Superhouse Ltd Management Discussions

Macroeconomic Overview

The global economic environment during FY2025-26 remained challenging, characterised by persistent geopolitical uncertainties, inflationary pressures in several economies, supply chain disruptions and subdued consumer demand across key international markets. These factors had a direct impact on global trade flows, including demand for leather and leather products.

Indias overall merchandise exports recorded a marginal increase from US$ 437.70 billion in FY2024-25 to US$ 441.75 billion in FY2025-26. However, exports of leather and leather products declined marginally from US$ 4.83 billion to US$ 4.75 billion during the year, representing a decline of 1.63%. The decline was primarily attributable to lower exports of Finished Leather, Leather Footwear and Leather Goods. Certain product categories however demonstrated resilience and registered positive growth. Exports of Leather Garments increased by 17.66%, Footwear Components by 3.77%, Saddlery & Harness by 7.30% and Non-Leather Footwear by 3.58%.

Footwear and leather goods continued to account for the largest share of Indias leather exports, contributing around 67.38% of total exports with a combined export value of US$ 3.20 billion. The United States remained the largest export destination for Indian leather products with a share of 20.54%, followed by Germany (10.97%), United Kingdom (8.84%), Italy (6.22%), Netherlands (6.11%), Spain (5.47%) and France (4.65%). Collectively, the top-20 importing countries accounted for about 86.96% of Indias total leather and leather products exports during FY2025-26.

Industry Structure and Developments

The Indian leather industry occupies a significant position in the countrys manufacturing and export landscape and continues to be one of the major foreign exchange earning sectors. During FY2025-26, exports of leather and leather products stood at approximately US$ 4.75 billion.

India enjoys a natural competitive advantage owing to the availability of abundant raw material resources, with nearly 20% of the worlds cattle and buffalo population and approximately 11% of the global goat and sheep population. The industry is further supported by a large skilled workforce, technological advancements, increasing environmental compliance and a well-developed ancillary ecosystem.

The leather sector is highly employment-intensive and provides livelihood opportunities to more than 4.42 million people, particularly from economically weaker sections of society. The industry also plays an important role in womens employment, with women constituting approximately 30% of the workforce in leather products manufacturing.

India is among the worlds leading producers of footwear and leather garments. The industry encompasses a wide range of product categories, including finished leather, footwear, footwear components, leather garments, leather goods, saddlery, harness and gloves.

Opportunities and Threats Opportunities

The Government of India continues to recognise the leather sector as a focus industry due to its significant export potential and employment generation capabilities. Various initiatives under the Foreign Trade Policy and sector-specific development programmes are aimed at strengthening manufacturing capabilities, enhancing exports and improving global competitiveness.

Key opportunities for the industry include:

• Growing demand for value-added leather products in international markets.

• Expansion of organised retail and e-commerce channels in India.

• Increasing preference for branded footwear and lifestyle products.

• Rising opportunities in safety footwear, workwear and industrial products.

• Diversification into non-leather and athleisure footwear segments.

• Adoption of sustainable manufacturing practices and environmentally compliant production facilities.

Threats

Despite the long-term growth potential, the industry continues to face several challenges, including:

• Intense competition from international manufacturers and multinational brands.

• Volatility in raw material prices and availability.

• Fluctuations in foreign exchange rates.

• Stringent environmental regulations and compliance requirements.

• Rapidly changing consumer preferences and fashion trends.

• Pressure on margins due to inflationary costs and global economic uncertainties.

• Reduction or rationalization of export incentives and government support schemes.

Segment-wise Performance

The Companys operations are organised into the following reportable segments:

The Leather and Leather Products segment continues to remain the principal contributor to the Companys revenue and profitability, while the Textile Garments segment complements the Companys diversified product portfolio.

Domestic Market Performance

The Company markets its products in the domestic market under the well-established brands "Allen Cooper" and "Double Duty".

The domestic business continues to benefit from growing brand recognition, increasing consumer preference for quality footwear and expanding distribution networks. The Company remains focused on strengthening its retail presence, enhancing customer engagement and improving product offerings across various consumer segments.

Outlook

The Company remains optimistic about its long-term growth prospects despite prevailing global uncertainties.

Its products continue to enjoy acceptance in both international and domestic markets. The Company is actively pursuing strategies to expand its geographical reach into new markets while deepening penetration in existing markets through focused marketing initiatives and strengthened distribution channels.

The Company is also exploring opportunities in high-growth categories such as sports footwear, childrens footwear, safety products and lifestyle accessories. Further, it continues to leverage digital commerce platforms and technology- enabled sales channels to enhance market reach and customer engagement.

Management believes that the Companys diversified product portfolio, established customer relationships, strong manufacturing capabilities and experienced leadership team position it favourably to capitalize on emerging opportunities in the footwear and leather industry.

Risks and Concerns

The Company operates in an industry that is exposed to various business risks, including fluctuations in raw material availability and prices, foreign exchange volatility, changing consumer preferences, regulatory developments and global economic conditions.

Raw hides and skins constitute the principal raw material for leather manufacturing. As leather is a natural product, both availability and pricing are subject to market conditions and seasonal factors. The Company mitigates this risk through its extensive sourcing network, long-standing supplier relationships and procurement expertise.

A substantial portion of the Companys revenues is derived from exports and is therefore exposed to foreign exchange fluctuations. The Company continuously monitors currency movements and adopts appropriate hedging and treasury management strategies to mitigate such risks.

The Company has also strengthened its enterprise risk management framework to monitor strategic, operational, financial, regulatory and cyber security risks. Appropriate risk mitigation measures are periodically reviewed by management and the Risk Management Committee.

Internal Control Systems and Their Adequacy

The Company has established adequate internal control systems commensurate with the size, scale and complexity of its operations.

The internal control framework is designed to provide reasonable assurance regarding:

• Effectiveness and efficiency of operations;

• Safeguarding of assets;

• Reliability of financial reporting;

• Compliance with applicable laws and regulations; and

• Prevention and detection of frauds and errors.

The Company has implemented appropriate controls over procurement, inventory management, production, sales, finance and information systems. Internal audits are conducted periodically to evaluate the effectiveness of internal controls and identify areas for improvement.

The Audit Committee regularly reviews internal audit findings, risk assessments, compliance reports and the adequacy of internal financial controls and monitors corrective actions taken by management.

Financial Performance with Respect to Operational Performance

The financial statements have been prepared in accordance with the provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) and other applicable statutory requirements.

During FY2025-26, the Company achieved standalone sales and other income of Rs. 519.45 Crores as against Rs. 504.91 Crores in the previous year.

Profit Before Tax (PBT) stood at Rs. 18.33 Crores and Profit After Tax (PAT) stood at Rs. 12.21 Crores as compared to PBT of Rs. 17.93 Crores and PAT of Rs. 13.41 Crores during the previous year.

The net block of fixed assets as at 31st March, 2026 stood at Rs. 206.28 Crores compared to Rs. 203.88 Crores as at 31st March, 2025. Net current assets stood at Rs. 158.35 Crores as against Rs. 148.65 Crores in the previous year.

On a consolidated basis, sales and other income stood at Rs. 682.99 Crores compared to Rs. 677.15 Crores during FY2024- 25. Consolidated Profit Before Tax stood at Rs. 7.24 Crores, while Consolidated Profit After Tax stood at Rs. 0.59 Crores as compared to Rs. 11.66 Crores and Rs. 7.65 Crores respectively during the previous year.

Detailed information on the Companys financial performance is provided in the Audited Financial Statements forming part of this Annual Report.

Key Financial Ratios

The key financial ratios of the Company are summarized below:

There were no significant changes in the key financial ratios during the year requiring specific explanation under applicable regulatory requirements.

Human Resources and Industrial Relations

The Company firmly believes that its employees are among its most valuable assets and key contributors to its long-term success.

Industrial relations remained cordial and harmonious throughout the year. The Company continues to focus on employee engagement, skill development, productivity enhancement, workplace safety and talent retention.

The Board places on record its appreciation for the dedication, commitment and contribution made by employees at all levels during the year.

As on 31st March, 2026, the Company had 1,335 permanent employees.

Cautionary Statement

Statements contained in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forwardlooking statements" within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied due to various factors including changes in economic conditions, government policies, taxation laws, foreign exchange fluctuations, market demand, competitive pressures and other incidental factors beyond the Companys control.

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events.