KDDL Ltd Management Discussions

GLOBAL ECONOMY

After a period of steady growth, the current moderation in global economic activity presents a strategic opportunity to realign policy frameworks towards more sustainable and inclusive development. Headline inflation is broadly expected to decline further, supporting real incomes and potentially easing financial households. However, some select economies have experienced modest upward revisions.

Although risks such as trade tensions and policy uncertainty continue to cast a shadow, they also present an opportunity to reinforce global policy coordination and build resilience, especially in emerging markets. The global economy grew at a moderate pace of 3.3% in 2024, indicating relative stability despite subdued momentum. However, as 2025 progresses, a major shift is underway, driven by nations adjusting policy priorities in response to rising geopolitical tensions and evolving economic pressures. The USA has introduced a new wave of tariff measures, prompting swift and strong retaliatory actions from major trading partners. This culminated in the imposition of near-universal tariffs on 2^nd April. Consequently, effective tariff rates have surged to their highest levels in over a century, causing a sharp and damaging blow to global growth. The shock has been compounded by the pace and unpredictability of these policy shifts. Economicon uncertainty has risen markedly, and the near-term global outlook has grown increasingly volatile. Traditional forecasting models have been undermined by the instability, making past assumptions unreliable.

OUTLOOK

Although the global economy continues to face multiple challenges, the current period also provides a critical opportunity to enhance resilience and shift towards a more sustainable growth path. The adaptability demonstrated by many economies under pressure signals a clear potential for recovery, primarily through well-coordinated policy efforts and targeted reforms. Projections indicate that global growth will slow to 2.8% in 2025 before rebounding to 3% in 2026. Sluggish investment, persistent inflationary pressures, and restrained consumer spending drive this moderation. Heightened trade tensions and persistent geopolitical risks, especially those involving tariffs and regional instability, are expected to maintain elevated uncertainty levels, suppressing both trade and capital flows. Underlying structural issues such as demographic transitions, capital misallocation, and income inequality continue to constrain productivity, posing further risks to medium-term growth. While advanced economies are likely to experience slower growth due to tighter monetary policy and ageing populations, emerging markets and developing economies may see varied outcomes based on their exposure to global demand, reform momentum, and commodity cycles. Furthermore, inflation is expected to ease gradually, though in some regions it may remain above target, necessitating a measured monetary stance that could further temper growth trajectory.

(Source: International Monetary Fund April 2025)

INDIAN ECONOMY

India continues on a path of robust growth trajectory, with GDP at 6.5% in 2024-25, placing it ahead ofmanyglobalpeers.This reflects the countrys sustained momentum despite ongoing global economic uncertainty. The projection is supported by robust domestic fundamentals and strategic policy interventions, which continue to drive the nations growth underpinned by strong performance across the agricultural and service sectors, and stable private consumption and macroeconomic equilibrium. Ongoing structural reforms, technological innovation, and significant infrastructure development fuel the nations economic growth. Additionally, targeted governmental measures further ensure the sustainability of this growth, while steady consumption and improved labour market conditions strengthen the outlook.

India is experiencing a sharp surge in the population of Ultra High Net Worth Individuals (UHNIs) and High Net Worth Individuals (HNIs), driven largely by a new generation of young wealth creators. With per capita income exceeding USD 2,000 and approaching USD 2,500, discretionary spending is accelerating as consumers shift from essentials to premium categories such as travel, healthcare, electronics, jewellery, and luxury goods. These categories are expected to expand at a CAGR of 13–17% through 2026-27.

The rising standard of living is evident in increasing household spending, a growing share of non-essential consumption, and strong consumer expenditure, reaching Rs. 24.6 Trillion in Q2 2024. Backed by income and employment growth across urban and rural India, this trend is fuelling demand for premium and aspirational products.

Among the biggest beneficiaries is the luxury watch segment. Valued at USD 1.6 Billion in 2024, Indias luxury watch market is set to grow at a CAGR of 5.7%, reaching USD 2.8 Billion by 2033. Growth is driven by rising disposable incomes, expanding affluent classes, and evolving preferences towards luxury timepieces as symbols of success. Millennials and Gen Z are emerging as key drivers, attracted by craftsmanship, heritage, and the investment appeal of premium watches. Increased global exposure, digital influence, and e-commerce accessibility are further accelerating this shift firmly linking Indias wealth trajectory to luxury watch consumption.

(Source: https://www.imarcgroup.com/ india-luxury-watch-market, https:// luxebook.in/the-rise-of-indian-hnis-and-uhnis-in-2024/, https://www.dbs.com/in/ treasures/articles/learning-centre/high-net-worth-individual-hni, https://upstox.com/ news/upstox-originals/investing/india-s-discretionary-spending-boom-lessons-from-the-usa-and-china/article-145469/, https:// www.deloitte.com/in/en/our-thinking/ spotlight-on-indian-economy/india-) economic-outlook-august-2024.html)

OUTLOOK

As India steps into 2025-26, the nations economic outlook remains cautiously optimistic, shaped by the persistent influence of global geopolitical tensions, ongoing trade disruptions, and the potential volatility in commodity prices. Domestically, sustaining GDP growth will hinge on several key drivers, including reviving private sector investment, fostering greater consumer confidence, and accelerating corporate wage growth. Encouragingly, rural demand is set to gain strength, supported by a rebound in agriculture, stabilising food inflation, and an overall favourable macroeconomic environment. In the medium term, Indias economic resilience will depend on its ability to enhance global competitiveness. This calls for structural reforms and a push towards deregulation at the grassroots level. Moreover, fostering a more business-friendly environment will be crucial to mitigating vulnerabilities and ensuring long-term economic sustainability. Geopolitical tensions and realignment of trading partners in major economies are leading to softening of the market conditions and necessitating the need for waiting and watching with cautious optimism. On one side, the market environment is subdued due to war and turmoil in different parts of the world, coupled with political uncertainty in many economies, tariff and non-tariff barriers leading to protectionist stance by major countries. On the other hand, there are positive developments, especially with India, due to signing of free trade agreements, preferential/MFN treatment in trade, growth in Indian GDP, softening of interest rates, major push for Make in India and consistent interest in India due to high consumption economy. These major macroeconomic factors require organisations to align the strategy and operations focus with the market realities. Strengthening and widening of the internal capabilities, improving productivity and new product development, speed of response and strong engagement with customers are necessary in the present environment and will help in growth and development post normalisation of the uncertain and dynamic environment.

(Source: Economic Survey 2024-25)

SWISS WATCH INDUSTRY

The Swiss watchmaking industry, which is the bellwether for the health of the global watch business, experienced a year of contrasts in 2024, with uneven performance across key markets and brands. Swiss watch exports declined by 2.8% year-on-year to CHF 25,993.1 Million, reflecting a steady downward trend with no major fluctuations. Export volume of Swiss watches shipped to international markets dropped significantly by 9.4%, with only 15.3 Million units exported during the year. This is 1.6 Million fewer units compared to 2023, marking one of the lowest shipment levels in recent history. This softening was largely attributed to subdued global demand and ongoing macroeconomic uncertainties in key geographies and over-accumulation of inventory over previous years. The beginning of 2025 appeared more optimistic, with cumulative exports rising by 4.0% through April. However, this growth was largely skewed by an exceptional 149% surge in exports to the USA market in April—a one-off event driven by a rush of shipments ahead of anticipated new tariffs. Excluding this anomaly, the underlying trend remains weak, with exports likely continuing their decline. Major markets such as China and Hong Kong posted sharp drops in April, with exports falling by 31% and 23% respectively, extending the sustained downward trajectory seen throughout 2024.

Regionally, North and South America emerged as the most dynamic markets, with a 5.4% increase, accounting for one-fifth of total

Swiss watch exports. The USA, with a 5.0% year-on-year rise, solidified its position as the industrys leading market for the fourth consecutive year, with a favourable outlook going forward.

In contrast, Asia witnessed a 7.6% decline, largely due to steep contractions in China (-25.8%) and Hong Kong (-18.7%), with Chinas export figures falling to near-2019 levels. However, Japan (+7.8%) experienced strong growth, primarily fuelled by tourist demand, reclaiming third position globally. South Korea also recorded robust growth of 8.7% due to a favourable base effect, while Singapore (-2.1%) aligned with the global average.

Europe remained relatively stable with a marginal decline of 0.1%. Market performance varied modestly across countries: France grew by 2.5%, while the UK and Italy each declined by 1.6%, and Germany saw a 3.8% drop.

Swiss Watch Exports Market

			(Million CHF)			Variance
Markets	2024	2023	2022	2021	CAGR	vs. Last year
USA	4,372.5	4,162.7	3,891.0	3,080.5	12.4%	5.0%
China	2,053.4	2,767.8	2,568.6	2,966.9	(11.5)%	(25.8)%
Japan	1,965.2	1,822.9	1,693.0	1,417.1	11.5%	7.8%
Hong Kong	1,914.9	2,356.4	1,908.8	2,133.2	(3.5)%	(18.7)%
UK	1,716.3	1,744.0	1,620.8	1,334.1	8.8%	(1.6)%
Singapore	1,620.8	1,655.1	1,615.2	1,277.0	8.3%	(2.1)%
France	1,311.9	1,280.0	1,184.0	953.9	11.2%	2.5%
Germany	1,305.8	1,357.9	1,292.2	1,061.3	7.2%	(3.8)%
UAE	1,272.0	1,264.1	1,126.5	997.4	8.4%	0.6%
Italy	1,049.4	1,066.9	976.2	859.6	6.9%	(1.6)%
India	273.9	218.8	187.8	156.8	20.4%	25.2%
Other Countries	7,137.0	7,051.7	6,795.0	6,064.3	5.6%	1.2%
Total	25,993.1	26,748.3	24,859.1	22,302.1	5.2%	(2.8)%

Exports to India grew strongly by 25.2% year-on-year, rising from CHF 0.22 Billion in 2023 to CHF 0.27 Billion

(approximately CHF 274 Million) in 2024—making India the fastest-growing export market for Swiss watches last year. While this growth is remarkable, Indias share remains small, accounting for only about 1% of total Swiss watch exports, indicating significant headroom for further expansion.

OUTLOOK

The outlook for the Swiss watch industry remains cautiously optimistic. India presents a strategic growth opportunity, but long-term success will depend on sustained consumer engagement, localisation strategies, and brand education. Swiss manufacturers are increasingly partnering with trusted retailers and investing in experiential retail formats to build deeper

INDIAN WATCH INDUSTRY

India is emerging as one of the most promising growth markets for the global luxury watch industry and is now undergoing a profound transformation. This shift is driven by a combination of rising affluence, evolving consumer behaviour, and a rapidly expanding retail ecosystem that together create a perfect storm for growth. A key driver of this change is the rise of the affluent Indian consumer. While Indias 1.4 Billion-strong population still includes a majority with modest incomes, the number of affluent individuals is set to grow significantly from 60 Million in 2023 to 100 million by 2027, according to Goldman Sachs Research. This growing class is increasingly seeking luxury experiences and products, with high-end Swiss watches emerging as coveted status symbols that reflect personal achievement and social prestige. Building on this trend, Swiss watchmakers are intensifying their focus on India as a key future market. The number of millionaires in the country is projected to reach 1.6 Million by 2026, further fuelling demand for luxury timepieces. For decades, Swiss watches have held a special place in Indian culture as emblems of success—traditionally acquired during overseas trips or at exclusive boutiques in upscale neighbourhoods like Mumbai. Today, this demand is no longer confined to the wealthy elite; it is being connections with Indian consumers.

The pre-owned and certified pre-owned (CPO) market is also gaining traction within the Swiss segment, creating new revenue channels and enhancing brand lifecycle value. Simultaneously, there is a growing focus on sustainability, with leading Swiss brands incorporating eco-innovation, ethical sourcing, and circular economy principles into their production processes.

increasingly driven by an aspirational younger generation.

This rising demand for luxury timepieces has spurred the growth of retail infrastructure across the country. Pioneering companies have laid the foundation for luxury watch retail in India, expanding from major metropolitan areas into Tier-II cities. What started as a bold venture two decades ago is now a thriving network of multi- and mono-brand stores carrying renowned Swiss brands across a wide price range. These brands have cemented their place in Indias premium market, a clear reflection of the growing appetite for high-end horology. Beyond retail, Indias luxury watch culture is evolving. Collector communities such as RedBar India are flourishing, while digital media platforms are sparking increased consumer interest in luxury timepieces. As Indias digital exposure increases and disposable incomes rise, luxury watches are increasingly seen not just as functional items, but as aspirational lifestyle accessories that define personal style and success.

A key factor in this evolution is the growing association of luxury watches with style. Alongside the rising demand for premium, custom-made timepieces, consumers are becoming more style-conscious. Watches are no longer just tools to tell time; they are coveted fashion statements of success and prestige. This transformation is driving

To maintain global leadership, Swiss watchmakers must remain agile—balancing tradition with innovation, exclusivity with accessibility, and craftsmanship with conscious luxury. As the next wave of watch collectors and enthusiasts emerges, brands that embrace digital transformation and consumer-centric storytelling will be best positioned to thrive. https://www2.deloitte.com/in/en/pages/ consumer-business/articles/deloitte-swiss-watch-industry-insights-2024.html

the markets growth, with luxury timepieces now seen as essential accessories for those seeking to make a statement of both elegance and status.

The success of the Indian market is reflected in the growth of Swiss watch exports to the country. In the first quarter of 2025, Swiss watch exports increased by 10.5% year-on-year, reaching CHF 104.3 Million (~Rs. 1,100 crores). This follows a standout 2024, where India saw the fastest export growth rate for Swiss timepieces globally. Deloittes predictions suggest that Swiss watch exports to India will grow steadily, pushing India into the top 10 global markets for Swiss exports.

This growth is being supported by strengthening trade relations between India and Switzerland. A landmark free trade agreement (FTA) between India and the European Free Trade Association (EFTA) is set to eliminate the 20% import duty on Swiss watches over the next seven years. The India-Switzerland FTA, which takes effect in October 2025, will be a crucial step in the evolution of India as an important luxury watch market.

(Source: https://www.imarcgroup.com/ india-watch-market#:~:text=Market%20 Overview:,key%20factors%20driving%20 the%20market. https://www.luxurytribune.com/en/india-becomes-fastest-growing-market-for-swiss-watch-exports https://www.nytimes.com/2024/09/11/ fashion/watches-india-sales.html)

GLOBAL METAL STAMPING MARKET

The global metal stamping market was valued at USD 236.8 Billion in 2023 and is projected to reach USD 316.7 Billion by 2030, growing at a CAGR of 4.2% during 2024-2030. Metal stamping components have very wide applications in various industries such as Electrical, Electronics, Automotive, Industrial, Consumer durables, Medical, Instrumentation, Aerospace and Defence, Infrastructure, Railways, Shipping and Space. Metal stamping business requires the investment, technology, know-how and skill of core manufacturing setups with availability of the trained and skilled manpower.

The companys precision engineering division, anchored by established brands like Eigen, continues to demonstrate strong growth, driven by increasing export momentum and rising demand from emerging geographies and advanced technology sectors. The Company supplies precision-engineered components to various segments such as automotive, electronics, alternate energy, aerospace and consumer durables.

Eigen is ideally placed by serving customers in many segments through niche capabilities, certifications and long and strong relationships with reputed customers for quality products. ‘Make in India in push by the Government of India, China Plus One one focus of many developed countries, including

USA, geopoliticalcompulsions and alignments will create enormous opportunities for competent players like Eigen to grow and develop in the precision engineering business. With the global metal stamping market projected to grow significantly, these policy measures enable companies like KDDL to tap into high-value global segments and strengthen OEM partnerships.

GLOBAL ORNAMENTAL PACKAGING MARKET

The global ornamental packaging market is projected to grow from USD 11.1 Billion in 2025 to USD 16 Billion by 2035, at a CAGR of 3.7%. Despite its relatively small volume share, ornamental packaging commands high margins, particularly in rigid boxes and foil-laminated cartons, and plays a critical role in brand identity and premium positioning.

Presently, KDDL has an insignificant presence in the global packaging market and in the emerging domestic market. There are huge market opportunities for luxury packaging across luxury goods, jewellery, watches, and premium gifting. Many international and reputed players are looking for the supply of quality packaging for their products and market. This opportunity provides players like KDDL with the scope to develop world-class facilities and emerge as preferred partners for premium packaging, driving both import substitution and global supply chain integration.

Consistent with its long-term approach, KDDL is expanding its manufacturing capabilities to meet growing customer requirements. Backed by strategic investments and deep-rooted relationships with global OEMs, the Company is well-positioned to capture a larger share of high-value, technology-driven opportunities across diverse sectors. (Source: https://www.grandviewresearch. com/industry-analysis/metal-stamping-market)

The ornamental packaging division continues to enhance its revenue profile by onboarding new customers and entering additional market segments. During the year, revenue witnessed a healthy uptick, driven primarily by strong demand and a steady flow of RFQs in the domestic market.

In parallel, the division is engaging with international brands operating in India, offering premium packaging solutions tailored to their specifications. This approach enables the Company to meet global quality standards while leveraging the advantages of a robust and dependable domestic supply chain. While still in the early stages of its growth journey, the business is witnessing encouraging traction. Export opportunities remain a key area of future focus, and the Company is actively building capabilities and forging strategic partnerships to support the growth of the business.

(Source: https://www.futuremarketinsights. com/reports/luxury-packaging-market#thankyou)

OUTLOOK

The Indian watch market is experiencing strong and sustained growth, driven by rising affordability, evolving consumer preferences, increasing brand awareness, and the growing availability of international and premium watch brands in the country. Watches have become widely accessible and are now seen as fashion accessories, particularly in the lower and mid-price segments where consumers are looking for value without compromising on quality. This trend is gaining further momentum with a growing number of women buyers, both in India and globally, contributing to a broader customer base.

At the other end of the spectrum, the premium and luxury segments are firmly led by organised players, who now account for 92% of the market. These brands are winning over consumers by offering better service, longer warranties, and stronger brand trust, key factors that are driving the adoption of high-end timepieces. Meanwhile, younger consumers are playing a growing role in shaping demand. Drawn to a mix of traditional craftsmanship and innovation, they increasingly view watches as both lifestyle statements and symbols of status. With demand growing across price points and age groups, and with quality and service remaining top priorities, the Indian watch market is well-positioned for long-term, sustainable growth.

BUSINESS OVERVIEW

KDDL Limited (referred to as ‘KDDL or ‘The Company), formerly known as Kamla Dials and Devices Limited, has been a hallmark of precision and craftsmanship since its establishment in 1981. Headquartered in the cultured city of Chandigarh, the Company stands as a distinguished name in the world of horology and precision engineering, with operations spanning both India and Switzerland. Celebrated for its impeccable attention to detail, KDDL is a trusted manufacturer of premium watch components, including hands, dials, and sub-assemblies, each crafted to exacting standards. Beyond its horological mastery, the Company also offers ornamental packaging solutions, reflecting its design finesse and commitment to aesthetics. Additionally, KDDL

OPERATIONAL OVERVIEW

Amid shifting global conditions, KDDL Limited has maintained a clear sense of direction and stability. Despite the challenging environment in the global watch market, KDDLs steady performance in the Indian market has provided a solid foundation for the Companys continued growth and expansion. The Companys revenue increased by 6.6% year-on-year primarily driven by the strong contributions from its Eigen (Precision Engineering Business) and bracelet division, which have helped offset the challenges faced in the global watch component market. These segments have demonstrated resilience and growth potential, reinforcing KDDLs strategic focus on diversifying and strengthening its domestic operations amid ongoing international uncertainties.

A key highlight and significant milestone of the year was the launch extends its expertise to high-precision stamped components and progressive tooling, serving the sophisticated requirements of the electrical, electronics, automotive, aerospace, and alternate energy industries.

Through its prestigious subsidiary, Ethos Limited, KDDL has established itself as the operator of Indias largest organised luxury retail chain for Swiss timepieces, demonstrating its leadership not only in precision manufacturing but also in delivering exceptional consumer experiences.

The Companys diversified revenue streams spanning watch components, precision engineering, and luxury retail serve as the foundation for its strong financial performance, driven by operational excellence and a firm strategic vision.

of KDDLs new bracelet division in October 2024, with the capacity to produce 75,000 high-end units annually, the division is set to serve the worlds most prestigious Swiss watchmakers. Initial customer feedback has been highly encouraging, leading the Company to consider scaling up operations sooner than planned. The division is expected to play a key role in KDDLs future growth. The strong early traction highlights both the demand for premium components and KDDLs ability to meet international standards. In August 2024, Favre Leuba, the iconic Swiss watch brand, was relaunched by Silvercity Brands, a subsidiary of KDDL. This relaunch aligns with the Companys broader strategic objective of strengthening its presence in the global horology ecosystem through selective and value-accretive investments. The

brand is now available globally, with exclusive distribution rights in India held by Ethos.

KDDLs precision engineering division, Eigen, continued to deliver exceptional performance in 2024-25, registering growth of 55% and achieving revenues of Rs. 146.8 Crore. Now, contributing nearly 38% to the Companys overall revenue, Eigen underscores the strength of KDDLs diversified business model and its ability to scale high-value segments. Demand across sectors like electronics, automotive, aerospace,

Revenue & Profitability

(Standalone)

The Company reported operational net revenue of Rs. 383.6 Crores, reflecting a 6.6% year-on-year growth over the Rs. 360 Crores recorded in 2023-24. This performance was driven mainly by the growth of our precision engineering business. Whereas, the watch component business witnessed a decline in revenue due to weak international demand.

The precision engineering business witnessed favourable global market conditions. Focussed efforts to expand its international footprint, sharpen its competitive edge, and deepen client relationships translated into tangible market share gains. KDDLs consistent emphasis on product quality, operational agility, and the ability to anticipate and respond to evolving customer needs remained central to its success. KDDL delivered strong performance in 2024-25, maintaining its stability in its export turnover while recording a robust 22.5% growth in domestic revenue.

alternate energy like EV, and energy storage systems continues to rise, positioning Eigen as a key growth driver within the KDDL portfolio. To capitalise on this momentum, the Company is expanding operations in an additional 30,000 sq. ft. facility in Bengaluru, scheduled for completion in 2025-26. These investments reflect KDDLs long-term vision and its focus on building strategic manufacturing capacity to meet future demand.

The ornamental packaging division has also made meaningful progress. In 2024-25, commercial operations

At the core of KDDLs operations, the watch component segment continued to be the primary revenue driver, despite a decline of 18.7% revenue during the year. Its share of total revenue dipped from 68.5% to 52.3%. While domestic revenue in this segment grew by 13.3%, export sales declined by 27.7%. Despite the decline in revenue from the exports market, the Company continued to maintain its market share with the major Swiss watch brands. The Eigen precision engineering division sustained its momentum as a critical growth driver, achieving 55% growth in revenue, driven by a 67% increase in exports and 33% growth in domestic sales. The growth in revenue for the last 3 years is 51.6%, 25.4% and 55.3% respectively. The segments export-to-domestic revenue mix improved highlighting a successful strategic shift. Growth was propelled by targeted expansion into high-potential sectors like commenced at the Panchkula facility, developed with an investment of Rs. 6 Crores. With a monthly capacity of 1,00,000 premium boxes, this unit is designed to cater to both domestic and international markets, with a particular focus on watches and other luxury products. The primary focus of the new ornamental packaging unit is to cater to and fulfil the requirements of international brands for the Indian market.

alternate energy comprising EVs, energy storage solutions, aerospace, automotive, and electricals, reflecting KDDLs adaptive, market-led approach and strong sectoral positioning. The divisions order book remains healthy, supported by an improving economic environment and a pickup in consumption. The Companys continued collaboration with strategic partners in emerging technologies is expected to further drive revenue and profitability.

In the ornamental packaging division, which remains focussed on the domestic market, revenue grew by 12.5%, following an 18.5% increase in the previous year. While exports in this vertical have yet to commence, the Company continues to focus on acquiring high-value, premium clients, both in India and globally.

Prospectus

Over the past year, KDDL has continued to build momentum in the domestic market. The Company works closely with key players, aligning its capacity and capabilities to meet demand, with a clear focus on productivity and timely delivery of premium watch components. Backed by strong relationships, efficient delivery models, and agility in operations, KDDL sees a solid opportunity to grow its market share in India.

On the export front, long-standing relationships, especially with partners in the Swiss watch industry, remain a major strength. While there has been a slowdown in the Swiss watch industry, recovery is foreseen in the near future. The Company remains cautiously optimistic. It is moving up the value chain by strengthening design capabilities, shortening response times, and ensuring high product quality. The current manufacturing setup is equipped to handle complex export requirements, and planned upgrades should further improve competitiveness.

KDDL is also stepping up its brand visibility through better focussed marketing and communication. Feedback from customers has been encouraging, and the Company plans to build on this momentum.

In Karnataka, the new steel bracelet facility is gradually scaling up. The Company expects to reach full capacity by 2026-27. This will broaden KDDLs product offering and help tap into new customer groups and markets.

In precision engineering, the Eigen division continues to grow its presence in high-complexity, value-added components. It is actively focusing on its chosen segments requiring high complexity, skills and capabilities along with high entry barriers. A growing number of RFQs from global clients points to increased interest, largely driven by the global shift to a ‘China Plus One sourcing model. KDDLs internal capabilities and reliability in quality, delivery along with strong engagement with customers give it a clear edge.

Indias position as a global sourcing hub is strengthening, and KDDL is in a good spot to take advantage of that. With fast development cycles, competitive pricing, and strong engineering capabilities, the Company is becoming a preferred partner for global manufacturers. Internally, efforts to optimise costs, improve productivity, and use capacity more efficiently paying off. These have helped in maintaining strong EBITDA and PBT margins. With continued investment, a growing product pipeline, and an expanding customer base, KDDL is well-positioned for sustainable growth and long-term success in both domestic and global markets. KDDL Limited is strategically diversifying both its customer base and product offerings in response to global economic uncertainties and a slowdown in the traditional Swiss watch industry. The Company is expanding beyond Switzerland into resilient markets such as Japan, the USA, the UK, Italy, and the Middle East, while also exploring opportunities in emerging watchmaking hubs like Germany and Scandinavia. Simultaneously, KDDL is shifting focus towards the mid- to high-value product segment in its watch component business, targeting higher-margin growth and greater customer value.

Key Financial Ratios

During the year of a challenging market environment, in its key business segment-watch components, KDDL delivered a creditable performance. Operational EBITDA (earnings before interest, depreciation, taxes, and appropriations) declined significantly by 13%, decreasing from Rs. 1,031 Million to Rs. 897 Million. The operating EBITDA margin, adjusted for exceptional and one-off items such as gains from investment sales, dividend income, asset disposals, liabilities no longer required, CSR expenses, and donations, contracted from 28.7% to 23.4%.

This margin decline is mainly due to the decline in export revenue of the watch components business by 27.7% compared to the previous year and change in the revenue mix of watch components and precision engineering business. The new bracelet and ornamental packaging units also came on stream, where front-loading of costs before revenues ramped up contributed to the reduction in margin. KDDL remains focussed on operational excellence and preparedness for long-term strategic execution and delivery while strengthening its solid financial foundation.

Debtors Turnover and Average Collection Period

Throughout the year, KDDL demonstrated and maintained its working capital efficiency with average debtors turnover ratio of 6.2 times. Despite the increase in business and revenue from the high credit period market segment, the Company maintained an average collection period of 58 days. It is important to note that these metrics are influenced by the Companys revenue mix across various business segments, some of which naturally operate with longer credit cycles.

Inventory Turnover and Average Inventory Holding Period

During the year, KDDL experienced a marginal decline in its inventory turnover ratio from 1.9 times to 1.8 times, accompanied by an increase in the average inventory holding period from 6.2 months to 6.5 months. This shift is primarily influenced by changes in the product mix and the evolving contribution of different business segments, as well as longer lead times required to source materials and components for newly acquired customer segments.

In response, the Company is proactively exploring alternative suppliers, optimising its sourcing strategies, and reassessing minimum order quantities (MOQs) to better manage inventory levels. Given the nature of KDDLs operations, characterised by smaller lot sizes and supplier-imposed MOQs, higher inventory holdings remain a structural necessity. Additionally, the diverse specifications and complexity of its product portfolio require maintaining a wide range of materials to meet varied customer demands. Many of these critical materials are customer-specified and sourced from a limited pool of suppliers, often with extended lead times, further highlighting the importance of strategic inventory management to ensure business continuity and support future growth.

Interest Coverage Ratio

KDDLs interest coverage ratio, based on normalised profit, declined marginally during the year, decreasing from 12.7 to 11.1. This decline was primarily due to lower profitability and additional borrowings for the continued expansion of the Companys operations. However, KDDL maintained a strong liquidity position, enabling the timely and efficient fulfilmentofits . financialobligations

Debt Service Coverage Ratio

KDDLs debt service coverage ratio (DSCR) remains strong and continues an upward trajectory, supported by limited reliance on external borrowings and healthy internal accruals. The

Companys prudent financial management is further underscored by the increasing inflow of unsecured deposits from members and Directors, growing confidence in KDDLs credibility and performance. Secured borrowings from banks and financial institutions remain minimal. The DSCR trend for secured debt is outlined here:

Current Ratio

The Companys current ratio stood at 1.39 times in 2024–25, compared to 2.02 times in the previous year. This shift primarily reflects the utilisation of Rs. 141.97 Crores from the previous years cash and bank balance—generated from the sale of investments—towards a strategic share buyback and increased investment in subsidiaries. When adjusted to exclude current maturities of non-current borrowings, the ratio changes from 2.37 to 1.61 times. Excluding cash and bank balances, the ratio improved significantly from 0.91 to 1.30 times; and from 1.06 to 1.50 times when further adjusted for current maturities. This marked improvement is driven by increased inventory requirements and extended credit cycles in the precision engineering business. Overall, the Companys healthy current ratio highlights its strong liquidity position and financial prudence, reaffirming KDDLs ability to sustain operational flexibility while supporting strategic growth initiatives.

Debt-to-Equity Ratio

KDDL has been consciously strengthening its capital structure by reducing secured debt, including working capital borrowings. During the year, the Company rewarded its shareholders through buy-back of 2,37,837 equity shares with total cash outflow of Rs. 109.16 Crores. As a result, the secured debt-to-equity ratio increased from 0.06 to 0.15. Similarly, the total debt-to-equity ratio changed from 0.17 to 0.29. The strong debt to equity ratio reflects the Companys disciplined, strategic approach to managing leverage. Importantly, KDDLs debt-equity position remains well below industry benchmarks, highlighting its sound financial health and commitment to prudent financial management.

Operating Profit Margin

KDDL reported an operating profit margin of 18.5% in 2024-25, compared to 24.8% in the previous year. This moderation was primarily driven by a shift in the revenue mix across business verticals and stable export revenues. Additionally, the commissioning of two new units in the bracelet and ornamental packaging businesses led to a temporary increase in overheads and depreciation. These investments, however, are expected to contribute meaningfully to revenue and profitability as production scales up in the coming quarters. While revenue growth for the year was modest, the Company remains well-positioned for stronger performance ahead. Gross margin remained robust, with only a marginal decline from 77% to 75%, reflecting continued operational efficiency despite expansion-related costs.

Net Profit Margin

KDDL experienced a decline in its normalised net profit before tax, excluding exceptional non-operational items and CSR-related expenses.

Shareholders Funds

KDDLs reserves declined from Rs. 3,845 Million as of 31^st March, 2024, to Rs. 3,190 Million as of 31^st March, 2025. The retained earnings increased by

Rs. 492 Million from profitability during the year. The overall shareholders funds decrease due to shares buy-back worth Rs. 1,094 Million and dividend of Rs. 50 Million during the year.

Loan Funds and Cost of Debt

KDDL successfully reduced its interest cost as a percentage of Gross Operating Revenue, from 1.6% to 0.7% in 2024-25. This decline was largely the result of increased revenue, operational profitability, and a strong liquidity position. Despite the rise in market interest rates, the Company effectively minimised high-cost borrowings and strategically utilised more cost-effective financing, particularly for its export activities. The Companys strong liquidity and high profitability were key drivers of this shift. Additionally, KDDLs average cost of debt decreased from 10.9% to 9.6% year-on-year, supported by lower interest rates on additional borrowings and more cost-efficient export financing options.

Looking forward, KDDL remains focused on exploring alternative financing solutions with the aim of further optimising borrowing costs, while maintaining a keen focus on managing its debt profile and strengthening its leverage position.

Fixed Assets

In 2024-25, KDDL saw a rise in its gross fixed assets, including capital work in progress, which grew from

Rs. 2,764 Million to Rs. 3,223 Million. Tangible fixed assets increased from Rs. 2,274 Million to Rs. 2,660 Million, while gross intangible assets experienced a slight rise from Rs. 47.4 Million to Rs. 50.7 Million. The Company also saw an increase in the right-of-use assets, which went up from Rs. 97.9 Million to Rs.371.2 Million. Additionally, investment property was recorded at Rs.17.7 Million, compared to Rs.1.2 Million in the previous year. A major shift occurred in capital work in progress, which increased from Rs. 343.3 Million to Rs. 123.2 Million. This decrease was primarily driven by KDDLs capitalisation of the ongoing capital expenditure for the bracelet unit.

Return on Net Worth

KDDL reported a return on net worth (RoNW) of 17.7% in 2024-25, compared to 64.0% in the previous year. However, the prior years performance was significantly influenced by one-time gains from the sale of investments and substantial dividend inflows from subsidiary companies, making a direct year-on-year comparison less meaningful. On a core operational basis, RoNW moderated from 36.0% to 18.1%, largely reflecting ongoing challenges in the watch components export business. Despite this, KDDL continues to demonstrate resilience and strategic focus. Importantly, the Companys long-term RoNW trajectory remains positive, underpinned by consistent profitability, disciplined capital allocation, and a strong foundation for sustainable growth.

ETHOS LIMITED (SUBSIDIARY COMPANY)

During 2024-25, Ethos Limited delivered robust financial performance, reflecting the strength of its operational strategies and continued demand across its luxury watch portfolio. The Company reported a standalone turnover of Rs. 1,27,651.39 Lacs, registering a strong year-on-year growth from Rs. 1,02,009.36 Lacs in 2023-24, supported by growth in both premium watch sales and increased contribution from the certified pre-owned (CPO) business.

Despite inflationary pressures and global uncertainties, the Company achieved an improvement in profit before tax (PBT) to Rs. 13,155.29

Lacs and profit after tax (PAT) to

Rs. 9,825.41 Lacs, demonstrating enhanced operating leverage. This improvement is attributable to optimised inventory management, cost discipline, and brand mix realignment towards higher-margin timepieces.

Operationally, the Company expanded its retail footprint to 73 stores across 26 cities, enhanced omnichannel capabilities, and signed new brand partnerships to strengthen its luxury and high-luxury portfolio. These operational initiatives directly contributed to increased footfalls, higher average transaction values, and improved customer retention.

Key performance indicators such as the Debtors Turnover Ratio improved from 91.77 to 73.99 days, reflecting tighter receivables management. However, the Inventory Turnover Ratio showed a marginal decline from 1.79 to 1.70, due to planned stock build-up to support new store openings and premium brand launches.

Overall, the Companys financial performance mirrors its strong operational execution, underpinned by strategic expansion, customer-centricity, and supply chain agility. The management continues to remain focused on long-term value creation through profitable and sustainable growth.

Risks, Threats & Concerns

KDDL recognises that risk is an inherent part of doing business, one that must be thoughtfully managed to safeguard performance and deliver on strategic goals. With this understanding, the Company has put in place a comprehensive and integrated risk management framework, focussed on protecting and enhancing shareholder value. This approach reflects KDDLs enduring commitment to sustainable growth and long-term success. Central to this framework is the Risk Management Policy, which defines clear, structured processes for identifying, assessing, reporting, and mitigating risks. Recognising the pace at which the business landscape evolves, the policy is regularly reviewed and refined.

Oversight by the Board of Directors ensures it remains relevant, forward-looking, and effective in addressing emerging challenges.

The risk philosophy extends across the organisation, where KDDL actively nurtures a culture of risk awareness. Employees at all levels are encouraged to anticipate potential risks and respond proactively, an inclusive approach that builds accountability and strengthens the Companys adaptability in a dynamic environment.

To support this culture, the risk management framework encompasses a broad spectrum of risks, covering both general business threats and those specific to the industry. This breadth allows KDDL to adopt a balanced, well-informed and comprehensive approach to risk mitigation.

HUMAN RESOURCES MANAGEMENT

KDDL considers its people a core asset and places human capital at the centre of its long-term strategy. The Company follows a structured, strategic approach to Human Resources Management, focussing on attracting, retaining, and developing talent. To support continuous learning and growth, the Company implements comprehensive development initiatives, including training programmes, succession planning, job rotations, and workshops. Engagement with external consultants ensures alignment with industry best practices. Proactive hiring across key functions and emerging domains strengthens future readiness, while internal talent is identified through tailored development plans. KDDL fosters a collaborative and inclusive work environment, motivating employees through structured recognition and reward programmes that celebrate both individual and team achievements. As of the year under review, the total workforce, comprising regular and contractual employees, stood at 2,386, underscoring its commitment to building a dynamic and empowered organisation.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

KDDL prioritises maintaining a strong internal control framework, underpinned by clearly defined systems, policies, and procedures that span all key operational areas. These controls are integral to ensuring the accuracy and reliability of financial reporting, compliance with applicable laws and regulations, protection of assets, and alignment with both strategic and operational goals. At the foundation of this framework are well-documented Standard

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates, and others may constitute ‘forward-

Operating Procedures (SOPs), which are regularly reviewed and updated to reflect evolving business needs and market conditions. These SOPs, along with broader governance protocols, enable KDDL to maintain full compliance with SEBI Listing Regulations.

The Companys internal audit function operates independently, guided by a risk-based annual audit plan approved by the Audit Committee. This ensures continuous monitoring of internal controls and adherence to SOPs. The internal auditor provides objective assurance to both the Audit Committee and the Board regarding the effectiveness of KDDLs risk management, control,

looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. Principal factors that could make significant difference to the Companys operations and actual results include among others, and governance systems. Regular interactions between the Audit Committee, statutory auditors, and internal auditors ensure comprehensive oversight of financial statements, accounting practices, and internal control mechanisms. In parallel, senior management actively evaluates internal systems, recommends enhancements, and oversees the implementation of corrective actions where necessary. This process is supported by periodic performance reviews across business segments, ensuring continuous improvement and alignment with the Companys long-term objectives.

Government regulations, statutes, tax laws, economic developments within India and countries in which the Company conducts businesses, litigations, and other allied factors.