Swiss Military Consumer Goods Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

AN ECONOMIC OVERVIEW

How did the global economy hold up in 2025 Rs. Better than many expected. Despite persistent geopolitical tensions, trade policy uncertainties and uneven regional recovery, global GDP grew by 3.3%. Advanced economies expanded by 1.7%, while emerging and developing economies outpaced them, expanding by 4.4%. Inflation continued to moderate, supported by easing energy prices, stabilising supply chains and coordinated central bank responses.

And India-did it live up to its billing as the worlds fastest-growing major economy Rs. It did. Real GDP expanded by 7.7% in FY26, driven by healthy domestic consumption, improving rural demand, a vibrant services sector and growing participation in high-value manufacturing exports. In a year of global uncertainty, India remained a clear standout.

Inflation was a concern for consumers in recent years. Has that pressure eased Rs. Significantly. Headline inflation averaged just 1.7% for April-December 2025, aided by lower food and fuel prices, stable commodity conditions and improved supply dynamics. The Reserve Bank of India responded by shifting to a more accommodative monetary stance-reducing borrowing costs, improving liquidity and creating a more supportive environment for consumption and investment.

What does this mean for consumer spending-specifically for categories like travel gear and lifestyle products Rs. The conditions are as favourable as they have been in years. Income tax relief, successive repo rate cuts and GST rationalisation-which reduced rates across approximately 375 product categories-collectively strengthened household purchasing power and lifted consumer sentiment. Air passenger traffic expanded to 430-440 Millions in FY26, directly reinforcing demand for travel gear and accessories. Across income segments, consumers are upgrading from unbranded to branded products and from branded to premium-a shift that sits squarely in Swiss Militarys favour.

Is this momentum sustainable, or are there risks on the horizon Rs. Indias FY27 outlook remains resilient, anchored by domestic consumption, public infrastructure investment and ongoing trade diversification. Proactive agreements with the UK, the US and the EU are expected to strengthen export linkages and support the Make in India initiative. Global uncertainties and rising protectionist tendencies are real risks-but Indias structural advantages, a young population, expanding digital infrastructure and a growing middle class, provide a durable foundation.

For consumer lifestyle companies, the opportunity is clear. Rising discretionary spending, increasing travel frequency and accelerating premiumisation are creating a compelling backdrop for categories where brand trust, design and affordability drive purchase decisions.

INDIAS BAGS AND LUGGAGE INDUSTRY: RIDING THE WAVE OF MOBILITY AND LIFESTYLE TRANSFORMATION

Indias bags and luggage market is witnessing steady growth, driven by rising travel activity, urbanisation, increasing disposable incomes and evolving consumer lifestyles. The market reached US$ 4.26 billion in 2025 and continues to benefit from growing demand for branded, premium and purpose-driven products.

Travel and Tourism: A Key Growth Catalyst

Travel and tourism remain the most powerful structural force reshaping demand for luggage and travel gear. Indias domestic tourist visits were estimated at 4.5 billion in 2025 and are projected to exceed 9.5 billion by 2030-a near-doubling that will fundamentally expand the addressable occasion for travel products. Travel and tourism are expected to contribute nearly Rs.42 Lakhs Crores to Indias economy and support approximately 64 Millions jobs by 2035, reflecting the scale of the infrastructure and consumption ecosystem being built around mobility. Rising road and air connectivity, growing interest in cultural, wellness, wildlife and MICE tourism and increasing business and international travel are collectively driving demand for purpose-specific luggage solutions across formats and price points. As travel becomes a more frequent and deliberate part of consumers lives-rather than an occasional event-luggage is transitioning from a periodic purchase into a recurring lifestyle investment, supporting long-term, compounding demand across the category.

Evolving Consumer Preferences Driving Premiumisation

Todays consumers seek products that combine functionality, durability, aesthetics and technology. This shift is encouraging manufacturers to move beyond conventional offerings and develop differentiated, value-added products. The transition from traditional soft luggage to lightweight hard-shell trolleys continues to support value growth, while smart features such as RFID-enabled security, anti-theft systems and integrated charging solutions are increasingly influencing purchase decisions.

Reflecting these changing preferences, new-age luggage brands have rapidly gained traction, captured nearly 25% of the organised market and doubled their share over the past two years. At the same time, stable prices of key raw materials—including polypropylene, polycarbonate and polyamide, which account for 40-45% of production costs—are expected to support profitability while enabling continued investment in product innovation and design enhancement.

Consumers are also seeking purpose-specific products designed for business travel, weekend getaways, vacations and work-from-anywhere lifestyles. At the same time, growing emphasis on design, brand identity and lifestyle positioning is contributing to higher average selling prices and supporting premiumisation across the industry.

Bags Segment Continues to Lead Market Demand

The bags category remains the largest contributor to industry revenues, supported by its relevance across work, education, commuting and leisure activities. Consumer preferences are increasingly influenced by aesthetics, brand perception and personal style, encouraging manufacturers to focus on innovation and differentiated product offerings.

As bags evolve from purely functional products into lifestyle accessories, brands are expanding their portfolios with contemporary designs, enhanced functionality and premium collections that cater to diverse consumer segments and usage occasions.

Omnichannel Retail Expanding Market Reach

Organised offline retail continues to dominate industry sales, supported by consumers preference to physically assess product quality, durability and design before making a purchase. However, the rapid growth of e-commerce and omnichannel retail models is reshaping the competitive landscape.

Digital platforms are expanding market reach, particularly across Tier II and Tier III cities, while enabling brands to strengthen customer engagement, improve product visibility and deliver seamless shopping experiences.

The integration of online and offline channels is helping brands enhance convenience, deepen customer relationships and drive incremental growth.

Outlook

The outlook for the Indian bags and luggage industry remains highly encouraging, supported by rising travel activity, accelerating urbanisation, growing disposable incomes and increasing consumer preference for branded and premium products. As mobility becomes an integral part of modern lifestyles and travel demand continues to expand, the industry is expected to witness steady and sustainable growth.

Reflecting these favourable fundamentals, the Indian bags and luggage market is poised to reach US$ 5.33 billion by 2032. Companies that leverage product innovation, premiumisation, robust distribution networks and seamless omnichannel experiences will be well-positioned to capitalise on emerging opportunities and strengthen their market leadership.

Expanding Air Connectivity

Indias airport network has grown from 74 in 2014 to 163 by 2025, opening new routes and making travel more accessible across the country.

Rising Disposable Incomes A growing middle class with higher purchasing power is converting travel from an aspiration into a routine-supporting demand for multiple luggage formats.

Tier II & III City Participation

Intercity bus travel grew 25% YoY in H1 FY26, driven by smaller towns adopting new travel patterns-widening the addressable consumer base significantly.

Experiential & Leisure Travel

Faith-based tourism, wellness, wildlife, cultural and short-duration leisure trips are encouraging consumers to invest in multiple, purpose-specific travel products.

Business & MICE Travel

Growing corporate mobility, conference travel and international business trips are driving demand for premium, purpose-built luggage and travel accessories.

Outbound Travel Boom Indian outbound tourism is growing at 11.4% CAGR, with rising passport penetration and wider international connectivity pushing overseas travel beyond metro cities.

INDIAS CONSUMER ELECTRONICS & SMART DEVICES INDUSTRY

Smart Wearables: From Accessory to Essential

The smart wearables segment has emerged as one of the most dynamic categories within Indias consumer electronics landscape. Valued at US$ 2.94 billion in 2025, the market is expected to grow at a CAGR of 23.17%, reaching US$ 10.26 billion by 2031. Smartwatches command approximately 63% of segment revenues, driven by multi-sensor health monitoring, UPI payment integration and standalone cellular connectivity. Emerging formats-smart rings, hearables and Al- enabled fitness devices-are expanding the category beyond wristwear, attracting consumers who seek compact, discreet and feature-rich wearable technology.

Three forces are propelling this growth: a health- aware middle class adopting wearables as everyday wellness companions; Production Linked Incentive schemes compressing costs and widening access beyond Tier I cities; and the deepening integration of wearables into Indias digital health and payments ecosystem. Consumers are no longer buying wearables as aspirational gadgets-they are buying them as functional necessities.

Wireless Audio: Connectivity Becomes a Lifestyle

Indias wireless audio market stood at US$ 3.28 billion in 2025 and is projected to reach US$ 8.68 billion by 2031, growing at a CAGR of 17.61%. True wireless stereo earbuds lead the segment with approximately 65% revenue share, supported by rising smartphone penetration, evolving content consumption habits and growing demand across entertainment, gaming, fitness and remote work. Offline channels grew 10% year-on-year, supported by experience stores and wider retail availability, while online platforms-led by quick-commerce logistics and festive flash events-accounted for nearly 74% of sales.

Indias TWS market recorded overall shipment growth of 1 % in 2025, with Q4 surging 12% year-on-year as festive demand, refreshed product portfolios and Al-enabled feature enhancements drove a strong recovery. Looking ahead, Al-driven features, gesture-based controls and health-monitoring capabilities are expected to drive the next wave of consumer upgrades-shifting the category from volume-led to value-led growth.

India as a Manufacturing Hub

India is rapidly strengthening its position in the global electronics value chain. Policy support through PLI schemes, growing investments from global technology companies and expanding domestic assembly infrastructure are enabling India to serve as a production base for smartphones, wearables, tablets and connected audio devices-supporting both domestic consumption and export ambitions.

This manufacturing momentum is compressing costs, improving supply chain reliability and making premium technology accessible to a broader consumer base.

Outlook

The outlook for Indias consumer electronics industry is compelling. Rising digital adoption, accelerating premiumisation, expanding domestic manufacturing and the deepening preference for connected lifestyles are expected to sustain long-term market growth. Categories such as smart wearables, wireless audio and personal electronics are poised to play an increasingly central role in Indian consumers daily lives-creating meaningful opportunities for brands that can combine technology, design, affordability and distribution reach.

Health & Wellness Adoption

A health-aware middle class is buying wearables as everyday wellness companions-tracking fitness, monitoring vitals and managing chronic conditions with connected devices.

Smartphone & 5G Penetration

Rising smartphone ownership and expanding 5G infrastructure are creating a connected ecosystem that naturally drives demand for complementary audio, wearable and smart devices.

PLI-Led Manufacturing Scale-Up

Production Linked Incentive schemes are compressing costs and attracting global investments, making premium technology accessible beyond Tier I cities and broadening the consumer base.

Premiumisation & Upgrading

Consumers are moving from entry- level to mid-range and premium devices, seeking Al-enabled features, superior audio quality, design and integration with their digital lifestyles.

E-Commerce & Quick Commerce

Online channels account for nearly 74% of wireless audio sales, supported by quick-commerce logistics, festive flash events and direct-to-consumer platforms expanding market reach.

Al & Feature-Led Innovation

Al-driven features-gesture controls, health monitoring, noise cancellation and personalised audio-are shortening replacement cycles and driving value-led growth across categories.

WHERE OPPORTUNITY MEETS READINESS

Indias bags and luggage industry and consumer electronics market are not just growing-they are growing in precisely the direction that Swiss Military Consumer Goods Limited is built to serve. Rising travel frequency, accelerating premiumisation, the shift from unbranded to branded and the deepening appetite for connected lifestyle products are structural trends, not cyclical upticks. They will outlast any single years performance and compound in favour of companies that are positioned early, positioned correctly and positioned with conviction.

Swiss Military is that company. With exclusive brand rights in India, a manufacturing facility now operational, an omnichannel distribution network spanning physical and digital retail and a portfolio that addresses both the travelling consumer and the connected home, the Company enters FY27 not as an aspirant but as a prepared participant-with the brand, the infrastructure and the strategic clarity to convert Indias consumption momentum into sustained, profitable growth.

COMPANY OVERVIEW

Swiss Military Consumer Goods Limited offers travel gear, luggage, backpacks, accessories and lifestyle essentials to Indias aspirational consumers. Founded in 1989 as Network Limited and reoriented under new strategic leadership in September 2020, the Company has undergone a deliberate and systematic transformation-from a distribution-led business into a brand-controlled, manufacturing-backed consumer platform.

At the heart of this transformation is a clear and consistent proposition: affordable premiumisation. Swiss Military combines functionality, durability and contemporary design with price points that make quality accessible-serving the growing segment of Indian consumers who aspire to upgrade without overreaching. This positioning is reinforced by one of the most recognised brand identities in the global lifestyle space, backed by exclusive licensing rights for India that create a durable competitive moat.

The Companys omnichannel presence spans multi- brand outlets, modern trade, leading e-commerce marketplaces and its proprietary direct-to-consumer platform. Its manufacturing facility-commissioned in January 2025-marks a defining inflection point, enabling tighter control over product quality, supply chain responsiveness and category scalability as the business enters its next phase of growth.

Pillars of Growth

Luggage & Travel Gear-The Core

Luggage and travel gear are the strategic heart of Swiss Militarys portfolio. Spanning hard luggage, soft luggage, backpacks, laptop overnighters, sling bags, duffels and travel accessories, the range is designed to serve the full spectrum of Indias travelling consumer-students, working professionals, leisure travellers and frequent business flyers alike. Product innovation, durable materials, considered design and reliable aftersales support are the pillars on which consumer trust is built and brand loyalty is sustained. As Indias travel frequency rises and consumers upgrade to branded, quality-assured alternatives, this category is positioned as the Companys primary growth engine.

Omnichannel Distribution-The Reach

Swiss Militarys distribution strategy is built on the principle that the brand must be available wherever consumers choose to shop. The Company is systematically expanding its presence across offline retail, e-commerce platforms, direct-to-consumer channels and new retail formats-including Exclusive Brand Outlets, large-format retail, specialty stores, multi-brand outlets and shop-in-shop arrangements. Each channel serves a distinct role: EBOs build brand experience, e-commerce drives reach and volume and MBOs maintain geographic depth. Together, they create a distribution architecture that is both wide and resilient.

Manufacturing-The Foundation

The commissioning of Swiss Militarys in-house manufacturing facility in January 2025 represents the most consequential strategic development of recent years. Manufacturing is not merely a cost or efficiency lever-it is a capability that transforms how the Company develops products, manages quality, controls timelines and responds to market demand. Alongside established manufacturing partnerships, this integrated approach enables the Company to scale its travel gear and lifestyle categories with greater confidence, consistency and speed-building a business that is harder to replicate and better insulated from supply chain disruption.

SWOT ANALYSIS

Strengths

Globally Trusted Brand Heritage

Swiss Military carries strong international recognition built over decades across 25+ countries. In Indias competitive lifestyle market, this heritage is a meaningful differentiator-shortening the consumers trust journey and supporting a premium positioning that domestic-only brands cannot replicate.

Experienced Leadership

Promoters and management bring over 30 years of international business expertise, enabling the Company to navigate Indias evolving travel and lifestyle landscape with strategic confidence and institutional knowledge.

Exclusive Licensing Rights

Holding sole rights to market Swiss Military products in India creates a durable competitive moat. No other player can leverage this brand identity in the country-a structural advantage that strengthens with every rupee invested in brand building.

Diversified Product Portfolio

The Company spans luggage, travel accessories, electronics, personal care, apparel and eyewear-allowing it to serve varied consumer needs, reduce category concentration risk and capture a wider share of the aspirational consumers wallet.

Extensive Omnichannel Reach

A well-built network spanning retail outlets, leading e-commerce marketplaces and direct-to-consumer platforms ensures broad market access and consistent consumer touchpoints across Indias physical and digital retail landscape.

Advanced Manufacturing Capability A modern, automated manufacturing facility strengthens product quality, tightens supply chain control and creates the capacity to scale production efficiently as demand grows-reducing external dependencies over time.

Travel-led Strategic Focus

A sharper focus on travel gear-hard luggage, soft luggage, backpacks, duffels and travel accessories-enables deeper category expertise, stronger product innovation and more focused market development in Swiss Militarys highest-potential segment.

Weaknesses

Limited Presence Beyond Metros

The brands penetration in Tier II, Tier III and rural markets remains relatively low, leaving a large, fastgrowing and increasingly brand-conscious consumer base underserved. Closing this gap is both a priority and an opportunity.

Dependence on Global Sourcing

A significant share of products and components is sourced internationally, exposing the business to currency fluctuations, rising import duties and supply chain disruptions. In-house manufacturing partially addresses this, but the exposure remains meaningful.

Capital-Intensive Investments

Ongoing manufacturing infrastructure spend can weigh on short-term profitability and limit flexibility to deploy capital towards accelerated marketing or faster geographic expansion. This is a deliberate trade-off, but one that requires careful management.

Highly Competitive Environment

The Company competes against established Indian brands and global players, many of whom offer comparable products at aggressive price points. Sustained differentiation through design, quality and brand equity is non-negotiable.

Low Brand Awareness in Smaller Cities

Despite strong global recognition, Swiss Military is not yet a familiar name in non-metro India. Building that awareness requires sustained, localised and long-horizon marketing investment-and the investment appetite to see it through.

Opportunities

Rising Aspirational Consumers

Indias expanding middle class is increasingly drawn to premium lifestyle brands. As disposable incomes rise, more consumers are willing to pay for quality, design and brand prestige-exactly the positioning Swiss Military occupies.

Boom in Travel & Tourism

Growing disposable incomes, a structural surge in domestic and international travel and rising business mobility are driving sustained demand for premium luggage and travel accessories-the Companys core and highest-margin category.

Retail Footprint Expansion

Opening Exclusive Brand Outlets, airport stores and shop-in-shop formats can meaningfully lift brand visibility, deepen consumer engagement and bring the Swiss Military experience closer to the aspirational consumer at the point of purchase.

Sub-Brand Expansion for Wider Market Access

A planned sub-brand can help the Company address Tier II and Tier III markets more effectively, widening reach without diluting the core Swiss Military positioning-unlocking a significant and currently underserved consumer base.

E-Commerce & Digital Growth

Indias online retail expansion offers a low-cost, high- reach route to consumers in cities and towns where physical stores do not yet exist, while D2C channels improve margins, deepen consumer data ownership and strengthen brand relationships.

Corporate Gifting Segment

Premium branded products are increasingly favoured for corporate gifting. This B2B channel offers high- volume, relationship-driven orders that complement retail revenue streams and improve capacity utilisation.

International Exports & Sustainability

The Swiss Military brands global appeal opens export opportunities across Asia, the Middle East and Africa. Growing consumer eco-consciousness also creates meaningful space for sustainable product lines that align with the brands quality and responsibility credentials.

Threats

Intensifying Competition

Domestic and international competitors are continually strengthening their India presence, potentially triggering price pressure, heavier marketing spend and erosion of premium market share.

Rapidly Evolving Consumer Tastes

Fashion, lifestyle and purchasing preferences shift quickly, particularly among younger consumers. Failure to continuously refresh and innovate product lines risks brand stagnation in a market where novelty commands attention.

Macroeconomic & Regulatory Headwinds

Economic slowdowns, inflationary pressures, changes in import or trade policies, or new regulatory frameworks could reduce consumer spending power and directly impact revenue and cost structures.

Supply Chain Volatility

Reliance on imported materials and global logistics exposes the business to disruptions from geopolitical tensions, freight delays, port congestion and currency movements that remain largely beyond the Companys direct control.

Brand Dilution Risk

Expanding across multiple lifestyle categories and price segments carries the risk of weakening Swiss Militarys premium, aspirational identity if product quality, design consistency or consumer experience are not rigorously maintained across the portfolio.

Financial Performance

FY26 was a year of deliberate growth for Swiss Military Consumer Goods Limited-one in which the Company chose to invest ahead of scale rather than optimise for near-term profitability. Revenue expanded strongly, the business deepened its distribution infrastructure, refreshed its product portfolio and commissioned in-house manufacturing. The results reflect that investment posture: robust top-line momentum, a considered moderation in margins and a balance sheet that remains healthy and growth-ready.

Revenue-Strong and Broad-Based

Revenue from operations grew 18.19% to Rs.25,134.49 Lakhs in FY26, compared to Rs.21,266.90 Lakhs in FY25. This marks the second consecutive year of high-teens revenue growth-following 17.35% standalone growth in FY25-and reflects deepening market penetration across both travel gear and consumer electronics categories. The growth was broad-based, supported by channel expansion, a refreshed product range including 8 new luggage models and 12 new backpack and sling models and strengthening consumer recognition of the Swiss Military brand across Indias physical and digital retail landscape.

EBITDA-Deliberate Investment, Temporary Margin Compression

EBITDA stood at Rs.1,252.56 Lakhs in FY26, compared to Rs.1,301.28 Lakhs in FY25-a decline of 3.74%, before exceptional items. This was a considered outcome rather than an operational shortfall. The Company made deliberate investments during the year in brand building, retail expansion, pan-India warehousing infrastructure, manufacturing ramp-up costs and the development of a dedicated retail field force, targeting full pan-India activation by FY27. These are front-loaded, growth-oriented costs. Q4 FY26 saw the sharpest margin compression-EBITDA of Rs.239.07 Lakhs versus Rs.392.51 Lakhs in Q4 FY25-reflecting the concentration of these investment outlays in the second half of the year. As these investments mature and operating leverage builds, the EBITDA trajectory is expected to improve meaningfully.

Profitability-Investment Phase Costs Reflected

Profit after tax stood at Rs.772.15 Lakhs in FY26, compared with Rs.919.06 Lakhs in FY25, a 15.98% decline of before exceptional items. The decline was a direct consequence of the Companys investment posture-higher marketing spend, increased distribution and warehousing costs and the operational ramp-up of the in-house manufacturing facility. These are not structural margin pressures; they are the cost of building a business of greater scale, resilience and competitive depth. The Companys underlying cash generation and balance sheet integrity remain intact, providing a firm foundation for the next phase of growth.

Scale and Reach-The Business Behind the Numbers

The financial performance is underpinned by a business with meaningful and growing operational scale:

1,500+ product SKUs across travel gear, consumer electronics and lifestyle categories; 3,400+ multi-brand outlet touchpoints; 200+ cities of presence; 19+ major distributors; and 15+ e-commerce portals that market Swiss Military products. The EBO rollout commenced in Q3 FY26, with 50 Exclusive Brand Outlets planned across Indias top cities by FY29. A new sub-brand targeting Tier II and Tier III markets is in development-expected to widen consumer reach without diluting the core Swiss Military positioning.

Outlook

The Company enters FY27 with revenue momentum, an expanded distribution architecture, a sharper product strategy and manufacturing capability now fully operational. As investments made in FY26 generate returns-through improved channel productivity, better product margins from in-house manufacturing and operating leverage across a larger revenue base-both profitability and return ratios are expected to strengthen progressively.

(Based on Standalone Financial Statements)

Particulars	For the year ended 31 -03- 2026 (Rs. in Lakhs)	For the year ended 31-03- 2025 Y-o-Y Growth (%) 2025	(Rs. in Lakhs)
Revenue from Operations	25,134.49	21,266.90	18.19
Other Income	156.79	221.64	-29.26
Total Revenue	25,291.28	21,488.54	17.70
EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation)	1,252.56	1,301.28	-3.74
EBIT (Earnings Before Interest &Tax)	1,207.06	1,269.91	-4.95
Profit Before Tax (PBT)	1,040.86	1,205.19	-13.64
Current Tax	270.13	288.45	-6.35
Deferred Tax	(1.42)	(2.32)	-38.79
Net Profit for the Year	772.15	919.06	-15.98

(Based on Standalone Financial Statements)

Key Financial Ratios - FY26

1 Particulars	FY24	FY25	FY26 I
Profitability Ratios
EBITDA Margin	6.06%	6.12%	4.98%
EBIT Margin	5.95%	5.97%	4.80%
Net Profit Margin	4.53%	4.24%	3.07%
Growth Ratios
Total Revenue	48.30%	17.34%	18.19%
EBITDA	64.38%	18.55%	-3.74%
EBIT	65.23%	17.71%	-4.95%
Net Profit	58.70%	11.84%	-15.98%
Net Worth	7.68%	78.70%	6.30%
Liquidity Ratios (Times)
Current Ratio	4.63x	4.89x	3.81x
Return Ratios
Return on Equity (ROE)	11.98%	9.27%	5.89%
Return on Capital Employed (ROCE)	15.72%	12.57%	8.96%
Return on Assets (ROA)	9.21%	5.60%	4.28%
Efficiency Ratios
AssetTurnover (Times)	2.03x	1.30x	1.39x
Receivable Turnover (Times)	5.83x	5.22x	5.71 x
Receivable Days	63	70	64
Inventory Turnover (Times)	8.33x	8.28x	7.87x
Inventory Days	44	44	46
Payables Turnover (Times)	22.51 x	10.86x	5.57x
Payable Days	36	34	66
Cash Conversion Cycle (Days)	70	80	45

Human Resources

A business in active transformation-commissioning manufacturing, building a retail field force, expanding omnichannel distribution and refreshing its product architecture-is ultimately a people story. Swiss Military Consumer Goods Limited recognises that the quality, alignment and motivation of its people are as central to its growth ambitions as any product or channel strategy.

Building for Scale

FY26 was a year of deliberate organisational buildout. As the Company expanded its retail presence, strengthened its distribution network and ramped up its manufacturing facility, it made targeted additions across sales, retail operations, supply chain, product development, quality assurance and customer support. A dedicated retail field force is being built out systematically-with full activation targeted across North, Central and West India by mid FY27, followed by nationwide coverage across South, East and North- East India by year-end. This phased deployment reflects a disciplined approach to geographic expansion-ensuring each market is entered with the right team strength before the next is activated.

Culture and Capability

The Company continued to invest in building a performance-oriented culture during the year-one that values accountability, cross-functional collaboration and customer-centricity at every level of the organisation. As Swiss Military evolves from a distribution-led model to a manufacturing-backed, brand-controlled consumer platform, the organisations capability requirements are changing in kind. Investment in training, onboarding quality and role- specific skill development is being scaled alongside the business itself, ensuring the organisation does not become the bottleneck in an otherwise accelerating growth story.

People as Competitive Advantage

In a consumer lifestyle business where brand experience is shaped at every touchpoint-the retail floor, the e-commerce interaction, the after-sales call-the quality of people is a direct determinant of brand equity. Swiss Militarys investment in its people during FY26 was therefore an investment in its brand. As the Company adds EBOs, enters large-format retail and deepens its D2C presence in the year ahead, the human capital foundation being built today will be the operating capability that enables and sustains that expansion.

Information Technology

For a consumer lifestyle company operating simultaneously across 3,400+ multi-brand outlets, 15+ e-commerce portals, a proprietary direct-to- consumer platform and an in-house manufacturing facility, technology is not a support function. It is the connective tissue that holds the business together and the enabling layer that makes omnichannel commerce possible at scale.

Omnichannel Operations

Swiss Militarys omnichannel business model places significant demands on its technology infrastructure. Order management, real-time inventory visibility, demand forecasting, customer engagement and financial reporting must function seamlessly across channels that operate at different speeds, with different data requirements and different consumer expectations. The Companys digital systems support the full commercial stack-from online sales initiation and order fulfilment to inventory tracking, customer support resolution and compliance reporting-ensuring that the consumer experience is consistent regardless of where or how a purchase is made.

E-Commerce and D2C

With products listed across 15+ e-commerce portals and a growing direct-to-consumer platform, digital commerce is an increasingly important revenue and brand-building channel for Swiss Military. Technology investments in this area are focused on improving discoverability, conversion, fulfilment speed and post-purchase engagement-the four levers that determine whether an online interaction builds lasting brand loyalty or remains a one-time transaction. As quick-commerce and D2C models continue to grow in importance across Indias retail landscape, the Companys ability to compete effectively in these channels will depend on the quality and responsiveness of its underlying digital infrastructure.

Manufacturing Integration

The commissioning of Swiss Militarys in-house manufacturing facility introduced an entirely new dimension to the Companys technology requirements. Digitally integrated manufacturing-connecting production planning, quality control, inventory management and supply chain visibility on a single platform-is a stated strategic priority. This integration reduces the information lag between production and commercial decisions, improves responsiveness to demand shifts and supports the kind of product quality consistency that a premium brand depends on. The Company is investing in automation-led processes and technology-enabled quality assurance systems as it scales manufacturing output through FY27 and beyond.

Cybersecurity and Data Governance

As digital transaction volumes grow and consumer data becomes an increasingly valuable asset, cybersecurity and data governance are emerging as board-level priorities. The Company is strengthening its controls around data security, access management and system resilience-ensuring that the trust consumers place in the Swiss Military brand extends to how their data is handled. Regulatory compliance with applicable data protection frameworks remains a standing commitment.

Outlook

Technology investment at Swiss Military is not a line item to be managed-it is a capability to be built. As the Company scales its manufacturing base, expands its retail footprint and deepens its digital commerce presence, investment in ERP upgrades, CRM depth,

D2C platform capability, warehouse management systems and data analytics will continue to accelerate-building the digital backbone that a multi-channel, manufacturing-backed consumer brand of this ambition demands.

Risk Management

Swiss Military Consumer Goods Limited operates at the intersection of several dynamic forces-a rapidly evolving consumer landscape, a business model in active transition from distribution-led to manufacturing-backed, expanding omnichannel retail commitments and a global sourcing network exposed to geopolitical and logistical uncertainty. In this context, risk management is not a compliance exercise. It is a strategic discipline that protects the Companys growth momentum, preserves brand equity and ensures that the investments being made today deliver the returns expected tomorrow.

The Companys risk management framework is designed to be proactive rather than reactive-identifying, assessing and addressing potential risks before they escalate into operational or financial disruptions. Risk ownership is decentralised across functions, ensuring that the people closest to each risk are accountable for monitoring and mitigating it. The Board and Audit Committee provide oversight, with material risks reviewed periodically and mitigation strategies updated to reflect changing business conditions.

The principal risks facing the Company and the mitigations in place, are set out below.

Supply Chain Risk

Swiss Military sources products and components across multiple international geographies. Geopolitical tensions, freight disruptions, port congestion and input cost volatility can affect product availability, lead times and landed costs-with direct implications for revenue and margin.

The Company maintains a diversified supplier base across multiple geographies, supported by strategic inventory management to minimise disruptions. Enhanced supply chain visibility through digital tools and real-time tracking enables agile decision-making and timely response to potential challenges.

Manufacturing Scale-up Risk

The scale-up of Swiss Militarys in-house manufacturing facility introduces execution risks around production efficiency, capacity utilisation, quality consistency, labour availability and machinery performance-risks that intensify as the facility scales toward meaningfully higher output levels through FY27 and FY28.

Quality assurance systems, process standardisation, production monitoring dashboards, preventive maintenance programmes and experienced operational teams are in place to manage ramp-up risks. Continuous improvement initiatives are embedded across manufacturing operations.

Regulatory & Compliance Risk

Evolving regulations around imports, product safety standards, packaging requirements and ESG disclosures can affect product availability, operational processes and cost structures-sometimes with limited lead time for adaptation.

Dedicated compliance and legal teams monitor regulatory developments continuously and ensure timely adherence across all applicable requirements. Manufacturing and sourcing partners are evaluated against compliance standards as part of the Companys procurement process.

Technology Obsolescence Risk

A business operating across 15+ e-commerce portals, a D2C platform, in-house manufacturing and an expanding retail network depends heavily on technology. Failure to keep pace with advances in retail technology, e-commerce capabilities and operational automation could impair customer experience, channel competitiveness and internal efficiency.

The Company invests continuously in digital transformation-including D2C platform upgrades, CRM systems, ERP solutions and technology-enabled manufacturing integration-to maintain operational agility and competitive relevance across all channels.

Competitive Risk

The India luggage and lifestyle market is attracting increased investment from both established domestic players and global brands. Competitive intensity across pricing, design, distribution and marketing could pressure market share, pricing power and profitability.

Swiss Militarys response is differentiation-not price competition. The Companys exclusive India licensing rights, globally recognised brand heritage, in-house manufacturing capability and growing omnichannel presence create a competitive position that is difficult to replicate and strengthens with scale.

Retail Expansion and EBO Execution Risk

The planned rollout of 50 Exclusive Brand Outlets across Indias top cities by FY29, alongside aggressive entry into large-format retail, specialty stores and shop-in-shop formats, carries execution risks around location selection, store productivity, inventory availability, consumer footfall and unit economics.

The Company follows a phased, data-driven retail expansion approach-supported by market assessment, performance tracking at store level, brand-led merchandising and a disciplined review of store economics before each subsequent phase of rollout is committed.

Inventory Management Risk

A portfolio spanning 1,500+ SKUs across categories with varying demand patterns and seasonality profiles creates meaningful complexity in demand forecasting and inventory planning. Excess stock ties up working capital and erodes margins through markdowns; stock-outs damage consumer trust and surrender revenue to competitors.

Advanced analytics, data-driven demand forecasting and real-time inventory monitoring systems are deployed across the supply chain to optimise stock levels, reduce obsolescence risk and improve replenishment accuracy across both offline and online channels.

Reputation & Brand Risk

Swiss Militarys brand is its most valuable asset. Product quality concerns, service failures, delivery delays or adverse consumer feedback-particularly in an era of instant and unforgiving social amplification-can damage brand perception faster and more permanently than it can be rebuilt.

Stringent quality assurance at both manufacturing and sourcing levels, a robust customer support infrastructure and an effective grievance redressal mechanism are the primary safeguards. Brand monitoring and consumer sentiment tracking are embedded in the Companys ongoing market intelligence process.

Brand Dilution and Category

Expansion Risk

Expanding across multiple lifestyle categories and price segments-from premium hard luggage to consumer electronics to personal care-carries the risk of diluting Swiss Militarys premium, aspirational identity-a risk that materialises not through a single decision but through the gradual erosion of quality standards, design consistency or consumer experience across an overstretched portfolio.

The Company manages this risk through focused category governance, product quality controls, differentiated positioning across core and sub-brand offerings and a disciplined portfolio review process. The planned sub-brand strategy is specifically designed to serve Tier II and Tier III markets without compromising the positioning of the flagship Swiss Military brand.

Internal Control Systems and Their Adequacy

Swiss Military Consumer Goods Limited maintains a robust internal control framework that supports effective governance, operational efficiency and risk management. The Companys internal control systems are designed to provide reasonable assurance regarding safeguarding of assets, accuracy of financial reporting, compliance with applicable laws and regulations and efficient conduct of business operations.

The internal control environment is aligned with the scale, complexity and risk profile of the business and includes defined policies, procedures and approval mechanisms to ensure transparency, accountability and operational discipline across the organisation. These controls support the prevention and detection of fraud, errors and irregularities while facilitating timely and reliable financial and operational reporting.

To strengthen oversight, the Company has appointed an independent Internal Auditor who periodically reviews the adequacy and effectiveness of internal controls, evaluates key business processes and identifies opportunities for improvement. The findings and recommendations arising from these reviews are presented to the management. Audit Committee and Board of Directors for evaluation and appropriate action.

The Board, supported by a well-structured Audit Committee, plays an active role in overseeing the Companys internal control environment and governance practices.The Audit Committee regularly reviews the effectiveness of internal controls, risk management processes, compliance mechanisms and financial reporting systems, recommending enhancements wherever necessary.

The Company remains committed to strengthening its control environment through process standardisation, automation initiatives, technology adoption and continuous improvement practices.

CAUTIONARY STATEMENT

THE STATEMENTS MADE IN THIS MANAGEMENT DISCUSSION AND ANALYSIS DESCRIBING THE COMPANYS OBJECTIVES, PROJECTIONS, ESTIMATES, EXPECTATIONS, PLANS OR OUTLOOK MAY CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF APPLICABLE SECURITIES LAWS AND REGULATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED DUETO VARIOUS FACTORS, INCLUDING CHANGES IN ECONOMIC CONDITIONS, CONSUMER DEMAND, COMPETITIVE INTENSITY, SUPPLY-CHAIN DISRUPTIONS, RAW MATERIAL PRICES, CURRENCY MOVEMENTS, REGULATORY DEVELOPMENTS, DISTRIBUTION PERFORMANCE, BRAND PERCEPTION, TECHNOLOGY ADOPTION AND OTHER INTERNAL OR EXTERNAL FACTORS. THE COMPANY ASSUMES NO OBLIGATION TO PUBLICLY AMEND, MODIFY OR REVISE ANY FORWARD-LOOKING STATEMENTS BASED ON SUBSEQUENT DEVELOPMENTS, INFORMATION OR EVENTS.