Gratex Industries Ltd Management Discussions

The Management Discussion and Analysis Report have been included in adherence to the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India (SEBI) and in compliance with the provisions of the Listing Agreement.

1. Industry Overview:

FY 2024–25 was marked by subdued macroeconomic activity, largely due to post-pandemic recovery inertia, inflationary pressures, muted real estate growth, and rising import costs due to currency volatility. While the Covid-19 threat has subsided, consumer sentiment and liquidity remain fragile.

The year, however, served as a strategic pause for the Company to consolidate operations, optimize costs, and gear up for the evolving demand in design-driven wallcoverings. We expect the industry to gradually normalize in FY 2025–26, with stronger traction in digitally printed and curated wallpaper collections.

2. Opportunities and Threats: Opportunities

? Digital printing is gaining ground with steady 3% YoY growth, indicating growing B2B and urban premium demand.

? With the growth and betterment of our digital wallpaper manufacturing infrastructure we are exploring the export market to further our sales.

? Paint still dominates Indian wall finishing due to cost advantages and legacy habits.

? Inflow of cheap Chinese imports continues to erode margins and disrupt quality perception in the market.

? Currency volatility has escalated import costs, requiring proactive procurement and pricing strategies.

3. Risk Management and Compliance:

Gratex Industries Ltd has established a Risk Management Framework under which all the risks covering the entire spectrum of operation are listed and categorized into high, medium and low risks. All the risks are discussed in the Senior Management Committee meetings periodically to ensure that the risk mitigation plans are well thought out and implemented and adverse impact of risks is avoided or kept within manageable proportions.

An internal check process is in place to prevent and limit risk of non-compliance. The Company ensures compliance of all applicable laws including those relating to establishment, Taxation, Export controls, health, safety, Environment and Company laws.

The Company being a small-cap company and the conservative market in which it operates is a cause of concern from the point of view of operating profits to the Company. However, the Company enjoys a niche in the segment in which it operates for providing value added and efficient services to its clients.

4. Outlook:

Despite the reduction in turnover by 6% which was mainly due to the decision of winding down our modular furniture manufacturing segment, we have still been able to remain profitable due to various cost cutting measures across the board as well as having sustainable margins. The furniture segment was wound down to extremely negligible margins as well as the need to concentrate on our core business i.e. manufacturing of wallpapers.

In 2025-26 we see a growth of turnover of 25% and have bettered our infrastructure to cater to the growing demand in that sector. The addition of the new machine with the technology of printing on metallic substrates will not only boost turnover but also increase margins in the coming year.

We continue to remain a near zero debt company which helps us to keep our costs down during this period of consolidation.

The Company remains committed to achieving positive growth in the financial year 2025-26.

5. Internal Control Systems:

Internal Control is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness.

The scope of internal audit is oriented towards mitigating or eliminating risks in business processes. The Audit Committee reviews the internal audit plan, significant audit findings and sustainability of measures for corrective actions. The internal audit plan is also aimed at addressing concerns, if any, of statutory auditors of the Company.

The Companys internal controls are commensurate with its size and the nature of its operations.

6. Corporate Social Responsibility:

Gratex Industries Limited is committed to being a socially responsible corporate citizen.

GILs CSR policy aims to protect and nourish the interest of all its stakeholders and contribute for an equitable and sustainable development. Ethics, Values and Transparency are the factors which lie in all its interaction within the community.

GIL has adopted a clearly defined Occupational Health and Safety Policy.

7. Human Resources Management:

In the dynamic and competitive environment where every company has access to available resources, the Company believes that upgrading and updating the skill levels of employees are highly important for achieving continuous improvement and to stay ahead in the market. As a company it focuses on effective Human Resource Management.

The company continues to maintain cordial and healthy industrial relations and it takes pride in its record of congenial work atmosphere.

8. Disclosure of Accounting Treatment:

The Company follows Accounting Standards as prescribed by the Institute of Chartered Accountants of India (ICAI) for preparation of financial statements; there is no such other treatment for the same.

9 . Performance:

During the Financial year ended on 31^st March, 2025 the Total Revenue of the Company stood at Rs. 3,75,33,820/- as compared to previous financial year ended on 31^st March, 2024 of Rs. 3,99,36,487/-

In the following table, please find brief of Financials of the Company:

The return on Networth of the Company stood at 1.96% for the financial year 2024-25 as compared to 2.68% for the previous financial year 2023-24. The reduction in sales has resulted in decrease of overall profitability thereby the return on net worth has decreased of current financial year.

1. The Sales for the period April to March 2025 is Rs. 3.75 cr as compared to Rs 3.99 cr in 2023-24 i.e. a reduction of 6%.

2. This F.Y. 2024-25 i.e. April to March 2025, we have clocked a Net Profit (NPAT) of Rs. 7.14 Lakhs (Rs. 10.74 Lakhs on NPBT) against a Net profit (NPAT) of Rs. 9.40 Lakhs (Rs. 12.34 Lakhs on NPBT) posted during corresponding period last year.

3. Our Digital Printing Sales for the period April to March 2025 is Rs.158.41 Lakhs as compared to Rs. 153.33 Lakhs in the last corresponding period. An increase of 3 %.

4. Our Catalogue Sales for the period April to March 2025 is Rs. 51.83 Lakhs as compared to Rs. 39.32 Lakhs in the last corresponding period. An increase of 32 %.

5. Our MFP (Modular Furniture & Profile) sales for the period from April to March 2025 is Rs.47.29 Lakhs as compared to Rs. 84.11 Lakhs in the last corresponding period.

6. Our Warehousing Income for the period April to March 2025 is Rs. 66.36 Lakhs as compared to Rs. 73.28 Lakhs in the last corresponding period. Sligt Decrease of 9 %.

7. Our Franchisee Commission Income for the period April to March 2025 is Rs. 25.38 Lakhs as compared to Rs. 18.24 Lakhs in 2023-24.

Certain statements made in the management discussion and analysis report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make a significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities over which the Company does not have any direct control.