Pearl Polymers Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

India is now among the worlds fastest-growing large economies and, on IMF projections, is set to become the 4th-largest by nominal GDP in 2025, while remaining #3 globally on a PPP basis (after China and the US). Domestic consumption remains the backbone of growth. Private final consumption typically accounts for ~58 61% of GDP, with recent quarters hovering near the top of that range.

Indias demographic profile continues to be a structural tailwind. The median age is ~28.8 years in 2025 and is projected to remain near ~31 by 2030, keeping India among the youngest major economies.

On recent performance, real GDP growth for FY2023 24 came in at 8.2% (NSO/MoSPI, provisional). For FY2024 25, fastest-growing major economy.

While Indian households are traditionally high savers, the mix has shifted. Gross household savings have eased to ~18% of GDP (FY24), and net financial savings rebounded to ~5.1% of GNDI in FY2023 24 after a dip the previous year—important context for consumption resilience.

Digital, Internet and E-Retail Adoption

Internet connectivity and digital payments keep expanding rapidly. India is approaching a billion internet users this decade, with 969 million internet subscribers reported in FY2024-25 and continued growth expected. Meanwhile,

UPI hit an all-time high 19.47 billion transactions in July 2025 ( 25.08 lakh crore in value), underscoring how digital payments now power everyday commerce.

E-retail has consolidated its scale. According to Bain (Mar 2025), India had 270+ million online shoppers in 2024 (second-largest globally) and ~$60 billion GMV in 2024, with a path to $170 190 billion by 2030 as discretionary spending rises. Quick commerce is already >2/3 of e-grocery orders and about a tenth of e-retail spend. Projections for consumption remain robust. The widely-cited WEF–Bain outlook still sees domestic consumption reaching ~$6 trillion by 2030, with a larger share of upper-middle and high-income households driving mix upgrades.

Implications for Brands and Categories

Better-connected, younger consumers display a sharper sense of ‘whats desirable, trading up in categories that improve convenience and comfort at home—household durables, kitchenware, and services. As e-retail deepens beyond metros (three in five new shoppers since 2020 coming from Tier-3+ cities), brands must localize assortments, innovate formats, and engage directly (D2C) alongside marketplaces.

PearlPET Context

PearlPET (the B2C houseware brand of Pearl Polymers) continues to operate in a market shaped by these trends: rising discretionary spends, digital discovery and purchase, and an expanding online shopper base. Our heritage in safe, transparent, unbreakable and odorless storage solutions now extends to steel, glass, biodegradable and other materials to meet evolving sustainability preferences.

Our commitment to safety and hygiene is backed by state-of-the-art CAD and in-house mould development, and recognized through WorldStar, AsiaStar, IndiaStar and Plasticon awards over the years. As consumer demand functionality, PearlPETs portfolio will continue tiltstowardresponsible,recyclableproductswith to prioritize recyclability and material safety, while leveraging digital channels for direct engagement and faster innovation cycles.

RECENT DEVELOPMENT

The India modular kitchen market is valued at approximately USD 6.17 billion in 2025 and is projected to grow to USD 12.32 billion by 2031, reflecting a CAGR of 12.2%. Another estimate places the India kitchen furniture market at USD 1.35 billion in 2025, expected to reach USD 1.82 billion by 2030, at a CAGR of 6.18%. The India home storage market was worth USD 1.48 billion in 2024, forecast to reach USD 2.26 billion by 2033, growing at a CAGR of 4.8% from 2025 to 2033.

Key drivers of this growth include urbanization, fragmented households, and space constraints, which are propelling demand for modular, space-saving, and customizable kitchen solutions. Lifestyle shifts, higher disposable incomes, and enhanced real estate activity are also fuelling appetite for modern, functional, and design-led kitchen setups. Sustainability and smart storage innovation are increasingly influencing consumer preferences, while preference for ‘made-in-India products is gaining momentum.

OPPORTUNITIES AND THREATS

The Indian economy is the third largest in the world by nominal GDP and the fourth largest by purchasing power parity. It is a rapidly growing economy with a young and growing population. The economy is driven by services, followed by industry and agriculture.

The following are some of the opportunities for the Indian economy:

Growing Domestic Market & Consumer Ambition: Indias rising middle class expected to exceed 50% of the population by 2030 alongside sustained private consumption (~60% of GDP), provides ever-broadening opportunities.

Digital Expansion & E-Commerce Boom: E-commerce in India reached USD 147 billion in 2024, with a projected CAGR near 19% through 2028.Forkitchenwarespecifically, 12% year -on-year growth was seen in 2024, driven by rising internet penetration.

Supply-chain Localization & ‘Aatmanirbhar Bharat Momentum: Policy initiatives like Make in India and Atmanirbhar Bharat are fostering self-reliance and domestic manufacturing.

Rural & Semi-Urban Penetration and Smart Kitchens: Brands are reaching deeper into Tier II & III cities, with consumers seeking smart, sustainable, and functional kitchenware.

The following are some of the threats to the Indian economy:

Economic Volatility & Global Trade Headwinds: The imposition of high U.S. tariffs (up to 50%) on Indian exports presents a serious threat to manufacturability and export-linked supply chains.

Inflation, Monetary Volatility & Consumption Pressure: Persistent food and energy inflation continues to strain budgets, while high interest rates dampen demand for durables.

Infrastructure Bottlenecks & Competitive Fragmentation: Despite improvement, gaps in logistics and rural connectivity limit market reach. The market is also highly fragmented with intense competition.

Counterfeit Products & Brand Dilution: Proliferation of substandard and counterfeit kitchenware, particularly in the unorganized segment, poses reputational risk and erodes trust in branded offerings.

The retail industry in India has emerged as one of the most dynamic and fast-paced. With the constant entry of several new players across a variety of product categories and retail formats, Indias retail market is expected to increase significantly. Organized retail in India has been growing exponentially every year.

Houseware is a growing category in the Indian domestic retail market with an annual growth of 25-30%. From the traditional to the modern society, across the globe, houseware has always existed as a major product category in the marketplace. India has also witnessed a major shift in buyer or consumer base for houseware products and it is no more restricted to women.

Production of standard quality tableware, kitchenware, and general houseware, and products in India is still very limited and hence, the market is also fed through imports. There are hundreds of importers and distributors, who either import and sell under their own brands or represent international brands in India.

With the evolving lifestyle of Indians, India has witnessed a major shift in the houseware industry. Due to the high degree of urbanization, the proliferation of nuclear families and technological advancement, there have been far-reaching changes in the nature of houseware products. In India, globalization has also brought about significant changes in cooking, serving and dining habits.

The complexity of the products also makes it necessary that husband-wife both engage in the purchase of these products - be it kitchenware, cookware, tableware, kitchen appliances, storage, cleaning or maintenance products, outdoor houseware, or travel goods, one can see the drastic change in the market scenario. Most of the modern day houseware products are now made by combining materials like steel, plastics, ceramics, glass and so on. Hence the market classification is now less material-driven and more utility or functionality-driven.

Aspirational demand across segments will also drive the consumption and consumer spending upwards. Increasing number of nuclear families and their keenness to invest in their own homes is leading to a consistent growth in the housing sector, which is bound to push demand for houseware products. It will also push upwards the market for consumer durables. With rising affluence, their purchases and will increasingly spend on lifestyle factors like design, trends, fashion and aesthetics. All these factors create a potential market for entrepreneurs to tap into and explore huge opportunities in India in manufacturing, retail, distribution and imports. Retail will obviously be the biggest of them all.

Traditionally, houseware products were more utility-driven with a high focus on functionality, labour saving and simplifying domestic chores. Today, such products are already well accepted by consumers across all market segments. But the Indian houseware industry missed the retail boom enjoyed by categories like apparel and food in India over the last 28 years, as the majority of its products lacked good design and glamour of branding.

Retailers always identify retail space allocation with big brands and well-designed products. As the houseware sector emerges in its contemporary avatar with focus on good design, high technology, branding and glamorous presentation, retailers are discovering a great opportunity in this segment as both unit prices and margins go up. With the increased allocation of retail space as well as the entry of e.com players, houseware business is poised for substantial growth.

The advancements in terms of product innovations and technologies in the market are also expected to create strong investment opportunities for global players. Regulatory and structural guidelines are expected to be the strongest restraints for the industry. High input costs and environmental concerns are the major challenges, whereas fluctuating patterns and advancements of alternative technologies are expected to be the burning issues.

However, despite having a good growth potential, the industry faces many threats and challenges. Some of the challenges are:

Environmental Consciousness

All of Pearls products are designed by keeping the environment in mind. We use fully recyclable materials which are approved by the worlds leading certification agencies for use.

With environmental awareness rising globally, there is a lot of discussion biodegradable solutions.

However, there are teething challenges the market is facing in providing these biodegradable solutions. The investment required for the research of these solutions is high. This has limited the number of available eco-friendly options. Also, these solutions come at an added cost which neither the industry nor the consumer is prepared to absorb. This is making manufacturers wary of investing in the production that might not fetch the markup price.

Stringent regulations

Stringent regulations imposed for plastic products may act as a restraint but to a lower extent. Compliance with regulations is necessary as the smallest defect in a product may lead to rejection of the product. It will also negatively impact the manufacturers profit.

Some of the players present in the industry follow unethical practices to increase the revenue by selling poor quality products which may look similar but are hazardous to the environment.

Most of these challenges can be solved with technology, to form a tightly knit and integrated system. However, with technology, an all-embracing approach would be necessary. Every stage of the procurement process will need automation. Business leaders can empower their teams with visibility of their supply chain in real-time.

This would help them absorb demand fluctuations faster.

India remains one of the most complex countries to manage and build businesses in. The market requires an in-depth consumer understanding and is not only price and value sensitive but also unorganized. Nonetheless, the Indian houseware markets potential and growth aspect are appealing to major international players.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Employees are the most important asset of any company. They are the ones who make the company run, and they are the ones who contribute to its success. Employees are responsible for providing the products or services that the company offers, and they are also responsible for creating a positive customer experience.

Pearl is committed to creating a workplace where employees feel valued and appreciated. We are doing this by:

Providing competitive salaries, health insurance, paid time off, and retirement savings plans.

Offering opportunities to learn new skills and advance careers through training programs and tuition reimbursement.

Allowing employees to have a flexible schedule and to take time off when they need it.

Creating a respectful and supportive workplace where employees feel comfortable and valued.

Recognizing employees contributions through awards, public recognition, and thank-you notes.

Engaging employees in the companys mission and values by providing opportunities for employees to share their ideas and to be involved in decision-making.

Empowering employees to make decisions and to take ownership of their work by giving them the freedom and resources to do their jobs effectively.

We believe that by doing these things, we can create a workplace where employees feel valued and appreciated, which can lead to increased productivity, innovation, and customer satisfaction.

We are committed to continuing to evaluate our practices and to make changes as needed to ensure that we are creating a workplace where all employees feel valued and respected.

As on 31st March, 2025, there were 65 employees including the Executive Directors recorded on roll of the Company.

OPERATIONS AND FINANCIAL REVIEW

The operations and financial review is covered in the Boards Report and is to be read as a part of this report itself.

KEY FINANCIAL RATIOS

Ratios	FY 2024-25	FY 2023-24	% of Variance	Reason
Current Ratio	5.60	7.28	23.08%	-
Debt-Equity Ratio	0.00	0.00	-	-
Debt Service Coverage Ratio	-33.70	2.09	-1712.44%	A
Return on Equity (ROE)	-14.23%	1.71%	-933.21%	A
Inventory Turnover Ratio	6.45	5.18	24.52%	-
Trade Receivable Turnover Ratio	12.64	8.63	46.47%	B
Trade Payable Turnover Ratio	2.77	2.48	11.69%	-
Net Capital Turnover Ratio	5.86	4.40	33.18%	C
Net Profit Ratio	-23.30%	3.99%	-684.30%	A
Return on Capital Employed	15.03%	0.95%	-1674.34%	A

Note: Explanations given where the change in the ratio is more than 25% as compared to the preceding year

A. Due to operating losses incurred during the year B. Due to reduction in credit period of sales

C. Due to better management of working capital for business

SEGMENT-WISE PERFORMANCE

During the Year under review, your Company was operating only in one segment.

RISK MANAGEMENT

The Company is also exposed to several potential risks both from internal and external sources. By addressing the risk in its nascent stages allows for long-term corporate success. Risks such as industry segment risks, technological changes, political risks, product distribution and supply can be anticipated and curbed.

Your Company believes that the products should not be hazardous to the environment. Our products are made of virgin plastics which are universally approved by USFDA, EU Directive 2002/72/ EC, BIS IS: 12252 -1987 and other regulating bodies for Food, Beverage and Water storage.

Some of the features that give an advantage to the Company over other local players in the market which may help the Company in increasing the revenue are:-

Non-toxic, Food-grade and Re-usable.

Unbreakable, Strong and Light-weight.

Manufacturing process integrates the finest quality certified raw materials, with state-of-the-art equipment and stringent quality control procedures, at every station on the line.

PearlPET products & raw material do not use Bisphenol A (BPA) or other harmful plasticizers/chemicals.

All of our products have good barrier properties that protect and preserve the food content.

Good strength, premium quality, Air tight.

100% recyclable and environment friendly.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the companies (Indian Accounting Standards) (Amendment) Rules,2016 and notified under Section 133 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act and other accounting principles generally accepted in India.

BUSINESS OUTLOOK

The Consumer Products market is expected to grow by 15% to 20% in the medium term in a normal business environment with potentiallyhighergrowthratesinthenearterm.VerifiedMarket Research points out that the non-biodegradable properties of plastic products have been reported to have a serious impact on the environment, which has slowed growth. Fluctuating raw material prices are also hindering growth. However, the plastics commodity market is expected to rise from $468.3 billion in 2020 to $596.1 billion by 2025 at a CAGR of 6.0% as plastics continue replace metals in the marketplace.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Pearl has in place an adequate system of internal control procedures for business processes, operations, financial reporting, fraud control and compliance with applicable laws and regulations, among others. They commensurate with the size of the company and the nature of the business and is in line with requirements of the regulations.

During the year under review, no material weakness in the policy or procedures was observed. Your Company has put in place an independent internal audit system conducted by a professional to ensure adequacy of internal financial control system, adherence to Company policies and compliance.