Tirupati Foam Ltd Management Discussions

DISCLAIMER

Readers are cautioned that this discussion and analysis contains forward looking statements that involve risks and uncertainties. The company undertakes no obligations to publicly update or revised any forward-looking statements, whether as a result of new information, future events, or otherwise, Actual results, performance or achievements, risks and opportunities could differ materially from those expressed or implied in these forward-looking statements.

The global economy displayed stability in CY 2024, successfully overcoming early concerns about a potential downturn caused by supply chain disruptions, geopolitical uncertainties and inflationary pressures. Posting a growth rate of 3.3% for the year, the global economy managed to sustain its momentum despite several headwinds. The US economy showcased resilience with high employment rates and impressive corporate earnings. In the US, there has recently been a change in Presidency, which may result in considerable policy changes, impacting global trade and bilateral relations among nations. Europe, despite facing political and economic challenges, navigated uncertainties and is positioned for a robust recovery. Meanwhile, China, having reopened its economy post-COVID, is actively addressing overcapacity and financial strains in the real estate sector, laying the groundwork for sustainable and balanced economic growth. Emerging markets and developing economies outperformed with a robust 4.3% growth rate, significantly outpacing the modest 1.8% expansion seen in advanced economies.

A substantial decline in global inflation from 6.7% in CY 2023 to 5.7% in CY 2024 played a crucial role in stabilising prices and fuelling economic activity. This achievement was largely driven by proactive and well-timed monetary policies implemented by central banks, alongside an expansion in energy supplies that helped ensure steady economic growth. Additionally, resilient consumer demand played a vital role in sustaining economic momentum, as household spending remained strong despite prevailing uncertainties. Government spending and targeted fiscal measures further supported this steady progress, countering the effects of structural and geopolitical challenges.

During the year under review (FY 2025), Indias GDP grew at a rate of 6.5%. Despite global economic turbulence and geopolitical conflicts in parts of Europe and the Middle East, Indias economy demonstrated significant resilience. This impressive expansion was fuelled by strategic government initiatives and a steady increase in exports.

Inflation has eased, decreasing from 5.4% in FY 2024 to an encouraging 3.6% in FY 2025, creating a more stable economic environment. This downward trend in inflation is bolstering positive consumer sentiment, setting the stage for heightened consumer spending across key retail categories.

Although urban consumption exhibited a plateauing trend, rural consumption remained robust supported by strong agricultural performance. On the other hand, the services sector continued to be a key driver of growth.

Government-aided structural reforms, deregulation efforts and infrastructure investments are further strengthening market confidence and creating a conducive environment for businesses. With a flourishing services sector, digital growth and increasing financial inclusion, India continues to be a vibrant marketplace for consumer brands aiming to scale.

There are many branded and unbranded players producing a wide range of mattresses through local distribution channels in Indias fragmented mattress market. The unorganised sector dominates the countrys mattress industry and has a major share of the Indian mattress market. Mattresses from this unorganised sector usually use cotton filler, as it is the cheapest of the many options that are now available. The changing market dynamics due to the pandemic and increased e-commerce adoption are expected to further augment the growth of the mattress market.

Further the Indian mattress market is comprised of PU Foam, Rubberised Coir, and Spring Mattresses. Consumer-driven factors such as increasing population, rising urbanisation, and improvement in institutional infrastructure are the key growth drivers for the growth of the mattress market. Branded mattress players have seen an increasing market share due to their constant efforts and investments to increase consumer awareness about premium and quality mattresses and development of retail infrastructure and marketing activities.

An increasing number of residential units is propelling the demand for mattresses all over the country. Residential consumers accounted for the bulk of the share, while the remaining was shared by institutional customers, which include hotels, hospitals and educational institutions. Among the different sizes available, king-size mattresses are the most preferred and comfort is the most crucial factor that determines their dominance in the market An increasing number of residential units is propelling the demand for mattresses all over the country. Residential consumers accounted for the bulk of the share, while the remaining was shared by institutional customers, which include hotels, hospitals and educational institutions. Among the different sizes available, king-size mattresses are the most preferred and comfort is the most crucial factor that determines their dominance in the market.

There is considerable scope for growth of foam industry because of increased usage of foam products in day-today life. However competition from importers and unorganized sector has been increasing day by day. Therefore the Indian industry will have to really strive hard to sustain against global competition as well as competition from unorganized markets. The steep competition has led to reduction in prices and increased expenses on promotional front. Therefore, the Company has to resort to an aggressive marketing campaign and thereby fetching higher volumes in the products positioned in lower and middle category segment at one hand and the higher realization from the products positioned in premium segment.

1. Product Differentiation

2. E-Commerce

3. Export Potential

4. Rural Market

1. Transportation and warehousing

2. Raw Material Prices

3. Economic Stability

4. Counterfeit Products

As such the Company deals only in one segment – Flexible polyurethane foams, hence there is no specific differential information pertaining to this section.

The companys ability to maintain its cash flows and profits in this uncertain environment reflects hard work done by executive directors of the company and its leadership in domestic sales.

The Net Sales including other income of Rs. 10652.68 Lacs as compared to Rs. 10453.66 Lacs for the Previous Year. The Profit before Financial Cost, Tax and Depreciation was Rs. 282.19 Lacs for period under review as compared to Rs. 276.25 Lacs for the Previous Year.

The Net Profit after making the provision for Depreciation and Taxation stood at Rs.213.75 Lacs as against Rs. 210.33 Lacs for the previous year.

The Company has adequate Internal control systems commensurate with its size and operations to ensure orderly and efficient conduct of business while safeguarding the assets, quality, safety, procurement, finance and accounts and reducing and detecting error.

The Company also has appointed an external firm of Chartered Accountants to supplement the efficient Internal Audit.

The Company routinely undertakes employee development activities keeping in mind the professional requirements of the employees as well as the growth of the Company.

The Industrial Relations were cordial throughout the year with no incidence of strike or lockouts.

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors.