Shree Balaji Mala Textiles Ltd Management Discussions

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Red Herring Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian GAAP, the accounting standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" 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 our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factor

BUSINESS OVERVIEW

Our Company was originally incorporated as “Shree Balaji (Mala) Textiles Private Limited” as a private limited company under the provisions of the Companies Act, 1956, with a Certificate of Incorporation dated September 30, 2005, issued by the Deputy Registrar of Companies, West Bengal. Subsequently, our Company was converted from a private limited company to a public limited company pursuant to a special resolution passed in the Extraordinary General Meeting of the Company on February 20, 2025, and the name of our Company was changed from “Shree Balaji (Mala) Textiles Private Limited” to “Shree Balaji (Mala) Textiles Limited”. A fresh Certificate of Incorporation was issued to our Company by the Central Processing Centre, Manesar, on March 24, 2025. The Corporate Identification Number of our Company is U17299WB2005PLC105711.

Our Promoter Mr. Binod Kumar Kedia had started his journey as a trader of cotton sarees under the name of “Shree Balaji Textile” a proprietorship concern in the category of ‘Women Specific Design. In the year 2005, Shree Balaji (Mala) Textiles Private Limited was incorporated and the proprietorship was taken over by the company through a Business Takeover Agreement dated June 27, 2006. Converted to a public limited company in 2025, we have grown into a B2B saree manufacturer, maintaining core values of quality and innovation.

Shree Balaji (Mala) Textiles Limited, is a contract manufacturer and wholesaler of cotton sarees in Indias B2B cotton sarees wholesale segment. Our Promoters experience in cotton sarees segment dates back to the year 1990s, wherein our Promoter was engaged in the trading of cotton sarees. Gradually we shifted our business model from trading to pure play manufacturing of cotton sarees on job work basis and that is when along with getting manufacturing done at designated job work units, we also started our manufacturing facility in Jetpur in the name of Shree Brindavan Chandra Prints. Our total revenue is generated from sale of cotton sarees. In Fiscal 2026, we have generated sales of Rs 21,197.18 lakhs and our product catalogue consists of multiple design o ptions to cater to all genre. Our products are recognised in textile industry under our own brand name “Mala Saree”. Our Company operates into B2B business model, focusing on selling our products through a network of approximately more than 105 brokers, approx.13 dealers, 69 wholesaler and approximately 3000 retailers as of March 31, 2026 spread across Central, East, North, Northeast, South and West parts of India.

Our Revenue from operations were, Rs19,554.07 lakhs in F.Y 2023-24, Rs 19,304.37 lakhs in the FY 2024-25 and 21,197.18 lakhs in the FY 2025-26. Our Net Profit after tax for the above mentioned periods are Rs 245.64 lakhs, Rs 494.61 lakhs and 585.42 lakhs respectively.

FINANCIAL KPIs OF THE COMPANY:

(Rs in Lakhs, Except % and ratios)

Performance	Shree Balaji (Mala) Textiles Limited
	Fiscal 2026	Fiscal 2025	Fiscal 2024
Revenue from operations (1)	21,197.18	19,304.37	19,554.07
Growth in revenue from operations (%)	9.81%	(1.28%)	(0.35%)
Total Income (2)	21,239.90	19,343.56	19,589.37
EBITDA (3)	1,550.10	1,320.29	1,022.69
EBITDA Margin (%) (4)	7.30%	6.82%	5.22%
PAT (5)	585.42	494.61	245.64
PAT Margin (%) (6)	2.76%	2.56%	1.26%
RoE (%) (7)	23.82%	25.79%	15.87%
RoCE (%) (8)	15.65%	18.17%	14.41%
Debt- Equity Ratio (9)	2.51	2.25	3.08

* Notes:

1. Revenue from Operations: This represents the income generated by the Company from its core operating operation. This gives information regarding the scale of operations. Other Income is the income generated by the Company from its non core operations.

2. Total income includes revenue from operations and other income.

3. EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit before tax for the year and adding back interest cost, depreciation, and amortization expense.

4. EBITDA margin is calculated as EBITDA as a percentage of Total Income.

5. PAT: Profit for the year represents the restated profits of the Company after deducting all expenses.

6. PAT Margin (%) is calculated as Profit for the year as a percentage of Revenue from Operations.

7. Return on Equity is calculated as Profit after tax, as restated, attributable to the owners of the Company for the year/ period divided by average equity. Average equity is calculated as average of opening and closing balance of total equity (Shareholders funds) for the year.

8. Return on capital employed calculated as Earnings before interest (excluding lease liabilities and other borrowing cost) and taxes divided by capital employed as at the end of respective year. (Capital employed calculated as the aggregate value of tangible net worth, total debt and deferred tax liability)

9. Debt- equity ratio is calculated by dividing total debt by total equity. Total debt represents long-term and short-term borrowings. Total equity is the sum of share capital and reserves & surplus.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Except as otherwise stated in this Red Herring Prospectus and the Risk Factors given in the Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

1. General economic and business conditions in the markets in which we operate and in the local, regional, national, and international economies;

2. Any change in government policies resulting in increases in taxes payable by us;

3. Increased competition in the industry in which we operate;

4. Ability to grow the business;

5. Changes in laws and regulations that apply to the industries in which we operate;

6. Company s ability to successfully implement its growth strategy and expansion plans;

7. Ability to keep pace with rapid changes in technology;

8. Ability to maintain relationships with Supplier Customers and vendors

9. Inability to successfully obtain registrations in a timely manner or at all;

10. General economic, political, and other risks that are out of our control;

11. Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

12. Any adverse outcome in the legal proceedings in which we are involved;

13. The performance of the financial markets in India and globally

14. Increase in price of raw materials and fuel cost

15. Adverse weather and climatic conditions in the region where we operate

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2026 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

The Directors confirm that there have been no other events or circumstances since the date of the last financial statements as disclosed in the Red Herring Prospectus which materially or adversely affect or is likely to affect the business or profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS

The restated summary statement of assets and liabilities of the Company as at March 31, 2026, March 31, 2025 and March 31, 2024 and the related restated summary statement of profits and loss and cash flows for year ended March 31, 2026, March 31, 2025 and March 31, 2024 (herein collectively referred to as (“Restated Summary Statements”) have been compiled by the management from the audited Financial Statements of the Company for the year ended on March 31, 2026, March 31, 2025 and March 31, 2024 approved by the Board of Directors of the Company. Restated Summary Statements have been prepared to comply in all material respects with the provisions of Part I of Chapter III of the Companies Act, 2013 (the “Act”) read w ith Companies (Prospectus and Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations”) issued by SEBI and Guidance note on Reports in Companies Prospectuses (Revised 2019) (“Guidance Note”). Restated Summary Statements have been prepared specifically for inclusion in the offer document to be filed by the Company with the BSE in connection with its proposed SME IPO. The Companys management has recast the Financial Statements in the form required by Schedule III of the Companies Act, 2013 for the purpose of restated Summary Statements.

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles in India.

All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non-current classification of assets and liabilities.

b) USE OF ESTIMATES

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c) PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS

i. Property, Plant & Equipment

All Property, Plant & Equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost for this purpose comprises its purchase price and any attributable cost bringing the asset to its working contribution for its intended use.

ii. Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.

d) DEPRECIATION / AMORTISATION

Depreciation on Property, Plant & Equipment is provided to the extent of depreciable amount on the Written down value method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013. Depreciation on addition to the Property, Plant & Equipment is provided on a pro-rata basis from the date of put to use.

e) IMPAIRMENT OF ASSETS

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such condition exists, the company estimates the recoverable amount of the assets. If such recoverable amount of the asset or recoverable amount of the cash generating units to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of Profit and Loss Account.

If at the Balance Sheet date there is an indication that previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at revised recoverable amount.

f) INVESTMENTS

Investments intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value /realizable value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline, other than temporary, in the value of the investments.

g) FOREIGN CURRENCY TRANSLATIONS

i. Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transactions.

ii. Monetary items denominated in foreign currencies at year end are restated at year end rates.

iii. Foreign Currency assets and liabilities at the year-end are realigned at the exchange rates prevailing at the year end and the difference on realignment is recognized in the statement of profit and loss/fixed assets as the case may be.

iv. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

h) BORROWING COSTS

Borrowing cost that are attributable to the acquisitions, constitution or production of qualifying assets are capitalised as part of cost of such assets till such time as the assets is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.

i) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

Contingent Liabilities are generally not provided for in the Accounts and are shown separately in Notes to the Accounts.

j) REVENUE RECOGNITION

Revenue from sale of goods is recognized when all the significant risk and rewards of ownership has been transferred to the buyer and is stated at net of claims, discount, sales related tax, trade discounts & rebates.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Other income

Other items of income are accounted for as and when the right to receive arises.

k) TAXES ON INCOME

Income taxes are accounted for in accordance with Accounting Standard (AS-22) - “Accounting for taxes on income”, notified under Companies (Accounting Standard) Rules, 2021. Income tax comprises of both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income-Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using substantially enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization.

l) INVENTORIES

Inventories comprises of Raw Material, Work-in-progess and Finished Goods.

Raw materials are measured at the lower of cost and net realisable value. The cost of raw materials is based on the first-infirst-out method principle. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

Work-in-progress are measured at the lower of cost and net realisable value. The cost of work-in-progress is valued based on the stage of completion, including proportionate material, labour and production overheads.

Finished goods are valued at lower of cost and net realizable value. The cost of finished goods includes raw material costs (net of recoverable taxes), direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition.

m) CASH AND BANK BALANCES

Cash and cash equivalents comprises Cash-in-hand, Current Accounts, Fixed Deposits with banks. Cash equivalents are shortterm balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Other Bank Balances are short-term balance (with original maturity is more than three months but less than twelve months).

n) EARNINGS PER SHARE

Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity share outstanding during the year. Diluted earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

o) EMPLOYEE BENEFITS

Defined Contribution Plan

Contributions payable to the recognised provident fund, which is a defined contribution scheme, are charged to the statement of profit and loss.

Defined Benefit Plan

The Company has an obligation towards gratuity a defined benefit retirement plan covering eligible employees The plan provides for lump sum payment to vested employees at retirement, at death while in employment or on termination of an amount equal to 15 by 26 days salary payable for each completed years of service without any monetary limit. Vesting occurs upon completion of five years of service. Provision for gratuity has been made in the books as per actuarial valuation done as at the end of the year.

p) SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue /expenses / assets / liabilities".

Accordingly, no reportable segments have been identified in accordance with Accounting Standard (AS) 17 - Segment Reporting.

RESULTS OF OUR OPERATIONS

Based on Financial Statements of Profit & Loss as Restated

(Amount Rs in lakhs)

Particulars	For the year ended 31st March, 2026	% of Total**	For the year ended 31st March, 2025	% of Total**	For the year ended 31st March, 2024	% of Total**
INCOME
Revenue from Operations	21,197.18	99.80%	19,304.37	99.80%	19,554.07	99.82%
Other Income	42.72	0.20%	39.19	0.20%	35.30	0.18%
Total Revenue (A)	21,239.90	100.00%	19,343.56	100.00%	19,589.37	100.00%
EXPENDITURE
Cost of Materials Consumed	10,343.18	48.70%	10,317.42	53.34%	10,676.48	54.50%
Purchase of Stock-in-trade	486.09	2.29%	318.00	1.64%	236.14	1.21%
Changes in Inventories of work-in-progress and finished goods	652.44	3.07%	(967.92)	(5.00%)	(324.02)	(1.65%)
Employee benefits expense	220.51	1.04%	219.27	1.13%	273.75	1.40%
Finance costs	741.67	3.49%	631.65	3.27%	661.49	3.38%
Depreciation expense	35.99	0.17%	37.35	0.19%	38.52	0.20%
Other expenses	7,966.90	37.51%	8,128.42	42.02%	7,697.66	39.30%
Total Expenses (B)	20,446.78	96.27%	18,684.19	96.59%	19,260.02	98.32%
Profit before tax	793.12	3.73%	659.37	3.41%	329.35	1.68%
Tax Expense/ (benefit)
(a) Current Tax Expense	208.88	0.98%	165.44	0.86%	85.43	0.44%
(b) Deferred Tax	(1.18)	(0.01%)	(0.68)	(0.00%)	(1.72)	(0.01%)
Net tax expense / (benefit)	207.70	0.98%	164.76	0.85%	83.71	0.43%
Profit for the year	585.42	2.76%	494.61	2.56%	245.64	1.25%

**Total refers to Total Revenue

Note: The above figures are based on the Restated Financial Statements of the Company.

Components of our Profit and Loss Account

Income

Our total income comprises of revenue from operations and other income.

Revenue from Operations

The Revenue from operations as a percentage of our total income was 99.80%, 99.80% and 99.82% for the Financial Years ended March 31, 2026, March 31, 2025 and March 31, 2024 respectively.

(Amount Rs in Lakhs)

Particulars	For the year ended 31 March 2026	For the year ended 31 March 2025	For the year ended 31 March 2024
Sale of Goods (Net of Discounts)	21,197.18	19,304.37	19,554.07
TOTAL	21,197.18	19,304.37	19,554.07

Other Income

Our other Income consists of Interest Income, Profit on Sale of Asset, Rental income & Liabilities Written Back and Insurance Claim Received.

(Amount Rs in Lakhs)

Particulars	For the year ended 31 March 2026	For the year ended 31 March 2025	For the year ended 31 March 2024
Interest Income on FDR	20.92	13.12	13.00
Insurance Claim Received	2.57	-	-
Interest from Parties	-	-	0.94
Profit on Sale of Vehicle	-	1.97	0.69
Rent	17.81	15.66	15.65
Liabilities Written Back	1.42	8.44	5.02
TOTAL	42.72	39.19	35.30

Expenditure

Our total expenditure primarily consists of Purchases, Cost of Materials Consumed, Changes in Inventories, Employee benefit expenses, Finance costs, Depreciation & Amortisation Expenses and Other Expenses.

Purchase stock in trade

Our purchases comprise of Purchases of Stock.

Employee Benefit Expenses

Our employee benefits expense comprises of Salaries and Wages, Staff Welfare, Directors Remuneration, Gratuity expense and Contribution to Provident fund & other fund.

Finance costs

Our Finance cost expenses comprise of Interest Expenses, Loan Processing Charges and Brokerage on Loan.

Other Expenses

Our other expenses mainly primarily comprise of Direct and Indirect expenses, which includes:

Direct expenses: Processing Charges, Saree Printing, Transport Charges, Clearing & Forwarding, Labour Charges, Brokerage on Purchase, Stickers & Labels and Saree Polish Charges.

Indirect Expenses: Auditors remuneration, Advertisement and Business Promotion Expenses, Brokerage on Sales, Packing expenses, Travelling & Conveyance, Rent expense, Rates & Taxes, General expenses, Consultancy Charges, Repair & Maintenance, etc.

(Amount Rs in Lakhs)

Particulars	For the year ended March 31, 2026	For the year ended March 31, 2025	For the year ended March 31, 2024
Direct Expenses
Processing Charges	475.79	670.50	493.77
Saree Polish Charges	50.96	24.65	26.39
Labour Charges	21.15	24.51	16.20
Saree Sample Charges	4.52	2.86	8.15
Saree Printing	5,595.71	5,717.11	5,476.67
Brokerage on Purchase	61.68	72.08	89.88
Brokerage on Sales	319.64	283.23	227.54
Stickers & Labels	45.47	38.58	43.70
Transport Charges	380.35	379.44	375.33
Clearing & Forwarding	77.99	91.93	66.36
Indirect Expenses
Advertisement and Sales Promotion Expenses	317.92	321.81	319.52
Payment to Statutory Auditor	4.25	0.95	0.95
Payment to Cost Auditor	0.25	0.50	-
Bad debts	55.57	26.33	93.90
Bank charges	1.95	4.75	2.77
Directors Sitting Fees	6.25	-	-
Packing expenses	286.23	263.07	263.37
Printing & stationary expenses	2.98	8.96	3.93
Consultancy Charges	33.72	20.26	12.99
Electricity expenses	8.89	8.07	4.49
General expenses	46.38	46.95	30.06
Filling expenses	12.16	0.44	0.38
Insurance expenses	8.73	6.97	5.82
Keyman Insurance expenses	19.76	9.46	9.48
Legal Expenses	1.66	3.66	4.19
Postage and Courier Expense	3.44	3.55	3.01
Subscriptions	1.79	0.22	3.92
Donation	13.89	-	2.21
Pollution expenses	0.53	1.56	1.13
Other selling and distribution expenses	12.84	3.48	8.18
Rates & Taxes	2.23	11.36	2.37
Rate difference	20.89	6.85	39.53
Rent expense	14.49	21.05	12.67
Repair and maintenance expense	7.75	6.37	7.03
Motor car expenses	12.01	15.57	14.76
Travelling and conveyance	28.42	31.34	27.01
CSR Expense	8.66	-	-
Total	7,966.90	8,128.42	7,697.66

Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

Fiscal 2026 compared with Fiscal 2025

Revenue from Operations

The Revenue from Operations of our company for Fiscal year 2026 was Rs 21,197.18 Lakhs against Rs 19,304.37 Lakhs for Fiscal year 2025. An increase of 9.81% in revenue from operations. This increase was due to the increased demand for cotton sarees across the Companys B2B wholesale customer base, supported by a moderate improvement in average realisations per saree and the addition of new wholesale & retailer buyers during the year.

Other Income

The other income of our company for Fiscal year 2026 was Rs 42.72 Lakhs against Rs 39.19 for Fiscal year 2025.

The increase of 9.01% in other income. This increase was due to a rise in interest income on fixed deposits

from Rs13.12 Lakhs to Rs20.92 Lakhs, an increase in rental income from Rs15.66 Lakhs to Rs17.81 Lakhs, and an insurance claim received of Rs2.57 Lakhs during the year.

Total Income

The total income of the company for Fiscal year 2026 was Rs 21,239.90 Lakhs against Rs 19,343.56 Lakhs of total income for Fiscal year 2025. An increase of 9.80% in total income. This increase was primarily due to the significant growth in revenue from operations driven by higher sales volumes and improved realisations, further supported by the increase in other income comprising rental receipts and fixed deposit interest.

Expenditure

Cost of Material Consumed

In Fiscal 2026, Cost of Material Consumed were Rs 10,343.18 Lakhs against Rs 10,317.42 Lakhs of Cost of Material Consumed in Fiscal 2025. An increase of 0.25%. This increase was due to a marginal increase in raw material consumption in line with higher production volumes. However, through focused procurement planning and bulk purchasing, the Company contained the increase in material costs to just 0.25% despite a 9.81% growth in revenue, resulting in material cost as a percentage of total income declining significantly from 53.34% to 48.70%.

Purchase of Stock-in-trade

In Fiscal 2026, Purchase of Stock-in-trade were Rs 486.09 Lakhs against Rs 318.00 Lakhs of Purchase of Stock-intrade in Fiscal 2025. An increase of 52.86%. This increase was due to the Companys increased focus on trading activity alongside its core manufacturing operations, whereby finished sarees were directly procured from third- party to supplement its product range and fulfil a wider variety of customer orders without additional manufacturing capacity.

Changes in Inventories

In Fiscal 2026, the Changes in Inventories amounted to t 652.44 Lakhs against t (967.92) Lakhs of changes in inventories in fiscal 2025. This was due to the Companys adoption of a leaner inventory management approach during Fiscal 2026, wherein work-in-progress declined from t1,640.73 Lakhs to t941.39 Lakhs and finished goods reduced from t1,904.45 Lakhs to t1,857.55 Lakhs, as a higher p roportion of production was converted into sales during the year compared to the previous year.

Employee Benefit Expenses

In Fiscal 2026, the Company incurred employee benefit expenses of t220.51 Lakhs against t 219.27 Lakhs expenses in fiscal 2025. An increase of 0.57%. This increase was due to routine annual increments in salaries and wages, which increased from t133.49 Lakhs to t150.55 Lakhs, partially offset by a reduction in directors remuneration from t75.00 Lakhs to t59.00 Lakhs during the year.

Finance Costs

The finance costs for the Fiscal 2026 were t 741.67 Lakhs while it was t 631.65 Lakhs for Fiscal 2025. An increase of 17.42%. This increase was due to the addition of new working capital credit facilities during the year ? specifically, a Cash Credit limit of t15.00 Crores sanctioned by Union Bank of India in February 2026 and a Cash Credit limit of t15.00 Crores sanctioned by ICICI Bank in February 2026, resulting in higher interest outgo on bank borrowings, which rose from t621.78 Lakhs to t713.84 Lakhs.

Other Expenses

In fiscal 2026, our other expenses were t 7,966.90 Lakhs and t 8,128.42 Lakhs in fiscal 2025. A decrease of 1.99%. This decrease was due to a reduction in key direct expense heads, primarily saree printing charges which declined from t5,717.11 Lakhs to t5,595.71 Lakhs, and processing charges which decreased from t670.50 Lakhs to t475.79 Lakhs. Rent expenses also reduced from t21.05 Lakhs to t14.49 Lakhs. These savings were partially offset by an increase in bad debts written off from t26.33 Lakhs to t55.57 Lakhs and the recognition of CSR expenditure of t8.66 Lakhs for the first time during Fiscal 2026.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2026 of t 793.12 Lakhs against profit before tax of t 659.37 Lakhs in Fiscal 2025. An increase of 20.28%. This increase was primarily due to the strong growth in revenue from operations, significantly better gross margins resulting from contained raw material costs, and effective rationalisation of other expenses, which together outweighed the increase in finance costs during the year.

Profit after Tax

Profit after tax for the Fiscal 2026 were at t 585.42 Lakhs against profit after tax of t 494.61 Lakhs in fiscal 2025. An increase of 18.36%. This increase was primarily due to the growth in profit before tax, with the effective tax rate remaining broadly stable at approximately 25.17% under the concessional Section 115BAA regime, enabling bottom-line profits to improve in proportion with pre-tax earnings.

Fiscal 2025 compared with Fiscal 2024

Revenue from Operations

The Revenue from Operations of our company for Fiscal year 2025 was t 19,304.37 Lakhs against t 19,554.07 Lakhs for Fiscal year 2024. A decrease of 1.28% in revenue from operations. This decrease was due to Product Pricing: Fabrics & thread rates softened over FY25; held, realizations per unit were lower. Credit Policy: Focus shifted to quality debtors and cash sales, reducing bad debt risk but marginally affecting top-line.

Other Income

The other income of our company for Fiscal year 2025 was t 39.19 Lakhs against t 35.30 for Fiscal year 2024. An increase of 11.02% in other income. This increase was due to Liabilities Written Back: Several old liabilities no longer payable were written off, boosting income.

Total Income

The total income of the company for Fiscal year 2025 was t 19,343.56 Lakhs against t 19,589.37 Lakhs of Total income for Fiscal year 2024. A decrease of 1.25% in total income. This decrease was primarily due to the slight fall in revenue from operations due to reason mentioned above. Other income growth partly offset the decline.

Expenditure

Cost of Material Consumed

In Fiscal 2025, Cost of Material Consumed were t 10,317.42 Lakhs against t 10,676.48 Lakhs of Cost of Material Consumed in Fiscal 2024. A decrease of 3.36%. This decrease was due to

Purchase of Stock-in-trade

In Fiscal 2025, Purchases of Stock-in-trade were t 318.00 Lakhs against t 236.14 Lakhs of Purchases of Stock- in-trade in Fiscal 2024. An increase of 34.67%. This increase was due to the increase in the traded goods this year.

Changes in Inventories

In Fiscal 2025, Changes in Inventories were t (967.92) Lakhs against t (324.02) Lakhs of Changes in Inventories in Fiscal 2024. This was due to the Companys strategic decision to build higher inventory levels of work-in

progress and finished sarees to meet anticipated demand and offer a wider product variety to wholesale clients. Work-in-progress increased from t1,462.19 Lakhs to t1,640.73 Lakhs and finished goods increased from t1,068.17 Lakhs to t1,857.55 Lakhs as at March 31, 2025.

Inventory Build-up: we have focused on value added sarees higher stockholding of sarees to meet anticipated demand and client variety expectations.

Value Added Sarees: because of increase in cost & stock due to increase in value added goods for future prospect.

Working Capital Strategy: Longer holding period adopted to ensure uninterrupted supply in case of market disruptions.

Employee Benefit Expenses

In Fiscal 2025, the Company incurred employee benefit expenses of t 219.27 Lakhs against t 273.75 Lakhs expenses in Fiscal 2024. A decrease of 19.90%. This reduction was primarily on account of Directors Remuneration: Reduced from 120.00 lakh to 75.00 lakh. Salaries & Wages: Slight moderation to 133.49 lakh.

Finance Costs

The finance costs for the Fiscal 2025 were t 631.65 Lakhs while it was t 661.49 Lakhs for Fiscal 2024. A decrease of 4.51%. This decrease was due to Interest Expense: Declined to 621.78 lakh vs 645.92 lakh, due to repayment of COVID-era term loans. MSME Interest: Dropped significantly to 1.54 lakh vs 5.48 lakh.

Other Expenses

In Fiscal 2025, our other expenses were t 8,128.42 Lakhs against t 7,697.66 Lakhs in Fiscal 2024. An increase of 5.60%. This increase was due to the following reasons:

Saree Printing Costs: Increased to 5,717.11 lakh vs 5,476.67 lakh, reflecting focus on premium designs.

Processing Charges: Jumped to 670.50 lakh vs 493.77 lakh, as because in value added sarees, dyeing is mandatory, leading to higher processing charges. Increase in number of saree printing & value-added sarees.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2025 of Rs 659.37 Lakhs against profit before tax of Rs 329.35 Lakhs in Fiscal 2024. An increase of 100.20%. This increase was primarily driven by -

Improved Gross Margins: Despite revenues almost same, procurement optimization and inventory management supported margins.

Expense Rationalization: Significant cuts in employee benefits (directors pay) and finance costs.

Quality Focus: Reprocessing defective goods and reselling at higher margins.

Reduced Bad Debts: Tighter credit policy improved bottom line.

Profit after Tax

Profit after tax for the Fiscal 2025 were at Rs 494.61 Lakhs against profit after tax of Rs 245.64 Lakhs in fiscal 2024, An Increase of 101.36%. This increase was primarily driven by Growth in PBT and Effective tax rate broadly stable, allowing net profits to scale in proportion.

Cash Flows

(Amount Rs in Lakhs)

	For the year	For the year	For the year
Particulars	ended March	ended March	ended March
	31, 2026	31, 2025	31, 2024
Net Cash Flow from / (used in) Operating Activities	(1,326.52)	880.11	400.32
Net Cash Flow from / (used in) Investing Activities	10.32	(21.53)	0.12
Net Cash Flow from / (used in) Financing Activities	1,309.37	(885.49)	(346.13)

Cash Flows from Operating Activities

1. In Fiscal 2026, Net cash outflow used in operating activities was Rs 1,326.52 Lakhs. This comprised of the net profit before tax of Rs 793.12 Lakhs, which was primarily adjusted for Interest cost of Rs 720.99 Lakhs, Provision for Gratuity of Rs 3.90 Lakhs, Depreciation expense of Rs 35.99 Lakhs, Bad Debt of Rs 55.57 Lakhs, Liabilities written-back of Rs 1.42 Lakhs, Interest income of Rs 20.92 Lakhs and Provision for CSR of Rs 8.66 Lakhs. The resultant operating profit before working capital changes was Rs 1,595.89 Lakhs, which was primarily adj usted for a decrease in Inventories of Rs 783.53 Lakhs, Short term loan and advances of Rs 93.00 Lakhs, Trade Payables of Rs 1,090.00 Lakhs and Other Current Liabilities & Provisions of Rs 561.78 Lakhs. Additionally, there was an increase in Trade Receivables of Rs 1,091.30 Lakhs, Other Non-current assets of Rs 513.99 Lakhs and Other bank balances of Rs 335.23 Lakhs.

Cash used in operations was ^1,119.88 Lakhs, which was reduced by Income Tax paid of Rs 206.64 Lakhs, resulting in a net cash flow from operating activities of Rs1,326.52 Lakhs.

2. In Fiscal 2025, Net cash flow from operating activities was Rs 880.11 Lakhs. This comprised of the net profit before tax of Rs659.37 Lakhs, which was primarily adjusted for Interest cost of Rs623.57 Lakhs, Provision for Gratuity of Rs4.96 Lakhs, Bed Debts of Rs 26.33 Lakhs, Depreciation expense of Rs37.35 Lakhs, Liabilities written- back of Rs8.44 Lakhs, Interest income of Rs13.12 Lakhs, Assets written off of Rs 1.24 Lakhs and Profit on sale of assets of Rs1.97 Lakhs. The resultant operating profit before working capital changes was Rs1,329.29 Lakhs, which was primarily adjusted for an increase in Inventories of Rs1,044.78 Lakhs, Trade Receivables of Rs 214.75 Lakhs, Short-term loans and advances of Rs 70.86 Lakhs and Other Non-current assets of Rs1.65 Lakhs, along with the decrease in Other Bank Balances of Rs139.21 Lakhs. Additionally, there was an increase in Trade Payables of Rs341.96 Lakhs and in Other Current Liabilities & Provisions of Rs515.26 Lakhs.

Cash generated from operations was Rs993.68 Lakhs, which was reduced by Income Tax paid of Rs113.57 Lakhs, resulting in a net cash flow from operating activities of Rs880.11 Lakhs.

3. In Fiscal 2024, Net cash flow from operating activities was Rs400.32 Lakhs. This comprised of the net profit before tax of Rs329.35 Lakhs, which was primarily adjusted for Interest cost of Rs654.82 Lakhs, Provision for Gratuity of Rs6.42 Lakhs, Bed Debts of Rs 93.90 Lakhs, Depreciation expense of Rs 38.52 Lakhs, Liabilities written- back of Rs5.02 Lakhs and Interest income of Rs 13.94 Lakhs. The resultant operating profit before working capital changes was Rs1,104.05 Lakhs, which was primarily adjusted for an increase in Inventories of Rs 356.01 Lakhs, Other Bank balance of Rs 165.88 Lakhs and a decrease in Trade Receivables of Rs 696.87 Lakhs, Short-term loans and advances of Rs7.94 Lakhs and Other Non-current assets of Rs2.00 Lakhs. Additionally, there was a decrease in Trade Payables of Rs123.87 Lakhs and Other Current Liabilities & Provisions of Rs 690.90 Lakhs.

Cash generated from operations was Rs474.20 Lakhs, which was reduced by Income Tax paid of Rs73.88 Lakhs, resulting in a net cash flow from operating activities of Rs400.32 Lakhs.

Cash Flows from Investment Activities

1. For the year ended March 31, 2026, net cash flow from investing activities was Rs 10.32 Lakhs. This primarily comprised purchase of property, plant & equipment and intangible assets of Rs 10.60 Lakhs and interest income received of Rs 20.92 Lakhs

2. For the year ended March 31, 2025, net cash used in investing activities was Rs 21.53 Lakhs. This primarily comprised purchase of property, plant & equipment and intangible assets of Rs 37.52 Lakhs, partially offset by proceeds from sale of property, plant & equipment of Rs 2.87 Lakhs and interest income received of Rs 13.12 Lakhs.

3. For the year ended March 31, 2024, net cash generated from investing activities was Rs 0.12 Lakhs. This mainly included purchase of property, plant & equipment of Rs13.82 Lakhs offset by interest income received of Rs13.94 Lakhs.

Cash Flows from Financing Activities

1. In Fiscal 2026, net cash flow from financing activities was Rs 1,309.37 Lakhs. This comprised proceeds from borrowings of Rs 2,622.65 Lakhs, repayment of borrowings of Rs 589.21 Lakhs and finance cost paid of Rs 724.07 Lakhs.

2. In Fiscal 2025, net cash used in financing activities was Rs885.49 Lakhs. This comprised proceeds from borrowings of Rs450.15 Lakhs, repayment of borrowings of Rs 712.07 Lakhs and finance cost paid of Rs623.57 Lakhs.

3. In Fiscal 2024, net cash used in financing activities was Rs346.13 Lakhs. This comprised proceeds from borrowings of Rs 731.28 Lakhs, repayment of borrowings of Rs 422.59 Lakhs and finance cost paid of Rs 654.82 Lakhs.

OTHER MATTERS

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. Except as disclosed in this Red Herring Prospectus, there are no unusual or infrequent events or transactions in our Company.

2. Significant economic changes that materially affected or are likely to affect income from continuing Operations

Other than as described in the Section titled “Financial Information” and chapter titled “Managements Discussion and Analysis of Financial Conditions and Results of Operations,” beginning on Page 183 and 195 respectively of this Red Herring Prospectus, to our knowledge there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

3. Known trends or uncertainties that have/had or are expected to have a material adverse impact on revenue or income from continuing operations

Apart from the risks as disclosed under Chapter titled “Risk Factors” beginning on page no. 22 in this Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known

Our Companys future costs and revenues will be determined by demand/supply situation, both of the end products as well as the government policies and other economic factors.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business and also dependent on the price realization on our products/services.

6. Total turnover of each major industry segment in which the issuer company operated.

Relevant Industry data and, as available, has been included in the chapter titled “Industry Overview” beginning on page no. 112 of this Red Herring Prospectus.

7. The extent to which business is seasonal.

Our business is dependent to a certain extent on the seasonal, environmental and climate changes. Hence, our business is seasonal in nature.

8. Any significant dependence on a single or few suppliers or customer

Our Business is dependent on network of retailers, wholesalers and dealers with the maximum contribution by the retailers. Our top ten customers contribute about 18.59%, 14.48% and 14.12% of our revenues from operations for the year ended March 31, 2026, March 31, 2025 and March 31, 2024.