Kiaasa Retail Ltd Management Discussions

1. Industry Structure & Developments Global Overview

Amidst the continued geo-political uncertainty, the global apparel market is projected to grow at a CAGR of approximately

8% , reaching USD 2.37 trillion by 2030 , while global textile and apparel trade is expected to expand at a CAGR of around 4% , reaching USD 1.2 trillion . These trends presentsignificantopportunities for Indian manufacturers to strengthen their presence in international markets.

Domestic Overview

Indias textile and apparel industry continues to strengthen its position as one of the country smostsignificanteconomic sectors. In FY 2025-26, the industry is estimated to have reached a market size of approximately USD 190 billion , supported by robust domestic demand, increasing export opportunities, and sustained government initiatives. The sector is projected to grow at a compound annual growth rate (CAGR) of around 10% , reaching USD 350 billion by 2030 .

The industry remains a vital contributor to the Indian economy, accounting for approximately 2% of GDP , around 13% of industrial production , and nearly 8.2% of the country s total exports . With continued investments in manufacturing, infrastructure, and innovation, the textile sectors contribution to Indias GDP is expected to nearly double to around 5% by the end of the decade .

Indicator	Data point
Indian apparel retail market FY25	9.3 lakh crore
Expected FY30 market	16 lakh crore
Historical CAGR since FY18	~7%
Organised retail share	~41%
Organised apparel retail growth	~10-13%
E-commerce share of organised apparel	~22%
Expected e-commerce share FY30	~25%
Expected e-commerce market FY30	~ 5 lakh crore

Source: India Brand Equity Foundation

Readymade Garment Industry Landscape

The global economy in FY 2025-26 continued to navigate a challenging landscape marked by geopolitical uncertainties, trade realignments, inflationary pressures, and evolving monetary policies across major economies. Despite these headwinds, India has maintained its position as one of the worlds fastest-growing major economies, supported by strong domestic demand, prudent fiscal management, sustained public capital expenditure, and continued digital transformation. The broader domestic consumption environment remains supportive, with private actual consumption expenditure accounting for approximately 61.5% of Indias GDP in FY 2025-26, its highest share since FY 2011-12. Strengthening rural consumption and improving real purchasing power are expected to support discretionary consumption, including apparel (Economic Survey 2025-26).

Both, Reserve Bank of India and World Bank have projected Indias GDP growth at 6.7% for FY 2026-27 , underscoring the country s macroeconomic resilience. Structural growth drivers including a young demographic profile, rapid urbanisation, low inflation, rising disposable incomes, expanding middle-class consumption, and increasing digital adoption continue to strengthen the long-term growth outlook for the Indian economy.

The Readymade Garment industry remains one of the most significant pillars of India s textile and apparel sector, contributing substantially to manufacturing output, exports, employment generation, and value addition. India continues to be one of the worlds largest producers of cotton, cultivating approximately 12-13 million hectares , accounting for nearly one-fourth of global cotton acreage . This abundant raw material base, combined with an integrated textile value chain, provides a strong competitive advantage to the domestic apparel industry.

Leading textile manufacturing states such as Gujarat, Tamil Nadu, Maharashtra, Telangana, Andhra Pradesh, Karnataka, Haryana, and Jharkhand continue to drive the sectors growth through investments in manufacturing infrastructure, skilled workforce development, and modern production capabilities. Industry participants are increasingly focusing on product innovation, sustainable manufacturing practices, superior fabric quality, and design excellence to meet evolving consumer preferences in both domestic and international markets.

India has further strengthened its position in the global textile value chain, remaining the third-largest exporter of textiles and apparel and the second-largest producer of man-made fibres (MMF) after China. Government initiatives, expanding free trade agreements, Production Linked Incentive (PLI) schemes, and the PM MITRA Parks programme are expected to further enhance Indias competitiveness and attract investments across the textile ecosystem.

The textile and apparel market remains significantly fragmented, with unorganised retail accounting for more than 50% of market. The continued shift towards organised brick-and-mortar and e-commerce channels provides a structural opportunity for branded players to gain market share through differentiated products, wider distribution and stronger customer engagement.

Within the apparel segment, childrens wear continues to be one of the fastest-growing categories, supported by favourable demographics, rising household incomes, increasing brand consciousness among parents, and the rapid expansion of organised retail and e-commerce channels. Demand is also being driven by growing preference for premium, comfortable, and sustainable clothing, creatingsignificantopportunities for manufacturers focused on innovation, quality, and value-added offerings.

Indias home textiles segment continues to be one of the fastest-growing categories, with the market projected to expand from USD 10.8 billion in 2023 to over USD 23 billion by 2032 , registering a CAGR of 8.9% . Simultaneously, the technical textiles sector is witnessing rapid growth, with an expected CAGR of around 10% , supported by increasing adoption across infrastructure, healthcare, automotive, defense, and agriculture. India is currently the fifth-largest technical textiles market globally , with significant headroom for further expansion.

Overall, Indias favourable macroeconomic fundamentals, robust manufacturing ecosystem, expanding consumer base, and supportive policy framework position the textile and apparel industry for sustained long-term growth, enabling it to strengthen its presence in both domestic and global markets.

2. Opportunities and Challenges OPPORTUNITIES

Favourable Market Dynamics

Rising disposable incomes, increasing urbanisation and evolving consumption patterns are expected to support sustained demand for womens ethnic wear, providing opportunities for the Company to expand its customer base and deepen its presence across key markets.

Growing preference for branded apparel and the shift from the unorganised to the organised retail sector provide opportunities for the Company to strengthen brand recognition and capture a larger share of organised ethnic wear consumption.

Expanding Consumer Base

Indias young population, increasing workforce participation among women and evolving fashion preferences are contributing to sustained demand for contemporary ethnic and fusion wear. This presents an opportunity for the Company to expand its product offerings and cater to a broader range of consumer preferences and occasions.

Rising purchasing power and increasing consumption in Tier II and Tier III cities provide opportunities for the Company to expand its geographical reach and strengthen its presence beyond major metropolitan markets.

Growth of Omnichannel Retail

The continued expansion of e-commerce and omnichannel retail provides the Company with opportunities to reach customers across a wider geographic footprint without being limited to its physical retail presence.

Digital platforms also enable the Company to enhance brand visibility, engage directly with consumers and leverage customer and sales data to improve product assortment, merchandising and personalised marketing.

Product Innovation

Increasing demand for contemporary ethnic wear, fusion collections and occasion-specific apparel creates opportunities for the Company to broaden its product portfolio while retaining its core positioning in womens ethnic wear.

The Companys ability to combine traditional craftsmanship with contemporary designs, supported by continued focus on design, quality and product innovation, provides an opportunity to differentiate its offerings and strengthen customer loyalty.

The Company may also leverage changing consumer preferences to develop collections across different price points, occasions and consumer segments, thereby increasing the addressable market.

Supportive Industry Ecosystem

Government initiatives aimed at strengthening domestic textile and apparel manufacturing, improving infrastructure and promoting investment are expected to support the broader industry ecosystem. These developments may provide the Company with greater access to domestic sourcing and manufacturing capabilities and support the scalability of its operations.

Continued development of textile and apparel supply chains may also improve availability of products and inputs, potentially enabling the Company to respond more efficiently to changing consumer demand.

CHALLENGES

Intense Market Competition

The womens ethnic wear segment remains highly competitive, with established national brands, regional players, digital-first brands and the unorganised sector competing across product categories, price points and geographies.

The Company may face continued pressure on market share, pricing and customer acquisition, requiring sustained investment in product differentiation, brand building, retail presence and customer engagement.

Rapidly Changing Fashion Trends

Women s ethnic wear is influenced by rapidly changing fashion preferences, seasonal demand and occasion-based consumption. Shorter product cycles require the Company to continuously refresh its product portfolio and respond promptly to changing consumer preferences.

Inaccurate demand forecasting may result in excess inventory, markdowns or stock shortages, which could adversely affect inventory turnover and operating margins.

The Company may need to maintain agility across design, sourcing, merchandising and inventory management to align product availability with evolving demand.

Raw Material Price Volatility

Fluctuations in the prices of fabrics, yarn, dyes, trims and other inputs may affect the Companys cost of products and operating margins, particularly where such increases cannot be fully passed on to customers.

Changes in logistics, freight and transportation costs may further affect the Company s cost structure and profitability.

Effective sourcing, vendor management, inventory planning and product pricing will therefore remain important mitigate the impact of input-cost volatility.

Supply Chain Risks

The Companys ability to maintain product availability depends on the timely sourcing of fabrics, apparel and other inputs from its supply chain. Geopolitical developments, trade disruptions, supplier-related issues and logistical constraints may affect procurement timelines and product availability.

Such disruptions may be particularly relevant in a fashion-led business where delays in sourcing or production can result in missed seasonal or occasion-based demand.

Macroeconomic and Regulatory Factors

Inflation, changes in disposable income, consumer confidence, interest rates and broader economic conditions may influence discretionary spending on apparel and affect consumer purchasing behaviour.

Changes in taxation, import/export policies, labour regulations, environmental requirements and other applicable regulations may also affect the Companys operating costs and business operations.

The Company s performance may therefore be influenced by broader macroeconomic and regulatory developments beyond its direct control.

Technology and Customer Expectations

Increasing consumer expectations for seamless digital experiences, faster delivery, convenient returns, personalised engagement and responsive customer service require continued investment in technology and operational capabilities.

The Company will need to continuously strengthen its digital and omnichannel capabilities, data-driven merchandising and customer engagement initiatives to remain competitive as consumer behaviour evolves.

Increasing consumer preference for sustainable and responsibly produced products may also require greater attention to sourcing practices, product composition, packaging and supply-chain transparency.

3. Product Segment

The Company operates primarily in the womens ethnic wear segment, offering fashion-forward apparel that combines traditional craftsmanship with contemporary designs and caters to diverse consumer requirements across everyday wear, festive occasions and special events. The Companys portfolio is positioned across key categories and price points, enabling it to address a broad range of consumer preferences.

Womenrepresentasignificantshare of domestic textile consumption, accounting for approximately 55.5% of textile purchases in 2024. Womens ethnic categories, including sarees, salwar kameez and other womens apparel, remain among the major demanded textile products (PIB). The womens ethnic wear market is also witnessing a shift towards ready-to-wear formats, particularly among younger and working consumers, driven by greater emphasis on convenience, variety and contemporary designs. The increasing tendency towards occasion-based purchasing across workwear, festive and casual categories is creating opportunities for organised brands to develop differentiated collections targeted to specific consumer needs. It is also important to note that womens ethnic wear is not merely festive wear, it has a daily-wear component, which gives the category a broader and more recurring demand base.

Further, Indian women s ethnic wear market continues to benefit from rising disposable incomes, increasing fashion consciousness, urbanisation and the gradual shift from unorganised to organised retail. Consumers are increasingly seeking ethnic apparel that combines style, comfort, quality and affordability, while the growing penetration of e-commerce and organised retail is expanding access to branded offerings beyond major metropolitan markets. The segment is also benefiting from increasing demand from Tier II and Tier III cities and the continued evolution of ethnic wear towards contemporary designs and occasion-led collections.

As on March 31, 2026, the Company had 124 stores across 75 cities, compared with 113 stores across 71 cities in 2025. The Companys e-commerce channels contributed small percentage in total revenue during the year.

The Company continued to focus on design innovation, trend-led collections and product development, with emphasis on responding to evolving consumer preferences across every day, festive and occasion wear. The category is also demonstrating strong engagement among younger and non-metropolitan consumers. Data from an e-commerce platform indicates that nearly half of its ethnic-wear customers are aged between 25 and 35, while Tier III and smaller towns accounted for approximately 55% of ethnic-wear shopper volume. The Companys focus on contemporary ethnic wear and expansion of its market reach therefore provides opportunities to participate in these emerging consumer trends (Orient).

The continued formalisation of the ethnic wear market, expansion of organised retail, increasing digital adoption and rising consumption in Tier II and III cities provide opportunities for the Company to expand its geographical and customer reach. Focusing on these cities has helped retailers unlock their consumption potential. Approximately 23% of total apparel demand is expected to come from these cities,withsignificantdemand in the value segment. Organised value retailers have led the transition of the Value Apparel segment in these cities from largely unorganised to somewhat organised. The ability to offer quality products at affordable prices in retail environments has been a key driver of the widespread acceptance of these formats across Tier II and III cities.

4. Outlook

The Indian womens ethnic wear market is poised for sustained growth, supported by favourable demographic trends, increasing disposable incomes, rising fashion consciousness, and the growing preference for branded apparel. The shift towards organised retail, expanding e-commerce adoption, and increasing penetration of digital platforms continue to createsignificantopportunities for brands operating in this segment. Indias apparel retail market was estimated at approximately 9.3 lakh crore in FY 2025 and is projected to reach approximately 16 lakh crore by FY 2030, representing a CAGR of around 11%. Organised retail currently accounts for approximately 41% of the market and is expected to grow at a faster pace of around 10-13%, while e-commerce is expected to increase its share of organised apparel retail from approximately 22% to 25% by FY 2030 (IBEF).

Consumer preferences are evolving rapidly, with increasing demand for contemporary designs, quality fabrics, comfortable silhouettes, and products that blend traditional aesthetics with modern fashion sensibilities. This changing landscape provides opportunities for the Company to strengthen its product portfolio, enhance customer engagement, and create differentiated offerings across various occasions and consumer segments. Ethnic wear also benefits from recurring demand associated with Indias extensive wedding and festive calendar. The frequency of weddings and festivals creates multiple consumption occasions throughout the year, supporting demand beyond seasonal fashion cycles.

The Company remains focused on strengthening its brand presence, improving operational efficiencies, enhancing innovation, and leveraging technology to deliver a seamless customer experience. With a customer-centric approach, efficient sourcing practices, and an emphasis on trend-led collections, the Company aims to capitalise on emerging opportunities in the womens ethnic wear market.

The expansion of organised retail, growth of Tier II and Tier III markets, and increasing adoption of omnichannel retail models are expected to support long-term growth opportunities. The Company will continue to focus on sustainable business practices, prudent resource management, and strategic initiatives aimed at creating long-term value for customers, stakeholders, and shareholders.

5. Risks and Concerns

The women s ethnic wear industry operates in a dynamic and competitive environment, influenced by evolving preferences, fashion trends, economic conditions, and changing market dynamics. The Companys performance is dependent on its ability to anticipate consumer expectations, introduce trend-relevant collections, and maintain an efficient product cycle.

Rapid changes in fashion preferences and shorter product life cycles require continuous innovation, effective merchandising, and agile inventory management to minimise the risk of excess inventory and ensure sustained customer engagement.

The industry is characterised by intense competition from established brands, regional players, online marketplaces, and unorganised retailers. Increasing competition may exert pressure on pricing, margins, and customer acquisition costs. The

Company also remains exposed to fluctuations in the cost of key inputs such as fabrics, accessories, and other raw materials, which may impact operating margins and profitability. Effective sourcing strategies and prudent cost management remain essential to mitigate these risks.

The Companys operations are also subject to risks associated with a presence in only one segment, and supply chain-related risks, including availability of quality products, timely sourcing, logistics challenges, and external disruptions. Any unforeseen interruption in the supply chain may affect product availability and business continuity. Additionally, the availability and retention of skilled personnel across design, merchandising, sourcing, and retail functions remain important for maintaining operational efficiency and supporting growth.

Consumer spending on apparel may be influenced by broader economic factors such as inflation, changes in disposable income, and overall consumer sentiment. A slowdown in discretionary spending could impact demand for fashion and lifestyle products. Furthermore, the rapid growth of digital commerce and evolving customer expectations require continuous investments in technology, online capabilities, and customer experience enhancement to remain competitive.

The Company remains committed to identifying, assessing, and managing these risks through operational excellence, strong supplier relationships, customer-focused product development, efficient inventory management, and continuous adaptation to changing industry trends. These measures are aimed at strengthening business resilience and supporting sustainable long-term growth.

6. Governance, internal control systems and their adequacy

The Company places due emphasis on maintaining effective internal control systems, safeguarding its assets, managing operational risks and ensuring compliance with applicable laws, regulations and internal policies. The Companys overall governance and internal control framework is designed to provide adequate assurance regarding the effectiveness of operations, reliability of financial reporting and compliance requirements.

Key features of governance and internal control framework

The Companys governance framework is multi-tiered, comprising the Board of Directors, its Committees, and the Managing Director. The Board remains committed to the highest standards of Corporate Governance.

Internal Audit and Oversight

The Company has an internal audit framework covering key business and operational processes.

Internal audit observations are periodically reviewed by the Audit Committee, which monitors the implementation of appropriate corrective measures.

The Audit Committee maintains regular engagement with the statutory and internal auditors to oversee the adequacy and effectiveness of the internal control framework.

Technology and Automation

The Company continues to strengthen its processes through increased use of technology and automation across various business functions.

Digital systems, supported by appropriate access controls and approval workflows, help improve transaction accuracy, minimise operational risks and enhance visibility across business activities.

Periodic Review and Risk Management

Internal controls are periodically reviewed to assess their effectiveness and identify areas for further improvement.

Management continuously evaluates emerging and evolving risks and takes appropriate measures to strengthen control mechanisms in line with changing business requirements and the operating environment.

People and Accountability

The Company is supported by qualified and experienced personnel responsible for implementing, monitoring and maintaining the internal control environment.

Appropriate oversight and accountability mechanisms are maintained across relevant business functions.

Based on the assessment undertaken, the Companys existing internal control systems are adequate and commensurate with the size, scale and nature of its operations, and provide reasonable assurance regarding operational effectiveness, reliability of financial reporting and compliance with applicable requirements.

7. Financial Performance of the Company

								Change
Particulars	2025-26				2024-25									Explanation
															(+/-)
Revenue from
				13,463.22							12,162.80				10.7%	-
Operations
Operating Profit				2,400.43							1,643.73				46.0%	During the year, total operating expenses increased in absolute
(EBITDA)																terms, primarily reflecting higher business volumes, expansion of
																operations, and investments in customer experience and supply
								However, as a percentage of revenue, operating chainefficiency.
														expenses declined compared to the previous year, driven by
																stronger margins, better cost absorption on higher sales, and
																enhanced operational productivity.
																This dual outcome demonstrates that while the company is
																investing more to support expansion, revenue growth and
																margin improvements are outpacing expense growth. As a
																result, operating profit has increased, underscoring effective cost
																management, scalability of operations, and strengthened overall
																profitability.
Finance Cost		609.48				279.64				117.9%			Finance costs during the year increased compared to the previous
																period, primarily on account of fresh borrowings undertaken
																to meet working capital requirements. These borrowings were
																necessary to support the company\u2019s expansion initiatives,
																strengthen the supply chain, and ensure adequate liquidity for
																future growth plans.
																While the absolute finance cost has risen, it reflects the company \u2019 s
																strategic decision to leverage short-term funding to sustain
																higher business volumes and capitalize on growth opportunities.
																Management remains focused on optimizing the capital structure and
																expects that improved operating performance and margin expansion
																will offset the impact of higher interest expenses over time.
Depreciation				281.26							139.29				101.9%	Depreciation expense increased during the year, primarily due to
																additions in infrastructure and fixed assets undertaken to support
																the company\u2019s expansion and future growth plans. Investments
																in new facilities, technology upgrades, and operational capacity
																have resulted in a higher depreciation charge, reflecting the
																capitalization of these assets.
																This increase is aligned with the company\u2019s long-term strategy
																of strengthening its infrastructure base to sustain higher business
																volumes . While depreciation has risen and enhance efficiency
																in absolute terms, it represents the company\u2019s commitment to
																building a scalable platform for continued growth.
Profit Before Tax				1,509.68							1,224.79				23.3%	-
Profit After Tax				1,117.35							901.49				23.9%	-
Debtor Turnover				1.40							2.20				-36.1%	The debtor turnover ratio decreased during the year, primarily
Ratio (Times)																attributable to a stretching of the receivable cycle by certain
																customers. While overall sales volumes grew, collections were
																extended due to delayed settlement schedules by customers.
																Management is closely monitoring receivables and strengthening
																collection processes to ensure that working capital remains
																adequately managed and liquidity is not adversely impacted.
Inventory				0.70							1.11				-36.7%	The inventory turnover ratio decreased during the year, primarily
Turnover Ratio																due to higher average inventory levels maintained to support
(Times)																operations and meet increased customer demand. The company
																strategically expanded its inventory base to ensure product
																availability, strengthen supply chain resilience, and avoid
																stock-outs during periods of rising sales.
																While the longer holding period has impacted turnover efficiency,
																the higher inventory reflects management \u2019 s proactive approach
																to sustaining growth and customer satisfaction. The company
																continues to monitor stock management practices to optimize
																working capital and improve inventory utilization going forward.
Interest Coverage				3.48							5.38				-35.4%	The interest coverage ratio declined during the year, primarily
Ratio (Times)																due to fresh borrowings undertaken to meet working capital
																requirements and finance expansion initiatives. These borrowings
																resulted in higher finance costs, which in turn reduced the
																coverage ratio despite improved operating performance.
																This change reflects the company \u2019 s strategic decision to leverage
																debt to support growth and strengthen its operational base.
																Management remains confident that the investments funded
																through these borrowings will generate good returns in the
																medium term, thereby improving coverage and overall financial
																resilience going forward.
Current Ratio
				1.92							1.66				15.0%	-
(Times)
Debt-Equity Ratio
			0.78				0.71		9.9%			-
(Times)
EBITDA Margin			17.8%				13.5%		31.9%			EBITDA margins improved during the year, primarily driven
(%)												by higher revenue and better operating leverage. The increase in
												sales volumes enabled more efficient absorption of fixed costs,
												while margin expansion reflected improved pricing discipline
												and operational efficiencies.
												ThisgrowthinEBITDAmarginsunderscoresthecompany\u2019sability
												to translate revenue gains into stronger profitability, highlighting
												both the scalability of operations and the effectiveness of its cost
												management initiatives.
Net Profit Margin
			8.3%				7.4%		12.0%			-
(%)
Return on Net			10.2%				22.2%		-53.9%			The return on net worth declined during the year, primarily due to
Worth (%)												a substantial increase in equity. The infusion of additional capital,
												while strengthening the company \u2019 s financial base and supporting
												future expansion, has temporarily diluted the return ratio.
												This change reflects the company \u2019 s strategic decision to enhance
												equity resources to fund growth initiatives and improve long-term
												stability. Management expects that as the expanded capital base
												is deployed effectively, improved earnings will gradually restore
												and enhance returns to shareholders.

8. Human Resources and Industrial Relations

At Kiaasa, we recognise our employees as an important part of the Companys growth and continued success. As at March 2026, the Company had a total workforce of 379 employees across its operations.

The Company is committed to fostering an inclusive, respectful and supportive work environment that provides employees with opportunities for professional growth and development. The Company places emphasis on employee well-being, skill development and continuous learning, and undertakes appropriate initiatives to support the professional and personal development of its employees.

The Company also seeks to promote a culture based on merit, equal opportunity, collaboration and accountability, while maintaining a safe and conducive workplace. During the year, the Companys industrial relations remained peaceful and harmonious, reflecting its continued focus on maintaining positive employee relations and a productive working environment.

9. Discussion on Accounting Treatment

The financial statements are prepared under the historical cost convention on an accrual basis, in accordance with the Accepted Accounting Principles in India (Indian GAAP). These financial statements comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with the Companies (Accounting Standards) Rules, 2021.