Autofurnish Ltd Management Discussions

This Management Discussion and Analysis Report ("MDAR") presents the operating and financial review of Autofurnish Limited "the Company" and, where indicated, its wholly owned subsidiary Golden Mace Private Limited (together, "the Group") for the financial year ended 31 March 2026. It should be read with the audited standalone and consolidated financial statements and the notes forming part thereof.

The global economy remained resilient but uneven. The International Monetary Funds July 2026 update projected global growth of 3.0% in 2026 and 3.4% in 2027, while highlighting continued uncertainty from trade-policy shifts, geopolitical tensions and financing conditions. For consumer-facing manufacturers, this environment reinforces the need for disciplined procurement, agile inventory planning and diversified sales channels.

India continued to be one of the faster-growing major economies. The Ministry of Statistics and Programme Implementations provisional estimates place real GDP growth for FY 2025-26 at 7.7%, with nominal GDP growth at 9.1%. Domestic demand, manufacturing activity and services supported the expansion, providing a constructive backdrop for mobility-linked consumption.

Vehicle demand expanded across major categories during FY 2025-26, reflecting sustained consumer demand, replacement purchases, improving mobility requirements and the introduction of new vehicle models across price segments. The Society of Indian Automobile Manufacturers reported passenger-vehicle sales of 46.43 lakh units, commercial-vehicle sales of 10.80 lakh units, three-wheeler sales of 8.36 lakh units and two-wheeler sales of 2.17 crore units. Year-on-year growth in these categories was 7.9%, 12.6%, 12.8% and 10.7%, respectively. The growth across passenger and utility vehicles, commercial mobility and two-wheelers contributed to the continued expansion of Indias overall vehicle parc and, consequently, the potential customer base for automotive accessories and aftermarket products.

The automotive-accessories market continues to benefit from consumers increasing focus on vehicle protection, comfort, convenience, aesthetics and personalisation. Products such as vehicle body covers, foot mats and other utility accessories generally experience demand from both purchasers of new vehicles and owners seeking replacement or upgraded products for existing vehicles. Premiumisation, availability of vehicle-specific products and growing preference for durable and better-designed accessories are also supporting the gradual transition from unorganised offerings to organised and branded products.

In addition, the increasing use of online marketplaces and direct-to-consumer channels has improved product discovery, price comparison and access to a wider range of automotive accessories across locations. These digital channels enable organised participants to reach customers beyond traditional distribution networks and respond more efficiently to evolving consumer preferences. Accordingly, continued growth in vehicle sales, a widening installed vehicle base and increasing acceptance of branded products are expected to support the addressable market for organised automotive-accessory businesses, subject to competitive intensity, fluctuations in input costs and changes in consumer spending.

Autofurnish designs, manufactures, markets and sells automotive accessories, with core offerings including body covers and foot mats for cars and two-wheelers. Products are sold under the Autofurnish and Mototrance brands. The Company primarily serves business-to-business customers, while Golden Mace Private Limited strengthens direct-to-consumer reach through major online marketplaces and the Groups own digital channels.

The integrated model combines product design, sourcing, manufacturing, brand management and distribution. It enables the Group to serve institutional and trade customers while using online channels to widen reach, gather consumer feedback and support product-line extension.

• Product portfolio: vehicle body covers, foot mats and related utility and comfort accessories across car and two-wheeler categories.
• Route to market: a combination of B2B relationships, distributors, online marketplaces and direct digital channels.
• Manufacturing: in-house production capabilities supported by sourced merchandise, allowing the Group to balance control, breadth and speed to market.
• Brand architecture: Autofurnish and Mototrance provide differentiated consumer propositions within the automotive-accessories category.

The Groups key financial results are summarised below:

Revenue from operations increased by 18.0% to ?3,901.20 lakh, reflecting higher scale across the Groups channels. Total income rose 18.7% to ?4,022.48 lakh. Profit before tax increased 7.5% to ?508.69 lakh; however, profit after tax was broadly stable at ?363.33 lakh.

The pace of earnings growth trailed revenue growth. Employee benefit expense rose 24.2%, finance costs increased 123.7% and depreciation and amortisation increased 48.8%. The profit-before-tax margin on revenue from operations moderated to 13.0% from 14.3%, while the profit-after-tax margin moderated to 9.3% from 10.9%. The higher finance-cost burden and working-capital build therefore remain important management priorities.

On a standalone basis, revenue from operations increased 14.2% and profit before tax increased 10.6%. Profit after tax grew 3.4% to ?321.02 lakh. The difference between standalone and consolidated performance reflects the contribution and cost structure of the wholly owned subsidiary.

Consolidated net worth increased 24.7% to ?1,834.36 lakh, supported by retained earnings. Total borrowings rose 140.0% to ?1,279.25 lakh and inventories increased 80.2% to ?1,739.35 lakh, reflecting scale-up and a working-capital build. Managements focus is therefore on demand-led procurement, inventory turns, credit discipline and collections.

Net cash used in operating activities was ?574.15 lakh compared with ?374.59 lakh in FY 2024-25. Investing activities used ?24.65 lakh, while financing activities generated ?609.69 lakh. Cash and cash equivalents closed at ?51.90 lakh, and total borrowings grew faster than operating cash generation, which partly indicates a rising operating cash flow during the year.

Prior-year figures in the FY 2025-26 audited statements have been regrouped or reclassified where necessary. Accordingly, the comparatives used in this MD&A are those reported in the FY 2025-26 audited financial statements and may differ from figures presented in earlier documents.

In accordance with Accounting Standard 17, the Group has identified a single primary business segment, automotive accessories, and no separate geographic segment has been reported in the audited consolidated financial statements. Consequently, no separate segment revenue or profitability is presented in this MD&A.

Operationally, management evaluates the portfolio across manufactured and traded products, customer categories and channels. The B2B platform of the Company and the B2C platform of Golden Mace are complementary routes to market rather than separately reported accounting segments.

a. Vehicle-market expansion: growth in passenger vehicles, two-wheelers and commercial vehicles enlarges the installed base that requires protection, maintenance and comfort accessories.

b. Organised and digital retail: online marketplaces and direct digital channels improve product discoverability and enable wider geographic access without a matching physical-retail footprint.

3. Product premiumisation: consumers increasingly seek fit, finish, design and convenience, creating scope for differentiated products and brand-led pricing.
   d. Portfolio extension: the Group can use existing design, sourcing, manufacturing and distribution capabilities to add adjacent automotive-accessory categories.
   e. Institutional relationships: established B2B capabilities provide a platform for deeper customer engagement, repeat business and broader product placement.

The operating backdrop remains constructive, supported by the growing vehicle parc and increasing adoption of organised and online retail. At the same time, the FY 2025-26 balance sheet and cash-flow profile call for measured expansion. The Group intends to pursue growth with an emphasis on margin quality, working-capital efficiency and return on capital.

a. Deepen distribution in existing markets and selectively expand into underpenetrated domestic and international markets.
b. Introduce adjacent and premium products using customer feedback, design capability and category data.
c. Improve inventory productivity through forecasting, SKU rationalisation and closer linkage between procurement and demand.
d. Strengthen receivables management and cash conversion while aligning debt with the Groups operating cycle.
e. Use the enhanced visibility and capital-market access following listing to support governance, brand building and disciplined growth.

The Company has constituted a Stakeholders Relationship Committee in accordance with the applicable provisions of the Companies Act, 2013 and other applicable regulatory requirements. The Committee oversees matters relating to the interests of security holders, reviews statutory compliances concerning securities and monitors the timely resolution of investor grievances.

During the financial year ended March 31, 2026, no complaints were received from the shareholders of the Company and, accordingly, no investor complaint remained unresolved as at the end of the financial year.

Human resources remain an integral part of the Companys operations and growth strategy. The Company maintained an adequate workforce across its administrative, manufacturing, sales and other operational functions. As at March 31, 2026, the Company had 39 employees on its rolls.

The Company recognises the importance of its human capital and remains committed to providing a supportive, inclusive and performance-oriented work environment. Appropriate financial and non-financial measures are undertaken to encourage, motivate and retain employees, while promoting skill development, accountability and operational efficiency.

The Human Resources function is managed by suitably qualified and experienced personnel and receives continuous attention from the senior management. During the financial year ended March 31, 2026, relations between the management and employees remained cordial, and there were no material adverse developments concerning industrial relations.

The following table sets forth the number of employees engaged across the various departments of the Company as at March 31, 2026:

The following ratios and explanations are reproduced from Note 33 to the audited standalone financial statements. Ratio values are shown as reported; return ratios and the net profit ratio are expressed as decimal equivalents:

• Current ratio = current assets / current liabilities
• Debt-equity ratio = total debt / shareholders equity
• Debt service coverage ratio = earnings available for debt service / debt service
• Return on equity = profit after tax / average shareholders equity
• Inventory turnover = cost of goods sold / average inventory
• Receivables turnover = revenue from operations / average receivables
• Payables turnover = net credit purchases / trade payables
• Net capital turnover = revenue from operations / working capital
• Net profit ratio = profit after tax / revenue from operations
• Return on capital employed = profit before interest and tax / (net worth + total debt + deferred tax liability).

This Management Discussion and Analysis may contain certain forward-looking statements concerning the Companys objectives, expectations, projections, estimates, strategies and future performance. Words such as "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will" and other similar expressions are intended to identify such forward-looking statements. These statements are based on the information available and the assumptions considered reasonable as at the date of this report and are not guarantees of future performance.

Actual results, performance, achievements, risks and opportunities may differ materially from those expressed or implied in the forward-looking statements. Factors that may affect the Companys operations include domestic and global economic conditions, demand and supply conditions, market prices, availability and cost of raw materials, competitive conditions, changes in governmental policies and regulations, labour relations, taxation laws, economic developments in India and other markets in which the Company operates, and other incidental or unforeseen factors.

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on account of subsequent developments, information or events, except as may be required under applicable laws.

This report has been prepared based on information available with the Company and information obtained from publicly available reports, websites, articles and publications of various institutions. The discussion and analysis contained herein should be read in conjunction with the Companys financial statements and the accompanying notes forming part thereof.