed during 2024-25 is 6.76% as compared to 4.67% during the previous financial year 2023-24.

SURPLUS MANAGEMENT

The Company had incurred cash profit of 485.02 Lakhs for the financial year ended March 31,2025 as compared to cash profit 280.51 Lakhs in the previous financial year.

SIGNIFICANT FINANCIAL RATIOS

Particulars	2024-25	2023- 24
Operating profit margin (%)	13.42	18.53
Net profit margin (%)	0.67	-0.63
Debtors turnover (times)	5.98	5.17
Inventory turnover (times)	2.18	1.85
Debt equity ratio (times)	0.03	0.22
Current ratio (times)	1.47	1.30
Interest service coverage ratio (times)	1.41	1.46
Return on Net worth (%)	0.04	-0.05

EARNINGS PER SHARE (‘EPS)

The Companys Basic EPS has increased from (2.40) in the previous financial year to 2.04 and Diluted EPS has increased from (2.40) in the previous financial year to 2.04 for the financial year ended as on March 31,2025.

HUMAN RESOURCE

Your Company firmly believes that its employees are its greatest assets, playing a crucial role in its growth. As of March 31, 2025, the Company has a permanent employee strength of 310. Emphasizing inclusive growth, the Company strives to be an employer of choice. With three distinct operating units, effective human resource management and strong employee relations are vital for smooth operations.

The Company is dedicated to addressing the development and social needs of its workforce. Ongoing initiatives focus on evaluating, training, motivating, and rewarding employees for their exceptional performance and contributions. This continuous investment ensures sustained commitment and excellence from employees, benefiting the Company in the long term.

CAUTIONARY STATEMENT

Estimates and expectations stated in this Management Discussion and Analysis may be ‘forward-looking within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations, include economic conditions in the Government regulations, tax laws, other statutes and other incidental factors.

The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise and forward-looking statements, on the basis of any subsequent development, information or events.