Shree Karni Fabcom Ltd Management Discussions

A. Industry Structure and Developments:

The global business environment during the year continued to be shaped by geopolitical uncertainties, supply chain disruptions, and volatility in commodity prices, impacting manufacturing industries worldwide. Despite these challenges, the Indian technical textiles industry demonstrated resilience, supported by robust domestic demand, increasing industrialization, and sustained investments across infrastructure, healthcare, automotive, construction, agriculture, and other key sectors. While fluctuations in raw material prices and competitive market conditions moderated value growth, the industrys long-term fundamentals remain strong.

The technical textiles sector continues to witness a structural transformation as industries increasingly adopt high-performance textile solutions that offer enhanced durability, safety, functionality, and sustainability. Technical textiles are no longer viewed as niche products but have become integral to a wide range of applications, including geotextiles, medical textiles, agro-textiles, industrial textiles, protective wear, packaging, and mobility solutions. Rising awareness of product performance, coupled with increasing regulatory standards and quality requirements, is driving greater adoption across both public and private sectors.

Infrastructure development remains a key growth driver for the industry. Continued investments in roads, railways, airports, urban infrastructure, water management, and renewable energy projects are creating sustained demand for specialized technical textile products. Similarly, the expansion of manufacturing activities, increasing industrial automation, and growing demand for filtration, insulation, and protective applications are further strengthening industry growth. The healthcare sector also continues to offer significant opportunities through increasing demand for medical disposables, hygiene products, and advanced healthcare textiles.

Innovation and sustainability are becoming central to the industrys growth. Customers are increasingly seeking products that combine superior performance with environmental responsibility, encouraging manufacturers to invest in advanced fibers, engineered fabrics, functional finishes, and sustainable manufacturing processes. At the same time, digitalization and technological advancements are enabling the development of application-specific solutions while improving manufacturing efficiency and product quality.

Government initiatives promoting domestic manufacturing, infrastructure development, and technological advancement continue to provide a favorable environment for the sector. Increased emphasis on quality standards, certification, and import substitution is strengthening the organized segment of the industry and enhancing Indias competitiveness in both domestic and international markets.

While challenges such as raw material price volatility and competitive pressures persist, the long-term outlook for the Indian technical textiles industry remains positive. Growing investments across end-user industries, increasing preference for high-quality and specialized textile solutions, and the ongoing shift from unorganized to organized manufacturers are expected to support sustainable growth. Backed by strong domestic demand, technological innovation, and supportive policy initiatives, the organized technical textiles sector is well positioned to capitalize on emerging opportunities and create long-term value.

Company Development:

The Company continued its growth momentum during the year, supported by a diversified product portfolio, strong customer relationships, and a focused approach towards developing application-specific technical textile solutions. The Companys consolidated revenue increased from Rs 16,697.77 lakhs to Rs 20,354.41 lakhs, reflecting sustained demand across key end-use industries. Amidst a challenging operating environment marked by geopolitical uncertainties, fluctuations in raw material prices, and competitive pressures, the Company maintained stable profitability during the year. Profit remained broadly consistent at Rs 1,523.54 lakhs compared to Rs 1,510.64 lakhs in the previous year.

The Company continues to strengthen its presence across diverse application segments, including luggage, medical arch support, furniture and seating, footwear, and apparel industries. Its expertise across a wide range of fabrics, including woven fabrics, knitted fabrics, coated fabrics, 100% polyester fabrics, and recycled polyester fabrics, enables it to deliver customized, high-performance, and sustainable textile solutions to meet evolving customer requirements.

During the year, the Company focused on improving operational efficiencies and product portfolio. Increased emphasis on innovation, quality enhancement, and sustainable solutions has positioned the Company well to capitalize on emerging opportunities across domestic and global markets.

Going forward, the Company remains committed to strengthening its position in the technical textiles sector through continuous innovation, technology adoption, and customer-focused solutions. Its diversified application base, manufacturing expertise, and focus on sustainability provide a strong foundation for long-term growth and value creation.

B. Opportunities and Threats:

The technical textiles industry is witnessing increasing demand for high-performance, application-specific, and sustainable textile solutions across diverse sectors. Growing adoption of technical textiles in industries such as luggage, healthcare, footwear, furniture and seating, and apparel presents significant growth opportunities. The shift towards value-added fabrics, including coated fabrics, engineered woven and knitted fabrics, 100% polyester fabrics, and recycled polyester fabrics, is expected to create avenues for product innovation and market expansion.

Rising emphasis on sustainability and circularity across global markets is driving demand for recycled and environmentally responsible textile solutions. The increasing preference among customers for durable, functional, and performance-oriented materials provides opportunities for manufacturers with strong technical capabilities and diversified product portfolios.

However, the industry continues to face challenges arising from geopolitical uncertainties, global supply chain disruptions, fluctuations in raw material prices, and increasing competitive intensity. Changes in trade policies, currency movements, and input cost volatility may impact margins and operating conditions. Additionally, the entry of new players and evolving customer expectations require continuous investments in technology, innovation, and quality enhancement.

The Companys diversified application base, focus on product development, and ability to cater to multiple end-use industries provide resilience against segment-specific fluctuations. Continuous focus on operational efficiencies, sustainable product offerings, and customer-centric solutions will enable the Company to capitalize on emerging opportunities while effectively managing industry challenges.

C. Segment / Product-wise Performance:

The Company continued to strengthen its presence across key technical textile application segments, supported by a diversified product portfolio and growing demand for performance-oriented textile solutions. Its products cater to diverse industries, including luggage, medical arch support, footwear, furniture and seating, and apparel.

The Companys enhanced offerings across woven fabrics, knitted fabrics, coated fabrics, 100% polyester fabrics, and recycled polyester fabrics to meet evolving customer requirements, focus on product innovation, quality enhancement, and application-specific solutions has enabled the Company to strengthen customer relationships and expand its market presence.

During the year, the Company continued to improve manufacturing capabilities and operational efficiencies while focusing on value-added and sustainable textile solutions. Going forward, the Company remains committed to leveraging its technical expertise and diversified product portfolio to capitalize on emerging opportunities in the technical textiles sector.

D. Outlook:

While the operating environment is expected to remain influenced by geopolitical uncertainties, raw material price fluctuations, and evolving market dynamics, the Company remains focused on strengthening its resilience and sustaining long-term growth. The Company will continue to leverage its diversified product portfolio, technical expertise, and application capabilities to navigate external challenges and capitalize on emerging opportunities across the technical textiles sector. Focus on innovation, operational excellence, sustainable product development, and customer-centric solutions will remain central to the Companys strategy as it seeks to enhance its market position and create sustainable long-term value.

E. Risks and Concerns:

The Companys operations and growth prospects are exposed to various risks and uncertainties that may impact business performance and profitability. Key risks include geopolitical uncertainties, raw material price volatility, currency fluctuations, supply chain disruptions, and increasing competitive intensity.

The Company continues to monitor these risks and remains focused on strengthening operational efficiencies, optimizing supply chain capabilities, and maintaining a diversified product and customer portfolio to mitigate potential challenges and support sustainable growth.

F. Internal Control Systems and their adequacy:

M/s. R S Y & Co., appointed as the Internal Auditors of the Company, periodically review internal controls, business processes, risk mitigation measures, financial and IT controls, statutory compliances, and operational efficiencies across various functions. The Internal Auditors submit their reports to the Audit Committee on a half yearly basis, and the Management takes appropriate actions on their recommendations.

The Company has established policies and Standard Operating Procedures (SOPs) for key activities and maintains regular oversight of operational and capital expenditure. Significant changes, if any, to policies are disclosed in the notes to the financial statements.

G. Financial Performance with respect to operational performance:

- Sales:

The Total Income of the Company for the year ended 31st March 2026 was at Rs 20,354.41 lakhs (previous year Rs 16,697.77).

- Expenditure:

The Total Expenses of the Company for the year ended 31st March 2026 was at Rs 18,755.59 lakhs (previous year Rs 14,786.37).

- Profit:

Profit after Tax for the year under review amounted to Rs 1,523.54 lakhs (Previous Year Rs 1,510.64 lakhs).

H. Material Developments in Human Resources/ Industrial Relations front, including number of people employed:

Our employees are our core resource and the Company has continuously evolved policies to strengthen its employee value proposition. Your Company was able to attract and retain best talent in the market and the same can be felt in the past growth of the Company. The Company is constantly working on providing the best working environment to its Human Resources with a view to inculcate leadership, autonomy and towards this objective; your company spends large efforts on training. Your Company shall always place all necessary emphasis on continuous development of its Human Resources. The belief "great people create great organization" has been at the core of the Companys approach to its people.

During the year, Industrial Relations remained cordial. The employee strength as on 31st March 2026 was 663.

I. Financial ratios:

Since the change in ratio is less than 25%, no explanation is required to be furnished.

J. Return on Net Worth:

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis report detailing the Companys objectives, projections, estimates, expectations or predictions 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 global and Indian demand supply conditions, raw material prices, finished goods prices, cyclical demand and pricing in the Companys products and their principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other factors such as litigation and / or labor negotiations.

Additional Shareholders Information

FY2026 represents fiscal year 2025-26, from 1 April 2025 to 31 March 2026, and analogously for FY2025 and previously such labelled years.

1. General Body Meetings

Below table gives the details of date, time, location and business transacted through special resolution at last two Annual General Meetings:

The Company got incorporated on 11/04/2023, this is the 3rd AGM of the Company

Resolution(s) passed through Postal Ballot

During the year, the Company did not pass any special resolution through postal ballot.

Annual General Meeting (AGM):

As per the Circulars issued by the Ministry of Corporate Affairs and the SEBI, from time to time, the 3rd Annual General Meeting of the Company is scheduled to be held on Saturday, September 26, 2026, at 1.30 P.M through Video Conference /Other Audio-Visual Means ("VC/OAVM") facility. The venue of the AGM shall be deemed to be the registered office of the Company situated Plot 188-190, Block - 314, Rajhans Texpa, Village - Baleshvar, Taluka - Palsana, Surat - 394317, Gujarat, India. The detailed instruction for participation and voting at the meeting is available in the notice of the 3rd AGM.

Proposal to Conduct Postal Ballot for any Matter in the Ensuing Annual General Meeting

There is no proposal to conduct a postal ballot for any matter in the ensuing Annual General Meeting.

2. Book Closure Date:-

From September 24, 2026 to September 30, 2026 (both days inclusive)

3. Dividend

The Board of Directors of the Company at their Meeting held on 21-05-2026 has recommended the Final Dividend of Rs. 0.25 /- per equity share of the face value of Rs. 10 /- (Rupees ten only) each for the financial year 2025-26, subject to approval of the members at the ensuing Annual General Meeting (AGM) of the Company

4. Financial Calendar

The financial year of the Company starts on 1st April every year and ends on 31st March subsequent year.

Indicative calendar of events for the financial year 2026-27 are as under

For the first half-year ending 30 September 2026 — First / Second week of November 2026

2nd half and year March 31, 2027 — by the Third/Fourth week of May 2027

AGM for the year ending 31 March 2027 — Third/Fourth week of September 2027

5. Listing of Stock Exchange and Stock Codes

National Stock Exchange of India Limited

Exchange Plaza, C-1, Block G,

Bandra-Kurla Complex, Bandra (East)

Mumbai – 400 051

Trading Symbol- SHREEKARNI

Annual Listing fees to the National Stock Exchange of India have been paid for the FY 2026-27. The Custodian fee for NSDL & CDSL has also been paid for the FY 2026-27.

6. The International Security Identification Number (ISIN)

ISIN is a unique identification number of traded scrip. This number has to be quoted in each transaction relating to the dematerialized securities of the Company. The ISIN of the Companys equity shares is INE0S4Y01010.

7. Market Price Data

Monthly High and Low Prices of the Equity Shares of the Company for the year ended 31st March, 2026:

8. Registrar and Share Transfer Agents

M/s. MAS Services Limited, T-34, 2nd Floor, Okhla Industrial Area, Phase - II, New Delhi -110020, is the Registrar and Share Transfer Agent of the Company, for Shareholders. Accordingly, all communications on matters relating to Share Transfers, Dividend etc. may be sent directly to them. Complaints, if any, on these matters may also be sent to the Compliance Officer of the Company.

Share Transfer System

As on date, the 100% of the issued and subscribed capital are held in dematerialised form, the process for physical share transfer is not relevant.

9. Description of Voting Rights

All shares issued by the Company carry equal voting rights, and one share confirms one vote.

10. Nomination Facility

Shareholders may contact their respective Depository Participant (DP) to avail nomination facility.

11. Distribution of shareholding as on March 31, 2026

12. Outstanding ADRs & GDRs, Warrants or any other convertible instruments, conversion date and likely impact on equity shares

As on 02-04-2025 Company has allotted 3,15,000 (Three Lakh Fifteen Thousand) warrants, each carrying a right to subscribe to 1 (one) equity share at an exercise price of Rs. 765/- (Rupees Seven Hundred and Sixty-Five Only) per equity share including a premium of Rs.755/- (Rupees Seven Hundred and Fifty-Five only) aggregating to Rs.24,09,75,000/- (Rupees Twenty-Four Crores Nine Lakh Seventy-Five Thousand Only) to the persons belonging to the promoters and promoters group.

An amount equivalent to 25% of the Warrant Price has been received towards allotment of the Warrants, and the balance 75% shall be payable at the time of allotment of equity shares pursuant to exercise of the right attached to the Warrants to subscribe to equity shares. The last date for exercise of option for conversion of warrants into equity shares happens to be on 02-10-2026.

13. Commodity Price Risk or Foreign Exchange Risk

The Company is exposed to the risk of price fluctuation of raw materials as well as finished goods and exchange rate fluctuation. The Company proactively manages these risks through forward booking Inventory management and proactive vendor development practices. The Companys reputation for quality, products differentiation and service, coupled with existence of powerful brand image with robust marketing network mitigates the impact of price risk on finished goods.

14. Credit Rating

The Company has not availed any Credit Rating.

15. Dematerialization of Shares

The Companys scrip forms part of the compulsory dematerialization segment for all investors. To facilitate easy access of the dematerialized system to the investors, the Company has signed up with both the depositories namely National Securities Depository Limited ("NSDL") and the Central Depository Services (India) Limited ("CDSL") – and has established connectivity with the depositories through its Registrar and Transfer Agents, MAS Services Limited.

The breakup of dematerialized shares and shares in certificate form as on March 31, 2026 as under:

16. Other Disclosures

Disclosures on materially significant related party transaction

The statements containing the transactions with related parties were submitted periodically to the Audit Committee. The details of Related Party Transaction are discussed in detail in Notes to the Financial Statements.

All the contracts/ arrangements/transactions entered by the Company during the financial year with related parties were in its ordinary course of business on an Arms Length Basis subject to such exceptions as prescribed in form AOC-2 to the Directors Report.

None of the transactions with any of related parties were in conflict with the Companys interest.

Details of non-compliance(s) by the company

There were no strictures or penalties imposed by either SEBI or the Stock Exchanges or any Statutory Authority for Non-Compliance of any matter related to the Capital Markets

Whistle Blower Policy/Vigil Mechanism

The Board of Directors of the company has adopted Whistle Blower Policy. The management of the Company, through the policy envisages encouraging the employees of the Company to report the higher authorities any unethical, improper, illegal, or questionable acts, deeds & things which the management or any superior may indulge in.

Details of Compliance with mandatory requirements and adoption of the non-mandatory requirements

The Company is exempted from compliance with the mandatory requirements of Corporate Governance under listing Regulations. However, the Company has complied with the corporate governance requirement, particularly in relation to appointment of independent directors including woman director on the Board and constitution of committees.

Disclosure of Accounting Treatments

The financial statements of the Company have been prepared in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"). These financial statements have been prepared on an accrual basis and under the historical cost conventions.

17. Name, Designation & Address of Compliance Officer and RTA for Complaints & Correspondence

Compliance Officer

Dhiraj Ramkishor Vaishnav

Company Secretary & Compliance Officer

Shree Karni Fabcom Limited

Plot 188-190, Block-314, Rajhans Texpa,

Village - Baleshvar, Taluka - Palsana,

Surat - 394317, Gujarat, India.

Tel: +91 262 235 0900

Email Id: cs@skflindia.com

CIN: L47820GJ2023PLC140106

Registrar & Share Transfer Agents

M/s. MAS Services Limited

T-34, 2nd Floor, Okhla Industrial Area,

Phase - II, New Delhi -110020

Tel: 033 2280-6616/6617/6618, Fax: 033 2280-6619

Email: info@masserv.com

URL: https://www.masserv.com/

18. Disclosure with respect to demat suspense account/unclaimed suspense account

19. Transfer of Unpaid / Unclaimed Amounts and Shares to Investor Education and Protection Fund

Your Company had not declared any dividend in the previous financial years. Hence, the above provisions are not applicable.

20. Reminder to Investors:

As there is no unpaid / unclaimed dividends, no reminders for such unclaimed shares and unpaid dividends to be sent to shareholders. The Company shall ensure compliance as and when applicable.