PDS Ltd Management Discussions

Economic Overview

Global Economic Overview

The world economy demonstrated notable resilience throughout 2025, navigating a challenging environment marked by shifting trade policies and uneven regional growth. Sustained investments in AI, automation, digital infrastructure, and supply-chain resilience enabled businesses to improve productivity, reconfigure networks, and absorb the effects of tariff changes and uncertainty, supporting continued global economic growth and moderating inflationary pressures

The geopolitical and trade environment remained a key source of uncertainty during the year. Ongoing US tariff actions, the continuing Russia-Ukraine conflict and broader geopolitical uncertainties continued to reshape global sourcing patterns, increase logistics and operating costs, and create volatility across global supply chains. Political instability and labour disruptions in Bangladesh, one of the worlds largest apparel manufacturing hubs, further highlighted the importance of diversified

Towards the latter part of the year, escalating tensions in West Asia emerged as an additional risk, raising concerns around energy security, shipping routes through the Strait of Hormuz and global freight costs. Collectively, these developments reinforced the need for agile, geographically diversified and digitally-enabled sourcing platforms

Within this context, global GDP grew by 3.4% in 2025. Advanced economies expanded at a measured pace of 1.9%, with the United States recording growth of 2.1%, supported by technology investment and fiscal policy. Emerging markets continued to outperform, expanding collectively by 4.4%.

The Euro area recorded real GDP growth of 1.4% in 2025, with performance remaining uneven across major economies. Spain led the region with growth of 2.8%, while France expanded by 0.9%, Italy by 0.5% and Germany by 0.2%. Fiscal policy became increasingly supportive, particularly in Germany, where higher infrastructure and defence spending laid the foundation for stronger economic activity, albeit at the cost of a wider fiscal deficit. Consequently, the Euro areas fiscal balance is projected to weaken, with Germanys deficit expected to widen to 3.8% of GDP. In addition, US tariffs redirected a portion of Chinese exports towards Europe and other Asian markets, providing a temporary boost to regional trade and economic activity. trade

The United Kingdom recorded real GDP growth of 1.3% in 2025. As a net energy importer, it remained particularly vulnerable to elevated commodity prices, which continued to fuel inflationary pressures and weigh on consumer demand. The slower pace of monetary easing further constrained domestic demand and moderated the pace of economic expansion.

Outlook

The global economy is projected to grow by 3.1% in 2026 and 3.2% in 2027, supported by resilience of the service sector, artificial intelligence and technology-driven productivity gains, which are expected to partly offset impact of persistent trade tensions, geopolitical uncertainty and evolving policy environments.

Growth across advanced economies is expected to remain broadly stable at 1.8% in 2026 before easing slightly to 1.7% in 2027. The US economy is forecast to expand by 2.3% in

2026 and 2.1% in 2027, supported by fiscal stimulus the lagged impact of monetary easing. Emerging market and developing economies are projected to grow by 3.9% in 2026, recovering to 4.2% in 2027 as the impact of higher energy costs and trade disruptions gradually recedes.

In Europe, the UK economy is projected to slow from 1.3% in 2025 to 0.8% in 2026, before recovering to 1.3% in 2027, reflecting the effects of higher energy prices and a slower pace of monetary easing. Across the Euro area, renewed inflationary pressures are expected to delay monetary easing, while fiscal deficits are likely to widen as public debt continues to increase.

Global headline inflation is projected to ease from 3.8% in 2026 to 3.4% in 2027, although the pace of disinflation is expected to vary across regions. Despite a resilient baseline outlook, risks remain elevated, with US tariff measures, the West Asia conflict and the prolonged Russia-Ukraine war continuing to weigh on business confidence, disrupt supply chains and increase energy and transportation costs.

Source: World Economic Outlook, April 2026, IMF

Indian Economy

Indian economy demonstrated strong momentum during FY 2025-26, with real GDP growth accelerating to 7.7% from 7.1% in FY 2024-25. Growth was driven primarily by the secondary sector (8.8%) and the tertiary sector (9.3%), while private consumption and investment remained robust, with Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) growing by

7.7% and 8.2%, respectively. Manufacturing, trade-related services, and financial and professional services recorded particularly strong performance, reflecting broad-based economic expansion.

The Reserve Bank of India has taken a proactive stance to support growth, implementing cumulative repo rate cuts of 100 basis points between April and December 2025, bringing the policy rate to 5.25%. A favourable monsoon bolstered agricultural output and rural demand, while manufacturing and construction continued to gain traction. Real GVA expanded 7.9%, up from 7.3% in FY 2024-25, underscoring the resilience of a domestic demand-led growth paradigm.

India achieved a significant become the worlds fourth-largest economy, with a current GDP reaching $4.18 trillion.

Sources:

• MoSPI (SAE), MoSPI (QE), June 2026,

• June 2026, The Hindu

Outlook

India enters FY 2026-27 with strengthened macroeconomic fundamentals, backed by structural reforms in labour laws and the GST framework. Real GDP is projected to grow 6.8%- 7.2%, driven by domestic consumption, government capital expenditure, services-sector resilience, and manufacturing momentum. The country remains on course to become the worlds third-largest economy by 2030, targeting a GDP of $7.3 trillion.

Private consumption continues to lead growth, supported by declining inflation, rising real incomes, strong agricultural output boosting rural spending, and employment-driven urban demand. On the investment side, government infrastructure spending across roads, railways, and defence provides a solid industrial foundation, while private sector investment is picking up in manufacturing, real estate, and digital infrastructure – including data centres.

The Union Budget 2026-27 reinforces the Governments commitment to strengthening Indias textile and apparel sector through an integrated policy framework focussed on enhancing manufacturing competitiveness, expanding exports and creating employment. The Budget builds on existing initiatives such as PM MITRA and the Production

Linked Incentive (PLI) Scheme for Textiles, while introducing a comprehensive textile programme encompassing the

National Fibre Scheme, Textile Expansion and Employment (TEEM) Scheme, Tex-Eco Initiative and Samarth 2.0. Together, these initiatives seek to strengthen the textile value chain, promote sustainable manufacturing, support workforce development and position India as a globally competitive and resilient sourcing destination, particularly as brands diversify supply chains and capitalise on emerging trade opportunities.

Sources:

• December 2025, Reuters,

• June 2026, PIB

Industry Overview

Global Fashion Industry

The global fashion industry continued to grow despite a challenging macroeconomic environment, with growth becoming increasingly selective across markets, channels and product categories. Within this landscape, the mass-fashion segment remained resilient as brands shifted their focus from volume-led expansion to profitable, driven growth, placing greater emphasis on inventory discipline, sourcing agility and capital

Consumer purchasing behaviour continued to evolve, with value increasingly defined by quality, durability and relevance rather than price alone. This shift is driving brands to strengthen product differentiation, optimise assortments and accelerate speed to market while maintaining greater flexibility across sourcing and fulfilment networks.

At the same time, the industrys operating model is undergoing structural transformation. Supply chain diversification, vendor consolidation, sustainability and digital enablement are becoming strategic imperatives as brands seek to enhance resilience, mitigate geopolitical and sourcing risks, and respond more effectively changing consumer demand. These trends are reinforcing the importance of scalable, technology-enabled and multi-country sourcing ecosystems capable of delivering speed, flexibility global marketplace.

Global Apparel Market

The global apparel market was valued at USD 1,749.67 billion in 2025 and is projected to grow from USD 1,804.08 billion in 2026 to USD 2,307.04 billion by 2034, at a CAGR of 3.52%. Casual and fashion wear are the leading product categories, accounting for 35.85% of market share in 2026. Asia Pacific dominates geographically with a 41.03% share, driven by an expanding middle class across India, China, Brazil, and Southeast Asia and a growing working population with rising purchasing power.

Long-term market growth continues to be supported by structural drivers including rising incomes in emerging markets, fast-fashion innovation, advances in manufacturing technology and the continued expansion of e-commerce. However, growth remains uneven across regions as consumers in several developed markets continue to prioritise value amid economic uncertainty.

Despite improving market momentum, the industry continues to face headwinds. Consumer demand across the

US and Europe remains cautious and value-driven, leading retailers to maintain lean inventories and shorter order visibility, which continues to exert pressure on margins.

At the same time, wage inflation across key sourcing markets remains a structural cost challenge, reinforcing the importance of diversified cost management.

Offsetting these pressures, stabilising cotton and other raw material prices, together with easing freight rates, are improving supply chain economics. Apparel companies are responding by accelerating digital transformation,demand-strengthening operational efficiency and embedding sustainability into their business models to enhance competitivenessandcapturelong-termgrowthopportunities.

Source:

• June 2026, Fortune Business Insights,

Global Apparel Sourcing

Global apparel sourcing refers to the procurement of raw materials, intermediate components, and finished garments from suppliers across international markets. The process encompasses vendor identification and evaluation, contract negotiation, logistics coordination, and adherence to applicable regulatory and quality standards.

Global apparel sourcing continuedto to evolve during FY 2025-26 as brands prioritised resilience, agility and supply chain diversification amid geopolitical uncertainties, trade policy shifts and increasing regulatory requirements. Retailers growthinanincreasinglycomplex are progressively moving beyond a single-country sourcing model towards diversified cost competitiveness with speed-to-market, compliance and risk mitigation. At the same time, vendor consolidation remains a key trend, with brands increasingly partnering with scaled sourcing platforms capable of offering multi-country manufacturing access, design capabilities, supply chain visibility and execution excellence. India, Vietnam and Bangladesh are expected to emerge as key sourcing hubs for US and European apparel brands, as Chinas labour costs increased by approximately 38% between 2010 and

2021, accelerating diversification strategies. Nearshoring also gaining momentum, with apparel and textile imports from nearshore destinations expected to increase by 2–3 percentage points by 2030 across major Western markets. Sustainability, traceability and digitalisation are also reshaping sourcing decisions, driven by evolving regulatory frameworks and growing stakeholder expectations. These structural shifts are reinforcing demand for integrated, technology-enabled sourcing partners with diversified geographic footprints and strong compliance capabilities.

Source:

• November 2024, The Business of Fashion,

• December 2025, HKUST Li & Fung Supply Chain Institute

• May 2025, Uniform Market

Trends in the Apparel Market sourcingstrategiesanddisciplined Geographic Shift in Demand

Asia Pacific continues to lead global apparel demand, driven by rising incomes, urbanisation and expanding middle-class populations, while North America remains one of the worlds largest consumer markets. These regional dynamics are reinforcing Asias role as a global manufacturing hub and shaping sourcing and investment decisions across the apparel value chain.

Digitalisation of the Apparel Value Chain

Digital technologies are reshaping every stage of the apparel value chain – from product design and merchandising to sourcing, manufacturing and customer engagement. Artificial intelligence, data analytics, digital product development, automation and connected supply chains are enabling faster decision-making, improved forecasting and shorter product development cycles. At the consumer end, virtual fitting, social commerce and omnichannel retailing continue to transform how apparel is marketed and sold.

Changing Consumer Behaviour and Market Dynamics

Consumer preferences in the apparel industry are changing. People now focus more on "smart value"– buying productssourcingnetworksthatbalance that offer a good balance of style, quality, and price. Because of economic uncertainty, many consumers prefer essential and value-based clothing over luxury or non-essential items. Buyers are also placing smaller, shorter-term orders, which increases pressure on retailers margins. Brands that provide good value while maintaining quality are more likely to retain customer loyalty and stay competitive.

Sustainability Becoming Mainstream

Environmental sustainability and responsible sourcing have become integral to business strategy rather than niche differentiators. Circular fashion, recycled materials, traceability and responsible manufacturing are increasingly embedded across the apparel ecosystem as brands respond to evolving stakeholder expectations.

Expansion of Omnichannel Retailing to Favour Market Growth

Omnichannel retailing is becoming a key growth driver in affordable luxury fashion, as brands blend physical stores with e-commerce, mobile apps, and social media into a single connected experience. Rather than treating each channel in isolation, retailers are giving consumers the flexibility to online, or through digital platforms, making the brand more accessible and driving stronger customer loyalty and sales.

Source: June 2026, Uniform Market

Growth Enablers

1. Diversification of Global Supply Chains

Geopolitical uncertainties, evolving trade policies and the need for supply chain resilience continue to accelerate the diversification of globalapparel sourcing.

International brands and retailers are expanding their manufacturing footprint across countries such as India, Bangladesh, Vietnam, Indonesia and T?rkiye to reduce concentration risk while improving sourcing flexibility.

This structural shift is expected to drive increased sourcing opportunities for manufacturers and sourcing partners with diversified geographic capabilities.

2. Supplier Consolidation and Strategic Sourcing Partnerships

Global retailers are increasingly consolidating their supplier base and partnering with fewer, larger sourcing organisations capable of delivering end-to-end solutions across design, product development, sourcing, quality assurance, compliance and logistics. This trend reflects the growing importance of scale, operational excellence and supply chain transparency, while creating opportunities for integrated sourcing platforms to deepen long-term customer relationships.

3. Accelerated Adoption of Artificial Intelligence and Digital Technologies

Artificial intelligenceis rapidly transforming the apparel value chain, with applications spanning demand forecasting, product development, merchandising, sourcing optimisation, inventory planning and supply chain visibility. Digital technologies such as Product

Lifecycle Management (PLM), predictive analytics and

AI-enabled design are helping companies reduce lead times, improve decision-making and enhance operational efficiency, making technology adoption an increasingly important competitive differentiator.

4. Growth of Value Retail and Private Labels

Consumers continue to demonstrate heightened value consciousness amid persistent macroeconomic uncertainty, supporting sustained growth in value apparel, private-label brands and affordable fashion segments. Retailers are strengthening sourcing partnerships to deliver quality products at competitive prices while maintaining flexibility, creating continued demand for efficient, cost-competitive sourcing and product development capabilities.

5. Regulatory Evolution

Increasing regulatory requirements relating to product traceability, environmental disclosures, circularity and

Extended Producer Responsibility (EPR) are encouraging greater investment in compliant and transparent supply chains.

Opportunities

AI-Driven Digitisation

The rapid adoption of artificial intelligence across the apparel value chain is enhancing product development, sourcing, demand forecasting and supply chain visibility. As retailers accelerate digital transformation, demand is growing for technology-enabled solutions that improve speed-to-market, operational decision-making.

Balancing Speed and Sustainability

Retailers are increasingly seeking sourcing partners that can deliver both speed-to-market and strong sustainability credentials. Growing consumer expectations and evolving regulatory requirements are accelerating the adoption of responsible sourcing, traceability and compliance, creating opportunities for integrated sourcing platforms that combine agility with sustainability.

Shift in Global Sourcing Preferences

Global sourcing strategies continue to evolve as retailers diversify supply chains in response to rising production costs, geopolitical uncertainty and the need for greater resilience. Procurement decisions are increasingly driven by cost competitiveness, lead times, execution capability and geographic diversification, creating opportunities for manufacturing destinations with strong sourcing ecosystems and policy support.

Source: June 2026, Fortune Business Insights

Improving Demand Environment and Greater Order Visibility

Despite a cautious consumer environment, inventory correction across the US and European markets is largely complete, with order pipelines strengthening and visibility expected to improve further. Gradually recovering discretionary demand, together with the increasing adoption of long-term sourcing programmes and multi-season commitments, is expected to support stronger order visibility, improved revenue conversion and greater margin stability.

Free Trade Agreements and Long-Term Sourcing Programmes

The expansion of free trade agreements, including the

India-UK Free Trade Agreement and the India-EU Free Trade

Agreement, is expected to enhance export competitiveness and improve market access. Combined with retailers growing preference for larger, long-term sourcing programmes, these developments are creating opportunities to expand sourcing volumes, strengthen customer relationships and build more diversified supply chains.

Government & Policy Support

Governments across key apparel markets are promoting trade, sustainability and supply chain resilience through free trade agreements, industrial incentives and regulatory reforms. These initiatives are driving supplier diversification, strengthening manufacturing ecosystems and increasing demand for sourcing partners with multi-country capabilities, compliance expertise and traceable supply chains.InIndia,initiativessuchasthePMMITRA scheme,the and data-driven

PLI Scheme for Textiles and digital traceability programmes are further enhancing manufacturing competitiveness and export potential.

Challenges

1. Trade Policy and Tariff Uncertainty

Frequent changes in global trade policies and tariff regimes continue to create uncertainty across apparel supply chains. Rising import duties, evolving customs requirements and increased scrutiny of country-of-origin compliance are adding to sourcing costs and operational complexity. In response, manufacturers and retailers are restructuring sourcing networks, renegotiating supplier contracts and diversifying production footprints to mitigate trade-related risks.

2. Moderating Demand and Evolving Consumer Behaviour

The global fashion industry is expected to deliver low single-digit growth in 2026 amid continued macroeconomic uncertainty. Consumers remain increasingly value conscious, prioritising affordability, quality and essential purchases while becoming more selective in discretionary spending. The continued growth of value retail, resale platforms and social commerce is reshaping purchasing behaviour, requiring brands to balance pricing, product innovation and customer engagement.

3. Supply Chain and Inventory Volatility

Persistent geopolitical disruptions, logistics challenges and tighter inventory management by retailers continue to reduce order visibility and increase supply chain complexity. Shorter procurement cycles, shipment deferrals and ongoing sourcing realignments are making production planning and inventory optimisation increasingly challenging across the apparel value chain.

4. Workforce Transformation in the AI Era

The rapid adoption of artificial intelligence and automation is reshaping workforce requirements across the apparel industry. Companies are increasingly investing in digital capabilities, reskilling initiatives and organisational transformation to integrate AI while preserving the creativity, product innovation and design expertise that remain central to the fashion industry.

5. Regulatory Complexity and Sustainability Compliance

The regulatory landscape continues to evolve rapidly, with increasing requirements relating to product traceability, Extended Producer Responsibility (EPR), environmental disclosures and product compliance across multiple jurisdictions. The absence of harmonised global standards is increasing compliance costs and operational complexity, while requiring companies to strengthen governance, transparency and sustainability practices across the value chain.

Sources:

• April 2026, The Daily Star

• Bangladesh election offers hope to garment sector battered by, February 2026, Reuters

Company Overview

About PDS Limited

PDS Limited is a global fashion solutions and infrastructure platform providing design-led sourcing, sourcing as a service, manufacturing, and brand management to leading retailers and brands worldwide. Leveraging its diversified global network, entrepreneurial operating model, and technology-enabled capabilities, PDS helps customers build resilient, agile, and responsible supply chains while driving long-term value creation.

Sourcing

Sourcing continues to be the core of PDS, contributing

12,399 crore in revenue and representing 95% of the Groups business. The year was marked by continued progress in expanding customer relationships, adding new accounts, broadening product categories, and increasing participation across strategic sourcing and consumption markets.

Design-Led Sourcing

PDS combines design, product innovation, and sourcing expertise to deliver a differentiated solution to leading global brands and retailers. Supported by a network of over 250+ designers across key fashion hubs, the Company translates consumer insights and market trends into commercially-relevant products. Through its integrated capabilities across design, sourcing, manufacturing, and supply chain management, PDS enables customers to expand categories, diversify sourcing, accelerate speed-to-market, and build resilient supply chains while maintaining high standards of quality, compliance, and sustainability.

Sourcing as a Service

PDS Sourcing as a Service (SaaS) model enables retailers and brands to outsource their sourcing officefunction through a transparent cost-plus framework to PDS. Acting as a strategic extension of the customers organisation, PDS provides end-to-end sourcing capabilities, including supplier management, product development, quality assurance, compliance, and execution. The model delivers flexibility, scalability, and access to a diversified global sourcing ecosystem, helping customers build agile and resilient supply chains.

Brand Management

Under Brand Management, the platform extends capabilities beyond sourcing to create, scale, and monetise brands across global markets. Spanning licensed brands, influencer-led brands, and owned intellectual property, the platform combines design, product development, sourcing, manufacturing, distribution, and marketing within a single operating ecosystem.

Supported by deep consumer insights, creative capabilities, and a diversified accelerates speed-to-market and commercial execution. This integrated approach enhances brand relevance, strengthens market presence, and drives sustainable value creation across the portfolio.

Manufacturing

The Manufacturing business continued to underpin the

Groups integrated value proposition, providing strategic production capabilities alongside its global sourcing platform. Over the period, the segment has transitioned from a standalone factory setup to a more integrated manufacturing arm comprising three facilities – two in

Bangladesh and one in India through the acquisition of Knit

Gallery.

This transformation has enhanced alignment with sourcing operations, strengthened long-term customer partnerships, and improved the ability to leverage scale, operational efficiencies, and best practices across the platform.

PDS Ventures and Others

PDS Ventures is the Groups strategic investment platform focussed on emerging businesses driving innovation, sustainability, and circularity across the fashion value chain.

Through investments in companies such as Materra, Reflaunt, and Upcycle Labs, the platform provides early visibility into disruptive technologies, evolving consumer trends, and next-generation business models.

These partnerships not only support innovation and commercialisation but also create strategic inroads into existing and prospective customer accounts, strengthening customer engagement and expanding opportunities across the broader PDS platform. Through PDS Ventures, the Group continues to build its innovation pipeline while creating long-term strategic value for the business and the wider fashion ecosystem.

Business Performance

The Company delivered a resilient performance in FY 2025-26 despite a subdued global retail environment and continued uncertainty across key markets. Growth was supported by customer diversification, increased wallet share, and continued expansion across categories and geographies. At the same time, disciplined execution of procurement, cost optimisation, and portfolio management initiatives contributed to improved gross margins and strengthened the overall quality of earnings.

Operational Highlights

• Order book as of early April 2026, increased 11% compared to the same period last year, reflectinghealthy demand,global deepersupply customerchain, it engagement, and growing momentum in higher-value Sourcing as a Service (SaaS) partnerships

• Growth was led by the UK and Americas, with the latter reflecting the success of the Groups strategic efforts to deepen its presence in the U.S. market through new customer acquisitions, expanded wallet share, and stronger engagement with key retail accounts, while softer demand in Europe and Asia moderated overall performance

• Capital allocation remained disciplined, with investments in new verticals reduced by 27% and capital expenditure lowered by 56%, reinforcing the focus on profitability, cash generation, and returns

Project PULSE, transitioning from BCGs cost transformation recommendations, is being institutionalised as a platform-wide digital backbone focussed on sourcing, supplier governance, and master data management, aimed at driving sustainable cost efficiencies and structurally improved margins

• Continued to strengthen the digital foundation of the platform through the advancement of the S/4HANA transformation programme, enhanced master data and pricing capabilities, increased adoption of AI-enabled analytics across functions such as planning, design, product development and operations, and the launch of a new corporate website showcasing the Groups integrated global capabilities and innovation-led growth strategy

Consolidated Financial Performance

All amounts in crore unless otherwise mentioned

Particulars	FY 2025-26	FY 2024-25
Revenue from operations	13,110	12,578
Other income	100	50
Total Income	13,210	12,628
COGS	10,410	10,047
Employee Expenses	1,317	1211
Other expenses	998	863
EBITDA	385	457
EBITDA Margin (%)	2.9%	3.6%
Finance Cost	147	127
Profit after tax	178	241
Profit after tax margin (%)	1.4%	1.9%
Basic EPS	7.91	11.44

Revenue

Revenue from operations for FY 2025-26 stood at 13,110 crore compared to 12,578 crore in FY 2024-25, representing growth of 4.2% year-on-year. The increase was supported by customer retention, expansion of existing customer relationships, new customer additions, and growth across selected product categories and geographies. Gross

Merchandise Value (GMV) increased to 19,666 crore during the year, while the order book strengthened to approximately

5,074 crore as of early April 2026, reflecting continued customer demand and growth in sourcing programmes, particularly in North America.

Other Income

Other income increased to 100 crore in FY 2025-26 from 50 crore in FY 2024-25, primarily due to higher foreign exchange gains and mark-to-market gains on investments within the PDS Ventures portfolio.

Gross Profit

Gross Profit increased to 2,701 crore in FY 2025-26 from 2,531 crore in FY 2024-25. Gross margin improved to 20.6% from 20.1% in the previous year, supported by procurement efficiencies, disciplined sourcing practices, and an improved business mix.

EBITDA

EBITDA for FY 2025-26 stood at 385 crore compared to 457 crore in FY 2024-25. EBITDA margin moderated to 2.9% from 3.6% in the previous year, primarily reflecting losses from new vertical investments, one-time restructuring and redundancy costs, and higher licence-related expenses. Losses from new verticals reduced by 24% year-on-year to

124 crore from 162 crore in FY 2024-25, reflectingongoing portfolio rationalisation initiatives.

Profit After Tax

Profit after tax for FY 2025-26 stood at 178 crore compared to 241 crore in FY 2024-25. PAT margin was 1.4% compared to 1.9% in the previous year. The decline was attributable to lower operating profitability, higher finance costs, and higher effective tax rate during the year.

Effective Tax Rate

The effective tax rate increased from 10% in FY 2024-25 to 14% in FY 2025-26, reflecting the impact of evolving global tax regulations and changes in the geographic mix of earnings. The year also included a one-time impairment charge of approximately 14 crore on the investment in DBS Lifestyle at the India standalone level. The effective tax rate is expected to stabilise within the range of 16%–

18%, subject to the mix of profits across jurisdictions and prevailing tax regulations.

Summarised Balance Sheet

All amounts in crore unless otherwise mentioned

Particulars	FY 2025-26	FY 2024-25
Non-Current Assets	1,492	1,234
Current Assets	3,773	3,512
Inventory	557	483
Trade Receivables	1,647	1,860
Cash and Bank Balances	1,036	737
Other Current Assets	534	431
Total Assets	5,266	4,745
Total Equity	1,859	1,677
Non-Current Liabilities	258	228
Borrowings	154	119
Other Non-Current Liabilities	104	109
Current liabilities	3,148	2,841
Borrowings	987	993
Trade Payables	1,740	1,507
Other Current Liabilities	422	341
Total Equity & Liabilities	5,266	4,745

Balance Sheet Review

Assets

Total assets as of March 31, 2026 stood at 5,266 crore compared to 4,745 crore as of March 31, 2025, representing an increase of 11.0%. The increase was driven by growth in both non-current and current assets, reflecting strategic investments, acquisitions, and improved liquidity.

Non-Current Assets

Non-current assets increased by 20.9% to 1,492 crore as of March 31, 2026 from 1,234 crore in the previous year. Property, Plant and Equipment increased to 559 crore from 496 crore, primarily due to the consolidation of Knit Gallery and the capitalisation of projects completed during the year. Intangible assets, including assets under development, increased to 70 crore from 41 crore, reflecting continued investments in technology and digital capabilities.

Goodwill increased during the year by 91 crore primarily on account of the acquisitions of Knit Gallery and GSCL. Other financial assets increased to 407 crore from 359 crore, reflecting mark-to-market gains on investments within the PDS Ventures portfolio and additional strategic investments made during the year.

Current Assets

Current assets stood at 3,773 crore as of March 31, 2026 compared to 3,512 crore in the previous year, an increase of 7.4%.

Inventories increased to 557 crore from 483 crore, primarily due to inventory held within the Ted Baker business and changes in product mix.

Trade receivables reduced to 1,647 crore from 1,860 crore, reflecting improved collections and enhanced working capital discipline. Debtor days improved to 46 days from 54 days in the previous year.

Cash and bank balances increased significantly to 1,036 crore from 737 crore, supported by strong operating cash flow generation and tighter management of working across the Group.

Equity

Total equity increased to 1,859 crore as of March 31, 2026 from 1,677 crore in the previous year, driven primarily by profits retained during the year & Foreign currency translation reserve.

Borrowings

Total borrowings stood at 1,141 crore as of March 31, 2026 compared to 1,111 crore as of March 31, 2025. Long-term borrowings increased to 154 crore from 119 crore, primarily due to debt assumed as part of the Knit

Gallery acquisition and term financing for office property in the United Kingdom. Short-term borrowings remained broadly stable at 987 crore compared to 993 crore in the previous year.

Current Liabilities

Current liabilities increased to 3,148 crore from 2,841 crore as of March 31, 2025. Trade payables increased to 1,740 crore from 1,507 crore, reflecting higher business activity and supplier balances at year-end.

Liquidity and Working Capital

The Group continued to strengthen its balance sheet through disciplined working capital management and robust cash generation. Net working capital days reduced significantly to 4 days as of March 31, 2026 from 17 days in the previous year, reflecting improved collections, inventory management, and payable efficiencies.

Net debt reduced substantially to 105 crore from 374 crore as of March 31, 2025, supported by strong operating cash flows and utilisation of Qualified Institutional Placement proceeds towards debt reduction. As a result, leverage remained conservative, with Net Debt to Equity at 0.06x and Net Debt to EBITDA at 0.27x.

Key Financial Ratios – Consolidated

Ratios	FY 2025-26	FY 2024-25	Change
Interest coverage ratio (x)	2.42	3.13	-0.71
Current ratio (x)	1.20	1.24	-0.04
Debt equity ratio (x)	0.61	0.66	-0.05x
Operating profit margin (%)	2.7%	3.1%	-0.4%
Net profit margin (%)	1.4%	1.9%	-0.5
Return on net worth (%)	9.6%	14.4%	-4.8
Debtors turnover ratio (x)	7.96	6.76	1.20
Inventory turnover ratio (x)	18.69	20.78	-2.09
Return in capital employed (%)	18.0%	19.3%	-1.29

Interest Coverage Ratio

The interest coverage ratio declined to 2.42x in FY 2025-26 from 3.13x in FY 2024-25, primarily due to lower operating profitability during the year coupled with higher finance costs arising from acquisition-related borrowings and term financing.

Current Ratio

The current ratio moderated to 1.20x from 1.24x in the previous year. The movement was primarily attributable to an increase in current liabilities, particularly trade payables, in line with business growth and working capital management initiatives.

Debt-Equity Ratio

The debt-equity ratio improved to 0.61x from 0.66x in FY 2024-25, reflecting a stronger equity base and disciplined management of borrowings despite strategic investments and acquisitions during the year.

Operating Profit Margin

Operating profit margin declined to 2.7% from 3.1% in

FY 2024-25, primarily due to losses from new vertical investments, one-time restructuring costs, and higher licence-related expenses incurred during the year.

Net Profit Margin

Net profit margin moderated to 1.4% from 1.9% in FY 2024-25, reflecting lower operating profitability, increased finance costs, and a higher effective tax rate.

Return on Net Worth

Return on net worth declined to 9.6% from 14.4% in the previous year, primarily due to lower profit after tax during the year, partially offset by growth in shareholders equity.

Debtors Turnover Ratio

Debtors turnover improved to 7.96x from 6.76x in

FY 2024-25, reflectingimproved collection efficiency, tighter credit management, and a sustained focus on working capital optimisation.

Inventory Turnover Ratio

Inventory turnover moderated to 18.69x from 20.78x in FY 2024-25, primarily due to higher inventory levels within the brand management business and changes in inventory mix during the year.

Return on Capital Employed

Return on capital employed stood at 18.0% compared to 19.3% in FY 2024-25. The marginal decline reflects lower operating profitability during the year, partly offset by improved working capital capital allocation.

Outlook

The Group enters FY 2026-27 with a sharper operating focus, a more disciplined portfolio, and a strengthened platform for sustainable growth. Ongoing portfolio rationalisation and the reduction of losses from new verticals are expected to support improved profitability and capital efficiency. with recent customer wins and expanding Sourcing-as-a-Service engagements providing a strong foundation for future growth. The business is also well positioned to benefit from structural sourcing shifts, vendor consolidation trends, and emerging trade opportunities, including the anticipated India-EU Free Trade Agreement. At the same time, the Group continues to advance its enterprise-wide digital transformation programme, with investments in SAP S/4HANA, data management, sourcing technologies, and AI-enabled capabilities expected to enhance operational efficiency, strengthen governance, and support scalable growth over the medium term.

Risk Management

The Company has implemented a proactive risk management framework to safeguard operations, assets, and stakeholder interests while enabling sustainable growth. Risks across strategic, operational, financial, and compliance areas are systematically identified, assessed, and prioritised based on impact and likelihood, with targeted mitigation measures in place. A formal governance structure, led by senior management, ensures effective oversight, continuous monitoring, and enterprise-wide integration of risk management practices, fostering a strong culture of risk awareness across the organisation.

Technology and Infrastructure

PDS Limited is advancing a structured digital transformation agenda through sustained investments in AI, analytics, and enterprise systems to enhance scalability, cybersecurity, and operationalefficiency. The Company is modernising core IT infrastructure, accelerating cloud adoption, and automating critical processes to strengthen agility and decision-making. Its integrated digital architecture spans analytics, design, procurement, manufacturing, supply chain, compliance, and QA/QC, supported by real-time dashboards and cloud-based data lakes. A unified SAP S/4HANA backbone governs over 150 legal entities across 22+ countries, reinforced by advanced cybersecurity frameworks to ensure data integrity and operational continuity.

Project PULSE is PDSs enterprise-wide digital backbone for procurement excellence, transitioning the Group from the BCG-led cost transformation recommendations into a fully institutionalised, AI-enabled platform. It integrates sourcing, supplier governance, contracts, and master data into a single system designed to deliver sustained improvements in efficiency, ambition of PULSE is to shift from manual e-auction processes to AI-led automatic bidding as the default sourcing approach, creating a structural cost advantage across PDSs raw material spend. Harmonised master data further unlocks intelligent pricing, supplier benchmarking, and AI-powered negotiation, positioning PULSE as a platform for margin expansion rather than process efficiency alone

Organisational Structure

The Company follows an entrepreneurial operating model that delegates full profit-and-loss accountability to business leaders across geographies. Its organisational structure includes multiple legal entities, comprising subsidiaries, joint ventures, and associate companies. This decentralised framework preserves operational independence while fostering greater transparency and strengthening customer confidence through clear visibility into individual business performance.

Human Resource Management

The Company maintains a strong focus on employee development, engagement, and well-being to foster a high-trust, high-performance culture. It enhances the employee experience through structured initiatives such as cross-functional job rotations, mentorship programmes, and strengthened communication and feedback frameworks. Capability building and leadership development remain strategic priorities, supported by formal training interventions through the PDS Learning Academy and executive coaching andcollaborations. margin performance. A central

HR processes have been modernised through digitisation, including the implementation of HRMS platforms and additional modules to improve efficiency and governance. Employee engagement is reinforced through participative surveys and recognition programmes that acknowledge performance and contributions. Collectively, these initiatives support the development of a motivated, skilled, and future-ready talent base aligned with the Companys long-term growth objectives.

Internal Audit & Controls

The Company has established a comprehensive internal control framework to ensure safeguarding of assets, integrity of financial reporting, and reliability of operational data.

This control environment is reinforced through a structured internal audit programme, periodic senior management reviews, and well-defined policies, standards, and procedural guidelines. Internal audit observations serve as key inputs for risk identification and evaluation. Additionally, business risks are systematically reviewed to proactively identify material exposures that could impact the Companys strategic objectives.

Cautionary Statement

This document contains forward-looking statements that reflect anticipated future events, as well as the expected financial and operational performance of PDS Limited.

These statements are based on certain assumptions and are inherently subject to risks and uncertainties. There is a significant possibility that the assumptions, projections and other forward-looking statements may not materialise as anticipated. Readers are urged to exercise caution and refrain from placing undue reliance on these statements, as various factors could cause actual outcomes and events to differ substantially from those predicted. Hence, this document is accompanied by a disclaimer and is fully subject to the assumptions, qualifications and risk factors discussed in the Managements Discussion and Analysis section of PDS Limiteds Annual Report for the fiscal year 2025-2026.