Madhur Knit Crafts Ltd

Madhur Knit Crafts Ltd Management Discussions

NSEBSE

₹0

(0%)

Madhur Knit Crafts Ltd Share Price Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the period ended 31^st March 2025, 31^st March 2024 and 31^st March 2023. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section titled "Restated Financial Information" on page 182 of the Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 17 of this Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer to the chapter titled "Forward-Looking Statements" of this Red Herring Prospectus. Unless otherwise stated, the Restated Financial Information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Madhur Knit Crafts Limited included herein are based on our Restated Standalone Financial Statements for period ended 31st March 2025, 31st March 2024 and 31st March 2023 included in this Red Herring Prospectus beginning on page 182 of this Red Herring Prospectus.

Business Overview

Founded in 1997 by Mr. Arun Gupta along with Mr. Rajesh Gupta, Mr. Ravi Gupta and Mr. Vishnu Gupta, the Company began commercial operations in 2013 (blankets), then broadened into fabrics and select technical textiles from 2021. It has since transitioned from limited processing to a fully integrated yarn-to-cloth model housed at Ludhiana, enabling in-house knitting, dyeing, printing and finishing with shorter lead times and tighter quality control. The Company was converted into a public limited company in January 2025; the present promoters are Mr. Arun Gupta, Mr. Piyush Gupta and Mr. Chirag Gupta.

To support this shift to end-to-end manufacturing, the Company undertook a structured capex program starting 2022 adding modern, high-throughput equipment (e.g., PLC-controlled multi-chamber thermal-oil systems, dyeing units, brushing, embossing/3D punching, bonding, shearing and printing), along with imported machinery that now underpins the integrated plant. Installed capacity scaled to 75,00,000 KGs by FY25 (from 37,50,000 KGs in FY24), with utilisation reflecting the step-up in capacity and evolving product

What we make. The portfolio spans blankets, knitted fabrics (winterwear and multi-season), sherpa/raised fabrics and select garments. FY25 revenue was primarily from knitted cloth ( 85%), with additional contributions from garments ( 6%), job work

( 4%) and blankets ( 3%). Sales were predominantly domestic.

How we operate. The Company follows an order-based, demand-driven model production commences on confirmed orders minimizing inventory, aligning procurement with sales, and improving working-capital discipline. Integrated manufacturing and a clustered supplier base in Ludhiana enable shorter lead times and cost efficiency. The model is B2B-led with repeat institutional/wholesale demand. Top-10 customer concentration reduced to 34% in FY25 (from 41% in FY24), reflecting a broadening base.

Capacity and utilisation. Capacity has scaled materially in recent years to 75,00,000 KGs (FY25). Utilisation moderated to 65% in FY25 (vs. 80% in FY24) due to step-up in installed capacity and product mix.

Competitive position key strengths.

- Vertically integrated plant with modern machinery enabling quality, scale and customization.

- Strategic cluster location (Ludhiana) for raw-material access, skilled labour and logistics.

- Order-based production model that supports cash-flow discipline.

- Experienced promoter group and trained operating teams. Growth strategy.

- Technical textiles: invest in specialized processing to serve higher-margin industrial uses (auto, construction, home improvement, healthcare).

- Market expansion: deepen domestic distribution; revive exports through compliance readiness and service levels.

- Working-capital optimisation: leverage early-payment discounts on yarn and tighten cash-conversion cycle.

The facility operates with sanctioned power load and thermal systems (boilers/thermopac) and recycles treated water from the ETP for select uses and vegetation, reducing freshwater draw.

This overview should be read in conjunction with the detailed sections titled Risk Factors see page 17, Financial Information see page 182, and Our Business see page 123 of this Red Herring Prospectus, for a full understanding of the context, and in particular, the sensitivities relating to forward-looking statements

Material Developments after Last financial Period that may affect the future results of operations

In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Red Herring Prospectus, there have not arisen any circumstances that materially or adversely affect, or are likely to affect, the profitability of our Company, the value of its assets, or its ability to pay its material liabilities within the previous twelve months, except as disclosed below:

1. Our Company, in consultation with the Book Running Lead Manager, undertook a preferential issue of 2,72,307 Equity Shares of face value 10 each at a price of 65 per Equity Share (including a premium of 55 per Equity Share), aggregating to 176.99 lakhs, as permitted under applicable law ("Pre-IPO Placement"). The Pre-IPO Placement was undertaken at a price determined by our Company in consultation with the Book Running Lead Manager and was completed prior to filing of this Red Herring Prospectus with the RoC. The amount raised pursuant to the Pre-IPO Placement has been reduced from the Fresh Issue, subject to compliance with Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended. The Pre-IPO Placement did not exceed 20% of the original size of the Fresh Issue as disclosed in the Red Herring Prospectus. Our Company had appropriately intimated the subscribers to the Pre-IPO Placement, prior to allotment pursuant to the Pre-IPO Placement, that there is no guarantee that our Company may proceed with the Offer or that the Offer may be successful and result in listing of the Equity Shares on the Stock Exchange. Further, relevant disclosures in relation to such intimation to the subscribers to the Pre-IPO Placement have been appropriately made in the relevant sections of this Red Herring Prospectus and will be made in the Prospectus.

2. A vehicle worth Rs. 20,00,000 was completely damaged, and an insurance claim was filed on January 23, 2026.

Further, the Board confirms that there are no changes or events which are expected to result in any future liabilities of the Company other than those already disclosed in this Red Herring Prospectus.

Key Financial performance (Rs. in Lakhs)

		Madhur Knit Crafts Limited
Key Performance Indicator	28-Feb-26	31-Mar-25	31-Mar-24	31-Mar-23
GAAP Financial Measures
Revenue from operations	19,469.05	17,163.50	10,838.45	8,932.70
Year-on-year growth in Revenue from Operations		58.36%	21.33%	15.41%
PAT	1,235.23	1,103.25	170.43	90.31
PAT Margin (%)	6.34%	6.43%	1.57%	1.01%
Net Worth	4,360.75	2,948.52	1,624.24	1,453.80
Debt	7,354.14	6,719.98	5,778.53	3,417.53
Current Ratio	1.49	1.48	1.41	1.33
Debt-Equity Ratio	1.69	2.28	3.56	2.35
Non-GAAP Financial Measures
EBITDA	2567.62	2,327.52	804.40	551.11
EBITDA Margin (%)	13.19%	13.56%	7.42%	6.17%
ROE (%)	28.33%	37.42%	10.49%	6.21%
ROCE (%)	31.11%	33.49%	13.09%	13.78%
Cash Profit after tax	1478.00	1,340.45	349.00	254.78
Operating Cash flow	443.50	-255.82	-367.70	-4.78
Interest coverage Ratio	3.43	3.40	1.46	1.25
Operational Measures
Trade Receivable Days	85	81	95	57
Trade Payable Days	79	48	56	65
Inventory Days	147	120	109	155
Cash Conversion Cycle	153	153	148	147

*Year on year comparison for the stub period not made.

Notes:

Revenue from operations is the total revenue generated by our Company from the sale of products.

Year-on-year growth in Revenue from Operations is calculated by comparing the revenue of the current year with that of the previous year

PAT is calculated as Profit before tax Tax Expenses

PAT Margin is calculated as PAT for the period/year divided by Revenue from Operations.

Net worth has been computed as sum of share capital and reserves and surplus.

Debt is calculated as the sum of all borrowings of the Company, including both long-term and short-term borrowings.

Current Ratio is calculated as Current Assets divided by Current Liabilities.

Debt-Equity Ratio is calculated as Total Debt divided by Shareholders Equity.

EBITDA is calculated as Profit before tax + Depreciation & Amortization + Interest Expenses -Others Income

EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

Return on Equity is ratio of Profit after Tax and Shareholder Equity.

Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as Total Assets minus Current Liability.

Operating Cash Flow is the restated cash flow of our operations.

Interest Coverage Ratio is calculated as Earning before interest and tax divided by Interest Expense for relevant financial period.

Trade Receivable Days are calculated by dividing the total trade receivables by the revenue earned during the period and then multiplying the result by 365 (or 334 for the stub period ending February, 2026).

Trade Payable Days are determined by dividing the total trade payables by the COGS during the period and multiplying the outcome by 365 (or 334 for the stub period ending February, 2026).

Inventory Days are determined by dividing the total inventory by the COGS during the period and multiplying the outcome by 365 (or 334 for the stub period ending February, 2026).

Cash Conversion Cycle is determined by adding Trade Receivable Days and Inventory Days, then subtracting Trade Payable Days from the total.

Factors affecting our results of operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 17 of this Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Our ability to successfully implement our strategy, our growth and expansion, technological changes.

2. Fail to attract, retain and manage the transition of our management team and other skilled & unskilled employees;

3. Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;

4. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

5. Inability to successfully obtain registrations in a timely manner or at all;

6. General economic and business conditions in the markets in which we operate and in the local, regional and Bombay economies;

7. Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations;

8. Recession in the market;

9. Changes in laws and regulations relating to the industries in which we operate;

10. Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition; 11. Failure to obtain any approvals, licensees, registrations and permits in a timely manner;

12. Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of

India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices; 13. Occurrence of natural disasters or calamities affecting the areas in which we have operations;

14. Conflicts of interest with affiliated companies, the promoter group and other related parties; 15. The performance of the financial markets in India and globally;

16. Any adverse outcome in the legal proceedings in which we are involved; 17. Our ability to expand our geographical area of operation;

Significant Accounting Policies

Particulars	Description
Revenue Recognition	Sr. Particulars No	Description
	1. Sale of Goods	Revenue from sale of goods is recognised when all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.
	2. Sale of Services	-
	3. Profit Sharing Revenues	-
	4. Licensing Agreements	-
	5. Sales Returns	-
	6. Other revenues please specify	-

Other Income
(In case the other income constitutes more than 10% of the total income,	Sr. No Particulars	Description
the break- up of the same along with the nature of the income, i.e., recurring or non-recurring shall be stated)	1. Interest Income	Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
	2. Dividend Income	Other income is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof. -
	3. Gain or loss on derecognition of Financial Assets	-
	4. Other revenues please specify	-

Property, plant and equipment	Property, Plant & Equipment are stated at cost of acquisition or construction less depreciation. Cost comprise the purchase price and other attributable costs including financing costs of borrowed funds attributable to acquisition of qulaifying assets for the period upto date when the asset is ready for use.
Depreciation & useful asset life	Depreciation on Property, Plant and Equipments is provided on SLM Basis as specified in Schedule II of the Companies Act, 2013. Depreciation for assets purchased / sold during a period is proportionately charged.

Particulars	Useful life
Building	30 years
Plant & Equipment	15 years
Furniture & Fixtures	10 years
Electrical Equipment	10 years
Computers	3 years
Office equipment	-
Vehicles	8 years
Intangible Assets	4 years

Goodwill & Intangible assets Intangible Assets are stated at cost less accumulated amortization. Intangible assets are amortized over their respective individual estimated useful lives on straight line method from the date they are available for use.

Sr. No Particulars	Description
1. Research &	Not applicable
Development
2. Goodwill
3. Trademark

Financial Instruments	NA
Fair Value Measurement	NA
Leases	Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognized as an expense on systematic basis over the term of lease.
Income Tax	The accounting treatment followed for taxes on income is to provide for current tax and deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for a period in accordance with the provisions of the Income tax Act,1961.
	Deferred tax is the tax effect of timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and tax laws enacted or substantively enacted as at its reporting dates. Deferred tax assets and deferred tax liabilities have been set off as it relates to income taxes levied by the same taxation authority.
Impairment	At each balance sheet date an assessment is made whether any indication exists that an asset/cash generating unit has been impaired. If any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.
Borrowing costs	Borrowing costs in relation to borrowings that are directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of the cost of assets. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Employee Benefits	(a) Short Term Employee Benefits Short term employee benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the period in which the related service is rendered.
	(b) Post Employment Benefits
	(i) Defined Contribution Plans
	The Employers contribution to Provident Fund and Employees Pension Scheme, a defined contribution plan is made in accordance with the Provident Fund Act, 1952 read with the Employees Pension Scheme, 1995. The contribution to the Scheme is recognised as an expense in the statement of profit and loss in which contribution to such schemes becomes due and when services are rendered by the employees.
	(ii) Defined Benefit Plans: The gratuity liability is determined and provided using the projected unit credit method, with actuarial valuation being carried out at each balance sheet date by an independent valuer. Actuarial gains and losses are recognized in the statement of profit and loss in the period in which they occur.

Provisions	A provision is recognized when the company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on management estimate required to settle the obligation at the balance sheet date and are not discounted to present value.
Contingent Liabilities	A disclosure for a contingent liability is made when there is :
	(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
	(ii) a present obligation that arises from past events but is not recognised because: a.) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
	b.) the amount of the obligation cannot be measured with sufficient reliability.
Contingent Assets	NA
Foreign currencies	(i) Foreign currency transactions are recorded on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
	(ii) Foreign currency monetary items are reported using the closing rate as at the date of balance sheet. The exchange difference arising on the settlement of monetary items or on reporting these items at rate different from those at which they are initially recorded during the period or reported in the previous financial statements are recognized as income or expenses in the period in which they arise.
Cash and cash equivalent	Please refer to Accounting Policies for Cash Flow Statement.
Earnings per share	Basic Earnings per share (before dilution) is calculated by dividing the net profit after tax for the period attributable to equity shareholders of the company by the weighted average number of shares for the period.
	Diluted Earnings per Share is calculated by dividing the net profit after tax for the period attributable to equity shareholders of the company by dividing the weighted average number of shares determined and assuming conversion of all potential securities.
Inventories	Inventories are valued at the lower of cost and net realised value. Cost includes cost of purchases, cost of conversion, and other costs incurred in bringing the inventories to their present location and condition. The Company is having inventory in the shape of knitted Cloth, Textile Cloth & Readymade garments.
Segment Reporting	NA
Cash Flow Statement	The above Cash flow statement has been prepared under the indirect method set out in AS-3 prescribed in Companies (Accounting Standards) Rules, 2021.
Events after reporting date	In the opinion of the management, there have been no material events, occurrences, or changes in circumstances between the balance sheet date and the date of approval of these Restated Financial Statements that would require adjustments to or disclosure in these financial statements, except as otherwise disclosed in the Prospectus.
Business Combinations	NA

Key Components of Profit & Loss

Particulars	Description
REVENUES
Revenue from Operations	Revenue from operations mainly consists of revenue from sale of Blankets , Knitted Cloth, fabrics and Job work.
Other Income	Other Income primarily comprises interest earned on fixed deposits and on electricity security deposits, write-back of excess provision for gratuity, rebate and discount income, and various miscellaneous income.
EXPENSES
Cost of Material	Cost of Material consumed expenses primarily comprises of Purchase of Yarn , Fabrics ,
Consumed	Chemicals , Dyeing , Packing etc.
Purchase of Stock-in Trade Change in inventories of finished goods and work in progress	Stock in trade included blanket purchased. Change in inventories of finished goods comprises of increase/ (decrease) in stock of finished goods.
Employee benefit	Employee Benefit Expenses include salaries and wages, directors remuneration, contributions
expenses	to provident and other funds, and staff welfare expenses.
Finance costs	Finance Costs comprise interest payable to banks and financial institutions, bank charges, interest payable to parties, and interest on income tax and TDS/GST.
Depreciation expenses	Tangible assets comprise buildings, plant and machinery, vehicles, electrical installations, office equipment, furniture and fixtures, as well as computers and laptops, all of which are depreciated over their estimated useful lives in accordance with applicable accounting standards.
Other expenses	Other Expenses comprise manufacturing expenses, including boiler expenses, consumables, stores and spares, packing and forwarding, job work/fabrication and erection charges, housekeeping labour job charges, and power and fuel. Administrative and selling expenses include auditors remuneration, exchange rate fluctuations, advertisement and business promotion expenses, commission, printing and stationery, telephone expenses, professional charges, rent, fees and taxes, repair and maintenance, travelling and conveyance, freight and cartage outwards, insurance, office expenses, software expenses, discounts, donations, sewage and water charges, provision for doubtful debts and advances, loss on sale of property, plant and equipment, and other miscellaneous expenses.
Tax expenses	Tax Expenses comprise current tax, deferred tax, and prior period taxes.

Result of operations

The following table sets forth select financial data from our restated statement of profit and loss for Stub period ended on February 28, 2026 and for the Fiscals 2025, 2024 and 2023, the components which are also expressed as a percentage of total income for such years.

(Rs. in Lakhs)

Particulars Income	28-Feb- 26	% of Total Income	31-Mar- 25	% of Total Income	31-Mar- 24	% of Total Income	31- Mar-23	% of Total Income
Revenue from operations	19469.05	99.95%	17,163.5	99.93%	10,838.4	99.98%	8,932.7	99.74%
			0		5		0
Other income	10.06	0.05%	12.56	0.07%	2.12	0.02%	23.05	0.26%
Total Income	19479.11	100.00	17,176.0	100.00	10,840.5	100.00	8,955.7	100.00
		%	6	%	7	%	5	%
Expenses
Cost of Materials Consumed	13559.66	69.61%	12,156.0	70.77%	8,112.04	74.83%	6,412.4	71.60%
			2				8
Purchase of Stock in Trade	4.70	0.02%	17.70	0.10%	53.92	0.50%	36.55	0.41%
Change in Inventories of	305.95	1.57%	(260.60)	(1.52%)	(161.71)	(1.49%)	546.30	6.10%
Finished Goods, Work in
Progress & Stock in Trade
Employee benefits expenses	591.07	3.03%	411.30	2.39%	372.51	3.44%	253.72	2.83%
Finance costs	676.75	3.47%	614.13	3.58%	429.17	3.96%	310.01	3.46%
Depreciation and Amortisation expenses	242.77	1.25%	237.20	1.38%	178.57	1.65%	164.47	1.84%

Other expenses	2440.36	12.53%	2,511.57	14.62%	1,657.30	15.29%	1,132.5	12.65%
							4
Total Expenses	17821.26	91.49%	15,687.3 3	91.33%	10,641.7 9	98.17%	8,856.0 7	98.89%
Restated Profit/(Loss) before tax	1645.91	8.51%	1,488.74	8.67%	198.78	1.83%	99.68	1.11%
Tax expense
Current tax	425.38	2.18%	347.74	2.02%	33.22	0.31%	13.33	0.15%
Deferred tax (benefit)/charge	6.05	0.03%	(26.67)	(0.16%)	(4.81)	(0.04%)	(3.97)	(0.04%)
Prior Period Taxes	-8.81	-0.05%	64.42	0.38%	(0.07)	(0.00%)	-	-
Total tax expense	422.62	2.17%	385.49	2.24%	28.35	0.26%	9.36	0.10%
Share of minority in profit	-	-	-	-	-	-	-	-
Restated Profit/(Loss) after	1235.23	6.34%	1,103.25	6.42%	170.43	1.57%	90.31	1.01%
tax

Particula rs	FY 2025 vs FY 2024	FY 2024 vs FY 2023
Revenue from Operatio	Revenue from operations increased by 58.38%, from 10,838.45 lakhs in FY 2024 to 17,163.50 lakhs in FY 2025.	Revenue from operations increased by 21.33%, from 8,932.70 lakhs in FY 2023 to 10,838.45 lakhs in FY 2024.
ns		Reason for increase in Revenue in FY 24 as
	Reason for increase in Revenue in FY 25 as compared to FY 24	compared to FY 23
	End-to-End Manufacturing Integration	Shifting Towards End-to-End Manufacturing
	In FY 2024-25, the company transitioned to a fully integrated yarn-to-cloth manufacturing model.	The company is in the process of integrating end-to- end manufacturing, a strategy aimed at capturing higher value and enhancing operational efficiency.
	Previously, value addition was limited to minor cloth processing. With end-to-end manufacturing, the company now oversees the complete value addition cycle, from yarn to finished cloth that enhancing product quality, expanding its product portfolio, and improving margins.	During the initial phase, growth was primarily driven by increased market demand for fabrics. At this stage, the company was still developing its fully integrated capabilities and primarily engaged in the production of semi-processed fabrics. Despite operating with a partially integrated setup, the company successfully leveraged market opportunities, scaled up sales
	To support higher production volumes and achieve economies of scale, we undertook a significant capacity expansion through targeted capital expenditures of 1,342 lakhs, including 627 lakhs in Capital Work in Progress of FY 24. As a result, annual installed capacity doubled from 37.5 lakh KGS in FY 2023-24 to 75 lakh KGS in FY 2024-25. Capacity utilization in FY 2024-25 stood at 64.5%, compared to 80.2% in the previous year, reflecting the ramp-up of new capacity. This expansion enabled a strategic focus on value-added, high-margin product, including knitted Fabric, which now constitute a larger portion of our sales mix.	volumes, and achieved a healthy year-over-year increase in revenue. This strategic shift was supported by an increase in annual installed capacity from 24 lakh KGS in FY 2022-23 to 37.5 lakh KGS in FY 2023-24, with capacity utilization rising to 80.2%. Capital expenditures of 3.05 crores during the year enabled this expansion, laying the foundation for scalable growth and higher-margin production. The table below summarizes our capital expenditure (Capex) over the past years
	The table below summarizes our capital expenditure (Capex) over the past years

Financ Annual Annual ial Installe Utilise Year d d Capaci Capaci ty in ty in	Capaci ty (%)	Capex during the year in INR	Financ Annua Annua ial l l Year Install Utilise ed d Capaci Capaci ty in ty in KGS KGS	Capac ity (%)	Capex during the year in INR
KGS KGS			2022- 24,00,0 18,94,5	78.9	93,59,03
2023- 37,50,0 30,07,5	80.2	3,05,06,4	2023 00 42		1
2024 00 64		19	2023- 37,50,0 30,07,5	80.2	3,05,06,
2024- 75,00,0 48,38,1	64.5	10,81,20,	2024 00 64		419
2025 00 90		840	The capacity utilization is based on the certificate

	The capacity utilization is based on the certificate issued by a Chartered Engineer, dated July 21, 2025	issued by a Chartered Engineer, dated July 21, 2025
Other	Other income increased by 492.45%, from 2.12 lakhs in	Other income decreased by 90.78%, from 23.05 lakhs
Income	FY 2024 to 12.56 lakhs in FY 2025.	in FY 2023 to 2.12 lakhs in FY 2024.
Cost of Material Consume d	Cost of materials consumed increased by 49.86%, from 8,112.04 lakhs in FY 2024 to 12,156.02 lakhs in FY 2025.	Cost of materials consumed increased by 26.51%, from 6,412.48 lakhs in FY 2023 to 8,112.04 lakhs in FY 2024.
Purchase of Stock- In Trade	Purchase of stock in trade decreased by 67.13%, from 53.92 lakhs in FY 2024 to 17.70 lakhs in FY 2025.	Purchase of stock in trade increased by 47.53%, from 36.55 lakhs in FY 2023 to 53.92 lakhs in FY 2024.

Particula	FY 2025 vs FY 2024	FY 2024 vs FY 2023
rs
Change in Inventori es	Change in inventories of finished goods, work in progress & stock in trade increased negatively by 61.18%, from ( 161.71) lakhs in FY 2024 to ( 260.60) lakhs in FY 2025.	Change in inventories of finished goods, work in progress & stock in trade decreased by 229.55%, from 546.30 lakhs in FY 2023 to ( 161.71) lakhs in FY 2024.
Employee Benefit Expenses	Employee benefits expenses increased by 10.41%, from 372.51 lakhs in FY 2024 to 411.30 lakhs in FY 2025.	Employee benefits expenses increased by 46.82%, from 253.72 lakhs in FY 2023 to 372.51 lakhs in FY 2024.
Finance Costs	Finance costs increased by 43.12%, from 429.17 lakhs in FY 2024 to 614.13 lakhs in FY 2025.	Finance costs increased by 38.45%, from 310.01 lakhs in FY 2023 to 429.17 lakhs in FY 2024.
Depreciat ion Expenses	Depreciation and amortisation expenses increased by 32.83%, from 178.57 lakhs in FY 2024 to 237.20 lakhs in FY 2025.	Depreciation and amortisation expenses increased by 8.57%, from 164.47 lakhs in FY 2023 to 178.57 lakhs in FY 2024.
Other Expenses Tax Expenses	Other expenses increased by 51.55%, from 1,657.30 lakhs in FY 2024 to 2,511.57 lakhs in FY 2025 Total tax expense increased by 1,259.06%, from 28.35 lakhs in FY 2024 to 385.49 lakhs in FY 2025.	Other expenses increased by 46.34%, from 1,132.54 lakhs in FY 2023 to 1,657.30 lakhs in FY 2024. Total expenses increased by 20.17%, from 8,856.07 lakhs in FY 2023 to 10,641.79 lakhs in FY 2024.
Profit After Tax (PAT)	Total tax expense increased by 547.31%, from 170.43 lakhs in FY 2024 to 1103.25 lakhs in FY 2025.	Restated profit after tax increased by 88.72%, from 90.31 lakhs in FY 2023 to 170.43 lakhs in FY 2024.
	Change in sales mix	Change in sales mix
	In FY 2024-25, our revenue grew 58.36% to 17163.50 lakhs, primarily driven by a strategic shift toward higher- margin products. Knitted cloth, our core segment, increased its share from 76.15% to 85.21 recording a year-on-year growth of 43.57%.	In FY 2024-25, our revenue grew 21.33% to 10838.45 lakhs, primarily driven by a strategic shift toward higher-margin products. Knitted cloth, our core segment, increased its share from 61.29% to 76.15% recording a year-on-year growth of 33.66%.

Particulars	Fiscal 2025	Fiscal 2024	Particulars	Fiscal 2024	Fiscal 2023
	In %	In %		In %	In %
Blanket	3.43%	5.10%	Blanket	5.10%	8.44%
Knitted Cloth	85.21%	76.15%	Knitted Cloth	76.15%	61.29%
garments	6.45%	13.31%	garments	13.31%	24.94%
Job work	4.27%	4.85%	Job work	4.85%	4.98%
Scrap	0.63%	0.59%	Scrap	0.59%	0.35%

Capital Deployment and Timing Effects Targeted capital expenditures, including 627 lakhs in Capital Work in Progress, expanded production capacity and supported operational scaling. In FY 2023-24, interest costs on these new assets were incurred before revenue benefits could materialize, affecting EBIT and PBT. In FY 2024-25, these assets became fully productive, leading to improved utilization, offsetting higher finance costs ( 614.13 lakhs), and resulting in a visible uplift in EBIT. Deferred tax adjustments of 26.67 lakhs further amplified PAT growth. Improvements in Cost Structure Effective cost management contributed to margin expansion. Although total expenses increased from 10,640.52 lakhs in FY 2023 24 to 15,704.76 lakhs in FY 2024 25, as a percentage of revenue they declined from 98.17% to 91.33%, reflecting improved control over material costs and enhanced operational efficiencies.

Particula rs	FY 2025 vs FY 2024	FY 2024 vs FY 2023
	Strategic Initiatives Driving Margin Expansion Vertical integration, operational efficiency, and value- added production drove profitability. End-to-end manufacturing from yarn processing to finished fabric added 2.5% to gross margins by capturing the full value chain. Capacity expansion, doubling annual installed capacity through capital expenditures of 1,342 lakhs, enabled higher output and economies of scale.
	This expansion supported the companys focus on high- margin products, such as knitted cloth, which now dominate the sales mix.

Liquidity and capital resources

Sr. No.	Particulars	Description
1	Capital Requirements	Historically, the companys primary capital requirements have been to finance capacity expansion initiatives. These requirements have been primarily met through borrowings. The companys capital requirements depend on factors such as the pace of growth, expansion of production capacity, investments in high-margin product lines, and scaling operations to support end-to-end manufacturing. It may explore additional equity or debt financing in the future to fund strategic initiatives and sustain growth. The company believes it has sufficient resources to meet current obligations and anticipated capital needs over the next few months.
2	Liquidity	Historically, liquidity requirements have been to finance working capital, production activities and , met through borrowings and equity infusions. As of June 30, 2025, the company had 3,02 lakhs in cash, 96.85 lakhs in other bank balances, and 4244.38 lakhs in outstanding short term borrowings. Considering expected cash flows, benefits of recent capacity expansions, and proceeds from the Issue, the company believes it has sufficient liquidity to meet current obligations and anticipated working capital needs over the next few months.

Cash Flows

Particulars	February 28,2026	2025	2024	2023
Net cash from operating activities	443.50	-255.82	-367.70	-4.78
Net cash from investing activities	-383.07	359.70	-1570.27	-132.20
Net cash flows from financing activities	129.67	606.00	1,949.68	129.41
Net increase/ (decrease) in cash and bank balance	190.11	-9.53	11.70	-7.57
Cash and cash equivalents at the end of the year end	201.10	10.99	20.52	8.82

Assessment of Cash Flow

a. Cash Flow from Operations

Particulars			2025 compared to 2024	2024 compared to 2023
Profit before tax			Profit before Tax increased by 1,289.95 lakhs in FY 25 ( 1,488.74 lakhs) as compared to 198.78 lakhs in FY 24.	Profit before Tax increased by 99.11 lakhs in FY 24 ( 198.78 lakhs) as compared to 99.68 lakhs in FY 23.
Adjustments
Depreciation and amortization			Depreciation & Amortization expense increased by 58.63 lakhs in FY 25 ( 237.20 lakhs) as compared to 178.57 lakhs in FY 24.	Depreciation & Amortization expense increased by 14.10 lakhs in FY 24 ( 178.57 lakhs) as compared to 164.47 lakhs in FY 23.
Other non-cash (income)/expenditure		Other non-cash (income)/expenditure increased by 0.84 lakhs in FY 25 ( 0.84 lakhs) as compared to Nil in FY 24.		Other non-cash (income)/expenditure increased by 0.40 lakhs in FY 24 (Nil) as compared to negative 0.40 lakhs in FY 23.
Loss on sale of Property, Plant and Equipment	Loss on sale of Property, Plant and Equipment increased by 2.83 lakhs in FY 25 ( 2.83 lakhs) as compared to Nil in FY 24.			Loss on sale of Property, Plant and Equipment remained Nil in both FY 24 and FY 23.
Interest Income	Interest Income increased by 5.58 lakhs in FY 25 ( 7.31 lakhs) as compared to 1.73 lakhs in FY 24.			Interest Income decreased by 4.60 lakhs in FY 24 ( 1.73 lakhs) as compared to 6.33 lakhs in FY 23.
Finance cost	Finance Costs increased by 184.97 lakhs in FY 25 ( 614.13 lakhs) as compared to 429.17 lakhs in FY 24.			Finance Costs increased by 119.15 lakhs in FY 24 ( 429.17 lakhs) as compared to 310.01 lakhs in FY 23.
Other Income	-			-
Provision for Gratuity	-			-
Foreign Exchange Fluctuation	-			-
Bad and Doubtful Debts	Provision for Doubtful debts & Advances increased by 15.95 lakhs in FY 25 ( 15.95 lakhs) as compared to Nil in FY 24.			-
Advances Written Off	-			-
Operating profit before working capital changes	Operating Profit before Working Capital Changes increased by 1,547.60 lakhs in FY 25 ( 2,352.38 lakhs) as compared to 804.79 lakhs in FY 24.			Operating Profit before Working Capital Changes increased by 237.36 lakhs in FY 24 ( 804.79 lakhs) as compared to 567.43 lakhs in FY 23.
Working Capital changes	-			-
Increase / (Decrease) in provisions	-			-
Increase/ (Decrease) in trade payables	Trade & Other Payables (including provisions) increased by 344.19 lakhs in FY 25 ( 373.30 lakhs) as compared to 29.11 lakhs in FY 24.			Trade & Other Payables (including provisions) increased by 200.40 lakhs in FY 24 (increase of 29.11 lakhs) as compared to decrease of 171.21 lakhs in FY 23.
Increase / (Decrease) in other financial liabilities	-			-
Increase / (Decrease) in other liabilities	-			-
(Increase) / Decrease in inventories	Inventories increased by 2,113.14 lakhs in FY 25 ( 1,522.52 lakhs) as compared to decrease of 590.61 lakhs in FY 24.			Inventories decreased by 1,029.30 lakhs in FY 24 (decrease of 590.61 lakhs) as compared to increase of 438.68 lakhs in FY 23.
(Increase) / Decrease in trade receivables	Trade Receivables decreased by 422.78 lakhs in FY 25 ( 1,005.58 lakhs) as compared to decrease of 1,428.36 lakhs in FY 24.			Trade Receivables decreased by 1,553.84 lakhs in FY 24 (decrease of 1,428.36 lakhs) as compared to increase of 125.48 lakhs in FY 23.
(Increase) / Decrease in other financial assets	-			-
(Increase) / Decrease in other assets	Loans, Advances and Other Assets increased by 81.53 lakhs in FY 25 ( 412.06 lakhs) as compared to 330.53 lakhs in FY 24.			Loans, Advances and Other Assets increased by 256.07 lakhs in FY 24 ( 330.53 lakhs) as compared to 74.46 lakhs in FY 23.
Cash (used in)/ generated from operations	Cash Generated from Operating Activities improved by 119.89 lakhs in FY 25 (outflow of 214.48 lakhs) as compared to outflow of 334.37 lakhs compared to inflow of 8.55 lakhs in in FY 24. FY 23.			Cash Generated from Operating Activities decreased by 342.92 lakhs in FY 24 (outflow of 334.37 lakhs) as
Income tax paid (net of refund)	Income Tax Paid increased by 8.02 Income Tax Paid increased by 20 .00 lakhs in FY 25 ( 41.34 lakhs) as lakhs in FY 24 ( 33.33 lakhs) as compared to 33.33 lakhs in FY 24 compared to 13.33 lakhs in FY 23.
Net cash flow (used in)/ generated from operating activities	Net Cash Generated from/(used in) Net Cash Generated from/(used in) Operating Activities improved by Operating Activities decreased by 111.87 lakhs in FY 25 (outflow of 362.92 lakhs in FY 24 (outflow of 255.82 lakhs) as compared to outflow 367.70 lakhs) as compared to outflow of 367.70 lakhs in FY 24. of 4.78 lakhs in FY 23.

b. Cash Flow from Investments

Particulars	2025 compared to 2024	2024 compared to 2023
Purchase of property,	Purchase of Property, Plant and	Purchase of Property, Plant and
plant and equipment	Equipment decreased by 1173.57 lakhs in FY 25 ( 375.73 lakhs) as compared to 1549.30 lakhs in FY 24.	Equipment increased by 1415.75 lakhs in FY 24 ( 1549.30 lakhs) as compared to 133.55 lakhs in FY 23.
Purchase of intangible assets	-	-
Purchase of capital work-in-progress	-	-
Interest Income	Interest Received increased by 5.58 lakhs in FY 25 ( 7.31 lakhs) as compared to 1.73 lakhs in FY 24.	Interest Received decreased by 4.60 lakhs in FY 24 ( 1.73 lakhs) as compared to 6.33 lakhs in FY 23.
Other Income	-	-
Proceeds from sale of property, plant and equipment	Sale of Property, Plant and Equipment increased by 20.56 lakhs in FY 25 ( 22.56 lakhs) as compared to 2.00 lakhs in FY 24.	Sale of Property, Plant and Equipment decreased by 2.36 lakhs in FY 24 ( 2.00 lakhs) as compared to 4.36 lakhs in FY 23.
Investments in bank deposits	Bank balances not considered as cash and cash equivalents decreased by 10.86 lakhs in FY 25 ( 13.84 lakhs) as compared to 24.70 lakhs in FY 24.	Bank balances not considered as cash and cash equivalents increased by 15.37 lakhs in FY 24 ( 24.70 lakhs) as compared to 9.33 lakhs in FY 23.
Proceeds from bank	-	-
deposits
Sale of investments	-	-
Purchase of	-	-
Investments
Loans and advances received/(given)	-	-
Net cash flow (used in)/ generated from investing activities	Net Cash Generated from/(used in) Investing Activities improved by 1210.57 lakhs in FY 25 (outflow of 359.70 lakhs) as compared to outflow of 1570.27 lakhs in FY 24.	Net Cash Generated from/(used in) Investing Activities decreased by 1438.07 lakhs in FY 24 (outflow of 1570.27 lakhs) as compared to outflow of 132.20 lakhs in FY 23.

c. Cash Flow from Financing

Particulars

2025 compared to 2024

2024 compared to 2023

Interest paid on borrowings	Finance Cost increased by 182.67 lakhs in FY 25 ( 594.00 lakhs) as compared to 411.33 lakhs in FY 24	Finance Cost increased by 101.31 lakhs in FY 24 ( 411.33 lakhs) as compared to 310.01 lakhs in FY 23.
Interest paid on lease liability	-	-
Dividend paid	-	-
Net Repayment of long-term borrowings	Net Proceeds from Long Term Borrowings decreased by 1749.86 lakhs in FY 25 ( 501.26 lakhs) as compared to 2251.12 lakhs in FY 24.	Net Proceeds from Long Term Borrowings increased by 1895.62 lakhs in FY 24 ( 2251.12 lakhs) as compared to 355.50 lakhs in FY 23.
Net Repayment of short-term borrowings	Net Proceeds from Short Term Borrowings increased by 367.82 lakhs in FY 25 ( 477.69 lakhs) as compared to 109.87 lakhs in FY 24.	Net Proceeds from Short Term Borrowings increased by 25.95 lakhs in FY 24 ( 109.87 lakhs) as compared to 83.92 lakhs in FY 23.
Payment of principal portion of lease liabilities	-	-
Proceeds from Share Capital	Proceeds from Share Capital (including Securities Premium) increased by 221.04 lakhs in FY 25 ( 221.04 lakhs) as compared to Nil in FY 24.	Proceeds from Share Capital (including Securities Premium) remained Nil in both FY 24 and FY 23.
Net cash flow (used	Net Cash Generated from/(used in)	Net Cash Generated from/(used in)
in)/ generated from financing activities	Financing Activities decreased by 1,343.68 lakhs in FY 25 ( 606.00 lakhs) as compared to 1,949.68 lakhs in FY 24.	Financing Activities increased by 1,820.26 lakhs in FY 24 ( 1,949.68 lakhs) as compared to 129.41 lakhs in FY 23.

Contingent Liabilities and Off-Balance Sheet Arrangements

Particulars	February 28 2026	2025	2024	2023
Contingent Liabilities
- Standby Letter of	-	-	-	-
Credit
- Bank Guarantee	-	-	-	-
- Income Tax related matter	-1.45	5.80	1.00	-
Commitments
- Borrowings	-	-	-	-
- Lease Liabilities	-	-	-	-
- Estimated Amount of contracts remaining to be executed on	122.13	46.23	335.38	-
capital account (Net of Advances)

Contractual Obligations & Commitments

Particulars	Carrying Amount	< less than 1 year	1 to 3 years	>3 years
As at Stub Period
- Borrowings	-	-	-	-
- Lease Liabilities	-	-	-	-
- Estimated Amount of	122.13	1	-	-
contracts remaining to be
executed on capital
account (Net of Advances)

Related Party Transaction (Rs. in Lakhs)

Particulars	February 28 2026	2025	2024	2023
Related Party - Asset	-	-	-	-
transactions
as a % of Total Assets	-	-	-	-
Related Party - borrowings	2.72	214.43	33.88	-7.92
availed/(Repaid) (Net)
as a % of Total borrowings	0.04%	3.19%	0.59%	-0.23%
Related Party - Revenue	332.10	590.05	125.75	95.73
Transactions
as a % of Total Income	1.71%	3.44%	1.16%	1.07%
Related Party - Expense	3844.65	4138.84	1259.52	1170.53
transactions
as a % of Total Expenses	21.57%	26.38%	11.84%	13.22%
Related Party - Issue of	268.20	221.04	-	-
Equity
as a % of Total Equity	19.60%	20.60%	-	-

Customer Concentration

Particulars	February 28,	2025	2024	2023
	2026
Top Customer (as % of total revenues)	5.97%	4.86%	10.84%	7.20%
Top 3 Customers (as % of total revenues)	17.11%	14.11%	24.42%	19.72%
Top 5 Customers (as % of total revenues)	24.86%	21.49%	30.41%	30.45%
Top 10 Customers (as % of total revenues)	34.14%	34.15%	41.45%	48.50%

Supplier Concentration

Particulars	February 28,	2025	2024	2023
	2026
Top 3 Suppliers (as % of total purchase)	30.48%	34.70%	27.46%	29.70%
Top 5 Suppliers (as % of total purchase)	40.56%	42.79%	35.69%	42.60%
Top 10 Suppliers (as % of total purchase)	52.37%	54.23%	51.61 %	64.13%

Our Company confirms that none of our foreign customers or suppliers constitute a significant portion of our business. Accordingly, there is no material impact on our operations on account of exchange rate fluctuations. Further, we clarify that only during Fiscal 2023, a portion of our sales was derived from exports, while there have been no purchases made through imports.

Auditors Observations

Financial Year / Period	Nature of Adverse Observation (Reservations, qualifications, adverse remarks, matters of emphasis or Other Matter)	Details of Adverse Observations	Companys response to reservations, qualifications, adverse remarks or matters of emphasis, including any corrective measures	Impact on the financial statements and financial position of the Company
		NA

Date	Event	Impact on the Financials	Mitigation Factors	Future Liabilities arising due to the event
			NA

FACTORS THAT MAY AFFECT THE RESULTS OF THE OPERATIONS

a. Unusual or infrequent events or transactions

Except as described in this Red Herring Prospectus, Our Company has not engaged in any transactions or events during the periods under review that, in our best judgment, would be considered unusual or infrequent.

b. Significant economic changes that materially affected or are likely to affect income from continuing operations

Other than as described in the "Risk Factors" beginning on page 17 of this Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

c. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations

Other than as described in this Red Herring Prospectus, particularly in the sections "Risk Factors" on page 17 , , to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

d. Future changes in relationship between costs and revenues in case of events such as future increase in labour or material cost or prices that will cause material change

Our Companys future costs and revenues will be determined by the growth of the industry in which we operate.

e. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased prices

The increase in revenue is by and large linked to increase in volume of all the activities carried out by the Company.

f. Total turnover of each major industry segment in which the Issuer Company operates

Our Company is engaged in Textile industry.

(Rs. in Lakhs)

Particulars	February 28 2026		Fiscal 2025		Fiscal 2024		Fiscal 2023
	Amount	In %	Amount	In %	Amount	In %	Amount	In %
Blanket	1,199.71	6.20%	589.04	3.43%	552.76	5.10%	754.15	8.44%
Knitted Cloth	17,197.23	88.30%	14,625.61	85.21%	8,253.03	76.15%	5,474.73	61.29%
garments	182.39	0.90%	1,107.53	6.45%	1,442.98	13.31%	2,227.83	24.94%
Job work	691.39	3.60%	733.39	4.27%	525.84	4.85%	444.79	4.98%
Scrap	198.34	1.00%	107.94	0.63%	63.84	0.59%	31.19	0.35%

Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 109 of this Red Herring Prospectus.

g. Status of any Publicly Announced New Business Segments

Except as disclosed in the section "Our Business" on page 123 of this Red Herring Prospectus, our Company has not publicly announced any new business segment. h. Seasonality of the Business

Our business is subject to seasonality. We experience higher demand for our winter wear products in the months leading up to the winter season and during end-of-season sales. For a detailed understanding, please refer to the Risk Factor on page 17 of this Red Herring Prospectus.

i. Any significant dependence on a single or few suppliers or customers

Our Company is significantly dependent on a few suppliers. For further details, refer to the chapter titled "Risk factors" on page 17 of Red Herring Prospectus.

j. Competitive Conditions

Competitive conditions have been discussed in sections titled "Our Business" and "Our Industry" on pages 123 and 109 of this Red Herring Prospectus.

Madhur Knit Crafts Ltd Management Discussions

Madhur Knit Crafts Ltd Share Price Management Discussions

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES