Pearl Polymers Ltd Management Discussions

1. INTRODUCTION

The Management Discussion and Analysis ("MD&A") for the financial year ended March 31,2026 ("FY 202526" or "FY26") provides an overview of the operating environment, industry trends, business performance, financial position, opportunities, risks and strategic priorities of Pearl Polymers Limited ("Pearl" or "the Company").

The Companys principal business continues to be associated with consumer houseware products under the PearlPET brand. Over the years, PearlPET has developed a distinctive presence around safe, durable, transparent, reusable and functional storage solutions. The Companys product philosophy has also evolved with changing consumer preferences and now encompasses products using materials such as steel, glass and wooden alongside plastics.

The Companys product development capabilities are supported by CAD-based design and in-house mould development. The brand has also received recognition through WorldStar, AsiaStar, IndiaStar and Plasticon awards over the years.

FY26 was a year of considerable external uncertainty. Global trade conditions, geopolitical tensions, energy and commodity-price volatility and changing consumer behaviour continued to influence businesses across markets. Against this backdrop, the Company remained focused on maintaining financial discipline, preserving liquidity, managing working capital and strengthening the foundations for sustainable growth.

2. GLOBAL ECONOMIC ENVIRONMENT

The global economic environment during and following FY26 remained characterised by elevated uncertainty.

The international economy demonstrated resilience in the face of higher trade barriers and geopolitical uncertainty; however, the outlook continued to be affected by geopolitical developments, commodity- price volatility, energy-market disruptions and changing trade relationships. The IMFs July 2026 World Economic Outlook Update projects global growth of approximately 3.0% in 2026 and 3.4% in 2027, while noting that geopolitical and policy uncertainty remains elevated.

For manufacturing and consumer businesses, these developments have implications for:

- raw-material prices;

- logistics and freight costs;

- supply-chain reliability;

- consumer purchasing power;

- international trade flows;

- energy costs; and

- the availability and pricing of imported products.

The global environment therefore reinforces the importance of flexible supply chains, prudent inventory management, cost discipline and a strong domestic demand orientation.

3. INDIAN ECONOMIC ENVIRONMENT

India continued to demonstrate relative economic resilience despite the challenging global environment.

Domestic consumption remains an important structural driver of economic activity. The IMFs assessment of India has highlighted favourable domestic conditions and resilient growth despite external headwinds, while identifying trade fragmentation, higher input costs and global uncertainty as important downside risks.

The Economic Survey 2025-26 identifies structural transformation, industrial competitiveness, infrastructure, urbanisation, climate resilience and strategic resilience as important themes for Indias continued economic development.

For consumer-facing businesses such as Pearl, Indias demographic profile, increasing urbanisation, rising aspirations, expansion of organised retail and digital commerce provide long-term structural opportunities.

4. INDUSTRY OVERVIEW

The Indian houseware industry is undergoing a significant transformation.

Historically, houseware products were primarily utility-driven and heavily influenced by price. The market is increasingly becoming design-led, brand-led and functionality-driven. Consumers are now evaluating products on the basis of convenience, aesthetics, durability, material safety, ease of use and overall lifestyle value.

The Companys earlier industry assessment identified the shift from a material-based classification towards a utility- and functionality-driven market. Modern houseware products increasingly combine materials such as plastics, steel, glass, wooden and ceramics depending on the intended use.

Urbanisation, nuclear families, changing lifestyles, space constraints and rising disposable incomes continue to support demand for organised household-storage and kitchen solutions.

The Indian modular kitchen market was estimated in the Companys earlier industry research at approximately USD 6.17 billion in 2025 and projected to reach approximately USD 12.32 billion by 2031. The home-storage market was estimated at approximately USD 1.48 billion in 2024 and projected to reach approximately USD 2.26 billion by 2033.

While market estimates vary by methodology and source, the broader structural direction remains favourable: Indian consumers are increasingly seeking organised, convenient, space-efficient and aesthetically appealing household products.

5. CONSUMER AND RETAIL TRENDS

Consumer behaviour is changing rapidly.

The growth of e-commerce and digital discovery has widened consumer access to branded products beyond traditional metropolitan markets. Consumers are increasingly exposed to product comparisons, reviews, design trends and alternative materials before making purchase decisions.

The Companys earlier MD&A noted that India had more than 270 million online shoppers in 2024 and that digital commerce was increasingly reaching Tier-II, Tier-III and smaller cities.

This evolution creates opportunities for established brands such as PearlPET to:

- improve digital discoverability;

- introduce products faster;

- understand consumer preferences;

- expand geographical reach;

- strengthen direct consumer engagement; and

- develop differentiated products.

The shift towards organised retail and e-commerce is particularly relevant to houseware products, where product presentation, design, branding and consumer trust increasingly influence purchase decisions.

6. PEARLPET - BRAND POSITIONING

PearlPET has a longstanding presence in the houseware segment and has developed its proposition around product safety, durability, functionality and design.

The Companys product portfolio has historically focused on storage and household solutions that are non-toxic, reusable, strong and lightweight. The Company has also highlighted product attributes including food-grade materials, BPA-free formulations, good barrier properties and recyclability.

The Company recognises that the next phase of growth in the houseware market will increasingly depend on:

Product + Design + Brand + Distribution + Digital Presence + Sustainability

Accordingly, PearlPETs future positioning will focus not merely on material selection but on solving everyday consumer needs through differentiated and functional products.

7. FY26 PERFORMANCE AT A GLANCE

FY26 presented a challenging operating environment for the Company.

Revenue from operations stood at Rs1,970.31 lakh during FY26 as compared with Rs2,197.21 lakh in FY25, representing a decline of approximately 10.33%.

Total income declined from Rs2,516.81 lakh in FY25 to Rs2,265.36 lakh in FY26.

Despite the decline in revenue, the Companys loss before tax reduced from Rs527.13 lakh in FY25 to Rs491.51 lakh in FY26, representing an improvement of approximately Rs35.62 lakh or 6.76%.

The reduction in the quantum of loss indicates that the Companys overall cost and operating discipline partially offset the pressure arising from lower revenue.

Financial Snapshot

Particulars	FY25	FY26	Change
Revenue from Operations	22,197.21 lakh	21,970.31 lakh	-10.33%
Other Income	2319.60 lakh	2295.05 lakh	-7.68%
Total Income	22,516.81 lakh	22,265.36 lakh	-9.99%
Loss Before Tax	2527.13 lakh	2491.51 lakh	Loss reduced 6.76%
Loss After Tax	2512.00 lakh	2476.88 lakh	Loss reduced 6.86%
EPS	2(3.04)	2(2.83)	Improved

The above figures are based on the FY26 financial statements and FY25 comparatives contained in the Companys financial workbook.

8. REVENUE PERFORMANCE

Revenue from operations decreased by approximately 10.33% during FY26.

The reduction should be viewed against the broader operating environment, including competitive intensity, changing consumer demand, market fragmentation and the continuing transition towards newer distribution formats.

At the same time, the Companys loss position improved during the year. This indicates that the Company continued to exercise discipline over its cost structure and operating expenditure despite the pressure on revenue.

Going forward, managements focus will be on improving revenue quality, strengthening product relevance and increasing the contribution of products and channels capable of generating sustainable margins.

9. PROFITABILITY

The Company recorded a loss before tax of Rs491.51 lakh during FY26 compared with Rs527.13 lakh in FY25.

The loss after tax stood at Rs476.88 lakh compared with Rs512.00 lakh in the previous year.

The improvement in the loss position, despite the decline in revenue, remains an important aspect of the Companys FY26 performance.

The Companys focus going forward will be to improve the relationship between revenue growth, gross contribution, operating expenses and working-capital utilisation.

Managements objective is to move progressively towards sustainable profitability rather than pursue growth at the expense of margins and cash generation.

10. BALANCE SHEET AND FINANCIAL POSITION

The Companys total assets stood at Rs3,599.55 lakh as at March 31,2026 compared with Rs4,085.04 lakh as at March 31,2025.

The reduction was primarily attributable to movements in current assets, particularly investments and other current assets.

Balance Sheet Snapshot

Particulars	FY25	FY26	Change
Total Assets	14,085.04 lakh	13,599.55 lakh	-11.88%
Non-current Assets	1646.76 lakh	1734.42 lakh	+13.56%
Current Assets	13,438.28 lakh	12,865.13 lakh	-16.67%
Current Investments	12,652.01 lakh	12,298.90 lakh	-13.31%
Trade Receivables	1172.14 lakh	1192.35 lakh	+11.74%
Cash & Cash Equivalents	175.69 lakh	136.35 lakh	-51.98%
Shareholders Equity	13,340.04 lakh	12,887.05 lakh	-13.56%
Borrowings	Nil	Nil	Nil

The Company continues to maintain a debt-free capital structure, which provides financial flexibility and limits exposure to interest-rate and leverage-related risks.

11. LIQUIDITY AND WORKING CAPITAL

Liquidity management remained an important area of focus during FY26.

Current assets stood at Rs2,865.13 lakh against current liabilities of Rs603.42 lakh, resulting in a current ratio of approximately 4.75 times.

Although the current ratio declined from 5.60 times in FY25, the Company continues to maintain a substantial current-asset position relative to its current liabilities.

Trade receivables increased from Rs172.14 lakh to Rs192.35 lakh. The Company will continue to focus on timely collections and disciplined credit management.

The Companys working-capital approach will increasingly focus on balancing liquidity, customer service and capital efficiency.

12. INVESTMENTS AND TREASURY MANAGEMENT

Current investments remained a significant component of the Companys asset base, standing at Rs2,298.90 lakh as at March 31,2026.

The Company continues to focus on prudent treasury management and preservation of capital while ensuring adequate liquidity for operational requirements.

The management will continue to monitor investment allocation, liquidity requirements and returns while maintaining an appropriate balance between safety, liquidity and yield.

13. KEY FINANCIAL RATIOS

Ratio	FY25	FY26	Movement	Management Commentary
Current Ratio	5.60	4.75		Current assets reduced during FY26
Debt-Equity Ratio	0.00	0.00	—	Company remains debt-free
Debt Service Coverage Ratio	(33.70)	(33.09)	Improved	Loss position improved
Return on Equity	(14.23%)	(14.15%)	Improved	Lower loss after tax
Inventory Turnover Ratio	6.45	6.80		Improved inventory movement
Trade Receivable Turnover Ratio	12.64	10.71		Higher average receivables
Trade Payable Turnover Ratio	2.77	2.73		Broadly stable
Net Capital Turnover Ratio	5.86	30.76		Significant change in working- capital base
Net Profit Ratio	(23.30%)	(24.20%)		Revenue contraction impacted margin
Return on Capital Employed	(15.03%)	(16.25%)		Operating loss continued

The ratios are based on the Companys FY26 ratio workings.

Management interpretation

The most significant movement was in the Net Capital Turnover Ratio, which increased substantially during FY26 primarily due to the reduction in average working capital. Management will continue to monitor this ratio alongside liquidity and operating requirements to ensure that improved capital efficiency does not compromise business flexibility.

The improvement in inventory turnover indicates relatively better movement of inventory during the year.

The reduction in trade receivable turnover indicates that receivables require continued management attention, particularly in an environment where cash conversion and liquidity remain important.

14. CAPITAL STRUCTURE

The Company continues to maintain a debt-free balance sheet.

As at March 31,2026:

- Equity Share Capital: Rs1,682.68 lakh

- Other Equity: Rs1,204.37 lakh

- Total Equity: Rs2,887.05 lakh

- Borrowings: Nil

The absence of financial debt reduces financial leverage and interest-rate exposure. The Companys capital allocation priorities remain focused on preserving financial flexibility, meeting operational requirements and creating a sustainable foundation for future growth.

15. OPPORTUNITIES

The Company believes the following opportunities can support its long-term development:

Urbanisation and nuclear households

Increasing urbanisation and the growth of nuclear families are supporting demand for compact, organised and multifunctional household products.

Premiumisation

Consumers are increasingly looking beyond basic utility towards aesthetics, convenience, durability and design.

Digital commerce

E-commerce and digital discovery can enable PearlPET to reach consumers beyond its traditional geographical markets.

Tier-II and Tier-III markets

The continued development of smaller cities and towns creates an opportunity to expand the addressable market for branded houseware.

Product diversification

The Companys ability to work across plastics, steel, glass and other materials can help address evolving consumer preferences.

Sustainability

Growing environmental awareness provides opportunities for products designed around recyclability, durability, material efficiency and responsible end-of-life considerations.

Domestic manufacturing

The increasing emphasis on domestic manufacturing and resilient supply chains creates opportunities for established Indian manufacturers.

16. THREATS AND CHALLENGES

The Company remains exposed to several industry and business challenges.

Competitive intensity

The houseware market remains highly fragmented, with competition from established brands, regional manufacturers, unorganised players, private labels and imported products.

Raw material volatility

Changes in polymer and other input prices can directly influence product costs and margins.

Consumer price sensitivity

The Indian houseware market remains price-sensitive, creating challenges in passing on increases in input costs.

Counterfeit and sub-standard products

Sub-standard products can create pricing pressure and dilute consumer trust in branded products. The Companys earlier MD&A also identified counterfeit and poor-quality products as an industry concern.

Environmental regulations

The regulatory framework surrounding plastics, waste management and sustainability continue to evolve. Compliance requires continued monitoring and appropriate investments.

Global trade uncertainty

Geopolitical developments, tariffs, trade restrictions and energy-price movements may indirectly affect input costs and consumer demand.

Changing consumer preferences

Rapid changes in design, functionality, material preferences and retail formats require continuous adaptation.

17. RISK MANAGEMENT

Risk management is an integral part of the Companys business planning and decision-making framework.

The Company seeks to identify material risks at an early stage, assess their potential impact and implement appropriate mitigation measures.

The principal risk categories include:

Risk	Potential Impact	Management Focus
Raw material prices	Margin pressure	Procurement and cost management
Competition	Pricing and market-share pressure	Brand, product differentiation and quality
Demand volatility	Revenue variability	Product and channel diversification
Receivables	Cash-flow pressure	Credit discipline and collections
Regulatory changes	Compliance cost	Continuous regulatory monitoring
Environmental requirements	Product/process changes	Material efficiency and recyclability
Supply-chain disruption	Availability/cost impact	Supplier and inventory management
Technology	Obsolescence/inefficiency	Product and process innovation
Counterfeit products	Brand dilution	Brand protection and consumer awareness
Global uncertainty	Input/trade volatility	Domestic focus and operational agility

The Company continues to believe that early identification and mitigation of risks is critical to long-term resilience.

18. TECHNOLOGY AND PRODUCT INNOVATION

Technology remains an important enabler of product differentiation and operating efficiency.

The Company has historically supported product development through CAD capabilities and in-house mould development.

Going forward, the Company intends to place greater emphasis on:

- consumer-led product development;

- faster product development cycles;

- improved design capabilities;

- material optimisation;

- digital product discovery; and

- data-driven understanding of consumer preferences.

The objective is to create products that combine functionality, safety, design and value.

19. SUSTAINABILITY AND RESPONSIBLE PRODUCT DEVELOPMENT

Sustainability is increasingly becoming a key consideration in the consumer products industry.

The Company recognises that plastics offer important functional advantages such as durability, lightweight construction and product longevity, while responsible material usage and end-of-life management remain important considerations.

PearlPETs product philosophy includes recyclability, product durability and material safety. The Company has also been expanding its product thinking beyond conventional plastics to include steel, glass and biodegradable materials.

The Companys sustainability focus will increasingly include:

- material optimisation;

- recyclability;

- product longevity;

- responsible product design;

- compliance with environmental regulations; and

- evaluation of alternative materials where commercially and technically viable.

The Company believes sustainability must be integrated with consumer value, product performance and commercial viability.

20. QUALITY AND PRODUCT SAFETY

Product quality and consumer safety remain fundamental to the Companys brand proposition.

The Companys products are developed with emphasis on food safety, durability, reusability and functionality. The Companys earlier disclosures highlight the use of certified raw materials and stringent quality-control procedures, together with product characteristics such as BPA-free materials and recyclability.

The Company will continue to focus on maintaining appropriate quality standards and strengthening consumer confidence in the PearlPET brand.

21. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

People remain an important enabler of the Companys business objectives.

The Company seeks to provide a professional and supportive working environment with emphasis on capability development, employee engagement, recognition and responsible workplace practices.

The Companys earlier MD&A identified training, employee recognition, participation in decision-making and employee empowerment as important elements of its people practices.

During FY26, the Company continued to focus on employee productivity, capability development and alignment of employee objectives with business priorities.

The median remuneration of employees increased from Rs4,65,528 in FY25 to 5,12,598 in FY26, representing an increase of approximately 10.11%.

As on 31^st March, 2026, there were 66 employees including the Executive Directors recorded on roll of the Company.

The Company believes that investment in people and capability is essential for improving productivity, innovation and customer responsiveness.

22. INTERNAL CONTROL SYSTEMS

The Company has established internal control systems commensurate with the size, scale and nature of its operations.

The internal control framework covers financial reporting, business processes, operational controls, compliance, fraud prevention and safeguarding of assets.

The Companys internal audit mechanism provides an independent review of internal controls, adherence to policies and compliance requirements. The Audit Committee reviews significant observations and corrective actions.

The Companys earlier MD&A records that the internal control framework was considered adequate and that no material weakness in the policy or procedures was observed.

23. SEGMENT-WISE PERFORMANCE

During FY26, the Company continued to operate in one reportable business segment.

The Companys principal activities continue to relate to consumer products/houseware products.

The segment information disclosed in the financial statements should be read together with this section.

24. STRATEGIC PRIORITIES

The Companys strategy for the coming period is built around six priorities:

01 — Strengthen the PearlPET Brand

Build on the Companys heritage and strengthen consumer trust through quality, safety, design and functionality.

02 — Consumer-Led Innovation

Develop products around changing household needs, convenience, space optimisation and lifestyle trends.

03 — Expand Market Reach

Increase presence across traditional retail, modern retail and digital/e-commerce channels.

04 — Improve Operating Efficiency

Strengthen procurement, inventory management, cost controls and supply-chain efficiency.

05 — Protect Financial Discipline

Focus on cash generation, working-capital efficiency and prudent capital allocation.

06 — Build Sustainable Product Platforms

Continue evaluating recyclable, durable and alternative-material solutions while maintaining commercial viability.

25. OUTLOOK

The Companys medium- to long-term outlook remains cautiously positive, notwithstanding near-term operating challenges.

Indias structural consumption opportunity remains attractive. Urbanisation, changing household structures, increasing digital commerce, premiumisation and growing preference for organised and branded products provide a favourable foundation for the houseware sector.

At the same time, management remains mindful of competitive intensity, raw-material volatility, consumer price sensitivity, regulatory developments and global uncertainty.

The Companys approach will therefore be centred on disciplined growth, product relevance, operating efficiency and financial resilience.

Managements objective is to strengthen the Companys core franchise while creating a more scalable and sustainable platform for future growth.

26. MANAGEMENTS FOCUS FOR FY27

For FY 2026-27, management intends to focus on the following:

Strategic Area	FY27 Focus
Revenue	Rebuild sustainable top-line growth
Product	Increase differentiated and value-added offerings
Brand	Strengthen PearlPETs consumer proposition
Distribution	Expand digital and organised retail presence
Costs	Improve operating efficiency
Working Capital	Strengthen receivables and inventory management
Innovation	Accelerate consumer-led product development
Sustainability	Improve material efficiency and recyclability
Financial Discipline	Preserve liquidity and maintain debt-free position

The Companys objective is to convert its established brand heritage and product capabilities into sustainable and profitable growth.

27. KEY MESSAGE TO STAKEHOLDERS

FY26 was a year of transition and consolidation for Pearl Polymers Limited.

While revenue declined during the year, the Company succeeded in reducing its loss position. The Company remains debt-free and continues to possess a substantial asset and investment base.

The management recognises that the Companys immediate priority is to strengthen the operating business, improve revenue quality, enhance working-capital efficiency and move progressively towards sustainable profitability.

The long-term opportunity remains supported by Indias consumption growth, urbanisation, digital commerce and evolving consumer preferences.

The Company enters FY27 with a clear focus on strengthening the brand, improving execution, innovating for the consumer and building a more efficient and financially resilient business.

28. CAUTIONARY STATEMENT

This Management Discussion and Analysis contains statements describing the Companys objectives, expectations, assumptions, estimates and future plans. Such statements are based on current expectations and information available to the Company and are subject to risks and uncertainties.

Actual results may differ materially from those expressed or implied due to factors including changes in economic conditions, consumer demand, competition, raw-material prices, regulatory developments, taxation, interest rates, geopolitical developments, supply-chain disruptions and other factors beyond the Companys control.

The Company assumes no responsibility for publicly updating or revising any forward-looking statements, except as may be required under applicable laws and regulations.