Stanley Lifestyles Ltd Management Discussions

Indian Economy

The Indian economy continues to show resilience despite global uncertainties. According to the International Monetary Fund, Indias GDP growth is projected to be 6.2% for year 2025 and 6.3% for year 2026, maintaining its position as the fastest- growing major economy.

Inflation has moderated to 4.9% in FY2025, a reduction from 5.4% in FY2024. This decline is largely driven by a fall in food prices, as a result of the governments measures to stabilize inflation, such as strengthening buffer stocks and facilitating smoother supply chains. The Reserve Bank of India is expected to implement a series of rate cuts, totalling at least 75 basis points during year 2025, aimed at supporting economic growth.

Indias manufacturing sector has shown growth, with the India Manufacturing PMI staying well above the neutral 50 mark and with a long-term average of 54.1. This expansion is supported by strong demand, particularly from export markets. In FY2025, Indias foreign direct investment FDI equity inflows increased by 14%, reaching Rs. 81.04 billion. This growth in FDI is driven by sectors such as services, computer software and hardware, highlighting Indias attractiveness as a global investment destination.

However, the economy faces external risks, including rising crude oil prices. These factors, along with ongoing geopolitical tensions, could disrupt trade and affect growth. However, India remains well-positioned to continue its growth trajectory, driven by strong domestic consumption, policy reforms and increased foreign investments.

Sources:

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2123826 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2097892 https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2111647 https://www.business-standard.com/economy/news/india-final-manufacturing- pmi-may-2025-hsbc-jobs-new-orders-1250 60200274_1.html

https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154840&ModuleId=3

Luxury Furniture Market

The overall Indian furniture market was valued at USD 24 billion in 2024 and is expected to grow to USD 60 billion by 2033, representing a CAGR of approximately 10%. A key characteristic of the domestic market is the shift towards personalised and premium products crafted from materials such as wood, leather and metal. Major metropolitan regions, including Bengaluru, Mumbai and Delhi, remain strongholds for furniture consumption, driven by modern housing developments and a rising aspirational class.

Indias luxury furniture industry continues its upward trajectory, supported by rising disposable incomes, urbanisation and a shift in consumer preferences toward aesthetic and high-end products. The market is estimated to reach USD 4.53 billion

in 2025 and is projected to grow at a CAGR of 4.24% through 2030, driven by increased demand from both residential and commercial sectors. This growth is further supported by the increasing demand of customisable and eco-conscious furniture, particularly among urban consumers seeking modern and space-efficient designs.

Additionally, government initiatives encouraging local manufacturing, combined with 100% FDI allowance in furniture production, are attracting global players to set up sourcing and distribution in India. As the industry matures, innovation, sustainability and design excellence are expected to define its next phase of growth.

Sources

https://www.indiabusinesstrade.in/blogs/indias-furniture-boom-urbanization-

e-commerce-brand-growth/

https://www.mordorintelligence.com/industry-reports/luxury-

furniture-market-in-india

https://www.investindia.gov.in/sector/furniture

Growth Drivers:

Rising Disposable Incomes

Indias increasing disposable income has significantly increased consumer spending, enabling more investments in premium and luxury furniture. With the growing middle class and rising household incomes in cities, the demand for high- quality and aesthetically pleasing furniture continues to rise, particularly in metropolitan regions.

Urbanization and Real Estate Expansion

Urbanization remains a critical factor driving furniture demand. As more people migrate to urban areas, the need for modern, space-efficient and customizable furniture has surged. With projections indicating that 51% of Indias population will reside in urban areas by 2047, the housing sector continues to provide substantial opportunities for the furniture industry, particularly in major cities such as Bengaluru, Mumbai and Delhi.

Increased Construction and Real Estate Development

The booming real estate sector has a direct positive impact on furniture sales. With residential and commercial spaces being developed at a rapid pace, the need for furniture, especially high-end and durable has grown. Government initiatives to enhance socio-economic infrastructure have further accelerated demand for furniture in residential and hospitality projects.

Technological Advancements and Customization

Advancements in furniture manufacturing technology, combined with growing demand for customizable solutions, have positioned the industry for further growth. Consumers increasingly prefer personalized furniture that fits their specific needs, enhancing the overall appeal of bespoke offerings in the market.

Source

https://www.indiabusinesstrade.in/blogs/indias-furniture-boom-urbanization-

e-commerce-brand-growth/

https://wwwJbef.org/download/1744008822_Retail-February-2025.pdf#page=11

Company Overview:

Stanley Lifestyles Limited

Founded in 2007, Stanley Lifestyles Limited has emerged as a leading Company in Indias luxury furniture market, offering a wide range of premium, luxury and ultra-luxury furniture and home interior solutions. The company designs, manufactures and retails high-end products such as sofas, recliners, dining sets, kitchen cabinetry, beds, wardrobes and accessories

under its distinct brands including Stanley Level Next, Stanley Boutique and Sofas & More. Stanley Lifestyles vertically integrated model, with two state-of-the-art manufacturing facilities in Bengaluru spanning over 300,000 square feet, allows full control over design, production and retail, ensuring the highest quality standards.

With 68 retail outlets across 24 major cities in India, Stanley Lifestyles operates through a combination of company-owned and franchised stores, strategically expanding its presence in high-opportunity markets. The companys commitment to design-led innovation, skilled craftsmanship and sustainable practices has helped it stay ahead in a competitive market. Stanley Lifestyles continues to build on its strong legacy, addressing the growing demand for luxury and premium home interiors across the country.

Manufacturing:

Stanley Lifestyles operates two advanced manufacturing facilities in Bengaluru, Karnataka, strategically located in Electronic City and Jigani. The Electronic City facility spans 197,643 square feet and has an installed capacity of 163,200 units, while the Jigani facility covers 103,243 square feet with an installed capacity of 144,000 units. These facilities enable Stanley to manufacture a wide range of bespoke furniture and home furnishing solutions under its 3 brands, as well as cater to multinational clients. Equipped with advanced machinery and supported by skilled labor, both units adhere to strict quality control measures to ensure that all products meet international standards. This manufacturing infrastructure supports Stanley Lifestyles commitment to delivering high- quality, innovative products that meet the evolving demands of the luxury and premium furniture market.

Financials:

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Particulars	FY 2025	FY 2024	Y-o-Y (%) Change
Revenue from operations (in Rs. million)	4,262	4,325	-1%
Total income	4,434	4,438	0%
EBITDA	818	849	-4%
EBITDA Margin (%)	19%	20%	-2%
Profit before tax	364	390	-7%
Profit after tax	292	291	0%
Profit after tax margin (%)	7%	7%	1%
Return on Net Worth (%)	8%	12%	-35%

Key Financials Ratios:

Particulars	FY 2025	FY 2024	Y-o-Y (%) Change	Reasons of variance
Current Ratio	3	2	94%	Increase in current assets and decrease in current liabilities of the group during the year has resulted in movement in this ratio
Debt equity ratio	0	1	-49%	Decrease in debt and increase in total equity of the group during the year has resulted in movement in this ratio
Inventory turnover ratio	1	2	-50%	Decrease in Cost of Goods Sold of the Group during the year has resulted in movement in this ratio
Particulars	FY 2025	FY 2024	Y-o-Y (%) Change	Reasons of variance
Trade Receivables Turnover Ratio	17	20	-15%	No material change
Trade Payables Turnover Ratio	4	4	0%	No material change
Net Capital Turnover Ratio		4	-100%
Net Profit Ratio	7%	7%	1%	No material change
Return on Capital Employed	6%	10%	-45%	Increase in capital employed and decrease in EBIT of the group during the year has resulted in movement in this ratio

Risk Management:

Risk description	Mitigation strategy
Any fluctuations in economic parameters within the Companys operating environment may present economic risks, potentially impacting its sustainable growth.	The Company continuously monitors economic trends and adapts its business strategies accordingly. This proactive approach helps mitigate the impact of economic fluctuations on business operations.
Stanley Lifestyles reliance on the sale of sofas and recliners exposes it to concentration risk, which could impact its operational and financial efficiency.	To mitigate the risks associated with its reliance on sofas and recliners, the Company diversified its portfolio by launching division such as kitchen and cabinet and case goods. This expansion targeted untapped markets, including Gujarat and Chennai. Additionally, the Company opened new Anchor stores to explore new business segments.
Any delays in procuring raw materials may pose a procurement risk, potentially affecting the timely delivery of products.	The Company diversified its raw material procurement by sourcing from various countries and increased the localization of leather, both in terms of quantity and value. This strategy helped reduce dependence on the purchase of finished leather.
Any changes in rules and regulations pose a regulatory risk to the Company, potentially affecting its operational efficiency.	The Company has a well-established compliance team and a robust system to streamline processes. Experienced consulting firms have also been engaged to guide the organization through various listing and non-listing compliance requirements. Furthermore, the Company invests in employee training to enhance their efficiency, ensuring effective adherence to regulatory requirements.

Human resource:

The Company consider its employees as its most valuable asset and remains committed to fostering a skilled, motivated and engaged workforce. During the year, Stanley Lifestyles invested in continuous training and development programs to enhance technical, operational and sales capabilities across all levels. The Company places strong emphasis on employee well-being, workplace safety and maintaining a positive work environment that promotes inclusivity and professional growth.

Internal control systems and their adequacy

The Company has established strong internal control systems to safeguard assets, prevent fraud, and ensure the accuracy of financial records. These systems support efficient business operations, compliance with policies, and the timely preparation of reliable financial reports. Regular reviews and updates are conducted, with any necessary adjustments made to align with company policies and industry standards.

Senior management and auditors actively monitor the internal controls, ensuring continuous improvements. These controls strengthen governance, improve operational efficiency, and support the Companys long-term objectives.

Cautionary statement:

A few forward-looking comments regarding future prospects in the MD&A section contain both known and unknown risks and uncertainties that could materially affect actual outcomes. These statements, which are predicated on assumptions made using available data and may vary over time, represent the Companys current beliefs, objectives and goals as of the date they were made. Risks can also arise from unpredictable variables like shifting regulations and the state of the economy. In light of new information or anticipated developments, the Company is under no duty to update these statements. A number of variables, such as shifts in governmental policies and the state of the domestic and global economies, could affect the actual results.