Shashwat Furnishing Solutions Ltd Management Discussions

The Management of the Company is pleased to present its report on the Industry Scenario including on the Companys performance during the financial year 2024-25.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economic Outlook

The global furniture market is currently estimated at USD 745.7 billion in 2024, with projections indicating it could reach USD 1.19 trillion by 2033, reflecting a CAGR of approximately 5.3% during 2025-2033

Asia-Pacific remains the dominant region, accounting for approximately 37-48% of the market share, with strong growth driven by urbanization and rising incomes

Key growth drivers include:

• Urbanization fueling residential demand.

• Expansion of the tourism and hospitality sectors, lifting commercial demand

• Rising preference for smart, modular, and sustainable furniture

INDIA: HANDICRAFT EXPORTS & MARKET LANDSCAPE

• In FY 2024-25 (April-February), Indian handicraft exports stood at approximately Rs29,391 crore (~USD 3.48 billion), up from Rs28,064 crore (~USD 3.39 billion) in the same period the previous year.

• For reference, in FY 2022-23, exports totalled Rs30,019 crore (~USD 3.60 billion); and in FY 2021-22, they were USD 4.35 billion, marking a substantial 25.7% year-on-year growth

• Woodwares, a key segment for furniture-related handicrafts, contributed Rs7,326 crore (~USD 868 million) in exports during FY 2024-25 (up to February)

• Other maj or export categories include:

- Embroidered & crocheted goods: Rs4,120 crore (~USD 160.8 million) o Art metalware: Rs3,791 crore (USD 449 million)

• Key export destinations are the USA, UAE, UK, Germany, Netherlands, and France—with the USA alone accounting for about 40-41% of total handicraft exports

Recent Challenges: Tariff Impact & Export Pressures

• The Indian handmade carpet industry, especially in Bhadohi-Mirzapur, is grappling with the fallout of a 50% US import tariff, which has resulted in 85% of US-bound orders being put on hold. This segment alone contributes ~Rs9,600 crore in exports to the US, out of a total ^16,000 crore of carpet exports. The disruption threatens the livelihoods of approximately 1.3 million rural artisans.

• Back in Rajasthan, handicraft exporters are already feeling the pinch—Jaipur has seen a 45% drop in daily export containers (from ~378 TEUs to ~209), while Jodhpur reports a 75% fall (from ~100 TEUs to 25). These figures underscore the immediate and severe impact on crafting clusters and the local economy

SUMMARY OF OUR BUSINESS

Our Company is engaged in the processing of semi-finished furniture products into high-quality finished products that cater to both domestic and international demand. We specialize in offering a diverse and qualitative product range, including:

• Industrial Furniture

• Restaurant and Cafe Furniture

• Garden and Outdoor Furniture

• Vintage Furniture Collections

• Mirror Frames, Wall Clocks, and Decorative Handicrafts

With a focus on aesthetic appeal, durability, and functionality, our product portfolio is designed to meet the evolving preferences of customers across sectors such as hospitality, corporate, residential, and retail decor.

Product Excellence

We take pride in delivering an extensive range of exclusively designed furniture and decor items that are recognized for their:

• Remarkable finish and durability

• Unique and innovative designs

• Trendy colour combinations

• Flawless detailing and craftsmanship

• Nationwide appreciation and trust

Our credibility is reinforced by being a Trade India Verified and Trusted Seller, ensuring customers receive consistent quality and reliable service across all categories.

OUR COMPETITIVE STRENGTHS

We believe that the following are our primary competitive strength:

Experienced and Visionary Management Team: -

Our management team, led by our Promoter and Managing Director, Mr. Hitesh Karnawat, has significant industry experience and proven business acumen. Their strategic foresight and operational expertise have driven our growth and enabled us to maintain consistent performance. Their in-depth understanding of the furniture and lifestyle industry positions us well to capitalize on emerging opportunities.

Strong Supplier and Vendor Relationship: -

Our longstanding and trust-based relationships with suppliers allow us to secure quality raw materials at competitive terms. This not only ensures product consistency but also gives us flexibility and stability in procurement. These relationships, nurtured over years, are a vital support system for our production cycle and supply chain.

Scalable and Customer-Centric Business Model: -

Our business model is designed to be customer-centric and scalable. We focus on understanding customer needs, leveraging existing resources efficiently, and delivering high-quality products at competitive prices. By expanding into new domestic and international markets, we are able to achieve economies of scale and ensure sustainable growth.

Commitment to Quality Assurance and Standards: -

Quality is at the core of our operations. We strictly adhere to industry standards and use only superior quality raw materials. Our consistent focus on quality assurance has helped us build customer trust, minimize complaints, and develop long-term goodwill in the market.

Product Diversification and Design Capabilities

We have built a diverse product portfolio including industrial, restaurant and cafe furniture, outdoor furniture, mirrors, clocks, and handicraft items. Our ability to offer customized and innovative designs as per customer requirements provides us with a strong competitive edge.

Established Market Presence and Growing Brand Value

Through years of consistent service and delivery, we have developed a recognized name in our segment. Our expanding market presence across India and overseas contributes to growing brand recognition and customer loyalty.

Focus on Sustainability and Efficiency

We are committed to responsible business practices by adopting energy-efficient systems and sustainable sourcing methods. This not only reduces costs but also aligns our business with global standards of environmental responsibility.

OUR BUSINESS STRATEGY

Our business strategy focuses on creating long-term value for our stakeholders through sustainable growth, operational excellence, and customer satisfaction. The key elements of our strategy include:

Leveraging Market Relationships and Customer Focus

We aim to strengthen existing relationships while building new ones. Our strategy emphasizes timely execution of orders, consistent engagement with customers, and value creation through superior service.

Enhancing Operational and Functional Efficiencies

We continuously strive to improve processes and reduce costs by adopting modern manufacturing techniques, upgrading machinery, and optimizing resource utilization. These measures help us improve productivity, reduce wastage, and gain a competitive edge.

Expanding Customer Base and Distribution Network

We plan to increase our customer reach by expanding our sales and marketing teams and penetrating new regions across India and abroad. This will allow us to cater to a larger population and enhance long-term customer relationships.

Building a Professional and Empowered Organization

We are committed to building a transparent, ethical, and professional organization. We continue to train and empower our employees, while also engaging external experts where required, to ensure the highest standards of professionalism. the wheels of development of the Organization.

Expanding Geographical Reach

We intend to identify and establish our presence in new domestic and international markets. By leveraging our product quality, established contacts, and competitive pricing, we seek to build a strong global footprint.

Investment in Technology and Digital Platforms

We plan to invest in technology-enabled solutions such as digital marketing, e-commerce platforms, and data-driven analytics to better understand customer needs, improve market penetration, and enhance brand visibility.

Product Innovation and Design Excellence

Our strategy includes continuous investment in R&D and design innovation to keep pace with changing market preferences. By introducing new designs, materials, and product lines, we aim to remain ahead of competition.

Sustainability and Corporate Responsibility

We aspire to align our growth with sustainable practices. By adopting eco-friendly processes, energy-efficient technologies, and responsible sourcing, we aim to reduce our environmental footprint while building long-term value for society.

OPPORTUNITIES AND THREATS Opportunities

-Potential to provide other value assed services Expanding new geographical area Opportunities in Indian Market

-Government thrust for development will boost in rise in demand.

Threats

- Increased Competition from Big Players ^ Change in Government Policies

- Rising labour wages

- There are no entry barriers in our industry which puts us to the threat of competition from new entrants

2. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company is primarily engaged in the processing of semi-finished furniture products into finished products and manufacturing through job work of furniture and handicraft items, which in the context of AS 117 on "Operating Segments" constitutes a single reporting segment. Further, there are no reportable geographical segments.

3. OUTLOOK Handicrafts Sector

Handicrafts continue to be a vital sector in Indias economy, providing livelihoods to over seven million artisans and encompassing a vast range of traditional products—from woodware and metal items to textiles, pottery, and decorative crafts. Retailing across 744 clusters and offering more than 35,000 varieties, the sector remains a beacon of cultural heritage and employment, with over 56% of artisans being women.

Exports of Indian handicrafts for FY 2024-25 reached approximately Rs33,123 crore (US $3.918 billion), marking a growth of about 7.9% in rupees and 5.6% in dollar terms compared to the previous year. EPCH confirms that this includes items such as fashion jewellery, accessories, and more.

In addition, broader data shows that exports of handicrafts excluding hand-knotted carpets stood at Rs33,122.79 crore for 2024-25.

Furniture Sector

Indias furniture market has emerged as the fourth-largest globally, valued at around US $22 billion in 2025. This places India second in the Asia-Pacific region, behind only China. Notably, domestic production accounts for over 90% of Indias furniture consumption, underscoring the strength of its manufacturing base.

On the export front, wooden furniture exports surged significantly in early 2024 (H1), achieving over 32% growth, largely driven by increased usage of imported American hardwoods such as red oak, cherry, and maple. The United States has become the largest destination for Indian wooden furniture exports.

4. THREATS, RISK AND CONCERNS

The Company is concerned about prevailing exposure norms, financial position, entry of new players in the market, rising competition from banks & multilateral agencies, uncertain business environment, fluctuation in rupee, likely increase in cost of capital due to volatile market conditions. Further, the state of business and policy environment in the country also has a cascading effect on the interest-rate regime, cost and availability of raw materials and gestation period & capital outlays required for raw material.

5. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company maintains an adequate system of Internal Controls including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company policies. Suitable delegation of powers and guidelines for accounting have been issued for uniform compliance. In order to ensure that adequate checks and balances are in place and internal control systems are in order, regular and exhaustive Internal Audit of Office/plant are conducted by the in-house Internal Audit Division and external professional audit firm. The Internal Audit covers all major areas of operations, including identified critical/risk areas, as per the Annual Internal Audit Programme. The Audit Committee of Directors periodically reviews the significant findings of different Audits, as prescribed in the Companies Act, 2013 and in the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

6. FINANCIAL AND OPERATIONAL PERFORMANCE

Revenue from the operations of your Company for the year 2024-25 was Rs.468.48 Lakhs which is 53.03% more than Rs. 306.13 Lakhs in the previous year. Profit before Depreciation Interest & Tax for the current year was Rs. 83.96 Lakhs against Rs. (50.34) Lakhs in the previous year. Profit after tax for the current year at Rs. 35.50 Lakhs was increased by 138.41% over Rs. (92.44) Lakhs in the previous year.

7. HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company gives utmost importance to the capacity-building and well-being of its employees. The Industrial Relations in the Company continued to be on a cordial note. There are regular interactions between the management

and the representative-associations on issues pertaining to employee welfare. The Company has an atmosphere of trust and cooperation, which results in a motivated work force and consistent growth in the performance.

8. ANALYSIS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS

As per the recent amendments to the SEBI Listing Obligations & Disclosure Requirements (LODR), we give below additional information in respect of financial parameters that are applicable to our company:

Detail of Significant changes (i.e. change of 25% of more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanation therefore as under:

a) Debtor Turnover Ratio: The Debtor Turnover ratio as on March 31, 2025 is 1.97 times as compared to 2.87 times in the previous year. (Due to increase in sales)

b) Inventory Turnover Ratio: The Inventory Turnover Ratio as on March 31, 2025 is 2.07 times as compared to 1.78 times in the previous year. (Due to fast replacement of inventory)

c) Interest Coverage Ratio: The Interest Coverage Ratio as on March 31, 2025 is 3.50 times as compared to 4.42 times in the previous year. (Due to increase in interest component)

d) Current Ratio: The Current Ratio as on March 31, 2025 is 2.83 times as compared to 2.58 times in the previous year. (Due to increase in current assets)

e) Debt Equity Ratio: The Debt Equity Ratio as on March 31, 2025 is 0.39 times as compared to 0.49 times in the previous year. (Due to decrease in debt)

f) Operating Profit Margin: The Operating Profit Margin Ratio as on March 31, 2025 is 12.15% as compared to 20.35% in the previous year. (Due to increase in sales)

g) Net Profit Margin: The Net Profit Margin Ratio as on March 31, 2025 is 7.58 % as compared to (30.20) % times in the previous year. (Due to increase in net profit)

Cautionary Note

Certain statements in "Management Discussion and Analysis" section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Management envisages in terms of future performance and outlook.