Retina Paints Ltd Management Discussions

INDIAN ECONOMY OVERVIEW

Throughout FY 2024 25, the global economy remained under the shadow of escalating geopolitical uncertainty. Conflicts in Europe and the Middle East continued unabated, exerting pressure on global energy security and trade flows. The Red Sea shipping disruptions, stemming from attacks on vessels, significantly impacted the Suez Canal corridor, leading to rerouting of cargo and elevated freight costs. Similarly, renewed tensions in the Strait of Hormuz threatened the stability of oil supplies, fueling sharp swings in crude prices, with an ~11% surge in June 2025 alone. These disruptions, combined with heightened commodity volatility and fragile supply chains, created a turbulent external environment. According to the IMF World Economic Outlook (October 2024), global growth is projected at 3.2% in 2024 and 2025, with risks tilted to the downside due to conflict-driven oil price shocks and geoeconomic fragmentation. Against this backdrop of global headwinds, India continued to stand out as the fastest-growing major economy in FY 2024 25. Growth momentum was supported by:

• Public capital formation and infrastructure investments,

• Robust services exports, particularly IT and digital services, and

• A strong domestic consumption base, though moderating compared to previous years.

The IMF Article IV Consultation (Feb 2025) highlights Indias real GDP growth at ~6.5% in FY 2024 25, after expanding by 7.6% in FY 2023 24

(NSO advance estimates). Inflation eased toward the Reserve Bank of Indias

2 6% tolerance band, averaging around 5%, with food price shocks being transitory. This created a relatively stable interest rate environment, supporting investor sentiment. The external sector remained resilient, with the current account deficit contained at ~0.9% of GDP, cushioned by services exports and diversified energy imports. Indias financial system continued to display resilience, with banks reporting healthy capital adequacy and reduced non-performing assets.

INDUSTRY STRUCTURE AND DEVELOPMENTS

PAINT INDUSTRY

During FY 2024 25, the Indian paint industry witnessed a period of transition marked by both opportunities and challenges. The decorative paints segment, which continues to account for the majority of demand, recorded subdued growth. While volumes expanded modestly by around 2 3%, overall value contracted by nearly 5 6% as consumers extended repainting cycles and showed a preference for more economical product categories. This trend was particularly visible in urban markets, where discretionary spending remained under pressure.

The industry also saw heightened competitive intensity, with new entrants expanding aggressively and existing players increasing promotional activities. This led to price discounting and stronger marketing spends, thereby exerting pressure on margins. CareEdge Ratings reported that overall industry revenue growth slowed to about 4% compared to the double-digit pace of the preceding years, though volume growth remained steady at around 10%, reflecting strong underlying demand but high price sensitivity.

Profitability, however, came under strain. Average operating margins for companies reduced from a historical average of around 18% to nearly 16% during the first half of FY25, and analysts expect this could moderate further in the coming years. In addition, advertising and promotional expenses rose by 100 200 basis points as companies sought to defend market share and strengthen brand identity.

Structurally, the industry continues to consolidate with organized players expanding capacity and enhancing distribution networks. The share of organized players is expected to approach 80% over the medium term, supported by large-scale investments, modern manufacturing facilities, and a stronger focus on digitalization.

Despite current pressures, the medium-term outlook remains positive. Urban demand is showing signs of gradual revival, and rural consumption is expected to improve with stable inflation and government-led housing and infrastructure initiatives. Furthermore, the industry is seeing rising demand for sustainable, eco-friendly, and technologically advanced coatings, which will be key drivers of long-term growth.

OPPORTUNITIES

MARKET EXPANSION

The steady rise in housing, urban infrastructure, and government initiatives such as affordable housing schemes and infrastructure development are expected to drive sustained demand for decorative and industrial paints. Growth in Tier-II and Tier-III cities presents an untapped opportunity, supported by rising disposable incomes and aspirations for better quality finishes.

SUSTAINABILITY AND INNOVATION

Increasing awareness of health, safety, and environmental concerns is accelerating the demand for eco-friendly paints with low or zero VOCs, bio -based formulations, and recyclable packaging. This trend provides an opportunity for innovation in product development, catering to environmentally conscious consumers while aligning with global green building standards.

TECHNOLOGICAL ADVANCEMENTS

Demand is rising for advanced coatings that offer higher durability, antimicrobial protection, weather resistance, and smart surface technologies. Continuous R&D investments in such areas can position the industry to cater to evolving consumer preferences and premiumization trends.

DIGITALIZATION AND DISTRIBUTION

The growing role of e-commerce, digital platforms, and data-driven marketing presents an opportunity to reach wider customer bases, improve dealer engagement, and streamline supply chains. Strengthening digital presence can help capture the next wave of consumer demand.

CHALLENGES

INTENSE PRICE COMPETITION

High competitive intensity and aggressive pricing strategies across the industry continue to exert pressure on margins. Sustaining profitability requires balancing competitive pricing with differentiated value propositions.

RAW MATERIAL PRICE VOLATILITY

Fluctuations in crude oil prices and supply chain disruptions continue to impact the cost of key raw materials such as resins, solvents, and titanium dioxide. This volatility poses challenges in maintaining stable pricing strategies and profitability.

CHANGING CONSUMER PREFERENCES

While demand for sustainable products is rising, it requires significant investment in R&D and reconfiguration of supply chains. Companies need to adapt rapidly to these evolving preferences, which may strain resources in the short term.

REGULATORY AND ENVIRONMENTAL NORMS

Increasingly stringent environmental regulations on emissions, waste management, and chemical usage require continuous compliance and investment in sustainable manufacturing practices.

SEGMENT WISE PERFORMANCE

At present, the Company is engaged only in manufacturing and selling of paints and there is no other separate reportable segment.

a) Revenue from operations increased to Rs. 2,06,242.23 thousands as against Rs. 1,16,564.43 thousands in the previous year a growth of 76.93%. b) Profit After Tax (PAT) of the Company stood at Rs. 13,039.42 thousands as against Rs. 7,423.74 thousands for the previous year registering a growth of 75.64% in PAT.

OUTLOOK

The Company has embarked on a transformative journey, redefining its business model through the strategic integration of Franchisee outlets and its own Retail Outlets. Initiating this shift, the company celebrated the inauguration of its Eighty-Fifth Franchisee Outlet in Vijaynagram, Andhra Pradesh, on the 09^th August, 2025. As on the date of this report, the company operates a total of Eight-Five Franchisee Outlets, strategically positioned in key areas, providing convenient access to Retinas products for customers in different regions. Leveraging this innovative business model, the Company ensures the availability of its diverse product range to a wider audience, eliciting enthusiastic responses from customers and driving robust daily sales figures.

RISK AND CONCERNS

Risk management plays a crucial role in corporate governance and strategy development. We recognize that risk assessment and mitigation are ongoing processes that must adapt to the evolving risk landscape, encompassing short-term, medium-term, and long-term challenges.

We believe that implementing systematic risk management practices is essential for effectively navigating towards our business objectives and ensuring sustainable growth in a volatile and complex environment. These risks continually evolve and change, both in terms of their impact and the likelihood of their occurrence.

We understand the importance of operating within the dynamics of the paints and coatings industry and taking calculated risks to maintain our relevance in the market.

Our responsible management teams and functional experts identify risks, followed by the formulation of appropriate mitigating actions.

Through our risk management framework, we strive to provide reasonable assurance that our business objectives can be achieved, and our obligations to various stakeholders can be fulfilled. The Board oversees the implementation of risk mitigation measures for key risks, as identified by the Audit Committee.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established internal control systems that are appropriate for the nature of its business, as well as the scale and complexity of its operations. These systems include well-defined policies and procedures designed to ensure the effectiveness and efficiency of its operations, reliability of financial reporting, compliance with applicable laws and regulations, prevention and detection of fraud and errors, and safeguarding of assets.

Regular examinations by internal auditors will be conducted to assess the adequacy and effectiveness of these internal controls, following a risk-based audit strategy. The internal audit plan is reviewed and approved by the Audit Committee, which also evaluates the sufficiency and effectiveness of the Companys internal financial controls and monitors the implementation of audit recommendations. The Audit Committee is kept informed of significant audit findings and activities, and appropriate corrective measures are undertaken accordingly.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

The Company relies heavily on its human resources to propel its operations, accomplish its objectives, and sustain its competitive advantage. It is committed to establishing a robust leadership succession plan while concurrently cultivating a secure, inclusive, and diverse workforce. Several training initiatives are regularly implemented to consistently engage with employees. The all-encompassing culture plays a pivotal role in fostering high performance among individuals and cultivating a sustainable business environment.

Employees are the pillars of your Company and a major resource for the future. Its their inexorable commitment that helps your Company to create spaces that enhance quality of life. Keeping the spirits high at the workplace needs sound mental and physical fitness and a deep-rooted culture that promotes work-life balance.

Your Companys focus is to continue building organizational capability and capacity, leverage and nurture key talent, encourage meritocracy and enhance people utilization aligned with the business strategy. As of March 31, 2025, your Company had 35 employees.

KEY FINANCIAL RATIOS

Particulars	Unit of Measure ment	31.03.2025	31.03.2024	Variation in %
Current Ratio	Times	2.38	2.35	1.28%
Debt-Equity Ratio	Times	0.26	0.29	-10.34%
Debt Service Coverage	Times	0.31	0.24	14.81%
Ratio
Return on Equity	In %	4.64	4.29	8.16%
Ratio
Inventory Turnover	Times	3.28	3.24	1.23%
Ratio
Trade receivables	Times	1.20	2.23	-46.19%
Turnover Ratio
Trade payables	Times	1.86	2.89	-35.64%
Turnover Ratio
Net Capital Turnover	Times	0.88	1.32	-33.33%
Ratio
Net Profit Ratio	In %	4.39	4.29	2.33%
Return on Capital	In %	0.09	0.06	50.00%
Employed
Return on Networth	In %	0.038	0.033	15.00%
Return on Investment	In %	-	-	-
(Assets)

The variation beyond 25% in some of the financial ratios is due to strong growth in Q4, which significantly increased turnover and receivables. In addition, higher capital was employed to sustain this growth momentum.

These changes are aligned with the Companys expansion and are expected to stabilize going forward.

DISCLOSURE OF ACCOUNTING TREATMENT

In the preparation of the financial statements for the year ended 31^st March 2025, the applicable Accounting Standards ("AS") have been followed.

	On behalf of the Board of Directors
	Sd/-	Sd/-
	Rakesh Dommati	Rajitha Koyyda
Place: Hyderabad	Managing Director	Whole Time Director
Date: 04.09.2025	DIN: 03214046	DIN: 07108068