Pramara Promotions Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Company Overview

Pramara Promotions Limited ("Pramara") is a leading integrated manufacturer and solutions provider in the toys and promotional products industry. With nearly three decades of experience since its founding in 1996, we specialize in ideation, product development, and large-scale manufacturing for multinational corporations across FMCG, QSR, pharma, personal care, telecom, and retail.

We are among the very few Indian companies with an end-to-end setup-from product design and mold development to cleanroom assembly, EN71/ASTM-certified testing facilities, pad/UV printing, and global logistics management. Our track record of successful multinational campaigns and compliance with stringent international audits (including Mondelez, Unilever, Kelloggs, Burger King, Reckitt, Colgate, LOreal, and P&G) has positioned Pramara as a trusted global OEM partner.

Global Economic Overview

The global toys and games market, valued at over US$180 billion in 2024, continues to grow strongly, driven by demand for innovative, licensed, and eco-friendly products. The U.S. and Europe remain the largest consumption markets, with sourcing shifting significantly towards India and Southeast Asia as global brands diversify beyond China. Tariff realignments in the U.S. have amplified Indias attractiveness as a manufacturing hub for toys and plastic products.

Key industry trends shaping the global outlook include:

• Accelerated adoption of eco-friendly materials and sustainable packaging.

• Rising importance of licensed toys and figurines driven by entertainment and media IPs.

• Increased reliance on OEM partners to deliver quality products at scale.

• Digital integration in promotional campaigns and experiential marketing.

Indian Economic & Industry Overview

Indias toy industry has crossed US$2 billion in 2024, with expectations to reach US$3.5 billion by 2028 at a double-digit CAGR. The Government of Indias "Make in India" push, combined with PLI incentives and new toy clusters, continues to strengthen Indias position as a credible global manufacturing base.

Pramara operates at the intersection of toys and consumer engagement products-bridging promotional requirements with retail-ready manufacturing. The industry is witnessing:

• Increasing demand for educational and STEM toys.

• Growth in loyalty and rewards programs linked with physical products.

• Expansion in e-commerce and private label channels for toys and accessories.

Business Strategy & Future Plans

Our growth strategy is built on strengthening existing operations while preparing for a much larger global footprint. Key initiatives include:

1. Strengthening Current Facilities

• Expanding the Daman plant with new cleanrooms, high-capacity molding lines, and advanced automation.

2. New Large-Scale Manufacturing Setup

• Planning a new large manufacturing facility in India with expanded production lines, flexible assembly cells, and additional testing capabilities to handle the increased volumes expected from our international client base. This step will ensure scalability, supply chain resilience, and long-term readiness as India consolidates its position as a global OEM hub.

3. Global Footprint

• USA office operational (Pramara NA), strengthening engagement with large retailers such as Walmart, Target, Home Depot, Lowes, 7-Eleven, and At Home.

• Hong Kong office continues as a sourcing and coordination hub.

• Japan: through our JV **Pramara Nippon Toycraft**, we are now positioned to capture and penetrate the Japanese toys and figurines market. This JV also enables us to soon begin retailing our manufactured products through some of Japans largest retail giants, supplying not only to Japan but also to their global markets.

4. Exports & Warehousing Strategy

• With new U.S. and European clients, we are steadily making inroads into exports in a significant way while continuing to grow in India.

• To better serve our U.S. customers, we are planning to establish a dedicated warehousing facility in the USA. This will allow us to manage inventories locally and offer door-delivery solutions, a capability highly valued by U.S. clients.

5. Product Innovation

• Retail brand "Toy Works" under development, focusing on toys and figurines for domestic and export markets.

• Launch of a figurine line (Indian mythology, superheroes, and character licensing).

• Expanded eco-friendly materials portfolio across plastics, paper, and packaging.

6. Aggregator & Digital Solutions

• Expanding aggregator role in home building materials (Surehome).

• Scaling loyalty and rewards programs via proprietary digital platforms.

• Broadening e-commerce channels, including private labels with Amazon. In addition, the JV also creates a pathway to introduce unique Japanese IP anime figurines and toys into the rapidly expanding Indian retail market. This leverages the strong anime and pop- culture fandom in India, giving Pramara an opportunity to not only export into Japan but also import Japanese cultural IP products into India, thereby building a two-way retail bridge.

SWOT Analysis Strengths:

• Trusted partner to global MNCs with approved audits (Unilever, Mondelez, Kelloggs, Reckitt, Colgate, LOreal, P&G).

• Integrated 40,000 sq.ft. Daman factory with cleanroom assembly, advanced testing, and printing capabilities.

• ISO 9001:2015, GMP, Sedex 4-Pillar, BIS, and CTPAT compliance.

• Global footprint: India HQ, USA office, Hong Kong office, and Japan JV (Pramara Nippon Toycraft).

Weaknesses:

• Long working capital cycles, particularly where external vendors (e.g., molding) are involved.

• Reliance on client approval/audit timelines for onboarding new multinational accounts.

Opportunities:

• U.S.-China tariff differential (25-36%) creating new sourcing opportunities for India.

• Expansion of eco-friendly and educational toy segments.

• Rising demand for OEM supply to large retailers and global toy brands.

• Government PLI schemes and "Make in India" policies favoring toy manufacturing.

• Retail access through Pramara Nippon Toycraft JV in Japan.

Threats:

• Volatility in raw material prices (plastics, PP, masterbatch).

• Tariff and trade uncertainties in the U.S. market.

• Intense competition from established Chinese and Vietnamese players.

• Increasing compliance costs with ESG and safety regulations.

Outlook

Pramara is at an inflection point of becoming a global OEM leader while simultaneously scaling its retail and aggregator platforms. With a strengthened U.S. presence, the Pramara Nippon Toycraft JV in Japan, and expanded Indian manufacturing capabilities, the company is well-positioned to capture global demand shifts. The upcoming large-scale manufacturing facility in India and plans for U.S. warehousing will ensure scalability, supply chain resilience, and stronger service for our clients.

Our continued investments in R&D, compliance, and digital solutions underline our commitment to delivering quality, innovation, and long-term value to both our clients and shareholders.

Cautionary Statement

Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties. When used in this discussion, words like will, shall, anticipate, believe, estimate, intend, and expect and other similar expressions as they relate to the Company or its business, are intended to identify such forward-looking statements. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether due to new information, future events or otherwise. Accordingly, actual results, performances or achievements could differ materially from those expressed or implied in such statements. Readers are cautioned not to place undue reliance on the forward-looking statements as they speak only as of their dates.