Airo Lam Ltd Management Discussions

Pursuant to Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report are as follows:

Indian Economic Overview:

The Indian economy demonstrated strong resilience and broad-based momentum during the financial year 2025-26, supported by robust domestic demand, improving investment activity, moderating inflation, strengthening services, and continued public capital expenditure. Despite persistent global uncertainties, geopolitical tensions, volatile commodity prices and challenging international trade conditions, India continued to remain among the fastest-growing major economies.

Growth and GDP: The Indian economy recorded a significant improvement in growth momentum during FY 2025-26. As per the Provisional Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), real GDP grew by 7.7% compared with 7.1% in FY 2024-25 under the revised GDP series. Real GDP increased to approximately ?323.12 lakh crore, while nominal GDP at current prices reached approximately ?346.36 lakh crore, representing nominal growth of 8.9%. Real GVA expanded by 7.9%, reflecting broad-based improvement across key sectors of the economy. The fourth quarter also remained strong, with real GDP growth estimated at 7.8%, indicating sustained economic momentum towards the end of the financial year.

Inflation and Monetary Environment: Inflationary pressures moderated substantially during FY 2025-26. According to the Economic Survey 2025-26, headline CPI inflation declined to approximately 1.7% during April-December 2025, supported by a significant moderation in food prices, particularly vegetables and pulses, favorable

Fiscal Deficit and Government Measures: The Government continued to pursue a balanced approach between fiscal consolidation and growth-oriented expenditure. Under the Union Budget 2025-26, the fiscal deficit was initially budgeted at 4.4% of GDP, compared with 4.8% in the revised estimates for FY 2024-25. The Government maintained its focus on infrastructure development, capital expenditure, employment generation, and manufacturing, MSMEs, rural development and improving the overall business environment. The continued focus on fiscal prudence, while protecting productive capital expenditure, strengthened the foundation for sustainable medium-term economic growth.

Foreign Direct Investment (FDI): India continued to remain an attractive destination for foreign investment, supported by its large domestic market, improving infrastructure, expanding digital economy, skilled workforce and ongoing structural reforms. Services, computer software and hardware, trading, renewable energy and infrastructure-related activities continued to attract significant foreign investment. Indias cumulative FDI inflows had crossed USD 1 trillion between April 2000 and September 2024, demonstrating the countrys increasing integration with global investment flows.

Agriculture and Rural Economy: Agriculture and allied activities continued to play an important role in supporting rural incomes and domestic consumption. The Economic Survey estimated agriculture and allied sectors to grow by approximately 3.1% in FY 2025-26. A favorable monsoon supported agricultural activity during the first half of the year, while allied activities such as livestock continued to provide stability to rural incomes. Nevertheless, productivity enhancement, irrigation, storage, supply-chain efficiency and value addition remain important priorities for ensuring sustainable agricultural growth.

Overall, FY 2025-26 reflected Indias increasing economic resilience and strengthening domestic fundamentals. With a favourable combination of strong consumption, infrastructure-led investment, moderating inflation, expanding services and continued structural reforms, India remains well positioned to pursue a higher and more sustainable growth trajectory in the years ahead.

Performance of major economies:

United States: Real GDP grew by approximately 2.0% in 2025, supported by resilient domestic demand and investment.

China: The economy continued to expand strongly in 2025, supported by exports and manufacturing, although weak domestic demand and property-sector.

United Kingdom: Real GDP growth was approximately 1.3% in 2025, reflecting subdued consumption and persistent economic uncertainties.

Japan: Real GDP growth was approximately 1.2% in 2025, supported by domestic demand and investment.

Germany: The economy showed signs of gradual recovery in 2025 after a prolonged period of weak industrial activity, supported by increased public investment. (Source: OECD, Trading Economics, IMF data, Investopedia)

Indian Market Overview:

Laminates

The India decorative laminates market was valued at approximately USD 1.98 billion in 2025 and is projected to reach USD 2.97 billion by 2034, registering a CAGR of approximately 4.62% during 2026-2034. Growth is supported by urbanisation, real estate development, modular furniture and increasing demand for modern interior solutions. (Source: IMARC Group) 1.60 billion in 2025 and is projected to reach USD 2.10 billion by 2034, growing at a CAGR of around 3.04% during 2026-2034. Rising demand for premium interiors, natural wood aesthetics and sustainable materials continues to support the segment. (Source: IMARC Group)

Plywood & Doors

The India plywood market was valued at approximately 247.85 billion in 2025 and is projected to reach 391.90 billion by 2034, registering a CAGR of approximately 5.22% during 2026-2034. Demand is being driven by residential and commercial construction, urbanisation, organised retail expansion and increasing preference for branded and quality-certified products. (source: IMARC Group OpenPR)

(source: IMARC Group OpenPR)

Overall, the Indian wood and interior-products industry continues to offer favorable long-term growth prospects, supported by rising disposable incomes, urbanization, housing and infrastructure development, and increasing consumer preference for premium, durable and aesthetically differentiated products.

Demand drivers

The key drivers of the plywood market are:

Construction & Real Estate Growth

Continued urbanization, residential development, infrastructure investment and government housing initiatives are supporting demand for plywood and laminates across residential and commercial applications..

Furniture & Interior Decor Industry

Rising adoption of modular kitchens, wardrobes, office furniture and customised interiors is driving demand for durable, aesthetically appealing and value-added plywood and laminates.

Growing Middle-Class & Lifestyle Changes.

Commercial & Institutional Demand

Expansion in retail, hospitality, healthcare, education and office infrastructure is creating sustained demand for plywood, laminates, doors and other interior solutions.

Shift Towards Organized & Branded Segment

Consumers are increasingly preferring established brands offering quality assurance, durability, termite resistance, fire-retardant properties and warranty-backed products.

Sustainability & Eco-Friendly Demand

Increasing awareness of environmentally responsible products, low-emission materials, sustainable sourcing and innovative manufacturing processes is encouraging the adoption of eco-friendly plywood and laminates.

(Source: Population U, Business Standard, Indian Retailer, Statista, , Business , TechSci Research)

Discussion on performance, Financial Year 2025-26

Balance Sheet

Total assets for FY 2025-26 stood at Rs. 22,840.01 Lakhs compared to Rs. 21,669.95 Lakhs in FY 2024-25.

Net worth stood at Rs. 8,250.51 Lakhs as on 31st March, 2026 compared to Rs. 7,599.20 Lakhs as on 31st March, 2025.

Profit and loss statement

Revenues from operations increased from Rs. 21,076.07 Lakhs in FY 2024-25 to Rs. 24,332.45 Lakhs in FY 2025-26

Profit after tax was witnessed at Rs. 623.00 Lakhs in FY 2025-26 as compared to FY 353.70 Lakhs in FY 2024-25

Depreciation and amortisation stood at Rs. 496.16 Lakhs in FY 2025-26 compared to 458.56 Lakhs in FY 2024-25.

Risks and Concerns

The Company has established a comprehensive Risk Management framework to identify, assess, monitor and mitigate key business risks. Risk management forms an integral part of the Companys strategic planning and day-to-day operations. During FY 2025-26, the Company continued to monitor the evolving business environment and implemented appropriate mitigation measures to manage identified risks.

Human Resources and Industrial Relations

The Company considers its human resources to be an important pillar of its sustained growth and operational excellence. During FY 2025-26, the Company continued to focus on attracting, developing and retaining competent talent through a supportive and performance-oriented work environment. Various training and development initiatives were undertaken to enhance employees functional, technical and behavioural competencies. The Company continues to maintain a healthy, cordial and harmonious relationship with its employees and factory workforce, supported by a balanced mix of experienced professionals and young talent.

Internal control systems and their adequacy

The Company has established adequate internal control systems commensurate with the size, scale and nature of its operations. These controls are designed to safeguard the Companys assets, prevent and detect errors and irregularities, ensure proper authorisation and recording of transactions, and support the reliability of financial and operational information.

The Company maintains appropriate processes and procedures for financial reporting and operational activities, with periodic review and monitoring by the management. The internal control framework is regularly evaluated and strengthened, wherever required, to ensure effective risk management, operational efficiency and compliance with applicable laws, regulations and accounting standards.

Cautionary Statement

The statements contained in the Management Discussion and Analysis describing the Companys objectives, expectations, estimates, projections and business outlook may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions, expectations and anticipated developments and are subject to various risks and uncertainties, including changes in economic conditions, market dynamics, government policies, regulatory requirements and other factors beyond the Companys control.

Actual results and performance may differ materially from those expressed or implied in such forward-looking statements. The Company does not undertake any obligation to publicly update, modify or revise these statements to reflect subsequent developments, information or events, except as may be required under applicable laws and regulations.