Encompass Design India Ltd Management Discussions

For the Financial Year ended 31 March 2026 The following discussion and analysis of our financial condition and results of operations for the Financial Years ended March 31,2026 and March 31,2025 is based on, and should be read in conjunction with, the audited Financial Statements of the Company, including the schedules, notes and significant accounting policies thereto. The Financial Statements have been prepared in accordance with the applicable provisions of the Companies Act, 2013 and the Accounting Standards prescribed under the Companies (Accounting Standards) Rules, 2006, as applicable to the Company.

You should read the following discussion of our financial condition and results of operations together with our financial statements for the Financial Years ended March 31,2026 and March 31,2025, including the notes and significant accounting policies thereto and the reports thereon, which form part of this Annual Report. You should also refer to the sections of this Annual Report discussing various factors and contingencies that could impact our financial condition and results of operations. Our fiscal year ends on March 31 of each year, and accordingly, all references to a particular financial year are to the financial year ended March 31 of that year.

The financial statements of the Company have been prepared in accordance with the applicable provisions of the Companies Act, 2013 and the Accounting Standards applicable to the Company, together with the relevant rules and regulations prescribed thereunder. The financial statements should be read together with the notes forming part thereof and the significant accounting policies followed by the Company.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be Forward Looking statement within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

BUSINESS OVERVIEW

Our Company was originally incorporated as Encompass Design India Private Limited a private limited company under the provisions of the Companies Act, 1956 vide Certificate of Incorporation dated March 09,2010 issued by Registrar of Companies, Mumbai. Further, our Company was converted from a private limited company to public limited company pursuant to special resolution passed in the Extra- Ordinary General Meeting of the company dated March 31,2025 and consequently, the name of our Company was changed from Encompass Design India Private Limited to Encompass Design India Limited and a fresh certificate of incorporation dated May 05,2025 was issued to our Company by the Registrar of Companies, Central Processing Centre.

The Corporate Identification Number of our Company is U74210MH2010PLC200672.

Our Company is based in Mumbai, Maharashtra. The registered office is located at Shop No. A-101, Virwani Industrial Estate, Opposite Western Express Highway, Goregaon (East), Mumbai 400063. The manufacturing unit of the Company is located at Gala No. 7 to 10,1st Floor, Building No. 1-09, ShreeArihant Compound, Bhiwandi, Thane 421302, Maharashtra.

Encompass Design India Limited (EDIL), operating under the brand nameScaleSauce, is engaged in building and scaling consumer brands in India, with a focus on the home & living and food segments tailored to the modern urban Indian consumer. The Company was incorporated in 2011 as a trading enterprise. In response to emerging market opportunities, we subsequently expanded our operations to include e-commerce support services, which we operated alongside our trading activities.

The Companys core business activities include the manufacturing of home and lifestyle products, such as bed sheets, curtains, comforters, table linens, and pillow covers, as well as food products, with a primary focus on sauces, marketed under its own brands. In addition to its manufacturing operations, the Company is also involved in the trading of agro-based products, cotton, and fabrics. It further undertakes the sale of various other goods, primarily through Gated market platforms, enabling access to niche buyers. In addition to our product- based operations, the Company offers a comprehensive range of digital and e-commerce support services designed to enable the growth of consumer brands in the online space. These services provide end-to-end solutions across marketing, technology, and operations, catering to both direct-to-consumer (D2C) businesses and corporate clients. Through these offerings, we assist brands in enhancing visibility, expanding their digital presence, and driving sales growth.

Our company is promoted by Mr. Amit Rajendraprasad Dalmia, Mrs. Susmita Amit Dalmia, Mr. Ruman Kailash Agarwal and Mr. Yogendra Vashishta. In addition to their roles as promoters, they are actively involved in the companys management, providing strategic guidance and contributing significantly to key areas such as marketing, branding, operations, and overall business strategy. For Further details, refer to the section titled.

ECONOMIC TRENDS

The Indian economy continues to demonstrate resilience, supported by domestic consumption, increasing digital adoption, urbanization and continued investment in infrastructure and technology. Rising household incomes, changing consumer preferences and the growing penetration of e-commerce are contributing to the expansion of the consumer goods, home and lifestyle, and food segments.

The continued growth of digital commerce, direct-to-consumer (D2C) platforms and organised retail is creating new opportunities for consumer brands to reach customers across geographies. At the same time, businesses are required to respond to changing consumer preferences, competitive pricing, evolving distribution channels and increasing expectations relating to product quality and customer experience.

Global economic conditions, inflationary pressures, fluctuations in commodity and raw material prices, foreign exchange movements, interest rates and changes in Government policies and regulations may have an impact on consumer demand, input costs and operating margins. The Company continues to monitor these developments and remains focused on maintaining operational efficiency, strengthening its product portfolio and expanding its presence across relevant sales channels.

INDUSTRY DYNAMICS

The Indian home and lifestyle and food industries are undergoing significant transformation, driven by changing consumer lifestyles, increasing disposable incomes, urbanisation and growing awareness of branded and quality products. Consumers are increasingly seeking products that offer a combination of quality, convenience, functionality, design and value for money.

The rapid expansion of e-commerce and D2C channels has further changed the consumer buying environment by providing brands with wider market access and enabling direct engagement with customers. Marketplaces, quick-commerce platforms, modern retail and digital marketing are increasingly becoming important channels for product discovery, customer acquisition and sales.

The home and lifestyle segment continues to benefit from increasing consumer preference for aesthetically appealing and functional products, while the food segment is witnessing growing demand for differentiated, convenient and branded products, including sauces and other value-added food offerings. The agro-based and textile-related trading markets also offer opportunities for structured and quality- driven operations.

The Company continues to evaluate market trends and consumer preferences and intends to strengthen its product portfolio, expand its distribution network and leverage digital and modern retail channels to support sustainable business growth.

1. FINANCIAL PERFORMANCE

The following table presents the financial performance of the Company for FY 2025-26 compared with FY 2024-25. Amounts are in Rs. Lakhs.

PARTICULARS	FY 2025-26	FY 2024-25	INCREASE / (DECREASE)	% CHANGE
Revenue from Operations	6,812.01	5,464.94	1,347.07	24.65%
Other Income	26.03	36.25	-10.22	-28.20%
Total Income	6,838.04	5,501.19	1,336.86	24.30%
Cost of Materials Consumed	824.89	534.16	2,927.78	548.11%
Purchase of Stock in Trade	2,637.08	1,907.85	-1,907.83	-100.00%
Change in Inventories	-277.83	83.19	-361.03	-433.95%
Employee Benefits Expense	499.17	466.83	32.35	6.93%
Finance Costs	180.37	31.63	148.75	470.33%
Depreciation & Amortisation	286.36	227.73	58.63	25.75%
PARTICULARS (CONTD.)	FY 2025-26	FY 2024-25	INCREASE / (DECREASE)	% CHANGE
Other Expenses	1,053.13	786.48	266.65	33.90%
Total Expenses	5,203.17	4,037.86	1,165.30	28.86%
Profit Before Tax (PBT)	1,634.87	1,463.32	171.55	11.72%
Current Tax	354.46	368.65	-14.19	-3.85%
Deferred Tax	-21.50	15.29	-36.78	-240.63%
Profit After Tax (PAT)	1,301.91	1,079.38	222.53	20.62%

2. KEY PROFITABILITY INDICATORS

PARTICULARS	FY 2025-26	FY 2024-25	CHANGE	% CHANGE
EBITDA	1732.02	1,322.90	409.12	23.08%
EBITDA Margin	25.43%	24.21%	1.22 pp	-
PAT Margin	19.11%	19.75%	-0.64 pp	-

3. FINANCIAL POSITION

The following table summarises the major components of the Balance Sheet as at 31 March 2026 compared with 31 March 2025. Amounts are in Rs. Lakhs.

PARTICULARS	31-MAR-2026	31-MAR-2025	INCREASE/(DECREASE)	% CHANGE
Share Capital	1,418.35	38.97	1,379.38	3,539.37%
Reserves & Surplus	6,760.56	3,218.68	3,541.88	110.04%
Long-Term Borrowings	240.17	308.69	-68.52	-22.20%
Deferred Tax Liabilities	82.95	104.45	-21.50	-20.58%
Long-Term Provisions	35.87	21.23	14.64	68.96%
Short-Term Borrowings	1,063.70	1,117.25	-53.55	-4.79%
Trade Payables	66.76	90.74	-23.98	-26.43%
Other Current Liabilities	558.64	439.28	119.35	27.17%
Short-Term Provisions	8.34	5.26	3.07	58.42%
Total Equity & Liabilities	10,235.34	5,344.55	4,890.79	91.51%
Property, Plant & Equipment	2,206.02	152.52	2,053.50	1,346.37%
Intangible Assets	2,305.62	1,700.80	604.82	35.56%
Capital Work-in- Progress	739.20	0.00	739.20	N/A
Other Non-Current Assets	28.87	37.15	-8.28	-22.30%
Inventories	1,628.32	1,086.87	541.45	49.82%
Trade Receivables	1,212.16	894.25	317.91	35.55%
PARTICULARS (CONTD.)	31-MAR-2026	31-MAR-2025	INCREASE/(DECREASE)	% CHANGE
Cash & Cash Equivalents	1,516.35	1,251.07	265.28	21.20%
Short-Term Loans & Advances	169.33	15.78	153.55	973.33%
Other Current Assets	429.47	206.01	223.47	108.47%
Total Assets	10,235.34	5,344.55	4,890.79	91.51%

4. KEY FINANCIAL RATIOS RATIO	FY 2025-26	FY 2024-25	CHANGE	% CHANGE
Current Ratio (times)	2.92	2.09	0.83	39.68%
Debt Equity Ratio (times)	0.16	0.44	-0.28	-63.58%
Debt Service Coverage Ratio (times)	119.65	119.49	0.16	0.13%
ReturnonEquity(%)	22.77	50.26	-27.49	-54.70%
Inventory Turnover Ratio (times)	2.35	3.32	-0.98	-29.44%
Trade Receivables Turnover Ratio (times)	6.47	7.97	-1.50	-18.86%
Trade Payables Turnover Ratio (times)	46.83	26.77	20.05	74.90%
NetCapitaITu move r Rat io (ti mes)	4.18	6.07	-1.89	-31.08%
Net Profit Ratio (%)	19.11	19.75	-0.64	-3.24%
Return on Capital Employed (%)	24.73	40.49	-15.76	-38.92%

5. MANAGEMENT ANALYSIS OF MATERIAL MOVEMENTS

• Revenue from operations increased from Rs.5,464.94 lakhs in FY 2024-25 to Rs.6,812.01 lakhs in FY2025-26, an increase of 24.65%.

• Profit before tax increased from Rs.1,463.32 lakhs to Rs.1,634.87 lakhs, an increase of 11.72%. Profit aftertax increased from Rs.1,079.38 lakhs to Rs.1,301.91

lakhs, an increase of 20.62%.

• Finance costs increased from Rs.31.63 lakhs to Rs.180.37 lakhs, while depreciation and amortisation increased from W227.7Z lakhs to Rs.286.36 lakhs.

• Inventories increased from Rs.1,086.87 lakhs to Rs.1,628.32 lakhs. Trade receivables increased from Rs.894.25 lakhs to Rs.1,212.16 lakhs.

• Share capital increased from Rs.38.97 lakhs to Rs.1,418.35 lakhs, and reserves and surplus increased from Rs.3,218.68 lakhs to Rs.6,760.56 lakhs.

• Long-term borrowings decreased from Rs.308.69 lakhs to 5240.17 lakhs, while short-term borrowings decreased from Rs.1,117.25 lakhs to Rs.1,063.70 lakhs.

6. LIQUIDITY AND CASH FLOW

The financial report shows cash generated from operations of 5609.20 lakhs in FY 2025-26 compared with Rs.89.87 lakhs in FY 2024-25. Cash and cash equivalents at year-end stood at Rs.1,516.35 lakhs compared with Rs.1,251.07 lakhs in the previous year.

7. BUSINESS AND OPERATIONAL OVERVIEW

The Company operates in the home and lifestyle products and food segments, including manufacturing, trading and related consumer-brand activities. The Company also undertakes e-commerce and digital support activities. The operational discussion should be read together with the financial results and schedules contained in the financial statements.

8. RISKS AND CONCERNS

Key risks include changes in market demand, competition, pricing and input costs, working-capital requirements, inventory management, receivable collection, regulatory changes, technology-related developments and other business and economic conditions affecting the Companys operations.

9. INTERNAL CONTROL SYSTEMS

TThe Companys financial statements and supporting schedules are subject to management review and statutory audit. The Company maintains accounting records and financial controls for recording transactions, monitoring liabilities and assets, and preparing periodic financial information.

10. OUTLOOK

Management will continue to focus on revenue growth, operating efficiency, working-capital management, inventory optimisation and strengthening the Companys consumer brands and distribution channels.

11. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing objectives, expectations, estimates or predictions may constitute forward-looking statements. Actual results may differ materially due to economic conditions, market demand, competition, changes in laws and regulations, costs, availability of resources and other risks and uncertainties.