Pil Italica Lifestyle Ltd Management Discussions

Annexure B:

Management Discussion and Analysis

ECONOMIC OVERVIEW

Global Economy

The global economy during FY26 continued to witness moderate growth amid persistent geopolitical tensions, inflationary pressures, volatile commodity prices, and ongoing supply chain disruptions. Global economic activity remained uneven across regions, with advanced economies experiencing relatively slower growth due to tighter monetary policies, elevated interest rates, and subdued manufacturing activity, while emerging economies demonstrated comparatively resilient growth supported by domestic consumption and infrastructure spending.

During the year, geopolitical conflicts and uncertainties in key regions led to volatility in global crude oil and commodity prices. Fluctuations in energy prices impacted transportation, logistics, and input costs across manufacturing industries globally, including the plastics and polymers sector. The volatility in crude oil prices also resulted in fluctuations in polymer and petrochemical-linked raw material prices during the year.

Global inflation showed signs of gradual moderation; however, pricing pressures continued across several sectors due to supply chain realignments, higher logistics costs, and commodity market volatility. Central banks across major economies maintained a cautious approach toward monetary policy in order to balance inflation control with economic growth.

The global manufacturing sector continued to face challenges arising from trade uncertainties, changing geopolitical dynamics, and evolving consumer demand patterns. At the same time, long-term demand fundamentals remained supported by urbanization, infrastructure development, technological advancement, and rising consumption trends across emerging markets.

Despite short-term macroeconomic headwinds, the global economy continues to present long-term growth opportunities driven by increasing industrialization, expanding middle-class populations, and rising demand for affordable and utility-driven consumer products across developing economies.

Indian Economy

India continued to remain one of the fastest-growing major economies globally during FY26, supported by resilient domestic demand, strong infrastructure spending, stable macroeconomic fundamentals, and improving rural consumption trends.

The Indian economy demonstrated strong resilience despite external headwinds arising from geopolitical conflicts, global trade disruptions, and commodity price volatility. Government-led capital expenditure on infrastructure, logistics, housing, transportation, and urban development continued to support economic activity across sectors.

Private consumption remained healthy during the year, aided by improving rural demand, favorable demographics, rising disposable incomes, and expanding middle-class consumption. The services sector remained a key growth engine, while industrial and manufacturing activity continued to expand steadily.

Inflationary pressures remained relatively contained during the year; however, elevated global crude oil prices significantly impacted fuel costs, logistics expenses, and prices of petrochemical-linked raw materials. The plastics and polymers industry witnessed substantial increases in procurement costs due to higher crude oil prices triggered by ongoing geopolitical conflicts and war-related disruptions.

The Reserve Bank of India continued to maintain a balanced monetary policy approach to support growth while ensuring inflation stability. Indias foreign exchange reserves remained comfortable, providing resilience against global volatility and external shocks.

Indias long-term growth outlook continues to remain positive, supported by infrastructure development, manufacturing growth initiatives, urbanization, digital transformation, and increasing formalization of the economy.

INDUSTRY OVERVIEW

Global Plastic Furniture Market Overview

The global plastic furniture market continued its steady growth trajectory during FY26, supported by increasing urbanization, rising demand for affordable furniture solutions, expanding hospitality and real estate sectors, and growing consumer preference for lightweight and low-maintenance products.

Plastic furniture continued to gain wider acceptance across residential, commercial, hospitality, healthcare, educational, and outdoor applications owing to its affordability, versatility, durability, weather resistance, and ease of maintenance.

Demand for modular, multifunctional, and space-efficient furniture solutions remained strong globally, particularly in urban markets characterized by shrinking living spaces and evolving consumer lifestyles. Manufacturers increasingly focused on innovation, aesthetics, customization, and product functionality to address changing consumer preferences.

However, the industry faced cost pressures during FY26 due to volatility in crude oil prices amid geopolitical tensions and global supply-side uncertainties. Since plastic polymers are linked to crude oil derivatives, fluctuations in oil prices resulted in volatility in raw material procurement costs across the global plastics industry. Volatile freight and logistics costs further impacted operating margins across the sector.

Sustainability continued to remain a key industry focus area during the year. Manufacturers globally increasingly adopted recycled plastics, eco-friendly materials, energy-efficient manufacturing processes, and circular economy practices to align with environmental regulations and evolving consumer expectations.

Asia-Pacific continued to remain one of the fastest-growing regions for plastic furniture, driven by rising urbanization, strong manufacturing ecosystems, increasing disposable incomes, and expanding middle-class populations.

Indian Plastic Furniture Market Overview

The Indian plastic furniture market continued to witness steady growth during FY26 driven by urbanization, rising consumer aspirations, increasing housing demand, growth in commercial infrastructure, and changing lifestyle preferences.

Demand for lightweight, durable, aesthetically appealing, and affordable furniture products continued to remain healthy across residential, institutional, and commercial segments. The increasing adoption of compact living spaces and multifunctional furniture solutions

further supported demand for plastic furniture products.

The growth of e-commerce platforms, organized retail channels, and digital commerce enhanced product accessibility and consumer reach across urban and semi-urban markets. Rising disposable incomes and increasing spending on home improvement and lifestyle products also contributed positively to market growth.

The Indian plastic furniture industry witnessed increasing focus on sustainability and environmentally conscious manufacturing practices. Manufacturers continued to invest in recycled plastics, waste management initiatives, and eco-friendly production processes to align with evolving regulatory standards and consumer expectations.

Despite favorable demand trends, the industry faced several challenges during the year. Volatility in crude oil prices amid geopolitical tensions created fluctuations in polymer and raw material prices, thereby impacting industry margins. Intense competition, pricing pressures, evolving consumer preferences, and environmental regulations also remained key industry concerns.

Nevertheless, the long-term outlook for the Indian plastic furniture market remains positive, supported by favorable demographics, urbanization, infrastructure development, rising middle-class consumption, and increasing demand for affordable and functional furniture solutions.

Opportunities

Rising urbanization and increasing migration towards urban and semi-urban regions continue to drive demand for affordable, durable, and space-efficient furniture solutions.

Growth in residential housing, commercial infrastructure, hospitality, educational institutions, and public utility projects presents significant opportunities for increased demand across furniture categories.

Rising disposable incomes, improving consumer lifestyles, and increasing aspirations of the growing middle-class population are supporting higher spending on home improvement and lifestyle products.

Increasing penetration of organized retail, dealer networks, and digital marketing platforms is enhancing market accessibility and strengthening consumer reach across India.

Growing consumer preference for aesthetically appealing, innovative, modular, and multifunctional furniture products is creating opportunities for value-added product offerings and product diversification.

Expansion into adjacent product categories such as storage solutions, crates, waste bins, and premium lifestyle furniture provides opportunities for improving product mix and enhancing revenue streams.

Increasing awareness regarding sustainable and recyclable products is encouraging manufacturers to adopt environmentally conscious manufacturing practices and develop eco-friendly product offerings.

Ongoing investments in manufacturing capacity expansion, technology upgradation, product innovation, and distribution network strengthening are expected to support market penetration and long-term growth.

Favorable demographic trends, rising nuclear families, and increasing demand for low-maintenance and lightweight furniture products continue to support long-term industry growth prospects.

Threats

Volatility in crude oil and polymer prices may impact raw material procurement costs and operating margins, as polymers constitute a major component of the Companys cost structure.

Geopolitical tensions, supply-side disruptions, and fluctuations in fuel prices may continue to impact logistics, transportation, and overall supply chain costs.

Intense competition from organized and unorganized industry participants may exert pressure on pricing, margins, and market share.

Regulatory changes relating to plastics usage, environmental compliance, and waste management norms may increase compliance requirements and operational costs.

Fluctuations in freight, transportation, and utility costs may adversely impact profitability and operational efficiencies.

Rapidly evolving consumer preferences and changing design trends require continuous focus on product innovation, aesthetics, quality enhancement, and customer engagement.

Availability of alternative furniture materials such as wood, metal, and engineered products may impact demand dynamics in certain customer segments.

Economic slowdowns, inflationary pressures, or moderation in consumer spending may impact demand for discretionary lifestyle and furniture products.

COMPANY OVERVIEW

PIL Italica Lifestyle Limited has established itself as a prominent and trusted player in the Indian lifestyle furniture industry, driven by its unwavering commitment to quality, innovation, functionality, and customer-centricity. Established in 1992 and headquartered in Udaipur, Rajasthan, the Company has consistently evolved with changing consumer aspirations and market dynamics, emerging as a recognized brand in the premium plastic and lifestyle furniture segment.

Aligned with the Companys theme, “Designing Comfort. Delivering Growth.”, PIL Italica continues to focus on creating thoughtfully designed, aesthetically appealing, durable, and value-driven furniture solutions that cater to the evolving lifestyle needs of modern consumers across India.

The Company operates advanced manufacturing facilities at Udaipur and Silvassa, equipped with modern infrastructure and state-of-the-art injection molding technologies. The strategically located Silvassa facility strengthens the Companys operational footprint across western and southern India, enabling improved logistics efficiencies, faster delivery timelines, and enhanced market responsiveness.

Over the years, PIL Italica has continuously expanded and diversified its product portfolio to address evolving consumer preferences and emerging market opportunities. The Company offers a wide range of products including plastic chairs, tables, stools, loungers, trolleys, crates, storage solutions, waste bins, and wooden furniture products. Through continuous product innovation, design enhancement, and focus on functionality, the Company remains committed to delivering superior value and comfort to its customers.

Innovation and manufacturing excellence remain integral to the Companys growth strategy. PIL Italica continues to invest in advanced injection molding machines, new molds, product development, and technology upgradation initiatives aimed at enhancing production capabilities, operational efficiencies, and product quality. The ongoing expansion initiatives at the Umerkui unit are expected to further strengthen manufacturing capacity and support the Companys future growth plans.

The Company has established a robust pan-India distribution network comprising dealers, distributors, fulfillment centers, and growing digital commerce channels, enabling deeper market penetration and wider customer reach. Strategic investments in branding, digital marketing, regional campaigns, and consumer engagement initiatives continue to enhance brand visibility and strengthen the Companys market presence across geographies.

Backed by decades of industry experience, strong manufacturing capabilities, an expanding product portfolio, and a customer-focused approach, PIL Italica remains well-positioned to capitalize on the growing opportunities in the Indian furniture and lifestyle products market. The Company continues to remain committed to operational excellence, sustainable growth, and delivering innovative furniture solutions that combine comfort, functionality, and modern design aesthetics.

FY26 PERFORMANCE DISCUSSION
Financial Performance Overview
Particulars	FY26	FY25	YoY Growth
			(%)
Total Income	10870.35	10083.18	7.81
EBITDA	933.46	1004.77	-7.10
EBITDA (%)	8.59	9.96	-138 bps
Profit Before Tax (PBT)	605.47	700.92	-13.62
Profit After Tax (PAT)	449.36	524.26	-14.29
PAT (%)	4.13	5.20	-107 bps

During FY26, PIL Italica Lifestyle Limited delivered resilient operational performance despite a challenging business environment characterized by volatility in crude oil prices, elevated polymer costs, inflationary pressures, and continued geopolitical uncertainties impacting global supply chains and input costs.

For FY26, the Company reported Total Income of 108.70 Crores as against 100.83 Crores in FY25, registering a growth of 7.81% on a year-on-year basis. The growth was supported by improved market penetration, strengthening of the distribution network, enhanced brand visibility initiatives, and steady demand across key product categories.

During the year, the Company continued to witness pressure on input costs due to fluctuations in crude oil prices and higher polymer procurement costs arising from geopolitical tensions and supply-side disruptions. Since raw materials constitute a significant portion of the Companys overall cost structure, the increase in raw material prices impacted operating margins during the year.

Despite these headwinds, the Company remained focused on operational efficiencies, strategic sourcing, product mix optimization, cost rationalization, and capacity enhancement initiatives. The Company also continued to invest in branding, digital marketing, dealer expansion, and regional market development activities to strengthen its market presence and consumer engagement.

EBITDA for FY26 stood at 9.33 Crores as compared to 10.05 Crores in FY25. EBITDA Margin for the year stood at 8.59% as against 9.96% in the previous year. Profit Before Tax (PBT) stood at 6.05 Crores compared to 7.01 Crores in FY25, while Profit After Tax (PAT) stood at 4.49 Crores as against 5.24 Crores in the previous year. PAT Margin for FY26 stood at 4.13% against 5.20 % in the previous year.

The moderation in profitability during the year was primarily attributable to elevated raw material prices, increased logistics and transportation costs, and continued investments towards market expansion, branding, and distribution strengthening initiatives.

The Company continued to benefit from improving consumer demand trends, increasing acceptance of value-added furniture products, expanding dealer and distributor network, and enhanced brand visibility across key markets. Continuous investments in product innovation, manufacturing capabilities, and customer engagement initiatives are expected to further strengthen the Companys long-term growth prospects.

Operational Performance

During FY26, PIL Italica Lifestyle Limited continued to strengthen its operational capabilities through strategic investments in manufacturing infrastructure, technology upgradation, product innovation, and distribution network expansion. The Company remained focused on improving operational efficiencies, enhancing product quality, and strengthening its market presence across key regions.

The Company continued to invest in advanced manufacturing capabilities across its operational facilities at Udaipur and Silvassa.

In line with its product diversification strategy, the Company also continued to invest in new molds, product development initiatives, and design enhancement programs aimed at strengthening its portfolio across plastic furniture, storage solutions, crates, waste bins, and lifestyle furniture categories. Continuous focus on innovation and functionality enabled the Company to cater to evolving consumer preferences and changing market trends.

During the year, the Company further strengthened its pan-India market presence through focused investments in distribution expansion, branding, and consumer engagement initiatives. Key operational and market development initiatives undertaken during the year included:

Expansion of dealer and distributor network across key markets

Strengthening of fulfillment, warehousing, and logistics capabilities

Enhanced digital marketing and consumer outreach initiatives

Increased focus on regional branding and promotional campaigns

Product demonstrations and customer engagement activities

Continued strengthening of online and digital commerce presence

The Company also continued to focus on operational discipline, efficient inventory management, supply chain optimization, and strategic sourcing initiatives to mitigate the impact of volatility in raw material and logistics costs during the year.

Backed by ongoing investments in manufacturing, product innovation, distribution reach, and brand visibility, the Company remains well-positioned to capitalize on long-term growth opportunities in the Indian furniture and lifestyle products market.

Key Financial Ratios

Particulars	Numerator	Denominator	March 31, 2026	March 31, 2025	Variance	Remarks
Current Ratio	Current Assets	Current Liabilities	2.66	3.51	-24.22%
Debt Equity Ratio	Total Debt	Shareholders Equity	0.32	0.22	45.45%	Increase in debt
Debt Service	EBITDA	Interest plus Principal	5.50	5.56	-1.08%
Coverage Ratio
Return on Equity (ROE)	Net Profit after Taxes	Average Shareholders Equity	5.42%	6.86%	-20.99%
Inventory	Sale of Products	Average Inventory	5.84%	5.68%	2.82%
Turnover Ratio
Trade Receivables Turnover Ratio	Revenue	Average Trade Receivables	20.96	16.11	30.11%	Decrease in debtor
Trade Payables Turnover Ratio	Net Credit Purchases	Average Trade Payables	26.62	35.84	-25.73 %	Increase in trade payable
Net Capital	Net Sales	Working Capital	2.88	2.72	5.88%
Turnover Ratio
Net Profit Ratio	Net Profit after Taxes	Net Sales	4.23%	5.38%	-21.38%
Return on Capital Employed (ROCE)	EBITDA	Capital Employed	10.58%	12.12%	-12.71%
Return on Investment (ROI)	Income Generated from Investments	Time Weighted Average Investments	No income generated from the investment

The Company maintained a healthy financial position during FY26 through prudent financial practices, and efficient resource utilization.

SUSTAINABILITY AND ESG INITIATIVES

Sustainability continues to remain an integral part of PIL Italica Lifestyle Limiteds long-term growth strategy and operational philosophy. The Company remains committed to environmentally responsible manufacturing practices, efficient resource utilization, and sustainable operational development while continuously striving to minimize its environmental footprint.

The Company continues to focus on strengthening sustainable manufacturing practices across its operations through initiatives aimed at improving resource efficiency, reducing wastage, and enhancing operational effectiveness. Key sustainability initiatives undertaken during the year include:

Reuse and recycling of manufacturing waste across operational processes

Continuous focus on minimizing material wastage and improving yield efficiencies

Adoption of energy-efficient manufacturing practices and process optimization initiatives

Development of durable, long-life, and value-driven products aimed at enhancing product sustainability

Efficient utilization of raw materials, utilities, and operational resources across manufacturing facilities

The Company also continues to evaluate opportunities to increase the usage of recyclable materials, strengthen environmentally conscious manufacturing processes, and enhance sustainability-led operational practices in line with evolving industry standards and regulatory expectations.

Through its continued focus on operational efficiency, responsible manufacturing, and sustainable growth practices, the Company remains committed to creating long-term value for all stakeholders while contributing towards environmentally responsible business operations.

DIGITAL AND BRAND BUILDING INITIATIVES

During FY26, PIL Italica Lifestyle Limited continued to strengthen its brand-building and digital outreach initiatives with a focused approach towards enhancing consumer engagement, expanding market reach, and strengthening brand visibility across key markets in India.

The Company continued to invest in integrated marketing and promotional initiatives aimed at improving brand recall, increasing customer connect, and strengthening its positioning in the lifestyle furniture segment. Key initiatives undertaken during the year included:

Enhanced digital marketing and consumer outreach campaigns across multiple platforms

Increased focus on regional advertising and localized brand promotion initiatives

Outdoor branding and newspaper advertisement campaigns across strategic markets

Expansion and strengthening of presence across digital commerce and e-commerce platforms

Product demonstrations, promotional activities, and dealer engagement programs

Strengthening social media presence and consumer interaction initiatives

Participation in high-visibility advertising campaigns during marquee sporting and entertainment events

These initiatives significantly enhanced the Companys market visibility and consumer engagement across urban and semi-urban markets. The Companys continued focus on strategic branding, digital outreach, and consumer-centric marketing initiatives is expected to further strengthen brand positioning, customer recall, and long-term market penetration across diverse customer segments.

OUTLOOK

The outlook for PIL Italica Lifestyle Limited remains positive, supported by favorable industry fundamentals, rising urbanization, increasing consumer aspirations, and growing demand for affordable, functional, and lifestyle-oriented furniture solutions.

The Company continues to strengthen its pan-India distribution network through expansion of dealers, distributors, fulfillment infrastructure, and digital commerce channels. Ongoing capacity expansion, technology upgradation, and operational improvement initiatives are expected to support future growth opportunities.

In line with evolving consumer preferences, the Company is undertaking various new initiatives focused on product innovation, design enhancement, and launch of contemporary products catering to next-generation consumers and modern lifestyles.

The Company remains focused on:

Expanding and diversifying its product portfolio

Launching innovative and value-added products

Increasing market penetration across key regions

Strengthening brand visibility and consumer engagement

Enhancing operational efficiencies and supply chain capabilities

Expanding digital and e-commerce presence

Maintaining prudent financial discipline

While volatility in crude oil prices and polymer costs may continue to pose near-term challenges, the Company remains confident of navigating these headwinds through strategic sourcing, cost optimization, operational efficiencies, and focused execution.

Backed by strong manufacturing capabilities, continuous innovation, expanding market presence, and a customer-centric approach, the Company remains optimistic about achieving sustainable long-term growth and creating value for stakeholders.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with the nature, size, and complexity of its operations. These systems are designed to safeguard assets, ensure accuracy and completeness of accounting records, prevent frauds and errors, and facilitate timely preparation of reliable financial information.

The internal control framework supports operational efficiency, effective risk management, regulatory compliance, and transparent financial reporting. Regular internal audits and management reviews are conducted to evaluate the effectiveness of internal controls and identify improvement opportunities.

The Audit Committee periodically reviews internal audit findings, compliance frameworks, and risk management practices to ensure continuous strengthening of internal control systems.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company firmly believes that its employees are one of its most valuable assets and key contributors to long-term success and sustainable growth.

The Company continues to focus on:

Employee engagement and development Skill enhancement and training initiatives Leadership development programs Safe and inclusive workplace practices Performance-driven organizational culture Talent retention and capability building

Regular training programs, workshops, and upskilling initiatives are conducted to enhance employee competencies and operational effectiveness. The Company remains committed to fostering a collaborative and employee-centric work environment that encourages innovation, accountability, and professional growth.

Industrial relations across all facilities remained cordial and

harmonious during the year.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, estimates, expectations, projections, or predictions may constitute “forward-looking statements” within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied due to various factors including changes in economic conditions, government regulations, taxation policies, demand-supply dynamics, raw material prices, geopolitical developments, currency fluctuations, competition, and other incidental factors.

The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statements based on subsequent developments, information, or events.