Butterfly Gandhimathi Appliances Ltd Management Discussions

Global Economy

The global economy remained broadly stable in

FY 2025 26, but growth was slow due to shifting trade policies, geopolitical tensions and uneven regional performance that disrupted tariffs, supply chains and monetary conditions. Inflation was generally stable with regional variation; advanced economies lagged while many emerging markets adapted better.

Ongoing tensions in Europe and West Asia continued to pressure energy and commodity markets and constrain purchasing power.

Indian Economy & Outlook

While the year began on a subdued note in Q1, Q2 saw an improvement in demand, supported by stronger retail sales, Q3 was aided by the festive season and the implementation of tax reforms; and Q4 remained volatile, reflecting ongoing global turmoil.

The Indian economy sustained momentum in

FY 2025-26, with real GDP growth estimated at 7.4%, supported by healthy agricultural output and low inflation. Private consumption recovered steadily, helped by rising rural demand and a strong services sector.

In September 2025, a GST rationalisation simplified the tax structure and reduced the rate on smaller appliances, such as pressure cookers, from 12% to 5%, improving affordability and supporting demand. However, elevated global commodity prices, a weakening rupee, and geopolitical tensions increased input costs, pressured margins, and led to gradual price increases in Q4.

The governments focus on capital expenditure, the PLI scheme, and the National Manufacturing Mission reinforced the Make in India push. Initiatives like Digital India, Start-up India, and Smart City Mission continue to open new growth avenues, while progress on free trade agreements created new export opportunities. Looking ahead, sustaining growth momentum amid global trade uncertainties and evolving geopolitical dynamics remains a key consideration.

Kitchen Appliances Industry Market Overview

The Indian kitchen appliances market is witnessing steady growth, driven by urbanisation, rising disposable incomes, and a shift towards modern, convenience-oriented cooking solutions. Consumers now prefer premium, energy-efficient, and multifunctional appliances The category is also seeing an influx of new domestic and global brands, intensifying competition while simultaneously validating overall market potential.

As consumers move towards greater convenience in their daily lives, demand for alternate cooking appliances is on the rise, presenting a significant opportunity for established brands to expand.

Key Growth Drivers

• Zillennial psychographics: Moving beyond traditional demographics to target a mindset of self-awareness, where the kitchen is an expression of individuality.

• Energy Efficient Appliances: Energy-efficiency and sustainability priorities are fuelling demand for efficient, environmentally friendly appliances.

• Convenience and premiumisation: Consumers favour feature-rich, design-forward products and are willing to pay a premium.

• Alternate Cooking Appliances: Expansion of alternate cooking appliances creating cross sell and bundling opportunities.

• Urbanisation and changing household dynamics supporting demand for versatile, compact and connected appliances.

Key Sectoral Challenges

• Rising raw material and component costs

(metals, plastics, electronic components) putting pressure on margins.

• Intensifying competition from national and international brands across price points, increasing price and innovation pressure.

• Channel fragmentation and promotional intensity on online marketplaces compressing margins and increasing volatility.

• Regulatory requirements (energy labelling, safety, environmental norms) and supply chain volatility increasing compliance cost and lead times.

Company Overview

Established in 1986, Butterfly Gandhimathi Appliances Limited ("Butterfly") is a leading player in the Indian appliances industry and a well-recognised brand in South India, known for delivering innovative, high-quality, and reliable products. The brand enjoys strong customer acceptance for its distinctive designs and user-friendly features. Butterfly ranks among the top kitchen appliances manufacturers in India, with a diverse product portfolio including LPG stoves, mixer grinders, pressure cookers, tabletop wet grinders, chimneys, air fryers, kettles, sandwich makers, inductions, and flasks.

Brand Identity

During the year, Butterfly unveiled a refreshed brand identity designed to sharpen its consumer relevance and clarify its strategic purpose. At the heart of the refresh is a signature mark fingerprint that merges into the wings of a butterfly symbolising the companys belief that while life changes, individual essence and preferences endure. This identity refresh is intended to strengthen emotional connection with consumers and support long-term brand equity.

Butterflys refreshed positioning, “Celebrating Change”, targets consumers defined by attitude rather than age described by the company as a ‘zillenial mindset. The brand is shifting focus from demographic segments to psychographics: engaging self-aware, change-embracing individuals whose lifestyles are fluid and tech-integrated. This positioning reflects a strategic move to remain relevant in modern Indian homes where roles, routines and technology adoption are evolving.

Consumer Centric Innovation

In response to shifting consumer lifestyles and growing demand for convenience, Butterfly launched the Idea First Series an industry-first, innovation-led portfolio designed around the real needs of Indian homes, where every product carries thoughtful innovations that solve everyday kitchen challenges. Developed after extensive consumer listening and field research, Idea First translates those challenges into usable innovations: mixer grinders with multiple specialised jars, and energy-efficient gas stoves engineered to allow cooking with the kitchen fan on without flame instability. Launched alongside the strategic brand refresh and the positioning “Celebrating Change” to reflect individuality and transformation, the range has received strong acceptance and positive feedback from consumers and retail partners. The product portfolio was further strengthened by the introduction of alternative cooking appliances, such as sandwich makers and electric kettles, to meet rising demand for versatile, multipurpose cooking solutions

Strengthening operations

The company continues to focus on automation and the implementation of new tools and methods to strengthen operations and improve efficiency. During the year, the Company consolidated one manufacturing facility into the main plant, deployed automation lines, strengthened quality systems on the shop floor, and enhanced collaboration with vendors and suppliers.

Human resources

Building on last years digital and engagement work, we focused on clarifying roles, developing key capabilities, and promoting a performance-oriented culture. During organisational integration, we put clearer accountabilities in place, stabilised operations, and aligned individual goals with business priorities. As a result, employee engagement and participation increased, workforce diversity improved, and operations remained steady through peak demand periods.

Business performance

In the fiscal year, the Company reported revenue of RS. 943.2 Crore, up 9.03% year on year from RS. 865 Crore.

The year recorded growth across all quarters pivoting on brand refresh and Idea First series launch supported by 360-degree ATL & digital campaigns, and retail visibility drives resulting in market share growth across core categories. Other key strategic initiatives included launch of Butterfly assist+; a one stop solution to enhance post purchase consumer experience, re-launch of auxiliary categories and consumer focussed promotions. EBIDTA improved significantly to 8.5%, growing by 11.94%, supported by spend optimisation, re-structuring of distributor margin and improvement in product mix, despite higher ad spends than last year.

On the channel front, offline sales grew 4%, driven by double-digit momentum in LFRs. Online also grew in double digits, aided by entry into q-commerce and market-share gains across core categories, while alternate channels continued to deliver robust performance.

All core categories grew by double digit and auxiliary categories saw re-bound with Chimney and Flask launch. ASPs grew across core categories as Idea First series contributed significantly to its retail sales The Companys innovation-driven product launches, emphasis on alternate appliances, targeted consumer outreach and continuous spend optimization position it to sustain growth in both revenue and profitability for the future.

Sustainability

Butterfly is committed to developing high-quality, energy-efficient, and sustainable products. This focus underscores the Companys objective to minimise ecological impact and support a cleaner future. Through innovation-driven product development, Butterfly aims to reduce its environmental footprint. Supporting these initiatives, the Company has shifted to group captive solar power, which has also generated measurable savings on energy costs.

Safety

Butterfly prioritises employee health and safety through a robust safety culture that minimises workplace risks and ensures continuous training. These measures have resulted in fewer safety incidents. The Company has implemented comprehensive safety protocols including Hazard Identification and Risk Assessments (HIRA), engineering controls such as complete perimeter guarding, and regular safety audits. The safety management framework emphasises training and active employee participation in hazard identification. Butterfly is committed to environmental sustainability through eco-friendly packaging and waste reduction initiatives. Safety performance monitoring is extended to supply chain partners. The Company has achieved a reduction in recordable injuries by building a strong safety foundation through ongoing safety culture programs, systematic elimination of Critical to Safety (CTS) machines, and proactive safety engagement activities.

Risk Management

Butterfly has identified potential risks and developed comprehensive mitigation plans through a robust risk management framework. This approach safeguards the Companys interests and ensures long-term sustainability in a competitive environment. Risk management is embedded into decision-making across all organizational levels, utilising both top-down and bottom-up methodologies. The risk management team has assessed significant risks and formulated mitigation strategies, which are reviewed and updated regularly. The risk management committee supervises the frameworks execution, the audit committee oversees financial risks, and the internal audit team validates the effectiveness of risk management processes.

Cautionary Statement

In accordance with applicable laws and regulations, certain statements in this management discussion and analysis relating to the Companys objectives, projections, outlook, expectations, and estimates may constitute forward-looking statements. Actual results may vary from these forecasts, expectations, and other express or implied statements. The Companys operations may be materially influenced by various factors, including environmental conditions, macroeconomic variables affecting demand and supply, government policies and taxation, natural calamities, and other elements beyond the Companys direct control.

Internal Control Systems

Butterfly has implemented comprehensive internal control systems and management processes to safeguard assets and ensure optimal utilisation. An Enterprise Resource Planning (ERP) system provides senior management with data-driven insights enabling real-time monitoring and informed decision-making. Compliance with accounting standards forms the foundation of the Companys financial reporting practices. Butterflys internal controls are designed to ensure operational effectiveness while fulfilling legal and regulatory obligations and enabling reliable financial reporting. Internal auditors perform assessments to verify the adequacy of these controls, ensuring adherence to standards and strengthening governance.