KDDL Ltd Management Discussions

GLOBAL ECONOMY

The global economy demonstrated resilient yet uneven performance in 2025, navigating a complex landscape of trade policy shifts and digital transformation. According to the IMF s World Economic Outlook (April 2026), global growth reached

3.4% in 2025, outperforming earlier conservative estimates. However, the outlook for 2026 has been moderated to 3.1% as the global economy faces renewed headwinds from geopolitical volatility in the Middle East, which has introduced fresh supply-chain pressures and volatility in energy markets.

Global headline inflation, which had moderated to 4.1% in 2025, is now projected to tick upward to 4.4% in 2026 before resuming its descent in 2027. The World Trade Organisation (WTO), in its March 2026 report, noted that after a robust 4.6% growth in merchandise trade in 2025, volumes are expected to slow to 1.9% in 2026 due to heightened trade policy uncertainty and the cooling of front-loaded inventory cycles seen in the previous year.

Source: World Economic Outlook, April 2026: Global Economy in the Shadow of War, WTO   2026 News items - Middle East conflict weighs further on slowing trade outlook

USA

The U.S. economy grew by 2.1% in 2025, supported by robust technology-led investment and steady consumption. Growth for 2026 is projected to rise slightly to 2.3%, as broad-based ofproductivity elevated interest rates. Inflation moderated to 2.7% at the end of 2025, with a target return to 2% expected by mid-2027.

Disclaimer: This map is a generalized illustration only for the ease of the reader to understand the locations, and it is not intended to be used for reference purposes. The representation of political boundaries and the names of geographical features/states do not necessarily reflect the actual position. The Company or any of its Directors or employees, cannot be held responsible for any misuse or misinterpretation of any information or design thereof. The Company does not warrant or represent any kind of connection with its accuracy or completeness.

EURO AREA

The Euro Area recorded a resilient growth of 1.4% in 2025, benefiting from a recovery in real wages and a stabilisation of energy costs mid-year. However, the 2026 growth outlook was revised downward to 1.1%, reflecting the regional impact of the early-2026 energy price shocks and industrial stagnation in major economies like Germany.

(Source: World Economic Outlook, April 2026: Global Economy in the Shadow of War)

CHINA

China successfully met its growth target in 2025, expanding by 5.0%. This resilience was supported by targeted fiscal stimulus and a strong export performance in high-tech sectors. For 2026, growth is projected to moderate to 4.4% as the economycontinuesits development amidst a persistent property sector downturn and evolving trade barriers.

OUTLOOK

The global economic environment for 2026 is characterised by a calibrated recovery . While structural drivers like AI-driven productivity and supply-chain diversification remain central to long-term growth, the short-term landscape is dominated by the need for geopolitical risk management. For businesses in the luxury and precision engineering sectors, success in 2026 will hinge on operational agility and the ability corridors and currency volatility.

INDIAN ECONOMY

India solidified its position as the world s fastest-growing major economy during 2025 26, with real GDP estimated to grow by 7.6%, significantly outpacing most major economies despite heightened geopolitical uncertainty during the latter part of the year. Growth continued to be supported by strong domestic demand, robust government capital expenditure of Rs. 12.2 Lac Crores, and expanding industrial activity, with manufacturing GVA growing by 9.13% during the first half of the fiscal year. India s macroeconomic resilience was further reflected in healthy banking sector fundamentals, with Gross Non-Performing Assets (GNPA) declining to 2.2% in September 2025, while foreign exchange reserves reached a record USD 701.4 Billion, strengthening confidence in the prospects.

Sources:

?€? https://www.pib.gov.in/PressReleasePage.aspx?PRID=2219912r=3&lang=2 ?€? https://www.pib.gov.in/PressNoteDetails. aspx?NoteId=156404&ModuleId=3r=37&lang=1 ?€? https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2026

tives are expected to enhance India sinitia

At the same time, the global economic landscape became increasingly complex. Escalating geopolitical conflicts, evolving tariff regimes, supply chain realignments and changing trade relationships activity worldwide. The Indian Rupee remained under pressure amid the continued strength of the Treasury yields and persistent foreign portfolio outflows. While relatively lower crude oil prices and supportive measures by the Reserve Bank of India, including the FCNR(B) swap window, are expected to provide near-term stability, the Rupee is expected to trade in a broad range of Rs. 92.5 97.0 against the US Dollar over the near -to medium-term. In addition, the appreciation of the Swiss Franc increased import costs across several industries.-termgrowth Nevertheless, India continued to pursue a balanced geopolitical and trade strategy by strengthening strategic partnerships, expanding free trade agreements with key economies, deepening engagement with emerging trading partners, and maintaining diversified global trade relationships accelerated domestic manufacturing through initiatives such as Make in India, Production Linked Incentive (PLI) schemes, customs rationalisation and trade agreements, including the Trade and Economic Partnership Agreement (TEPA) with EFTA nations. These

integration into global value chains.

Sources:

?€? http s://www.pib.gov.in/PressReleasePage.aspx?PRID=2219912r=3&lang=2 ?€? https://www.pib.gov.in/PressNoteDetails. aspx?NoteId=156404&ModuleId=3r=37&lang=1 ?€? https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2026

The country s stable macroeconomic environment and calibrated monetary policy contributed to a moderation in headline inflation, with CPI easing to 3.4% in March 2026. However, inflationary risks arising from global commodity prices, energy markets and geopolitical developments continued to warrant close policy attention. Stable inflation, coupled with rising employment in organised sectors, supported improvements in disposable incomesandconsumption. crossed USD 2,800 in 2026, reflecting the country s continued transition towards higher discretionary spending. Wealth creation also accelerated, with the number of Ultra High Net Worth Individuals (UHNWIs) increasing to 19,877, representing a 63% increase over thepastfive years. This expanding affluent population continues to drive premiumisation across sectors, with s diversified trade partnerships, products expected to register a CAGR of 14 18% through 2027.

Sources:

?€? https://www.reuters.com/world/india/view-indias-march-retail-inflation-quickens-340-yy-2026-04-13/ ?€? https://www.rbi.org.in/Scripts/AnnualReportPublications. ?€? https://www.imf.org/external/datamapper/NGDPDPC@WEO/IND/BGD ?€? https://www.knightfrank.com/wealthreport

The favourable consumption beneficial for the luxury watch industry. The Indian watch market was valued at approximately USD 4.19 billion in 2025 and is projected to reach USD 7.52 billion by 2031, at a CAGR of 10.23%. The implementation of TEPA has reduced customs duty on Swiss watches to 15.71% from January 2026, with duties scheduled to be phased out completely by 2031. Combined with increasing wealth creation, greater pricing parity with international markets and changing consumer preferences, these developments continue to create favourable long-term growth opportunities for companies operating across

Sources:

?€? https://www.imarcgroup.com/india-watch-market

?€? https://www.pib.gov.in/PressReleasePage.aspx?PRID=2238889&lang=1r=3 ?€? https://www.pib.gov.in/PressReleasePage.aspx?PRID=2227012&lang=1r=3

OUTLOOK

The Indian economy is projected to grow by approximately 6.5% in 2026 27, reflecting a moderation year amid rising external risks, including geopolitical tensions, commodity price volatility, dynamics and policy uncertainty. Despite these headwinds, India s growth outlook remains resilient, supported by sustained public infrastructure investment, expanding manufacturing activity, healthy domestic stable financial markets and continued policy support for capital expenditure.

While global tariff actions, inflationary pressures and currency volatility may continue to create near-term uncertainties, and luxury balanced geopolitical approach, continued reforms, emphasis on Make in India, and deeper integration into global supply chains are expected to strengthen its long-term economic competitiveness. Inflation is expected to remain within the Reserve Bank of India s target range, supporting real income growth and consumption. Rising urbanisation, increasing affluence, expanding premium consumer segments and continued has been particularly manufacturing-led policy initiatives position India favourably for sustained growth across precision engineering, exports and organised luxury retail.

Sources:

?€? https://www.rbi.org.in/Scripts/AnnualReportPublications. aspx?year=2026 ?€? https://www.pib.gov.in/PressReleasePage. aspx?PRID=2219912r=3&lang=2

strengthen the organised luxury watch ecosystem and

the premium watch value chain.

SWISS WATCH INDUSTRY

The Swiss watchmaking industry entered 2026 following a second by consecutiveyearofmoderation.In 2025, 1.7% to CHF 25.6 Billion, while export volumes decreased by 4.8% to 14.6 million watches. The softer performance was primarily driven by weaker demand across key Asian markets, particularly China and Hong Kong, alongside elevated gold prices and the appreciation of the Swiss Franc, which increased production costs and retail prices globally. Despite these headwinds, demand remained resilient in the premium and high-luxury segments, underscoring the enduring appeal of high-value Swiss timepieces. This resilience is particularly relevant for manufacturers serving the luxury watch segment, where demand has remained comparatively stable despite broader market softness.

Sources:

?€? https://www.fhs.swiss/pdf/communique_250112_a.pdf ?€? https://www.fhs.swiss/eng/statistics.html

Amid the moderation witnessed across several mature markets, India continued to stand out as one of the brightest growth markets for Swiss watch exports. Supported by rising affluence, increasing premiumisation, and strengthening demand for luxury timepieces, Swiss watch exports to India reached approximately CHF 296 million during 2025, reflecting continued growth and reinforcing Indias emergence as a strategically important market for global luxury watch brands. The phased implementation of the India EFTA Trade and Economic Partnership Agreement (TEPA) is expected to further strengthen this momentum by improving price competitiveness and encouraging greater participation by global brands.

Sources:

?€? https://www.fhs.swiss/pdf/communique_250112_a.pdf ?€? https://www.fhs.

The initial months of 2026 indicated a mixed trend, continued demand variability across markets. January 2026 recorded a 3.6% decline in Swiss watch exports, followed by a narrower decline in the subsequent period. Performance varied across geographies, with resilience in select European markets and continued softness across parts of Asia.

Sources:

?€? https://www.fhs.swiss/file/59/comm_260101_a.pdf ?€? https://www.fhs.swiss/scripts/getstat.

MARKETS		(MILLION CHF)			VARIANCE VS. LAST YEAR	CAGR (2022 2025)
	2025	2024	2023	2022
USA	4,352.9	4,372.6	4,162.7	3,891.0	(0.5%)	3.81%
China	1,804.4	2,053.5	2,767.8	2,568.6	(12.1%)	(11.10%)
Japan	1,850.9	1,965.4	1,822.9	1,693.0	(5.8%)	3.02%
Hong Kong	1,790.8	1,914.9	2,356.4	1,908.8	(6.5%)	(2.10%)
UK	1,718.9	1,716.4	1,744.0	1,620.8	0.1%	1.98%
Singapore	1,632.7	1,620.8	1,655.1	1,615.2	0.7%	0.36%
France	1,329.1	1,311.9	1,280.0	1,184.0	1.3%	3.93%
Germany	1,217.4	1,305.8	1,357.9	1,292.2	(6.8%)	(1.97%)
UAE	1,316.2	1,272.0	1,264.1	1,126.5	3.5%	5.32%
Italy	1,044.4	1,049.6	1,066.9	976.2	(0.5%)	2.28%
India	296.0	273.9	218.8	187.6	8.1%	16.42%
Other Countries	7,198.7	7,136.3	7,051.7	6,795.2	0.9%	1.94%
Total	25,552.4	25,993.1	26,748.3	24,859.1	(1.7%)	0.92%

*The 2025, 2024 and 2023 values for the core markets are from FH s latest annual market release; the 2022 figures for the same core markets and the total are from FH s historical series; India s 2022 figure is from FH s 2022 annual report.

Sustainability is also becoming more important across the Swiss watch value chain. Global luxury brands are placing greater emphasis on ethical sourcing, responsible manufacturing, circularity and sustainable materials. This shift is expected to increase preference for suppliers with strong quality systems, transparent processes and responsible manufacturing practices.

Sources:

?€? https://www.fhs.swiss/pdf/mt3_250112_a.pdf

?€? https://www.fhs.swiss/scripts/getstat.php?file=histo_marches_260202_a.pdf ?€? https://www.fhs.swiss/file/6/RA_2022_en.pdf

OUTLOOK

The Swiss watch industry is expected to witness gradual stabilisation through 2026, following the moderation observed in 2025. Early-year export trends indicate a mixed performance, withrecoveryvisibleinselectmarkets,while o attract greater attention from global watch demand in certain regions, particularly parts of Asia, remains measured.

Growth is expected to be supported by continued demand in higher-value segments, where consumer preference for premium and luxury products remains intact. Established markets such as the USA are expected to provide stability, while demand recovery in key Asian markets will remain an important factor influencing overall industry performance.

India is expected to remain one of the most attractive long-term growth markets for Swiss watchmakers. Supported by favourable demographics,risingdiscretionary incomes, increasing acceptance of luxury watches as long-term value assets, and the progressive reduction in import duties under TEPA, the country . continues Manufacturers are increasingly strengthening partnerships with trusted suppliers and organised retail networks to capitalise on this structural opportunity.

At the same time, input cost dynamics, including precious metal prices, and currency movements are expected to continue influencing pricing and margins across the value chain. Trade conditions and evolving consumer preferences across regions may also shape demand patterns.

INDIAN WATCH INDUSTRY

The Indian watch industry has transitioned into a structural growth phase in 2025 26, characterised by a shift premiumisation. This landmark implementation of the India- EFTA Trade and Economic Partnership Agreement (TEPA), which officially came into force on 1 st October 2025. By initiating a phased reduction on customs duty on Swiss timepieces, this regulatory breakthrough has resulted in significant price rationalisation, making luxury watches more accessible to domestic collectors competitiveness has catalysed a deeper strategic entry of global Swiss maisons into the Indian market, viewing the country as a resilient alternative to slowing growth in traditional Western and Chinese markets. Beyond improving affordability, TEPA isexpectedtoencouragegreater luxury brands, expand consumer choice and strengthen India s organised luxury watch ecosystem through deeper investments in retail networks and customer engagement.

This premiumisation and pricing. Consumers are increasingly seeking products that embody craftsmanship, heritage, exclusivity and enduring value. Luxury watches are progressively being viewed not only as timekeeping instruments but also as expressions of personal identity, milestones and collectible assets, supporting sustained demand across premium and high-luxury categories.

Source: https://www aspx?PRID=2173138r=3&lang=2

This regulatory tailwind is underpinned by the rapid expansion of India s of individuals earning over USD 10,000 projected to reach 100 million by 2027. The emergence of this cohort has triggered a fundamental change in consumer behaviour, with high-end timepieces increasingly viewed as expressions of personal achievement and collectible assets. Growing exposure to global luxury brands through digital platforms and international travel has further accelerated aspiration-led consumption, particularly among younger affluent consumers entering the luxury segment for the first time. Consequently, Swiss watch exports to India increased by 8.1% year-on-year, from CHF 273.9 million in 2024 to CHF 296.0 million in 2025.

Over 2023 2025, exports rose by approximately 35.3%, equivalent to a CAGR of about 16.4%. Despite this strong trajectory, India represented approximately 1.2% of total Swiss watch exports in 2025, underscoring substantial untapped growth potential and long-term market headroom.

This trend is further bolstered by a historic surge in wealth creation; as India s UHNWI population the demand for hard luxury has led to the rise of the Certified Pre-Owned (CPO) segment, allowing collectors to participate in the full brand lifecycle while ensuring high residual values for their acquisitions. Increasing consumer confidence in authenticated watches is expanding participation across the luxury watch ownership lifecycle while reinforcing the long-term value proposition of premium timepieces.

Source: https://www.business-standard.com/finance/personal-finance/ india-s-rich-are-spending-like-never-before-and-the-numbers-are-staggering-126042800795_1.html

The consequence of these converging factors is a highly professionalised and consolidated retail landscape.

Consumers increasingly prefer organised retail channels that offer authenticity, transparent pricing, certified after-sales service and trusted customer experiences. These capabilities have become important differentiators within the luxury watch ecosystem. The consumer s demand for authenticity and specialised maintenance has driven the market towards organised retail players, which now control major stake of the luxury segment. This formalisation has enabled a strategic expansion of luxury retail into Tier-II cities where a new generation of digital-native wealth creators is seeking global-standard horological experiences. Luxury retail is also evolving towards larger experiential boutiques and destination led formats that strengthen customer engagement and enhance brand storytelling. The growing emphasis on premium retail environments is expected to support demand across the broader luxury watch value chain, including premium packaging, visual merchandising and specialised watch components. As Millennial and Gen Z enthusiasts, who now represent the majority of first-time luxury buyers, prioritise transparency, the industry s focus has shifted toward omnichannel storytelling and experiential retail. For KDDL Limited, this structural evolution ensures that the convergence of duty reduction and a surging base provides a durable and long-term growth trajectory.

Sources:

?€? https://www.news.admin.ch/en/newnsb/ O8hG66Fgv1j36OLRRz0Ud

?€? https://www.pib.gov.in/PressReleasePage.aspx?PRID=2173968)

GLOBAL METAL

STAMPING MARKET

The global metal stamping market is undergoing a structural transition towards high-precision and high-complexity manufacturing, with its eaching USD 259.35 Billion in 2025.r valuation This growth is primarily fuelled by the global pivot toward Electric Vehicles (EVs) and the increasing miniaturisation of components in consumer electronics sectors. As industries move towards lightweight and energy efficiency, the demand for intricate, high-strength metal parts has resulted in a significant technological shift within the stamping sector. Manufacturers are increasingly moving away from traditional mechanical presses towards servo and hydraulic press systems, which offer the micron-level tolerance necessary for aerospace and medical applications. This evolution has led to a market trajectory projected to reach USD 377.45 Billion by 2034, establishing precision stamping as a critical component of the global high-tech supply chain.

Sources:

?€? https://www.fortunebusinessinsights.com/metal-stamping-market-112842 ?€? https://www.grandviewresearch.com/industry-analysis/ metal-stamping-market

The ongoing geopolitical realignment, specifically the " China Plus One " strategy, has further accelerated opportunities for Indian precision manufacturers. This shift, supported by the Indian government s Make initiatives and India PLI schemes, has triggered a surge in domestic manufacturing demand.

Aligned to this tailwind, the Company s precision engineering arm, Eigen, has successfully capitalised on these global tailwinds by aligning its technical capabilities with high-growth segments such as energy storage systems and advanced electronics. Eigen s long-standing partnerships with global Original Equipment Manufacturers (OEMs), where the subsidiary s expertise in progressive tool design and die-making provided a definitive competitive edge. By delivering high-speed, zero-defect production for complex assemblies, Eigen has successfully transitioned from a component supplier to a strategic solution provider for global technology leaders.

GLOBAL ORNAMENTAL

PACKAGING MARKET

The global ornamental packaging market is undergoing a structural shift towards Eco-Luxury, with its valuation reaching USD 14.58 Billion in 2025 and projected to hit USD 15.42 Billion by 2026. This momentum is primarily fuelled by the dual demand for sustainable, low-carbon materials and an enhanced unboxing experience that serves as a critical extension of luxury brand identity. As top-tier watch and jewellery maisons transition towards the preference for recyclable paperboard and reusable formats has resulted in a 5.7% CAGR for the segment. This evolution has led to a market environment where high-gloss aesthetics must now coexist with circularity, prompting manufacturers to innovate in foil-lamination and biodegradable coatings to meet stringent global ESG standards.

Source: https://www.researchandmarkets.com reports/6231627/ luxury-packaging-market-report

India is emergingasattractive manufacturing destination for premium packaging as global luxury brands diversify their supply chains and increasingly source from reliable, high-quality partners. The growing domestic luxury market, expanding presence of international watch and jewellery brands, and increasing emphasis on localisation have created significant opportunities across luxury watches, jewellery, premium gifting and lifestyle products. These trends are strengthening demand for organised manufacturers capable of delivering customised packaging solutions that meet global quality standards while supporting faster turnaround times and import substitution.

The Company s ornamental packaging division ocontinued strengthen its capabilities during 2025 26 through the operationalisation of its Panchkula manufacturing facility, with an installed capacity of approximately 1,00,000 premium boxes per month. During the year, the division recorded over 35% year-on-year revenue growth, supported by increasing domestic demand and a healthy pipeline of Requests for Quotations (RFQs) from international brands operating in India. The Company continuesto enhance its manufacturing capabilities, expand its customer base and deliver customised, value-added packaging solutions that align with the quality expectations of leading global brands.

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 engineering and craftsmanship since its establishment in 1981. Headquartered in Chandigarh, the Company operates across India and Switzerland, serving leading global customers in the luxury watchmaking and precision engineering sectors.

Over the years, the Company has evolved into an export-oriented manufacturer with capabilities across premium watch components, including dials, hands, indexes, and bracelets, catering to global luxury watch brands. The Company complements its core offering with premium ornamental packaging solutions, serving the requirements of watch and jewellery brands. In addition, KDDL operates a precision engineering division (Eigen), which manufactures high-precision stamped components and tooling solutions for industries such as automotive, aerospace, electrical and electronics, consumer durables, and alternate energy. Through its subsidiary, Ethos Limited, the Company is present in luxury watch retail and operates one of Indias leading organised retail networks for premium and luxury watches.

The Company s presence across manufacturing and retail enables participation across the luxury value chain, supported by longstanding customer relationships and a diversified business portfolio.

OPERATIONAL OVERVIEW

KDDL Limited maintained operational resilience during 2025 26 and witnessed growth in all business units despite continued softness in the global watch market while benefiting from relatively stable domestic demand.

During the year, the Company reported revenue growth of 31.6% acility of ~30,000 sq. ft. in Bengaluru, expected to year-on-year, supported by strong contributions from its precision engineering (Eigen) and bracelet businesses, which partially offset the moderation in the global watch component segment.

Akeyoperational of the bracelet division, which was commissioned in October 2024, with an installed capacity of ~75,000 units per annum. The division witnessed healthy traction from global customers, with capacity utilisation reaching 75% during the year, itsroleasakeyaddition portfolio planning its next phase of expansion, which includes the construction of an additional floor to further scale up capability.

The precision engineering division (Eigen) continued to demonstrate strong momentum during 2025 26, with revenue of around Rs. 200 Crores and contributing 39.4% to the Company s overall revenue. Over the last five years, Eigen has scaled significantly, growing from a revenue base of Rs. 37 Crores in FY 2020 21 to its current position. Demand remained robust across sectors such as automotive, electronics, and alternate energy. To support this growth, the Company is expanding its manufacturing footprint through an beadditional operational in 2026 27.

The ornamental packaging division also progressed during the year, with commercial operations gaining traction at the Panchkula facility, developed with an investment of Rs. 8 Crores and a capacity of 1,00,000 units per month. The division is focused on serving premium watch, jewellery, and luxury segments across domestic and international markets, with an emphasis on localisation and faster turnaround for global brands.

During the year, the Company also advanced the global .Buildingonthissuccess,theCompany isalready rollout of the Favre-Leuba brand through its subsidiary, Silvercity Brands AG, expanding its presence across key international markets.

Overall, the Company continued to strengthen its operational capabilities through capacity expansion, entry into adjacent product categories, and a sharper focus on high-value, export-oriented segments.

REVENUE AND PROFITABILITY (STANDALONE)

The Company reported operational net revenue of Rs. 504.8 Crores, reflecting magnificent year-on-year growth of 31.6% over the Rs. 383.6 Crores recorded in 2024 25. Despite a challenging market environment in the global watch industry, geo-politicalconflicts, uncertain economic environment and tariff issues, all business units recorded healthy growth over the previous year.

This performance was driven mainly by the growth of our precision engineering business, newly commenced bracelet and packaging units. Watch component business comprising watch hands and watch dials also witnessed value growth due to major Rupee depreciation during the year and enhanced volumes in domestic market. The precision engineering business continued its journey of healthy growth majorly in the international markets. Focused efforts to expand its international footprint, sharpen its competitive edge, and deepen client relationships translated into tangible market share gains. KDDL s consistent emphasis on product quality, operational agility, enhanced capabilities and product range, and the ability to anticipate and respond to evolving customer needs remained central to its success.

KDDL delivered strong performance in 2025 26, recording a robust growth of 40.9% in exports turnover while domestic revenue witnessed growth of 13.3%.

AtthecoreofKDDL soperations,the continued to be the primary revenue driver. During the year this segment also included the revenue from our new business unit for manufacture of steel bracelets. The revenue from the watch component segment grew by 31.3% during the year majorly due to an increase in revenue from bracelet business by 214%. Its share of total revenue dipped marginally from 55.4% to 55.3%. While domestic revenue in this segment grew by 20.9%, export sales witnessed growth of 35.5%. The growth in exports market was primarily due to higher capacity utilisation in bracelet business owth gr andincrementalrevenueduetoRupeedepreciation. The improved indomestic market conditions and increase in volumes with major customers from across the country.

The Eigen precision engineering division sustained its momentum as a critical growth driver, achieving 35.6% growth in revenue, driven by a 49.7% increase in exports and modest growth of 4.1% in domestic sales. The compounded revenue growth in last 5 years from 2020 21 to 2025 26 is 40.1%. The segment s export-to-domestic revenue mix improved highlighting a successful strategic shift. Growth was propelled by targeted expansion into high-potential sectors like alternate energy comprising EVs, energy storage solutions, aerospace, automotive, and electricals, reflecting KDDL s adaptive, market-led approach and strong sectoral positioning. The division s order book remains healthy.

The Company s continued collaboration with strategic partners in emerging technologies is expected to drive revenue and profitability growth.

Ornamental packaging division also witnessed healthy growth of 37.3% mainly due to ramp-up in volumes from new production facility which had commenced production during the previous year. The Company is continuously adding new customers with major focus on international brands from their domestic needs to leverage the logistics and warehousing costs.

STRATEGIC PRIORITIES

Looking ahead, the Company s strategic priorities remain focused on:

Expanding the watch component business across global markets, supported by established customer relationships and product capabilities

Scaling the precision engineering division through increased participation in high-value, application-driven segments

Strengthening presence in premium ornamental packaging through continued focus on design, quality, and customer alignment

Enhancing offerings through specialised, high-value products, supported by design capabilities and integration across business units

Strengthening market outreach and customer engagement across key geographies

Driving operational efficiency through process optimisation and capacity utilisation

PROSPECTS

Over the past few years, KDDL has continued to focus on increasing its market share both for domestic and exports customers by adding new capabilities, enhanced product offerings, world class quality and delivery with competitive pricing. 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 next 6 months. up the TheCompanyremainscautiously 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 e pricing, and 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. 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.

The Company plans to increase the capacity of steel bracelet factory to tap new customer groups and markets in the coming year. 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. KDDL s internal capabilities and reliability in quality, delivery along with strong engagement with customers give it a clear edge. India s position as a global sourcing hub is strengthening, and KDDL is in a good spot to take advantage of that. With fast developmentcycles, engineering capabilities, the Company is becoming a preferred partner for global manufacturers. Internally, efforts to optimise costs, improve productivity, and use capacity moreefficiently are 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.

KEY FINANCIAL RATIOS

During 2025 26, KDDL delivered a strong financial performance despite a challenging global environment for the luxury watch industry. Revenue growth was supported by continued momentum across watch components, precision engineering, bracelets and packaging businesses, while the Company continued to invest in future growth opportunities. Operational profitability remained resilient, with the Operating Profit Margin at 18.4% compared with 18.5% in the previous year. Gross Margin stood at 74.9%, reflecting the strength of the Company s value-added manufacturing portfolio and disciplined oved cost management. Profit Before Tax before exceptional a percentage of operationalnet revenue stood at 15.6%, broadly in line with the previous year despite increased investments in expansion and capability enhancement.

The Company s financial position remained robust. The Interest Coverage Ratio improved to 11.5 times, demonstrating strong debt-servicing capacity supported by healthy operating earnings. The Current Ratio improved to1.51times, liquidity position, while the Debt-to-Equity Ratio remained stable at 0.29 times, indicating prudent leverage management despite higher borrowings to support growth initiatives.

Working capital metrics remained healthy. While the Debtors Turnover Ratio moderated to 5.7 times and the collection period increased to 63 days, the movement was largely to higher business volumes and receivables associated with growth across domestic and export markets. Inventory Turnover improved to 1.9 times, with the inventory holding period reducing impr utilisation. to6.3months,reflecting items as The Company s capital base continued Shareholders Funds increasing to Rs. 3,839.2 Million and Return on Net Worth (Overall) improving to 25.1%. These metrics underscore KDDL s ability to generate stronger returns while continuing to invest in capacity expansion, operational and long-term growth opportunities, thereby reinforcing its financial resilience and value creation

DEBTORS TURNOVER AND AVERAGE COLLECTION PERIOD

The Debtors Turnover Ratio moderated to 5.7 times in 2025 26 from 6.2 times in the previous year, while the average collection period increased to 63 days. The movement was particularly primarilydrivenbya from export markets, bracelets, precision engineering and packaging businesses, resulting in a higher receivables base. The ratio remains at a healthy level, reflecting disciplined credit management despite accelerated business growth.

INVENTORY TURNOVER AND AVERAGE INVENTORY HOLDING PERIOD

Inventory Turnover improved marginally to 1.9 times from 1.8 times, while the inventory holding period reduced to 6.3 months from execution and tionamid utilisa 6.5months.Theimprovementreflects higher production betterinventory stronger demand across watch components, precision engineering and bracelet businesses. Strategic inventory build-up to support growth and customer commitments was balanced by efficient inventory management practices.

INTEREST COVERAGE RATIO

Interest Coverage Ratio improved to 11.5 times from 11.1 times. The increase was supported by stronger operating profitability, driven by growth across key business segments and improved costsearningsgeneration. associated with ongoingexpansioninitiatives,operatingprofits grew at a faster pace, strengthening debt-servicing capability.

DEBT SERVICE COVERAGE RATIO

Debt Service Coverage Ratio moderated to 5.60 times from 6.91 times. The decline was primarily and increased financing commitments linked to capacity expansion, infrastructure enhancement and working capital requirements. Nevertheless, the ratio remained comfortably above industry benchmarks, reflecting

CURRENT RATIO

The Current Ratio improved to 1.51 times from 1.39 times. The increase reflects growth in current assets, including inventories, trade receivables and cashbalances,inlinewithexpandingbusinessoperations. indicates adequate liquidity to support operational The initia. requirementsandfuturegrowth The adjusted current ratio improved to 1.42 times from 1.30 times. The improvement demonstrates stronger operating liquidity and enhanced working capital management, even after excluding cash and bank balances from the calculation.

DEBT-TO-EQUITY RATIO

The Debt-to-Equity Ratio remained stable at 0.29 times despite higher borrowings during the year. Growth in shareholders funds through retained earnings and improved profitability adequately supported the increase in debt, resulting in a balanced capital structure and prudent leverage position.

OPERATING PROFIT MARGIN

Operating Profit Margin remained largely stable at 18.4% compared with 18.5% in the previous year. The Company maintained profitability despite investments in growth initiatives, changing business mix and ongoing expansion activities. Operational efficiencies and a favourable product portfolio helped offset inflationary and cost pressures.

PROFIT BEFORE TAX MARGIN (BEFORE EXCEPTIONAL ITEMS)

Gross Margin stood at 74.9%,demonstratingtheCompany s ability to sustain value-added manufacturing and maintain pricing discipline. Continued focus on premium watch precision engineering products and specialised manufacturing capabilities supported margin stability.

Profit Before Tax Margin before exceptional items remained broadly stable at 15.6% compared with 15.7% in the previous year. Higher revenues and operating profits offset the impact of increased depreciation and finance costs arising from recent capital investments and expansion projects.

SHAREHOLDERS FUNDS

Shareholders Funds increased to Rs. 3,839.2MillionfromRs.3,313.9Million.Thegrowthreflects retention during the year and profit continued strengthening of the Company s net worth, providing a stronger foundation to support future expansion and strategic investments.

LOAN FUNDS AND COST OF DEBT

Loan Funds increased to Rs. 1,099.7 Million from Rs. 958.8 Million, reflecting borrowings undertaken to support capacity expansion, infrastructure development and working capital requirements. Despite the increase in debt levels, the Cost of Debt remained stable at 9.54%, indicating effective treasury management and access to funding at competitive rates.

FIXED ASSETS

Tangible Fixed Assets increased to Rs. 2,936 Million from Rs. 2,660 Million. The increase reflects continuedinvestments in manufacturing infrastructure, capacity enhancement, process improvements and technology upgrades across business segments to support future growth opportunitiesand .efficiency operational

RETURN ON NET WORTH

Return on Net Worth (Overall) improved significantly to 25.1% from 17.7%. The increase was driven by stronger profitability, improved shar capital, reflecting the Company s ability to create enhanced value from its earningsgenerationand betterutilisation of equity base.

Operational Return on Net Worth improved to 21.5% from 18.1%. The improvement reflects stronger performance of the core operating businesses, supported by growth across watch components, precision engineering, bracelets and packaging, as well as improved operational efficiency and capital productivity.

ETHOS LIMITED

During 2025 26, Ethos Limited continued its trajectory, reinforcing its position as India s leadingluxury om Favre watch retailer. The Company delivered another year of robust operational and financial performance, supported by sustained demand across luxury and premium watch categories, expansion of its retail network, increasing customer engagement, and growth in adjacent luxury segments. Ethos achieved record sales during the year and crossed significant milestones in its expansion journey.

The Company reported a standalone turnover of Rs. 1,65,312 Lacs during 2025 26, registering a year-on-year growth from Rs. 1,27,651 Lacs in 2024 25, supported by continued momentum in luxury watch sales, growingcontributionfrom the and expansion of its retail Certified footprint across key markets. The Company also benefited from increasing customer engagement, risingaveragetransaction values, and a favourable premium product mix.

Despite currency-related headwinds, ongoing investments towards expansion, and global macroeconomic uncertainties, the CompanyreportedaProfit e Tax (PBT) of Rs. 12,747 Lacs and a Profit After Tax (PAT) of Rs. 9,492 Lacs, demonstrating the resilience of its business model and operating leverage.s across its The performance was supported by disciplined inventory management, improved stock productivity, operational efficiencies, prudent cost control measures, and a growing contribution from higher-margin luxury and high-luxury watch brands.

The Company expanded its presence to 94 boutiques across 30 cities, adding new stores in both metro and emerging markets ourages accountability at all levels. while strengthening its experiential retail formats such as City of Time. As on date, the network has further expanded to 103 boutiques across 34 cities. Larger-format stores, strategic luxury o enhance t locations,andgrowingbrandpartnershipscontinued tocustomeracquisitionand significantly expand its network over the coming years.

The luxury watch market in India continued to demonstrate pr strongmomentum,supportedbyrisingaffluence, trends, and increasing alignment of domestic pricing with global markets. Swiss watch exports to India reached approximately CHF 296 million in 2025, representing growth of nearly 35% over the previous two years, further validating the long-term growth opportunity for organised luxury watch retail.

Operationally, Ethos strengthened its omnichannel ecosystem, customer relationship management capabilities, after-sales service infrastructure, and Certified Pre-Owned (CPO) business. The Company also expanded its portfolio through lifestyle and luxury brands, including growing traction in categories such as luxury travel accessories and jewellery. Improved inventory management practices, enhanced stock rotation mechanisms, and disciplined working capital management supported operational efficiency across the network.

FAVRE LEUBA

TheCompanyalsowitnessedencouragingtraction Leuba, the iconic Swiss heritage watch brand owned through Silvercity Brands AG. The brand expanded rapidly across international markets, achieved strong sell-through performance, and continued to strengthen its global footprint through new product introductions and expanded points of sale. Despite currency-related headwinds arising from Swiss Franc appreciation and continued investments towards future growth, Ethos maintained healthy profitability and remained focused on long-term value creation through market leadership, customer experience, disciplined execution, and strategic expansion. The management remains confident of sustaining strong growth momentum while further strengthening its position within India s rapidly expanding luxury consumption landscape.

RISKS, THREATS AND CONCERNS

KDDL recognises risk as an integral part of business management and treats it as a key input in decision-making, control design, and long-term planning. The Company has established a structured risk management framework that supports timely identification, risk assessment,monitoring,andmitigation of operations. This framework is designed to protect business continuity, support compliance, and strengthen value creation. Oversight by the Board ensures that the approach remains current, practical, and aligned with the environment.

The risk management philosophy is embedded across the organisationand Employees are expected to remain alert to emerging risks, report concerns early and respond with discipline and clarity. This culture supports a balanced approach to risk recognition and mitigation, enabling the Company to adapt to changing conditions while maintaining operational resilience.

General Risk Management

KDDL follows a proactive approach to managing day-to-day business risks arising from market conditions, operational variables, and external developments. The Company monitors these factors regularly and takes suitable measures to support continuity, efficiency, and performance stability. This approach helps the organisation remain prepared and responsive in a changing business environment.

Macroeconomic and Regulatory Risks

The Company operates in an environment shaped by macroeconomic movements, regulatory developments, tax changes, and policy updates. KDDL closely tracks these factors to assess their potential impact on business planning, compliance, and execution. By maintaining regular monitoring and internal review processes, the Company remains better positioned to adjust operations and support business flexibility.

Environmental and Disaster-related Risks

KDDL remains mindful of risks arising from natural events, operational disruptions, and other unforeseen incidents. The Company has put in place suitable systems and preparedness measures to support business continuity and reduce the impact of such events. In addition, insurance coverage and operational safeguards provide an added layer of protection across facilities and operations.

Market Risks

The Company is exposed to market-linked risks, including changes in demand, shifts in consumer preferences, competitive pressures, and economic volatility. These conditions can affect business performance and planning visibility. To address these factors, KDDL follows an agile operating model that supports timely adjustments in line with market conditions and helps sustain business resilience.

Risk Category	Description of Risk	Mitigation Strategy
Demand Variability in Watch Segment	Changes in economic conditions and	The Company continues to strengthen
	evolving consumer preferences may	its product portfolio through design,
	influence demand across the watch	innovation, and expanded offerings
	segment, including premium categories.	aligned with evolving consumer
	Variations in discretionary spending can	preferences. A calibrated pricing
	impact sales volumes and product mix.	approach and focus on premium
		positioning support market relevance and
		demand stability.
Customer Concentration	A significant portion of the Company \u2019 s	KDDL is focused on expanding its
	business is derived from a defined	customer base by strengthening
	set of key customersacrossdomestic s and partner relationshipswithexisting
	and international markets, including	engaging with new customers across
	Switzerland. This concentration may	geographies. This approach supports
	influence revenue visibility and order	diversification while maintaining
	flow.	continuity in business operations.
Segment Concentration	A considerable share of revenue	The Company continues to scale its
	continues to be generated from the	precision engineering components
	watch components segment. While this	business and explore opportunities
	reflects domain strength, it also increases	across adjacent sectors. This supports
	reliance on a specific business line.	diversification of revenue streams and
		enhances overall business balance.
Foreign Exchange Exposure	With a significant share of revenue	The Company manages currency
	linked to exports, the Company	exposure through a combination of
	remains exposed to fluctuations in	natural hedging, currency alignment
	foreign exchange rates, particularly the	between imports and exports, and
	Swiss Franc and US Dollar. Currency	appropriate financial strategies. This
	movements may influence revenue	approach supports stability in earnings
gins. mar realisationand		and financial performance.
Talent Availability and Retention	The business requires skilled talent	KDDL continues to strengthen its human
	across manufacturing and retail	resource practices through structured
	operations. Competition for experienced	hiring, training, and development
	professionals may influence hiring and	initiatives. Competitive compensation
	retention, particularly in specialised roles.	structures and employee engagement
		programmes support talent retention and
		capability building.

HUMAN RESOURCES MANAGEMENT

KDDL continues to recognise its people as a core driver of long-term value creation and operational strength. The Company follows a structured and strategic approach to human resource management, focused on talent across functions. Emphasis remains on building capabilities, workforce supporting development with business requirements.

During the year, the Company strengthened its talent development initiatives through focused training programmes, role-based skill enhancement, and structured learning interventions. Leadership development and succession planning remain integral to building organisational depth, while job rotations and building across teams. External partnerships and domain-specific training programmes continue to align internal competencies with evolving industry practices.

KDDL maintains a ensuring the availability of skilled resources across key operational and strategic areas. Internal talent is supported through targeted development initiatives, enabling progression and role readiness. The Company continues to foster a work environment, supported by structured engagement, recognition, and performance-linked feedback mechanisms. ovement across business segments es

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

KDDL maintains a strong internal control framework supported by clearly defined systems, policies, and procedures covering key operational areas. These controls are designed to support the accuracy and reliability of financial reporting, ensure compliance with applicable laws and regulations, safeguard assets, and align operations with both strategic and business objectives. The framework is built on documented standard operating procedures that are reviewed and updated periodically to reflect changes in business requirements, market conditions, and expectations.

The internal audit function operates independently and follows a risk-based annual audit plan approved by the Audit Committee. This enables regular monitoring of internal controls, operating processes, and compliance with established procedures. The internal auditor provides objective assessments to the Audit Committee and the Board on the effectiveness of controls, risk management, and governance practices. approach to talent acquisition, Senior management reviews the observations and recommendations arising corrective actions management, the Audit Committee, statutory auditors, and internal auditors helps maintain oversight of financial accounting practices, and control mechanisms. This process andsupportscontinuous objectiv. reinforcesalignmentwiththeCompany slong-term

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Company s objectives, projections, outlook, expectations,estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressedorimplied.Principalfactorsthatcouldmake significant difference to the Company s operations and actual results include among others, government regulations, statutes, tax laws, economic developments within India and countries in which the Company conducts businesses, litigations, and other allied factors.