Hindware Home Innovation Ltd Management Discussions

Economic Environment

Global

The global economy proved to be resilient in 2024, maintaining real GDP growth at about 3.3% even amidst geopolitical strains and tighter monetary policies 1 .

However, this recovery is still behind the 3.7% average recorded during the pre-pandemic period, highlighting the ongoing effort required to return to stronger, more sustainable growth. Central banks repeated interest rate hikes helped slow down price increases, bringing headline inflation to 5.8% from 6.8% in 2023.

This easing reassures markets and the public that inflation is under control, stabilising expectations for future prices, which is important for long-term investment and planning. While nominal wages rose, boosting real household purchasing power, weak consumer confidence still dampened spending globally.

Performance across regions was uneven. India, driven by domestic demand, surged, while growth in North America and parts of Asia was more moderate.

Geopolitical risk remains elevated due to unrest in Ukraine and the Middle East, disrupted energy flows and trade routes and intensifying market volatility. Adding further complexity, in late January 2025, reciprocal tariff announcements by the U.S. introduced additional complexity, heightening the risk of supply chain fragmentation and dampening private investment. UNCTAD highlighted that recent tariff impositions are fracturing supply networks and making future trade less predictable.

Global growth is projected to moderate to 2.8% in 2025 before recovering to 3.0% in 2026, reflecting the lagged effects of policy tightening and fading fiscal support 2 . Headline inflation is expected to decline further to 4.4% in 2025 3 . However, the World Trade Organisation forecasts a

0.2% contraction in global trade for 2025, driven by intensifying protectionist measures, persistent policy uncertainty and the impact of tariff escalations.

U.S. tariffs and regional slowdowns in North America and parts of Asia might dampen the outlook, though some developing economies could benefit from shifting global supply chains. Nations with strategic geography and preferential trade agreements are poised to become critical economic connectors, realigning trade flows and bolstering resilience. Policymakers will need to strike a careful balance. They must support growth and private investment through rate cuts, tax relief, and deregulation while remaining vigilant against

inflation risks from trade disruptions, rising wages, and volatile commodity prices.

Overall, while growth and trade are set to soften in 2025-26, coordinated multilateral efforts and targeted structural reforms, particularly in supply chain diversification, digital infrastructure and sustainable energy, will be essential to navigate escalating trade barriers, preserve financial stability and lay the groundwork for a more inclusive global recovery.

Indian Economy

India sustained robust growth of 6.5% 4 , the fastest among major economies, powered by strong domestic consumption and a resilient services sector. Inflation remained close to the Reserve Bank of Indias 4% target band. Retail inflation fell to a five-year low of 3.34% in March 2025, allowing the RBI to adopt a growth-supportive monetary stance with consecutive repo rate cuts to 6.00% 5 .

Despite global headwinds, including elevated geopolitical tensions and supply chain disruptions, Indias solid macro fundamentals and above-normal monsoon forecasts supported resilience in agriculture and rural demand. However, consumer sentiment remained muted due to elevated inflation concerns and lingering job market anxieties. This cautious consumer mood had a notable impact on certain consumer-facing segments.

A booming services industry, contributing over 55% of GDP, remained a consistent engine of growth alongside emerging manufacturing clusters fostered by the Make in India initiative.

Financial inclusion expanded markedly through digital payment networks and a growing fintech ecosystem, while infrastructure investments, ranging from roads and railways under the National Infrastructure Pipeline to urban renewal via Smart Cities projects, have boosted productivity and employment.

Looking ahead, India is poised to add USD 1 trillion to its GDP every 1.5 years, putting it on track to become a USD 10 trillion economy by 2032 6 . Continued emphasis on manufacturing and infrastructure, supported by expanding PLI schemes and improved ease- of-doing-business reforms will enhance industrial output and attract foreign direct investment (FDI). Additionally, the digital

L

economy is projected to account for 20% of national income by 2029-30, driving broader participation and innovation.

Domestically, uneven rural recovery, climate-related agricultural shocks, and potential inflationary rebounds present challenges. To sustain momentum and realise the goal of an advanced economy by 2047,

India must deepen structural reforms, improve governance, simplify regulations, enable flexible labour markets, and invest in human capital and green technologies, while maintaining fiscal discipline. Nevertheless, risks persist as global geopolitical fragmentation and escalating protectionism could disrupt trade, while oil price volatility threatens fiscal stability.

Building Products

Bathware Business

Industry Overview

The subdued consumer demand observed in the Bathware sector is not isolated to the Indian market. Globally, economic headwinds have impacted consumer spending across various sectors, including home improvement and construction.

The ongoing geopolitical uncertainties, including conflicts and trade tensions, have created a climate of economic instability, further weakening consumer confidence.

In India, the Bathware sector experienced a period of subdued consumer demand during the reporting year. A noticeable slowdown was observed not only in major metropolitan areas but also in Tier 2 and Tier 3 cities. This trend can be attributed to broader economic uncertainties impacting discretionary spending. Contributing factors include inflationary pressures affecting consumer purchasing power and fluctuating real estate market conditions.

However, over the next few years, we expect demand to increase across the Bathware segment, supported by significant government infrastructure initiatives like the Smart Cities Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0.

These initiatives will lead to increased spending on home improvement and lifestyle enhancements. Programmes such as the Swachh Bharat Abhiyan will create a strong impetus for improved sanitation and hygiene standards, driving demand for related products. Additionally, reduced inflation rates and subsequent repo rate cuts will boost consumer spending.

We are also at the forefront of developing intelligent water closets (IWCs) that incorporate smart features for affordable hygiene and water efficiency. This includes advanced flushing systems like Vortex flushing and Aquasheet

technology that ensure thorough cleaning with significantly less water, often operating on efficient two-fourths litre per flush systems. We have also pioneered tankless water closets in India, which not only save space but also offer 100% efficient flushing without the need for a traditional cistern.

Business Review

Our building products segment, renowned for its comprehensive Bathware products, encompasses diverse offerings such as sanitaryware, faucets, and tiles.

To enhance efficiency and streamline operations, we optimised our go-to- market approach by consolidating the sanitaryware and faucets business teams, which allowed us to leverage synergies across our product lines and improve overall market responsiveness. Product innovation and category expansion have also been at the forefront of our efforts.

By investing in modern technologies and design advancements across various price points, we have broadened our product portfolio, effectively catering to a wider range of consumer preferences and market segments.

Despite the segment experiencing an increase in input costs, which subsequently impacted profitability, we accelerated the rollout of brand stores, with a strong emphasis on highlighting the Hindware Italian Collection and Queo brands.

This strategy will help us to enhance brand visibility and drive sales. Additionally, we expanded our shop- in-shop format of retail presence to increase product accessibility and reach.

Recognising the importance of delivering a superior brand experience, we are currently undertaking a comprehensive review of our existing experiential stores across India. As part of this strategic initiative, we are rebranding all the Lacasa Stores to Hindware Experience Centre. This unified branding plan will foster better recognition and create a consistent and engaging environment for our customers. Our vision for the Hindware Experience Centres is to establish them as a haven for both retail consumers, and the architects and interior designer fraternity, providing an immersive space to interact with and experience our extensive range of products firsthand.

Building on our commitment to consumer engagement, we are strengthening our presence in the premium tiles segment. This portfolio complements our Bathware business, creating a cohesive and elevated offering for discerning consumers.

In FY 2025-26, we will continue this momentum by opening more brand stores and launching new tile ranges to meet the expectations of our customers. Our influencer engagement programme - Plumber No. 1 continued to be a benchmark in the Bathware industry in terms of registered and active plumbers. It is going to be our focus going forward as well, with enhancements.

To build stronger brand recall, we adopted a 360-degree marketing approach. Our television campaign, featuring a partnership with the Royal Challengers Bengaluru IPL team, created significant consumer buzz.

At the same time, we deepened relationships with architects, builders, and other B2B stakeholders through active participation in industry exhibitions and knowledge-sharing forums. On the digital front, we drove engagement through targeted campaigns, influencer collaborations, and content-led storytelling across key social media platforms. Together, these initiatives created a unified brand voice and consistent visibility across multiple touch points, strengthening our connect with diverse customer groups.

Outlook

We are embarking on a focused multi-year programme to strengthen our go-to-market approach, deepening loyalty among our distributors and dealers while targeting high-potential white spaces across the nation. At the same time, we are sharpening our product strategy by focusing on strengthening our premium and mass-premium brand positioning so that we capture a larger share of both core and aspirational segments. We will open a new generation of multi-functional experience centres in key metropolitan areas, rebranded as Hindware Experience Centres, while simultaneously expanding our network of Brand Stores.

L.

Our marketing and demand generation efforts will be equally comprehensive. In addition to impactful TVCs, we will deploy targeted hyper-local digital campaigns to drive footfall and build stronger consumer connect. We are reinforcing our Plumber No. 1 community?€”now bolstered by an annual Plumber Day event and an enhanced mobile app featuring training modules, product catalogues and service-request tools. At the same time, we have relaunched our Club Maestro platform to deepen engagement with retail focused architects and interior designers. A specialised sales force in eight to ten priority

cities will further enhance our reach in the design and specification- based channel.

Underpinning all of this, our next-gen GTM programme will invest in capability-building and data-driven engagement to enhance productivity across our sales teams and partner network. By weaving together distribution excellence, product leadership, immersive retail experiences and smart-tech integration, we will accelerate our future growth and reinforce our position at the forefront of Indias evolving Bathware market.

Plastic Pipes and Fittings

Industry Overview

The plastic pipes and fittings segment in India demonstrated tepid performance in FY 202425, influenced by factors such as subdued capital expenditure and volatility in raw material prices. Addressing the challenges posed

by raw material availability and fluctuating costs will be crucial for sustained market expansion.

However, looking ahead, the governments strong emphasis on initiatives such as Housing for All and the Smart Cities Mission will be key catalysts, generating significant demand for plastic piping systems

across residential and commercial construction. Driven by rapid urbanisation, increasing construction activities, and a growing focus on infrastructure development, the sector is poised to witness steady growth in the coming years.

Business Review

In a challenging operating environment during FY 2024-25, marked by significant raw material price volatility and muted consumer sentiment, we navigated sharp fluctuations in resin prices, including a steep downward movement that pressured realisation.

Demonstrating resilience, we delivered ~12% volume growth y-o-y. Our Telangana manufacturing facilities maintained healthy capacity utilisation levels of 75-80%, even as lower selling prices increased the fixed cost ratio. This resilience enabled volume growth, although margins remained compressed.

To drive future growth, we have strategically expanded our portfolio and capabilities. We introduced foamcore pipes and inspection chambers for drainage and wastewater applications, entered niche PPRC plumbing markets in cold regions, and are preparing to introduce double-wall corrugated pipes (pending BIS approval) to tap into infrastructure drainage opportunities. We have also ventured into PTMT plastic taps and will soon start in-house manufacturing of these products.

Additionally, our engagement with the plumbing community through targeted training forums and a

proprietary database of over 85,000 plumbers has further helped in strengthening our market connect and brand recall.

Outlook

We remain focused on stabilising value-driven growth and expanding our presence across diversified end-use markets. To achieve this, we are pursuing continued portfolio expansion, particularly in high-growth segments such as agricultural pipes, drainage solutions, and CPVC-based fire sprinkler systems, to help us capture emerging opportunities.

While raw material prices need to be monitored, we are strategically aligning ourselves to mitigate commodity-linked risks through greater product mix optimisation and operational efficiencies.

The new greenfield manufacturing facility at Roorkee is set to commence commercial production and will significantly increase

our reach in northern India while improving supply chain efficiency.

Capitalising on infrastructure and housing sector growth, and with continued investments in brand building and channel engagement, we are well-positioned for an improved performance in the upcoming year.

Consumer Appliances Business

Industry Review

The consumer appliances industry experienced a slowdown in FY 2024-25, despite underlying drivers such as rising disposable incomes, rapid urbanisation, and a growing appetite for energy-efficient and smart home solutions. Inflationary pressures and supply chain disruptions posed significant challenges for the sector. However, supportive government policies, including Production-Linked Incentive (PLI) schemes, along

with targeted tax relief measures announced in Indias 2025-26 Budget, helped strengthen sector resilience.

In the coming years, rising disposable income, urbanisation, technological advancements, government initiatives, e-commerce growth, changing consumer preferences, smart home technology, and infrastructure development are expected to contribute to the growth of the consumer appliances market in India.

The shift towards digital channels is driving appliance sales through e-commerce channels, while experiential retail and micro-digital marketing boost store footfall. A stable macroeconomic backdrop and moderating inflation will underpin consumer confidence and discretionary spending on home upgrades. Nonetheless, the industry should remain vigilant against raw material price volatility and trade uncertainties, which can squeeze margins and disrupt supply chains.

Business Review

We have sharpened our business focus by realigning our product mix, expanding our retail footprint, and focusing on high-margin categories.

Recognising the growth trajectory and healthy margins in kitchen appliances, we prioritised chimneys, hobs, cooktops and sinks as focus categories, while strategically exiting the ceiling-fan category in general trade, where low gross margins, intense unbranded competition and a highly fragmented market have made sustainable profitability elusive.

This strategic direction enables us to concentrate resources on our core strengths, driving stronger and sustainable returns.

To bring our kitchen appliance products closer to consumers, we accelerated the rollout of Hindware Smart Appliances brand stores. These exclusive Brand Stores enhance our direct engagement with consumers, providing a specialist environment to showcase our expanded kitchen range.

In the Water Heaters category, our Intelli 5 Technology-powered water heaters deliver up to 25% faster heating with improved energy efficiency and safety in a compact footprint, reinforcing our reputation for innovation and cost-efficient performance.

In the cooling segment, we placed greater emphasis on the high- growth e-commerce platforms like Amazon and Flipkart, enabling Hindware Air Coolers to gain greater visibility and traction among digitally savvy consumers.

Together, these strategic actions ?€” including rationalising the portfolio, store expansion, strengthening innovation, and channel optimisation ?€” are expected to help us build a more sustainable and financially resilient Consumer Appliances business.

Outlook

I The Consumer Appliances business aims for market leadership as a trusted smart kitchen appliance brand in India, recognised for both our innovative products and a seamless customer experience. This will be achieved through three core pillars. First, we are committed to innovation, continuously developing and rapidly launching cutting-edge kitchen appliances, building upon our track record of

successful innovations like MaxX Silence Technology, Gesture Control, Grey coloured chimney and IoT Water Heaters. Second, we will deliver Omni-Channel Excellence by creating a consistent and immersive brand experience across all touchpoints. This includes the expansion of Hindware Smart Appliances Brand store network, supported by unified sales and marketing. The e-commerce portfolio,

featuring exclusive SKUs, will further optimise our online presence while strategically avoiding channel conflict. In addition, we will foster customercentric engagement through targeted marketing initiatives, leveraging online trends for direct engagement and complementing this with local campaigns to ensure broader market reach.

Risk

Management

Overview

We believe that effective risk management is fundamental to the Companys long-term success and resilience. Our approach embeds risk considerations into every facet of the business, enabling us to identify, evaluate and address both internal and external uncertainties as they arise. Far beyond a box-ticking exercise, our risk framework empowers us to safeguard operations, protect our financial health and uphold our reputation while also uncovering opportunities for innovation and growth.

Key Dimensions

Our risk framework rests on four core pillars:

Comprehensive Identification and Assessment

We continuously scan the business landscape market trends, regulatory changes, technological shifts, and internal processes to build a dynamic risk register. Each item is scored for likelihood and impact, ensuring that our Board and leadership team can prioritise the most critical exposures.

Targeted Mitigation and Control

For every high-priority risk, we appoint a clear owner and embed tailored controls into daily operations and decision-making forums. From procurement to production, compliance to customer service, these measures reduce our vulnerability and reinforce accountability.

Ongoing Monitoring and Reporting

We track key risk indicators and control effectiveness through automated dashboards and regular management reviews. Any emerging issues are escalated promptly to the Audit Committee under the Boards oversight and to our executive leadership, ensuring swift and coordinated responses.

Continuous Improvement and Governance

Annually, our Board, advised by the Audit Committee, reviews our risk management performance, stress-tests our assumptions and refines our risk appetite. This cycle of learning and adaptation keeps our framework aligned with evolving business realities and best- practice standards.

Key Risks and their Mitigation Process

We view risk management as a strategic imperative, integral to sustaining our growth, protecting our assets, and upholding stakeholder trust. We categorise our principal exposures into External, Operational and Financial risks, each addressed through tailored mitigation measures and overseen by robust internal control processes.

External Risks

Risk Category	Key Risks and Definition	Mitigation Strategy
Economic, Political and Market Risk	Exposure to macroeconomic slowdowns, global market disturbances, geopolitical tensions, inflation spikes and interest-rate hikes, all of which can dampen consumer demand.	Diversify across business segments to reduce dependence on any single sector; optimise cost structures; enhance operational efficiency; broaden customer base; and pursue new growth avenues to bolster resilience against market fluctuations.
Competition Risk	Intensifying competition particularly from unbranded players can erode pricing power and compress margins.	Continuously monitor industry developments; invest in R&D and product innovation; and leverage an omnichannel distribution network to maintain competitiveness and meet evolving customer expectations.
Consumer Risk	Rapid shifts in consumer preferences may lead to lower adoption of our products if we fail to adapt.	Implement a structured consumer- feedback mechanism to capture evolving needs and tailor product offerings, ensuring relevance and sustained demand.

Operational Risks

Risk Category	Key Risks and Definition	Mitigation Strategy
Product Quality Risk	Poor quality can damage sales and brand reputation.	Enforce rigorous quality-control standards, evidenced by our position among the top five brands in key categories, with continuous audits and supplier oversight.
Technology Risk	Reliance on outdated technology may erode competitiveness.	Invest in state-of-the-art equipment; partner with global technology leaders; and maintain ongoing technology scouting to integrate breakthroughs.
Employee Risk	Inability to attract or retain talent can hinder strategic growth objectives.	Foster an inclusive culture through career development programmes provide continuous learning opportunities to support employee progression and retention.
Distribution Risk	Shifts in buying habits may undermine traditional distribution channels, impacting revenue and profitability.	Develop an omnichannel distribution strategy combining strengthened e-commerce presence with continued investment in traditional channels to ensure seamless customer access and robust dealer engagement.
Operating Efficiency Risk	Under-utilisation of logistics, retail and support assets can inflate costs and reduce margins.	Regularly review and optimise logistics and store operations; implement automation where appropriate; and leverage a franchise model to improve market coverage and resource utilisation.
Cyber Security Risk	Cyber attacks could disrupt operations and compromise data integrity.	Build and maintain a resilient IT infrastructure; deploy comprehensive cybersecurity controls; and conduct periodic penetration testing and staff training to safeguard systems and information.
Business Continuity Risk	Unforeseen events (e.g., pandemics, major incidents) can disrupt daily operations and impact performance.	Maintain and regularly update a dynamic business-continuity and pandemic-response plan; monitor external developments and execute pre-defined contingency actions to ensure minimal operational interruption.
Brand Legacy Risk	Misleading or negative perceptions via various media channels can detract from brand equity and sales.	Execute integrated communication strategies across traditional, and new age platforms to reinforce consistent messaging, protect hard-earned brand equity and maintain stakeholder trust.

Financial Risks

Risk Category	Key Risks and Definition	Mitigation Strategy
Credit Profile Risk	Difficulty securing short-term and long-term funds at favourable rates can strain liquidity and hamper operations.	Optimise working-capital cycles (inventory, receivables, payables); and maintain access to competitively priced debt with well-staggered maturities. Shareholders have infused 249 crore under right issue.
Credit Rating Risk	Downgrades can restrict financing access and worsen borrowing terms.	Sustain strong debt-servicing track record; cultivate transparent relationships with lenders and rating agencies through regular communication and reliable performance metrics.
Currency Risk	Volatility in foreign exchange rates can erode profitability on imports and exports.	Employ appropriate hedging strategies, including forward and option contracts, to manage and mitigate foreign-exchange exposures.
Legal and Compliance Risk	Non-compliance with laws and regulations can result in penalties, litigation, and reputational damage.	Uphold a robust governance framework; conduct continuous compliance monitoring; and maintain transparent reporting to regulatory authorities to ensure full adherence to applicable standards and regulatory requirements.

Internal Control

We maintain a robust internal control environment designed to safeguard our operations, protect assets, and ensure the integrity of our financial reporting. Our controls prevent and detect errors or fraud, guarantee that accounting records are prepared accurately and on schedule and deliver reliable management information. Aligned with our Principles of Governance, this framework is continually assessed by the Audit Committee of the Board, supported by our Independent Directors, who review our annual audit plan, key findings, control effectiveness and compliance with accounting standards and regulatory requirements.

Internal Financial Control

Our internal financial control framework reflects industry best practices for organisations of comparable scale and complexity. We conduct regular reviews and rigorous testing of these controls to identify enhancement opportunities, ensuring that our processes remain fit for purpose and responsive to evolving business needs.

Cautionary Statement

This document contains forward-looking statements based on current expectations and assumptions. Actual outcomes may differ materially due to factors such as economic, political, or regulatory developments, interest rate fluctuations and other uncertainties. We undertake no obligation to update these statements unless required by law.