Naman In-Store (India) Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENT

Indias retail sector is experiencing robust growth driven by several factors. The country is experiencing a steady increase in national wages, rapid urbanization, and the emergence of the digital economy. Lower-tier cities no longer have to rely solely on physical stores, as an expanding network of last-mile logistics suppliers enables access to preferred brands through online platforms. The retail landscape in India offers a wide array of choices, including global e-commerce platforms, single-brand shopping websites, multi-retail apps, and social media sellers. Furthermore, discretionary spending power is on the rise, with the average per capita income in India surpassing US$ 2500 and projected to exceed US$ 12,000 by 2047. The substantial middle class and underserved consumer base in non-metropolitan cities have attracted the interest of several international retail giants seeking expansion into new markets. Branded products, such as apparel, cosmetics, jewelry, footwear, watches, food, and beverages (F&B), are gaining popularity and becoming essential lifestyle items for both business and leisure purposes. India ranks among the best countries to invest in Retail space. Factors that make India so attractive include the second largest population in the world, a middle-income class of 158 million households, increasing urbanization, rising household incomes, connected rural consumers, and increasing consumer spending. FMCG, apparel & footwear, and consumer electronics are the largest retail segments, constituting 65%, 10%, and 9% As per Kearney Research, Indias retail industry is projected to grow at 9% over 2019-2030, from US$ 779 billion in 2019 to US$ 1,407 billion by 2026 and more than US$ 1.8 trillion by 2030. Revenue of Indias offline retailers, also known as brick-and-mortar (B&M) retailers, Indias direct selling industry is expected to be valued at US$ 2.14 billion by the end of 2021. E-retail has been a boon during the pandemic and according to a report by Bain & Company in association with Flipkart ‘How India Shops Online 2021 the e-retail market is expected to grow to US$ 120-140 billion by FY26, increasing at approximately 25-30% p.a. over the next 5 years. Despite unprecedented challenges, the India consumption story is still robust. Driven by affluence, accessibility, awareness, and attitude, household consumption stood at Rs. 130 140 trillion (US$ 1.63-1.75 trillion) in 2021.

The sizeable middle class and nearly unexplored retail market in India are the main enticing factors for international retail behemoths seeking to move into newer markets, which will help the Indian retail business grow more quickly. The urban Indian consumers purchasing power is increasing, and branded goods in categories like apparel, cosmetics, footwear, watches, beverages food, and even jewellery are gradually evolving into business and leisure that are well-liked by the urban Indian consumer. The retail sector in India is expected to reach a whopping US$ 2 trillion in value by 2032, according to a recent analysis by the Boston Consulting Group (BCG). India is the worlds fifth-largest global destination in the retail space. In the FDI Confidence Index, India ranked 17 (after the US, Canada, Germany, United Kingdom, China, Japan, France, Australia, Switzerland, and Italy).

Indias rapid economic growth and urbanization create a significant demand for commercial spaces like offices, retail outlets, hotels, and restaurants, driving the need for quality furniture fixtures, while the burgeoning startup ecosystem and small and medium enterprises (SMEs) increase the need for modern, ergonomic, and affordable Smart furniture equipped with integrated technology solutions is becoming popular in commercial settings, providing an innovative market segment, the industry currently lacks the technological advancements, stickingto a traditional procurement is advantageous for cost effective production.

While there are lot of opportunities in the industry, it comes with an equal share of threats, the current scenario being highly competitive with numerous domestic and international players, leading to price wars and reduced profit margins. Economic uncertainties or slowdowns can reduce investment in commercial infrastructure, directly impacting the demand for furniture fixtures. The dependence on global supply chains for raw materials and components can or trade restrictions. leadtodisruptionsduetogeopolitical Rapid technological advancements can render existing products obsolete, necessitating continuous investment in research and development.

Opportunities in Industrial Segment have opened up in the field of Data Centres, Server Power Consumption, Server Racks and HVAC centres. India accounts for roughly 14 to 15% of global internet users, whereas data centre is only 6% leaving a huge gap there. Only IT Equipment like networking equipment make up 50-60% proportion of server power consumption. The surge in global data, from streaming to cloud services, demands powerful servers. However, efficiency equipment.increasingvolumeleadstohigherpowerrequirements,sometimes outweighing The advent of the cloud has resulted in a massive expansion of reliance on server technology. More Companies than necessitating a surge in the number of servers. Data centres rely everbeforearetransitioning heavily on HVAC systems, which often consume more power than the IT equipment they could.

The Company provides comprehensive solutions with a diverse selection of high-quality modern modular office furniture, including partition systems, office chairs, cabinets, wardrobes, storage racks, executive chairs, and office workstations. Additionally, it designs and develops various retail outlets such as beauty shops, paint shops, and fashion apparel outlets. Retail leasing in India is growing by 21% since 2022, driven by fashion retailers, hyper- markets, & restaurants, according to CBREs ‘India Market Monitor 2022 report. The retail leasing market is expected to gain momentum in tier-2, tier-3, and tier-4 cities in India as business activitiesin these power of these regions continues to grow. Several states in India are incentivizing businesses to establish their presence in non-metropolitan areas.

The Company is also engaged in manufacturing and supplying a wide range of metal industrial Products. These are developed by a team of creative professionals as per the norms and guidelines laid down by the industry. Moreover, to meet the specific needs of individuals, it also provides customized version of these products as per the specifications detailed by the clients. Clients can avail products such as Electrical Control Panels, Petrol Pump Kiosks, HVAC Outer Housing, Battery Rack, UPS cabinets, Server Racks etc.

The Indian retail market is set to grow significantly, reaching US$1.1 trillion by 2027 and US$2 trillion by 2032. This growth is fueled by a diverse retail environment that includes global ecommerce platforms, single-brand stores, multi-brand outlets, and social media sellers. The organized retail sector, which currently makes up 15% of the total market, and is projected to expand to 25 % growing at a 25% CAGR, reflecting the sectors dynamic development. Many global investors are drawn to the Indian retail sector due to its demographic dividend, untapped market opportunities, and with a per capita income of approximately $2,400, India is in a stage where it is poised for significant economic growth, which typically leads to increased consumer spending and investment opportunities.

Historically, nations that surpass the $2,500 income level experience substantial growth until reaching $8,000-$10,000, enhancing the country appeal as a prime market for retail investments. The largest retail segments FMCG, apparel & footwear, and consumer electronics comprise 65%, 10%, and 9% of the market respectively are expected to grow rapidly, with companies optimistic about expanding their store networks. Also, the retail leasing surged to 5 year high in the first half of 2024 reaching 3.1 million square feet across 8 cities, driven by sectors such as fashion, hypermarkets, and restaurants. This trend is expected to continue, with growthanticipatedin tier -4 -2, cities as business activities and purchasing power rise. Several states are offering and international players to establish themselves in these nonmetropolitan areas. The major drivers of the in-store furnitureand Growing consumer demand for modern, stylish, and functional in-store environments is a key factor, driven by increasing preferences for aesthetically pleasing and practical retail spaces. Urbanization and real estate development further boost this demand, as the expansion of retail and commercial projects necessitates diverse furniture solutions for store setups. Economic growth also plays a significant role which acts as a tailwind for industrial growth, with rising disposable incomes leading to greater investments in high-quality in-store furnishings to enhance the shopping experience. With technological advancements in manufacturing processes and materials contributing to enhanced product quality and design, making furniture more appealing to a broad audience.

The growth of e-commerce platforms adopting an omni-channel presence enhances the demand for a wide range of furniture and fixtures, thereby boosting sales and expanding market reach. Retailers are increasingly focusing on creating engaging and immersive environments within their stores. By incorporating interactive displays, offering personalized consultations, and designing inspiring setups, they enhance the customer experience. This approach not only enriches the shopping journey but also drives higher sales both online and offline by making the in-store experience more engaging and aligned with customers needs and preferences.

Naman In-Store (India) Limited operates with a concentrated presence in Maharashtra, making it vulnerable to region-specific risks such as regulatory changes, infrastructure challenges, and localized economic slowdowns. Any disruption in this geography could materially impact the Companys operations and revenue streams. Further, the business operates in a highly competitive segment, where pricing pressure, evolving client expectations, and the presence of both organized and unorganized players pose ongoing challenges to market positioning and margin sustainability. Operational risks, particularly around product quality and timely execution, remain critical with leading retail brands, even minor lapses in quality standards or delivery timelines could impact its credibility and client relationships.Although a formal risk management system is in place and reviewed by the Board, its depends on continuous oversight, system upgrades, and prompt mitigation measures.

A company with adequate internal control systems demonstrates a robust framework designed to ensure operational efficiency, reliability of financial reporting, and compliance with applicable laws and regulations. This includes clearly defined roles and responsibilities, regular and thorough audits, secure information systems, and effective communication channels. Management actively monitors and updates these controls to address new risks and improve processes, thereby fostering a culture of accountability and transparency throughout the organization.

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The internal control system is in place with respect to its financial statement which provides reasonable assurance regarding reliability of financial reporting and the preparation of financial statements. Procedures and controls are reviewed periodically.

1. Current Ratio: 2.89

This ratio indicates that the company has 2.89 times more current assets than current liabilities, suggesting good short-term financial health.

2. Debt-Equity Ratio: 0.23

The company has a balanced mix of debt and equity in its capital structure, with slightly more equity than debt.

3. Inventory Turnover: 2.59

The inventory turnover ratio of 2.59 implies that the company sells and replaces its inventory roughly 2.59 times a year i.e., every 81 days in year.

4. Net Profit Margin: 4.03

The net profit margin indicates that the company retains 4.03 of its revenue as profit have been deducted.

1. Revenue from Operations: Rs. 15,562.86 Lakhs

The companys revenue fromoperations positionin the commercial furniture highlightsastrongmarket and fixtures sector. This figure underscores the companys ability to generate substantial income from its Changes. core activities.

2. Public Listing and Fundraising:

Raised Rs. 34,99,99,220/- (Rupees Thirty-Four Crores Ninety-Nine Lakhs Ninety-Nine Thousands Two Hundred Twenty only) through an Preferential Issue offer providing a significant boost to the companys financial resources.

The Companys financial performance in 2025 shows a solid foundation with healthy liquidity and a balanced capital structure. The inventory turnover rate indicates efficient inventory management, while the net profit margin shows the companys profitability.

The infusion of capital from the PreferentialIssue will support expansion plans and technological upgrades will ultimately help in the enhancement of manufacturing capabilities, and improve production efficiency and scalability.

The Company is well-positioned to leverage the growing opportunities in the Indian Retail Store furniture and fixtures market. By focusing on innovation,sustainable practices, and expanding its market presence, the Company can enhance its market share and profitability. Continued investment in technology, talent, and customer-centric strategies will be key to sustaining long-term growth and competitive advantage.

Statements made in the Management Discussion & Analysis describing the Companys objectives, projections, tes, expectationsmay be "Forward-looking statements" within the meaning of applicable laws & regulations.estima Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the governmentregulations,tax laws & other statutes and other incidental factors.