2.11 Provisions and contingencies

Provisions are recognised when the Company has a present obligation (legal or constructive)
as a result of a past event, it is probable that the Company will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, taking into account the risks
and uncertainties surrounding the obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows. (when the effect of the time value of money is material)

Contingent liabilities are disclosed when there is a possible obligation arising from past
events, the existence of which will be confirmed only by the occurrence or non occurrence
of one or more uncertain future events not wholly within the control of the Company or a
present obligation that arises from past events where it is either not probable that an outflow
of resources will be required to settle or a reliable estimate of the amount cannot be made.

2.12 Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party
to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or
loss) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.

2.13 Financial assets

All financial assets are recognised initially at fair value, plus in the case of financial assets not
recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable
to the acquisition of the financial asset. However, trade receivables that do not contain a
significant financing component are measured at transaction price. Purchases or sales of
financial assets that require delivery of assets within a time frame established by regulation
or convention in the marketplace (regular way trades) are recognised on the trade date, i.e. the
date that the Company commits to purchase or sell the asset.

All recognised financial assets are subsequently measured in their entirety at either amortised
cost or fair value, depending on the classification of the financial assets.

2.13.1 Classification of financial assets

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value through other comprehensive income
(FVOCI) or fair value through profit and loss (FVTPL), and

- those measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets
and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in the Statement
of Profit or Loss or Other Comprehensive Income. For investments in debt instruments, this
will depend on the business model in which the investment is held. For investments in equity
instruments, this will depend on whether the Company has made an irrevocable election at
the time of initial recognition to account for the equity instrument at fair value through Other
Comprehensive Income.

The Company reclassifies debt investments when and only when its business model for
managing those assets changes.

2.13.2 Subsequent measurement

Financial assets that are held for collection of contractual cash flows, where those cash flows
represent solely payments of principal and interest, are measured at amortised cost.

Financial assets that are held for collection of contractual cash flows and for selling the
financial assets, where the asset’s cash flows represent solely payments of principal and
interest, are measured at FVOCI. All equity investments are measured at fair value through
other comprehensive income, except for investments in subsidiary / associate which is
measured at cost. Changes in the fair value of financial assets are recognised in Statement of
Other Comprehensive Income. In those cases, there is no subsequent reclassification of fair
value gains and losses to Statement of profit and loss.

Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at
FVTPL. A gain or loss on such financial assets that are subsequently measured at FVTPL and
is recognised and presented net in the Statement of profit and loss within other income in the
period in which it arises.

2.13.3 Impairment of financial assets

In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for
measurement and recognition of impairment loss on the following financial assets and credit
risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortised cost e.g.,
loans, debt securities, deposits, and bank balance.

(b) Trade receivables.

The Company follows 'simplified approach’ for recognition of impairment loss allowance on
trade receivables which do not contain a significant financing component.

The application of simplified approach does not require the Company to track changes in
credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.

For other financial assets carried at amortised cost the Company assesses, on a forward
looking basis, the expected credit losses associated with such assets and recognises the
same in profit or loss.

The Company derecognizes a financial asset when the contractual right to the cash flows
from the financial asset expire or it transfers substantially all risk and rewards of ownership of
the financial asset. A gain or loss on such financial assets that are subsequently measured at
amortized cost is recognised in the Statement of Profit or Loss when the asset is derecognised.

2.14 Financial liabilities and equity instruments2.14.1 Classification of debt or equity

Debt and equity instruments issued by a Company entity are classified as either financial
liabilities or as equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.

2.14.2 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity
after deducting all of its liabilities. Equity instruments issued by a Company are recognised at
the proceeds received, net of direct issue costs.

2.15 Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective
interest method or at FVTPL. (fair value through profit or loss)

2.15.1 Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through profit or loss or at amortised cost (loans and borrowings, and payables). All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.

2.15.2 Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in Statement of Profit
and Loss when the liabilities are derecognised. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
This category generally applies to interest-bearing loans and borrowings.

2.15.3 Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts
is recognised in the Statement of Profit and Loss.

2.15.4 Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the
Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.

2.16 Cash and cash equivalents

Cash and cash equivalents includes cash and cheques on hand, current accounts and fixed
deposits accounts with banks with original maturities of three months or less that are readily
convertible to known amounts of cash (other than on lien) and which are subject to an
insignificant risk of changes in value and book overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the balance sheet.

2.16.1 Statements of cash flows

Cash flows are reported using the indirect method, where by net profit before tax is adjusted
for the effects of transactions of a non-cash nature, any deferrals or accruals of past or
future operating cash receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating, investing and financing
activities are segregated.

2.17 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. A fair value
measurement assumes that the transaction to sell the asset or transfer the liability takes
place either in the principal market for the asset or liability or in the absence of a principal
market, in the most advantageous market for the asset or liability. The principal market or the
most advantageous market must be accessible to the Company. The fair value of an asset or

a liability is measured using the assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's
ability to generate economic benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximizing the use of relevant
observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for
which fair value is measured or disclosed in the Financial Statements are categorised within
the fair value hierarchy based on the lowest level input that is significant to the fair value
measurement as a whole. The fair value hierarchy is described as below:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - Other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value
that are not based on observable market data.

For assets and liabilities that are recognised in the Financial Statements at fair value on a
recurring basis, the Company determines whether transfers have occurred between levels in
the hierarchy by reassessing categorization at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets
and liabilities on the basis of the nature, characteristics and risks of the asset or liability and
the level of fair value hierarchy. Fair values have been determined for measurement and / or
disclosure purpose using methods as prescribed in "Ind AS 113 Fair Value Measurement".

2.18 Revenue recognition

The Company's revenue majorly represents revenue from sale of garments. The Company
sells garments through own stores and to business partners such as distributors, franchisees,
large format stores and E-Commerce.

Revenue towards satisfaction of a performance obligation i.e. sale of traded goods is
measured at the amount of transaction price (net of variable consideration) allocated to that
performance obligation. The transaction price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered by the Company
as part of the contract.

The Company derives revenue from sale of goods and revenue is recognised upon transfer
of control of promised goods to customers in an amount that reflects the consideration
the Company expects to receive in exchange for those goods. To recognise revenues, the
Company applies the following five step approach:

(1) identify the contract with a customer,

(2) identify the performance obligations in the contract,

(3) determine the transaction price,

(4) allocate the transaction price to the performance obligations in the contract, and

(5) recognise revenues when a performance obligation is satisfied.

The Company has concluded that it is principal in its revenue arrangements, because it
typically controls the goods or services before transferring them to the customer.

With respect to arrangements with its business partners, where the Company has an
unconditional right but not an obligation relating to unsold inventory, the Company has
concluded that these arrangements are also on principal to principal basis as the control is
passed or right of consideration is established.

The transfer of control of promised goods as above, generally coincides with the delivery of
goods and collection of tender to / from customers.

- For business partner acting as principal, revenue is recognised upon sale to business partner.

Sales are recognised, net of returns and trade discounts, rebates, and Goods and Services
Tax (GST).

Under the Company’s standard contract terms, the Company may calls for return goods
at the end of the seasons as per Company’s policy. At the point of sale, a refund liability
and a corresponding adjustment to revenue is recognised for those products expected to
be returned. At the same time, the Company has a right to recover the product when the
return occurs; consequently, the Company recognises a right-to-returned-goods asset with
a corresponding adjustment to cost of sales. The Company uses its accumulated historical
experience to estimate the number of returns on a seasonal basis using the expected
value method. It is considered highly probable that a significant reversal in the cumulative
revenue recognised will not occur given the consistent level of returns over previous years.

The Company under the schemes gives discount to its retail customers. Based on market
trends, competitiveness in pricing, etc, the Company also negotiates and gives discount
to its business partners / franchisee’s. These are reduced from the revenue being variable
considerations.

The Company operates a loyalty program through which retail customers accumulate points
on purchases of apparels that entitle them to discounts on future purchases. These points
provide a discount to customers that they would not receive without purchasing the apparels
(i.e. it is a material right). The promise to provide the discount to the customer is therefore
a separate performance obligation. The transaction price is allocated between the sale of
apparels and the rights related to the loyalty points on a relative stand-alone selling price
basis. The stand-alone selling price per point is estimated based on the discount to be given
when the points are redeemed by the customer and the likelihood of redemption, as evidenced
by the Company’s historical experience. A contract liability is recognised for revenue relating
to the loyalty points at the time of the initial sales transaction. Revenue from the loyalty points
is recognised when the points are redeemed by the customer. Revenue for points that are
not expected to be redeemed is recognised in proportion to the pattern of rights exercised by
customers.

2.18.2 Interest income

Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the Company and the amount of income can be measured reliably.
Interest income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net carrying
amount on initial recognition.

2.18.3 Other income

Other incomes are accounted on accrual basis and except interest on delayed payment by
debtors which are accounted on acceptance of the Company’s claim.

2.19 Foreign currency Transactions and balances

Transactions in foreign currency are translated into the functional currency using the
exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at the exchange
rates prevailing at reporting date of monetary assets and liabilities denominated in foreign

currencies are recognised in the profit or loss and reported within foreign exchange gains /
(losses).

2.20 EMPLOYEE BENEFITS

Company’s Employee benefit obligations include Short-term obligations and Post¬
employment obligations which includes gratuity plan and contributions to provident fund.

2.20.1 Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be
settled wholly within 12 months after the end of the period in which the employees render the
related service which are recognised in respect of employees services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee benefit obligations in the balance
sheet.

2.20.2 Post-employment obligations
Defined benefit plans

The Company has defined benefit plan namely gratuity, which is unfunded. The liability or
asset recognised in the balance sheet in respect of gratuity plan is the present value of the
defined benefit obligation at the end of the reporting period. The defined benefit obligation is
calculated annually by actuary using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated
future cash outflows by reference to market yields at the end of the reporting period on
government bonds that have terms approximating to the terms of the related obligation.

The interest cost is calculated by applying the discount rate to the balance of the defined
benefit obligation. This cost is included in employee benefit expense in the statement of profit
and loss.

Re-measurement gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they occur, directly in other
comprehensive income. They are included in retained earnings in the statement of changes
in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments
or curtailments are recognised immediately in profit or loss as past service cost.

Defined contribution plans

The defined contribution plan is a post-employment benefit plan under which the Company
contributes fixed contribution to a Government Administered Fund and will have no obligation
to pay further contribution. The Company’s defined contribution plan comprises of Provident
Fund, Labour Welfare Fund, Employee State Insurance Scheme and Employee Pension
Scheme. The Company’s contribution to defined contribution plans are recognised in the
Statement of Profit and Loss in the period in which the employee renders the related service.

2.21 Share-based payment to employees

Equity-settled share-based payments to employees providing similar services are measured
at the fair value of the equity instruments at the grant date. Details regarding the determination
of the fair value of equity-settled share-based transactions are set out in Note No. 37.

The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Company’s estimate
of equity instruments that will eventually vest, with a corresponding increase in equity. At
the end of each reporting period, the Company revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled employee benefits reserve.

2.22 Taxation

Income tax expense represents the sum of the current tax and deferred tax.

2.22.1 Current tax

The current tax is based on taxable profit for the year. Taxable profit differs from 'Profit Before
Tax’ as reported in the statement of profit and loss because of items of income or expense
that are taxable or deductible in other years and items that are never taxable or deductible.
The Company’s current tax is calculated using tax rates applicable for the respective period.

2.22.2 Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the Financial Statements and their tax bases. Deferred tax liabilities are
recognised for all taxable temporary differences. Deferred tax assets are recognised for all
deductible temporary differences and incurred tax losses to the extent that it is probable that
taxable profits will be available against those deductible temporary differences can be utilised.

Such deferred tax assets and liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to
apply in the period in which the liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the end of the reporting
period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Company expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same
taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.

2.22.3 Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they relate to items
that are recognised in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive income or directly in
equity respectively.

2.23 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the Board of Directors that makes strategic decisions.

2.24 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) for the year attributable
to the shareholders of the Company by the weighted average number of equity shares

outstanding during the year. Diluted earnings per share is computed by dividing the profit
/ (loss) for the year attributable to the shareholders of the Company as adjusted for
dividend, interest and other charges to expense or income (net of any attributable taxes)
relating to the dilutive potential equity shares, by the weighted average number of equity
shares considered for deriving basic earnings per share and the weighted average number
of equity shares which could have been issued on the conversion of all dilutive potential
equity shares. Potential equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share from continuing ordinary operations.
Potential dilutive equity shares are deemed to be converted as at the beginning of the
period, unless they have been issued at a later date. The dilutive potential equity shares
are adjusted for the proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive potential equity shares are
determined independently for each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for share splits / reverse share splits and
bonus shares, as appropriate.

3 | RECENT ACCOUNTING PRONOUNCEMENTS

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to
time. For the year ended March 31,2026, the management has assessed that impact of the
new amendments to the existing standards or issuance of any new standard is immaterial to
the Company.

The Ministry of corporate Affairs ("MCA") notified amendments on May 07, 2025 and
August 13, 2025 under the Companies (Indian Accounting Standards) Amendment Rules,
2025 and the Companies (Indian Accounting Standards) Second Amendment Rules, 2025,
respectively, which is effective from annual reporting periods beginning on or after April 01,
2025.

(a) Amendment to Ind AS 7 and Ind AS 107 - Supplier Finance Arrangement:

The amendments to Ind AS 7 'Statement of Cash Flows’ and Ind AS 107 'Financial
Instruments: Disclosures’ clarify the characteristics of supplier finance arrangements
and require additional disclosures for such arrangements. The disclosure requirements
in the amendments are intended to assist users of financial statements in understanding
the effects of supplier finance arrangements on an entity’s liabilities, cash flows and
exposure to liquidity risk.

The Company does not have any supplier finance arrangements during the reporting
period.

(b) Amendment to Ind AS 1 - Classification of liabilities as current or non-current and
non-current liabilities with covenants:

The amendment specifies the requirements for classifying liabilities as current or non¬
current in the balance sheet, and clarifies the following:

(a) An entity’s right to defer settlement of a liability for at least twelve months after the
reporting period must have substance and must exist at the end of the reporting
period. The classification of a liability as current or non-current is unaffected by the
likelihood that the entity will exercise its right to defer settlement.

(b) If an entity’s right to defer settlement of a liability is subject to covenants, such
covenants affect whether that right exists at the end of the reporting period only
if the entity is required to comply with the covenant on or before the end of the
reporting period.

(c) In case of a liability that can be settled, at the option of the counterparty, by the
transfer of the entity’s own equity instruments, such settlement terms do not
affect the classification of the liability as current or non-current only if the option is
classified as an equity instrument.

These amendments have no effect on the measurement of any items in the financial
statements of the Company. The Company did not make retrospective adjustments as a
result of adopting the amendments to Ind AS 1.

(c) Amendment to Ind AS 12 - Pillar-Two Tax Reforms:

The Company is not within the scope of the OECD Pillar Two Model Rules, as Pillar Two
legislation has not yet been enacted in any of the jurisdiction in which the Company
operates.

(d) Amendment to Ind AS 21-Lack of exchangeability:

The Amendments introduces requirement to assess when a currency is exchangeable
into another currency and when it is not. The amendment requires an entity to estimate
the spot exchange rate when it concludes that a currency is not exchangeable into
another currency. These amendments had no effect on the financial statements of the
Company.

The below amendments are notified but not yet effective:

Amendment to Ind AS 1 'Presentation of Financial Statements’- Classification of Liabilities as
current or non-current and non-current liabilities with covenants:

The amendment includes specific provisions that will take effect for reporting periods
beginning on or after April 1,2026 retrospectively, as outlined below:

(a) Breach of material covenant for long-term loan arrangement on or before end of
reporting period with effect that liability becomes payable on demand as on reporting
date, then it shall be classified as current liability, if lender agreed after reporting period
and before approval of financial statements to not demand payment as a consequence
of breach.

(b) Classify as non-current liability, if lender agreed by end of reporting period to provide
grace period ending at least 12 months after reporting period within which entity can
rectify the breach provided lender does not demand immediate repayment.

(c) Disclose information about the timing of settlement to understand the impact of the
liability on the financial statements.

The Company does not expect this amendment to have an impact on its operations or
financial statements.

4 | USE OF ESTIMATES AND CRITICAL ACCOUNTING JUDGEMENTS

The preparation of Financial Information requires the management to make judgments,
estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates. Such judgments, estimates and associated assumptions are evaluated
based on historical experience and various other factors, including estimation of the effects
of uncertain future events, which are believed to be reasonable under the circumstances.

Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the
amounts recognised in the Financial Information are disclosed below.

4.1 Property, plant and equipment and Intangible assets

The charge in respect of periodic depreciation is derived after determining an estimate of an
asset’s expected useful life. The useful lives of the Company’s assets are determined by the
management at the time the asset is acquired and reviewed periodically, including at each
financial year end. The lives are based on historical experience with similar assets as well as
anticipation of future events, which may impact their life, such as changes in technology etc.

4.2 Leases

The Company determines the lease term in accordance with Ind AS 116 which requires
lessees to determine the lease term as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use of such option is reasonably certain. The
Company makes an assessment on the expected lease term on a lease-by-lease basis and
thereby assesses whether it is reasonably certain that any options to extend or terminate the
contract will be exercised. In evaluating the lease term, the Company considers factors such
as any significant leasehold improvements undertaken over the lease term, costs relating
to the termination of the lease and the importance of the underlying asset to Company’s
operations.

4.3 Inventories

The Company considers year and seasonality to which inventory pertains for determining net
realisable value for old inventories. Such old inventories are marked down to its estimated
realisable value based on amount which the Company has been able to realise on sale of old
inventory. The management applies judgement in determining the appropriate provisions for
slow moving and / or obsolete stock, based on the analysis of old season inventories, past
experience, current trend and future expectations for these inventories, depending upon the
category of goods.

4.4 Employee benefits

The cost of the defined benefit plan is determined by actuarial valuations using the projected
unit credit method. An actuarial valuation involves making various assumptions that may
differ from actual developments in the future. These include determination of discount rates,
future salary increases, attrition and mortality rates. Due to the complexities involved in the
valuation and its nature, a defined benefit is highly sensitive to change in these assumptions.
All assumptions are reviewed at each reporting period.

4.5 Provision for sales return

The Company recognises a provision for sales returns based on seasonal trends observed in
prior periods. This provision is reviewed periodically to ensure its continued relevance in light
of changing market conditions, based on management’s assessment.

Note:

In previous financial year, KAPS Mercantile Private Limited ("KMPL", a wholly owned
subsidiary of the Company) had filed an application for striking off it’s name from the Register
of Companies, under Section 248(2) of the Companies Act, 2013, on January 21, 2025.
Subsequently, the name of KMPL has been struck off from the Register of Companies w.e.f.
April 23, 2025 as per the Form STK-7 received by the Company and KMPL is hence dissolved.
The value of the Investment held by the Company in KMPL, has already been fully impaired in
the financial year 2022-23. Hence, there would be no financial impact in the books of account
of the Company, although the investment shall be written off in the books of accounts in
financial year 2025-26 being the year in which the Form STK-7 has been received giving effect
to the Strike Off and dissolution of KMPL.

Note:

(i) The right to return goods asset represents the Company’s right to recover products from
customers under the Company’s returns policy. The Company uses its accumulated
historical experience to estimate the number of returns on a seasonal basis using the
expected value method.

(i) The cost of inventories recognised as an expense is ' 2,466.06 million for the year ended
March 31,2026 (for the year ended March 31,2025'2,642.75 million).

(ii) The cost of inventories recognised as an expense on account of write-down of inventory
is ' 37.89 million for the year ended March 31,2026 (for the year ended March 31,2025
' 35.27 million).

(iii) The mode of valuation of inventory has been stated in note 2.9.

(iv) Inventories have been pledged against secured term loan and cash credit facility (Refer
note 18)

(iii) The Company recognises allowance for expected credit loss on trade receivables, which
are assessed for credit risk on individual basis.

(iv) The management has established a credit policy under which customers are analysed
for their creditworthiness.

(v) Trade receivables have been pledged against secured term loan and cash credit facility
(Refer note 18)

(vi) There were no receivables due from directors or any of the officers of the Company.

(vii) No single customer represents 10% or more of the Company’s total revenue for the year
ended March 31,2026 and 2025, respectively.

(viii) Generally, customers remit sales consideration without specifying particular invoices
in respect of which such remittances are being made. Hence, such receipts from the
customers are adjusted against their trade receivables on First in First out (FIFO) basis.

(ix) There are no disputed trade receivables as at March 31,2026 and March 31,2025.

(x) Relationship with Struck off Companies: During the current financial year, Company
doesn’t have any transactions and outstanding balances with struck off Companies.

15 | CASH AND CASH EQUIVALENTS

For the purpose of statement of cashflows, cash and cash equivalents includes cash on hand
and balance in banks. Cash and cash equivalents at the end of the reporting period as shown
in the statement of cash flows can be reconciled to the related items in the balance sheet as
follows:

e. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ' 2 each (Refer
note 16 g). Each holder of equity shares is entitled to one vote per share. In the event of
liquidation of the Company, holder of equity shares will be entitled to receive remaining
assets of the Company after distribution of all preferential amount. The distribution will
be in proportion to the number of equity shares held by the shareholders. The dividend
proposed by the Board of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting, except in case of interim dividend.

f. Bonus-issue of equity shares

The Company has allotted 96,45,282 fully paid-up shares of face value ' 10 each on April
07, 2023, pursuant to bonus issue approved by the shareholders in the Extraordinary
General Meeting dated February 14, 2023. For the bonus issue, bonus share of three
equity share for every one equity shares held, has been allotted.

g. Sub-division of equity shares

The Shareholders in their Extraordinary General Meeting dated April 18, 2023 approved
sub-division of each authorised and issued equity shares of face value ' 10 into five
equity shares of face value of ' 2 each.

1.3 Security

Vehicle loan is secured by first and exclusive charge on the corresponding vehicle.

1.4 Prepayment terms

Prepayment of term loan prior to completion of tenure shall attract a penal charge.

2 Cash credit facility

Cash credit from banks are secured by hypothecation of existing current assets and
immovable assets of the Company.

3 Working capital demand loan

Working capital facilities and other fund based facilities i.e. working capital demand loan
and are secured by hypothecation of inventories, book debts and receivables.

Note:

(i) Statutory dues include goods and service tax, tax deducted at source, provident fund,
profession tax, labour welfare fund.

(ii) Other current liabilities include refund liabilities relating to the right of return in accordance
with the Company’s policy. At the point of sale, the Company recognises a refund liability
along with a corresponding adjustment to revenue for products expected to be returned.
The estimate of returns is determined using the expected value method, based on the
Company’s accumulated historical experience and seasonal trends.

During the year ended March 31, 2026, the Central Government of India has notified
the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social
Security, 2020 and the Occupational Safety, Health and Working Conditions Code,
2020, collectively referred to as the 'New Labour Codes’, effective from November
21, 2025 primarily impacting the wage definition to be considered for the purpose of
defined benefit obligation relating to gratuity. The new Labour Codes introduced by
the Government of India, interalia, requires gratuity to be calculated based on wages
constituting at least 50% of total remuneration. This has resulted in an increase in

(ii) Other matters includes:

a) Bonus liability amounting to ' 3.87 million for the 2014-15 is pending for settlement
with judiciary authorities.

b) The vendors have raised claims amounting to ' 3.71 (as at March 31,2025'3.71
million) on account of non-payment in accordance with the terms of the respective
contracts. The Company has contested these claims, asserting that the vendors
have not complied with certain contractual terms. The matters are currently
pending before the appropriate jurisdictional authorities.

(iii) Apart from the commitments disclosed above, the Company has no financial
commitments other than those in the nature of regular business operations.

(iv) The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.

(v) In the previous financial year, bank guarantee amounting to ' 27.50 million given to
Bombay Stock Exchange (BSE) in relation to Initial Public Offer (IPO)

34 | SEGMENT REPORTING

The Company is primarily engaged in the business of retailing of men’s casual wear under its
Brand MUFTI, which in the terms of Ind AS 108 on 'Operating Segments’, constitutes a single
reporting business segment.

There are no material individual markets outside India and hence the same is not disclosed
for geographical segments for the segment revenues or results or assets. During the year
ended March 31,2026 and March 31,2025, revenue from transactions with a single external
customer did not amount to 10 % or more of the Company’s revenues from the external
customers.

Notes:

(i) The Company has assessed all its pending litigation and proceedings and has adequately
provided where provision are required. The Company has disclosed contingent liabilities
wherever applicable. The resolution of these legal proceedings is not likely to have a
material and adverse effect on the results of operations or the financial position of the
Company.

36 | EMPLOYEE BENEFIT PLANS

Disclosure on Retirement Benefits as required in Indian Accounting Standard (Ind AS) 19 on
"Employee Benefits" are given below:

A. Defined Contribution Plan

The Company’s contribution to Provident & Other Funds is ' 4.83 million for the year
ended March 31, 2026 (for the year ended March 31, 2025: ' 4.42 million), has been
recognised in the Statement of Profit and Loss under the head employee benefit expense.

B. Defined Benefit Plan:

Gratuity

(a) The Company offers to its employees unfunded defined-benefit plan in the form of
a gratuity scheme. Benefits under the unfunded defined-benefit plans are based on
years of service and the employees’ compensation (immediately before retirement).
Benefits payable to eligible employees of the Company with respect to gratuity, a
defined benefit plan is accounted for on the basis of an actuarial valuation as at the
balance sheet date.

(b) This plan typically exposes the Company to actuarial risks such as: interest rate
risk, longevity risk and salary risk.

Interest Risk

A fall in the discount rate which is linked to the G.Sec. Rate will increase the present
value of the liability requiring higher provision.

Mortality risk

Since the benefits under the plan is not payable for life time and payable till
retirement age only, plan does not have any longevity risk.

Salary Risk:

The present value of the defined benefit plan liability is calculated by reference to
the future salaries of members. As such, an increase in the salary of the members
more than assumed level will increase the plan’s liability.

Asset Liability Matching Risk:

The plan faces the ALM risk as to the matching cash flow. entity has to manage
pay-out based on pay as you go basis from own funds.

37 | SHARE-BASED PAYMENTS
A. Credo stock option plan 2020

a. The shareholders of the Company, vide special resolution dated November 05,
2020, authorised the Board to grant options under one or more stock option plans.
Pursuant to the said approval from the shareholders the Board adopted Credo
stock option plan 2020 and granted options to the permanent employees of the
Company for the first time on November 06, 2020, second time on November 06,
2021 and third time on August 14, 2023.

The Company has used the Fair Value Method by applying Black and Scholes
Option Pricing Model to measure share-based payments plan.

b. Options granted would vest over a maximum period of 5 years, while the exercise
period is 10 years from the date of grant. Options vest on account of passage of
time as well as on fulfilling certain performance criteria. The options exercised
would be settled in Equity.

c. There were no modification to the awards during the year ended March 31,2026.
Grant 1 issued on November 06, 2020 has been fully exercised in the earlier years.
Details and movement of the outstanding options as at the end of the financial year
are as follows:

40 | FINANCIAL INSTRUMENTS40.1 Capital management

The Company’s objective when managing capital is to safeguard its ability to continue as
going concern so that the Company is able to provide maximum return to stakeholders,
benefits to other stakeholders and maintain an optimal capital structure to reduce the cost
of capital.

The capital structure of the Company consists of total equity (Refer note 16 and 17) and net
debt (Refer note 18 and 15).

The Company’s management reviews the capital structure on a regular basis. As part of this
review, the management considers the cost of capital, risks associated with each class of
capital.

40.3.1.1 Currency risk

Currency risk is the risk or uncertainty arising from possible currency movements and their
impact on the future cash flows of a business. There are no material currency risk affecting
the financial position of the Company.

40.3.1.2 Interest risk

Interest risk is the risk or uncertainty arising from possible interest rate movements and their
impact on the future obligation and cash flow of a business. There are no material interest risk
affecting the financial position of the Company.

40.3.1.3 Price risk

Price risk is the risk or uncertainty arising from possible market price movements and their
impact on the future performance of a business. There are no material price risk affecting the
financial position of the Company.

40.3.1.4 Foreign currency risk management

The Company undertakes transactions denominated in different foreign currencies and
consequently exposed to exchange rate fluctuations.

The carrying amounts of the Company’s foreign currency denominated monetary assets and
monetary liabilities at the end of the year are as follows.

Foreign currency sensitivity analysis

The Company is principally exposed to foreign currency risk against USD. Sensitivity of profit
or loss arises mainly from USD denominated receivables.

The following table details the Company's sensitivity to a 10% increase and decrease in
the ' against the relevant outstanding foreign currency denominated monetary items.
10% sensitivity indicates management's assessment of the reasonable possible change in
foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the year end for a 10% change in
foreign currency rates. A positive number below indicates an increase in profit or equity where
Rupee appreciates 10% against the relevant currency. A negative number below indicates a
decrease in profit or equity where the Rupee depreciates 10% against the relevant currency.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign
exchange risk because the exposure at the end of the reporting year does not reflect the
exposure during the year.

40.3.2 Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss. The Company is exposed to
credit risk from its operating activities (primarily trade receivables) and from its financing
activities, including deposits with banks and other financial instruments.

The concentration of credit risk in relation to trade receivables is high. Credit risk has always
been monitored and managed by the Company through credit approvals, establishing credit
limits and continuously monitoring the credit worthiness of customers to which the Company
grants credit terms in the normal course of business.

Bank balances are held with reputed and creditworthy banking institutions.

Financial instrument and cash deposit

Credit risk is limited as the Company generally invests in deposits with banks and financial
institutions with high credit ratings assigned by international and domestic credit rating
agencies. Counterparty credit limits are reviewed by the Company periodically and the limits
are set to minimise the concentration of risks and therefore mitigate financial loss through
counterparty's potential failure to make payments.

40.3.3 Liquidity risk management

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents
including bank deposits and availability of funding through an adequate amount of committed
credit facilities to meet the obligations when due. Management monitors rolling forecasts
of liquidity position and cash and cash equivalents on the basis of expected cash flows. In
addition, liquidity management also involves projecting cash flows considering level of liquid
assets necessary to meet obligations by matching the maturity profiles of financial assets &
liabilities and monitoring balance sheet liquidity ratios.

The following tables detail the Company's remaining contractual maturity for its non¬
derivative financial liabilities with agreed repayment periods. The information included in the
tables have been drawn up based on the undiscounted cash flows of financial liabilities based
on the earliest date on which the Company can be required to pay. The tables include both
interest and principal cash flows. The contractual maturity is based on the earliest date on
which the Company may be required to pay.

42 | ADDITIONAL REGULATORY INFORMATION

(a) Title deeds of all immovable properties are held in the name of the Company.

(b) The Company has not revalued its property, plant and equipment (including right-of-use assets) and other intangible assets during the current and previous year.

(c) No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions (Prohibitions Act, 1988 and the rules made thereunder.)

(d) The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

(e) The Company has registered all its charges or satisfaction with Registrar of Companies within the statutory period.

(f) The Company has not been declared wilful defaulter by any bank or financial institution or other lender.

(g) The Company has not advanced or loaned or invested funds to/in any other person(s) or entity(ies) including foreign entities (intermediaries) with the understanding that intermediary shall,

(i) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate beneficiaries)
or

(ii) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

(h) The Company has not received any fund from any person(s) or entity(ies), including
foreign entities (funding party) with the understanding (whether recorded in writing or
otherwise) that it will,

(i) Directly or indirectly lend or invest in other persons or entities identified in any
manner whatsoever by or on behalf of the Company (ultimate beneficiaries)

or

(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate
beneficiaries.

(j) The Company does not have any such transaction which is not recorded in the books of
accounts that has been surrendered or disclosed as income during the period in the tax
assessments under the Income Tax Act 1961.

(k) The Company has not entered into any scheme of arrangement which has an accounting
impact on current period or previous financial year.

(l) The Company has not traded or invested in crypto and virtual currency during the
reporting periods.

(m) The Company has complied with the number of layers prescribed under the Companies
Act, 2013, read with the Companies (Restriction on number of layers) Rules, 2017.

(n) The borrowings obtained by the Company from banks have been applied for the purposes
for which such borrowings were taken.

43 | DIVIDEND

(a) The Company has declared and paid dividend amounting to ' 196.11 million during the
year ended March 31,2026. (during the year ended March 31,2025, 32.48 million)

(b) The Board of Directors has proposed a final dividend of ' 2 per share of face value of
' 2/- each for the financial year 2025-26, subject to the approval of the Shareholders in
the ensuing Annual General Meeting.