Duroply Industries Ltd Management Discussions

Annexure - 1

Global economic review

Overview:

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.

The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023). On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty and emerged as the largest singular uncertainty in 2025.

Regional growth (%)	2024	2023
World output	3.2	3.3
Advanced economies	1.7	1.7
Emerging and developing economies	4.2	4.4

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Outlook:

The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7 per cent for 2025 and 2026, factoring the various economic uncertainties. (Source: IMF, United Nations)

Indian economic review

Overview:

The Indian economy grew at 6.5% in FY 24-25, compared to a revised 9.2% in FY 23-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was RS. 330.68 trillion in FY 24-25 (RS. 301.23 trillion in FY 23-24). The nominal GDP per capita increased from RS. 2,15,936 in FY 23-24 to RS. 2,35,108 in FY 24-25, reflecting the impact of an economic expansion. The Indian rupee weakened 2.12% against the US dollar in FY 24-25, closing at RS. 85.47 on the last trading day of FY 24-25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 24-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in FY 24-25, was the lowest since the pandemic, catalysing savings creation. Indias foreign exchange reserves stood at a high of USD676 billion as of April 4, 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%) (Source: MoSPI, Financial Express)	8.7	7.2	9.2	6.5

Growth of the Indian economy quarter by quarter, FY 24-25

	Q1 FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%) (Source: The Hindu, National Statistics Office)	6.5	5.6	6.2	7.4

The banking sector continued its improvement, with gross non-performing assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services reached USD824.9 billion in FY 24-25, up from USD778 billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports grew 6% YoY, reaching USD374.1 billion.

Indias net GST collections increased 8.6%, totalling RS. 19.56 Lakh Crore in FY 24-25. Gross GST collections in FY 24-25 stood at RS. 22.08 Lakh Crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in FY 24-25. The industrial sector grew by 6.5%, supported by growth in construction activities, electricity, gas, water supply and other utility services.

Indias services sector grew at 8.9% in FY 24-25 (9.0% in FY 23-24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in FY 24-25, compared to 8.6% in FY 23-24. Meanwhile, the construction sector expanded at 9.4% in FY 24-25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in FY 24-25, with growth at 4.5%, which was lower than 12.3% in FY 23-24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY 24-25, compared to 8.1% in FY 23-24. From a demand perspective, the private final consumption expenditure (PFCE) exhibited robust growth, achieving 7.2% in FY 24-25, surpassing the previous financial years rate of 5.6%. The Nifty 50 and SENSEX recorded their weakest annual performances in FY 24-25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of USD3,070 per ounce, the highest increase since FY 07-08, indicating global uncertainties.

Outlook:

India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY 25-26.

Tariff-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. (Source: Niti Aayog).

Union Budget FY 24-25: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating RS. 11.21 Lakh Crore for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to RS. 12 Lakh annually will be fully exempt from income tax. Economists estimate that the resulting RS. 1 Lakh Crore in tax savings could boost consumption by RS. 3-3.5 Lakh Crore, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current RS. 200 Lakh Crore.

Free trade agreement: In a post-Balance Sheet development, India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Pay commission impact: The 8th Pay Commissions awards could lead to a significant salary revision for nearly ten million central government employees. Historically, Pay Commissions have granted substantial pay hikes along with generous arrears. For instance, the 7th Pay Commission more than tripled its monthly salaries, raising the range from RS. 7,000 to RS. 90,000 to RS. 18,000 to RS. 12.5 Lakh, triggering a widespread ripple effect.

Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook. Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34 per cent, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India.

Deeper rate cuts: In its February 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 25-26. Besides, Indias CPI inflation is forecasted at 4% for FY 25-26.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Global furniture market overview

The global furniture market has demonstrated growth, with projections indicating continued expansion. From 2023 to 2024, it is set to increase from USD752.22 billion to USD805.54 billion, boasting a compound annual growth rate (CAGR) of 7.1%. Despite short-term setbacks due to the Russia-Ukraine conflict hindering global economic recovery, including economic sanctions, increased commodity prices and supply chain disruptions, the market is resilient.

The furniture market is anticipated to experience robust growth in the coming years, reaching USD1040.36 billion by 2028, with a CAGR of 6.6%. This projected growth is driven by several factors, including the adoption of flexible and multifunctional designs, a focus on sustainability and wellness-oriented furniture, expansion in rental markets and a growing interest in luxury furniture. Emerging trends such as smart furniture, customizable designs, retro styles, biophilic design and space-saving solutions are shaping consumer preferences and driving innovation within the industry.

Among the various market segments, living room furniture stands out as the largest, estimated to enjoy a market volume of USD227.70 billion in 2024. This reflects the enduring significance of living room furnishings in the global furniture landscape. In terms of distribution, offline channels maintain a stronghold, commanding a 73.1% share in bedroom furniture distribution. This preference stems from consumers inclination to physically experience furniture before making purchasing decisions, highlighting the enduring significance of brick-and-mortar retail experiences in the furniture industry.

Regionally, the Asia-Pacific region emerges as the market leader, boasting a commanding 40.1% share. This dominance is fueled by robust manufacturing bases in countries such as China and India.

Furniture manufacturers are adopting augmented reality (AR) technologies to improve sales by allowing sales representatives to showcase products more effectively and assisting customers in making decisions. AR mobile apps let customers place virtual 3D furniture models in their rooms, offering them a comprehensive view and enhancing their shopping experience.

(Source: researchandmarkets.com, grandviewresearch, statista. com, market.us)

Indian furniture industry overview

The Indian furniture market is projected to grow from USD25.75 billion in 2025 to USD37.18 billion by 2030, registering a CAGR of 7.63%. This growth is catalysed by shifting consumer preferences, rapid urbanization, and retail modernization. The market is transitioning from unorganized to organized retail, spurred by policy changes like 51% FDI in multi-brand retail. Urban consumers are increasingly opting for modern, ready-to-assemble furniture, with online average basket sizes ranging from RS. 15,000 to RS. 20,000, reflecting rising trust in digital purchases. Adoption of advanced technologies like the Internet of Things (IoT) by furniture manufacturers enhances competitiveness. IoT services enable capabilities in design management, performance tracking, and maintenance, contributing to overall market development. The highly competitive and fragmented nature of the market sees organized players and multinational companies gradually increasing their market share, alongside the entry of new players due to low entry barriers.

E-commerce has revolutionized furniture shopping, offering convenience and global reach. The surge in online shopping in India is expected to further boost digital furniture sales. Data-driven insights from e-commerce platforms empower retailers to make informed decisions on product assortment, pricing, and marketing strategies.

Indias vibrant furniture market contributes significantly to both local consumption and exports, sustained by a population of 1.4 billion and a growing middle class with increased disposable income. Predicted to become the fifth-largest manufacturer and fourth-largest furniture consumer by 2022. India ranks 16th in global furniture exports, with projections indicating a global industry value of USD872.5 billion by 2030, growing at a 6% CAGR.

(Source: mordorintelligence.com, timesofindia.com, ibef.org)

Global furniture e-commerce industry overview

In 2024, the global furniture e-commerce market was valued at USD242.67 billion, with the United States generating the highest revenue at USD125 billion, followed by China at USD45.1 billion. The market is expected to grow at a robust CAGR of 20.2%, reaching USD1,271.04 billion by 2033.

North America currently leads the market, while the Asia-Pacific region is projected to be the fastest-growing region over the forecast period. Market expansion is being driven by shifting consumer behaviours, the rise of direct-to-consumer (D2C) brands in countries like Germany, Italy, and Spain, and the growing influence of marketplaces in Europe. Amazon and IKEA continue to be dominant global players, with Otto holding a strong position in Germany.

In 2024, the global average order value for online furniture purchases stood at USD422, highlighting strong consumer engagement with the channel.

(Sources: Market.us: Global Furniture E-Commerce Market Analysis, 2024–2033, Statista: Furniture eCommerce – Worldwide, Mordor Intelligence: Furniture Market Reports)

Indian plywood sector overview

The India plywood market was valued at RS. 235.1 billion in FY 24–25 and is projected to grow to RS. 387.9 billion by FY 33–34, registering a CAGR of 5.44% during FY 25–26 to FY 33–34. Growth in the sector is being driven by expanding distribution networks and the proliferation of exclusive outlets by premium furniture brands, enhancing product accessibility nationwide. Rising urbanization and evolving consumer lifestyles are boosting demand for lightweight, ready-to-assemble furniture. Increased government investment in housing schemes and infrastructure projects continues to position plywood as a vital component in both construction and interior applications. (Source: Imarcgroup. com)

Market drivers

Construction industry expansion: Indias construction sector is projected to grow by 11.2%, reaching RS. 25.31 trillion in 2024. This growth, driven by government-led infrastructure development, is significantly boosting plywood demand for building and interior applications.

Furniture market dynamics: Rising disposable incomes are fuelling demand for stylish, modular, and space-saving furniture. This shift towards easy-to-assemble and lightweight designs is further accelerating plywood consumption.

Government initiatives: Programs like the USD1.3 trillion Gati Shakti national master plan are spurring infrastructure reforms, indirectly strengthening the plywood market by increasing construction and housing activity.

Technological advancements and innovation: The industry is adopting advanced manufacturing techniques, such as automated production and precision cutting, to enhance efficiency and quality. Innovations like fire- and water-resistant plywood and sustainable practices are broadening the market and attracting eco-conscious consumers.

Market projections: Indias plywood market reached RS. 235.1 billion in FY 24–25 and is expected to grow at a CAGR of 5.44%, reaching RS. 387.9 billion by FY 33–34.

(Source: IMARC, Press Release Services, GIISearch.com)

Market trends

Surging demand for eco-friendly products: Increasing environmental awareness is driving consumers toward eco-friendly plywood options. In response, manufacturers are adopting sustainable wood sourcing, green manufacturing practices, and certifications. The use of recycled materials and eco-conscious methods enhances industry credibility and market appeal. Digitalization and online sales channels: The Indian plywood sector is rapidly digitizing, with e-commerce platforms becoming key distribution channels. Online availability offers convenience, price comparison, and variety, especially for urban buyers. This shift is encouraging manufacturers to enhance their digital presence and marketing strategies to meet tech-savvy consumer expectations.

(Source: Market research reports, BlueWeave Consulting)

Indian veneer market overview

The Indian veneer market is poised for steady growth, projected to increase from USD1.54 billion in 2024 to USD2.03 billion by 2033, registering a CAGR of 3.17% during 2025–2033. Growth in the hardwood veneer and plywood segments is also anticipated, with a CAGR of 5–7% between 2025 and 2031. This expansion is being driven by rising demand from urban interiors, fueled by rapid urbanization, increasing disposable incomes, and a preference for natural textures in both residential and commercial spaces. Consumers are increasingly choosing veneers over laminates or paints due to their natural aesthetic and premium finish. The surge in demand for engineered wood products, particularly plywood, is further boosting the veneer market. Technological advancements in manufacturing processes are improving efficiency and product quality, while applications across diverse sectors such as hospitality, retail, and automotive are creating new growth opportunities. The expansion of distribution networks and exclusive outlets for premium furniture brands is enhancing accessibility and market penetration. (Sources: Future Market Insights, IMARC Group, Statista)

Indian flush door segment overview

In 2024, the Indian flush door market was valued at USD16.04 billion, accounting for over 45.9% of the total door market. Driven by affordability, durability, and versatility, flush doors remain a preferred choice in residential and commercial construction. The market is projected to grow at a CAGR of 6.2%, reaching USD1,776.9 million by 2032.

Flush doors are commonly made from plywood, MDF, or solid wood, with plywood favoured for strength and MDF for cost-effectiveness. Available in solid core, hollow core, laminated, and veneered variants, they cater to diverse needs. Pricing depends on core material, finish, size, thickness, brand, and customization. Rising construction activity and the demand for low-maintenance, budget-friendly solutions continue to fuel market growth.

(Source: Market research future)

SWOT analysis

Strengths

Established brand presence: Duroply enjoys a strong brand recall and holds a dominant market position, particularly in Northern India, reinforcing customer trust and loyalty.

Extensive distribution network: A well-developed, pan-India distribution network ensures broad market access and product availability across urban and semi-urban centers.

Diverse product portfolio: The company offers a comprehensive range of plywood and wood panel solutions tailored to different customer segments and applications.

Strategically located manufacturing facility: Duroplys manufacturing unit is optimally located to efficiently serve key regional markets and reduce logistical costs.

High entry barriers: Significant capital requirements, branding, and distribution complexities act as deterrents for new entrants, giving Duroply a sustained competitive edge.

Weaknesses

Exposure to raw material volatility: Fluctuating prices and inconsistent availability of timber and other key inputs can impact production costs and margins.

Competition from unorganized sector: Smaller, unorganized players continue to compete on price, affecting volumes and market share in certain price-sensitive regions.

Inventory management risks: Overstocking or misalignment between supply and demand could lead to working capital pressures or revenue shortfalls.

Opportunities

Growth of organized market: Structural reforms like GST and rising consumer preference for branded products are accelerating the shift toward the organized wood panel sector.

Rising disposable incomes: Growth in per capita income is catalysing the demand for quality housing and premium interior products, benefiting organized plywood brands.

Millennial consumer base: A large and design-conscious millennial population is driving demand for contemporary furniture and modular interiors, creating new market opportunities.

Digital and e-commerce channels: Increasing adoption of digital tools, online platforms, and AR/VR solutions in furniture retail can enhance Duroplys reach and customer engagement.

Threats

Price undercutting by unorganized players: Aggressive pricing by regional and unorganized manufacturers may exert downward pressure on pricing and profitability.

Global trade disruptions: Export limitations or import restrictions in timber-exporting nations could strain raw material supplies. Rising input costs: Continued upward trends in timber, adhesives, and transportation costs could challenge cost efficiency and profit margins.

Details of significant changes in the key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios and any changes in Return on Net worth of the Company including explanations thereof are given below:

Regional growth (%)	March 2025	March 2024	% change*
Current ratio	1.37	1.41	-2.42
Debt equity ratio	0.39	0.32	20.24
Debt service coverage ratio	1.81	1.13	60.54
Return on equity	0.06	0.01	537.65
Inventory turnover ratio	3.14	3.47	-9.39
Trade receivables turnover ratio	9.06	10.22	-11.35
Trade payables turnover ratio	3.64	3.75	-2.93
Net capital turnover ratio	8.27	17.37	-52.38
Net profit ratio	0.02	-	569.54
Return on capital employed	0.08	0.05	50.87

*For change of more than 25% refer Balance Sheet Note No 40

Company overview

Duroply Industries Limited (DIL) is a well-established plywood manufacturer in India, operating a state-of-the-art production facility in Rajkot, Gujarat. The companys flagship DURO brand has been steadily gaining traction in the market, driven by its focus on innovative design, superior craftsmanship, and exceptional customer service.

Companys financial performance

During the year under review, the Company generated a revenue of RS. 371.79 Crore compared to RS. 323.42 Crore in the previous year, a growth of 15%. However, the Company earned a net profit of RS. 7.77 Crore, as compared to a net profit of RS. 1.01 Crore in the previous year.

Business risk management

Effective risk management is vital for sustaining business continuity and operational resilience. A robust framework enables organizations to identify, assess, and mitigate potential threats, ensuring minimal disruption to operations. It also supports proactive decision-making, enhances service quality, improves resource planning and utilization, and helps prevent losses and inefficiencies.

Duroply Industries Limited has established a comprehensive risk management framework that is periodically reviewed by the Board of Directors to ensure its effectiveness. This framework systematically evaluates risks across various business functions and implements strategic measures to mitigate their impact, thereby safeguarding the companys long-term stability and performance.

Risks and concerns

Competition risk

Risk: Heightened market competition may result in a decline in the Companys market share.

Response: Duroply leverages a strong pan-India distribution network and an expansive product range that includes plywood, veneers, and doors, enabling deep market reach. Its continued focus on product quality and innovation positions the Company well to maintain growth momentum, even in a competitive environment.

Product relevance risk

Risk: A shift in consumer preferences could render the Companys offerings obsolete, leading to inventory build-up and reduced revenue.

Response: Duroply integrates current and anticipated market trends into its product development process. By prioritizing utility, quality, design aesthetics, and value-based pricing, the Company ensures its offerings remain relevant and desirable.

Financial risk

Risk: Ineffective financial oversight may compromise the Companys long-term viability.

Response: Duroply maintains disciplined financial management through robust systems for receivables and payables. As of 31 March 2025, the Company held cash and liquid investments amounting to RS. 0.08 Crore. A debt service coverage ratio of 1.81 and interest coverage of 2.42 further reflect its sound financial position.

Quality risk

Risk: Sub-standard product quality could harm customer trust, negatively affecting sales and brand reputation.

Response: Duroply operates modern, well-equipped manufacturing units focused on producing premium-quality products while maximizing material efficiency and minimizing waste.

Distribution risk

Risk: An inadequate distribution setup could limit the Companys geographic growth potential.

Response: Duroply has established a wide-reaching distribution ecosystem comprising 8000+ dealers, distributors, and retail partners across the country. This network underpins the Companys ability to respond swiftly to customer demands and support market expansion.

Demand volatility risk

Risk: Forecasted demand for certain products may not materialize as expected.

Response: The Company strategically selects product segments based on emerging and underserved demand trends. This targeted approach has enabled consistent growth, aligning Duroplys offerings with evolving market needs.

Talent risk

Risk: Difficulty in attracting or retaining skilled professionals could hinder operations and innovation.

Response: Recognized as an industry-preferred employer, Duroply enjoys one of the highest retention rates in its sector. The Company fosters a culture of growth, offering ample professional and personal development opportunities that attract top-tier talent.

Innovation risk

Risk: A lack of product innovation may weaken the brands market standing.

Response: Duroplys dedicated R&D team actively develops new offerings, continuously energizing its product portfolio and maintaining customer engagement across distribution and retail channels.

Human resources management

The Company attributes its success to the strength and capability of its workforce. The company remains focused on equipping employees with the necessary skills and knowledge to adapt to rapid technological shifts. During the year, it maintained a constructive and collaborative work environment, placing strong emphasis on training and upskilling initiatives to help employees navigate the changing dynamics of the workplace. As on March 31, 2025, the company had 594 permanent employees.

Cautionary statement

Certain statements in this Management Discussion and Analysis, describing the Companys objectives, outlook and expectations, may constitute "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. Several factors make a significant difference to the Companys operations, including climatic conditions, economic scenario affecting demand and supply, Government regulations, taxation, natural calamity and such other factors over which the Company does not have any direct control.