Butterfly Gandhimathi Appliances Ltd Management Discussions

Global Economy

The global economy has shown resilience and expected to grow moderately in the F.Y.2024-25. Several factors have growth including dynamic job markets, consumer spending, global tensions, monetary policies, regulatory changes, and sustainability economies are experiencing a decline in inflation, while emerging markets have shown mixed results, especially countries facing currency declines and supply challenges. Consumer spending has been moderate and focussed more on essentials items. Geopolitical tensions, differing monetary policies, and financial market fluctuations are still risks for global growth, international trade. Sustainability is becoming more important with countries focusing more on green energy and sustainable practices.

Indian Economy

Despite global headwinds, the Indian economy demonstrated steady growth. The countrys real GDP growth is projected at 6.4% driven by growing domestic consumption, reviving rural demand, structural reforms and resilient agricultural output. Additionally, the Reserve Bank of Indias measured approach, including calibrated repo rate cut is anticipated to keep under check. The private consumption was boosted by better job opportunities and increasing incomes levels, while strong agricultural performance helped rural consumption. The services sector remains a key contributor to growth.

The governments major initiatives such as ‘Make in India, ‘Start-up India, ‘Digital India, and ‘the Smart City Mission are creating new opportunities. Focus on tax reforms, increasing spends on infrastructure and urban development is aiding Indias growth trajectory. In recent, there were several announcements encouraging local manufacturing and boosting the consumer durable sector.

Indian Economy Outlook

The Indian economy has shown steady growth over the years, making it one of the fastest-growing economies worldwide. For F.Y. 2025-26, the outlook for the Indian economy remains largely positive, with GDP growth expected to remain between 6.3% and 6.8%. Backed by the Indian governments push for structural reforms and growing consumer confidence, the country is poised to handle global challenges.

Kitchen Appliances Industry MarketOverview

Over the years, the kitchen appliances industry in India has witnessed change in consumer lifestyle with increasing preference for modern kitchens. With more households investing in modern technologies and convenient . Advanced cooking solutions, the demand is projected to rise. Additionally, technological advancements and a growing emphasis on energy-efficient and smart appliances are influencing consumer choices. Governments support for manufacturing is also helping brands to expand their offering and improve product quality, supply chains and

Key Growth Drivers

• Increasing health and wellness awareness is aiding demand for appliances like air fryers, juicers and blenders

• Consumers are showing preference for convenience, good looks, and sustainability with the willingness to pay premium

• Energy-efficient appliances are becoming popular due to rising energy costs and environmental concerns

• Online channel is becoming more crucial for consumers to find and buy products pressures

Key Sectoral Challenges

• The market is highly competitive with several domestic and international brands

• Lower incomes in smaller cities make affordability an important factor for consumers

• Brands need to keep changing to meet new consumer trends

• Keeping up with stricter regulations can slow down how fast products get to market

Kitchen Industry Outlook

The kitchen appliances industry in India is expected to grow significantly in the coming years due to urbanisation, rising disposable incomes, and a shift towards modern cooking practices. Consumers want advanced and energy-efficient appliances, driven by the desire for convenience and enhanced lifestyle. Additionally, the growing trend of online shopping is making it easier for consumers to access a wide range of products. Government initiatives like ‘Make in India are also encouraging domestic manufacturing, which could lead to better quality at competitive pricing. Overall, the segment is expected to grow with evolving technology and consumer preference.

Company Overview

Founded in 1986, Butterfly Gandhimathi Appliances

Limited ("Butterfly") is a leader in the Indian appliances sector and a well-recognised brand in the South Indian market known for its innovative, high-quality and reliable products. The brand has been well-received by customers for its differentiated designs and user-friendly features. Butterfly is one of the leading kitchen appliances manufacturing companies, offering a diverse range of products such as LPG stoves, mixer grinders, pressure cookers, chimney, hobs, air fryers, kettles, water bottles, flasks etc.

Uplifting Brand Identity

The Company is continuously working towards strengthening the brand connection with its consumers. Last year, it focused on advertising and campaigns that really connect with the audience. Festive campaigns, especially for Onam, helped highlight the brands values. The Company is improving its processes to ensure integrated and effective marketing effort and achieve better engagement. Leveraging the brand legacy and consumers trust, the company has now repositioned and rebranded itself to establish a distinctive identity through new tagline ‘Celebrating Change. It reflects the commitment to innovation and responsiveness to evolving consumer needs by offering products that enhance everyday life with ease.

Consumer Centric Innovation

The Company understands the importance of using new technology and features in its products. It has launched a new range called ‘Idea First Series which offers unique propositions that addresses consumer needs. The company is committed to short-term and long-term plans to grow its market position and customer loyalty. The company promotes innovation through teamwork among business and R&D team to better meet customer needs. Leveraging Crompton expertise, it has further strengthened its innovation capabilities.

Strengthening Operations

The company focuses on understanding advanced methodologies and tools that delivers high-quality results. It has implemented several initiatives to optimise its manufacturing process and cost to deliver right product quality. It consolidated the operations of one plant into the main plant, which has helped to improve efficiency and reduce costs. Investments have been made to modernise manufacturing processes, including the establishment of an automated production line for pressure cookers and introduction of a laser-cutting machine for precision fabrication. These upgrades have increased production speed and consistency while minimising material waste.

Human Resources

Over the past year, the company has improved its HR practices to focus on digitalisation, employee engagement, capability building and workplace safety. It has launched SyncUp portal for internal communication and upgraded its payroll systems for improved transparency. Plans are in place to implement SuccessFactors and introduce contractual workforce management system. To promote employee engagement and well-being, it has conducted engagement survey and conducted health check-ups. Workplace safety remains a priority and regular training programmes have been conducted to create a secure working environment. Leadership development efforts are being taken for skill-building through customised training programs. Additionally, the company is focusing on diversity by hiring skilled women and supporting differently abled employees, fostering an inclusive workplace.

Business Performance

In the fiscal year, the company reported a revenue of H 86,450.15 Lakhs compared to H 93,128.25 Lakhs in the previous year. The first half of the last fiscal year experienced business decline as the Company implemented strategic interventions aimed at driving business revival and enhancing profitability. Key initiatives included a revised pricing structure, improved management of trade spends, a shift in marketing strategies, and a focus on enhancing commercial hygiene. These changes paid off, resulting in a 5% revenue growth in the second half of the year and a notable improvement in EBIT.

On the channel front, the retail channel, which accounts for ~60% of the revenue, remained flat.The alternate channel continued to perform robustly. In terms of product categories, we saw strong growth of 12% in key segments during H 2, although auxiliary categories saw big decline in F.Y.2024-25. In mixer grinders category, <600W segment grew strongly in trade channel driven by the price restructuring. Glass top gas stoves saw good traction whereas pressure cookers business was supported by high impact campaigns and channel expansion across

South India.

The combination of improved average selling prices (ASPs), optimised spending, and a favourable product mix has improved our margins and mitigated the increase in commodity costs. Overall, the strategic changes have laid a strong foundation for future growth and profitability.

Financial Performance

(Rs. Lakhs) (except total debt)

* Interest service coverage ratio is calculated on EBITDA

Safety

The Company prioritises the health and safety of its people. It emphasises the importance of a safety culture, minimises workplace risks and helps to provide continuous training to employees. These practices have minimised safety incidents, and the Company aims for zero accidents. Comprehensive safety measures, including Hazard Identification and Risk Assessments (HIRA) and engineering controls like full perimeter guarding, have been implemented. Regular audits help proactively address safety issues. A structured safety management framework emphasises ‘zero injuries, offering training across all levels and involving safety champions to encourage employee participation in hazard identification. The Company is also committed to environmental sustainability by using eco-friendly packaging alternatives and by minimising waste. Safety and environmental expectations are communicated to supply chain partners for consistent performance.

Sustainability

Butterfly strives to create high-quality, energy-efficient and sustainable products. This commitment emphasises its aim to minimise ecological impact and contribute to a cleaner future. By prioritising innovative product development, the Company aims to reduce its environmental footprint.

Risk Management

Butterfly aims to identify, assess, and mitigate potential risks through a robust risk management framework. It enables the Company to protect its interests and ensure long-term viability in a competitive environment. Risk management is integrated into decision-making at all levels, employing top-down and bottom-up approaches. The risk management team identifies significant risks and evaluates mitigation strategies, which are regularly updated. The risk management committee oversees the frameworks implementation, the audit committee monitors financial risks, and the internal audit team ensures the effectiveness of the risk management processes.

Internal Control Systems

Butterfly has established robust internal control frameworks and management processes to protect assets and optimise utilisation. An Enterprise Resource Planning (ERP) system allows senior management to access data-driven insights for real-time monitoring and informed decision-making. Adherence to accounting standards is essential for our financial reporting practices. Butterflys internal controls aim to ensure operational efficiency while meeting legal and regulatory requirements and supporting reliable financial reporting. Internal auditors conduct assessments to evaluate the effectiveness of these controls, ensuring compliance and enhancing governance.

Cautionary Statement

As per the relevant laws and regulations, certain statements in the management discussion and analysis report relating to the Companys goals, forecasts, outlook, expectations and estimates may be considered ‘forward-looking statements. Actual outcomes could differ from these predictions, expectations and other explicit or implicit statements. The operations of the Company could significantly change depending on several variables These include environmental factors, macroeconomic factors that affect supply and demand, governmental policies and taxation, natural disasters, and other factors over which the Company has no direct control.