Raymond Lifestyle Ltd Management Discussions

1. Global Economy Overview and Outlook

The global economy is still grappling with major challenges. Slower growth, stubborn inflation, and increasing geopolitical instability are all contributing factors. Leading economic organizations recently predicted a decline in worldwide economic activity, with the United States and China being particularly affected.

Higher US tariffs are likely to affect the global economy by increasing inflation and slowing growth, though a worldwide recession isnt expected. The global economy seems to be settling into a low-growth pattern, which wont be enough to support long-term economic development. To boost growth and development, global and national policies are needed to improve the external economic environment, enhance macroeconomic stability, ease structural limitations, and address climate change.

Global economic growth forecasts for 2025 are looking grim, with major organizations predicting a significant slowdown. The United Nations Conference on Trade and Development (UNCTAD) projects a low 2.3% growth, attributing it to escalating trade tensions and ongoing uncertainties. The International Monetary Fund (IMF) has also cut its 2025 forecast sharply to 2.8% from an earlier 3.3%. Similarly, the Peterson Institute for International Economics (PIIE) expects global GDP growth to slow to 2.7% in 2025, with only a slight improvement to 2.8% in 2026, a notable drop from 2024s 3.2% growth.

India is projected to continue its lead as the fastest- growing major economy in 2025, with a 6.5% growth rate, according to reports from both the World Bank and UNCTAD. This growth will likely be fueled by sustained momentum in the services sector and an acceleration in manufacturing activity, thanks to government efforts in improving logistics infrastructure and implementing tax reforms.

India stands out among countries driving global growth through increased government spending and supportive monetary policies. While robust domestic demand, a shrinking trade deficit, and controlled inflation are bolstering its economy, persistent weak global demand continues to pose trade challenges. Although the risk of foreign investor outflows remains, a rise in domestic investment offers a significant buffer. The Reserve Bank of Indias (RBI) proactive policies have also been instrumental in stabilizing liquidity and managing inflation expectations.

Overall, Indias economic outlook is strong, but global market uncertainties, financial volatility, and trade disruptions remain key risks. Continued policy support and domestic resilience will be vital to maintaining this economic momentum.

The financial year 2024-25 was characterized by a complex and evolving global economic landscape. Geopolitical tensions and macroeconomic uncertainties in international markets continued to pose challenges. For India, while the economy demonstrated resilience and maintained its position as one of the fastest-growing major economies, it was not immune to these pressures.

Persistent high inflation, particularly during the first half of the fiscal year, exerted significant pressure on consumer wallets, leading to subdued demand for discretionary goods. This directly impacted the textile and apparel sector, which is highly sensitive to consumer sentiment and disposable income levels. While inflationary pressures began to moderate towards the end of the year, the impact on consumption patterns was visible throughout the period.

The Indian textile and apparel industry, a cornerstone of the national economy, contributes significantly to GDP, industrial output, and employment. The industry is undergoing a significant transformation, driven by evolving consumer behavior, technological advancements, and a greater focus on sustainability. Key developments include a noticeable shift from unbranded to branded products, the rapid growth of e-commerce and omnichannel retail, and increasing demand for casual wear and specialized product categories like ethnic wear. Government support through initiatives like the Production-Linked Incentive (PLI) scheme continues to encourage domestic manufacturing and investment in the sector.

The global apparel market is a significant force, valued at US$ 1.84 trillion in 2025 and representing 1.65% of global GDP. Its set for steady growth, projected to hit US$ 2.04 trillion by 2029 with a CAGR of 2.61%. Indias apparel industry is particularly well-positioned for this expansion, fueled by innovation, government backing, and rising global demand. The future leaders in this market will be those embracing eco-friendly practices. India is poised to become a central hub for textile innovation and sustainable production, continuing to export high- quality goods and serve its booming domestic market. To fully achieve this potential, the industry must prioritize ongoing innovation, infrastructure improvements, and environmental responsibility.

Raymond Lifestyle Limited is a leading, diversified entity in the fashion and retail space in India. The Company has a strong portfolio of iconic brands and an extensive retail network that caters to a wide spectrum of consumers. The business is structured across the following key segments:

• Branded Textile: The flagship business, renowned for its high-quality suiting and shirting fabrics.

• Branded Apparel: A comprehensive portfolio of ready-to-wear brands including Park Avenue (formal wear), ColorPlus (smart casuals), Parx (casual wear), and Ethnix by Raymond (ethnic wear).

• Garmenting: A B2B business that manufactures and supplies garments to leading domestic and international brands.

• High-Value Cotton Shirting: A specialized business focusing on the production of premium cotton and linen shirting fabrics for leading global brands.

The Companys products reach consumers through a multi-channel distribution network, including an expansive web of over 1,600 exclusive and multi-brand retail stores across India.

Raymond Lifestyle Limited navigated a challenging year, with its performance reflecting the broader industry headwinds.

Financial Performance Highlights (Consolidated, YoY):

1. Weak Consumer Demand: High inflation led to reduced discretionary spending, impacting sales volumes and leading to scale deleverage.

2. Changing Consumer Spending Patterns: The consumer behavior is changing with a greater emphasis on discretionary spending on things like healthcare and travel, rather than apparel and textiles. This shift in priorities coupled with pile-up with consumer due to large inventory clearance by all FMCG companies post COVID-19 period has led to reduced demand for textiles and apparel.

3. Investment in Expansion: Profitability was also impacted by upfront investments in retail store expansion and an adverse sales mix during the year.

• Retail Expansion: Continued its aggressive retail expansion, adding 170 new stores in FY25, taking the total network count to 1,688 stores as of March 31, 2025. This includes a growing presence for its ethnic wear brand, Ethnix by Raymond.

• Strong Balance Sheet: The company successfully maintained a net debt-free position, ending the year with a net cash surplus of Rs.90 Crore.

• Additionally, the Company encountered unforeseen disruptions, including a ransomware attack. Companys IT team with the support of cybersecurity experts, restored back normalcy of the operations, underscoring resilience. This experience reinforced that sharper execution, financial agility, and disciplined capital allocation for future progress.

• Branded Textile: This segment was significantly affected by weak consumer demand and the operational disruption from the ransomware attack. Revenue stood at Rs.3,002 Cr, a decline of 13% from the previous year. EBITDA fell by 42% to Rs.420 Cr, with margins contracting to 14.0% from 20.9%.

• Branded Apparel: Revenue for this segment remained flat at Rs.1,593 Cr. However, EBITDA saw a steep decline of 38% to Rs.118 Cr, with margins falling to 7.4% from 11.9%. This was primarily due to upfront investments in retail expansion and an unfavorable channel mix.

• Garmenting: The garmenting segment showed a modest revenue growth of 3% to Rs.1,068 Cr, supported by new customer acquisitions in international markets. However, EBITDA declined by 52% to Rs.50 Cr due to an adverse sales mix and higher training costs for new customer onboarding.

• High Value Cotton Shirting: Revenue for this segment declined by 4% to Rs.800 Cr. In contrast, EBITDA grew by 21% to Rs.114 Cr, supported by a one-time subsidy of approximately Rs.53 Crore in Q4 FY25.

• Premiumization and Casualization: A growing aspirational consumer base and increased brand consciousness are driving demand for premium products and a shift towards more versatile, casual wear.

• Retail Penetration: The expansion of organized retail, both in metropolitan areas and Tier 2/3 cities, is creating new avenues for growth and brand visibility.

• Government Support: Initiatives like the Production- Linked Incentive (PLI) scheme for textiles aim to boost domestic manufacturing, especially in the man-made fiber (MMF) and technical textiles segments.

• China Plus One Strategy: Global brands are actively looking to diversify their sourcing, presenting a significant opportunity for Indian manufacturers to increase their share of global exports. Potential Free Trade Agreements (FTAs), such as the one with the UK, could further accelerate this trend.

• Intense Competition: The industry faces stiff competition from countries like Bangladesh and Vietnam, which have advantages in terms of scale and cost structures.

• Input Cost Volatility: Fluctuations in the prices of key raw materials, especially cotton, can significantly impact margins.

• Subdued Demand: As witnessed in FY25, weak consumer demand, both domestically and in key international markets, remains a primary threat to volume growth.

• Sustainability and Regulatory Compliance: Increasing global focus on ESG (Environmental, Social, and Governance) standards requires significant investment in sustainable practices and transparent supply chains.

• Macroeconomic Risks: Continued inflation and a slowdown in economic growth could further dampen consumer sentiment and discretionary spending.

• Market-related Risks: The apparel market is intensely competitive and subject to rapidly changing fashion trends and consumer preferences.

• Operational Risks: The business is vulnerable to supply chain disruptions (as evidenced by the ransomware attack), volatility in raw material prices, and the complexities of managing a large and expanding retail network.

The company is actively working to mitigate these risks by diversifying its product portfolio with a focus on high-growth areas like ethnic and casual wear, strengthening its supply chain, and leveraging its brand equity to maintain a competitive edge.

The company has a robust internal control framework, which is essential for its complex and widespread operations. The framework is designed to ensure the accuracy and reliability of financial reporting, the efficiency of operations, the safeguarding of assets, and strict compliance with all applicable laws and regulations. The internal audit function continuously monitors the adequacy and effectiveness of these controls, and its findings are reviewed by the Audit Committee of the Board, ensuring the highest level of oversight.

Our employees are our most valuable asset and the driving force behind our success. The company is committed to fostering a culture of excellence, continuous learning, and inclusivity. We focus on attracting, developing, and retaining the best talent in the industry. Through various training and development programs, we aim to enhance the skills and capabilities of our workforce, ensuring they are equipped to meet the evolving demands of the business.

Raymond Lifestyle is committed to sustainable and responsible business practices, as detailed in its FY25 SASB and climate-related disclosure reports.

• Environmental: The company has a stringent approach to chemical management, moving beyond a simple Restricted Substances List (RSL) to a comprehensive Manufacturing Restricted Substances List (MRSL) framework. It actively monitors and manages its water usage and effluent treatment. There is a clear focus on sourcing sustainable raw materials, with 100% of its wool being certified under the Responsible Wool Standard and increasing use of recycled polyester.

• Social: The company emphasizes worker health and safety, fair labor practices, and product quality across its supply chain.

• Governance: A well-defined governance structure, including dedicated ESG and Risk Management committees at the board level, ensures that climate- related risks and opportunities are integrated into the core business strategy.

While FY25 was a challenging year, the management remains optimistic about the future. Early signs of demand recovery were visible towards the end of the fiscal year. The companys strategic priorities for the future include:

• Capitalizing on Market Recovery: Leveraging its strong brand and expanded retail network to capture the expected revival in consumer demand in FY26.

• Continued Retail Expansion: Persisting with its strategy to deepen its reach across the country, enhancing accessibility for consumers.

• Focus on Profitable Growth: Driving operational efficiencies and optimizing the product and channel mix to improve profitability.

• Leveraging FTAs: Proactively preparing to take advantage of emerging export opportunities from potential trade agreements.

The companys focus on building a sustainable business, backed by a strong brand and a robust balance sheet, positions it well to navigate future challenges and capitalize on the long-term growth story of the Indian apparel and retail sector.

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax regimes, and other statutes.