Pearl Global Industries Ltd Management Discussions

Management Discussion and Analysis

Economy Overview Global Economy

The year under review was characterised by escalating trade tensions and heightened geopolitical uncertainties. Despite these challenges, the global economy exhibited notable resilience. Global GDP grew by 3.4% in CY 2025, broadly in line with the previous year, indicating stable underlying momentum.

Growth was supported by a confluence of factors. Front-loaded trade flows provided impetus to manufacturing and logistics. Sustained investments in Artificial Intelligence (AI), semiconductor ecosystems and digital infrastructure, particularly in North America and parts of Asia, strengthened capital expenditure cycles. In addition, supportive fiscal measures across major economies helped preserve economic stability and support growth.

Growth patterns remained divergent across regions. Advanced economies expanded by 1.9%, reflecting moderate growth within relatively stable policy environments, despite ongoing trade constraints. In contrast, emerging and developing economies grew by 4.4%, supported by stronger domestic demand, resilient services activity and continued public investment. However, several smaller economies faced constraints due to fiscal limitations, currency volatility and elevated debt levels.

Policy responsiveness and technological advancement continued to support economic stability. However, the global economy remains exposed to risks from trade disruptions and geopolitical developments. Escalating tensions in West Asia have increased uncertainty around energy supply chains. Disruptions in key transit routes such as the Strait of Hormuz have contributed to oil price volatility, with spillover effects on inflation, logistics and industrial activity.

In response, several countries have intensified diplomatic engagement and diversified energy sourcing and crude import channels to mitigate supply risks.

Outlook

Following a period of elevated trade barriers and uncertainty in 2025, global economic activity faces additional challenges from geopolitical developments in West Asia. Assuming these tensions remain contained, global GDP is still projected to grow by 3.1% in CY 2026, followed by a marginal improvement to 3.2% in CY 2027.

Global headline inflation is expected to rise modestly to 4.4% in CY 2026 before easing to 3.7% in CY 2027.

The impact of slower growth and higher inflation is likely to be more pronounced in emerging markets and developing economies.

Fiscal and monetary policies across major economies are expected to remain broadly supportive. At the same time, expanding trade partnerships may strengthen supply chain diversification. However, the near-term outlook may witness intermittent volatility due to evolving geopolitical developments, particularly impacting energy markets. This could result in temporary cost pressures and supply-side disruptions.

Overall, the global environment calls for a calibrated approach in the near term, with a continued focus on resilience and adaptability. As global supply chains stabilise, sustaining economic growth is expected to depend on deeper trade integration, institutional reforms and stronger investment-driven growth, particularly across emerging markets.

Indian Economy

India has maintained strong macroeconomic momentum during the year, retaining its position as one of the fastest-growing major economies globally. Real GDP is estimated to grow by approximately 7.7% in FY 2025-26, compared with 7.1% in the previous year, reflecting sustained momentum.

Growth was driven by resilient rural demand, favourable agricultural output and a gradual improvement in industrial activity. Government initiatives, including the Production Linked Incentive (PLI) schemes, continued to support manufacturing. The services sector remained a key contributor, while sustained public capital expenditure on infrastructure sustained overall demand.

Inflation remained broadly contained, with the Consumer Price Index (CPI) at 3.40% based on the revised 2024 base year. Stable inflation supported real incomes and consumption across both urban and rural segments.

Fiscal and monetary measures, including income tax relief, GST rationalisation and an accommodative policy stance, contributed towards maintaining demand conditions.

India continued to strengthen its integration with global value chains

through an expanding network of trade agreements. During FY 2025-26, Indias FTA network expanded to nine FTAs covering 38 countries, including agreements with the UAE, Australia, the U.K., EFTA nations, Oman, New Zealand and the European Union, along with an interim trade framework with the United States. These agreements are expected to enhance export competitiveness, improve market access, facilitate technology transfer and attract longterm investments across sectors, including textiles and apparel.

In response to geopolitical developments in the Middle East, India has taken steps to diversify crude oil sourcing and strengthen alternative supply channels, enhancing energy security.

Outlook

India is expected to remain the fastest- growing major economy in the near term. Real GDP growth for FY 2026-27 is projected in the range of 6.8% to 7.2%.

Growth is likely to be supported by continued government capital expenditure and a recovery in private consumption. Real Private Final Consumption Expenditure is projected to grow by around 7.0% in FY25-26, indicating improving demand conditions.

Ongoing structural reforms are expected to support long-term growth. These include GST rationalisation, progress in free trade agreements and continued efforts to improve the ease of doing business.

Inflation is expected to remain moderate under the revised base year. This may allow the Reserve Bank of India (RBI) to maintain a supportive monetary policy stance. Such conditions are likely to facilitate investment and sustain credit growth, even as global uncertainties persist due to tariff pressures and geopolitical uncertainties.

The global textile and apparel industry is one of the largest and most diversified sectors worldwide. It is supported by strong consumption demand, expanding global trade and evolving fashion trends. The industry continues to demonstrate steady growth, driven by rising urbanisation, increasing disposable incomes and the growing influence of e-commerce and fast fashion.

The global textile and apparel market is projected to be valued at approximately USD 2.10 trillion in 2026. It is projected to reach USD 2.60 trillion by 2030, registering a compound annual growth rate (CAGR) of 5.5% over the forecast period.

Industry Structure and Demand Drivers

The industry is primarily driven by the clothing textiles segment, which accounts for a significant share of global demand. This growth is supported by increasing consumption of ready-to- wear garments, fashion apparel and functional clothing.

Industry Overview

Global Textile and Apparel Industry

Global Textile and Apparel Industrys Size and Growth

Burgeoning population and accelerated urbanisation continue to drive apparel demand globally. The popularity of fast fashion and the growth of digital retail channels have enabled shorter product cycles and wider market access.

Rising awareness of sustainability is influencing material choices and manufacturing practices. At the same time, technological advancements such as automation, artificial intelligence and smart textiles are further transforming the industry landscape.

Material and Product Trends

Synthetic fibres continue to dominate the global market, backed by their durability, cost-effectiveness and versatility across applications. However, the industry is gradually shifting towards sustainable materials, including recycled fibres and organic fabrics, as environmental considerations gain importance.

Demand for performance and technical textiles is also increasing, particularly in activewear and specialised applications. This trend is accompanied by a growing focus on value-added and differentiated product categories.

Regional Dynamics

The Asia-Pacific region remains the dominant hub for textile and apparel manufacturing. This is supported by large-scale production capabilities, cost competitiveness, availability of skilled labour and favourable policy support.

Countries such as Bangladesh, China, India, Indonesia and Vietnam play a central role in global supply chains.

In recent years, Chinas exports to the USA have come down, whereas Vietnam and Bangladeshs exports to the USA have increased. In contrast, North America and Europe are primarily consumption-driven markets. These regions are characterised by higher purchasing power and growing demand for premium, sustainable and performance-oriented apparel, supported by well-established retail and distribution networks.

Industry Outlook

The global textile and apparel industry is expected to witness steady and moderate growth in the coming years. This growth will be driven by increasing emphasis on supply chain diversification, nearshoring strategies and sustainability- led transformation.

Companies are also focusing on digital integration across design, sourcing and retail functions to enhance efficiency and responsiveness. Supported by evolving consumer preferences, expanding global demand and ongoing supply chain realignment, the industry is expected to continue creating long-term growth opportunities across markets.

Indian Textile and Apparel Industry

Indias textile and apparel industry is one of the largest and most significant sectors of the economy. It plays a critical role in employment generation, exports and industrial output.

The sector contributes approximately 2.3% to Indias GDP, 13% to industrial production and 12% to exports, highlighting its structural importance to the economy. It is also one of the largest employment generators, providing direct employment to over 45 million people. A significant proportion of this workforce comprises women and individuals from rural communities.

India holds a strong position globally as the sixth-largest exporter of textiles and apparel. This is supported by a diversified product base and a robust manufacturing ecosystem.

The industry benefits from a comprehensive value chain, spanning fibre production to finished garments. India is the largest cultivator of cotton by acreage, the largest producer of jute and among the leading producers of silk, cotton, polyester and man-made fibres globally.

During FY 2025-26, total exports, including handicrafts, grew by 2.1% year-on- year to Rs.3,16,334.9 crore. This steady increase reflects sustained global demand and the sectors ability to remain competitive despite evolving trade dynamics and macroeconomic uncertainties.

The performance emphasises the strength of Indias diversified textile value chain and its expanding presence across global markets.

Industry Structure and Policy Support¹²

The Indian textile sector remains highly fragmented, with nearly 80% of production capacity concentrated in MSMEs and cluster-based units. The structure contributed to its labourintensive and inclusive nature.

The Government of India continues to support the sector through initiatives aimed at enhancing competitiveness, scale and sustainability. The Union Budget FY 2026-27 places textiles at the centre of the growth strategy, with focus on:

• Promotion of man-made fibres (MMF) and technical textiles

• Support for MSMEs, artisans and skill development

• Strengthening the entire value chain from fibre to finished products

These measures are expected to enhance Indias position in global textile value chains while driving exports and employment.

Opportunities

* Strong government support through schemes such as PM MITRA, PLI and export incentives

* Large domestic market supported by rising disposable incomes and consumption

* Diversified value chain spanning from fibre to finished garments

* Increasing demand for MMF, technical textiles and sustainable products

* Global shift towards a China+1 sourcing strategy

* Export growth potential with a target of Rs.9 Lakh crore by 2030

* Availability of a large and skilled labour base

Opportunities and Challenges

Industry Outlook

The Indian textile and apparel industry is expected to witness steady growth over the medium term, supported by strong domestic demand, expanding export opportunities and continued government policy support. Initiatives such as PM MITRA, the Production Linked Incentive (PLI) Scheme and the growing focus on technical textiles and man-made fibres are expected to enhance the sectors global competitiveness and manufacturing scale.

Additionally, Indias trade agreements and Free Trade Agreements (FTAs) with key markets such as the U.K., Australia and the UAE, along with ongoing engagements with the European Union and other global economies, are expected to improve market access and strengthen export competitiveness for Indian textile manufacturers. The increasing adoption of the China+1 sourcing strategy by global brands further positions India as a preferred sourcing destination.

Challenges

* Volatility in global demand and dependence on key export markets

* Intense competition from low-cost manufacturing countries such as Bangladesh and Vietnam

* Infrastructure and logistics inefficiencies in certain clusters

* High dependence on cotton vs. the global MMF shift

* Fragmented industry structure with MSME dominance

* Rising cost pressures, including labour, compliance and logistics)

* Need for continuous technology upgradation and productivity improvement

With a strong raw material base, skilled workforce and rising emphasis on sustainability, digitalisation and value-added products, the industry is well-positioned to strengthen its role in global textile supply chains and drive long-term growth.

Company Overview

Pearl Global Industries Limited (Pearl Global, The Company) is a leading Indian- headquartered multinational specialising in end-to-end apparel manufacturing solutions with a strong commitment to sustainability and innovation. Established in 1987, the Company has evolved into a trusted partner to many of the worlds leading fashion brands, delivering high-quality, ethically manufactured garments across diverse categories, age groups and style segments.

PGIL has built a diversified manufacturing base across India, Bangladesh, Vietnam, Indonesia and Guatemala. This multi-country presence enables the Company to serve key global markets, including the United States, Europe, the United Kingdom, Japan and Australia. It enhances operational agility, optimises costs and allows effective navigation of evolving trade dynamics and geopolitical developments.

The Companys model emphasises value-added products, strong customer partnerships and a responsive supply chain. This approach enables PGIL to adapt quickly to changing fashion trends and demand cycles. Long-standing relationships with global brands have been forged through consistent delivery of quality, reliability and innovation.

PGIL continues to pursue scalable growth through capacity expansion including partnership factory, process optimisation, technology adoption, while maintaining a disciplined approach to capital allocation.

Sustainability is integral to operations, with ongoing initiatives to improve resource efficiency, reduce environmental impact and ensure compliance with global standards.

Listed on Indian stock exchanges, Pearl Global is powered by a diverse, skilled workforce and a culture of excellence, sustainability and customer-centricity. Trusted by global brands such as Chicos, Kohls, Muji, Old Navy, Poligono, Primark, PVH, Ralph Lauren and other marquee names in the Industry. The Company is recognised as a leader in ethical manufacturing and circular economy practices. Pearl Global remains committed to becoming the worlds preferred apparel partner, setting new benchmarks in responsible fashion and operational excellence.

Key Highlights of the Year

• Strengthened global manufacturing footprint in key manufacturing locations, enhancing supply chain flexibility and risk diversification.

• Expanded geographical presence across Europe, the U.K., Japan and Australia, diversifying the targeted geography or addressable market reducing dependence on a single market.

• Enhanced customer diversification, with the addition of new global brands and increased engagement across existing clients.

• Strengthened order book visibility and execution capabilities, supported by a diversified product portfolio and strong client relationships.

• Strengthened multi-country sourcing strategy, improving tariff optimisation and competitiveness across key markets.

• Achieved sustained quality production scale, supported by strong execution capabilities, leading to timely shipment of quality garment during the year.

• Advanced capacity expansion initiatives, including new manufacturing and partnership facilities to support future growth.

• Improved operational efficiency and productivity through technology adoption and process optimisation across manufacturing units.

• Advanced sustainability initiatives, including water-efficient technologies and increased use of renewable energy in operations.

Revenue and Profitability Growth

Pearl Global Industries Limited delivered a resilient performance during FY 202526. This was supported by its diversified manufacturing footprint, improving product mix and strong execution across geographies.

The Company reported revenue growth of 11.5% year-on-year, led by volume and high value-added product growth in overseas business.

Profitability remained stable despite external headwinds, including tariff- related pressures and ramp-up costs associated with new facilities. Operational efficiencies and a focus on value-added products supported margin resilience during the period.

The Company further strengthened its global presence by expanding across Europe, the U.K., Japan and Australia, while reducing dependence on a single geographic location. Its multicountry manufacturing model enabled effective navigation of evolving trade dynamics and supported sustained operational performance.

Capacity Expansion

Capacity expansion remains a key strategic priority for Pearl Global. It is aimed at enhancing scale, improving operational efficiency and supporting long-term growth.

During the year, the Company progressed with capacity additions across the locations except Guatemala. The total capacity as on 31^st Mar-2026 stands at 100.8 million pieces p.a. compared to 93.1 million pieces p.a. as on 31^st Mar-2025.

In Bangladesh, expansion initiatives are focused on strengthening large- scale manufacturing capabilities.

The ongoing expansion project in Bangladesh is scheduled for completion by H1 FY 2026-27 and is expected to add 6-7 million pieces of capacity during FY 2026-27.

The Company is also evaluating multiple projects to grow its manufacturing footprint in Vietnam and Indonesia through in-house expansion and a partnership factory arrangement.

These initiatives are expected to enhance the Companys ability to meet growing global demand while maintaining flexibility across geographies.

Growth Potential Post-Expansion

With ongoing capacity expansion and a diversified manufacturing base, Pearl Global remains well- positioned to achieve 125-130 million pieces by FY 2027-28

Its multi-country presence enables optimisation of sourcing, responsiveness to changing customer requirements and utilisation of trade advantages across key markets.

Strong relationships with existing customers, along with the addition of new global brands, continue to support a robust order pipeline.

Going forward, the Company remains focused on scaling operations efficiently, improving product mix and enhancing customer engagement, positioning it to sustain growth momentum and strengthen its position as a global apparel manufacturing partner.

Geographical Reach

Pearl Global Industries Limited has established a diversified manufacturing footprint across South Asia, Southeast Asia and Central America. This enables the Company to serve key international markets with agility and resilience.

Its multi-country presence supports cost optimisation, supply chain continuity and effective management of trade dynamics.

Each geography plays a distinct strategic role in the Companys global operating model, supporting a balanced mix of scale, efficiency and market proximity.

South Asia India

India remains a key manufacturing base for the Company, supported by strong design capabilities and proximity to global customers. Operations continue to scale through capacity additions, including the commissioning and ramp-up of new facilities. Recent trade developments with major markets such as the United States, the United Kingdom and the European Union are expected to enhance competitiveness and contribute meaningfully to future growth. With Indias recent trade agreements with the U.S., EU and UK—alongside earlier agreements with Japan and Australia—the Company now has preferential access to all major markets collectively valued at cover USD 250 billion. Pearl Global is strategically positioned to accelerate growth, strengthen investor confidence in Indias potential and capitalise on broader market opportunities. The UK FTA, in particular, opens new avenues to expand Indias revenue contribution to the UK market. With capacity already in place, the Company is well-prepared to leverage these opportunities and drive revenue and profitability growth. The UK business, which currently contributes around 5% of revenue, is expected to expand nearly 2-3x over the next 1-2 years, supported by the India-UK FTA and increasing manufacturing capacity in India. Adequate capacity has also been built to support incremental demand as trade conditions improve.

Bangladesh

Bangladesh is a core pillar of Pearl Globals manufacturing network, offering cost efficiency, skilled workforce and favourable trade access to key markets.

The Company is strengthening its presence in the region through ongoing capacity expansion, including new apparel manufacturing capacity and development of a sustainable laundry facility. This in-house expansion is expected to add approximately 6-7 million pieces of annual capacity, which will support operational scale, efficiency and margin improvement. The sustainable laundry facility in Bangladesh will reduce the washing cost and water consumption.

Bangladesh continues to benefit from strong export competitiveness, established trade advantages and increasing sourcing diversification by global brands under the China+1 strategy. Strong order visibility, faster ramp-up capabilities and growing customer engagement position the geography as a key growth driver for the Company.

Southeast Asia Vietnam

Vietnam plays a strategic role in serving high-value and fashion-oriented segments. Its strong trade linkages and operational efficiency support value- added production and deeper customer engagement. The geography enhances product diversification and supports margin improvement.

Vietnam continues to strengthen its position as one of the worlds leading textile and apparel exporters, with industry exports estimated at approximately USD 46 billion in 2025¹³, reflecting growth of around 5-7% year- on-year. The country also benefits from favourable trade agreements, including the EU-Vietnam Free Trade Agreement (EVFTA) and increasing sourcing diversification by global brands under the China+1 strategy. These structural advantages continue to create longterm growth opportunities for apparel manufacturers operating in the region.

Indonesia

Indonesia is an emerging growth hub and is currently in a ramp-up phase following recent operational realignment. Increasing volumes and customer traction are expected to drive scale and enhance sourcing diversification.

Indonesias textile and apparel industry continues to demonstrate longterm growth potential, supported by competitive labour availability, a large manufacturing base and rising export opportunities. The countrys textile market is estimated to be valued at approximately USD 40 billion in 2025¹⁴, with continued growth expected over the coming years. Increasing focus on higher-value products, sustainability initiatives and expanding global demand for diversified sourcing locations are expected to support future growth opportunities in the region.

Near Shore Guatemala

Guatemala serves as a nearshore manufacturing base for the U.S. market. It offers reduced transit time and favourable trade access.

Operations are in a stabilisation phase, with ongoing efforts to improve efficiency and scale. The geography remains integral to enhancing responsiveness and strengthening the regional supply chain.

Global Manufacturing Footprint

Location	No. of Units		Annual Capacity (in Million Pieces)	Specialisation
	In-house	Partnership
India	8		25.9	Woven and Knit products including Top, Bottoms and dresses, womens fashion wear, mens wear and kids wear
Bangladesh	4	5	59.7	Woven, knits, denim, sleepwear and loungewear, active wear & athleisure, tops and bottoms for men, women and kids
Vietnam	1	4	7.2	Outerwear and jackets including down jackets, woollen jackets and coats, seam sealed jackets, puffers, parkas, blazers, anoraks, swimming trunks and synthetic bottoms
Indonesia	2		4.8	Womens professional wear, performance wear, activewear, Woven tops & dresses, sleepwear and loungewear
Guatemala	1		3.3	Polos, heavy weight knits, light weight knits

Business Performance

Pearl Global Industries Limited delivered a resilient operational performance during FY 2025-26. This was supported by its diversified manufacturing footprint, strong customer relationships and disciplined execution across geographies.

During the year ended FY 2025-26, the Company reported revenue of Rs. 5,025 crore, reflecting a year-on- year growth of 11.5%. The growth was driven by improved product mix and higher contribution from key manufacturing locations, particularly Vietnam and Indonesia.

Operating performance remained stable during the period. EBITDA stood at Rs.464 crore, with a margin of approximately 9.2%. Adjusted EBITDA margin was 10.3% Excluding the reciprocal tariff impact crore incremental loss in Bihar/Guatemala.

Profit after tax for the year was Rs.270 crore, representing year-on-year growth of 17.0%. This improvement was supported by operational efficiencies and ongoing cost optimisation initiatives.

Operationally, the Company continued to prioritise geographical diversification. It reduced dependence on any single market while expanding its presence across Europe, the U.K.,

Japan and Australia. The multi-country manufacturing model enabled effective management of tariff-related challenges and evolving global trade dynamics.

The Company also made steady progress on capacity expansion initiatives in Bangladesh and India. At the same time, it continued to scale operations in emerging locations such as Indonesia and Guatemala. These efforts are expected to strengthen production capabilities and support future growth.

With a strong order book, an improving product mix and a continued focus on execution, the Company remains well-positioned to sustain its growth trajectory.

Financial Highlights (Consolidated)

( Rs. in Crore Unless Stated Otherwise)

Particulars	FY 2025-26	FY 2024-25	FY 2023-24	FY 2022-23	FY 2021-22
Revenue from Operations	5,024.6	4,506.3	3,436.2	3,158.4	2,713.5
EBITDA	463.9	403.6	307.8	255.5	140.6
EBITDA Margin (%)	9.2	9.1	9.0	8.1	5.2
Other Income	37.1	33.6	32.4	22.8	33.5
Profit Before Tax	309.3	267.3	192.1	175.8	85.8
Profit After Tax	270.0	230.8	169.1	153.0	70.1
PAT Margin (%)	5.4	5.1	4.9	4.8	2.6
Earnings Per Share ( Rs.)	60.34	54.96	40.26	34.45	31.46

F in a nc ia I Ratio s

Particulars	FY 2025-26	FY 2024-25	% Change	Formula Used
Debtors Turnover Ratio (x)	12.34	13.89	-11.19	Revenue from Operations/Receivables
Inventory Turnover Ratio (x)	5.69	6.39	-10.91	Revenue from Operations/Inventory
Interest Coverage Ratio (x)	4.01	3.65	9.88	EBIT/Interest
Current Ratio (x)	1.60	1.57	1.54	Current Assets/Current Liabilities
Gross Debt-Equity Ratio (x)	0.48	0.48	-0.72	Total Borrowings/Total Equity
Net Debt-Equity Ratio (x)	-0.04	-0.01	225.50	Net Debt/Total Equity
Operating Profit Margin (%)	8.2%	8.03%	2.12	EBIT/Revenue from Operations
Net Profit Margin (%)	5.4%	5.12%	4.93	PAT/Revenue from Operations
Return on Capital Employed	27.7%	30.5%	-9.13	EBIT/(Total Equity + Net Debt)
Return on Net Worth (%)	18.5%	20.0%	-7.37	PAT/Shareholders Equity

(x) denotes Times

The reason for the variation (improvement) in Net Debt Equity Ratio is mainly on account of negative net debt level due to healthy cash and bank balance as on 31 Mar 2026.

Risk Management

Pearl Global Industries Limited operates in a dynamic global apparel environment characterised by evolving trade policies, shifting consumer demand, geopolitical uncertainties and increasing sustainability imperatives.

During FY 2025-26, the Company continued to navigate a complex environment marked by tariff uncertainties, supply chain disruptions and cautious retail demand across key markets.

The Companys diversified manufacturing footprint across India, Bangladesh, Vietnam, Indonesia and

Guatemala, along with a geographically diversified customer base, remains central to its risk mitigation approach. This enables resilience against region-specific disruptions and demand volatility.

A structured enterprise risk management framework supports the proactive identification, assessment and mitigation of emerging risks. This framework ensures business continuity and long-term value creation.

Risk Assessment and Mitigation Framework

Risk Title	Impact	Mitigation Strategy
Trade Policy and Tariff Risk	Changes in tariffs, particularly in the U.S. market, may impact pricing competitiveness and margins. This could necessitate pricing adjustments and affect profitability.	The Company utilises its multi-country manufacturing presence across India, Bangladesh, Vietnam and Indonesia to optimise duty structures.
Geographical Revenue Concentration	High exposure to select markets, especially the U.S., increases vulnerability to demand fluctuations and policy changes.	The Company is accelerating diversification into the EU, the U.K., Japan and Australia. This is supported by expanding its customer base and leveraging FTAs.
Supply Chain and Geopolitical Disruptions	Global disruptions, including trade conflicts and logistics constraints, may delay deliveries and increase costs.	A geographically diversified manufacturing footprint and a flexible supply chain enable efficient rerouting of production and shipments.
Demand Volatility and Retailer Behaviour	Cautious purchasing by global retailers and inventory corrections may lead to order variability and volume pressure.	The Company focuses on a value-added product mix, strengthens order book visibility and enhances production agility to respond quickly to demand changes.
Foreign Exchange Risk	Currency fluctuations impact margins given the export-oriented revenue model of the business.	The Company adopts structured hedging strategies, supported by natural hedging through import-export balancing and active treasury management.
Operational Execution Risk (Multi-Country Manufacturing)	Expansion into new geographies and the ramp-up of facilities, such as Bihar and Guatemala, may impact efficiency and margins in the short term.	The Company leverages experience from established locations such as Bangladesh and Vietnam. It follows a phased ramp-up, backed by workforce training and standardised operating processes.
Client Concentration Risk	Dependence on a limited number of large customers may expose the Company to order concentration risk.	The Company continues to broaden its customer base across geographies while deepening engagement with existing clients to enhance retention and share of business.

Human Resources Management

Pearl Globals human resource function continued to evolve during FY 2025-26 in line with the Companys expanding global operations and growing workforce footprint across India, Bangladesh, Guatemala, Vietnam and other geographies. The HR framework is increasingly aligned around three key pillars- talent management, cultural integration and regulatory compliance, supported by strengthened governance systems and digital HR processes.

While core policies relating to hiring, performance management, leadership development and compliance remain globally standardised, the Company has adopted a flexible and localised execution approach to address region- specific labour market dynamics, skill availability and cultural nuances.

The Company continues to invest in leadership p ipelin es, succession planning and capability development, enabling the HR function to transition from a transactional role to a strategic business partner supporting organisational agility, workforce engagement and longterm resilience. Pearl Global has also institutionalised a structured internal growth framework based on clearly defined competency models, regular talent reviews, cross-functional exposure and targeted learning interventions, creating a strong pipeline of internally developed talent across functions and geographies.

As the Company scaled operations across multiple regions during the year, including capacity additions in Bangladesh and Bihar significant focus was placed on strengthening recruitment, onboarding, training and workplace safety processes without compromising operational quality or employee well-being. The Company adopted a structured "train- deploy-stabilise" model supported by multilingual induction programmes, standard operating procedures, continuous skill assessments and strong EHS oversight mechanisms. In parallel, Pearl Global further strengthened its worker-centric ESG initiatives through programmes focused on employee welfare, womens empowerment, financial literacy, health awareness and safe working conditions. The Company also continues to enhance diversity and inclusion across its workforce, with women representing a significant proportion of total employees globally, while initiatives aimed at improving leadership representation, cross-cultural integration and equal opportunity frameworks gained further momentum during the year. Overall,

Pearl Globals organisational culture remains values-led, performance-driven and increasingly integrated across geographies, with strong emphasis on operational discipline, employee development, ethical practices and compliance standards.

Internal Control Systems

Pearl Global maintains a robust internal control framework designed to ensure operational efficiency, financial integrity and regulatory compliance.

The Company adheres to stringent governance practices, supported by active oversight from the Board of Directors and the Audit Committee, ensuring compliance with SEBI regulations and alignment with global best practices.

The Companys integrated SAP system, implemented across all manufacturing units, plays a critical role in enhancing operational transparency and efficiency. To uphold the highest standards of governance, Pearl Global engages Big Four accounting firm as its statutory auditor for overseas operations, thereby embedding global best practices in financial oversight.

To further strengthen its control environment, the Company appointed M/s. Deloitte Touche Tohmatsu as the statutory auditor for Pearl Global (HK) Limited for the financial year ending March 31, 2026. Additionally, Ernst & Young (E&Y) continues to oversee internal audits for India and Bangladesh and has been further engaged for Vietnam for FY 2026-27. The Company remains committed to continuously strengthening its internal control systems across all geographies.

Cautionary Statement

Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties. Words such as anticipate, believe, estimate, intend, will, expect and similar expressions are intended to identify such forwardlooking statements.

The Company assumes no obligation to update, amend, or revise any forward-looking statements based on subsequent developments, information, or events. Actual results, performance, or achievements may differ materially from those expressed or implied in such statements due to various risks, uncertainties and other factors beyond the Companys control.