Rushil Decor Ltd Management Discussions

<dhhead-MANAGEMENT DISCUSSION AND ANALYSIS</dhhead-

An Economic Overview

Global Economic Overview

The global economy continued to navigate a complex landscape marked by persistent inflationary pressures, tightening monetary policies, and evolving geopolitical tensions. Trade dynamics have been increasingly influenced by protectionist measures, including rising tariff barriers across key economies, impacting cross-border flows of raw materials and finished goods. These developments have introduced volatility in input costs and supply chains, particularly for industries dependent on commodities such as timber and resins.

The ongoing geopolitical tensions involving the USA, Israel and Iran, particularly around the Strait of Hormuz, have disrupted global petrochemical supply chains. As a key transit route for resin and related products from Gulf countries, the region has witnessed logistical challenges, resulting in delays and increased freight and insurance costs. This has led to volatility in resin import prices and constrained availability of raw materials. Additionally, exports from/to Gulf countries have been impacted, affecting overall market stability. Consequently, the Company faces some pressure on input costs and supply continuity, requiring proactive sourcing and inventory management strategies.

Despite these challenges, structural drivers such as urbanization, infrastructure development, and housing demand across emerging markets continue to support long-term growth. However, businesses are required to operate with greater agility, balancing cost pressures with demand resilience in a fragmented global environment.

Indian Economic Overview

India remains one of the fastest-growing major economies, supported by strong domestic consumption, infrastructure push, and policy-led initiatives. The construction and real estate sectors continue to be key growth engines, directly benefiting industries such as wood panels, laminates, and furniture.

At the same time, the Indian economy is also navigating global headwinds, including trade disruptions, fluctuating commodity prices, and evolving tariff regimes. Policy measures such as quality control norms and import restrictions are gradually supporting domestic manufacturing, creating a more favorable environment for organized players. The continued focus on housing, urban development, and "Make in India" is expected to drive sustained demand for value-added building materials.

Industry Overview

Indian Furniture Industry

The global furniture industry is undergoing a shift toward modular, ready-to-assemble, and affordable solutions, with engineered wood products such as MDF and particle board playing a central role. Growth is being driven by urban lifestyles, e-commerce penetration, and demand for space-efficient designs.

In India, rising disposable incomes, urbanization, and increasing adoption of branded furniture are driving demand. The transition from traditional carpentry to organized and modular furniture solutions presents significant long-term opportunities.

The outlook for the wood panel, MDF, laminates, and furniture industries remains positive, supported by strong underlying demand drivers such as housing growth, and evolving consumer preferences. While short-term challenges related to cost pressures and global uncertainties persist, the long-term trajectory is underpinned by structural shifts toward organized manufacturing, engineered wood adoption, and sustainability. Companies that focus on innovation, operational efficiency, and market diversification are expected to be well-positioned to capitalize on these opportunities.

I. Wood Panel Industry

Global Wood Panel Industry Outlook

The global wood-based panel industry is witnessing steady growth, driven by increasing construction activity, rising home renovation trends, and growing demand for cost-effective and sustainable materials. The market continues to expand on the back of urbanization and infrastructure development, with Asia-Pacific emerging as the dominant region.

A report from Grand View Research states that the global wood-based panel market size was estimated at USD 198.0 billion in 2024 and is projected to reach USD 284.1 billion by 2030, growing at a CAGR of 5.9% from 2025 to 2030. This growth can be attributed to the Increasing urbanization and rising construction activities worldwide, which are significant contributors, as more affordable housing solutions are needed. The report further states that the projected size for the year 2030 is anticipated to be USD 284.1 Billion.

Indian Wood Panel Industry Outlook

In India, the wood panel industry is at an inflection point, with strong growth prospects supported by rising real estate demand and infrastructure expansion. The sector is transitioning from unorganized to organized players, while engineered wood products are gaining increasing acceptance. However, challenges such as raw material availability and cost volatility remain key considerations.

Wood Based Panel Market

Trends, by Region, 2025 - 2030

55.4% Asia Pacific Market Revenue Share, 2024

The Indian wood-based panels market is also undergoing a phase of structural evolution, driven by shifting consumer preferences and a growing emphasis on sustainable construction materials. Increasing environmental awareness is accelerating the transition toward eco-friendly products, prompting manufacturers to innovate in both material selection and production processes. This shift is expected to drive the development of advanced solutions that balance sustainability with performance and cost efficiency. At the same time, robust growth in the construction and real estate sectors continues to support demand, with wood- based panels gaining preference for their versatility, durability, and aesthetic appeal across residential and commercial applications.

The industry is also witnessing a steady integration of technology, with automation and digitalization playing an increasingly important role in manufacturing operations. These advancements are enabling improved production efficiency, optimized resource utilization, and reduced wastage, thereby enhancing overall competitiveness. As companies adopt modern manufacturing practices, the sector is likely to benefit from better quality consistency and cost rationalization.

Looking ahead, the continued pace of urbanization and infrastructure development in India is expected to remain a key demand driver. As urban centers expand and modern construction practices evolve, wood-based panels are becoming integral to contemporary building solutions.

Overall, the market outlook remains positive, supported by the combined impact of sustainability trends, technological progress, and strong underlying demand from the construction ecosystem.

Sustainability Focus ... is becoming central to industry strategy, with manufacturers increasingly adopting environmentally responsible materials and processes. This shift is influencing sourcing decisions, product innovation, and long-term business models.

Technological Advancements ... are transforming manufacturing capabilities, with automation and digital tools enhancing efficiency, improving product quality, and minimizing waste, thereby strengthening competitive positioning.

Urbanization and Infrastructure Growth ... continue to drive demand momentum, as expanding cities and large-scale infrastructure projects increase the adoption of wood- based panels across diverse construction applications.

II. MDF (Medium Density Fibreboard) Industry

The MDF segment has emerged as one of the fastest-growing categories within engineered wood, driven by its versatility, smooth finish, and cost- effectiveness. It is widely used in modular furniture, interior decor, and ready-to-assemble applications. The rising demand for MDF is mainly driven by rising trend of eco-friendly preferences, technological advancements in the manufacturing sector, modern consumer preferences, and government initiatives in India that lead to a boosting domestic production, and expanding market opportunities.

The use of Medium Density Fibreboard (MDF) is increasingly finding market acceptance over plywood over a few years. A report from Industry Research states that China, India, and Germany collectively produce 45% of global general MDF panels annually. Also, the General MDF segment dominates with USD 1,713 million in 2025, accounting for 57.3% market share, projected to reach USD 2,487.8 million by 2034, growing at a CAGR of 4.3%.

Source: Industry Research Website- MDF Panel Market Report, 2026

In India, the segment is benefiting from import substitution trends, with regulatory measures supporting domestic manufacturers. However, industry dynamics continue to be influenced by overcapacity, pricing pressures, and fluctuations in timber costs. A report from imarcgroup states that The India medium density fiberboard market is projected to exhibit a CAGR of 7.24% during 20262034, reaching a value of USD 2.6 Billion by 2034.

The market is emerging as a high-growth segment within the broader wood panel and furniture

India Medium Density Fiberboard Market Forecast

Size, By Sector, 2024-2033 (USD Billion)

Source: imarcgroup.com, India Medium Density Fiberboard Market Size Report 2026-2034 ecosystem. Globally, MDF has already achieved significant scale and acceptance, and India is gradually aligning with this trend. While the domestic market is currently at a relatively nascent stage, it is witnessing strong momentum, with growth expected to outpace global averages over the medium term. This expansion is being driven by increasing adoption across residential and commercial applications, supported by rising urbanization and evolving consumer preferences.

III. Laminates Industry

The laminates industry is closely linked to interior design and furniture demand, with growth driven by urban housing, commercial spaces, and evolving consumer preferences for aesthetics and durability. Increasing demand for premium, decorative, and functional laminates is shaping product innovation, with a focus on textures, finishes, and sustainable materials.

The increasing adoption of modular kitchen concepts is a key driver of segment growth, as consumers gravitate toward contemporary designs with flexible, customizable configurations. A clear shift from traditional, carpenter-led furniture to organized retail solutions featuring standardized laminate finishes is further accelerating consumption.

Pre-laminated particleboards and medium-density fibreboards are emerging as preferred substrates for mass-produced furniture, catering to varied aesthetic and functional needs. This transition is sustaining demand across both residential and commercial segments, while the rising popularity of ready-to-assemble furniture continues to reinforce the segments growth in urban markets.

India remains a significant global hub for laminate manufacturing, supported by strong export capabilities and cost competitiveness. The India decorative laminates market is poised for steady revenue growth over the forecast period, supported

by ongoing construction activity, rising adoption of modular furniture, and a shift in consumer preference toward aesthetically refined interior solutions.

Market expansion is expected to accelerate as organized players scale up production capacities and strengthen distribution reach. Advancements such as antimicrobial surfaces, moisture-resistant coatings, and digital customization are likely to fuel growth in the premium segment. Additionally, exports of Indian laminates are set to gain momentum, driven by competitive pricing and improving global quality benchmarks. The market, valued at USD 1.98 billion in 2025, is projected to reach USD 2.97 billion by 2034, registering a CAGR of 4.62% during 2026-2034, according to a report form imarcgroup.

Opportunities

Urbanization and Housing Demand

The continued pace of urbanization and expansion in residential and commercial construction remain key demand drivers for the industry. Increasing housing requirements, coupled with growth in office spaces, retail developments, and infrastructure projects, are significantly boosting the consumption of wood panels and interior solutions. This structural demand provides sustained visibility for growth across product categories.

Shift Toward Engineered Wood

The industry is witnessing a gradual but decisive shift from traditional wood to engineered wood products such as MDF, particle board, and laminates. These materials offer advantages in terms of cost efficiency, uniformity, and scalability, making them increasingly preferred across applications. This transition is expected to drive long-term growth as adoption deepens across both organized and semiorganized segments.

Import Substitution

Evolving regulatory frameworks, including quality control measures and import restrictions, are creating favorable conditions for domestic manufacturers. As reliance on imports reduces, local players are well-positioned to capture incremental market share by leveraging cost competitiveness and improved product quality. This trend supports the strengthening of domestic manufacturing capabilities and supply chains.

Rising Demand for Modular Furniture

Changing consumer lifestyles and preferences are accelerating the shift toward modular and ready-to- assemble furniture. Increasing urbanization, space constraints, and the growing influence of organized retail and e-commerce are expanding the adoption of such solutions. This trend is driving demand for standardized and engineered materials, creating new growth avenues for the industry.

Sustainability and Eco-friendly Products

Rising environmental awareness among consumers and regulators is encouraging the adoption of sustainable and eco-friendly materials. Engineered wood products, which optimize raw material usage and support responsible sourcing, are gaining wider acceptance. This shift is also prompting manufacturers to invest in greener processes and certifications, aligning with global sustainability standards.

Real Estate Momentum Driving Material Demand

The sustained expansion in real estate, supported by initiatives such as smart cities and affordable housing, is creating a strong demand pipeline for interior building materials. The increasing integration of laminates and MDF in contemporary design applications is further accelerating consumption. Expanding engagement with institutional segments such as hospitality, commercial offices, retail developments, and education infrastructure can enable broader revenue diversification.

Flexible Workspaces Reshaping Commercial Interiors

The rapid evolution of co-working and flexible office formats is redefining workspace design and material requirements. Demand from startups, global capability centres, and the IT/ITeS sector is driving the need for adaptable, cost-efficient office environments. As flexible workspace adoption scales over the medium term, it is expected to generate sustained demand for interior solutions and value- added panel products.

Modular Living Trends Transforming Furniture Consumption

Shifting consumer preferences toward modular, ready-to-assemble furniture are reshaping the furniture ecosystem. Urban lifestyles, space optimization needs, and design consciousness are accelerating the adoption of functional yet aesthetic solutions. Strategic alignment with modular furniture manufacturers, digital marketplaces, and institutional buyers can unlock new growth channels in this rapidly evolving segment.

Export Potential

Indias cost competitiveness, improving manufacturing capabilities, and strategic positioning are enabling it to emerge as a strong export hub for wood-based products. Growing global demand for affordable and quality interior solutions presents significant opportunities for domestic players to expand their international footprint.

Threats

Raw Material Volatility

The industry remains exposed to fluctuations in the availability and pricing of key raw materials, particularly timber and related inputs. Variability in supply, driven by seasonal factors, regulatory restrictions on logging, and changes in plantation cycles, can lead to cost unpredictability. Any sustained increase in input costs may exert pressure on operating margins, especially in a competitive pricing environment where the ability to fully pass on cost increases remains limited.

Intensifying Competitive Landscape

The sector continues to face heightened competition from both unorganized domestic players and global manufacturers. The presence of a large unorganized segment often leads to aggressive pricing strategies, impacting market realizations for organized players. Additionally, imports in certain product categories further intensify competition, particularly in price- sensitive segments, necessitating continuous focus on differentiation, branding, and operational efficiency.

Geopolitical and Trade-Related Uncertainties

Evolving geopolitical dynamics and changes in global trade policies, including the imposition of tariffs and trade barriers, pose potential risks to supply chains and export markets. Disruptions in the movement of raw materials or finished goods, along

with currency volatility, can impact cost structures and competitiveness in international markets. Such uncertainties require companies to adopt diversified sourcing strategies and maintain operational flexibility.

Capacity Expansion and Supply Imbalances

The industry has witnessed significant capacity additions in recent years, particularly in segments such as MDF and engineered wood panels. While this reflects long-term growth confidence, it may lead to short- to medium-term supply-demand imbalances. Elevated capacity levels can result in pricing pressure, lower capacity utilization, and margin compression, especially during periods of moderated demand growth.

Regulatory and Environmental Compliance Requirements

Increasingly stringent regulatory frameworks related to environmental standards, emissions, and sustainability practices are shaping the operating landscape. Compliance with evolving norms may require additional investments in technology, processes, and certifications. While these measures are essential for long-term sustainability, they can lead to higher operating costs and necessitate continuous monitoring and adaptation by industry participants.

Financial Performance

Standalone Financial Highlights

Details	2025-26	2024-25
Revenue from Operations	8,561.33	8,913.39
Profit before Tax	115.68	629.61
Profit after Tax	81.93	483.04
Earnings per Share (EPS) (Basic)	0.28	1.77
Non-Current Liabilities	1,789.46	2,165.24
Current Liabilities	4,613.94	3,807.18
Equity Share Capital	293.42	286.82
Other Equity	6,226.54	6,040.97
Total Equity	6,519.96	6,327.79
Total Equity and Liabilities	12,923.36	12,300.22

Segmental Performance

Details	Laminate Sheets		MDF Boards
	2025-26	2024-25	2025-26	2024-25
Revenue from Operations	2,144.21	2,017.74	6,288.12	6,733.85
Profit before Interest and Tax	139.13	194.65	265.47	682.48

Accounting Treatment

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS), thereby ensuring complete compliance with the established accounting guidelines. There were no deviations from these standards in the preparation of the financial statements.

Key Financial Ratios

Sr. No. Ratios	2025-26	2024-25	Change (in %)
1. Debtors Turnover (in times)	4.41	5.73	-23.01
2. Inventory Turnover (in times)	3.41	4.18	-18.36
3. Current Ratio	1.15	1.30	-11.90
4. Debt-to-Equity Ratio	0.40	0.42	-5.58
5. Net Profit Margin (%)	0.96	5.42	-82.34
6. Return on Equity (%)	1.28	9.70	-86.85
7. Trade Payable Turnover (in times)	2.97	4.17	-28.17
8. Debt Service Coverage Ratio	0.86	1.34	-37.13
9. Return on Capital Employed	4.43	9.37	-52.70

Internal Control Systems and their Adequacy

The company has in place strong internal control procedures commensurate with its size and operations. The company believes that safeguarding of assets and business efficiency can be prolonged by exercising adequate internal controls and standardizing operational processes. The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance code of the organisation. It is an integral part of the general organisational structure of the company and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities.

The Board of Directors offers guidance, support and strategic supervision to the Executive Directors and management, monitoring and support committees.

Human Resource

The Company values its human and intellectual capital as the key drivers of its success, with employee satisfaction playing a crucial role. The company believes in nurturing its workforce, as their growth directly influences the companys achievements. The Company is dedicated to fostering a diverse and inclusive environment that promotes personal development and wellbeing.

The companys ability to attract, develop and retain talent has been a cornerstone of its growth trajectory. Teamwork and collective professional advancement define the companys ethos. It invests in training and upskilling to support the career growth of its employees. By adopting a transparent communication structure, it encourages open dialogue between staff and management. These practices have been instrumental in attracting and maintaining a dedicated workforce.

As of March 31, 2026, RDL employed approximately 942 staff members.

Key Risks and Concerns

The Company values its human and intellectual capital as the key drivers of its success, with employee satisfaction playing a crucial role. The company believes in nurturing its workforce, as their growth directly influences the companys achievements. The Company is dedicated to fostering a diverse and inclusive environment that promotes personal development and wellbeing.

The companys ability to attract, develop and retain talent has been a cornerstone of its growth trajectory. Teamwork and collective professional advancement define the companys ethos. It invests in training and upskilling to support the career growth of its employees. By adopting a transparent communication structure, it encourages open dialogue between staff and management. These practices have been instrumental in attracting and maintaining a dedicated workforce.

As of March 31, 2026, RDL employed approximately 942 staff members.

Risk	Definition	Mitigation
Regulatory Risk	Changes in regulatory frameworks may impact operations and compliance requirements.	The company maintains strict adherence to safety, health, environment, and sustainability standards. It has implemented robust waste management, recycling, and emission control practices to ensure full regulatory compliance.
Raw Material Risk	Volatility in raw material prices and potential supply constraints may disrupt operations and affect margins.	The company mitigates raw material risk through strategic sourcing and supply chain diversification, ensuring access to key inputs such as wood, resins, and chemicals from multiple vendors and regions. Long-term supplier relationships and proximity to plantation sources support cost efficiency and supply reliability. Continuous process optimization, material substitution, and efficient inventory management further help manage price volatility and ensure uninterrupted production.
Competition Risk	Intense competition from regional, national, and international players may impact market share and pricing power.	The company drives differentiation through operational efficiency, continuous product innovation, and a well- established brand. Data-driven pricing strategies and portfolio diversification support sustained competitive positioning.
Innovation Risk	Inability to adapt to evolving consumer preferences may hinder growth and profitability.	The company maintains strict adherence to safety, health, environment, and sustainability standards. It has implemented robust waste management, recycling, and emission control practices to ensure full regulatory compliance.
Customer Retention Risk	Increasing complexity in consumer preferences may affect the ability to retain customers, impacting revenues.	A diversified product portfolio, backed by strong R&D and consumer insights, enables the company to cater to varied customer needs while enhancing product appeal and strengthening brand loyalty.
Geographical Concentration Risk	High dependence on specific regions may expose the business to localized disruptions and demand fluctuations.	The company is expanding its presence across multiple high-consumption regions, strengthening distribution reach and reducing reliance on any single geography.
Product Concentration Risk	Over-reliance on a limited product range may adversely affect revenue stability.	The company mitigates product concentration risk through a well-defined portfolio diversification strategy across MDF, laminates, and value-added surface solutions such as decorative panels, prelaminated boards, and specialty finishes.
		Continuous investment in design innovation, texture development, and premium offerings enables expansion into adjacent applications including modular furniture, interiors, and commercial fit-outs.
		Embedded climate resilience into both its operational strategy and its broader social responsibility framework. Specific initiatives
Climate Change, Energy and Emissions Risk	Climate change represents a material and evolving risk to the Companys operational continuity and cost structure. As agroforestry- sourced wood constitutes the primary raw material for MDF production, and paper forms an essential input for the laminated sheet segment, any climate-induced disruption to these natural resource supply chains could adversely impact production volumes, input costs, and margin stability.	undertaken include active participation in Agroforestry programmes to support sustainable raw material sourcing and ecological regeneration; installation of Solar Power Systems at the Companys Head Office as a first step toward renewable energy integration; deployment of energy tracking and consumption monitoring systems across manufacturing facilities and plants to systematically identify and reduce energy waste; and formalisation of Agroforestry as an integral component of the Companys social and sustainability journey, reinforcing its long-term commitment to responsible land stewardship.
Raw Material Procurement Risk	Fluctuations in the availability or pricing of primary raw materials like agroforestry- sourced wood and paper-based inputs can directly impact production continuity, input cost structures, and ultimately, the Companys margins. Furthermore, increasing global demand for wood-based products, combined with tightening environmental norms governing timber sourcing, presents an additional layer of procurement risk that the Company continuously monitors.	Supplier diversification, strategic inventory management, and long-term procurement agreements further insulate the Companys operations from short-term market disruptions, ensuring a stable and traceable supply of raw materials in alignment with its quality and sustainability standards.

Risk Management

A comprehensive risk-management framework allows us to pre-emptively monitor risks spawning from the internal and external environment. As a result, navigating the challenges of the industry, we have been able to create durable value for our stakeholders.

Our risk mitigation plan:

The Board takes the following steps as a part of its risk management and mitigation plan:

• Defines the roles and responsibilities of the Board and the respective Committee

• Participates in major decisions affecting the organizations risk profile

• Integrates risk-management reporting with the Boards overall reporting framework

The company functions under a well-defined organization structure. Flow of information is well defined to avoid any conflict or communication gap between two or more departments. Second-level positions are created in most of the department to continue the work without any interruption in case of unavailability of functional heads.

Proper policies are followed in relation to maintenance of inventories of raw materials, consumables, key spares and tools to ensure their availability for planned production programmes. Effective steps are being taken to reduce the cost of production on a continuing basis, taking various changing scenarios in the market.

Our risk mitigation plan is explained below:

Stage	Approach	Description
1. Risk Identification & Assessment	Structured evaluation of risks	Estimating the likelihood of occurrence, assessing potential impact, and classifying as well as prioritizing risks based on severity.
2. Risk Prevention & Control	Strategic mitigation planning	Developing actionable measures to minimize risks and their consequences, while also enabling strategies that can leverage potential opportunities.
3. Monitoring & Surveillance	Continuous control evaluation	Assessing the effectiveness of implemented controls to strengthen risk identification, tracking, and ongoing oversight.
4. Review & Reporting	Governance and periodic review	Regularly evaluating the risk management process, with active oversight led by the Board Risk Management Committee.

Cautionary Statement

The statements made in the Management Discussion and Analysis describing the companys 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. Important factors that could make a difference to the companys operations include economic conditions affecting demand-supply and price conditions in the markets in which the company operates, changes in government regulations, tax laws and other statutes, and other incidental factors.