Lehar Footwears Ltd Management Discussions

GLOBAL ECONOMY

The global economy operated in a challenging environment during 2025, shaped by heightened geopolitical tensions, evolving trade policies, tariff-related uncertainties and moderating inflation. The conflict in West Asia disrupted key trade routes, increased volatility in energy markets and elevated freight and logistics costs, while changing tariff regimes and protectionist measures continued to influence global trade flows and supply chain decisions. Although easing price pressures and resilient labour markets supported economic activity in several regions, businesses continued to contend with higher input costs, intermittent supply chain disruptions and a cautious global growth outlook. These conditions influenced global investment, cross-border trade and business confidence, creating an uneven operating environment across major economies.

Despite these headwinds, the global economy demonstrated buoyancy during the year, supported by moderating inflation, steady labour market conditions and sustained domestic demand across several major economies. World GDP growth reached 3.5% for the year, although economic performance remained uneven across regions. Advanced economies recorded a collective growth of 1.9%, led by the United States at 2.1%, while the euro area and Japan expanded by 1.4% and 1.1%, respectively. Emerging market and developing economies continued to outperform, recording an average growth of 4.5% and reaffirming their role as key drivers of global economic expansion and international trade.

Global trade continued to recover during the year as supply chain conditions improved and shipping networks gradually adapted to geopolitical and trade-related disruptions. Global merchandise trade volume grew by 5.0% in 2025, compared with 3.7% in 2024, reflecting a gradual improvement in cross-border trade activity despite an uncertain operating environment. Nevertheless, fluctuations in freight costs, energy prices and other key commodities continued to influence manufacturing costs, while changing trade policies and tariff-related measures affected export competitiveness across several industries. These developments reinforced the importance of efficient supply chain management and operational agility in an increasingly interconnected global economy.

Outlook

The mid-term global economic outlook suggests a period of sustained growth, projected at 3.0% for 2026 before stabilising at 3.4% in 2027. This positive trajectory is increasingly underpinned by a structural shift towards technology-led productivity, specifically the integration of artificial intelligence across industrial and clinical domains.

The financial landscape is expected to stabilise as headline inflation, after rising from 4.1% to 4.7% in 2026, and then dips to 3.9% by 2027. The global economic outlook remains cautiously optimistic, supported by moderating inflation, improving consumer confidence and a gradual recovery in international trade. Easing price pressures are expected to support discretionary consumer spending across several markets, benefiting consumer-facing industries such as footwear. At the same time, continued diversification of global supply chains and the adoption of China+1 sourcing strategies are expected to create opportunities for manufacturing economies such as India. However, evolving trade policies, tariff-related measures and geopolitical uncertainties are likely to remain key factors influencing global demand, input costs and export competitiveness in the near term.

(Source: World Economic Outlook (IMF), WEO (IMF)-July)

INDIAN ECONOMY

Indias economy in FY 2025-26 has shown steady strength and broad momentum against a global backdrop of geopolitical tensions, trade uncertainty, and financial market swings. According to the provisional estimates by the Ministry of Statistics & Programme Implementation (MoSPI), the real GDP grew by 7.7%, and Gross Value Added (GVA) by 7.9% in FY 2025-26. This highlights the durability of our domestic demand-led growth model. Good agricultural output supported rural incomes. Urban consumption improved with steady employment, tax measures, and lower inflation.

India continues to remain one of the worlds fastest-growing major economies, supported by resilient domestic demand, strong investment activity, and ongoing structural reforms. However, the latest GDP estimates indicate that India is currently the 6th largest economy in the world with a nominal GDP of about $4.15 trillion in 2026. The country is expected to retain its strong growth momentum and may regain a higher global ranking over the medium term as economic expansion continues.

Domestic demand strengthened across both rural and urban markets during FY 2025-26, creating a favourable environment for consumer-oriented industries. Rural economic activity benefited from a normal monsoon, healthy reservoir levels and improved agricultural incomes, supporting consumption across semi-urban and rural markets where value and affordable footwear continue to witness steady demand. Urban consumption remained supported by sustained growth in the services sector, improving employment conditions and the GST rate rationalisation introduced during the year, which enhanced household purchasing power and encouraged discretionary spending across several consumer categories. Public capital expenditure also remained strong, with the Central Governments capital expenditure increasing by 14.5% during April to February FY 2025-26, supporting infrastructure development, employment generation and economic activity across regions. Continued formalisation of the economy, expansion of organised retail and increasing digital adoption further strengthened the operating environment for branded consumer goods companies.

The inflation environment remained favourable through most of the year as easing food prices following a normal monsoon helped moderate headline inflation, while core and fuel inflation remained largely contained. The improving inflation outlook enabled the Reserve Bank of India to reduce the policy repo rate by a cumulative 125 basis points to 5.25% by December 2025 and lower the Cash Reserve Ratio by 100 basis points to 3.0%, improving liquidity conditions and supporting economic activity. Lower borrowing costs, together with stable inflation, contributed to higher consumer confidence and discretionary spending. Towards the end of the year, escalating geopolitical tensions in West Asia led to an increase in global crude oil prices, creating upward pressure on freight, logistics and input costs across manufacturing industries. Going forward, movements in energy prices and the progress of the monsoon, particularly the potential impact of El Nino conditions, will remain important factors influencing inflation and consumer demand.

Indias fiscal and external position remained stable during the year, supported by healthy tax collections and continued fiscal discipline. The Union Budget 2025-26 retained the fiscal deficit target at 4.4% of GDP while maintaining a strong focus on infrastructure development, manufacturing, employment generation and digital public infrastructure. Indias external position also remained comfortable, with foreign exchange reserves of US$ 700.9 billion as on 10 April 2026 and a current account deficit of around 1.0% of GDP. Although higher energy prices may exert some pressure on the current account during FY 2026-27, Indias stable macroeconomic fundamentals, improving consumption trends and sustained public investment continue to provide a supportive environment for manufacturing, retail and long- term consumer demand.

Outlook

The outlook for the Indian economy remains positive and stable. For the upcoming fiscal year (FY 2026-27), real GDP is expected to grow between 6.8% and 7.2%, demonstrating Indias ability to maintain strong momentum even during uncertain times globally. This growth will likely be fuelled by ongoing government spending on infrastructure, a steady increase in private sector investment, and a strengthening manufacturing base. Additionally, the services sector is expected to continue its consistent expansion. Backed by a stable economy and steady government policies, India is well-prepared to manage global challenges while ensuring that economic progress remains inclusive and sustainable over the long term.

(Source: PIB, PIB 2)

INDUSTRY OVERVIEW Global Footwear Industry

The global footwear industry continues to expand steadily, supported by rising consumer spending, growing preference for athleisure and casual footwear, increasing digital retail penetration and ongoing product innovation. According to Mordor Intelligence, the global footwear market was valued at $388.31 billion in 2025, and estimated at $400.64 billion in 2026 and projected to reach $471.32 billion by 2031, growing at a CAGR of 3.3%. Asia Pacific remains the worlds largest manufacturing base and an important consumption market, while North America accounts for the largest share of global demand, supported by higher consumer spending on branded and premium footwear. At the same time, online retail and direct-to-consumer channels continue to reshape purchasing behaviour and expand market reach across geographies.

Global footwear supply chains are undergoing gradual diversification as international brands seek to reduce dependence on a single manufacturing geography under their China+1 sourcing strategies. This has created opportunities for alternative manufacturing destinations including India, Vietnam and Indonesia. Indias established manufacturing ecosystem, competitive labour base, expanding industrial infrastructure and supportive government initiatives position the country to attract incremental sourcing from global brands. The increasing presence of international contract manufacturers and investments in non-leather footwear manufacturing further strengthen Indias role in global supply chains, particularly as multinational companies continue to diversify production networks across Asia.

Indias growing prominence in global footwear manufacturing is further supported by its expanding network of Free Trade Agreements (FTAs) and strategic trade partnerships. The recently concluded India-UK Comprehensive Economic and Trade Agreement (CETA), along with agreements such as the India-UAE Comprehensive Economic Partnership Agreement (CEPA), the India-Australia Economic Cooperation and Trade

Agreement (ECTA) and the Trade and Economic Partnership Agreement (tepa) with the European Free Trade Association (EFTA), is expected to improve market access, reduce tariff barriers and strengthen the competitiveness of Indian footwear exports. These agreements, together with Indias expanding manufacturing base, position the country to play a larger role in the evolving global footwear value chain.

Indian Footwear Industry

India has emerged as one of the worlds largest footwear markets, supported by its large consumer base, expanding manufacturing capabilities and rising demand across urban and rural markets. The Indian footwear market was valued at $20.67 billion in 2025 and is projected to reach $47.53 billion by 2034, registering a CAGR of 9.7% during 2026-2034. The industrys growth is supported by favourable demographics, increasing disposable incomes, rapid urbanisation and expanding retail infrastructure. In addition, the GST rationalisation introduced during the year, including the reduction of GST on footwear priced up to ^ 2,500 per pair from 12% to 5%, is expected to improve affordability, stimulate consumer demand and strengthen the competitiveness of organised manufacturers. Growing digital adoption and wider product accessibility continue to further support demand across the country.

The industry caters to a broad spectrum of consumers through mass, mid-priced and premium footwear segments. While the mass segment continues to account for the largest share of industry volumes, supported by its affordability and widespread reach, rising aspirations, increasing brand consciousness and evolving lifestyle preferences are accelerating demand across the mid-priced and premium categories. This shift is encouraging consumers to prioritise product quality, comfort, durability and design, leading to greater acceptance of branded footwear. At the same time, the Indian footwear industry continues to witness a gradual transition from the fragmented unorganised sector towards organised manufacturers and brands, supported by expanding organised retail, deeper penetration of e-commerce platforms and increasing consumer preference for standardised products and reliable after-sales service.

Indias footwear market continues to offer significant long- term growth potential, with annual per capita footwear consumption estimated at around two pairs, substantially lower than the global average of seven to eight pairs. This gap highlights considerable headroom for future demand as rising income levels, improving living standards and increasing replacement purchases support higher consumption over time. Going forward, the industry is expected to witness sustained volume growth driven by increasing penetration across smaller towns and rural markets, while value growth is likely to be supported by premiumisation, product innovation and the growing preference for branded footwear. These structural trends are expected to create opportunities for organised manufacturers with diversified product portfolios, established distribution networks and the ability to cater to evolving consumer preferences.

(Source: Imarc Group, PIB)

Key Structural Growth Drivers

Drivers	Industry Perspective
Rising Disposable Incomes and Urbanisation	Rising household incomes, increasing urbanisation and improving employment levels are strengthening consumer spending on discretionary products, including footwear. Growing purchasing power is encouraging consumers to replace footwear more frequently and seek products offering greater comfort, quality and durability across multiple price segments.
Premiumisation and Brand Preference	Consumers are gradually shifting from unbranded footwear to branded products that offer superior quality, design, comfort and durability. Increasing brand consciousness and evolving lifestyle preferences are encouraging organised manufacturers to expand differentiated product offerings, supporting higher value realisation across the industry.
Fashion-led Demand and Athleisure Growth	Rapidly changing fashion trends and increasing lifestyle awareness continue to influence footwear purchasing decisions. At the same time, athleisure has emerged as one of the fastest-growing footwear categories, supported by growing health consciousness, casual dressing trends and rising demand for versatile everyday footwear.
Expanding Rural and Tier II & III Markets	Improving rural incomes, greater infrastructure development, increasing retail penetration and wider product availability are supporting footwear demand across Tier II, Tier III and rural markets. Rising aspirations and growing acceptance of branded products are creating new opportunities beyond metropolitan cities.
Growth of Digital and Modern Retail Channels	The continued expansion of e-commerce, quick-commerce and organised retail formats is improving product accessibility and customer reach across the country. Omnichannel shopping behaviour, faster delivery networks and digital engagement are enabling consumers to access a wider range of footwear brands and product categories.

Formalisation of the Indian Footwear Industry

Structural Driver	Industry Impact
Growing Shift towards Organised Manufacturers	Consumers are increasingly preferring branded, quality-assured footwear, enabling organised manufacturers to gradually gain market share from the fragmented unorganised sector.
GST Reduction, BIS and Digital Commerce Accelerating	GST-driven tax compliance, evolving BIS quality standards and the rapid expansion of e-commerce are encouraging greater transparency, standardisation and product traceability across the footwear value chain, strengthening the organised manufacturing ecosystem.
Competitive Advantage for Compliant Manufacturers	Manufacturers with established production capabilities, regulatory compliance, quality assurance systems and scalable operations are better positioned to meet evolving customer expectations and regulatory requirements, enabling them to capitalise on the industrys ongoing formalisation.

Opportunities and Challenges

Opportunities	Industry Implication
Category Expansion	Rising consumer demand across slippers, sandals, casual footwear, school shoes, safety footwear and other non-leather categories is creating opportunities for manufacturers to diversify product portfolios and address a wider customer base across multiple price segments.
Growth in Athleisure and Casual Footwear	Increasing health awareness, active lifestyles and the growing preference for comfortable everyday footwear continue to support demand for athleisure and casual footwear, creating opportunities for manufacturers to expand into adjacent product categories where aligned with their capabilities.
OEM and B2B Manufacturing	Increasing outsourcing by domestic and international brands is creating opportunities for Indian manufacturers to expand OEM and private-label production, supported by established manufacturing capabilities, quality standards and cost competitiveness.
Export Opportunities and China+1 Strategy	Global supply chain diversification and the China+1 sourcing strategy are encouraging international buyers to diversify procurement across alternative manufacturing destinations. Indias expanding manufacturing ecosystem, competitive cost structure and policy support provide opportunities to increase footwear exports.
Government Procurement and Institutional Demand	Procurement by government departments, defence establishments, educational institutions and other public sector organisations continues to create opportunities for manufacturers supplying footwear through institutional and tender-based channels.
Threats	Industry Implication
Raw Material Price Volatility	Fluctuations in the prices of EVA, PVC, PU, rubber and other key raw materials may increase manufacturing costs and impact profitability, particularly where pricing flexibility is limited.
Import Competition	Continued imports of competitively priced footwear, particularly from low-cost manufacturing countries, may increase pricing pressure and intensify competition across value and mass-market segments.
Demand Cyclicality	Consumer spending on discretionary products, including footwear, remains influenced by economic conditions, inflation, rural incomes and overall consumer sentiment, which may affect industry demand during periods of slower economic growth.
Tender and Policy Dependency	Manufacturers participating in institutional and government procurement may experience fluctuations in order inflows due to changes in tender schedules, procurement policies or budget allocations.
Competitive Intensity in Athleisure	The rapid expansion of the athleisure segment has attracted organised domestic brands, international players and digital-first companies, increasing competition, product innovation requirements and marketing expenditure across the category.

COMPANY OVERVIEW

Since 1995,

Lehar Footwears Limited ("Lehar" or "the Company") is a branded footwear manufacturer with over three decades of experience in developing, manufacturing and marketing value-driven non-leather footwear across domestic and international markets. The Company has established its presence by combining a diversified product portfolio, integrated manufacturing capabilities and an extensive distribution network, enabling it to cater to the footwear requirements of men, women and children across value and mass-market consumer segments.

The Company offers a portfolio of more than 1,500 active SKUs, comprising EVA, PVC and PU injected footwear, Hawai slippers, sandals, school shoes, canvas shoes, sports shoes and other lightweight footwear categories. Its diversified product portfolio enables the Company to address multiple consumer preferences and price points while responding to changing fashion trends, seasonal demand and evolving customer expectations. Continued emphasis on product development and manufacturing efficiency supports the delivery of quality footwear at competitive price points.

Lehar operates five integrated manufacturing facilities, comprising four facilities in Jaipur, Rajasthan and one facility in Kundli, Sonipat, equipped with modern manufacturing technologies and quality assurance processes that support efficient production across multiple footwear categories. The Companys manufacturing capabilities are complemented by a distribution network of more than 520 dealers spanning 27 states, together with an established export presence across Africa, the Middle East and South-East Asia, providing access to a diversified customer base in both domestic and international markets.

As the Indian footwear industry continues to benefit from increasing formalisation, rising demand for branded footwear, expanding export opportunities and evolving consumer preferences, Lehar remains focused on strengthening its manufacturing capabilities, broadening its product portfolio and expanding its market presence. Ongoing investments in manufacturing infrastructure, including the development of a new athleisure manufacturing facility, together with continued emphasis on product innovation and operational efficiency, are expected to support the Companys long-term growth strategy.

Expansion into Government-supported Initiatives

While footwear continues to remain its core business, Lehar Footwears has expanded into government programme execution by supplying toolkits under the PM Vishwakarma Scheme, creating an additional business vertical that complements its manufacturing and supply chain capabilities.

The initiative broadens the Companys revenue streams while leveraging its expertise in procurement, assembly, quality assurance, warehousing and nationwide distribution.

The toolkit business is an efficient operating model supported by technology-enabled order management and delivery- based payment mechanisms, contributing to healthy cash flow generation and capital efficiency. The Company continues to strengthen its execution capabilities under the Scheme and is exploring opportunities to expand its participation beyond carpenter toolkits into additional trades covered under the programme, subject to government requirements.

The Union Budget for FY 2026-27 has proposed an allocation of ^ 3,861 crore towards the PM Vishwakarma Scheme, reflecting the Governments continued emphasis on supporting traditional artisans and craftspeople. Against this backdrop, Lehar believes its established execution capabilities, nationwide operational network and partnership with the National Small Industries Corporation (NSIC) provide a strong platform to support the continued growth of this business vertical.

Segment-wise / Product-wise Performance Footwear Business

The footwear business remained the Companys principal revenue contributor during FY 2025-26, supported by its diversified product portfolio and established presence across domestic and international markets. The Company continued to serve customers through three primary business channels comprising domestic sales, exports and institutional/ government business, enabling a balanced revenue mix across multiple markets.

During the year, the Company sold approximately 1.96 crore pairs of footwear compared with 1.93 crore pairs in the previous year. The diversified channel mix helped the Company address varying demand conditions across geographies and customer segments.

Toolkit Business

The toolkit business continued to support the Companys business diversification strategy under the Government of Indias PM Vishwakarma Scheme. During FY 2025-26, the Company supplied 1,67,776 sets toolkits and continued the execution of orders received under the programme.

Operational Performance

FY 2025-26 marked another year of operational progress for Lehar Footwears as the Company continued to strengthen its manufacturing capabilities, diversify its product portfolio and expand its presence across domestic and international markets. During the year, the Company remained focused on improving manufacturing efficiency, enhancing product offerings and creating additional growth avenues through strategic initiatives beyond its core footwear business.

The Company continued to broaden its footwear portfolio by strengthening its presence across value-driven and emerging footwear categories while enhancing manufacturing capabilities to support changing consumer preferences. As part of its long-term growth strategy, Lehar advanced the development of its dedicated athleisure manufacturing facility at Kundli, Sonipat, which is expected to commence commercial operations in Q2 FY 2026-27. The new facility is expected to strengthen the Companys presence in the rapidly growing athleisure segment while expanding its manufacturing capacity and product portfolio.

Exports remain an important focus area of the Companys business strategy. However, exports remained subdued during the year due to the challenging geopolitical environment and tariff-related uncertainties affecting global trade. The Company continued to explore opportunities to expand its presence across additional overseas markets while strengthening relationships in its existing export geographies. Lehars diversified manufacturing capabilities and broad product portfolio continue to support its long-term export growth strategy.

The Company also continued to strengthen its business diversification strategy through the toolkit business under the PM Vishwakarma Scheme. Supported by an established execution framework, technology-enabled operations and a nationwide warehousing and distribution network, the business has emerged as a complementary revenue stream alongside the Companys core footwear operations. During the year, management also initiated efforts to expand its participation beyond carpenter toolkits into additional trades covered under the Scheme, creating opportunities for further business growth.

Alongside its operational initiatives, the Company continued to invest in manufacturing infrastructure, product development and distribution capabilities to strengthen its competitive position. With ongoing capacity expansion, increasing focus on branded footwear, growing export opportunities and continued execution of government-supported projects, Lehar remains well positioned to capitalise on emerging opportunities across the footwear industry while supporting its long-term growth objectives.

Financial Performance

( in Lakhs)

Particulars	FY 2025-26	FY 2024-25	YoY %
Operating Revenue	43,110.93	27,721.30	55.51%
Total Income	43,131.93	27,748.00	55.44%
Operating Profit	3,895.88	2,613.10	49.09%
Finance Cost	523.78	704.04	-25.60%
Depreciation	591.55	491.38	20.38%
Profit/(Loss) Before Tax	2,801.55	1,444.40	93.95%
Tax	717.73	357.49	100.76%
Net Profit/(Loss)	2,083.82	1,086.90	91.72%

Key Ratios

Particulars	FY 2025-26	FY 2024-25
Debtors Days	66	121
Inventory Turnover Ratio (times)	4.9	3.6
Debt Service Coverage Ratio (times)	4.2	1.9
Current Ratio (times)	1.4	1.3
Debt Equity Ratio (times)	0.5	0.8
Operating Margin (%)	9.0	9.4
ROE (%)	22.0	14.7
ROCE(%)	20.1	13.7

Outlook

The Indian footwear industry is entering a phase of structural growth, supported by rising disposable incomes, increasing urbanisation, growing preference for organised brands and favourable government initiatives promoting domestic manufacturing. The rapid expansion of the sports and athleisure segment, coupled with the ongoing shift from the unorganised to the organised market, presents significant opportunities for scalable manufacturers with strong execution capabilities.

Lehar Footwears is well-positioned to capitalise on these opportunities through its diversified product portfolio, established manufacturing capabilities, expanding distribution network and growing OEM partnerships. The Company remains focused on strengthening its branded business, scaling its sports footwear portfolio under the RANNR brand, enhancing operational efficiencies through technology and automation, and expanding its presence in both domestic and international markets.

Supported by a stronger balance sheet, disciplined capital allocation and over three decades of manufacturing expertise, Lehar is confident of sustaining profitable growth while creating long-term value for all stakeholders. Guided by its theme, "Laced to Lead", the Company remains committed to executing its growth strategy with agility, innovation and operational excellence, reinforcing its position as a trusted partner and an emerging leader in Indias organised footwear industry.

RISK AND CONCERNS

Lehar operates in a dynamic business environment where effective risk management plays an important role in supporting sustainable growth and operational continuity. The Company follows a proactive approach to identifying, evaluating and managing key business risks through appropriate internal controls, periodic reviews and continuous monitoring of the operating environment.

The footwear industry remains highly competitive, with organised domestic manufacturers, international brands and regional players competing across multiple product categories and price segments. The Company addresses this challenge through a diversified product portfolio, continuous product development and an extensive distribution network that enables it to cater to a broad customer base across domestic and export markets.

Changing consumer preferences, evolving fashion trends and increasing expectations relating to quality, comfort and design require manufacturers to respond with agility. The Company continues to strengthen its product portfolio by focusing on innovation, design enhancement and the timely introduction of products aligned with changing market requirements, helping maintain its relevance across consumer segments.

Attracting and retaining skilled employees remains essential to sustaining operational excellence and long-term growth. The Company seeks to address this through competitive compensation practices, opportunities for learning and professional development, and initiatives that promote employee engagement, collaboration and a positive workplace culture.

As digital technologies become increasingly integrated into business operations, safeguarding information systems and business data remains a key priority. The Company has implemented appropriate cybersecurity measures and information security protocols to protect its digital infrastructure, maintain data integrity and support business continuity.

Risk management is embedded within the Companys governance framework, with key risks being regularly reviewed by the management and the Boards respective committees. This structured approach enables the Company to respond to emerging risks in a timely manner while supporting informed decision-making and the creation of long-term stakeholder value.

HUMAN RESOURCES

Lehar recognises its employees as integral to its long-term growth and operational excellence. The Company focuses on creating a collaborative and performance-oriented workplace that encourages continuous learning, accountability and professional development while aligning individual contributions with organisational objectives.

The Company places significant emphasis on developing employee capabilities through structured learning and training programmes aimed at enhancing functional knowledge, technical skills and cross-functional collaboration. These initiatives not only strengthen day-to-day operational effectiveness but also support leadership development and succession planning across the organisation.

Talent acquisition continues to be aligned with evolving business requirements to ensure the availability of skilled professionals across functions. Alongside recruitment, the Company undertakes various employee engagement initiatives to promote teamwork, strengthen workplace relationships and foster a positive and inclusive work environment that supports employee well-being and organisational effectiveness.

As on March 31, 2026, Lehar had a workforce of 1,409 employees, including contractual personnel. The Company remains committed to investing in its people and building a workplace that supports sustainable business growth through employee development, engagement and shared values.

INTERNAL CONTROL SYSTEM

The Company has established a well-structured and adequate internal control system tailored to the scale, nature, and complexity of its operations. This framework incorporates defined authorisation hierarchies, supervision mechanisms, checks and balances, and detailed procedures, all governed by documented policy guidelines and operational manuals. These controls ensure that all transactions are properly authorised, accurately recorded, and compliant with applicable regulations and internal policies.

Operational managers maintain control over key processes through the use of standardised operating procedures, financial authority matrices, and process manuals, which are periodically reviewed and updated to drive continuous improvement and operational efficiency.

A strong internal audit function is central to the Companys governance framework. The internal audit system operates independently to evaluate the effectiveness of controls, ensure compliance, and identify potential areas for enhancement across all functions.

Audit findings and recommendations are regularly reviewed by senior management and presented to the Audit Committee of the Board. Based on these insights, corrective actions are implemented in a timely manner to strengthen the overall control environment and support sustainable business performance.

CAUTIONARY STATEMENT

Statements in this Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on the managements current expectations, assumptions and beliefs and are subject to various risks and uncertainties that could cause actual results, performance or achievements to differ materially from those expressed or implied.

Important factors that could influence the Companys operations include changes in economic conditions, government policies and regulations, tax laws, market demand, raw material prices, competitive intensity and other factors beyond the Companys control. Readers are therefore advised to exercise their own judgement and undertake an independent evaluation of the relevant information before making any investment or business decision.