Gretex Industries Ltd Management Discussions

1. Global Macroeconomic Environment

The financial year 2025 26 unfolded against a complex yet broadly resilient global economic backdrop. After a period of aggressive monetary tightening across major economies, central banks began calibrating policy toward a more accommodative stance as inflationary pressures moderated. The global economy demonstrated greater durability than many had anticipated, supported by the strength of services consumption, ongoing fiscal stimulus in select markets, and a technology investment cycle centred on artificial intelligence. According to the International Monetary Fund, the world economy maintained a real growth rate of approximately 3.2 3.3% in calendar year 2025, broadly consistent with the prior year, affirming a "soft landing" trajectory.

However, the year was far from uniform. Geopolitical tensions, including ongoing conflicts, elevated trade friction between the United

States and China, and evolving tariff frameworks, introduced layers of uncertainty that weighed on global trade volumes and investment sentiment. Commodity prices, particularly in energy and industrial metals, exhibited heightened volatility, affecting supply chain economics across manufacturing-dependent industries. These headwinds were most acutely felt by export-led economies and sectors with deep global supply chain integration.

A defining feature of the global consumption landscape in FY2026 was the continued divergence between East and West. In Western markets, principally North America and Europe, consumer spending held up well, underpinned by robust labour markets, accumulated household savings, and moderating inflation. In contrast, China, the worlds second-largest economy and historically a key driver of global consumer demand, grappled with structural headwinds including a protracted property sector ial support contraction, subdued domestic consumption, and the lagged impact of regulatory interventions across several industries. Emerging economies in South and Southeast Asia, particularly India, Vietnam, and Indonesia, emerged as the bright spots of global growth, demonstrating that the centre of gravity for global consumption is unmistakably shifting eastward.

1.1 The Global Musical Instruments Industry

Against this macroeconomic backdrop, the global musical instruments industry entered a phase of recalibration. The extraordinary demand surge experienced during the COVID-19 pandemic, when home-bound consumers worldwide invested in instruments as a creative and therapeutic outlet, had, by FY2026, largely normalised. The global market, estimated at approximately USD 20.94 billion in 2025, is projected to grow to USD 36.76 billion by 2034, implying a compound annual growth rate of approximately 6.5%. Asia Pacific led regional performance, accounting for approximately 40% of the global market, with the fastest growth trajectory at a CAGR of 8.1%.

Yamaha Corporation, the worlds largest musical instruments manufacturer with a 26% global market share, offers perhaps the most authoritative lens through which to assess the industrys current state. In its fiscal year ended March 2025, Yamahas Musical Instruments Business generated revenue of \296.1 billion, accounting for approximately 64% of Group revenue. Yamahas own assessment of the period was candid: the post-COVID demand normalisation, combined with a severe contraction in the Chinese market, created conditions that tested the entire industry.

Key industry dynamics observed through Yamahas

FY2025 performance:

Post-COVID inventory overhang at global retailers gradually resolved through FY2025, with underlying demand stabilising in North America and Europe.

China suffered a structural shock: government restrictions on childrens extracurricular activities and the removal of academic bonus points for artistic skills dismantled the education-driven acoustic piano market, which had been the engine of Chinese instrument demand for over a decade. Yamaha acknowledged that recovery in introductory-level demand in China is unlikely.

North Americas wind, string and percussion segment normalised after the U.S. government programmes ended, but underlying consumer demand remained above pre-pandemic levels.

Digital instruments proved resilient: Yamaha holds 48% global share in digital pianos and portable keyboards, driven by their accessibility, lower price points and suitability for home studios.

Electric guitars delivered consistent performance in China and broader Asia, even as acoustic piano demand contracted sharply.

The strategic message from the worlds largest player is instructive: the industry is not in structural decline, but it is maturing in some geographies while accelerating in others. Yamahas President explicitly acknowledged that the musical instruments business "could be considered a mature business if we look only at hardware sales", and accordingly set forth a medium-term plan to evolve toward music education ecosystems, digital platforms, and recurring services. Its new "Rebuild & Evolve" plan (FY2026 2028) targets a 5% revenue CAGR, with the explicit identification of India, ASEAN and Latin America as the primary growth theatres. Yamahas commitment to accelerating growth in India, evidenced by its school music education programme expansion and production investment, is a powerful external validation of the markets long-term opportunity.

2. Indias Macroeconomic Momentum

India stands apart in the global growth narrative. In FY2026, the Indian economy demonstrated exceptional resilience and dynamism, consolidating its position as the worlds fastest-growing major economy. According to the First Advance Estimate released by the Ministry of Statistics and Programme Implementation, real GDP is estimated to have grown at approximately 7.4% in FY2026, following growth of 6.4% in FY2025. Real GDP in absolute terms is estimated at approximately 201.9 lakh crore, a significant milestone in Indias economic ascent. On a quarterly basis, Q1 FY2026 recorded growth of 7.8% and Q2 expanded at 8.2%, before moderating somewhat in the second half of the year, resulting in a full-year outcome that meaningfully exceeded consensus expectations at the start of the fiscal year.

This growth was broad-based. The manufacturing sector recovered ground lost in the prior year, services continued their structural expansion, and agricultural output benefited from a favourable monsoon. Infrastructure investment, both public (driven by the central governments record capital expenditure allocation) and private, sustained its momentum, creating jobs and income across a wide geography. The Reserve Bank of India revised its FY2026 GDP growth estimate to 7.3% during the year, reflecting the sustained strength of domestic demand indicators.

Critically for consumer-facing businesses, private consumption remained the dominant pillar of growth. Private Final Consumption Expenditure (PFCE) grew approximately 7.0% in FY2026 and, as a proportion of GDP, reached 61.5%, the highest share since FY2011-12, reflecting the deepening of Indias consumption economy. Household disposable income per capita is estimated at approximately USD 3,200 in 2026, and while still modest in absolute terms, the direction and pace of improvement are structurally significant. Real income growth, supported by moderating food inflation, stable employment, and increasing formalisation of the workforce, is translating into discernible upgrades in spending patterns across both urban and semi-urban households.

2.1 The Rise of the Indian Consumer

Indias consumption story is being written by a demographic cohort that is unlike any prior generation of Indian consumers. The aspirational middle class, conservatively estimated at 300-400 million people, is younger, more digitally connected, more globally informed, and considerably more willing to spend on experience, self-expression and lifestyle than its predecessors. Small nuclear households now constitute approximately 50% of Indias household base (up from 37% in 2008), and their per-capita spending is estimated to be approximately two times that of larger family units, a structural driver of premiumisation and category expansion across consumer sectors. The GenZ and millennial consumer cohorts, in particular, are reshaping discretionary spending. Exposed through social media and streaming platforms to global music, culture and creative expression, they are increasingly investing in personal skill development, of which music occupies a prominent place. The narrative of music as a "lifetime skill" rather than a childhood extracurricular is gaining traction, and this is manifest in demand patterns: purchases of musical instruments are no longer confined to a narrow window of a childs early education; they are being made by adults, by hobbyists and by aspiring content creators in increasing numbers. Indias digital infrastructure has been transformational in enabling this shift. UPI processed approximately 24,162 crore transactions in FY2026, with digital payments accounting for an estimated 93% of payment value, making India one of the most digitally enabled consumption economies in the world. This infrastructure has enabled small-ticket aspirational purchases of instruments and accessories across tier-2 and tier-3 cities in ways that were structurally impossible a decade ago. E-commerce penetration into hobby and musical categories is growing rapidly, and the democratisation of access, both to products and to learning, is expanding the addressable market in a manner that bricks-and-mortar distribution alone could never have achieved.

2.2 Music Education & Cultural Tailwinds

Music education in India is at an inflection point.

The convergence of digital learning platforms, increased parental investment in childrens arts education, and a culturally reinforced appreciation for music as a life skill is driving a sustained expansion in instrument purchases at the entry and mid-level price points. Online music education platforms have proliferated across the country, with AI-powered feedback tools, virtual tutorials and community-based learning models broadening access beyond the metros. By 2026, online music learning in India is characterised by personalisation, technology integration and geographic reach that would have seemed aspirational even five years ago.

The government, too, has demonstrated awareness of this opportunity. The Kala Sanskriti Vikas Yojana and broader arts promotion initiatives signal an institutional recognition that cultural and creative industries merit policy support. Yamaha itself has expanded its School Project, a global initiative for promoting musical culture through school partnerships, to include India among its target countries, with aggregate participation in the programme approaching 4.25 million children globally as of March 2025, targeting 7 million by 2028. This direct, strategic bet on India by the worlds largest instrument manufacturer serves as an independent barometer of the markets structural promise.

2.3 Indias Musical Instruments Market

Indias musical instruments market is one of the most attractive growth opportunities in the global industry. Estimates from leading research firms value the Indian market at USD 224 256 million in 2025 26, with a projected CAGR of approximately 10% over the succeeding five years, well above the global industry average of

6.5%. The growth is multi-dimensional: rising disposable incomes, expanding music education at school and college levels, a growing hobbyist and amateur musician population, increased online purchase accessibility, and the deepening penetration of branded instruments into tier-

2 and tier-3 cities, which have historically been underserved by organised distributors.

The market skews toward affordably-priced beginner and intermediate instruments, particularly portable keyboards, acoustic and electric guitars, and entry-level percussion, consistent with a market in the early-to-mid stages of development. Branded instruments, particularly those from Yamaha, DAddario and other globally recognised names, command significant preference premiums as income levels rise and consumers increasingly associate the quality of their instrument with the quality of their musical experience. This brand sensitivity creates a durable competitive moat for authorised distributors with established principal relationships.

India Musical Instruments Market: At a Glance

Estimated market size: USD 224 256 million

(2025 26)

Projected CAGR: 10.0% (2026 2031)

Asia Pacific share: 40% of global market, fastest growing region at 8.1% CAGR

Key growth drivers: rising incomes, online music education, tier-2/3 city penetration, GenZ aspirational spending

Yamaha India: expanding production and music school footprint; India named a strategic growth priority in FY2026 2028 plan

3. Company Overview

Gretex Industries Limited ("the Company" or "GIL") is a listed company incorporated in Kolkata, engaged in the wholesale and retail trading of musical instruments. The Company is amongst Indias largest distributors of branded musical instruments, representing globally renowned principals including Yamaha, DAddario and associated brands. GILs business model is built on three enduring competitive advantages: deep, long-standing relationships with global instrument principals; a wide and growing pan-

India distribution network; and a professional sales and after-service capability that supports customers from first purchase through ongoing engagement. The Company is listed on Indian stock exchanges and is headquartered in Kolkata, West Bengal.

FY2026 was a year of exceptional commercial momentum for GIL. The Company delivered its highest-ever revenue from operations, expanded its operational infrastructure, meaningfully strengthened its balance sheet through a strategically executed capital raise, and established the organisational foundations for the next phase of growth. The year demonstrated that GIL is well-positioned to capture a disproportionate share of Indias expanding musical instruments market, by virtue of its principal relationships, distribution reach, and the structural tailwinds now decisively in its favour.

4. Strategic Initiatives

FY2026 was not only a year of commercial scale-up but also one of deliberate business model innovation. The Company launched distinct initiatives during the year aimed at diversifying its revenue streams, deepening customer engagement, and maximising the productivity of its existing physical and brand infrastructure.

4.1 Surveda: Hyper-Local Music Studios and Academies

Surveda is GILs proprietary concept for creating a network of community-embedded music studios and academies, designed to serve simultaneously as professional practice spaces and music learning centres. The model is built around partnerships with residential societies, within which GIL identifies, acquires and converts a dedicated space into a fully equipped music studio. Each Surveda studio serves a dual purpose: as a shared facility for artists and community members for practice and jamming sessions, and as a hyper-local music academy offering training to children, young adults and aspiring musicians of all backgrounds.

The strategic rationale is compelling on two fronts. First, Surveda creates a recurring, subscription-driven revenue channel that is largely independent of the episodic nature of instrument hardware sales. Second, and equally important from a business development perspective, each studio functions as a curated sales funnel for GILs instrument portfolio placing the Companys brands directly in front of an actively engaged, musically invested audience at the precise moment they are considering purchase decisions.

During FY2026, two Surveda studios were successfully operationalised one within the Yamaha Music Square premises in Goregaon, Mumbai, and a standalone studio in Dombivli. Additional studios are in active preparation at the Companys existing locations in Pune and Kolkata, enabling GIL to leverage owned infrastructure at minimal incremental cost. Looking ahead, the

Company has set an ambitious target of operating

27 Surveda studios across Maharashtra, West Bengal and North-East India by the end of FY2027 a geographic footprint that aligns with the Companys existing distribution and brand presence in these regions.

To support the Surveda ecosystem digitally, GIL has launched a dedicated mobile application, now available on both the Google Play Store and Apple App Store, enabling users to discover nearby studios, book practice slots and track their musical progress. The application represents an important step toward building a recurring digital touchpoint with GILs end-consumer base.

4.2 Interiors and More: Franchise Diversification at Existing Touchpoints

GILs second strategic initiative during FY2026 was the acquisition of a franchise license from Interiors and More, Indias largest manufacturer of artificial flowers and decorative plants. Interiors and More is a publicly listed company on

NSEs SME Emerge platform; the Gretex Group, through Gretex Corporate Services Limited, had served as Book Running Lead Manager to the companys IPO a relationship that facilitated this commercial partnership.

Under the franchise arrangement, GIL introduced an Interiors and More product range within its Yamaha Music Square premises in Goregaon. The strategic logic is rooted in retail economics: musical instruments are an inherently high-value, low-SKU product category, characterised by considered purchase behaviour and relatively low walk-in traffic. Artificial decorative by contrast, is a low-value, high-SKU category that drives higher footfall frequency, impulse purchases and repeat visits. By co-locating both propositions within the same physical space, GIL meaningfully expands the addressable customer base of its retail touchpoint and creates structured cross-selling opportunities between categories attracting a new demographic of customers who may not have otherwise engaged with GILs core instrument offering.

This initiative reflects a broader philosophy of sweating existing assets a philosophy that informs both Surveda and the Interiors and More franchise: using GILs physical infrastructure, brand relationships and operational capability as a platform across which multiple, complementary revenue streams can be layered with limited incremental investment.

4.3 Professional Audio and Audio Visual

The PA and AV vertical is a more established dimension of GILs diversification, contributing meaningfully to both revenue and brand breadth. The Professional Audio business operates through the Companys distribution network across Eastern and North-Eastern India, serving educational institutions, houses of worship, auditoriums, hospitality establishments, government organisations and system integrators. The portfolio spans Yamaha Professional Audio, Beta3, Peavey and GILs own Gretex PA brand.

The Audio Visual business is anchored at the Yamaha Music Square showroom in Kolkata, which operates as a dedicated experience centre for premium home audio and home theatre solutions. The portfolio includes Denon, BenQ, Polk Audio, Bosch, Bowers & Wilkins, ELAC, HEF and TAGA, catering to premium residential customers, home theatre enthusiasts, architects, interior designers and luxury developers. The experience-centre model is well-suited to this category: high-involvement purchases of this nature are materially influenced by in-person demonstration.

Across both sub-verticals, GIL is deliberately transitioning from product distribution toward end-to-end solution delivery, covering design, supply, installation and commissioning. This consultative positioning enables participation in higher-value engagements and builds deeper, recurring customer relationships. Rising disposable incomes and growing consumer appetite for premium lifestyle experiences provide a structural tailwind for both businesses over the medium term.

5. Financial Overview: FY2026

The financial year 2025 26 marks a watershed in Gretex Industries commercial journey. The Company recorded its highest-ever revenue from operations, accelerated its physical expansion, and fundamentally transformed its balance sheet from a leveraged structure into a well-capitalised, virtually debt-free platform for growth. The results, viewed in their proper context, speak to the strength of the underlying business and the quality of managements strategic execution.

Revenue from Operations	Gross Profit
5,130 Lakhs	498 Lakhs
+55.8% YoY	+28.5% YoY
EBITDA	PAT
164 Lakhs	151 Lakhs
Operating leverage	Positive & growing
building
Total Equity	Operating Cash Flow
5,263 Lakhs	296 Lakhs
+96% YoY	Turnaround from - 683
	Lakhs
Net Debt	Basic EPS
Nil	0.98
Debt-free (vs 974 Lakhs in FY25)	On expanded share base

5.1 Revenue: A Landmark Year

Gretex Industries recorded Revenue from Operations of 5,129.94 Lakhs in FY2026, a robust growth of 55.8% over 3,292.27 Lakhs in FY2025. This growth is all the more significant when viewed in the context of the broader industry: as discussed above, the global musical instruments market was navigating a normalisation phase in FY2026, and the worlds largest player, Yamaha, reported broadly flat-to-declining instrument revenues across several categories. In this environment, GILs near-56% topline expansion reflects a decisive gain in market share, meaningful deepening of distribution reach, and the Companys strengthening position as a preferred distribution partner for global instrument brands in India.

Revenues are derived substantially from the domestic Indian market (India revenues: 5,111.74 Lakhs; Export revenues: 18.20 Lakhs), affirming that the Companys growth is anchored in the structural expansion of Indias own musical instruments market, a market in which GIL holds an advantaged position. The two-year revenue trajectory of 3,112.64 Lakhs in FY2024, 3,292.27 Lakhs in FY2025, and 5,129.94 Lakhs in FY2026, illustrates an acceleration that is consistent with the Company entering a higher-velocity phase of commercial activity.

5.2 Gross Profitability: Volume-Led Growth With Resilient Margins

The gross profit for FY2026 was 497.97 Lakhs, a growth of 28.5% over the prior years 387.44 Lakhs. Gross margins of 9.7% reflect a modest compression from the FY2025 level of 11.8%, which is characteristic of a period in which the Company scaled volumes aggressively, often requiring competitive pricing to grow market presence and expand channel partnerships. For a distributor operating in the branded musical instruments space, gross margins in the 9 12% range are consistent with industry benchmarks and are expected to expand as the business scales and the mix shifts toward higher-value product categories.

The absolute gross profit grew by 110.53 Lakhs YoY, providing the operating leverage base upon which the Company continues to invest in its team, infrastructure and customer relationships.

Management views this phase of volume-led growth as a necessary and deliberate investment in establishing GIL as a dominant, trusted distribution platform, one that will yield improving margin profiles as operational efficiencies mature and principal incentive structures are enhanced.

5.3 Operating Costs: Disciplined Investment in Capacity

Total employee benefit expenses were 251.08 Lakhs in FY2026 (FY2025: 180.92 Lakhs), an increase of 38.8%. This growth reflects the deliberate expansion of the Companys commercial and operational workforce in line with the significantly higher business volumes and the establishment of enhanced customer support capabilities. On a per-rupee-of-revenue basis, employee costs as a proportion of revenue improved marginally from 5.5% in FY2025 to 4.9% in FY2026, indicating early-stage operating leverage.

Other expenses of 181.73 Lakhs (FY2025: 137.75 Lakhs, +31.9%) reflect increased expenditure across areas directly linked to business activity growth, including travel and business development ( 32.46 Lakhs), professional and consultancy fees ( 14.70 Lakhs), commissions ( 11.04 Lakhs) and event expenses ( 7.62 Lakhs). The growth in other expenses at 31.9%, materially below the revenue growth rate of 55.8%, demonstrates that cost scaling is being managed with discipline relative to the topline opportunity being pursued.

Finance costs declined sharply to 28.37 Lakhs (FY2025: 56.64 Lakhs), a reduction of approximately 50%, reflecting the full repayment of the Companys short-term borrowings

( 973.75 Lakhs) during the year. This is a structural improvement: GIL is now effectively free of interest-bearing debt, and the finance cost burden going forward will be limited to lease liability unwinding and any episodic working capital facilities.

Depreciation and amortisation increased to 48.89 Lakhs (FY2025: 25.12 Lakhs), reflecting the expansion of the Companys leased infrastructure (Right-of-Use assets: 35.31 Lakhs) alongside additions to fixed assets ( 13.58 Lakhs). These increases are consistent with a business investing deliberately in its physical presence to support higher volumes.

5.4 Profitability: Reading the Numbers With Context

Reported Profit 87.18 Lakhs, compared to 299.58 Lakhs in FY2025. A headline reading of this comparison risks significantly misrepresenting the quality of underlying business performance, and the Board wishes to provide shareholders with a fuller picture.

The FY2025 PBT of 299.57 Lakhs included 214.65 Lakhs of fair value gains on mutual fund and equity investments, a non-cash, non-recurring item with no connection to the Companys trading operations. Adjusting for this, the normalised FY2025 PBT attributable to operating activities was approximately 85 Lakhs. Conversely, the FY2026 PBT of 87.18 Lakhs includes a fair value loss of 91.14 Lakhs on listed equity holdings, which depressed reported earnings. Adjusting for this fair value swing, the normalised FY2026 PBT would approximate 178 Lakhs, an improvement of approximately 110% over the comparable FY2025 normalised figure. This improvement is the truest measure of how the business performed in FY2026.

Normalised Profitability (adjusting for non-cash FV swings):

FY2025 Reported PBT: 299.57 Lakhs Less: FV gains on investments: 214.65 Lakhs Normalised PBT: 85 Lakhs

FY2026 Reported PBT: 87.18 Lakhs Add back: FV loss on investments: 91.14 Lakhs Normalised PBT: 178 Lakhs

Normalised PBT growth: 110% YoY, reflecting the true operational improvement in FY2026

Profit After Tax for FY2026 was 150.67 Lakhs. The total tax expense for the year was a net credit of 63.49 Lakhs, arising from the recognition of a Deferred Tax Asset on the fair value losses recorded on equity investments (consistent with applicable Ind AS requirements), as well as the reversal of prior year tax provisions. The PAT figure thus reflects both the operational earnings of the business and the accounting mechanics of the investment portfolio, and should be read alongside the normalised PBT figure above.

5.5 Balance Sheet: A Fundamental Transformation

Perhaps the most consequential development of FY2026 was the transformation of GILs balance sheet from a modestly-leveraged, working-capital-intensive structure into a well-capitalised, debt-free platform with significant financial headroom for the next phase of growth. Total equity expanded to 5,263.09 Lakhs as at 31st March 2026 (FY2025: 2,675.07 Lakhs), an increase of approximately 97%. This expansion was funded through a successfully executed preferential allotment of equity shares at 236 per share, a premium that reflects investor confidence in GILs business prospects. The allotment raised 1,631.94 Lakhs in equity capital and 805 Lakhs in the form of share warrant subscriptions (25% upfront, with the balance 2,415 Lakhs exercisable within 18 months), collectively demonstrating strong capital market endorsement of the Companys growth strategy. Proceeds from the capital raise were deployed towardtherepaymentofallshort-termborrowings

( 973.75 Lakhs), leaving GIL effectively debt-free. The debt-equity ratio declined from 0.383x in FY2025 to 0.013x in FY2026, a near-complete elimination of financial leverage. This significantly reduces the Companys vulnerability to interest rate movements, removes working capital pressure, and frees management bandwidth from financial risk management toward business development.

Particulars	FY2026 ( Lakhs)	FY2025 ( Lakhs)	Change
Total Equity	5,263.09	2,675.07	+96.7%
Short-term Borrowings	Nil	973.75	-100%
Total Assets	6,097.38	4,207.46	+44.9%
Inventories	1,203.33	1,100.63	+9.3%
Trade Receivables	461.31	441.29	+4.5%
Trade Payables	699.95	404.06	+73.2%
Cash & Cash Equivalents	171.52	34.89	+391%
Current Ratio	3.36x	1.57x	+114%
Debt-Equity Ratio	0.013x	0.383x	-96.5%

5.6 Working Capital: Improving Efficiency on Higher Volumes

A hallmark of GILs FY2026 performance is the improvement in working capital efficiency even as business volumes grew significantly. Debtor days reduced to approximately 41 days (FY2025: approximately 47 days), reflecting stronger collections discipline and healthier channel partner relationships. Inventory days, calculated on cost of goods sold, reduced to approximately 95 days from approximately 138 days in FY2025, indicating better inventory planning and faster stock turn on a larger revenue base.

Trade receivables of 461.31 Lakhs are of high quality: approximately 93% ( 429.28 Lakhs) are within 6 months of the invoice date, with minimal long-overdue balances. The Expected Credit Loss provision of 2.25 Lakhs is commensurately modest. Trade payables of 699.95 Lakhs reflect the Companys enhanced ability to negotiate extended credit terms from principals and suppliers, a natural consequence of higher purchase volumes, and should be understood as a positive working capital development rather than a distress signal.

5.7 Cash Flow: The Business Earns Its Own Growth

Operating cash flow turned robustly positive at 296.34 Lakhs in FY2026, compared to a deeply negative (682.55) Lakhs in FY2025. This reversal is among the most compelling indicators of improved business quality in FY2026. The FY2025 negative operating cash flow was driven by a large inventory build ( 641 Lakhs) as the Company stocked aggressively to support growth; FY2026 saw the business generate cash from its trading operations even while continuing to grow. Free Cash Flow (Operating Cash Flow less capital expenditure) was a positive 227.74 Lakhs, compared to a deeply negative position in FY2025. The business is now self-funding its working capital, a significant and qualitatively important inflection point. Capital expenditure of 68.60 Lakhs in FY2026 (FY2025: 21.64 Lakhs) primarily comprises investments in furniture, fixtures and office equipment to support the expanded physical footprint of the business. The asset-light nature of GILs distribution model is reflected in the modest capex intensity relative to revenue.

5.8 Key Financial Ratios

Section A: SEBI LODR Schedule V Mandated Ratios

Ratio	FY2026	FY2025	% Change	Reasons for Significant Deviation
Debtors Turnover?	8.9x	7.8x	+14.1%
Inventory Turnover	3.84x	2.64x	+45.5%	Significantly higher revenue base accelerated stock rotation; improved procurement planning reduced average holding period from 138 days to 95 days
Interest Coverage Ratio?	4.07x	6.29x	-35.3%	Reported EBIT in both years is distorted by non-cash fair value movements on listed equity investments (FV loss of 91.14L in FY26; FV gain of 214.65L in FY25). Adjusting for these, normalised ICR improved from 2.5x in FY25 to 7.3x in FY26, reflecting both higher operating earnings and a 50% reduction in finance costs following full repayment of short-term borrowings
Current Ratio	3.36x	1.57x	+114.0%	Preferential allotment raised 1,632L in equity; proceeds were deployed to fully repay short-term borrowings of 974L, eliminating a significant current liability; cash balances strengthened from 34.9L to 171.5L
Debt-Equity Ratio	0.013x	0.383x	-96.5%	Full repayment of 974L short-term borrowings funded via preferential allotment proceeds; the Company is now effectively debt-free
Operating Profit Margin?	2.3%	10.8%	-79.2%	FY25 EBIT was inflated by 214.65L non cash FV gains; FY26 EBIT was correspondingly depressed by 91.14L non-cash FV losses. Excluding FV movements, normalised operating margin was 4.0% in FY26 vs 4.3% in FY25, with the residual compression attributable to gross margin dilution during the volume-scaling phase

 

Net Profit Margin	2.9%	9.7%	-70.2%	Driven by the same non-cash FV movements as above; the recognition of a Deferred Tax Asset on FV losses partially offset the impact at the PAT level. On a normalised basis, PAT margin improved, consistent with higher operating earnings on a materially larger revenue base
Return on Net	3.8%	12.7%	-70.1%	Two concurrent effects:
Worth				(i) reported PAT was reduced by a non-cash FV loss of 91.14L; and
				(ii) equity base expanded 97% via preferential allotment during the same year. The denominator expansion preceded the earnings recovery, compressing the ratio. As operating earnings accrete on the enlarged capital base, RoNW is expected to normalise
Section B: Supplementary Ratios
Ratio	FY2026	FY2025	% Change	Reasons for Significant Deviation
Revenue Growth	55.8%	5.8%		Highest-ever revenue; reflects market share gains and deepening distribution reach
Gross Margin	9.7%	11.8%	-17.8%
EBITDA Margin	3.1%	10.6%	-70.3%gin above; EBITDA as Mar SeeOperatingProfit
				reported includes FV movements above the EBIT line
Debtor Days?	41 days	47 days	-12.8%
Inventory Days	95 days	138 days	-31.2%	Consistent with Inventory Turnover improvement; better stock management on significantly higher volumes

Footnotes:

1 Debtors Turnover and Debtor Days are calculated on trader/ wholesale sales only, excluding retail point-of-sale revenue, in line with the Company s debtor composition. 2 ICR = EBIT (PBT + Finance Costs) / Finance Costs; reported figures include non-cash fair value movements. 3 Operating Profit Margin = EBIT / Revenue from Operations.

5.9 Earnings Per Share

Basic EPS for FY2026 was 0.98 per share (FY2025: 2.63 per share). The decline in per-share earnings reflects two concurrent factors: the lower reported PAT consequent upon the non-cash fair value loss on investments, and the expansion of the weighted average share base from approximately 12.1 million shares in FY2025 to approximately 15.4 million shares in FY2026 following the preferential allotment. The diluted EPS of 0.96 per share additionally accounts for the outstanding share warrants. Management acknowledges that the share issuance has been dilutive in the short term; however, the capital raised has fundamentally de-risked the balance sheet, eliminated all short-term debt obligations, and positions the Company to pursue growth opportunities from a position of financial strength. As earnings from the expanded business base accrete, per-share metrics are expected to recover meaningfully.

Section 6: Risks and Concerns

6.1 Macroeconomic and Discretionary Spending Risk

Musical instruments are a discretionary purchase. Any meaningful deceleration in tion, infla IndiasGDPgrowth,resurgenceoffood or compression in urban household incomes would disproportionately affect the category. Yamahas experience in China is instructive: government policy changes restricting childrens extracurricular activities dismantled the acoustic piano market within a compressed timeframe, with Yamaha explicitly acknowledging that introductory-level demand is unlikely to recover. Indias education policy landscape, while currently supportive, warrants monitoring for analogous shifts. More broadly, Yamahas own characterisation of the global instruments business as one that "could be considered a mature business" in the context of hardware sales signals an industry in structural transition one where distributors anchored solely to hardware face medium-term disintermediation risk.

6.2 Principal Concentration Risk

A significant portion of GILs revenue is attributable to Yamaha products. Any change in Yamahas India distribution strategy, shift toward direct-to-consumer channels, or disruption to its supply chain would materially impact the Company. GIL mitigates this through deepening multi-category engagement with Yamaha and ongoing diversification of its principal portfolio, but the concentration remains a material risk.

6.3 New Initiative Execution Risks

Surveda: The model is early-stage and unproven as a recurring revenue stream. Scaling from two operational studios to a target of 27 by FY2027 requires simultaneous execution across real estate, faculty deployment, member acquisition, and technology in a compressed timeline. Unit-level economics are yet to be validated, and the initiative could represent a net cash drain during the scaling phase.

Interiors and More: GILs competencies are in technical instrument distribution; artificial decorative products are an operationally distinct category. The cross-sell thesis between instruments and decor remains untested at scale. As franchisee, GIL is dependent on the franchisors brand and supply, which it does not control. Additionally, given that Gretex Corporate Services served as BRLM to Interiors and Mores IPO, the arrangement may attract related-party scrutiny, notwithstanding its independent commercial merit.

Professional Audio and AV: Project-based and consultative revenue is inherently lumpy and pipeline-dependent. The AV business is geographically concentrated in Kolkata. Scaling requires specialised technical sales and installation capabilities that must be built or acquired.

6.4 Working Capital and Inventory Risk

FY2025 demonstrated that aggressive inventory build in a growing business can produce severe operating cash outflow. As GIL expands into new geographies and product categories, misjudging demand in any cycle risks inventory accumulation, extended holding periods, and potential markdowns. Working capital discipline will require increasingly sophisticated demand forecasting as the business scales.

6.5 Foreign Exchange and Import Cost Risk

GIL imports a significant proportion of its product portfolio. Sustained Rupee depreciation against the Yen or US Dollar increases landed costs and compresses gross margins, with recovery dependent on the ability to pass through price increases across channels. Evolving global trade policy and tariff frameworks may additionally affect the cost structure of instruments manufactured in Asia.

6.6 Dilution from Outstanding Share Warrants

2,415 Lakhs in share warrants remain exercisable within 18 months. Exercise will be dilutive to existing shareholders. Non-exercise would withhold an anticipated capital inflow, reducing the financial headroom available to fund growth initiatives.