Archidply Decor Ltd Management Discussions

The global economy in 2025 continues to face uncertainty from geopolitical tensions, inflationary pressures, and tightening monetary policies. Despite this, India has emerged as one of the fastest growing major economies, with GDP growth estimated at 8.2% for FY 2024-25 (MoSPI advance estimates). Domestic consumption, infrastructure expansion, and government push for affordable housing and urbanization remain strong drivers.

The wood-based panel industry in India continues to be an integral part of the construction, housing, furniture, and interior design ecosystem.

- Plywood: Demand is driven by real estate, office spaces, and affordable housing. The Indian plywood market is expected to grow at a CAGR of ~7.5% through FY 2028, reaching nearly ?3 lakh crore.

- Veneer: Decorative veneers remain a premium but fast-expanding category, growing at ~8.5% CAGR. Rising disposable incomes, urban lifestyle changes, and demand for luxury aesthetics fuel growth.

- Particle Board & MDF: These engineered panels are increasingly favored for cost efficiency, eco-friendliness, and alignment with modular furniture trends. Market growth is estimated at 10-12% CAGR.

Sustainability, eco-certifications, and digital adoption in supply chains are becoming differentiators for long-term competitiveness.Overall, the Indian wood industry is poised to be a significant player in the global market, leveraging its growth potential, government support, and a strategic focus on sustainability and innovation.

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.

Raw Material Price Volatility: Resin, timber, and veneer log availability remains uncertain, though global supply chains have partially stabilized.

Rising Imports: Cheaper panels from Vietnam, Malaysia, and China remain a competitive threat.

Environmental Compliance: Stringent emission norms and certifications increase compliance costs.

Margin Pressure: Intense competition, rising finance costs, and slower demand recovery in luxury veneer affect profitability.

Despite these challenges, your Companys well-established brand, strong pan-India presence, and network of dedicated channel partners built over four decades serve as robust tools to withstand competition. By maintaining a steadfast commitment to quality, eco-friendly manufacturing practices, and consistent commercial policies, the Company is well-positioned to navigate market challenges and achieve its growth targets. Additionally, the introduction of product variants within the same categories ensures continued relevance and appeal in a competitive market.

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

Salient features relating to the Profit & Loss Account:

(Rs. In Lacs)

During the year the Company has achieved a turnover of Rs.5248.15lakhs and earns profit before Tax [PBT] of Rs.11.93 Lakhs and profit after taxes of Rs.5.65 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.

The Company aims to:

- Enhance capacity utilization across all product lines.

- Strengthen its eco-friendly veneer and plywood portfolio.

- Explore MDF/particle board opportunities.

- Focus on cost optimization, better working capital management, and deeper dealer network engagement..

Key risks include raw material availability, foreign competition, and volatility in interest rates. The Company mitigates these through long-term vendor tie-ups, prudent risk management, and emphasis on value-added categories. The Company has established a comprehensive and integrated risk management framework, incorporating stringent norms, regulations, and a prudent control mechanism.. While the Company faces identifiable risks such as fluctuating interest rates, an unpredictable economy, a volatile business environment, and credit risk, along with uncontrollable external factors, it effectively mitigates these risks through a conservative business policy and diligent business practices

The Company has implemented internal controls across its business processes and departments to ensure operational efficiency, adherence to internal policies, and compliance with applicable laws and regulations.

These internal controls complement external oversight mechanisms, reinforcing the integrity of the Companys operations. To further enhance this system, a full-time in-house internal auditor has been appointed, ensuring the accuracy of accounting and financial transactions and compliance with regulatory requirements.

The internal auditor regularly monitors and evaluates the Companys internal controls, with their findings and observations being reviewed by the Audit Committee.

The Company continues to focus on employee training, safety, and retention. Industrial relations remained cordial during the year..

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.