Silkflex Polymers (India) Ltd Management Discussions

(Pursuant to Regulation 34(2)(e) read with Schedule Vof the SEBIListing Regulations)

Our Company trades premium water-based textile inks and premium water-based wood coating polymers under the Malaysian brand Silkflex, produced by Silkflex Polymers SDN BHD. We hold the exclusive rights to sell Silkflex products and use the Silkflex brand name in India. Our Company has always believed in the best quality in its products. The company is dedicated to the quality of its products and adheres to quality standards as prescribed by its clients. The company strives for complete transparency and satisfaction of its clients with an unwavering trust and focus on professional excellence and integrity.

Over the years, our product portfolio has expanded to include a wide range of printing inks for the textiles and garments industry, as well as water-based wood coatings for the furniture sector. Silkflex offers a diverse portfolio of 108 textile printing inks and 51 wood coating polymer products. Our Company aims to broaden its business operations by venturing into the manufacturing of textile ink printing products.

i. GDP growth and Indian economic outlook:

Indias economy has demonstrated remarkable resilience and growth momentum in recent years. According to official estimates, the country recorded a real GDP growth of approximately 7.2% in FY 2023-24, driven by robust domestic demand, strong infrastructure spending, and a rebound in manufacturing and services. This growth rate has placed India among the fastest-growing major economies globally, reinforcing investor confidence and signaling a positive macroeconomic trajectory.

India is expected to grow at a moderate but healthy pace of around 6.5% in FY 2024-25, as forecasted by the Reserve Bank

Despite its strengths, the Indian textile industry faces challenges including rising raw material prices, competition from countries like Bangladesh and Vietnam, and evolving global trade dynamics. ESG expectations from international buyers and the need for technological advancement further demand continuous adaptation by Indian textile players to maintain competitiveness in the global market.

As a supplier of eco-friendly, high-performance textile printing inks and coating solutions, Silkflex Polymers (India) Limited is strategically aligned with the growth of the Indian textile sector. Increasing demand for sustainable, compliant, and innovative printing solutions offers significant opportunity. The Company is poised to benefit from industry modernization, export-led demand, and the shift towards environmentally responsible production.

According to the Indian Technical Textile Association (ITTA) and ministry data, exports of 247 technical textile items during April-June 2024-25 are estimated to have reached approximately Rs.6,315 crore. This represents a 6.2% growth compared to the Rs.5,946 crore recorded in the same period of 2023-24.

of India and international agencies such as the IMF and UN. Silkflex Polymers remains committed to aligning its strategic initiatives with the evolving economic landscape. The Company is expanding its market reach, to cater to the rising demand from a growing economy. By staying agile and innovation-driven, Silkflex aims to capitalize on Indias sustained economic progress in the years ahead.

ii. Indian Textile Industry:

The Indian textile industry is one of the oldest and most significant sectors in the countrys economy, contributing around 2% to Indias GDP and accounting for approximately 12% of total export earnings. It plays a critical role in employment generation, directly and indirectly employing over 45 million people. The sector spans the entire value chain, from fibre to fashion, encompassing cotton, synthetic fibres, silk, wool, jute, and technical textiles.

Indias textile and apparel market is projected to grow from USD 165 billion in 2023 to over USD 250 billion by 2030, driven by rising domestic consumption, growth in e-commerce, and expanding export demand. Increasing urbanisation, a young consumer base, and rising disposable incomes are key contributors to domestic demand growth. The technical textiles segment, in particular, has gained traction due to its applications in healthcare, automotive, and industrial sectors.

The Government of India continues to support the textile sector through schemes such as the Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles, PM MITRA (Mega Integrated Textile Region and Apparel) parks, and Technology Upgradation Fund Scheme (TUFS). These policies aim to modernize infrastructure, improve global competitiveness, and attract private investment, creating a favourable policy environment for growth.

iii. Indian Wood Coating Industry :

Wood coatings are generally created by combining various layers of shellac, drying oil, lacquer, varnish, etc. where every layer is followed by sanding. Whereas, on the contrary, waterborne wood coatings are made from a wide range of resins which include acrylic, polyester, polyurethane, fluoropolymer, waterborne powder, etc. Water is added in these coatings to enable the resin to get dispersed easily. These coatings are applied on the wood surface to protect and enhance its appearance. The high-water content of these coatings makes them easy to apply and environment-friendly as well. The consistency and the composition of the waterborne coatings vary and different solvents can be added to it. These coatings are often applied on furniture items such as tables, chairs, shelves, decorative wooden items, etc.

The Indian wood coatings sector is a critical subset of the broader coatings industry, encompassing finishes for furniture, flooring, cabinets, doors, and architectural wood elements. As of2024, the global wood coatings market is valued at approximately USD 10.95 billion, with Asia-Pacific—led by India and China— accounting for nearly 45% of this share.

Driven by rapid urbanisation, a growing middle class, expanding residential and commercial construction, and rising disposable incomes, the Indian wood coatings market is forecast to grow at a steady 5-5.5% CAGR over the next decade. The flourishing furniture and decor sectors—projected to reach USD 37 billion by 2026—act as a significant growth conduit, with furniture applications alone representing over 58% of demand. The industry faces constraints from high raw material costs, especially petroleum-based resins, and stringent VOC regulations. These challenges are encouraging a shift toward eco-

• India is the worlds 3rd largest exporter of Textiles and Apparel.

• India ranks among the topjive global exporters in several textile categories, with exports expected to reach US$100 billion.

• The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030.

• The textiles and apparel industry contributes 2.3% to the countrys GDP, 13% to industrial production and 12% to exports.

• The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade.

friendly, bio-based, and water-based coatings despite their higher costs—a trend bolstered by both regulation and consumer preference.

Silkflex is well-positioned to capitalize on these industry trends by expanding its range of water-based, durable, low-VOC wood coatings geared toward furniture and flooring segments. Leveraging technical expertise and regional manufacturing can support partnerships with both multinational and domestic OEMs. Continued R&D to develop sustainable, high- performance coatings can enhance Silkflexs competitiveness in this high-growth space.

Indias furniture market is expected to reach USD 37 billion by 2026, growing at a CAGR of over 13%. This expansion is driven by rising disposable incomes, urban housing demand, and increasing adoption of modular furniture—all of which directly boost demand for high-quality wood coatings. Growth in organized furniture retail (e.g., IKEA, Urban Ladder, Pepper fry) and OEM-led manufacturing clusters in states like Tamil Nadu, Rajasthan, and Maharashtra is fuelling demand for consistent, durable, and aesthetic wood finishes, creating opportunities for scalable coating solutions.

Schemes like PMAY (Pradhan Mantri Awas Yojana) and investments in affordable housing are accelerating residential construction. This, in turn, drives downstream demand for wood coatings in applications such as doors, panels, wardrobes, and kitchen cabinets. Due to growing environmental regulations and increased health awareness, theres an accelerating shift in India from traditional solvent-based finishes to eco-friendly, water- based coatings. Silkflex is well-aligned to serve this evolving demand with its sustainable coating technologies.

India is the fastest-growing

market in Asia- Pacific for water-borne wood coatings, driven by residential and commercial investments due to its durability & aesthetic appeal.

Boosted by the booming furniture sector and government housing and infrastructure initiatives

F ocus on sustainable coatings with low- VOC and HAPs-free

formulations to meet stringent environmental standards.

Water - borne coatings is

projected to experience highest growth compared to solvent-borne & UV-curved

Water-based coatings are

popular for their lower environmental impact and high performance in

applications like kitchen cabinets and furniture.

Water - borne coatings offer superior elasticity, allowing the paint to move with the wood without degradation, ensuring longer-lasting finishes.

Transition from solvent-based to water- based and UV- cured coatings, balancing environmental performance with quality

Evolving consumer preferences

for coatings that balance aesthetics, durability, and environmental sustainability.

II. Opportunities and Threats:

• Silkflex products are certified to ZDHC Confidence Level 3 (Zero Discharge of Hazardous Chemicals). ZDHC aims to remove harmful chemicals from production and the supply chain to protect workers, consumers and the environment. Silkflex ensures that the products not only conform to the requirements of ZDHCs manufacturing restricted substances list but also to the strict manufacturing restricted substances list of global brands and retailers. Silkflex products are also accredited with Eco-Passport certificate issued by Oeko-Tex? and GOTS-version 7 (Global Organic Textile Standard) certificate.

• Increased environmental regulations and customer preference for eco-friendly, water-based, and low-VOC coatings create strong demand for Silkflexs green product portfolio, especially in wood, textile, and industrial coatings.

• With technical textile exports rising (USD 2.9 billion in FY 2024-25) and the Indian furniture market projected to touch USD 37 billion by 2026, there is significant scope for Silkflex to expand its customer base in value-added finishes and printing solutions. ^•

• The growth of organized furniture manufacturing, real estate projects, and modular interior solutions provides a large, structured customer segment for high-performance, application-specific coatings.Schemes like the PLI for

textiles and technical textiles, and investments under

PM Gati Shakti, are expected to improve logistics and incentivize production, boosting Silkflexs scale and distribution efficiency.

• The efficiency of the marketing and sales network is critical to the success of our Company. We produce distinctive marketing and advertising campaigns that generate high customer engagement. This marketing and campaigns include workshops, exhibitions and seminars including training programmes for product handling. To retain our customers and acquire new customers, our team having adequate experience and competencies, regularly interact with them through workshops, exhibitions, seminars and focus on gaining an insight into the additional needs of customers. Our technical team give technical demonstration to our customers on regular interval for new developing techniques & usage of products.

• Silkflex textile printing products are certified to ZDHC

Confidence Level 3, supporting the Zero Discharge of Hazardous Chemicals initiative to eliminate harmful substances and protect workers, consumers, and

the environment. Silkflex holds the OEKO-TEX? Eco Passport and is accredited under the Global Organic Textile Standard (GOTS) version 7, ensuring the highest levels of safety and sustainability. Our wood coating products are GREENGUARD certified, ensuring low chemical emissions and contributing to healthier indoor air quality—recognized by green building programs like LEED.

• Prices of petroleum-based inputs, resins, and solvents remain volatile and heavily influenced by global supply chains. This could impact margins, especially in price-sensitive segments.

• Large global players with greater brand recognition, R&D capabilities, and deeper distribution networks may pose pricing and innovation pressures in both wood coatings and textile ink markets.

• With stricter global environmental and chemical regulations (e.g., REACH, GOTS), non-compliance could lead to loss of export-linked business or reputational damage.

• Overreliance on textiles or wood coatings without diversification into newer sectors (e.g., automotive, packaging) may expose the company to cyclical downturns or sector-specific risks.

• Frequent changes in laws, environmental regulations, and industry standards—both in India and globally—can significantly impact the operations, product formulations, and cost structures of companies in the chemical and coatings sector. Compliance with norms related to volatile organic compounds (VOCs), hazardous substances, waste disposal, and worker safety is becoming increasingly stringent. Any

Textile Coatings and Printing Inks Segment:

Silkflexs core business in textile printing inks and coatings

remained the primary revenue driver during FY 2024-25, contributing approximately 93-96% of the total turnover.

delay or inability to adapt to such regulatory changes may lead to penalties, restricted market access, or reputational harm. Silkflex continues to monitor policy developments closely and invest in R&D and process upgrades to ensure ongoing compliance and sustainability.

The segment witnessed healthy volume growth supported by strong demand from garment exporters and domestic apparel manufacturers, particularly in Tirupur, Ludhiana, and Surat. The Companys water-based, eco-friendly formulations, certified under GOTS and OEKO-TEX standards, saw

increasing adoption due to rising environmental compliance by global brands. Notably, Silkflex expanded its reach to new geographies and added key clients in the childrens apparel and activewear categories. Continuous product innovation and customized formulations contributed to improved margins and customer retention.

Silkflex Polymers has established a strong presence in the ecofriendly water-based textile inks segment, with 108 distinct SKUs and certification credentials like GOTS and ZDHC Level 3. While the overall Indian textile ink market is highly fragmented—with many unorganized players—Silkflex stands out among the leading organized and compliance- driven suppliers. The company has grown revenue from Rs.43.10 crore in FY23 to Rs.57.71 crore in FY24, to Rs.76.73 crore in FY 25, signalling a compound annual growth rate of approximately 33% and consistent strengthening of its market position. Though no precise market share figures are disclosed publicly, this growth trajectory and brand penetration indicate increasing share in export-oriented textile clusters.

Wood Coatings Segment:

The wood coatings division, although smaller in contribution (~4-7% of revenue), demonstrated robust growth of over 45.13% YoY in FY 2024-25. This surge was driven by increased construction and interior furnishing activity, especially in Tier 1 and Tier 2 cities. The demand for PU-based and water-based wood coatings rose sharply, as customers across the modular furniture, OEM, and

hospitality segments shifted toward high-performance and low-VOC solutions. Silkflex introduced new shades and surface effect finishes to cater to evolving interior design trends. Strategic expansion in regional distribution, dealer activation, and engagement with contract manufacturers supported a broad-based increase in market share.

Silkflexs wood coatings division has rapidly scaled, offering 51 water-based polymer variants and achieving 45.13%+ YoY revenue growth in FY 2024-25.The broader Indian wood coatings market plays within the larger decorative coatings space—one dominated by giants like Asian Paints (market leader with ~52% overall paint share), Kansai Nerolac, Berger, Indigo, and AkzoNobel. These Tier-1 companies control ~50-55% of the global wood coatings market.

Sirca Paints, a specialist in PU wood coatings, reported Rs.268 crore revenue in FY 2023, growing 34% YoY, and retains strong regional share—particularly in North India—with a mature dealer-OEM network.

Compared to these, Silkflex remains a niche local player, but is gaining share in the mid-premium segment—especially with growing demand for low-VOC, water-based alternatives, aligning with sustainability trends and import substitution.

IV. Discussion on financial performance with respect to operational performance

During the financial year 2024-25, Silkflex Polymers (India) Limited demonstrated robust operational growth across its key business segments, which positively translated into its financial performance. The company achieved a total revenue of Rs.80.16 crore, marking a substantial increase from Rs.50.27 crore in the previous financial year, reflecting a YoY growth of approximately 59%.

This growth was primarily driven by an increase in sales volumes across both textile inks and wood coatings, supported by strategic geographic expansion, the introduction of new product variants, and rising demand from key end-user industries such as apparel exports, home furnishings, and modular furniture manufacturing.On the cost side, Silkflex managed to optimize its raw material procurement and production efficiency, despite ongoing reflects the success of its strategy to position itself as a reliable, innovation-driven supplier in niche coating segments.

volatility in input prices. Operational efficiencies, better inventory management, and scaling of in-house production contributed to improved gross margins.

The company also continued its investment in product development and compliance-related certifications, which helped secure new institutional clients and long-term contracts, particularly in the export-linked textile cluster markets. Despite inflationary pressures and macroeconomic uncertainties, EBITDA margins remained stable, owing to the companys focus on high-margin, sustainable product lines. Overall, the financial performance of the company is closely aligned with its operational growth initiatives, and

V. Key Financial Ratios: