Prabhhans Industries Ltd Management Discussions

Overview

Your directors are pleased to present the Management Discussion and Analysis Report for the year ended March 31, 2026.

The Management Discussion and Analysis have been included in consonance with the Code of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI). Investors are cautioned that these discussions contain certain forward-looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report consequent to new information or developments, events or otherwise. The main business of the Company is trading in all types of products primarily in papers.

Industry Structure & Development

The clothing industry has strengths across the entire value chain from Fiber, yarn, fabric to apparel. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool, and silk products to the organized textile industry in India. The organized textile industry in India is characterized by the use of capital-intensive technology for the mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

Opportunities and Threats

Clothing and Garments: Positive steps taken by the Central Government for the paper industry, from allocation of funds to give extra rebate to exporters (mainly on made-ups) and various other benefits, are expected to improve investment in this sector and provide more business opportunities in the near future. With increasing capacities of man-made fibres as compared to cotton, the preferred shift of the consumer to use products of man-made fibres i.e. viscose, polyester, polyamide, acrylic, etc. and its blends, is expected.

We believe that the principal factors affecting competition in our business include client relationships reputation, the abilities of employees, market focus and the liquidity on the Balance Sheet.

Indian garment industry has an advantage as it produces and exports stylish garments at economical prices due to cheap labour rates. Today, by way of Technological advancement and use of sophisticated machinery, it has enabled the manufacturers to achieve better quality and well-designed garments.

Risk and Concerns

Risk Management forms an integral part of your Company’s operations. Your Company continues to focus on a system-based approach to business risk management. It broadly involves identification & potential risks; their analysis and impact as also risk mitigation initiatives to address the same. The Board of Director of the Company oversees the risk management Process.

Segment-wise or product-wise performance

During the year under review, since Company is being working in a single segment therefore the specific performance does not stand eligible.

Outlook

The outlook for industry and the Company in the near term can be viewed with cautious optimism.

The Indian textiles industry has immense potential to register an indelible mark while contributing to the growth and success story of the nation but the sector needs more support from the government like policy initiatives, crackdown on red-tapism involved in availing schemes meant for the textile industry.

Moreover, the Centre also took the decision to rationalize the duties on raw material inputs. But more export promotion policies are required for the textiles sector, like in the past, the Central government allowed 100 percent FDI in the sector under the automatic route.

Indian textile industry is entering into a no holds barred kind of phase where the sky is the limit, provided the sector gets robust support from the government in terms of policies, promotions, and incentives so that the domain can move up the ladder and chart its own course in the right direction.

Adequacy of Internal Control System

The Company has adequate internal control systems for the business processes in respect of all operations, financial reporting, compliance with laws and regulations etc. The management information system forms an effective and sound tool for monitoring and controlling all operating parameters. Regular internal audits ensure that responsibilities are executed effectively. The Audit Committee reviews the adequacy of internal controls on regular basis.

Human Resources Development/Industrial Relations

Human resources are valuable assets for any organization. The employees of the Company have extended a very productive cooperation in the efforts of the management to carrying the Company to greater heights. The Company is giving emphasis to upgrade the skills of its human resources and continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees of the Company.

Details of significant changes in key financial ratios, along with detailed explanations therefore

Ratio	Numerator	Denominator	For the year ended 31 March 2026	For the year ended 31 March 2025	Variance %	Reason for changes by more than 25%
Current ratio (in times)	Total current assets	Total current liabilities	1.35	1.34	1%	NA
Debt equity ratio (in times)	Total debts	Shareholders Equity	1.00	0.63	59%	Increased due to increase in borrowings during the year
Debt service coverage ratio (in times)	Earnings available for debt service (Net profit before taxes + Non-	Debt service (Interest & lease payments + principal repayments)	0.27	0.57	-53%	Decreased due to increase in borrowings during the year.
	cash operating expenses like depreciation and other amortizations + Interest + other non-cash adjustments)
Return on equity ratio (in %)	Profits for the year less preference dividend (if any)	Average shareholder’s equity	0.16	0.27	-42%	Decreased due to decrease in profit during the year
Inventory turnover ratio (in times)	Revenue from operations	Average inventory	7.12	8.15	-13%	Decreased due to increase in revenue during the year
Trade receivables turnover ratio (in times)	Revenue from operations	Average trade receivable	7.55	71.90	89%	Increased due to increase in revenue during the year
Trade payables turnover ratio (in times)	Cost of traded goods and other expenses	Average trade payables	8.94	6.49	38%	Increased due to increase in cost of traded goods during the year
Net capital turnover ratio (in times)	Revenue from operations	Average working capital	8.26	10.00	- 17%	NA
Net profit ratio (in %)	Profit for the year	Revenue from operations	1.62%	2.61%	-38%	Decreased due to decrease in profit during the year
Return on capital employed (in %)	Profit before tax and finance costs	Average Capital employed	24.29%	39.85%	-39%	Decreased due to decrease in profit during the year
Return on investment (in %)	Income generated from invested funds	Average invested funds	4.86%	7.86%	-38%	Decreased due to decrease in investment during the year

Discussion on financial performance with respect to operational performance.

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India.

Date: 29.07.2026		For & on behalf of
Place: Ludhiana		Prabhhans Industries Limited
	Sd/-	Sd/-
	Satnam Singh	Parminder Kaur
	Managing Director	Director
	DIN- 09526002	DIN- 09525971