Shashwat Furnishing Solutions Ltd Management Discussions

The Board of Directors is pleased to present the Management Discussion and Analysis Report for the Financial Year ended

31 March 2026. This Report provides an overview of the global and domestic economic environment, industry developments, business performance, opportunities, risks, internal control framework and future outlook of the Company. The discussion has been prepared in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The statements contained herein describing the Companys objectives, expectations and projections may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially depending upon economic conditions, government policies, market demand, competition and other factors beyond the Companys control.

1. GLOBAL ECONOMIC OVERVIEW

The global economy demonstrated remarkable resilience during the Financial Year 2025 26 despite persistent geopolitical tensions, changing trade dynamics and financial market volatility. Major economies continued to experience moderate growth supported by easing inflationary pressures, improving labour markets and gradual normalization of monetary policies.

During the year, central banks across developed economies adopted cautious approaches towards interest rate decisions as inflation moderated from the elevated levels witnessed over the previous two years. Consumer demand remained relatively stable across North America and Europe despite higher borrowing costs, while emerging economies continued to outperform developed markets owing to favourable demographics and increased domestic consumption.

Global manufacturing activity showed gradual improvement driven by recovery in supply chains, increased industrial production and renewed investments in infrastructure and technology. International trade also witnessed moderate growth although uncertainties arising from geopolitical conflicts, shipping disruptions and changing tariff structures continued to influence global commerce.

Digital transformation, automation, sustainability and environmental responsibility emerged as major themes across industries. Businesses increasingly focused on optimizing supply chains, reducing carbon emissions, adopting circular economy practices and improving operational efficiencies through technological advancements.

Despite these positive developments, global businesses continued to face challenges including: Inflationary pressures on raw materials High freight and logistics costs Currency volatility Geopolitical conflicts Supply chain diversification Labour shortages in manufacturing sectors Sustainability compliance requirements

Overall, the long-term outlook for the global manufacturing sector remains positive, supported by infrastructure investments, urbanization, increasing consumer spending and technological innovation.

2. INDIAN ECONOMIC OVERVIEW

India continued to maintain its position as one of the worlds fastest-growing major economies during FY 2025 26. Strong domestic consumption, robust public infrastructure spending, expanding manufacturing capacity and favourable government policies contributed significantly to economic growth.

Government initiatives such as: Make in India PM Gati Shakti Digital India National Logistics Policy Startup India Skill India

Production Linked Incentive (PLI) Schemes Atmanirbhar Bharat continued to strengthen Indias manufacturing ecosystem and improve competitiveness across multiple industrial sectors. The countrys infrastructure development remained one of the largest growth drivers with substantial investments in: Highways Railways Airports Ports Smart Cities Urban Housing Industrial Corridors Warehousing Infrastructure

These developments significantly increased demand for commercial furniture, institutional furniture, hospitality furniture and interior furnishing products.

India also witnessed rapid urbanization coupled with rising disposable income, expanding middle-class population and increasing consumer preference for premium lifestyle products. Growth in residential housing projects, hospitality infrastructure, office spaces, restaurants, caf?s and retail outlets created sustained demand for furniture and decorative products.

The Government continued to encourage MSMEs through various policy initiatives including easier access to finance, digital compliance mechanisms, export incentives and infrastructure support, thereby creating a favourable environment for manufacturing companies.

Indias digital economy also continued its rapid expansion with increasing penetration of e-commerce platforms enabling furniture manufacturers to access wider customer bases both domestically and internationally.

3. GLOBAL FURNITURE INDUSTRY

The global furniture industry continued to experience sustainable growth driven by changing consumer lifestyles, urbanization, residential construction and hospitality expansion.

Growing consumer awareness regarding aesthetics, functionality and sustainability has transformed purchasing behaviour across developed and emerging economies. Customers increasingly prefer furniture products that offer:

Modern designs

Modular configurations

Space optimization

Eco-friendly materials

Superior durability

Premium finishing

Customized solutions

Commercial demand remained strong owing to expansion of:

Hotels

Resorts

Restaurants

Caf?s

Corporate offices

Educational institutions

Healthcare facilities

Co-working spaces

The hospitality sector particularly witnessed healthy recovery after several years of disruption, resulting in increased

procurement of premium furniture products.

Manufacturers worldwide continued investing in:

Automation

Robotics

Computerized production systems

Artificial Intelligence

Digital manufacturing

Sustainable sourcing

Green manufacturing technologies

Environmental sustainability has become a significant purchasing criterion globally. Consequently, manufacturers

increasingly adopted FSC-certified timber, recyclable materials, energy-efficient production processes and

environmentally responsible packaging solutions.

Digital commerce also transformed furniture retailing through:

Online product visualization

Virtual showrooms

Augmented Reality applications

Direct-to-consumer sales

Digital marketing

Social commerce

These technological developments are expected to continue shaping industry dynamics over the coming years.

4. INDIAN FURNITURE INDUSTRY

India has emerged as one of the fastest-growing furniture markets globally owing to rapid urbanization, increasing disposable incomes, expanding real estate activity and changing lifestyle preferences.

The Indian furniture industry comprises both organized and unorganized sectors, with organized players steadily increasing their market share due to improved product quality, standardized manufacturing processes and stronger distribution networks.

Major growth drivers include:

Residential Housing

Growing housing demand under various Government housing initiatives has significantly increased demand for modular kitchens, bedroom furniture, living room furniture and customized interior solutions.

Hospitality Industry

Expansion of hotels, restaurants, caf?s, banquet facilities and tourism infrastructure has generated substantial demand for commercial furniture.

Office Infrastructure

Growth of corporate offices, IT parks, coworking spaces and commercial real estate has accelerated demand for ergonomic office furniture.

Institutional Demand

Educational institutions, hospitals and government infrastructure projects continue to provide stable long-term demand.

E-Commerce

Online furniture retail has expanded rapidly with improved logistics, digital payment systems and changing customer buying behaviour.

Export Potential

Indian manufacturers continue to benefit from competitive labour costs, skilled craftsmanship, strong design capabilities and availability of quality raw materials.

However, the industry also faces challenges including:

Rising timber prices

Imported raw material costs

Foreign exchange volatility

Labour availability

Competition from imports

Increasing compliance requirements

Environmental regulations

Despite these challenges, the long-term outlook remains positive due to favourable demographic trends and increasing urbanization.

5. HANDICRAFT INDUSTRY

The Indian handicrafts industry continues to represent one of the countrys most significant traditional manufacturing sectors, providing employment to millions of artisans across rural and semi-urban regions.

Indias handicraft sector enjoys strong international recognition owing to its:

Traditional craftsmanship

Unique artistic designs

Handmade manufacturing techniques

Cultural heritage

Sustainable production methods

Major export markets include:

United States

United Kingdom

Germany

France

Netherlands

UAE

Australia

Canada

Wooden handicrafts, decorative furniture, home d?cor products, mirrors, wall art and vintage furniture continue to witness healthy international demand.

Government agencies such as the Export Promotion Council for Handicrafts (EPCH), MSME Ministry and various State Governments continue to promote Indian handicrafts through export incentives, trade fairs, international exhibitions and digital marketing initiatives.

Growing global preference for sustainable and handcrafted products presents significant long-term opportunities for Indian manufacturers.

6. COMPANY OVERVIEW

Your Company is engaged in the processing of semi-finished furniture products into premium quality finished furniture and handicraft products catering to both domestic and international markets. Over the years, the Company has established itself as a reliable manufacturer by consistently delivering products that combine superior craftsmanship, contemporary aesthetics, durability and functionality.

The Companys product portfolio has evolved in line with changing customer preferences and industry trends. Through continuous product development and innovation, the Company has diversified into various categories of furniture and home d?cor products catering to residential, commercial and hospitality sectors.

The Company focuses on delivering value through superior quality, innovative designs, timely execution and customer satisfaction. Its manufacturing operations are supported by an experienced management team, skilled workforce, established supplier network and robust quality control systems, enabling the Company to maintain long-term relationships with customers in domestic as well as international markets.

The Company continues to strengthen its presence by expanding its customer base, improving manufacturing capabilities and adopting modern production techniques that enhance efficiency while maintaining high quality standards.

7. BUSINESS MODEL

The Companys business model is designed around sustainable growth, operational efficiency and customer-centricity. It integrates procurement, manufacturing, finishing, quality assurance, logistics and customer service into a streamlined value chain.

The Company procures high-quality semi-finished furniture components, timber, engineered wood and allied materials from reliable suppliers. These materials undergo value-added processing, finishing, polishing, painting, upholstery and quality inspections before being delivered to customers.

The Companys integrated business model offers several advantages including:

Efficient procurement management.

Strong vendor relationships ensuring uninterrupted supply of raw materials.

Flexible manufacturing processes capable of handling customized orders.

Focus on quality and timely delivery.

Scalable production capabilities.

Cost optimization through efficient resource utilization.

Long-term customer relationship management.

The Company serves customers across multiple sectors including hospitality, residential housing, commercial establishments, restaurants, caf?s, retail outlets, institutional buyers and export markets.

8. PRODUCT PORTFOLIO

The Company has developed a diversified portfolio that caters to a broad spectrum of customer requirements. Continuous innovation and design enhancement have enabled the Company to strengthen its market position and reduce dependence on any single product category.

The Companys principal product categories include:

Industrial Furniture

The Company manufactures industrial-style furniture designed for commercial and institutional applications. These products are known for durability, robust construction and modern aesthetics.

Restaurant and Caf? Furniture

The Company manufactures tables, chairs, benches, bar stools and customized seating solutions designed specifically for restaurants, caf?s, hotels and food service establishments.

Outdoor and Garden Furniture

Outdoor furniture manufactured by the Company combines durability with weather resistance, making it suitable for gardens, resorts, hotels and recreational facilities.

Vintage Furniture

The Company specializes in vintage and handcrafted furniture inspired by traditional designs blended with modern functionality. These products cater to premium lifestyle and interior d?cor markets.

Home D?cor Products

The Company also manufactures decorative products including:

Mirror Frames

Wall Clocks

Decorative Accessories

Wooden Artifacts

Handcrafted Home D?cor

Designer Utility Products

These products complement the Companys furniture offerings and provide opportunities for cross-selling.

9. MANUFACTURING EXCELLENCE

The Companys manufacturing philosophy is centred on quality, efficiency, innovation and customer satisfaction.

Its production processes emphasize:

Precision workmanship

Superior finishing

Modern production techniques

Efficient resource utilization

Continuous quality monitoring

Waste minimization

Timely order execution

The Company continuously evaluates opportunities for upgrading machinery, adopting automation where economically viable and improving manufacturing processes to enhance productivity and reduce operational costs.

Lean manufacturing principles, efficient inventory management and disciplined production planning enable the Company to optimize capacity utilization while maintaining high quality standards.

10. QUALITY ASSURANCE

Quality remains one of the Companys most significant competitive advantages.

The Company has implemented comprehensive quality assurance procedures across every stage of its operations, including:

Raw Material Inspection

Only high-quality raw materials sourced from approved suppliers are accepted for production.

Process Quality Control

Quality inspections are conducted at multiple stages of manufacturing to ensure adherence to predefined specifications.

Finished Goods Inspection

Every finished product undergoes detailed inspection covering:

Structural strength

Surface finishing

Painting and polishing

Dimensional accuracy

Packaging quality

Overall aesthetics

Continuous monitoring of quality parameters has enabled the Company to minimize defects, improve customer satisfaction and strengthen its market reputation.

11. RESEARCH, DESIGN AND PRODUCT DEVELOPMENT

Consumer preferences in the furniture industry continue to evolve rapidly.

Accordingly, the Company focuses on continuous product development by introducing innovative designs, improved finishes, enhanced functionality and contemporary styling.

Key areas of focus include:

Modular furniture

Space-saving solutions

Sustainable materials

Premium finishing techniques

Contemporary colour combinations

Customized furniture solutions

The Company regularly analyses customer feedback, emerging design trends and market developments to ensure that its product portfolio remains competitive.

12. COMPETITIVE STRENGTHS

The Company believes that the following factors provide a sustainable competitive advantage:

Experienced Management

The Company is managed by experienced professionals possessing extensive knowledge of the furniture manufacturing and handicrafts industry. Their strategic vision, operational expertise and customer-centric approach continue to drive sustainable growth.

Strong Vendor Network

Long-standing relationships with suppliers ensure uninterrupted availability of quality raw materials at competitive prices. These relationships contribute significantly towards production stability and cost efficiency.

Diversified Product Portfolio

A diversified range of furniture and handicraft products enables the Company to cater to multiple customer segments while reducing dependence on any single product category.

Strong Customer Relationships

The Company has developed long-term relationships with customers through consistent product quality, timely deliveries and responsive after-sales service.

Quality-Focused Operations

Strict quality control procedures and continuous process improvements help maintain customer confidence and enhance brand reputation.

Operational Efficiency

Efficient production planning, disciplined inventory management and optimized procurement practices contribute towards improved profitability and better utilization of resources.

Scalable Business Model

The Companys manufacturing capabilities and operational systems provide adequate flexibility to support future expansion without significant structural changes.

13. BUSINESS STRATEGY

The Companys long-term strategy focuses on achieving sustainable growth while strengthening profitability and shareholder value.

Market Expansion

The Company intends to expand its geographical presence across India and strengthen its footprint in international markets by developing long-term customer relationships and exploring new export destinations.

Product Innovation

Continuous investment in design innovation and product development will enable the Company to respond effectively to changing customer preferences and emerging market trends.

Manufacturing Efficiency

The Company plans to improve operational efficiency through technology adoption, process automation, improved production planning and better capacity utilization.

Digital Transformation

The Company aims to leverage digital technologies for marketing, customer engagement, order management and business analytics to improve decision-making and customer experience.

Brand Building

Focused branding initiatives, participation in trade exhibitions and enhanced digital presence will support wider market recognition and customer acquisition.

Sustainability

The Company remains committed to adopting environmentally responsible manufacturing practices, efficient resource utilization and sustainable sourcing to create long-term value for stakeholders.

14. SWOT ANALYSIS

Strengths

Experienced management team.

Established supplier relationships.

Strong product quality.

Diversified product portfolio.

Skilled workforce.

Customer-centric approach.

Efficient manufacturing operations.

Growing market reputation.

Weaknesses

Dependence on availability of quality timber and raw materials.

Exposure to fluctuations in input costs.

Working capital intensive operations.

Dependence on skilled craftsmanship for certain product categories.

Opportunities

Growing domestic furniture demand.

Increasing exports.

Expansion of hospitality sector.

Rising urbanization.

Government support for manufacturing.

Growth of organized retail.

Increasing online furniture sales.

Demand for premium handcrafted furniture.

Threats

Intense market competition.

Imported furniture products.

Foreign exchange volatility.

Rising labour costs.

Raw material price fluctuations.

Regulatory changes.

Geopolitical uncertainties affecting exports.

15. 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, 2026 is 1.25 times as compared to 1.97 times in the previous year. (Due to decrease in sales)

b) Inventory Turnover Ratio: The Inventory Turnover Ratio as on March 31, 2026 is 1.11 times as compared to 2.07 times in the previous year. (Due to decrease in profits)

c) Interest Coverage Ratio: The Interest Coverage Ratio as on March 31, 2026 is 4.99 times as compared to 3.50 times in the previous year. (Due to decrease in interest component)

d) Current Ratio: The Current Ratio as on March 31, 2026 is 2.54 times as compared to 2.83 times in the previous year. (Due to decrease in current assets)

e) Debt Equity Ratio: The Debt Equity Ratio as on March 31, 2026 is 0.49 times as compared to 0.39 times in the previous year. (Due to increase in debt)

f) Operating Profit Margin: The Operating Profit Margin Ratio as on March 31, 2026 is -17.32% as compared to 12.15% in the previous year. (Due to decrease in sales)

g) Net Profit Margin: The Net Profit Margin Ratio as on March 31, 2026 is -22.82 % as compared to 7.58 % times in the previous year. (Due to decrease 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.