Vaxfab Enterprises Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian textile industry continues to remain one of the largest and most significant sectors of the Indian economy, contributing substantially to employment, exports and industrial growth. During the Financial Year 2025 26, the textile industry continued to navigate a dynamic operating environment marked by changing global demand conditions, fluctuations in raw material prices, evolving trade policies and geopolitical uncertainties.

The domestic textile sector demonstrated resilience, supported by increasing domestic consumption, government initiatives for strengthening the textile value chain, promotion of technical textiles, investments in manufacturing capabilities and continued emphasis on export competitiveness.

The industry is also witnessing a gradual shift towards sustainable manufacturing, responsible sourcing and environmentally conscious production. Increasing consumer awareness and evolving international market requirements have encouraged textile manufacturers to focus on sustainable raw materials, efficient production processes, waste reduction and compliance with environmental and social standards.

Technological advancement, automation, digitalisation and the increasing adoption of e-commerce and organised retail are also expected to play an important role in shaping the future growth of the textile industry.

2. OPPORTUNITIES AND THREATS

Opportunities:

Rising domestic and international demand for textiles and apparel.

Increasing consumer preference for sustainable, organic and ethically produced textiles. Expansion of e-commerce, digital retail and organised distribution channels. Government initiatives and supportive policies aimed at strengthening the Indian textile sector.

Growing opportunities in technical textiles, medical textiles, smart textiles and other value-added textile products.

Potential for increasing Indias share in global textile and apparel markets.

Adoption of automation, digital technologies and modern manufacturing processes to improve productivity and operational efficiency.

Threats:

Volatility in prices of key raw materials such as cotton, synthetic fibres and other inputs.

Intense competition from low-cost textile-producing countries.

Fluctuations in foreign exchange rates affecting export competitiveness and profitability.

Availability and cost of skilled and semi-skilled labour.

Increasing labour, energy, transportation and other operating costs.

Increasing environmental, social and regulatory compliance requirements.

Global geopolitical uncertainties and disruptions in international supply chains.

The Company recognises that the above opportunities and risks are an integral part of its business environment. The Company continuously monitors developments in the internal and external environment and takes appropriate measures to manage and mitigate identified risks. Risk factors are assessed from time to time and appropriate measures are incorporated into the Companys business strategy, operational plans and decision-making processes with a view to minimising their potential impact on the Companys operations and financial performance.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company is operating in only one reportable segment, i.e. the Textiles and Clothing Business. Accordingly, separate segment-wise reporting is not applicable to the Company.

The Companys operational performance is therefore reviewed and evaluated at the overall business level.

4. FUTURE OUTLOOK

The outlook for the textile industry remains cautiously optimistic, supported by increasing domestic consumption, opportunities in international markets, technological advancement and the growing demand for sustainable textile products.

During the Financial Year 2026 27 and going forward, the Company intends to focus on strengthening its business operations and improving operational efficiency through:

Product diversification and increased value addition.

Strengthening existing customer relationships and exploring new markets. Adoption of automation and digital technologies wherever commercially viable. Improving productivity and operational efficiencies. Exploring opportunities in domestic as well as international markets. Focusing on sustainable and environmentally responsible business practices. Strengthening quality standards and customer satisfaction. Maintaining prudent financial and working capital management.

The Company will continue to evaluate emerging market opportunities and take appropriate business decisions based on prevailing economic and industry conditions.

5. RISKS AND CONCERNS

The Companys business and financial performance may be affected by various external and internal factors. Some of the key risks and concerns are as follows:

Exchange Rate Volatility:

Fluctuations in foreign exchange rates may impact the competitiveness and profitability of export-oriented business.

Raw Material Price Volatility:

Changes in the prices and availability of cotton, synthetic fibres and other raw materials may affect production costs and margins.

Compliance Risks:

Increasing environmental, labour, social and other regulatory requirements may result in additional compliance obligations and costs.

Climate and Weather Conditions:

Changes in climatic conditions and variability in the monsoon may affect the availability and pricing of cotton and other agricultural raw materials.

Logistics and Supply Chain Disruptions:

Global geopolitical developments, transportation constraints and disruptions in international supply chains may affect the availability, movement and cost of raw materials and finished goods.

The Company continuously monitors these risks and undertakes appropriate measures to mitigate their potential impact on its operations.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established internal control systems and procedures commensurate with the size and nature of its operations. The internal control framework is designed to ensure operational efficiency, safeguarding of assets, reliability of financial reporting and compliance with applicable laws, rules and regulations.

The management periodically reviews the effectiveness of internal controls and takes appropriate corrective measures wherever necessary. The Company endeavours to continuously strengthen its internal control framework in line with the changing business environment and emerging risks.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company for the Financial Year 2025 26 is described in the Financial Statements and the Boards Report forming part of the Annual Report.

The Companys operational and financial performance is reviewed by the management on a regular basis. The Company continues to focus on improving operational efficiency, prudent cost management, effective utilisation of resources and strengthening its business operations.

Details of Significant Changes in Key Financial Ratios

In accordance with the applicable provisions, details of significant changes, i.e. changes of 25% or more as compared to the immediately preceding Financial Year, in key financial ratios, along with detailed explanations thereof, are given below:

Ratios

Ratios	Numerator	Denominator	31 March, 2026	31 March, 2025	Unit	% Chang e in Ratio than 25%	Reason for Change s more than 25%
1 Current Ratio	Total Current Assets	Total Current Liabilities	1.01	1.07	Times	(5.17 %)	Due to increas e in sales as compar ed to previou s year.
			1,25,92,65,41 8.76	1,05,36,10,12 7.65
			1,24,54,55,57 1.87	98,82,04,781. 07
2 Debt Equity Ratio	Total Debt	Sharehol ders Equity	0.18	0.59	Tim es	(69.76 %)	Due to increas e in debt as compar ed to previou s year.
			8,53,05,357.0 0	7,73,94,650.0 0
			48,06,41,380. 48	13,18,53,092. 76
Debt Service Coverage Ratio	NA
4 Return on Equity	Net Profit After Tax	Average Sharehol ders Equity	11.88%	5.11%	%	132.2 8%	Due to Profit in Current Year as compar ed to loss in Previou s Year.
			3,63,80,352.9 2	33,71,626.35
			30,62,47,236. 62	6,59,27,367.2 8
Inventory Turnover Ratio	Sales	Average Inventor y	2.84	1.77	Tim es	60.40 %	Due to increas e in sales as compar ed to previou s year
			94,10,75,141. 51	58,67,09,691. 16
			33,13,63,738. 08	33,13,63,972. 46
_ Trade Receivables 6 Turnover Ratio	Sales	Average Trade Receivab les	1.47	5.61	Tim es	(73.74 %)	Due to increas e in sales as compar ed to previou s year
			94,10,75,141. 51	58,67,09,691. 16
			63,89,37,472. 34	10,46,13,263. 63
Trade Payables Turnover Ratio	Net Credit Purchas	Average Trade Payables	0.28	2.84	Tim es	(90.09 %)	Due to increas e in
	es		27,93,36,790. 76	1,24,40,56,11 9.66			sales as compar ed to previou s year
			99,29,71,327. 66	43,83,42,847. 56
Net Capital Turnover Ratio	Sales	Average Working Capital	23.76	17.94	Times	32.44 %	Due to increas e in sales as compar ed to previou s year
			94,10,75,141. 51	58,67,09,691. 16
			3,96,07,596.7 4	3,27,02,672.3 6
9 Net Profit Ratio	Net Profit	Sales	3.87%	0.57%	%	572.7 1%	Due to Profit in Current Year as compar ed to loss in Previou s Year.
			3,63,80,352.9 2	33,71,626.35
			94,10,75,141. 51	58,67,09,691. 16
1 Return on Capital 0 Employed	Earning s before Interest & Taxes	Capital Employe d	9.14%	2.18%	%	319.1 2%	Due to Profit in Current Year as compar ed to loss in Previou s Year.
			5,17,47,332.8 3	45,64,978.07
			56,59,46,737. 48	20,92,47,742. 76
1 Return on 1 Investment	Income from Investm ents	Investm ents at Beginnin g	0.00%	570501.83%	%	(100.0 0%)	Due to higher Revalua tion Loss in Current Year as compar ed to Previou s Year.
				69,09,290.59
			5,94,44,806.3 9	1,211.09

Note: Ratios and reasons for changes of 25% or more shall be finalised based on the audited financial statements for FY 2025 26 and the corresponding figures for FY 2024 25.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company considers its human resources to be an important contributor to its business operations and growth. The Company endeavours to maintain cordial and harmonious relations with its employees and provides an appropriate working environment for the effective discharge of their responsibilities.

During the Financial Year 2025 26, the Company continued to focus on employee development, skill enhancement and maintaining a safe and productive working environment.

As on March 31, 2026, the Company had 18 employees.

The Company continues to recognise the importance of employee capabilities and seeks to enhance productivity through appropriate training, skill development and efficient deployment of human resources.

9. CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied in such statements due to various factors, including changes in economic conditions, market conditions, industry developments, raw material prices, government policies and regulations, taxation laws, exchange rate fluctuations, availability of resources, geopolitical developments and other internal and external factors.

The Company assumes no responsibility for publicly updating any forward-looking statements, whether as a result of future events or otherwise.

For and on behalf of the Board of Directors

SD/-

Ravindra Ashokbhai Joshi

Chairman

DIN: 10112296

Date: September 07, 2026

Place: Ahmedabad