Safe Enterprises Retail Fixtures Ltd Management Discussions

ANALYSIS

Forward-Looking Statement

The Management Discussion and Analysis ( MD&A ) contains certain statements describing the Company s objectives, projections, estimates, expectations, or predictions, which may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including economic conditions, regulatory developments, competition, raw material prices, customer spending patterns, and other incidental factors beyond the control of the Company. Readers are cautioned not to place undue reliance on such forward-looking statements.

1. Industry Overview

India s retail sector continues to be one of the fastest- growing large consumer markets globally, supported by favorable demographics, rising disposable incomes, rapid urbanization, increasing premiumization, and expansion of organized retail formats. Retail contributes over 10% to India s GDP and employs more than 35 million people, making it a major economic driver.

The structural transition from unorganized to organized retail remains one of the most significant long-term trends in the Indian economy. Large-format retailers, specialty chains, direct-to-consumer brands, and global brands are increasingly investing in experiential retail formats to strengthen customer engagement and brand visibility.

The Indian retail market is expected to grow from USD 779 billion in 2019 to USD 1.6 trillion by2030, registering a CAGR of 6.8%.

Growth in Organized Retail

Organized retail penetration in India remains relatively low compared to developed markets, providing substantial headroom for expansion. However, the organised retail share is rising, projected to increase from 12% in 2022 to 17% by 2030, ( USD 272 billion) driven by urbanisation, policy support, and digital adoption. Domestic chains and international brands continue aggressive store rollouts across metros and Tier II/NI cities.

Global Retail Tailwinds

Global retail is undergoing a structural transformation, driven by organised retail expansion, evolving consumer behaviour and technology adoption. This is creating sustained demand for modern store infrastructure, shopfitting and retail automation solutions.

Rise of Phygital Retail

The convergence of physical and digital retail is accelerating. Consumers increasingly expect seamless transitions between online and offline journeys. This trend is creating strong demand for smart fixtures integrated with:

- RFID

- Digital displays

- AI-powered engagement

- Smart checkout systems

- IoT-enabled merchandising

Refurbishment Opportunity

As retail chains mature, refurbishment cycles are becoming predictable. Existing stores require redesigns every 3-4 years to remain relevant, creating recurring revenue opportunities for fixture companies.

The Company believes these structural trends create a long runway for sustained growth in the retail fixtures industry.

Several macro trends are shaping demand in the retail infrastructure ecosystem:

2. Business Overview

Safe Enterprises Retail Fixtures Limited ( SERFL or the Company ) is one of India s pioneering organized retail fixture and shopfitting solution providers. Established in 1976, the Company has evolved from a conventional fixture manufacturer into an integrated retail solutions provider specializing in design, manufacturing, installation, and technology-enabled shopfitting systems.

Over nearly five decades, the Company has developed deep expertise in retail space engineering and has executed more than 50,000+ projects across multiple retail formats .

The Company operates through a fully vertically integrated business model, covering the entire value chain from design and engineering, product development, metal fabrication, and wood processing to assembly, supply chain management, site installation, and after-sales support. This end-to-end integration enables the Company to maintain stronger control over every stage of execution, ensuring superior quality, optimized lead times, cost efficiency, scalability, and an enhanced customer experience.

At the core of the Company s operating philosophy is the principle of Standardized Engineering, Customizable Skins. This approach allows clients to rapidly deploy highly customized retail environments while leveraging standardized modular engineered components. By combining flexibility in design with efficiency in execution, the Company creates a strong competitive advantage through faster store rollouts, lower redesign costs, greater product consistency, and superior scalability for clients expanding across multiple locations.

3. Key Business Segments

The Company derives revenue from two major business streams

A. New Store Rollout Business

B. Refurbishment / Additions Business

A. New Store Rollout Business

This segment includes fixture manufacturing and store fit- outs for greenfield retail expansion.

- Retail chains expanding into new geographies require:

- Complete fixture packages

- Layout planning

- Display solutions

- Installation

This remains the Company s primary revenue driver.

During FY26, new store revenue contributed 68.9% of total revenue, reflecting continued strong expansion by organized retail customers.

B. Refurbishment / Additions Business

This segment includes:

- Store remodeling

- Fixture replacement

- Additional display installations

- Layout redesign

This business provides recurring revenue and improves earnings stability.

Refurbishment and additions contributed 24.8% of FY26 revenue, highlighting the strength of the Company s repeat business model.

Management believes this segment will continue growing as client store networks mature.

4. Technology and Innovation

Innovation remains central to SERFL s growth strategy. Through the INSYNC Shopfittings platform, the Company has developed advanced modular fixture systems combining engineering, design, and technology.

Key innovation metrics include:

3,000+

standardized components registered designs

5,000+

hours of research

15,000+

hours of development

The Company s smart fixture portfolio integrates:

- LED illumination

- IoT devices

- Digital interfaces

- Sensor-enabled components

- AI-driven customer engagement

This positions the Company as a leading player in future- ready retail infrastructure.

New Product Launches in FY26

THE WAVE

THE WAVE is the companys RFID-based self-checkout solution, designed to transform the in-store billing experience by enabling customers to place products into a smart basket for seamless automated checkout. By minimizing manual intervention in the billing process, the solution significantly enhances store efficiency while improving the overall shopping experience. The platform delivers multiple benefits, including reduced billing queues, faster checkout times, improved customer convenience, and lower dependency on manpower, making it particularly relevant for modern high-footfall retail environments. With WAVE , Safe Enterprises has entered USD 30 bn+ Global Retail Automation Market .

EVOLV

EVOLV is an electrified modular track system for home interiors, representing the Company s strategic expansion beyond traditional retail fixtures. Leveraging its strong expertise in modular engineering and scalable design systems, the Company has extended its capabilities into home interiors, lifestyle spaces, and residential modular installations. Through EVOLV, the Company is broadening its addressable market and unlocking new growth opportunities beyond retail, while continuing to capitalize on its core strengths in engineered modular solutions. With EVOLV , Safe Enterprises has entered USD 800 bn+ Global Home Furnishings Market.

5. Operational Performance

FY26 was a transformational year for Safe Enterprises, characterized by strong execution, strategic capacity expansion, and continued product innovation. During the year, the Company successfully executed 425 stores, reflecting its robust operational capabilities and ability to deliver at scale across diverse client requirements. The Company also witnessed a significant increase in average revenue per store, driven by higher value realization and deeper customer engagement.

Growth during the year was supported by strong repeat business from existing customers, increased adoption of higher-value fixtures, and continued expansion of relationships with marquee clients. The Company further benefited from favorable industry and customer trends, including larger store formats, higher fixture density, a premium product mix, and increased adoption of smart fixtures. As a result, average realization per store improved materially, demonstrating the Company s stronger value capture and reinforcing its ability to drive sustainable, high- quality growth.

The Company maintains a strong pan-India presence, having executed 425 store installations in FY26 across key retail markets. Its strategically located manufacturing facilities enable faster delivery, seamless installation, and superior client servicing nationwide.

6. Financial Performance

FY26 Consolidated Financial Performance

Amt in INR lakhs

Particulars	FY26	FY25	YoY Growth
Revenue from Operations	21,841.51	13,831.31	57.91%
Other Income	808.85	141.86	470.17%
Total Revenue	22,650.36	13,973.18	62.10%
Total Expenses	14,114.47	8,973.46	57.29%
Profit before extraordinary items and tax	8,535.90	4,999.71	70.73%
Profit before tax	8,439.38	4,999.71	68.80%
Profit for the period	6,385.83	3,918.54	62.96%
Basic EPS (Rs.)	14.62	11.42	28.01%

Revenue growth was supported by organized retail client expansion, higher revenue intensity per store, larger project scopes, greater contribution from refurbishments / additions and increased utilization of expanded manufacturing capacity.

Balance Sheet and Liquidity

Amt in INR lakhs

	As a t Mar 31, 2026
Share Capital	2,330.22	1,715.22
Reserves and Surplus	26,446.25	5,492.36
Total Assets	31,800.39	10,194.16
Property, Plant & Equipment	1,444.82	965.06
Capital Work in Progress	5,869.63	14.94
Inventories	1,168.19	959.29
Trade Receivables	4,524.33	2,381.05
Cash and Cash Equivalents	13,044.29	2,738.89
Long-Term Borrowings	-	24.16
Short-Term Borrowings	0.17	0.17

The increase in capital work-in-progress reflects the Company s ongoing capacity expansion. Borrowings were negligible as at March 31, 2026, supporting the Company s positioning as a virtually debt-free enterprise

7. Manufacturing and Capacity Expansion Pune Expansion

During FY26, the Pune facility was expanded by 46,505 sq. ft., strengthening manufacturing throughput and improving production flexibility.

This expansion helps support rising order inflow.

Key highlights:

Total plant area: 1,80,000 sq. ft.

Manufacturing facility area: 96,505 sq. ft.

Ambernath Mega Facility

Construction of the Company s flagship integrated manufacturing plant at Ambernath is progressing as planned.

Key highlights:

Total plant area: 350,000 sq. ft.

Manufacturing facility area: 250,000+ sq. ft.

Expected completion: December 2026

8. Risks and Concerns

While the Company is well-positioned, certain risks remain: Dependence on Retail Expansion

Slowdown in retail capex may affect new store rollout demand.

Raw Material Volatility

Steel, aluminum, laminates, and wood prices may impact margins.

Customer Concentration

Revenue concentration among large clients may pose risks. Execution Risk

Large projects require flawless coordination and logistics. Capex Execution Risk

Delays in Ambernath commissioning could defer capacity benefits.

Economic Slowdowns

Consumer demand softness can affect store expansion plans.

Management continuously monitors these risks and has mitigation strategies in place

9. Human Capital

Employees remain at the heart of SERFL s success and continue to be a key driver of the Company s operational excellence and long-term growth. The Company s diverse workforce spans critical functions including design, engineering, manufacturing, installation, finance, sales, technology, and management, enabling seamless collaboration across the entire value chain. This crossfunctional expertise strengthens SERFL s ability to deliver high-quality, customized solutions with speed and consistency.

600 +

(includes all the on-roll and contractual Employee Count employees on a consolidated basis.)

SERFL remains committed to building a future-ready organization by continuously investing in its people through focused initiatives around skill development, workplace safety, productivity enhancement, employee retention, and fostering a high-performance culture. The Company emphasizes continuous learning, operational discipline, and employee engagement to ensure its teams remain aligned with evolving industry requirements and business objectives. As SERFL scales its operations and expands into new growth areas, it continues to invest in talent and leadership capabilities that will support sustainable growth and innovation.

This facility will consolidate multiple manufacturing operations into a single integrated campus.

Expected benefits include:

- Higher production capacity

- Reduced logistics costs

- Better workflow integration

- Lower turnaround time

- Improved automation

- Greater scalability

The plant is expected to materially increase the Company s execution capabilities and support long-term growth.

10. Outlook

Management remains optimistic about the Company s longterm growth outlook, supported by favorable structural shifts within the Indian retail industry. The sector is entering a significant expansion phase, driven by the continued growth of organized retail, accelerated store expansion, increasing premiumization of consumer offerings, omnichannel integration, experience-led store formats, and rising technology adoption. These evolving market dynamics are reshaping retail infrastructure requirements and creating strong demand for innovative, scalable, and high-quality store solutions.

Growth drivers for the coming years include:

Capacity Expansion

The commissioning of the Company s Ambernath manufacturing facility is expected to be a major growth catalyst, significantly enhancing production capacity and operational efficiency. The new plant will enable large-scale manufacturing, improved workflow optimization, and better consolidation of existing operations. With higher available capacity, SERFL will be better positioned to execute larger order volumes, reduce turnaround times, and cater to the growing requirements of marquee clients. This expansion also provides sufficient headroom to support long-term revenue growth without proportionate increases in fixed costs.

Product Innovation

SERFL continues to focus on innovation-led growth by developing smart fixtures, automation-enabled retail solutions, and technology-integrated store infrastructure. As retailers increasingly adopt data-driven and efficiency- focused operating models, demand for intelligent fixtures and automated solutions is expected to rise significantly. Products such as THE WAVE, the Company s RFID-based self-checkout solution, position SERFL to capture high-value opportunities at the intersection of retail infrastructure and technology, while strengthening its value proposition beyond traditional fixtures.

Recurring Revenue Growth

The Company s refurbishment and replacement business continues to emerge as a strong recurring revenue stream. As retail chains periodically upgrade store formats, refresh layouts, and replace aging fixtures to maintain customer appeal, SERFL benefits from repeat business from its existing client base.

This segment provides greater revenue visibility, improves customer stickiness, and creates a more stable revenue mix alongside new store installations

With organized retail expansion accelerating, management expects refurbishment-led revenues to continue growing steadily over the coming years.

Adjacent Market Entry

Through EVOLV, its electrified modular track system, SERFL is strategically expanding into home interiors, lifestyle spaces, and residential modular installations, significantly broadening its addressable market beyond retail. The Indian home interiors and modular furniture market is estimated at approximately ^1.8-2.2 lakh crore (USD 22-27 billion) and is expected to grow at a strong CAGR driven by rising urbanization, premium housing demand, and increasing consumer preference for modular living solutions.

In addition, SERFL s technology offerings such as RFID- enabled retail solutions open opportunities in the rapidly growing global RFID market, which is estimated at approximately USD 18-20 billion, while the retail RFID solutions segment alone is estimated at USD 4-5 billion and expanding rapidly with increasing adoption of smart checkout, inventory tracking, and loss prevention systems. These adjacent opportunities provide SERFL access to large, high-growth markets with significant long-term monetization potential.

Global Expansion

SERFL also sees meaningful long-term opportunities in international markets, particularly in regions witnessing rapid retail infrastructure development such as the Middle East, Southeast Asia, and Africa. The Company s scalable manufacturing capabilities, modular engineering expertise, and ability to deliver customized solutions position it well to serve global clients seeking cost-efficient, high-quality store infrastructure. As global brands continue expanding across emerging markets, SERFL aims to leverage its strong execution capabilities and technology-led offerings to build a larger international presence and diversify revenue streams geographically

Conclusion

FY26 marked a defining year in Safe Enterprises journey as a listed company. The Company delivered strong revenue growth, improved margins, expanded capacity, and launched innovative new products, reinforcing its position as a leading retail fixture solutions provider.

Safe Enterprises is well placed to participate in the next phase of India s retail transformation and create enduring value for shareholders.