Le Merite Exports Ltd Management Discussions

global economic overview and outlook

The global economy remained resilient during FY 2025-26, although growth continued to be influenced by geopolitical uncertainties, inflationary pressures, changing trade policies, currency fluctuations and uneven consumer demand. The textile and apparel industry continued to experience varying demand across markets, with manufacturers focusing on cost efficiency, supply-chain resilience, product diversification and sustainability.

At the same time, the global shift towards diversified sourcing and the increasing demand for technical and specialised textiles are creating new opportunities for manufacturers with strong quality, manufacturing and product-development capabilities. Sustainability, digitalisation and technological . advancement continue to remain important drivers of the industry.

Indian economy - overview and outlook

The Indian economy continued to demonstrate resilience during FY 2025-26, supported by domestic consumption, infrastructure development, manufacturing activity and continued policy support. Indias growing manufacturing ecosystem and increasing integration with global supply chains provide a favourable environment for export-oriented industries.

The Governments focus on Make in India, Atmanirbhar Bharat, technical textiles, infrastructure development and export promotion continues to create opportunities for the textile sector. Initiatives such as the Production Linked Incentive (pli) Scheme, PM MITRA

Parks and the National Technical Textiles Mission are expected to support investment, innovation and capacity development across the sector.

Indias expanding trade relationships and trade agreements with key international markets, including European and other major economies, are also expected to provide opportunities for Indian exporters through improved market access and greater integration with global supply chains.

global textile industry

The global textile and apparel industry continues to be a significant manufacturing and employment sector, with Asia remaining the dominant production and sourcing region.

During FY 2025-26, the industry continued to navigate changing consumer preferences, cautious retail demand, inventory adjustments, raw-material price volatility and geopolitical uncertainties. At the same time, demand for technical textiles, performance fabrics, sustainable products and specialised applications continued to provide opportunities for industry participants.

Global buyers are increasingly seeking diversified and resilient supply chains, creating opportunities for Indian manufacturers to strengthen their position in international marlets.

Indian textile industry

India continues to be one of the worlds leading textile and apparel manufacturing and exporting countries, supported by its large raw-material base, established manufacturing ecosystem, skilled workforce and growing domestic market.

The Indian textile industry is increasingly moving towards value-added products, technical textiles, sustainability and advanced manufacturing. Government initiatives, improving infrastructure and increasing global interest in supply-chain diversification provide a positive long-term outlook for the sector.

For LMEL, these developments provide opportunities to strengthen its core textile business while expanding into specialised and technical textile applications, including the Defence sector.

OPPORTUNITIES

growth in technical and specialised textiles

Increasing applications of technical textiles across Defence, healthcare, infrastructure, automotive and other specialised sectors provide significant opportunities for product diversification and value addition.

government initiatives

Government initiatives such as Make in India, Atmanirbhar Bharat, PLI and the National Technical Textiles Mission are encouraging domestic manufacturing, investment and innovation. The PLI approval received by the Companys Tactical and Defence subsidiary further supports the Groups strategic focus in this area.

supply chain diversification

Global customers are increasingly diversifying sourcing beyond traditional manufacturing hubs. Indias manufacturing capabilities and improving infrastructure position the country to benefit from this shift.

defence sector

The growing focus on domestic Defence manufacturing and self-reliance is creating opportunities for Indian manufacturers of specialised and technical textiles. LMEL is strengthening its Defence footprint and pursuing opportunities associated with specialised Defence requirements, including projects linked with DRDO.

export and global market opportunities

Indias evolving trade relationships and agreements with Europe and other international markets provide opportunities for Indian textile exporters to expand their customer base and improve market access. LMEL remains focused on geographical diversification and strengthening its international customer relationships.

sustainability and innovation

Growing demand for sustainable, value-added and performance-based textiles provides opportunities for manufacturers investing in technology, R&D and environmentally responsible production.

THREATS

raw material price volatility

Fluctuations in cotton, synthetic fibres, dyes and other input costs may impact margins and operating performance.

currency and logistics risks

Exchange-rate fluctuations, freight costs, shipping disruptions and changes in global logistics conditions may impact the competitiveness and profitability of export operations.

COMPETITION AND TECHNOLOGICAL CHANGES

The textile industry remains highly competitive, and rapid technological developments require continuous investment in modernisation, innovation, product development and skilled manpower.

global demand and geopolitical uncertainty

Economic slowdowns, changing consumer demand, geopolitical tensions and evolving trade policies may affect export orders and international business conditions.

regulatory and compliance requirements

Increasing environmental, sustainability and product-compliance requirements in international markets may require continued investment in technology, processes and certifications.

outlook

LMEL remains focused on strengthening its core textile business while building new growth opportunities in Defence, technical textiles and international markets. The Company intends to leverage its manufacturing capabilities, customer relationships and emerging opportunities from Government initiatives and global b trade developments to pursue sustainable and profitable growth.

The Company will continue to focus on operational efficiency, product diversification, R&D, technology adoption, export-market expansion and disciplined financial management, while remaining responsive to changes in the global business environment.

introducing lmel- company overview

Le Merite Exports Limited (LMEL), established in 2003, is a prominent name in the cotton yarn and greige fabrics manufacturing industry. Renowned globally, "Le Merite" has become a trusted brand in numerous yarn-importing countries. Our strong relationships with customers and exclusive partnerships in top importing nations, such as Bangladesh, China, Turkey, Portugal, Egypt, Guatemala, South Korea, Spain, Italy, Vietnam, Thailand, Peru, UAE, and the USA, allow us to export to over 25 countries.

At LMEL, we believe in the power of team building and prefer to grow through an asset-light model. Our most significant investment is in acquiring top talent. With our marketing and branding expertise, our goal is to achieve the highest standards of customer satisfaction and loyalty.

mission

Target is our mission - Revenue, Production, Team building, Enhancement of Sustainable product & most importantly value creation for all stakeholders."

vision

"Constant innovation to build sustainable & digital billion-dollar conglomerate"

At LMEL, we are committed to conducting our business with integrity, responsibility and sustainability. We value our people, promote an inclusive and collaborative work environment, and encourage open and transparent communication.

We believe that sustainable business practices create long-term value for all stakeholders. Accordingly, we remain focused on responsible operations, strong governance, environmental stewardship and continuous improvement.

human capital management

Our people are central to our growth and success. We recognise the contribution of our employees and strive to foster a workplace that encourages commitment, innovation, learning and collaboration. We remain focused on attracting, developing and retaining talent with the skills and capabilities required to support our evolving business objectives.

details of significant changes in key financial ratios

In accordance with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Regulation 34(3), details of significant changes of 25% or more in the key financial ratios, as compared with the immediately preceding financial year, along with explanations thereof, are provided in Notes to the Standalone Financial Statements.

cautionary statement

Statements in this Annual Report describing the Companys objectives, expectations and future prospects may contain forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks, uncertainties and other factors. The Company assumes no obligation to publicly update or revise such statements in light of subsequent developments.

annual industry & corporate report:

technical textiles

executive summary & market

IANI i.SCAII

The global and Indian technical textile industries have transitioned from basic functional substrates into highly engineered, mission-critical materials. Propelled by industrialization, infrastructure modernization, stringent workplace safety mandates, and modernization of armed forces, the sector commands significant multi-year growth through 2030.

global technical textile market: current VALUATION & 20 30 OUILOOKGlobally current value (2025) for Protech, Packtech,sportech/outdoor segment are USD B 23.7, 215 and 17.2 which is expected to reach at 39.8, 31.9 & 28.5 respectively by 2030.

The global technical textile market reached $215.4 billion and is projected to expand to $335.8 billion by 2030, reflecting a Compound Annual Growth Rate (CAGR) of 6.5% to 7.2%.

most promising global sectors

• Protech & Tactical Defence: Increasing geopolitical friction, rising cross-border defense budgets, and modernization drives (e.g., Extreme Cold Climate / ECC systems, modular body armor) have created rapid demand for high-tenacity, low-weight ballistic fabrics.

• Medtech & High-Performance Athleisure (Sportech): Demand for breathable membranes, moisture-wicking synthetic matrix fabrics, and biocidal medical barriers continues to outpace traditional industrial commodity growth.

INDIAN TECHNICAL TEXTILE MARKET:

CURRENT VALUATION & 2030 OUTLOOK

Indias technical textile sector represents one of its fastest-growing manufacturing domains, propelled by the National Technical Textiles Mission (NTTM), dedicated Production-Linked Incentive (PLl) schemes, and Atmanirbhar Bharat domestic indigenization drives.

The domestic market currently for Protech/defence, sportech/athleasure and packtech is USD B 1.8, 1.5 and 8.8 which is expected to be USD B 4.8, 3.8 & 15.2 by 2030

The domestic market stood at approximately $24.5 billion, tracking toward $45.0 billion to $50.0 billion by 2030 at an estimated CAGR of 10.5% - 12.0%.

MOST PROMISING DOMESTIC SECTOR

• Protech & Defence Solutions: The Ministry of Defences phased indigenization lists have restricted imports on soldier combat fabrics, ECC (Extreme Cold Climate) apparel, and load-carriage gear. This structural pivot has shifted procurement directly to domestic technical textile mills capable of precision engineering and testing.

strategic project profile:

le merite tactical & defence solutions

To capitalize on the macro shift toward high-margin technical textiles, Le Merite Tactical & Defence Solutions Private

Limited

(LMEL group) is executing a state-of-the-art greenfield manufacturing complex located at the Amravati Textile Park, Maharashtra.

Concurrently, Le Merite Tactical & Defence Solutions Private Limited (a strategic subsidiary of Le Merite Exports Limited) is executing a greenfield facility designed to manufacture specialized, high-performance tactical, protective, packtech and industrial teethes.

The greenfield plant processes diverse polymer compositions tailored to rigorous mechanical specifications:

Nylon 6 & Nylon 6,6 (Polyamide): Engineered for ultra-high tensile strength, elongation recovery, cut-and-slash resistance, and ballistic integrity. Utilized predominantly for tactical plate carriers, rucksacks, and high-abrasion roin for comont panels.

Polyester (High-Tenacity & Micro-Denier): Deployed for dimensional stability, UV degradation resistance, hydrophobic properties, and lightweight strength in packtech, marine, and industrial outerwear.

Cotton Blends (NYCO & Poly-Cotton): Combining the comfort, breathability, and non-melting characteristics of natural cellulose with the high tear-and-tensile strength of synthetic continuous filaments; formulated specifically for military combat uniforms, field duty fatigues, and protective workwear.

The facility houses integrated wet-processing, printing, and multi-layer functional laminating lines:

• Dyeing & Specialty Camouflage Printing

• Advanced Coating & Surface Engineering

• High-Precision Multi-Layer Lamination

targeted end-use market segments

• Defence & Tactical Solutions: High-spec uniforms, kit bag, sleeping bag, rain poncho, ECC matresses and Extreme Cold Climate (ECC) outerwear.

• Protech (Protective Textiles): Industrial flame-resistant garments.

• Athleisure & Sportech: synthetic shells, moisture-management compression fabrics, and lightweight performance activowoar.

• Packtech: High-denier coated pack fabrics, military-spec rucksacks, heavy-duty protective cases, etc

• Industrial & Outdoor: Heavy-duty outdoor shelters, tents, tapes, etc

quality assurance & new product development

(NPD) framework

To satisfy the stringent audit requirements of institutional defense buyers, global brands, and tier-1 industrial clients, the Amravati plant incorporates a closed-loop quality and rapid-prototyping ecosystem.

precision quality control architecture

• In-Line & final check Process Methodology

• In-House Testing Laboratory

• New Product Development (npd) Focus

strategic synthesis

The convergence of explosive domestic market growth-guided by Indian government procurement mandates—and expanding international demand positions technical textiles as a high-margin growth engine. By pivoting away from asset-light commodity yarn processing toward dedicated, precision-engineered technical manufacturing at Amravati, Le Merite Tactical & Defence Solutions establishes a vertically integrated production footprint.

With specialized processing of Nylon 6, Nylon 6,6, Polyester, and functional blends—coupled with chemical coating, lamination, and a dedicated NPD pipeline—the venture is situated to capture significant market share across global and domestic defense, industrial, and specialized functional textile sectors.