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Kitex Garments LtdIndustry : Textiles - Products
BSE Code:521248NSE Symbol: KITEXP/E(TTM):25.15
ISIN Demat:INE602G01020Div & Yield %:0.27EPS(TTM):7.47
Book Value(Rs):55.4199599Market Cap ( Cr.):3748.61Face Value(Rs):1
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Dear Members,

Your Directors are pleased to present the 33rd Annual Report of the Company together with the Audited Financial Statements for the financial year ended March 31, 2025.

1. CORPORATE OVERVIEW

Your company is primarily into exports of cotton garments especially Infants wear and Kids wear. The Company exports its products to United States and European Markets.

2. FINANCIAL HIGHLIGHTS

As mandated by the Ministry of Corporate Affairs, your company has prepared the financial statements (both standalone and consolidated) for the year ended March 31, 2025 as per Indian Accounting Standard (‘IND AS') notified under Sec 133 of the Companies Act, 2013 read with notification no. G.S.R. 111(E) dated 16.02.2015 as amended from time to time.

The Standalone and Consolidated financial performance of the Company for the financial year ended March 31, 2025 is summarized below:

Standalone Consolidated
Particulars For the year ended March 31, 2025 For the year ended March 31, 2024 For the year ended March 31, 2025 For the year ended March 31, 2024
Sales and other Income
Revenue from operations 98,280.46 61,692.20 98,280.46 61,692.20
Other Income 3,660.96 2,467.06 1,854.11 1,424.99
Total Revenue 101,941.42 64,159.26 100,134.57 63,117.19
Profit Before Interest, Depreciation and Tax 23,648.33 12,711.76 21,930.44 11,476.39
Less: Finance Charges 1,401.72 733.19 1,401.72 733.19
Depreciation 1,571.67 2,070.40 1,574.50 2,070.74
Net Profit Before Tax 20,674.94 9,908.17 18,954.22 8,672.46
Less: Provision for Tax 5,379.61 3,089.40 5,379.62 3,089.41
Net Profit After Tax 15,295.33 6,818.77 13,574.60 5,583.05
Share of Profit/ (Loss) of Associates - - - -
Net Profit after share of profit of 15,295.33 6,818.77 13574.60 5,583.05
Associates
Balance of Profit brought forward 62,896.45 59,109.12 57,383.72 54,533.44
Balance available for appropriation 78,191.78 65,927.89 70,958.32 60,116.48
Dividend paid on Equity Shares 997.50 997.50 997.50 997.50
Transfer to General Reserve 2,000.00 2,000.00 2000.00 2,000.00
Issue of Bonus Shares 1,330.00 - 1,330.00 -
Surplus carried to Balance Sheet 73,864.28 62,930.39 66,630.82 57,118.98

3. FINANCIAL PERFORMANCE

The Company continues to maintain its market leadership in Infants wear across US markets during the year under review. We are glad to inform that the Company achieved its record turnover in the history during the fiscal year. Global market trends favours Indian Textile Industry. Drive to find alternate source from China provides huge opportunity for India. Recent turmoils in Bangladesh has exposed the risk in sourcing of garments from there. The recent Trade agreement signed with UK will open up huge market for Indian Textiles Industry. Kitex Group vision to expand capacity has given it an edge as the capacity available in India is limited and the lead time to add capacity is longer. We expect to capture the huge opportunities available and will continue our record growth in the coming years also.

During this year we have added few more leading buyers both from USA and Europe to strengthen our exports and as future potential partners in our future journey.

STANDALONE PERFORMANCE

On standalone basis, your company reported a turnover of H101,941.42 lakhs ie., a 58.89% increase over the previous financial year. Cost of goods sold as a percentage to revenue from operations increased to 42.98% as against 41.35% in the previous year due to increased production. Employee cost as a percentage to revenue from operations decreased to 16.11% (H15,833.66 lakhs) as against 19.35%

H ( 11,939.36 lakhs) in the previous year. The operating profit stood at H 20,674.94 lakhs compared with H 9,908.17 lakhs in the previous year, a jump of 108.67% over previous year. The net profit for the year was H 15,295.33 lakhs as against

H 6,818.77 lakhs reported in the previous year, a growth of 124.31% over previous year. The EPS from continuing operations for the reporting year was H7.67 as against H 3.42 reported in the previous year.

CONSOLIDATED PERFORMANCE

On consolidated basis, total revenue for the financial year under review was H100,134.57 lakhs as against H63,117.19 lakhs for the previous financial year, a growth of 58.65%. Profit before tax was H18,954.22 lakhs and net profit after tax was H13,574.60 lakhs for the financial year under review as against H8,672.46 lakhs and H5,583.05 lakhs for the previous year.

During the year under review, your company received orders confirmations from major infant garment buyers viz., Gerber Childrenswear LLC, Carters, Carters brands, Sam's Club and LAT who can contribute major part of your Company's turnover in coming years. On an average, the Company manufactures 2.75 lakhs pieces of infant's apparel per day and dispatches as a whole container to clients in US.

4. PERFORMANCE HIGHLIGHTS OF SUBSIDIARY & ASSOCIATE COMPANY

ASSOCIATE COMPANY

As on March 31, 2025, the Company has an Associate Company, Kitex USA LLC being an Associate Company with joint investment between the Company and Kitex Childrenswear Limited to support and facilitate design and supply for US Market customers. The Associate Company markets through own Brand "Little Star" Infants wear in US and Canada.

Your company has also sold products worth H3,396.85

Lakhs to its Associate during the reporting period.

SUBSIDIARIES

During the year under review, the company has 6 wholly owned subsidiaries viz. Kitex Babywear Limited, Kitex Littlewear Limited, Kitex Kidswear Limited, Kitex Knits Limited, Kitex Socks Limited and Kitex Packs Limited. Company has one more Subsidiary named Kitex Apparel Parks Ltd formed as joint venture to take care of the expansion at Telangana along with Kitex Childrenswear Limited in the ratio 70:30 investment ratio.

Further, pursuant to the provisions of Section 136 of the Act, Audited Financial Statements in respect of subsidiaries are available on the website of the Company www.kitexgarments.com.

A report on the salient features of the financial statements of Subsidiaries/ Associate Companies/ Joint Ventures prepared in e-Form AOC-1 is provided as Annexure - A.

There are no companies which have ceased to be its Subsidiaries, Joint Ventures or Associate Companies during the year under review.

The Company has adopted the policy for determining material subsidiaries in terms of Reg 16(1)(c) of Listing Regulations as amended from time to time and may be accessed on the company's website www.kitexgarments.com.

The Consolidated Financial Statements of the Company along with its Subsidiaries and Associate prepared for the year 2024-25 in accordance with relevant Ind AS issued by ICAI forms part of this Annual Report.

5. DIVIDEND AND DIVIDEND DISTRIBUTION POLICY

Your Directors recommend for your approval, final dividend of H0.50 paise per share (50%), subject to deduction of income tax at source for the year ended March 31, 2025 on equity shares of Re. 1/- each fully paid-up. The total outgo on account of dividend inclusive of taxes for FY 2024-25 is H997.50 lakhs ( PY H 997.50 lakhs) which represents a payout of 6.52 % of the Company's standalone profits.

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top one thousand listed entities based on market capitalization are required to formulate a Dividend Distribution Policy. Accordingly, the Board approved and adopted Dividend Distribution policy which is available on the Company's website URL at: http://www.kitexgarments.com/wp-content/uploads/2017/05/KGL_Dividend-Policy_2017.pdf

6. TRANSFER TO RESERVES

During the year under review, your company transferred a sum of H2,000 lakhs to the General Reserve on account of future expansions.

7. ISSUE OF BONUS SHARES

Your Directors are pleased to inform that during the year under review, your Company issued 13,30,00,000 bonus equity shares of H1/- each in the ratio of 2:1. Accordingly, the paid-up share capital of the Company was increased from H 6,65,00,000 to H 19,95,00,000.

8. SHARE CAPITAL

Increase in Authorized Share Capital

The Board of Directors at their meeting held on August 04, 2025 approved and has resolved to seek approval from the shareholders at the ensuing Annual General Meeting for increase in Authorized Share Capital of the Company from H25,00,00,000 (Rupees Twenty Five Crores only) divided into 25,00,00,000 (Twenty Five Crores) Equity Shares of Re.1/- each (Rupee One only) to H50,00,00,000

(Rupees Fifty Crores only) divided into 50,00,00,000 (Fifty Crores) Equity Shares of Re.1/- (Rupee One only) each and consequent alteration of Clause V of Memorandum of Association of the Company

The paid-up equity share capital as on 31st March, 2025, was H1995.00 lakhs consisting of 19,95,00,000 equity shares of Re. 1/- each fully paid-up.

9. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report.

10. CORPORATE DEVELOPMENT

Scheme of Arrangement – Kitex Childrenswear Limited

During FY 2024-25, your Directors approved a Scheme of Arrangement ("the Scheme") between Kitex Childrenswear Limited ("KCL"), your Company and their respective shareholders and creditors. The Scheme provides for demerger of the Textile Business Division of KCL into your Company.

KCL is primarily engaged in apparel business specialized in premium infants wear and Childrenswear. Under the Scheme, your Company will issue 9706 shares of face value of H1/- each for every 100 equity shares of KCL of face value H 1/- each to the shareholders of KCL as on the record date as defined in the Scheme, resulting in the issuance of 9,21,97,779 new equity shares of your Company. The transaction will enable your company to optimize business operations, achieve economies of scale, create operational efficiency, common pool of production and better utilization of resources.

The merger is in advanced stage of approval with stock exchanges and SEBI and we expect the same to conclude by end of December 2025.

The proposed scheme of arrangement will bring greater agility, enabling a more focused approach to execution and value creation, delivering superior experiences for customers, rewarding careers for employees, and long-term returns for shareholders.

11. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Act, the Board of Directors of the Company hereby state and confirm that:

(i) in the preparation of the Annual accounts for the year ended March 31, 2025, the applicable accounting standards had been followed along with proper explanation relating to the material departures, if any;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the profit of the Company for the year ended on that date; (iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts had been prepared on a going concern basis; (v) that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

12. TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND a. Transfer of Unpaid Dividend

Pursuant to the provisions of Sec 124(5) of the Companies Act, 2013, your Company has transferred H6,08,739.00 for the financial year 2016-17 to Investors Education Protection Fund (IEPF) on August 22, 2024. This amount was lying unclaimed/ unpaid with the Company for a period of 7 (seven) years after declaration of final dividend for the said financial year.

Pursuant to the provisions of Sec 124(5) of the Companies Act, 2013, your Company has transferred H7,02,827.00 pertaining to interim dividend in 2017-18 to Investors Education Protection Fund (IEPF) on December 20, 2024. This amount was lying unclaimed/ unpaid with the Company for a period of 7 (seven) years after declaration of final dividend for the said financial year. b. Transfer of sale proceeds of fractional shares

Your Company has transferred the sale proceeds of fractional bonus shares issued in the year of 2017 amounting to H32,997.00 which were not encashed for a period of seven years has transferred to Investor Education and Protection Fund (‘IEPF') pursuant to the provisions of Sec 125(2) of the Companies Act, 2013. c. Transfer of shares underlying unpaid dividend

The Board of Directors at its meeting held on May 20, 2024, transmitted 11,676 equity shares of the Company into the demat account of the IEPF

Authority held with CDSL (DPID/ Client ID: 12047200 – 13676780) in terms of the provisions of Sec 124(6) of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time.

The Board of Directors at its meeting held on October 30, 2024, transmitted 13,805 equity shares of the Company into the demat account of the IEPF Authority held with CDSL (DPID/ Client ID: 12047200 – 13676780) in terms of the provisions of Sec 124(6) of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time.

The equity shares were the shares of 23 shareholders whose unclaimed/ unpaid dividend pertaining to FY 2016-17 and the equity shares were the shares of 24 shareholders whose unclaimed/ unpaid dividend pertaining to interim dividend in 2017-18 had been transferred into IEPF and who had not encashed their dividends for 7 (seven) subsequent financial years. The Company has taken various steps by sending reminders requesting them to encash their dividend so as to reduce the limit of unclaimed dividend before transferring the dues to IEPF. The complete list of such shareholders whose shares were due for transfer to IEPF was also placed in investor's relations section on the website of the Company www.kitexgarments.com.

Further, dividend which has become unclaimed for the last 7 years since 2017-18 will be transferred to IEPF account on or before October 01, 2025 for which Company had sent the reminder letter to shareholders concerned. The details are provided in the Shareholder information section of this Annual Report and are also available on our website www.kitexgarments.com.

13. CAPITAL EXPENDITURE

As on 31st March, 2025, the Gross Fixed Assets stood at H29,275.46 Lakhs and net fixed assets of H10,153.21

Lakhs. Additions during the year amount to H339.77 Lakhs.

14. FUTURE PROSPECTS

Our major future prospects is planned through our expansion in the state of Telangana through our subsidiary Kitex Apparel Parks Ltd. The total project cost planned is approximately H3550 Crores which is funded through

Debt/Equity in the ratio of 70:30. The equity is shared in a proportion of 70:30 by KGL and KCL. The term loan is funded by a Consortium of Six Banks headed by Axis Bank. There are two Projects, one at Kakatiya Mega Textiles Park and second one at Sitarampur Industrial Park near Hyderabad.

Warangal Project is coming to a closure and H1425

Crores already spent against H1770 Crores planned and production commenced in April 2025. In Sitarampur consideration towards land has already been fully paid and land documentation expected immediately. H92 Crores

has been totally spent against this Project. Commercial production for this Project is planned in March 2027.

In view of the China plus 1 policy, political instability in Bangladesh and the recent Trade agreement signed with UK, Indian Textile Industry is expected to benefit considerably, as there will be a major shift of textiles demand to India. Your Company is at a major advantage due to advanced stage of Implementation of Telangana Project.

15. CREDIT RATING

During the year under review, India Ratings, the Credit Rating Agency assigned the rating of the Company as "IND A Stable for the company's long term borrowings and assigned the rating of IND A1 for the Company's short term borrowings.

16. QUALITY AND ACCOLADES

Your Company continues to win awards year by year, thus reiterating its credible market position.

17. CHANGE IN THE NATURE OF BUSINESS

During the year under review, there was no change in the nature of the business.

18. LISTING

The Equity Shares of the Company continue to remain listed on BSE Limited and the National Stock Exchange of India Limited.

19. DEPOSIT FROM THE PUBLIC

The Company has not accepted any deposit within the meaning of Chapter V of the Companies Act, 2013 and the Rules framed thereunder.

20. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134 (3) (a) of the Act, the Annual Return as on March 31, 2025 is available on the website of the Company at: www.kitexgarments.com.

21. SECRETARIAL STANDARD

The Company complies with all applicable secretarial standards.

22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY

The Company had given a Corporate Guarantee of H 2000

Crores during the financial year 22-23 and enhanced the same to H 2023 Crores during the financial year 23-24 pursuant to the provisions of Section 185 and 186 of the Act and SEBI (LODR) Regulations, 2015. However, loan amount of H 10,634.77 Lakhs and Investments of H 45,141.54 Lakhs have been made in its Subsidiary Companies, the details that are covered under the provision of the said section are given in the notes to financial statements.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review and between the end of the financial year and date of this report, the following are the changes in Directors and Key Managerial Personnel of the Company:

(i) Mr. A K Mathew (DIN: 02437778) was appointed as Non-Executive Independent Director of the Company for a term of 5 years with effect from August 14, 2024. His appointment was approved by the members at the last Annual General Meeting (AGM).

(ii) Mrs. Sindhu Chandrasekharan (DIN: 06434415) was re-appointed as Whole-Time Director of the Company for a term of 5 years effective from March 16, 2025. Her re-appointment was approved by the members at the last Annual General Meeting (AGM).

(iii) Mr. Benni Joseph ceased to be the Independent Director of the Company upon successful completion of his tenure on January 11, 2025. The Board places on record its appreciation towards valuable contribution made by him during his tenure as Director of the Company.

(iv) Mr. Sabu M. Jacob (DIN: 00046016) is sought to be reappointed as Chairman and Managing Director of the Company effective from August 16, 2025 till August 15, 2028 based on recommendation of Nomination and Remuneration Committee and the Board had in its meeting held on June 23, 2025 approved the same, subject to the approval of shareholders at the ensuing Annual General Meeting.

(v) Mrs. Sumi Francis (DIN: 08950675) was appointed as the Non-Executive Independent Director of the Company at the 29th Annual General Meeting held on September 07, 2021 for a period of five years. The said period of five years ends on November 12, 2025. Considering the past performance of Mrs. Sumi Francis as Director of the Company, her consent and necessary disclosures to continue as Independent Director of the Company and that she continues to meet criteria of Independence, the Board of Directors, on June 23, 2025, had approved her re-appointment as Independent Director of the Company for the second term from November 13, 2025 to November 12, 2030, subject to approval of the shareholders and has recommended her re-appointment for approval of the shareholders in the forthcoming Annual General Meeting by way of Special Resolution.

(vi) In accordance with Articles of Association, Mr. Sabu M Jacob (DIN: 00046016), executive director of the Company will be retiring at the ensuing Annual General Meeting and being eligible, seek reappointment. Item seeking his re-appointment

74 along with his detailed profile has been included in the notice convening the AGM.

There is no change in the Board of Directors & Key Managerial Personnel of your company during the financial year 2024-25 except as mentioned above.

The Company has received declaration of Independence as stipulated under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from the Independent Directors confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended from time to time. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.Based on the confirmation/ disclosure received from the directors, the Non-Executive Directors namely Mr. C. P. Philipose, Mr. A. K. Mathew and Mrs. Sumi Francis are treated as independent as on March 31, 2025.

In the opinion of the Board, the Independent Directors are persons with integrity, expertise and experience in the relevant functional areas. The Independent Directors of the Company have registered themselves with the data bank maintained by Indian Institute of Corporate Affairs (IICA). In terms of Section 150 of the Companies Act, 2013 read with Rule 6(4) of the Companies (Appointment & Qualification of Directors) Rules, 2014, Mr. C. P. Philipose and Mr. A. K. Mathew are exempted from undertaking the online proficiency self assessment test and Mrs. Sumi Francis has successfully qualified the online proficiency self assessment test, conducted by the IICA.

During the year under review, meetings of the Board of Directors and its Committees were held, details of which are set out in the Corporate Governance Report which forms part of this Report.

24. BOARD EVALUATION & FAMILIARISATION PROGRAMME

Having a formalized Board evaluation gives Board Members an opportunity of assessing their own performance and brings out the importance of the contributions of individual directors. It is a mechanism by which Board members candidly reflect on how well the Board is meeting its responsibilities.

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 as well as SEBI (LODR) Regulations, 2015.

With the objective of evaluating the performance of Directors, Nomination and Remuneration Committee has formulated a structured questionnaire after taking into consideration the various aspects viz., composition of the Board and its committees, Board's function, its culture, quality and timely flow of information, frequency of meetings, execution and performance of specific duties, obligations and governance.

Board has carried out an annual performance evaluation of its own performance, the performance of various committees of the Board, Individual Directors and the Chairman based on adopted questionnaire. A note on the familiarizing programme adopted by the Company for the orientation and training of the Directors and the manner in which the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Corporate Governance Report which forms part of this Report.

Further, the Independent Directors of the Company met on January 20, 2025 to review the performance of the Non-Executive Directors, Chairman of the Company and the access of the quality, quantity and timelines of flow of information between the Company management and the Board to effectively perform their duties and met on February 14, 2025 to review and recommend the above mentioned Scheme of Arrangement. The details of familiarization program conducted for Independent Directors of your Company are available on your Company's website www.kitexgarments.com.

25. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in Section 178(3) of the Act is available on our website www.kitexgarments.com. We affirm that remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

Some of the salient features of which are as follows:

1. To regulate the appointment and remuneration of directors, key managerial personnel and the senior management personnel;

2. To identify persons who are qualified to become directors as per the criteria/ Board skill matrix identified by the Board;

3. To ensure proper composition of Board of Directors and Board diversity;

4. To ensure that level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors, key managerial personnel and senior management and their remuneration involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to Company's working and its goals.

The policy has been amended to incorporate the changes that took place during the year under review.

26. BOARD COMMITTEES

Detailed composition of the mandatory Board committees namely Audit Committee, Nomination and Remuneration Committee, Risk Management Committee, CSR Committee, Stakeholders Relationship Committee, its number of meetings held during the year under review and other related details are set out in the Corporate Governance Report which forms part of this Report. There have been no situations where the Board has not accepted any recommendation of the Audit Committee.

27. EMPLOYEES' STOCK OPTION SCHEME

The Company has not granted any Employee Stock Option within the meaning of section 62 (1) (b) of the Companies Act, 2013 read with its Rules framed thereunder and respective SEBI regulations.

28. CORPORATE SOCIAL RESPONSIBILITY

Your Company believes in touching some of the important aspects of human life. Even before commencement of Companies Act, 2013, it has embarked on the journey of social change through inclusive growth, dedicated to the cause of future and future generations. The Company implements CSR directly to the society of Kizhakkambalam Panchayat and four neighboring Panchayats in which it operates and efforts are revolved around several projects relating to Social Empowerment and Welfare, Infrastructure Development, Sustainable Livelihood and Health Care during the year under review. These projects are in accordance with Schedule VII of the Act and its CSR policy.

The brief report of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - B of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company are available on your Company's website www.kitexgarments.com.

During the year under review, there has been no change to the CSR policy.

29. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report on the operations of the Company, as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, forms an integral part of this Report.

30. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As required under Regulation 34 of the Listing Regulations, the Business Responsibility and Sustainability Report is provided in a separate section and forms part of the Annual Report describing the initiatives undertaken by the Company from an environmental, social and governance perspective during the year under review.

31. CORPORATE GOVERNANCE

A separate section on parameters of statutory compliance evidencing the standards expected from a listed entity have been duly observed and a report on Corporate Governance as well as certificate from Practicing Company Secretary confirming compliance with the requirements of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 forms part of this Report.

32. VIGIL MECHANISM

The Company has adopted a Vigil Mechanism to report concern about unethical behavior, actual or suspected fraud or violation of Company's code of conduct by the Directors and employees. The policy provides for direct access to the Chairman of the Audit Committee and safeguarding the employees and Directors who raises grievances against victimization. The details of establishment of such mechanism have been disclosed in the corporate governance report for the year under review. The vigil mechanism is disclosed in the website of the company viz., www.kitexgarments.com.

33. RELATED PARTY TRANSACTIONS

All transactions or arrangement entered into with the related parties for the year under review were on arm's length basis and in the ordinary course of business. Hence the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Accordingly, the disclosure of Related Party Transactions as required under Section 134 (3) (h) of the Companies Act, 2013 in e-Form AOC - 2 is enclosed as Annexure - C.

The company has developed a framework through Standard Operating Procedures for the purpose of identification and monitoring of such Related Party Transactions. All Related Party Transactions were placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained on a yearly basis for transactions which are of repetitive nature. A statement showing the details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

None of the Directors has any pecuniary relationship or transactions vis-?-vis the Company. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company viz., www.kitexgarments.com.

34. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new/ revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The Internal and operational audit is entrusted with M/s. K. Venkatachalam Aiyer & Co, a leading firm of Chartered Accountants. The main thrust of Internal Audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal financial control systems w.r.t. the financial statements and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

The Audit Committee of the Board of Directors, Independent Auditors and the Core Committee Heads have periodically been appraised the significant internal audit observations and the corrective actions have been taken. The Audit Committee places a key role in providing assurance to the Board of Directors. In order to maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

35. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchanges earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 as amended from time to time is annexed as Annexure - D and forms an integral part of this Report.

36. BUSINESS RISK MANAGEMENT

Your Company continues to strengthen its robust Risk Management Framework and the same was reviewed by the Audit Committee periodically. As per the listing regulations, top 1000 listed entities based on market capitalization has to constitute Risk Management Committee. Accordingly, Board of Directors at its meeting held on May 28, 2021 has constituted the Committee, the details of which have been covered in the Corporate Governance Report forming part of the report. The Committee meets for focused interaction with business, identifying and prioritizing strategic, operational risk and formulating appropriate mitigation strategies and conducting frequent review of the progress on the management of the identified risk. The Committee also constituted the Risk Management policy for assessing the risks connected to the company and also minimization procedures. Your company believes that managing risk helps in maximizing return. The company's approach in addressing business risks includes periodical review of such risks and thereby mitigating it effectively. The risk management framework is reviewed periodically by the Board and the Audit Committee. Some of the risks that the company is exposed to are:

FINANCIAL RISKS:

The Company's policy is to actively manage its foreign exchange risks within the framework laid down by the Company's forex policy approved by the Board. Given the interest rate fluctuations, your Company has adopted a prudent and conservative risk mitigation strategy to minimize financial and interest cost risks.

COMMODITY PRICE RISKS

The Company is exposed to the risk of price fluctuations of raw materials as well as finished goods. The company proactively manages these risks through forward booking, inventory management and proactive vendor development practices. Your company's reputation for quality, product differentiation coupled with the existence of a powerful brand image with a robust design and marketing network in US mitigates the impact of price risk on finished goods.

REGULATORY RISKS

The Company recognized its risks attached to various statutes, laws and regulations. The company is mitigating these risks through regular review of legal compliances carried out through our internal as well as external compliance audits by our customers.

HUMAN RESOURCE RISKS

Retaining the existing talent pool and attracting new talent are the major risks affecting the company. We have initiated various measures including rolling out of strategic talent management systems, training and integration of learning and development activities. Our company has collaborated with various agencies like Integrated Skill Development Scheme (ISDS) which helps to identify, nurture and groom labour talents within all states of India to prepare them for future business leadership.

STRATEGIC RISKS

Emerging businesses, capital expenditure for capacity expansion etc are normal strategic risks face by your company. However, your Company has well-defined processes and procedures for obtaining approval for investments in new businesses and capacity expansions.

37. AUDITORS

37.1. INDEPENDENT AUDITORS

As per the provisions of Section 139 of the Companies Act, 2013, M/s. MSKA & Associates, Chartered Accountants, (FRN 105047W) have been re-appointed as Independent Auditors of the company for the second term of five years from the conclusion of the 31st AGM of the Company held on September 30, 2023. Further the report of the Independent Auditors along with notes to financial statements is enclosed to this Annual Report.

The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI. The Audit Committee reviews the independence and objectivity of the Auditors and the effectiveness of the Audit process.

The Auditors' Report on the Company's Standalone and Consolidated Financial Statements contain qualification, reservation, disclaimer or adverse remarks.

37.2.BOARD'S COMMENT ON AUDITOR'S QUALIFICATIONS

The explanations on the qualifications/observations given by the Statutory Auditors in their Audit Reports have been provided in Note 2.02.1 to the Standalone Financial Statements and Consolidated Financial Statements.

37.3. SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has re-appointed M/s. SVJS & Associates, Practicing Company Secretaries, Kochi to conduct the Secretarial Audit for the financial year 2024-25. The Audit Report issued by the Secretarial Auditors for the said FY form part of this Report and is set out in Annexure - E which is self-explanatory.

The explanations on the observations given by the Secretarial Auditors in their Audit Report are as follows: Company has paid fines imposed by both the stock exchanges for delayed compliance of Regulation 17(1A) of the Listing Regulations and Company has taken steps to ensure compliance of the SEBI (Prohibition of Insider Trading) Regulations, 2015.

The Company's unlisted subsidiary, Kitex Apparel Parks Limited (KAPL) had also undergone Secretarial Audit in terms of Regulation 24A of the Listing

Regulations and Circulars/Guidelines issued thereunder. The Secretarial Audit Report of KAPL for the financial year ended March 31, 2025 is annexed herewith as Annexure - E1. The Secretarial Audit Report of KAPL does not contain any qualification, reservation or adverse remark.

Further, pursuant to amended Regulation 24A of SEBI Listing Regulations, and subject to your approval being sought as the ensuing AGM M/s. SVJS & Associates, Practicing Company Secretaries, Kochi, (Peer Review Certificate No. 6215/2024 dated November 11, 2024) has been appointed as a Secretarial Auditor to undertake the Secretarial Audit of your Company for the first term of five consecutive financial years from FY 2025-26 till FY 2029-30. M/s. SVJS & Associates, Practicing Company Secretaries, Kochi has confirmed that they are not disqualified to be appointed as a Secretarial Auditor and is eligible to hold office as Secretarial Auditor of your Company.

37.4. INTERNAL AUDITORS

M/s. K. Venkatachalam Aiyer & Co, Chartered Accountants continue to be the Internal Auditors of your company for the financial year 2024-25.

38. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant and material orders passed by the Regulators/ courts except as mentioned in corporate governance report which forms part of this report, which would impact the going concern status of your company and its future operations during the period under review.

39. ENVIRONMENT AND SAFETY

TheCompanyisconsciousoftheimportancetoenvironmental friendly and safe operations. The company's policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliance of environmental regulations and preservation of natural resources.

As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at the workplace with a mechanism of lodging complaints. The following is a summary of sexual harassment complaints received and disposed off during the reporting period:

No. of complaints of sexual harassment received in the year: Nil

No. of complaints disposed off during the year: Nil

No. of cases pending for more than ninety days: Nil

No. of complaints pending as on end of the financial year: Nil

The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Act. The Company has filed Annual Report for the year ended December 31, 2024 under the Act with District officer.

40. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company believes that its manpower is an asset for the company and enjoys strong brand image as a preferred and caring employer. The ongoing focus is on attracting, retaining and engaging talent with the objective of creating a robust talent pipeline at all levels. Value-based HR programmes have enabled your Company's HR team to become strategic partners for the business. Your company laid stress to build a women-friendly workplace by introducing various initiatives for the development of women employees in the organization. Your Company has focused on internal talents and nurtures them through the culture of continuous learning and development, thereby building capabilities for creating future leaders. Your company's initiatives like a hiring freeze at some levels, robust talent review, career development conservations and best-in-class development opportunities, which will help to enhance the employees experience at your Company. The Company's Human Resources plays a critical role in your Company's talent management process.

The disclosure as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - F and forms a part of this report.

Information relating to remuneration of Directors under Section 197 read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been given in Annexure - G to the Director's Report.

41. GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

There were no frauds reported by the auditors under provisions of the Companies Act, 2013;

Issue of equity shares with differential rights as to dividend, voting or otherwise;

There were no revisions in the financial statements;

Issue of share (including sweat equity shares) to employees of the Company under any scheme as permitted under any provision of Companies Act, 2013.

Company is not required to maintain cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013.

The Company has complied with the applicable provisions of Maternity Benefit Act, 1961.

No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year is not applicable; and

The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

42. ACKNOWLEDGEMENTS

Your Directors thank various Central and State Government Departments, Organizations and Agencies for the continued help and cooperation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.