Archidply Decor Ltd Management Discussions

1. Industry Structure and Developments

The global economy continued to experience uncertainty during 2025-26 on account of geopolitical developments, inflationary pressures, changing interest rate scenarios and evolving global trade conditions. Against this backdrop, the Indian economy continued to demonstrate resilience, supported by domestic consumption, infrastructure development, urbanisation, housing demand and continued government spending on infrastructure and related sectors.

The wood-based panel industry remains an integral part of the construction, housing, furniture and interior design ecosystem. Demand for wood-based products continues to be influenced by residential construction, real estate development, renovation and refurbishment activities, commercial spaces and the growing preference for organised furniture and interior solutions. The key developments in the industry include:

• Plywood: Demand continues to be supported by residential construction, real estate, renovation activities, office spaces and furniture applications.

• Veneer: Decorative and premium veneer products continue to find applications in furniture and interior projects, supported by increasing consumer preference for aesthetically appealing and value-added products.

• Engineered Wood Products: The increasing adoption of engineered wood products, including MDF and particle board, is being supported by the growth of modular furniture and cost-efficient interior solutions.

• Sustainability: Increasing awareness regarding sustainable sourcing, environmentally responsible manufacturing and low-emission products is influencing customer preferences and industry practices.

• Technology and Supply Chain: Technology adoption, efficient supply- chain management and product innovation continue to be important factors for improving competitiveness and operational efficiency.

Overall, the Indian wood-based products industry continues to offer longterm growth opportunities, although the industry remains competitive and sensitive to raw material prices, demand conditions, imports and overall economic activity.

2. OPPORTUNITIES AND THREATS Opportunities:

• Housing, Infrastructure & Government Schemes: Affordable housing, Smart Cities Mission, and rapid urbanization continue to spur demand.

• Expansion into MDF & Particle Board: Growing acceptance of engineered wood products creates diversification potential.

• Eco-friendly & Sustainable Products: Customers increasingly demand FSC-certified, E0/E1 emission compliant boards, opening opportunities for premium positioning.

Export Potential: With rising global interest in cost-competitive wood products, India can target exports to Middle East and Africa.

Threats:

Raw Material Price Volatility:

Fluctuations in the availability and prices of timber, veneer logs, resin and other raw materials may affect the Companys operating margins.

Competition and Imports:

The Company operates in a competitive market and faces competition from domestic manufacturers as well as imported wood-based products.

Regulatory and Environmental Requirements:

Changes in environmental regulations, emission standards and certification requirements may increase compliance requirements and operating costs.

Demand and Margin Pressure:

Changes in consumer demand, economic conditions, competitive pricing and input costs may put pressure on margins.

Foreign Exchange Exposure:

Changes in foreign exchange rates may impact the cost of imported raw materials and other imported inputs.

Despite these challenges, the Company continues to focus on product quality, customer relationships, efficient operations and prudent business practices. Its established presence and channel relationships provide a foundation for addressing competitive pressures and pursuing sustainable growth.

3. Financial Performance

The following are relevant financial performance details with respect to the operational performance of the Company.

Salient features relating to the Profit & Loss Account:

Particulars	2025-26
Revenue from Operation	4633.23
Other Income	145.50
Total Revenues	4,778.73
Cost of Materials Consumed	1,801.01
Purchases of Stock in Trade	1476.42
Changes in Inventories of Finished Goods, Work-in-progress and Stock-in-trade	(68.05)
Employee benefits expense	558.83
Finance Costs	179.26
Depreciation & Amortization Expenses	151.59
Other Expenses	664.84
Total Expenditure	4763.90
Profit Before Tax	14.82
Exceptional Item ( Impact of Labour Code)	15.97
Tax	(1.35)
Profit after Tax	0.20

During the year the Company has achieved a turnover of Rs.4778.73 lakhs and earns profit before Tax [PBT] of Rs.14.82 Lakhs and profit after taxes of Rs.0.20 lakhs. The Companys business activity fall within a single operating segment, namely Wood based products. Accordingly, the disclosure requirements of Ind AS 108 - Operating Segments are not applicable.

Key Financial Ratios

Particulars	31.03.2026	31.03.2025	Deviation	Explanation
a Debt Service Coverage Ratio	1.85	1.79	3.13%	NA
b Interest service Coverage Ratio	1.09	1.06	2.69%	NA
c Debt Equity Ratio	0.35	0.39	-9.35%	NA
d Current Ratio	0.24	0.25	-4.26%	NA
e Total Debts to Total Assets	11.53	13.05	-11.65%	NA
f Debtors Turnover Ratio	2.63	2.82	-6.57%	NA
g Inventory Turnover Ratio	4.62	5.69	-18.87%	NA
h Operating Margin(%)	0.45%	1.27%	-64.63%	Decrease in sales
i Net Profit Margin(%)	0.00%	0.11%	-96.00%	Decrease in sales
j Return on Equity Ratio	0.000	0.001	-96.47%	Decrease in sales
k Return on Capital Employed	0.03	0.03	-14.84%	NA

4. OUTLOOK

The Company remains focused on strengthening its business operations and improving its financial and operational performance.

The Companys key focus areas include:

• Enhancing capacity utilisation across its product lines;

• Strengthening its plywood and veneer product portfolio;

• Developing and introducing suitable value-added product variants;

• Exploring opportunities in engineered wood products, including MDF and particle board;

• Improving cost efficiency and operational productivity;

• Strengthening working capital management;

• Expanding and deepening relationships with dealers and channel partners; and

• Continuing to focus on product quality, customer service and sustainable business practices.

The Company will continue to evaluate market conditions and emerging opportunities and will take appropriate measures to improve its competitiveness and long-term performance.

5. Risks and Concerns

The Company operates in an environment subject to various business and economic risks, including fluctuations in raw material prices, availability of raw materials, competition from domestic and international players, changes in consumer demand, foreign exchange fluctuations, interest rate movements and changes in regulatory requirements.

The Company seeks to manage these risks through prudent business practices, monitoring of market conditions, appropriate vendor relationships, cost- control measures, working capital management and continuous review of its operating and financial performance.

The Company has established an integrated risk management framework under which key business risks are identified, assessed and monitored. The management periodically reviews such risks and takes appropriate measures to mitigate their potential impact on the Companys operations.

While certain external factors remain beyond the Companys control, the Company continues to adopt a cautious and disciplined approach towards risk management.

6. Internal Control Systems and their adequacy

The Company has established internal control systems across its business processes and functions with a view to ensuring operational efficiency, safeguarding of assets, reliability of financial reporting and compliance with applicable laws, regulations and internal policies.

The internal control framework is supported by appropriate policies, procedures and monitoring mechanisms. The Companys internal controls are periodically reviewed to assess their adequacy and effectiveness.

The Company has an in-house Internal Auditor who reviews the internal control environment, accounting and financial processes and compliance with applicable requirements. The observations and findings of the Internal Auditor are placed before and reviewed by the Audit Committee.

The Board and the Audit Committee periodically review the adequacy and effectiveness of the Companys internal financial controls and recommend appropriate measures wherever considered necessary.

7. HUMAN CAPITAL

The Human resources continue to be an important component of the Companys operations. The Company remains focused on employee development, training, workplace safety, retention and maintaining a productive work environment.

During the year under review, the Company continued its efforts towards strengthening employee capabilities and maintaining cordial industrial relations.

8. CAUTIONARY NOTE

Important factors such as economic developments within the country, demand and supply conditions of the industry, input prices, changes in Government regulations, tax laws and other factors such as litigation and industrial relations, influence the Companys operations. This may lead to the Companys projections and approximate estimates to dispose them as "forward looking statements".

Though, these qualitative aspects are usually set in the framework meaning of applicable securities laws and regulations. The actual results may sometimes materially differ from those expressed or implied.