Saraswati Saree Depot Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. Cautionary Statement

Forward looking statement -

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements of the Company have been prepared in accordance with the provisions of the Companies Act, 2013 ("the Act"), the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other applicable provisions of the Act.

The financial statements have been prepared on the historical cost basis, except for those assets and liabilities that are required to be measured at fair value or amortised cost in accordance with the applicable Indian Accounting Standards.

In preparing these financial statements, management has made estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, income, expenses and related disclosures. These estimates and underlying assumptions are based on historical experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates and are reviewed on an ongoing basis.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "SSDL" are to Saraswati Saree Depot Limited.

2. GLOBAL ECONOMIC OVERVIEW

The global economy in FY26 has transitioned into what may be best described as an "era of resilient normalization." Following a prolonged phase of monetary tightening across major economies between 2023 and 2025, global growth has demonstrated notable stability, defying earlier expectations of a sharp slowdown. Policymakers across developed markets have largely succeeded in engineering a soft landing, balancing inflation control with economic continuity.

Global GDP growth is estimated at approximately 3.3% in 2026, reflecting a modest but stable expansion. This resilience has been achieved despite ongoing geopolitical tensions, fragmented trade dynamics and periodic commodity price volatility. A defining feature of the current global environment is the divergence in regional growth trajectories. While the United States continues to exhibit strength supported by robust labor markets and innovation-led productivity, the Eurozone remains relatively subdued, constrained by energy uncertainties and weaker industrial output.

Emerging markets, particularly in Asia, continue to anchor global growth. Structural shifts in global supply chains—most notably the "China Plus One" strategy—have accelerated, evolving from a tactical diversification approach into a long-term realignment of manufacturing capabilities. Countries such as India, Vietnam and Bangladesh are increasingly benefiting from this transition, positioning themselves as key global production hubs.

For the textile and apparel sector, these developments carry significant implications. The reconfiguration of global sourcing patterns has enhanced Indias relevance within the global value chain, supported by its integrated manufacturing ecosystem and favorable demographic profile. At the same time, input cost volatility—particularly in synthetic fibers such as polyester and viscose—continues to pose challenges, driven largely by fluctuations in crude oil prices and geopolitical developments.

Additionally, sustainability considerations are increasingly shaping global production and consumption trends. Regulatory pressures and consumer preferences are accelerating the adoption of environmentally responsible sourcing, recycled materials and circular manufacturing practices.

Overall, while global risks persist, the underlying resilience and structural transformation of the global economy provide a balanced and constructive backdrop for the textile sector.

Source: IMF World Economic Outlook (April2026) -https://www.imf.org/en/Publications/WEO

3. INDIAN ECONOMIC OVERVIEW

India continues to reinforce its position as the fastest-growing major economy globally, with GDP growth estimated at approximately 7.0% in FY26. This growth reflects not merely cyclical recovery but a deeper structural strengthening of the economy.

The growth momentum is underpinned by three key drivers. First, sustained government capital expenditure in infrastructure and manufacturing has enhanced productivity and improved logistics efficiency. Second, the rapid e x p a n s i o n o f d i g i t a l infrastructure—through platforms such as UPI, Aadhaar and e-commerce ecosystems—has deepened financial inclusion and broadened consumption access. Third, resilient domestic consumption, supported by improving income levels, continues to act as a stable growth engine.

A notable development during the year has been the revival of rural demand. Favorable monsoon conditions, improved agricultural output and supportive policy measures such as higher Minimum Support Prices have contributed to increased rural incomes. This has translated into stronger discretionary spending, particularly in categories linked to social and cultural consumption such as apparel, weddings and festive purchases.

The consumption pattern, which previously reflected a "K-shaped recovery," is now showing signs of normalization, with broader participation across income segments. Inflation has remained within the Reserve Bank of Indias target range of 2%-6%, supporting purchasing power and consumption stability.

For the saree industry, which is intrinsically linked to cultural occasions and discretionary spending cycles, these macroeconomic trends provide a strong demand foundation. The resurgence in weddings, festivals and traditional events has positively influenced consumption patterns, reinforcing growth prospects for the sector.

Source: RBI Annual Report FY26 - https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx

4. INDUSTRY STRUCTURE AND DEVELOPMENT

A. Textile and Apparel Market

The Indian textile and apparel market continues to demonstrate robust long-term growth potential, with its size estimated at USD 248.70 billion in 2025 and projected to reach USD 656.31 billion by 2034, registering a strong CAGR of 11.38% over 2026-2034. This growth trajectory is underpinned by a combination of structural drivers including rising domestic consumption, increasing export competitiveness and policy support through initiatives such as PLI schemes and textile parks. The sector remains a vital pillar of Indias economy, contributing significantly to GDP, exports and employment, while also acting as a bridge between traditional craftsmanship and modern industrial capabilities.

From a raw material perspective, natural fibres continue to dominate the industry, accounting for approximately 56% of the market in 2025. This dominance is largely attributed to Indias strong cotton production base, well-established ginning and spinning infrastructure and a long-standing legacy of handloom and textile traditions. The availability of diverse natural fibres such as cotton, silk, wool and jute supports a wide spectrum of textile applications, enabling India to cater to both mass-market and premium segments across domestic and global markets.

In terms of application, clothing textiles remain the largest demand driver, contributing around 40% of the total market share in 2025. This is supported by Indias large and growing population, rising disposable incomes, increasing urbanisation and heightened fashion awareness, particularly among younger consumers. Additionally, the rapid expansion of organised retail, e-commerce platforms and fast-fashion brands has further accelerated apparel consumption, positioning clothing textiles as the primary growth engine for the sector.

At the product level, fabric accounts for the largest share at approximately 38% in 2025, highlighting the importance of the intermediate value chain where yarn is converted into usable textile material. Regionally, Maharashtra leads the textile landscape with a 20% market share, driven by strong industrial clusters in Mumbai and Pune, established textile manufacturing infrastructure and strategic access to ports that facilitate efficient trade. This regional concentration reinforces Maharashtras role as a key hub for both domestic distribution and export-oriented textile production.

Source: https://www.imarcgroup.com/indian-textiles-apparel-market

B. India Saree Market - Structural Insights

The saree continues to be the largest category within womens ethnic wear in India, retaining its cultural significance while adapting to contemporary fashion trends. The market is witnessing steady growth, supported by increasing formalization and a gradual shift toward organized retail structures.

The market size is estimated to grow from USD 6.15 billion in 2025 to USD 6.62 billion in 2026, with a long-term projection of USD 10.77 billion by 2034. A key growth driver is the emergence of the "affordable premium" segment, typically priced between ^800 and ^3,000. This segment reflects a convergence of aspiration and value, with consumers seeking improved fabric quality, contemporary designs and competitive pricing.

This evolving consumer preference is reshaping product offerings and driving innovation across the value chain, creating opportunities for scalable and organized players.

C. Digital Transformation and Changing Consumption Patterns

The saree industry is undergoing a meaningful transformation driven by digital adoption and evolving consumer behavior. Social commerce platforms such as WhatsApp and Instagram have become integral to B2B transactions, enabling seamless product discovery and order placement. Simultaneously, the expansion of e-commerce into Tier-2 and Tier-3 markets has significantly widened the addressable market.

Consumer preferences are also shifting toward convenience and customization. The demand for ready-to- wear and pre-stitched sarees is growing rapidly, particularly among younger consumers, with this segment witnessing strong double-digit growth. These trends are redefining traditional distribution models and enabling more agile, technology-driven business approaches.

5. COMPANY OVERVIEW

Saraswati Saree Depot Ltd. (SSDL) is a key player in sarees wholesale (B2B) segment and its origin into the sarees business dates back to the year 1966. It is also engaged in the wholesale business of other womens apparel wear such as Kurtis, dress materials, blouse pieces, lehengas, bottoms, etc. Its product catalogue consists of more than 3,00,000 different SKUs.

The Company expanded their product range to include ready-made garments in 2017 with the beginning of Kurti sales. Since then, the ready-mades portfolio has grown to include several other offerings such as bottoms, pyjamas, one-piece clothing and dresses. The Kurti business of the partnership firm has grown significantly and has been recognized with awards such as "Star of the Industry" and "Iconic Brand" at the annual Kurti Expo events.

The sarees are sourced from different manufacturers across India. Over the years, Company has developed relationships with manufacturers in hubs like Surat, Varanasi, Mau, Madurai, Dharmavaram, Kolkata, and Bengaluru. It regularly sources sarees and other womens apparels from more than 9000 weavers/suppliers across different states in India.

6. OPPORTUNITIES, RISKS AND CONCERNS

The saree market in India continues to evolve with changing consumer dynamics and increasing workforce participation among women, driving the emergence of "professional ethnic wear". This shift is transforming sarees from occasion-based attire to everyday workwear, resulting in more stable and non-seasonal demand.

The industry is largely driven by the economy segment, which holds ~55% market share, reflecting strong demand from price-conscious consumers. Additionally, cotton sarees dominate with ~23% market share, supported by their affordability, comfort and suitability for Indias climate.

Digital transformation is further accelerating growth, with increasing adoption of B2B e-commerce platforms, AI-based recommendations and virtual draping technologies, enabling better inventory management and deeper penetration into Tier 2 and Tier 3 markets.

The market is also witnessing a trend of premiumization and fusion wear, including ready-to-wear and Indo- Western sarees, which are gaining traction among younger consumers and expanding the overall addressable market.

Threats

The industry faces raw material price volatility, particularly in cotton and synthetic yarns, which can significantly impact margins in a low-margin wholesale environment. It also remains highly fragmented, with a large presence of unorganized players competing aggressively on pricing, thereby limiting pricing power and customer stickiness for organized businesses.

Further, a shift toward Western and casual wear, especially among younger consumers, may reduce the frequency of saree usage in urban markets, restricting demand primarily to occasions. Additionally, supply chain disruptions and global uncertainties can increase logistics costs, delay procurement and impact overall operational efficiency, particularly for businesses dependent on large-scale distribution networks.

Source: —IMARC Group India Saree Market Report (2026-2034); -Mordor Intelligence Textile Market Report

7. Financial Performance

Particulars	2025-26	2024-25	Change
Revenue from Operations	6311.62	6035.90	4.57%
Operating Profit (EBITDA)	378.08	477.88	(20.88%)
Finance Cost	10.03	22.79	(55.99%)
Depreciation Cost	56.09	46.88	19.65%
Profit before Tax	311.96	408.21	(23.58%)
Profit after Tax	234.06	305.76	(23.45%)

Financial Ratios

Particulars	2025-26	2024-25	% Change	Reason
Debtor Turnover Ratio (Days)	8.02	7.66	5%	Increase in Average Trade receivables on account of overall business growth
Inventory Turnover (Days)	5.13	5.26	-3%	Increase in closing inventory on account of future orders
Interest Coverage Ratio (Times)	NA	NA	-	-
Current Ratio (Times)	2.98	2.63	13%	There is increase in working capital requirement due to increase in inventory and trade receivables.
Debt-Equity Ratio (Times)	-	0.02	-100%	Borrowings repaid by company to reduce finance costs.
EBITDA Margin (%)	5.10%	7.14%	-26%	Decrease in earning dues to regrouping of discount on sales
Net Profit Margin (%)	4.91%	6.61%	-26%	Decrease in earning dues to regrouping of discount on sales
Return on Net Worth (%)	16.43%	22.10%	-26%	Decrease in earning dues to regrouping of discount on sales

8. Internal Control Systems and Adequacy

The Companys internal control systems, including internal financial controls, have been designed and implemented by the management to provide reasonable assurance regarding the reliability of financial reporting, the effectiveness and efficiency of operations, safeguarding of assets against unauthorized use or disposition, and compliance with applicable laws and regulations, including the Companies Act, 2013, the Listing Regulations, directions issued by the Securities and Exchange Board of India, labour laws, tax laws and other applicable statutes.

The Company has an Internal Audit function that operates independently and reviews, on a test- check/sample basis, the adequacy and operating effectiveness of internal control checks across significant areas of the Companys operations, including accounting and finance, procurement, business operations, statutory compliances, IT processes, and safeguarding of assets. The scope and coverage of the internal audit is guided by a risk-based internal audit plan, which is reviewed annually and approved by the Audit Committee.

Reports of the Internal Auditor are placed before the Audit Committee for its review. Based on such reports, corrective actions are undertaken by the respective process owners, under the supervision and follow-up of the Audit Committee, to strengthen the control environment. Disciplinary action is initiated by the management, wherever warranted, for non-compliance with corporate policies and controls.

Owing to the inherent limitations of any internal control system, including the possibility of collusion or override of controls by management or employees, there can be no absolute assurance that all events of error or fraud will be detected. However, the internal control systems are periodically reviewed by management and the Internal Auditor to identify weaknesses and are strengthened accordingly, with the objective of ensuring optimal utilization of resources, improving financial management, and facilitating appropriate information flow for effective monitoring.

9. HUMAN RESOURCES

The Companys workforce is central to its operational success. With a team of over 500 employees, the focus remains on continuous skill development, performance-driven incentives and employee engagement. The Company has maintained a stable workforce with low attrition levels, reflecting a positive organizational culture and alignment between employee and business objectives.

10. OUTLOOK

The outlook for FY27 remains positive, supported by favorable macroeconomic conditions, improving rural demand and structural growth within the textile sector. The continued formalization of the saree market, expansion of the affordable premium segment and increasing digitalization of distribution channels are expected to drive sustainable growth.

With a clear strategic focus on scale, efficiency and customer-centricity, Saraswati Saree Depot Limited is well-positioned to capitalize on emerging opportunities and deliver long-term value creation.

	For and on Behalf of The Board of Directors
	Vinod Dulhani
Place : Kolhapur	CEO & Managing Director
Date : 14.08.2026	DIN: 09105157