Pil Italica Lifestyle Ltd Management Discussions

ECONOMIC OVERVIEW

Global Economy

The global economic outlook for 2025 remains fragile, marked by divergent growth trajectories, persistent policy uncertainty, and mounting risks of stagnation. According to the IMFs January 2025 World Economic Outlook, global growth is projected at 3.3% for both 2025 and 2026, unchanged from October 2024 forecasts. However, this aggregate figure masks significant regional disparities. Advanced economies like the United States are expected to grow at 2.7% in 2025, revised upward by 0.5% points due to robust consumption and investment. In contrast, the euro area faces a downgrade to 1.0% growth amid weak manufacturing and geopolitical tensions, while Chinas growth is marginally revised to 4.6% in 2025, constrained by property market drag and trade policy uncertainty. Emerging markets, particularly in Latin America and sub-Saharan Africa, show modest improvements but remain vulnerable to external shocks.

Inflation dynamics are uneven, with global headline inflation projected to decline to 4.2% in 2025, though services inflation remains sticky in advanced economies like the U.S. and Europe. Central banks face a delicate balancing act between maintaining restrictive policies where inflation persists, while cautiously easing in regions like Europe as price pressures recede. However, trade policy shocks and financial volatility threaten to disrupt disinflation progress. The IMF warns that escalating tariffs could pass through to consumer prices more sharply than in previous cycles, especially given elevated inflation expectations and tighter cyclical conditions.

The April 2025 IMF update underscores these challenges, highlighting a global growth forecast of 3.2% for 2025, marginally lower than earlier projections. Structural headwinds — such as aging populations, weak productivity, and geoeconomic fragmentation — are expected to cap medium-term growth at 3.1%, the lowest in decades. Regional divergences intensify: while the U.S. benefits from fiscal resilience and deregulation, Europes stagnation persists, and Chinas slowdown weighs on emerging Asia. The World Bank and UNCTAD offer more pessimistic global growth at 2.7% and 2.3%, respectively, citing trade disruptions, debt vulnerabilities, and climate risks. For instance, UNCTAD warns that reciprocal tariffs could shrink global trade growth by 0.5% points in 2025, disproportionately impacting developing economies.

Monetary and fiscal policy trade-offs complicate the outlook. The IMF emphasizes the need for advanced economies to rebuild fiscal buffers while supporting growth through structural reforms. In emerging markets, tighter financial conditions and dollar strain external balances, necessitating targeted interventions to stabilize currencies. Meanwhile, S&P Global notes rising input costs in manufacturing due to tariffs, with U.S. core goods inflation accelerating since late 2024. Despite these pressures, services inflation shows signs of moderation, offering some relief. Looking ahead, downside risks dominate. Escalating trade tensions, geopolitical conflicts, and climate-related shocks could further destabilize growth. The IMF stresses that multilateral cooperation is critical to mitigating fragmentation, particularly in restoring WTO dispute mechanisms and fostering resilient supply chains. However, with policy uncertainty at historic highs and medium-term growth prospects dimming, the global economy remains on a precarious path, requiring coordinated action to avoid prolonged stagnation.

Indian Economy

Indias economic outlook for 2025, presents a picture of resilient and broad-based growth amid global uncertainties and evolving domestic challenges. Real GDP growth for FY25 is estimated at 6.4%, aligning closely with the countrys decadal average, and projections for FY26 range between 6.3-6.8%. This steady performance is underpinned by robust macroeconomic fundamentals, a rebound in rural demand, and the governments sustained focus on capital expenditure and infrastructure development. As per the Department of Economic Affairs, the private consumption expenditure is expected to grow by 7.3% in FY25, largely driven by a revival in rural demand following improved agricultural output. The agriculture sector is projected to expand by 3.8%, supported by record kharif foodgrain production and favorable monsoon conditions. The industrial sector is estimated to grow by 6.2%, with construction, electricity, and utilities providing strong support despite some moderation due to global trade headwinds. The services sector remains a key pillar, forecast to grow by 7.2%, fueled by robust activity in estate, public administration, and particularly strong growth in services exports, which surged by 12.8% during April November FY25.

Government capital expenditure continues to be a central growth driver. Indias fiscal position remains stable, with a focus on adhering to the fiscal consolidation roadmap and targeting a fiscal deficit of 4.5% of GDP by FY26. Gross FDI inflows revived strongly, increasing by 17.9% in the first months of FY25 compared to the previous year, signaling renewed investor confidence. Indias foreign exchange reserves, though moderating from their September 2024 peak, remain robust at over $634 billion, sufficient to cover nearly 11 months of imports and 90% of external debt, thus safeguarding against external shocks.

Headline retail inflation softened to 4.9% during April December 2024, with expectations of further alignment towards the Reserve Bank of Indias 4% target in FY26. While food inflation remains elevated, particularly for vegetables and pulses, strong agricultural performance and proactive government interventions are expected to ease pressures.

The RBIs monetary policy has shifted towards cautious easing, supporting both household consumption and private investment.

The unemployment rate declined to 3.2% in 2023-24, reflecting ongoing formalization and job creation, especially in the services sector. Social sector spending, particularly on health and education, has seen significant increases, with government health expenditure rising to 48% of total health spending and out-of-pocket expenses declining sharply.

Despite these strengths, the outlook is tempered by notable risks. Global trade and geopolitical uncertainties, potential commodity price shocks, and subdued private capital expenditure remain key concerns. The Economic

Survey emphasizes the need for systematic deregulation and grassroots-level reforms to enhance Indias global competitiveness and unlock the potential of the MSME sector.

Continued infrastructure investment, particularly in renewable energy and logistics, is identified as critical for sustaining high growth over the next two decades.

INDUSTRY OVERVIEW

Global Plastic Furniture Market Overview

The global plastic furniture market is experiencing sustained growth, driven by a convergence of economic, demographic, and lifestyle trends that are reshaping consumer preferences worldwide. The market is projected to reach a value of approximately USD 15.87 billion in 2025, with forecasts indicating expansion to between USD 19.54 billion and USD 23.53 billion by 2030 2032, at a compound annual growth rate (CAGR) ranging from 3.8% to 4.9% as per different publications. This growth trajectory is underpinned by several key factors: affordability, durability, lightweight, and the low maintenance requirements of plastic furniture, which collectively make it an attractive alternative to traditional wood and metal furnishings.

A significant driver of market expansion is the rising demand for versatile, space-efficient, and modular furniture solutions, particularly in urban environments where living spaces are shrinking due to rapid urbanization. The plastic furniture segment has benefited from the trend toward nuclear families and compact homes, with consumers favoring products that are easy to move, assemble, and adapt to various uses. In parallel, the hospitality and real estate sectors are fueling demand for functional, weather-resistant, and cost-effective furniture, especially for outdoor and semi-outdoor settings such as patios, gardens, and public spaces. Plastic furnishing range includes everything from chairs and tables to sofas and storage units, addressing a broad spectrum of functional and aesthetic preferences.

Regionally, Asia-Pacific stands out as the fastest-growing market, propelled by increasing disposable incomes, urbanization, and the dominance of manufacturing hubs in China, India, and Southeast Asia. These regions not only serve as major production centers due to their cost advantages and established industrial infrastructure but also represent burgeoning consumer markets as middle-class populations expand. North America currently holds the largest share of the global plastic furniture market, driven by renovation cycles, a preference for affordable and stylish solutions, and a strong culture of outdoor living. Europe remains a significant market, particularly for innovative and design-driven products, though much of its supply is sourced from Asia due to lower production costs.

Sustainability has also emerged as a central theme within the industry, responding to growing environmental concerns over plastic waste. Manufacturers are increasingly investing in the use of recycled plastics, including ocean waste, and developing biodegradable alternatives to address regulatory pressures and shifting consumer expectations. The market is witnessing a proliferation of eco-friendly product lines, with many global companies leading efforts in sustainable design and production.

This trend is further reinforced by the rise of e-commerce, which has expanded consumer access to a wide variety of plastic furniture options and facilitated the growth of direct-to-consumer brands.

Design innovation remains a competitive differentiator, with manufacturers focusing on aesthetics, multifunctionality, and customization to overcome the perception that plastic furniture is less elegant or durable than wood or metal alternatives.

Technological advancements in molding and materials science have enabled the creation of products that mimic the look and feel of traditional materials while offering superior resistance to moisture, pests, and UV exposure. The residential segment dominates global unit sales, accounting for roughly 70% of demand, but commercial applications in offices, hospitality, healthcare, and education are also expanding rapidly.

Despite these positive trends, the market faces challenges such as environmental regulations, fluctuating raw material prices, and lingering perceptions of inferior quality. The industrys long-term success will depend on its ability to balance affordability and versatility with the imperative for sustainability and higher design standards. As urbanization accelerates and consumer lifestyles evolve, the global plastic furniture market is poised for continued growth, innovation, and transformation, with Asia- Pacific and emerging markets at the forefront of this dynamic landscape.

Indian Plastic Furniture Market Overview

The Indian plastic furniture market is undergoing a period of notable growth and transformation, driven by shifting consumer preferences, rapid urbanization, and a pronounced emphasis on sustainability. The growth trajectory of the plastic furniture market in India is largely attributed to the rising demand for lightweight, durable, and cost-effective furniture solutions that cater to both residential and commercial segments. The proliferation of compact and integrated living spaces, especially in urban India, has accelerated the need for space-efficient and multifunctional furniture, making plastic furniture an appealing choice for modern Indianhouseholdsandoffices.

Plastic furniture in India is predominantly manufactured using thermoplastic polymers such as polyethylene (PE), polypropylene (PP), polystyrene (PS), polyvinyl chloride (PVC), and acrylonitrile butadiene styrene (ABS). These materials offer significant advantages, including high strength, durability, resistance to corrosion and temperature fluctuations, and ease of maintenance. As a result, plastic furniture finds extensive application in diverse settings from homes and offices to schools, hospitality venues, and public spaces — serving both functional and aesthetic purposes. The markets adaptability is further enhanced by the availability of a wide range of designs, colors, and styles, allowing consumers to choose products that align with their decor preferences and practical needs.

A key trend shaping the Indian plastic furniture market is the growing awareness and adoption of sustainable practices.

Environmental consciousness among Indian consumers is on the rise, prompting manufacturers to innovate with recycled, reused and eco-friendly plastic furniture options. This shift is not only helping to divert plastic waste from landfills and reduce ocean pollution but also promoting a circular economy, where materials are continuously reused and repurposed. Brands are increasingly launching product lines made from recycled plastics, targeting both institutional buyers (such as schools and public parks) and environmentally conscious households. The sustainability movement is further reinforced by government initiatives and stricter regulations on plastic waste management, encouraging industry players to embrace greener production processes.

The expansion of the Indian real estate and hospitality sectors is another significant growth driver, as new residential, commercial, and hospitality projects generate substantial demand for affordable and stylish furniture solutions. The rise in disposable incomes, particularly among the burgeoning middle class, has also contributed to higher spending on home d?cor and furnishings, with consumers seeking both premium and budget-friendly options. The rapid growth of e-commerce platforms has revolutionized the distribution landscape, providing consumers with convenient access to a vast array of plastic furniture products and enabling manufacturers to reach a broader customer base.

Despite these structural tailwinds, the market faces a few immediate challenges. Fierce competition among numerous suppliers and manufacturers has led to market saturation in some regions, putting pressure on prices and profit margins.

Additionally, while plastic furniture is celebrated for its affordability and versatility, it still contends with perceptions of being less sophisticated or durable compared to wood or metal alternatives. Susceptibility to wear and tear, especially in high-traffic or outdoor settings, remains a concern, as does the need for continuous innovation to meet evolving consumer expectations for design and quality.

In summary, the Indian plastic furniture market is poised for sustained expansion, driven by urbanization, changing lifestyles, and a growing commitment to sustainability. The sectors future will hinge on the ability of manufacturers to innovate with eco- friendly materials, respond to consumer demand for functional and stylish products, and navigate the challenges of intense competition and evolving market dynamics. As Indias economy and population continue to grow, plastic furniture is set to play an increasingly prominent role in shaping the countrys residential and commercial environments.

COMPANY OVERVIEW

Established in 1992 and headquartered in Udaipur, Rajasthan, PIL Italica Lifestyle Limited has emerged as a leading name in the Indian lifestyle furniture sector, renowned for its innovative, functional, and luxury furniture offerings. The Company initially carved its niche in the molded plastic furniture market and has recently diversified its portfolio to include wooden reflecting its commitment to evolving consumer preferences and market trends.

PIL Italica operates two major manufacturing units: its flagship facility in Udaipur and another plant in Silvassa, acquired through a strategic inorganic growth transaction. This acquisition not only expanded the Companys manufacturing capacities but also strategically positioned PIL Italica to strengthen its presence in the southern and western regions of India. The Silvassa unit, with its advantageous logistics and proximity to key markets, enables the Company to streamline operations and leverage seamless transportation networks, efficiennationwide. enhancingdelivery

The Company boasts a robust operational manufacturing capacity of 8,450 MTPA across its 2 operational units. In line with its growth strategy, PIL Italica is further investing in additional injection molding machines equipped with the latest technology, as well as new molds and dyes for its Silvassa plant. This initiative is expected to increase the Companys manufacturing capacity by 1,600 MTPA, reaching a cumulative capacity of 10,050 MTPA in a phased manner by March 2026.

The expanded capacity will enable the production of value-added products such as advanced furniture, crates, and waste bins, further diversifying the Companys product mix. With corporate offices in Mumbai and operational offices in

Delhi, PIL Italica has established a strong pan-India presence, supported by a robust distribution network that includes over 10 fulfillment centers and an expansive network of dealers and distributors. The Companys focus on e-commerce, digital marketing, and consumer-centric strategies has enabled it to reach a wider audience and adapt to changing retail dynamics.

PIL Italicas product portfolio is extensive, encompassing plastic chairs, tables, stools, trolleys, sun loungers, crates, storage bins, waste bins, and, more recently, wooden furniture.

The Company is recognized for its commitment to innovation and advanced manufacturing techniques, as evidenced by its furniture, launch of industry-first products like the Spine Chair and the fully ventilated Oxy series chairs. With over 150 proprietary molds, PIL Italica continually introduces new designs and value-added products to meet evolving customer demands.

Quality is a cornerstone of PIL Italicas operations. The Company is ISO 9001:2015 accredited and is distinguished as the only Indian Company with CE certified plastic furniture products, underscoring its adherence to international standards. PIL Italicas philosophy extends beyond commercial objectives; it is deeply invested in understanding and fulfilling customer needs, focusing on creating furniture that is not only functional but also comfortable and aesthetically pleasing. This customer-centric approach is reflected in its continuous product innovation and dedication to delivering outstanding value.

PIL Italicas strategic expansion, technological upgrades, and product diversification position it as a dynamic player in the Indian furniture industry. The Companys vision is to blend quality, innovation, and customer satisfaction, ensuring sustained growth and relevance in a competitive market. Its ongoing investments in capacity, technology, and distribution are aimed at reinforcing its market leadership and expanding its footprint pan-India.

In summary, PIL Italica Lifestyle Limited stands out as a pioneer in the Indian furniture landscape, leveraging decades of expertise, a robust manufacturing base, and a strong commitment to quality and innovation to deliver value-added products that cater to the evolving needs of consumers across the country.

FY25 PERFORMANCE DISCUSSION

Financial Overview

( in Lakhs)

Particulars	FY25	FY24	YOY Growth (%)
Total Income	10,083.18	9,725.19	3.68
EBITDA	1,004.77	812.40	23.68
EBITDA (%)	9.96%	8.35%	161 bps
Profit Before Tax (PBT)	700.92	619.79	13.09
Profit After Tax (PAT)	524.26	461.95	13.49
PAT (%)	5.20%	4.75%	45 bps

Financial Ratios

Particulars	Numerator	Denominator	March 31, 2025	March 31, 2024	Variance	Remarks
Current Ratio	Current assets	Current liabilities	3.51	3.11	12.86%
Debt - Equity Ratio	Total Debt	Shareholders Equity	0.22	0.31	-29.03%	Decrease in Debts
Debt Service Coverage Ratio	EBITDA	Interest plus principal	5.56	6.41	-13.26%
Return on Equity (ROE)	Net Profits after taxes	Average Shareholders Equity	6.86%	6.43%	6.69%
Inventory Turnover Ratio	Sale of products	Average Inventory	5.68%	5.49%	3.46%
Trade Receivables Turnover Ratio	Revenue	Average Trade Receivable	16.11	15.16	6.27%
Trade Payables Turnover Ratio	Net Credit Purchases	Average Trade Payables	35.84	21.29	68.34%	Decrease in Trade Payables
Net Capital Turnover Ratio	Net Sales	Working Capital	2.72	2.20	23.64%
Net Profit Ratio	Net Profits after taxes	Net Sales	5.38%	4.89%	10.02%
Return on Capital Employed (ROCE)	EBITDA	Capital Employed	12.12%	10.57%	14.66%
Return on Investment (ROI) Unquoted	Income generated from investments	Time weighted average investments	No income generated from investment.

Outlook

PIL Italica is poised for robust growth as it continues to strengthen its pan-India presence by tapping into new markets and enhancing its distribution network through the addition of dealers, distributors, and strategic fulfillment centers.

The Companys aggressive on-ground demand generation activities are further fueling this expansion.

In line with its growth strategy, PIL Italica is expanding capacity at its Umerkui unit by installing a state-of-the-art injection moulding line, enabling the production of a wider range of product variants and designs. On the brand building front, the

Company has rolled out a comprehensive marketing strategy, significantly increasing investments in newspaper and outdoor advertisements, regional campaigns, product demonstrations, digital marketing, and high-visibility promotions such as advertising during the IPL on Jio Cinema. These initiatives are expected to substantially boost Italicas brand awareness and market reach across the country.

Sustainability also remains integral to the companys outlook, with all manufacturing waste being reused to minimize its carbon footprint. Additionally, ongoing investments in digital tools and marketing strategies are set to enhance brand visibility and operational efficiency. With these concerted efforts, PIL Italica is confident of achieving 15% topline growth and at least a 150 basis point improvement in EBITDA margins in the coming year. The Companys unwavering commitment to innovation, operational excellence, and sustainability will continue to drive its success in the years ahead.

Internal Controls and their Adequacy

The Company has established a comprehensive system of internal controls designed to safeguard its assets against unauthorized use or disposal. This framework ensures that all transactions are properly authorized, accurately recorded, and transparently reported. In addition, the Company has implemented effective mechanisms to optimize resource utilization, enhance operational activities, and ensure strict compliance with applicable laws and regulations. The adequacy and effectiveness of these internal control systems have been independently verified and affirmed by the auditors.

Human Resource Development and Industrial Relations

PIL Italica Lifestyle Limited places significant emphasis on its human resources, recognizing its workforce as one of the Companys most vital assets and a cornerstone for sustainable growth and innovation. The Companys approach to human capital management is rooted in the belief that investing in people directly translates to organizational success and long-term value creation. Accordingly, PIL Italica actively engages with its employees through a range of initiatives aimed at enhancing their skills, knowledge, and overall professional development. These initiatives include regular training programs, workshops, and opportunities for upskilling, ensuring that employees remain abreast of industry trends and best practices, while also fostering a culture of continuous learning and adaptability.

Attracting and retaining top talent is a strategic priority for PIL Italica Lifestyle. The Company is deeply committed to building a strong employer brand underpinned by its reputation for ethical business practices. This commitment is reflected in its efforts to create a supportive and inclusive work environment where employees feel valued, motivated, and empowered to contribute to the Companys vision. PIL Italicas brand reputation as a reliable and forward-thinking organization not only helps draw skilled professionals from across the industry but also encourages long-term retention by offering meaningful career growth opportunities and a sense of belonging.

Throughout the reviewed period, employee relations at PIL Italica Lifestyle remained positive and highly cooperative across all organizational levels. The Companys leadership has consistently prioritized open communication, mutual respect, and transparency, which have been instrumental in maintaining harmonious industrial relations and a collaborative workplace-to-day culture. As of March 31, 2025, PIL Italica Lifestyle Limited employed a total of 227 individuals across all its locations.

Cautionary Statement

This section of the Annual Report has been included in adherence to the spirit enunciated in the Code of Corporate Governance approved by the Securities and Exchange Board of India. Shareholders and Readers are cautioned that in the case of data and information external to the Company, though the same are based on sources believed to be reliable, no representation is made on its accuracy or comprehensiveness.

Further, utmost care has been taken to ensure that the opinion expressed therein contain its perceptions on most of the important trends having a material impact on the Companys operations.

The opinions expressed by the management may contain certain forward-looking statements in the current scenario, which is extremely dynamic and increasingly fraught with risk and uncertainties. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, future events, or otherwise. Estimation and expectation made in the Report may differ from actual performance due to various Economic conditions, Government Policies and other related factors.