Pee Cee Cosma Sope Ltd Management Discussions

1. Industry Structure and Developments

The Indian soap and detergent industry continued to witness steady growth during FY 2025 26, supported by rising hygiene awareness, urbanization, improving disposable incomes and increasing penetration of modern retail, e-commerce and quick-commerce channels. The industry is also undergoing a structural shift towards premiumization and format upgradation, particularly in liquid detergents, fabric care and specialized household cleaning products. As an indicator of the organized home-care market, Hindustan Unilever Limited reported Home Care revenue of 23,672 crore in FY 2025 26, representing high-single-digit underlying volume growth, while its liquids portfolio crossed the 4,000 crore revenue milestone and recorded strong double-digit growth.

The Home Care segment reported a 19% margin, reflecting the continued scale and profitability of the organized market.

The industry, however, remains highly competitive and sensitive to fluctuations in key raw-material and packaging costs, including surfactants, LAB/acid slurry, soda ash, caustic soda, fatty acids, fragrances and packaging materials. Going forward, growth is expected to be driven by rural market penetration, premium and liquid products, product innovation, changing consumer preferences and expansion of digital and modern distribution channels. The overall outlook for the Indian soap and detergent industry remains positive, with opportunities for companies having strong distribution networks, efficient manufacturing capabilities, competitive pricing and differentiated product offerings.

2. Opportunities and Threats

Opportunities l Expanding rural penetration supported by government schemes and rising disposable income.

l Growth in e-commerce and direct-to-consumer platforms. l Increasing demand for eco-friendly, herbal, and antibacterial products. l Export potential in developing economies in Asia and Africa.

Threats l Intense competition from MNCs and regional brands leading to price wars.

l Fluctuations in raw material prices (palm oil, LAB, soda ash, fragrances, packaging).

l Changes in consumer preference towards natural/organic products.

l Regulatory challenges relating to environmental and quality compliance.

3. Segment Wise or Product Wise Performance

The Company operates primarily in two business segments:

1 . Personal Care (Soaps and Body Wash) Contributed 26.63% of total revenue in FY 2025-26. The premium soap and liquid body wash categories recorded higher growth, supported by increasing urban demand.

2. Fabric Care (Detergent Powders and Cakes) Contributed 73.37% of total revenue. The Company s flagship detergent brand maintained strong rural and semi-urban presence, though margin pressure continued due to higher raw material costs.

4. Financial Performance with respect to Operational Performance (Amount in Lakhs)

Particular	Standalone
	Current Yr.	Previous Yr.
	31.03.2026	31.03.2025
Net Revenue from Operation	15,782.82	14,059.23
Other Income	25.56	173.99
Total Income	15,808.38	14,233.22
Total Expenditure	14,688.78	12,942.61
Profit before tax	1,119.60	1,290.61
Provision for tax	285.96	329.68
Profit after tax	833.64	960.93
Paid-up Share Capital	264.63	264.63
Reserves and Surplus (excluding revaluation reserve)	5,346.71	4,592.46

Growth was primarily driven by premium products and expansion in rural markets, while margin pressure was witnessed due to higher input costs. Strategic cost optimization and supply chain efficiency initiatives partially offset inflationary pressures.

5. Outlook

The outlook for FY 2026-27 remains positive, supported by strong demand in both rural and urban markets. The Company aims to: l Strengthen its premium product portfolio. l Focus on sustainability through biodegradable detergents and recyclable packaging. l Enhance digital and e-commerce presence. l Expand exports to emerging markets. l Invest in R&D for innovative formulations and cost-effective manufacturing.

6. Risks and Concerns

Key risks faced by the Company include: l Raw Material Price Volatility Dependency on imported palm oil and crude-based inputs. l Competition Risk Aggressive pricing by domestic and multinational players.

l Regulatory Risk Compliance with environmental and chemical usage regulations.

l Operational Risk Supply chain disruptions and dependency on third-party distributors.

l Consumer Preference Risk Shift towards herbal and organic alternatives.

The Company has instituted a robust risk management framework to monitor, evaluate, and mitigate these risks.

7. Internal Control Systems and Their Adequacy

The Company has a well-defined internal control framework, commensurate with the size and nature of its business. Controls are regularly reviewed by the Internal Audit team and monitored by the Audit Committee of the Board. The system ensures accuracy of financial reporting, safeguarding of assets, compliance with statutory requirements, and operational efficiency.

8. Human Resources and Industrial Relations The Company regards its employees as its most valuable asset. As on March 31, 2026, the Company employed 327 permanent employees across manufacturing, sales, and corporate functions.

HR initiatives during the year included: l Regular training programs on safety, hygiene, and skill upgradation. l Performance-driven appraisal and incentive mechanisms. l Employee engagement and welfare programs. The industrial relations climate remained cordial and

harmonious throughout the year.

9. Key Financial Ratios

In accordance with SEBI (LODR) requirements,

key financial ratios are given below:

Particular	FY	FY	Change Remarks
	2025-26	2024-25	%
Debtors Turnover	71.29:1	71.63:1	(0.47)	Due to Increase in Debtors
Inventory Turnover	2.37:1	2.26:1	4.87	Due to Increase in Sales
Interest Coverage Ratio	123.7: 1	60.06:1	63.64	Due to decrease in interest
Current Ratio	5.65:1	3.32:1	71.73	Due to Increase in Current Assets
Debt-Equity Ratio	0.01:1	0.03:1	(66.67)	Due to Decrease in Utilisation from bank Cash Credit Limit
Operating Profit Margin (%)	5.12%	5.60%	(0.48)	Due to Increase in cost of raw materials
Net Profit Margin (%)	5.27%	6.75%	(1.48)	Due to Increase in cost of raw materials
Return on Net Worth (%)	14.86%	19.78%	(4.93)	Due to Increase in cost of raw materials

10. Cautionary Statement

Statements in this report describing the Company s objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied due to various risks, uncertainties, and economic conditions.