Durlax Top Surface Ltd Management Discussions

ECONOMIC OVERVIEW

Global Economy

FY25- 26 unfolded amid heightened geopolitical uncertainty, continued conflict in the Middle East, trade fragmentation and volatility in energy and commodity markets. These developments affected supply chains, inflation and financial conditions across economies. The International Monetary Fund projects global growth at 3.0% in 2026, compared with an average of 3.5% during 2024- 25, with a recovery to 3.4% in 2027. Global headline inflation is projected to rise to 4.7% in 2026, reflecting higher energy and food prices. Overall, the global economy remained resilient, although the outlook continued to be exposed to renewed conflict, commodity- price volatility and tighter financial conditions.

Indian Economy

India continued to demonstrate strong economic momentum during FY25- 26. Based on the latest Provisional Estimates released by the Ministry of Statistics and Programme Implementation under the new 2022- 23 base year, real GDP grew by 7.7% compared with 7.1% in FY24- 25. Growth was supported by the secondary sector, comprising manufacturing, utilities and construction, which expanded by 8.8% Gross Fixed Capital Formation, an indicator of investment and asset creation, grew by 8.2% reflecting continued momentum in infrastructure development and productive capacity. These trends provided a favourable operating environment for construction- linked and interior surface- material businesses.

INDUSTRY OVERVIEW

Indias acrylic solid-surface market

Indias acrylic solid- surface market is gaining wider acceptance across kitchens, washrooms, healthcare facilities, hospitality, retail, offices and public infrastructure. Its seamless finish, non- porous composition, ease of maintenance and design flexibility make it suitable for both hygiene- sensitive and premium interior applications. In the latest publicly available DGTR assessment*, indexed domestic demand increased by 64% over FY20, while imports accounted for 94% of Indian demand, highlighting the categorys growth as well as the headroom for domestic manufacturing and import substitution.

Decorative laminates represent a larger and more established surface- material opportunity. The Indian market is estimated at US$1.39 billion in 2026 and is projected to reach US$1.81 billion by 2031, growing at a CAGR of 5.35%. Growth is being supported by residential construction, modular furniture, organised retail and commercial fit- outs. Furniture accounted for nearly 55.8% of the market in 2025, while wall panels are projected to be the fastest- growing application through 2031.

*Based on DGTRs annualised investigation period covering April 2022 to June 2023.

SWOT ANALYSIS

The following SWOT analysis outlines the key industry dynamics shaping the Companys operating environment and its ability to capture emerging opportunities while managing structural and competitive risks.

COMPANY OVERVIEW

Durlax Top Surface Limited is an integrated surfacesolutions company with capabilities across acrylic solid surfaces, decorative laminates and architectural metal surfaces. Built on a market- first approach, the Company established its brands, distribution network and customer understanding before setting up manufacturing at Vapi. Its portfolio includes ASPIRON, LUXOR, HERONITZE and TRUDO.

Guided by a vision of building global leadership through innovation, operational excellence and sustainable practices, Durlax aims to deliver high- performance material solutions that create long- term stakeholder value. As India advances through the Amrit Kaal growth era, rising investment in airports, hospitals, public buildings, housing and urban infrastructure is expanding demand for durable and design- led surfaces, positioning Durlax to participate in the countrys next phase of growth.

OPERATIONAL OVERVIEW

During FY26, Durlax strengthened its operating platform across manufacturing, products, markets and institutional projects. Vapi facility operated at approximately 81% capacity utilisation. Portfolio expanded with TRUDO. LUXOR was installed at Kartavya Bhavan- 3. Pan- India reach continued through distributors, dealers and fabricators. Export presence extended across select international markets. Sales teams were aligned to drive cross- category opportunities.

FINANCIAL OVERVIEW

Durlax delivered a strong financial performance during FY26, supported by higher operating scale, improved product mix and expanding market presence. Revenue from operations increased to 184.6 crore, registering a growth of approximately 50% over the previous year, while Profit After Tax increased to 12.6 crore, reflecting improved operating efficiency and profitability.

The Companys balance sheet strengthened during the year, with the Debt- Equity Ratio improving to 0.35x from 0.79x supported by equity infusion and reduction in debt levels. Liquidity also improved, with the Current Ratio increasing to 2.70x from 1.85x while improved inventory management supported an increase in the Inventory Turnover Ratio to 3.13x from 1.98x.

During the year, the Company successfully completed a Rights Issue of 49.2 crore, with proceeds deployed towards the approved objectives, including working capital and business expansion. The Company also received approval for a Preferential Issue of Fully Convertible Warrants aggregating up to 49.0 crore, further strengthening its long- term growth capital platform.

Key financial indicators reflect a stronger operating foundation:

The Company continues to focus on profitable growth, disciplined capital deployment and strengthening its operating platform to support its next phase of expansion.

INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

The Company has established internal control systems commensurate with the scale and nature of its operations. These systems are designed to safeguard assets, maintain accurate financial records, support regulatory compliance and improve operating efficiency. The controls are periodically reviewed under the oversight of senior management, the Audit Committee and the statutory auditors, with suitable improvements introduced as the business expands.

RISK MANAGEMENT

Durlax regularly evaluates operational, financial and market risks that may influence its performance. The key risks and corresponding mitigation measures are outlined below:

HUMAN RESOURCES

Durlax continued to strengthen its people capabilities across sales, technical and manufacturing functions during FY26. The Company focused on performance- linked incentives, selective hiring, training and retention to build a results- oriented and accountable culture. With the expansion into decorative laminates and architectural surfaces, sales and technical teams were trained to represent the complete product portfolio across a common architect, dealer and project ecosystem.

OUTLOOK

The outlook for Indias surface- materials industry remains positive, supported by continued investment in housing, commercial interiors, airports, hospitals and public infrastructure. Rising adoption of seamless, hygienic and design- led materials is expected to support growth in acrylic solid surfaces, while modular furniture, organised fit- outs and premium interior applications should sustain demand for decorative laminates. High import dependence in acrylic solid surfaces also presents a continuing opportunity for domestic manufacturers, although raw- material volatility, competitive intensity and changes in trade policy will remain key monitorables.

Against this backdrop, Durlax intends to strengthen its core solid- surface business, scale TRUDO ?„? within the decorative- laminates segment and deepen engagement with architects, fabricators, dealers and institutional customers. Growth will be pursued through improved capacity utilisation, wider market reach, product- led cross- selling and disciplined working- capital management.

CAUTIONARY STATEMENT

In this Management Discussion and Analysis, statements describing the Companys objectives, projections, estimates, expectations or predictions may be forward- looking statements, within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.