V-Mart Retail Ltd Management Discussions

Management Discussion and Analysis Report

Economic Review

A World in Transition: Growth, Geopolitics and Realignment

The global economy is entering a phase of steady and measured expansion, supported by continued investment in technology, particularly the rapid advancement and adoption of artificial intelligence (Al), alongside easing inflationary pressures. While growth remains stable, it reflects a more moderated trajectory compared to the sharp post-pandemic recovery with productivity gains increasingly influenced by Al and machine- led systems. At the same time, the broader macroeconomic environment continues to be shaped by persistent geopolitical tensions, evolving trade dynamics and structural shifts in global supply chains, factors that, together with the transformative impact of Al, introduce a degree of uncertainty into the outlook.

GDP Growth Projections (in %)

	CY 2025	CY 2026	CY 2027
Global Economy	3.4	3.1	3.2
Advanced Economies	1.9	1.8	1.7
The US	2.1	2.3	2.1
Euro Area	1.4	1.1	1.2
Emerging Markets & Developing Economies	4.4	3.9	4.2
China	5.0	4.4	4.0
India	7.6	6.5	6.5
The Middle East and Central Asia	3.6	1.9	4.6
Sub-Saharan Africa	4.5	4.3	4.4
Latin America & Caribbean	2.4	2.3	2.7
Emerging Europe	2.0	2.0	2.1

The global economy continues to navigate geopolitical complexities driven by ongoing conflicts and shifting trade dynamics. Tensions in the Middle East and the Russia-Ukraine conflict have impacted energy markets and supply chains, causing volatility in oil, gas and commodity prices. In response, particularly in Europe, economies are diversifying energy sources, strengthening energy security and building more resilient supply chains.

Meanwhile, geopolitical competition, especially between the US and China, has intensified tariffs, technology restrictions and strategic resource controls, accelerating near-shoring, friend-shoring and regionalisation as businesses and governments prioritise supply security and self-reliance.

Global headline inflation is projected to increase from 4.1% in 2025 to 4.4% in 2026, before declining to 3.7% in 2027, driven by higher energy and food prices, rising commodity prices, firmer inflation expectations and intensifying geopolitical tensions.

Despite challenges, the global economy remains resilient. Investments in digital infrastructure and emerging technologies, particularly Al, alongside supportive fiscal measures and policy responses, continue to sustain growth. Emerging markets are benefiting from domestic demand and reforms, while advanced economies are seeing steady expansion driven by public spending and technological progress.

Outlook

Global growth prospects remain broadly stable, despite downside risks. Trade tensions, geopolitical uncertainties and high public debt levels could tighten financial conditions and impact economic activity. At the same time, changing expectations around productivity gains from Al investments may create market volatility and influence investor sentiment.

Structural challenges, including demographic pressures, supply chain adjustments and uneven technology-led productivity gains, are also expected to moderate growth in some regions. In response, policymakers are focusing on strengthening fiscal buffers, maintaining price and financial stability, reducing policy uncertainty and advancing structural reforms to support productivity, innovation, institutional resilience and long-term economic growth.

A Nation in Momentum: Demand, Investment and Strength

India continues to lead the global growth landscape, retaining its position as the fastest-growing major economy on the back of strong GDP growth. This momentum is firmly anchored in domestic demand, with private consumption accounting for 61.5% of GDP as per the First Advance Estimates, complemented by sustained investment activity.

The global macroeconomic environment, however, witnessed a sharp escalation in risks toward the latter part of FY 2025-26. A significant oil price shock was triggered by the escalation of the Iran-US conflict following US-led strikes on Iran and the subsequent disruption of shipping through the Strait of Hormuz, a critical artery for global energy trade. The effective blockade of the strait disrupted a meaningful share of global oil supplies, leading to a sharp spike in crude prices during March and early April 2026.

During most of FY 2025-26, domestic consumption and investment remained resilient, supported by low inflation, stable employment, rising real incomes, strong agricultural output, improving urban demand and tax rationalisation measures. However, the late oil shock poses upside risks to inflation, input costs and external balances, with its full macroeconomic impact expected in the subsequent period.

Gross Fixed Capital Formation stands at 30% of GDP, reflecting sustained investment momentum supported by public capital expenditure, infrastructure expansion and improving private sector sentiment. Fiscal discipline, moderating inflation and a stable financial sector continue to underpin macroeconomic stability and confidence, although external risks, particularly energy price volatility, require close monitoring.

Inflationary and Monetary Policy Trends

Inflation moderated significantly, with headline CPI inflation declining to 1.7% during April-December FY 2025-26, supported by easing food prices and favourable supply conditions. Fiscal prudence, aided by resilient tax collections, GST reforms and calibrated expenditure rationalisation, sustained growth while maintaining stability. Monetary policy also remained supportive, with repo rate cuts, liquidity measures and stronger banking sector balance sheets improving credit availability and lowering borrowing costs.

Outlook

Real GDP growth for FY 2026-27 is projected at 6.6%, broadly in line with Indias potential growth rate of around 7%. Domestic demand, supported by improving investments, healthier household and corporate balance sheets, and continued public capital spending, is expected to remain the key growth driver. Global uncertainties, including slower growth in key markets, trade policy changes and financial market volatility, may affect exports and investor sentiment, though ongoing trade negotiations with major partners, including the US, could ease external risks over time. Overall, the outlook remains positive, supported by stable inflation, sound fiscal management, stronger financial institutions and structural reforms, positioning India to sustain growth while remaining resilient to external shocks.

Industry Review

Indian Retail Market

Indias retail sector continues to demonstrate a strong growth trajectory, supported by an expanding consumer base, rising disposable incomes, and rapid urbanisation. The market, estimated at around USD 1 Trillion in 2024, is projected to grow to USD 1.6-1.8 Trillion by 2030, reinforcing Indias position as one of the worlds most dynamic consumption-driven economies. At the same time, the sector is undergoing a significant transformation, driven by evolving consumer aspirations, advancements in digital infrastructure, and improvements in logistics and supply chain capabilities. These developments are strengthening the overall retail ecosystem.

Organised retail, spanning modern brick-and-mortar formats and digital commerce, continues to expand steadily, supported by wider product assortments, enhanced shopping experiences and greater convenience. This structural shift is expected to translate into a USD 600 Billion+ opportunity by 2030, with organised retail accounting for nearly 35% of Indias total retail market The retail landscape is expanding beyond traditional branded products, with organised retail increasingly catering to regional and unbranded consumption segments that continue to account for a significant share of demand. Distribution-led models are also gaining prominence, with organised channels growing faster than legacy pan-India brands and gradually shifting value creation towards channel partners. At the same time, organised retail formats are evolving around assortment, value and convenience, enabling stronger alignment with diverse consumer preferences across demographics and income groups. The coexistence of regional players, local retailers, national brands, digital- first businesses and omnichannel models reflects the depth of Indias retail ecosystem, while expanding consumer access, convenience and choice.

Against this backdrop, Indias e-commerce market continues to gain strong momentum. The sector is projected to grow from USD 120-140 Billion to around USD 280-300 Billion by 2030, supported by rapid digital adoption and improving logistics infrastructure. In parallel, the online shopper base is expanding steadily, with nearly 300 Million users today and expected to reach around 440 Million by 2030.

Importantly, this growth is becoming increasingly inclusive. Rural India now accounts for nearly 30% of online users, while women represent about 45% of digital shoppers, driven by the convenience, safety, and independence offered by online platforms.

Collectively, these developments are shaping a dynamic and resilient retail landscape, well positioned to support Indias next phase of consumption- led growth.

Indian Fashion Industry

Indias fashion market continues to expand, driven by rising disposable incomes, evolving lifestyles and growing fashion awareness among younger consumers. The market is expected to grow at a CAGR of 9.02% between 2025 and 2029, supported by strong demand for branded, trend-led products across physical and digital channels.

Within this, the fast fashion segment is witnessing robust growth, projected to expand from USD 13.48 Billion in 2025 to USD 39.74 Billion by 2032 at a CAGR of 16.7% during 2025-2032. Rising incomes, global fashion exposure and a large young consumer base continue to drive demand, with dresses, tops, jeans and skirts accounting for the largest share.

Apparel and Fashion Accessories Industry

The Indian apparel industry continues to grow steadily, supported by rising incomes, changing fashion preferences and expanding retail channels. The market is projected to generate USD 115 Billion in revenue in 2026 and grow at a CAGR of 3.11% during 2026-2030. Womens apparel remains the largest segment, valued at USD 56.18 Billion in 2026, driven by demand across urban and emerging markets.

Despite growth, Indias per capita apparel spending is estimated at USD 77.77 in 2026, indicating significant growth potential. Industry volumes are expected to reach 42.7 Billion pieces by 2030, with average consumption at 25.4 pieces per person in 2026 and volume growth of -3.4% projected in 2027.

The non-luxury segment is expected to account for nearly 98% of sales by 2026, reflecting strong demand for affordable fashion. At the same time, rising awareness is increasing interest in sustainable and ethically produced clothing, signalling a gradual shift towards responsible consumption.

Key Trends

Omnichannel Retail Expansion

Consumers increasingly prefer seamless omnichannel experiences, prompting retailers to integrate online platforms, mobile apps and store networks to offer greater convenience through options such as home delivery and click-and-collect.

Digital and Al-Driven Retail

Retailers are leveraging Al and data analytics to understand consumer behaviour, optimise pricing, enhance personalisation and improve inventory efficiency, driving more effective operations.

Rise of Value-focused Consumption

Consumers are becoming increasingly price-conscious, driving demand for value retail formats, private labels, and promotional offerings. Retailers that combine quality with affordability are therefore gaining stronger traction.

Influence of Social Media and Digital Platforms

Social media is increasingly influencing purchase decisions, making influencer marketing, digital promotions and targeted advertising key drivers of customer engagement and brand building.

Growth of Tier-il and Tier-Ill Markets

As smaller cities urbanise and digitise, they are emerging as key consumption hubs, prompting retailers to expand through both physical and digital channels.

Increasing Focus on Sustainability

Consumers are becoming more conscious of environmental impact, encouraging retailers to adopt responsible sourcing, eco- friendly packaging, and sustainable operational practices.

Opportunities

Growing Middle-Class Consumption

The expansion of Indias middle-class population is driving demand across retail categories, including apparel, electronics, personal care, and home products, creating long-term growth opportunities for retailers.

Rising Participation of Women in the Workforce

Greater workforce participation among women is influencing household purchasing behaviour and increasing demand for lifestyle, personal care, and convenience- oriented products.

Urbanisation and Changing Household Structures

Rapid urbanisation, along with the rise of nuclear families, is reshaping consumption patterns. Consequently, demand is increasing for organised retail formats.

Expansion of E-commerce and Quick Commerce

Online retail continues to grow rapidly, supported by digital payments, improved logistics, and last-mile delivery capabilities.

Rural Consumption Potential

Improving connectivity, rising incomes, and greater awareness are opening opportunities for retailers to expand into rural markets.

Product and Category Diversification

Retailers can drive growth by expanding into new product categories, introducing private labels, and offering differentiated products.

Challenges*

Rising Operating Costs

Increasing input costs, higher rentals, logistics expenses and employee costs are putting pressure on margins for retailers, requiring greater operational efficiency.

Inflationary Pressures on Consumption

Inflation can reduce consumer purchasing power, impacting discretionary spending and forcing retailers to balance pricing strategies with demand management.

Supply Chain Disruptions

Global uncertainties, geopolitical tensions, and climate- related events can disrupt supply chains, leading to delays, cost increases, and inventory challenges.

Digital Disruption and Competitive Intensity

Retailers face competition from e-commerce platforms, direct-to-consumer brands, and international players. Continuous technology investment is required to remain competitive.

Geopolitical and Regulatory Risks

Changes in trade policies, regulatory frameworks, and global economic conditions can impact sourcing strategies, pricing structures, and market expansion.

Energy and Climate Risks

Energy cost fluctuations and climate-related disruptions can affect logistics, sourcing, and operational efficiency across the retail value chain.

Details on how the Company is addressing these challenges, including specific mitigation measures, are provided in the Risk Management section of this report.

Company Overview

V-Mart Retail (also referred to as V-Mart or The Company) has built a strong presence in Indias organised value retail landscape. The Company offers an extensive assortment of apparel, footwear, home furnishings, and general merchandise at compelling prices. With a strategic focus on Tier-II and Tier-III cities, the Company addresses the aspirations of Indias growing middle class. It delivers stylish, quality-driven products within a modern retail environment. Its merchandise portfolio spans ethnic, fusion, and western wear for women. It also includes formal, casual, and sportswear for men. In addition, the Company offers a broad range of childrens apparel, ensuring options across age groups.

Operational Performance

Store Expansion and Reach

Expanded footprint to 577 stores with 92 planned additions, driven by a cluster-led expansion strategy.

Customer

Engagement

Strong loyalty reflected in 72% repeat purchases, led by increasing influence of younger consumers.

Sustainability and : Compliance

Prudently accounted for labour code-related costs, reinforcing strong compliance.

Product and Category _L Development

Private labels contribute 66%, enabling sharper design control and regional relevance.

Technology and Governance

Strengthened assortment planning through AI-led tools, enabling sharper selection and timely reduction of slow-moving inventory.

Customer

Experience

Ensured consistently high satisfaction with Google ratings of 4.9.

Operational ¹ Efficiency

Delivered strong operating leverage with 16%+ revenue growth. Prepaid model adoption and cost discipline improved EBITDA margins to 13.6%.

Financial Performance

The Company prepares its financial statements on an accrual basis and historical cost convention, in compliance with Ind AS under Section 133 of the Companies Act, 2013 and related rules. In FY 2025-26, the Company delivered a strong financial turnaround, driven by improved operational momentum and disciplined execution.

• Net worth increased to Rs. 95,110 Lakhs from Rs. 81,018 Lakhs in FY 2024-25

• Revenue from operations rose to Rs. 378,936 Lakhs, compared to Rs. 325,386 Lakhs in the previous year

• EBITDA strengthened significantly to Rs. 51,346 Lakhs from Rs. 37,711 Lakhs

• Profit Before Tax stood at Rs. 15,597 Lakhs in FY 2025-26, growing by 689% compared to FY 2024-25

• The Company reported a PAT of Rs. 12,400 Lakhs, registering a growth of 171% from Rs. 4,577 Lakhs in FY 2024-25

Working Capital Management

The Companys working capital position remained stable on account of improved liquidity and operational efficiency.

• As of March 31, 2026, current assets stood at Rs. 123,977 Lakhs, including inventory of Rs. 98,753 Lakhs, compared to Rs. 122,579 Lakhs and Rs. 98,683 Lakhs, respectively, in FY 2024-25

• Current liabilities increased to Rs. 119,604 Lakhs, comprising borrowings of Rs. 10,001 Lakhs and lease liabilities of Rs. 24,410 Lakhs, as against Rs. 116,809 Lakhs in the previous year, which included borrowings of Rs. 14,896 Lakhs and lease liabilities of Rs. 19,258 Lakhs

• Cash and cash equivalents stood at Rs. 1,953 Lakhs from Rs. 3,942 Lakhs in FY 2024-25

• Return on Capital Employed (RoCE) witnessed a sharp improvement to 14.09%, compared to 10.39% in the previous year, indicating stronger capital efficiency and operational performance

Ratio	Formulae	March 31, 2026	March 31, 2025	% Change	Details of significant changes in the Key Financial Ratios - (>+/- 25%)
Current Ratio (in Times)	Current Assets/ Current Liabilities (incl. Lease Liabilities)	1.04	1.05	(1%)	Not Applicable
Interest Coverage Ratio (in Times)*	Earnings before Interest & Tax/Finance cost	3.05	1.32**	131%	Due to reduction in interest on ? lease liability (ind AS impact) & increase in EBIT
Debt-equity ratio (in Times)	Total Debt (incl. Lease liabilites)/ Shareholders Equity	1.01	0.97	4%	Not Applicable
EBITDA Margin (in %)	EBITDA/Revenue from Sale of Traded Goods x 100	13.6%	11.6%	16.92%	Not Applicable
Days of Inventory (doi)	(Quarterly Average Inventory/Revenue) x 365	93	96**	(4%)	Not Applicable
Inventory Turnover Ratio (in Times)	Cost of Goods Sold/ Average Inventories	2.52	2.36	6.60%	Not Applicable
Net Capital Turnover Ratio (in Times)	Net Sales/Working Capital	86.65	56.39	53.66%	Increasing mainly on account of increase in sales and decline in working capital
Net Profit Ratio (%)	Net Profit/Net Sales	3.27%	1.41%	132.63%	The Company has earned higher profit in the current year as compared to previous year
Operating Profit Margin (%)	EBIT/Revenue from Operations x 100	6.1%	5.5%	9.59%	Not Applicable
Return on Capital Employed (%)	EBIT/Average Capital Employed	14.09%	10.39%**	35.60%	The Company has earned higher profit in the current year as compared to previous year
Return on Equity Ratio (%)	Net profit/Average Shareholders Equity	14.08%	5.88%	139.52%	The Company has earned higher profit in the current year
Trade Payables Turnover Ratio (in Times)	Net Credit Purchases/ Average Trade Payables	4.95	4.72**	4.96%	Not Applicable
Debtors Turnover Ratio (in Times)#	Net Credit Sales/ Average Trade Receivables	-	-	-	Not Applicable
Days Payable Outstanding (dpo)	Average Trade Payables/Purchases x 365	74	77**	(4%)	Not Applicable

* EBIT grew 28% year-on-year, supported by a 45% reduction in finance costs driven by lower interest expense on lease liabilities.

** For previous year, numbers/ratios have been recomputed/reclassified to ensure comparability with the current year numbers.

# The Company is into retail business and there are no trade receivables in the Company, accordingly ratio is not applicable.

Strengths

• Extensive pan-India presence catering to diverse and evolving consumer segments

• Strong value-for-money proposition aligned with the aspirations of budget-conscious customers

• Diverse product portfolio spanning apparel, footwear, accessories, home offerings and aspirational FMCG

• Focused expansion in underserved high-growth urban and semi-urban markets

• Large-scale sourcing capabilities supported by dedicated design labs for trend-led collections

• Increasing integration of sustainable practices, including renewable energy initiatives

• Enhanced e-commerce and digital capabilities strengthening omnichannel presence

• Scalable and resilient supply chain designed to support long-term growth

• Strong ESG quotient among peers reflects a well-embedded commitment to responsible and sustainable business practices

Challenges

• Highly competitive retail landscape across both offline and online channels

• Ongoing need to strengthen supply chain efficiency, inventory control, and store operations

• Rapidly evolving consumer preferences requiring continuous innovation and agility

• Exposure to macroeconomic factors that may impact consumer spending patterns

• Increase in input cost due to higher crude oil prices, global uncertainties and rising dollar rates

Opportunities

• Rising disposable incomes and expansion of the middle-class population driving demand for value fashion

• Growing influence of social media and digital adoption enabling seamless omnichannel experiences and higher customer engagement

• Expansion potential in Tier-III and Tier-IV markets, unlocking new customer segments

• Implement strong AI-enabled capability to decode customer behaviour and drive operational efficiency through data-led insights and intelligent decision-making

• Strong opportunity to engage Gen Z consumers through trend-driven, affordable fashion

• Integration of ESG principles to drive sustainable growth and brand differentiation

Threats

• , Inflationary pressures and income volatility influencing discretionary spending

• Accelerated growth of online retail intensifying competition for physical store formats

• Regulatory changes, including tax reforms and labour laws, potentially impacting cost structures

• Shifts in consumer behaviour and preferences affecting retail demand dynamics

Human Resources Review

V-Marts Human Resource approach remained focused on building a high-performance, people-centric Company aligned to its M.A.G.I.C. culture framework, strengthening engagement through listening platforms, collaboration initiatives and employee recognition. Capability development remained a priority, supported by leadership pipelines, internal mobility and training programmes. During FY 2025-26, the Company delivered over 4.6 Lakhs training hours across frontline and backend teams, covering operations, customer orientation, leadership and digital capabilities. Initiatives such as Champions of Change, Pragati, Gurukul and mentorship programmes further strengthened leadership readiness. Technology-led interventions, including AI-driven learning and Project BOOST, enhanced workforce productivity and operational efficiency. Employee well-being, diversity and inclusion also remained key focus areas through initiatives covering mental wellness, family engagement and equitable opportunities.

Supported by a young workforce and continued investment in skills, engagement and digital enablement, V-Mart continues to build a resilient and future-ready organisation aligned with its growth ambitions.

Internal Control Systems and their Adequacy

The Company has established a robust internal control and risk management framework to safeguard assets, ensure financial reporting integrity and strengthen governance, anchored in the Three Lines Model comprising operational management, risk and compliance functions, and Internal Audit.

The Internal Control function conducts periodic risk-based reviews, reporting key findings to management and the Audit Committee. The framework is continuously strengthened to align with evolving business and regulatory requirements, supported by the Control Self-Assessment (csa) mechanism to enhance accountability and process improvement. The Company also upholds ethical standards and remains compliant with the Companies Act, 2013, SEBI (lodr) Regulations, 2015 and other applicable statutory requirements.

Our Enterprise Risk Management Framework

Enterprise Risk Management

The Company has established an integrated enterprise risk management framework aligned with globally recognised standards and regulatory requirements. Supported by active Board oversight and a structured top-down and bottom-up approach, it enables proactive identification, assessment, and mitigation of strategic, operational, financial, compliance, and reputational risks. The increasing use of Al and advanced analytics strengthens risk identification, predictive monitoring, and real-time decision-making, while the integration of ESG considerations enhances resilience, stakeholder trust, and long-term value creation.

Risk

Management

Process

Identify

Identify potential uncertainties across business functions, markets, and strategic objectives

Analyse

Assess likelihood and impact to determine exposure and prioritise key risks

Mitigate

Deploy appropriate actions to reduce, transfer, or accept identified risks

Monitor

Track risk status, review control, and ensure ongoing mitigation effectiveness