Yug Decor Ltd Management Discussions

The Company operates through two business divisions, namely Plywood and Adhesives, which complement each other by serving the building materials, furniture, interior infrastructure and construction sectors. During FY 2025-26, the Indian plywood and adhesives industries continued to witness healthy demand driven by residential housing, commercial construction, renovation activities and increasing preference for branded products. While demand remained resilient, manufacturers continued to operate in a competitive environment characterized by fluctuations in input costs, changing customer preferences and increasing emphasis on product quality and environmental compliance.

Heres an overview of the key market drivers for the Adhesive Industry:

Opportunities & Threats for Adhesive Industry:

> Opportunities for the Adhesive Industry are as follows:

• Increasing demand from housing, furniture, modular kitchens and interior decor: Growing residential construction, furniture manufacturing and interior furnishing activities are driving demand for adhesives across various applications. Increasing urbanisation and changing consumer preferences are further supporting this demand.

• Rising adoption of premium, waterproof and specialty adhesive solutions.

• Growing demand for low-VOC, environment-friendly and water-based adhesives.

• Expansion of distribution networks in Tier-II and Tier-III cities.

• Continued growth in repair, renovation and home improvement activities.

> Threats to the Adhesive Industry are as follows:

• Volatility in prices of imported petrochemical derivatives, resins and specialty chemicals due to global supply-demand dynamics and currency fluctuations.

• Intense competition from established national brands and regional manufacturers resulting in pricing pressure.

• Increasing regulatory focus on environmental compliance and sustainable manufacturing.

• Dependence on imported raw materials exposing manufacturers to exchange-rate movements.

• Rising freight, energy and logistics costs impacting operating margins.

As far as our plywood division is concerned Indian plywood industry is experiencing robust growth, driven by urbanization, rising disposable incomes, and increased demand from the construction and furniture sectors. Heres an overview of the key market drivers for the Plywood Industry.

Opportunities & Threats for Plywood Industry

> Opportunities for the Plywood Industry are as follows:

• Continued government focus on housing, infrastructure and urban development.

• Rising demand for modular furniture, office spaces and premium interiors.

• Increasing shift of consumers towards organised and branded plywood manufacturers.

• Growing acceptance of value-added products such as calibrated plywood, decorative panels and moisture-resistant boards.

• Expansion of retail and dealer networks across emerging markets.

> Threats to the Plywood Industry are as follows:

• Fluctuation in timber prices and limited availability of quality raw materials.

• Competition from MDF, particle boards and other engineered wood products in selected applications.

• Price competition from the unorganised sector.

• Increasing transportation and manufacturing costs affecting profitability.

• Compliance costs associated with quality standards and environmental regulations.

Segment-wise or product-wise performance

The Company is engaged in the business of Speciality Chemicals-Adhesives and Plywood. Segment wise breakup of the revenue along with profit before interest and tax (PBIT) bifurcation is given below:

1. Out of the total Gross Sales from operations of approximately 3,874.51 lakhs around 2,332.75 lakhs was attributed to the Speciality Chemicals-Adhesives division which is approximately 60.21% of the total revenue during the current financial year 2025-26, while our plywood division stands at approximately 39.11% of the total revenue during the current financial year 2025-26 (as given in the chart below). However in the previous financial year i.e. 2024-25 our companys 77.24% revenue was attributable to Adhesives division and 22.47% revenue was attributable to Plywood division.

2. Our Company has reported a Profit before interest and tax (PBIT) of approximately 180.80 lakhs in the financial year 2025-26. Out of this, 152.72 lakhs was attributable to the adhesives division which is approximately 84% of total Profit before Interest and Tax (PBIT) of the Company while our plywood division stands at approximately 16% of total profit before interest and tax (PBIT) of the Company during the current financial year 2025-26. In the previous financial year i.e. 2024-25 our companys 64% PBIT was attributable to the Adhesives division and 36% PBIT was attributable to plywood division.

Future Outlook of our Industry:

The Company remains optimistic about the long-term growth prospects of both its Adhesives and Plywood businesses. Increasing urbanisation, sustained infrastructure development, rising disposable incomes and growing demand for organised building material brands are expected to provide favourable growth opportunities.

During the coming years, the Company intends to strengthen its dealer and distribution network, improve operational efficiencies, expand the market presence of its plywood division and continue developing quality adhesive products catering to evolving customer requirements. The management will continue focusing on cost optimisation, prudent inventory management and disciplined working capital practices to improve profitability and enhance shareholder value.

The Company also remains committed to evaluating emerging market opportunities while maintaining a balanced product portfolio across both business segments.

Discussion on financial performance with respect to operational performance

The discussions in this section relate to the financial results pertaining to the year that ended March 31, 2026. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the financial statements.

The following table gives an overview of the annual financial performance of the Company:

(Amount in 000 )

Particulars	31/03/2026	31/03/2025
Net Revenue from operations	3,87,450.88	3,31,971.43
Add: Other Income	4,821.33	130.78
Total Revenue	3,92,272.21	3,32,102.21
Expenditure	3,67,299.04	3,13,768.22
Profit/ (Loss) before Finance Cost, Depreciation & Amortization and Tax Expenses	24,973.17	18,333.99
Less: Finance Cost	14,612.70	9,249.55
Less: Depreciation & Amortization	9,334.49	8,178.93
Profit/ (Loss) Before Tax	1,025.98	905.51
Less: Taxation
i) Current Tax	370.00	257.77
ii) Earlier year Income Tax	-	176.50
iii) Deferred Tax	(108.92)	(206.07)
Total Tax (i+ii+iii)	261.08	228.20
Profit/ (Loss) after Tax	764.90	677.31
Add: Balance brought forward from previous year	7,976.94	8,275.14
Less: Utilized for Right Issue and Share Capital Increase expenses	(1,170.13)	(975.51)
Less: Utilized for Interim Dividend	-	-
Balance carried forward to next year\u2019s accounts	7,571.71	7,976.94

OVERVIEW OF FINANCIALS:

The Key points pertaining to the business of the Company for the year 2025-26 and period preceding thereto have been given hereunder:

¦ The Total revenue of the Company during the Financial year 2025-26 was 3, 92,272.21 (000) against the total revenue of 3, 32,102.21 (000) in the previous financial year 2024-25.

¦ The Total expenses of the Company during the financial year 2025-26 was 3, 91,246.23 (000) against the expenses of 3, 31,196.70 (000) in the previous financial year 2024-25.

¦ The Profit after tax was 764.90 (000) for the financial year 2025-26 as compared to the Profit after tax of 677.31 (000) in the previous financial year 2024-25.

RISKS AND CONCERNS:

In todays dynamic environment filled with uncertainties, effective risk management is crucial for navigating market cycles and unforeseen events, especially in the interior infrastructure sector where technology and process consistency play a vital role. Our promoters are committed towards ensuring a clear understanding of our operating matrix among all stakeholders which will enable us to uphold a predictable and stable process, leading to improved outcomes and strengthened corporate sustainability.

Your Companys governance structure has well-defined roles and responsibilities, which enables and empowers the management to identify, assess and leverage business opportunities and manage risks effectively. The Company has identified the below mentioned risk and suggested the mitigation strategy:

* Macro-economic risk:

The plywood and other allied businesses are impacted by national or international events with economic impacts beyond our control

* Risk associated with raw material and supply:

The Company uses timber, veneers, resins, chemicals and other inputs whose prices may fluctuate because of global commodity prices, foreign exchange movements, import policies and supply-demand imbalances. Such fluctuations may adversely impact production costs and operating margins if not adequately managed.

Mitigations: The Company continues to diversify its supplier base, maintain optimum inventory levels, negotiate long-term procurement arrangements wherever feasible and regularly monitor raw material costs to minimize the impact of price volatility.

* Credit Risk:

The Company by virtue of extending credit to its customers is exposed to credit risk in terms of non-realization of book debts and delayed recovery of receivables thereby posing unexpected cash flow issues.

Mitigations: The effective risk management practices of the Company includes regular evaluation of creditability of customers, frequent review of credit limits of the customers and fixing/ tightening of credit limits according to the track record of the customers.

* Demand risk:

Demand for plywood and adhesives is closely linked to construction, infrastructure, furniture manufacturing and interior furnishing activities. Any slowdown in these sectors could impact sales volumes.

Mitigations: The Company continues to diversify its customer base, strengthen its dealer network, expand geographical presence and broaden its product portfolio to reduce dependence on any single market segment.

* Geographic risk:

The Companys over reliance on few regions might affect the future prospects for the growth of the Company.

Mitigations: The Company continues to strengthen its presence across multiple regions of India to reduce dependence on any particular geography and to capture growth opportunities in emerging markets through an expanding distribution network.

Internal control systems and their adequacy

The Company has established an effective internal control system that undergoes continuous review. Additionally, corrective measures are taken to enhance efficiency levels as needed, highlighting its strong focus on quality management and ecofriendly processes. The internal control systems are further supplemented by internal audit carried out by an Independent Chartered Accountant and periodical review by the management.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS INCLUDING NUMBER OF PEOPLE EMPLOYED:

At Yug Decor, we believe our people are our most important capital. It is our constant endeavor to maximize our value proposition for them and strengthen our human capital management. To ensure this, concerted efforts are directed towards building a safe and stimulating work environment. Our people are central to our vision and mission. We provide inclusive and diverse work environment and a culture of self-development.

The cornerstone of our Companys Human Resource management philosophy lies in empowering employees to enhance their integral role within the organization. We strive to strike a balance between achieving business objectives and nurturing our employees skills to ensure the organizations competitive edge. The industrial relations have largely remained positive across all locations. The enthusiasm and unwavering dedication of our employees have enabled our Company to achieve various milestones.

Your Company has in place Anti Sexual Harassment Committee and there is also a policy in place, to address the issues in regard. The total number of employees on the rolls of the Company as on 31st March, 2026 was 85.

Key financial ratio - Significant changes and explanations

Ratio	Unit	FY 2025-26	FY 2024-25	% Variance	Explanations for change of 25% or more
Return on Equity Ratio	%	0.45%	0.58 %	-22.76 %	N.A.
Return on capital employed	%	7.42%	5.84 %	27.05%	Return on Capital Employed increased because EBIT growth significantly outpaced the capital expansion driven by this year\u2019s rights issue.
Net Capital Turnover Ratio	Times	3.02	3.90	-22.56%	N.A.
Trade Receivable Turnover Ratio	Times	2.77	2.87	-3.48 %	N.A.
Trade Payable Turnover Ratio	Times	6.42	6.88	-6.69 %	N.A.
Inventory Turnover ratio	Times	3.12	4.87	-35.93 %	The Inventory turnover Ration has decreased due to increase in cost of goods sold as compared to average inventory.
Interest Coverage Ratio(Debt Service Coverage Ratio)	Times	0.10	0.07	42.86 %	The Debt Service Coverage ratio has increased due to decrease in overall debt of the company.
Current Ratio (with short term borrowings)	Times	1.84	1.67	10.18 %	N.A.
Debt Equity Ratio	Times	1.15	1.59	-27.67 %	The Debt Equity ratio has decreased due to increase in paid up capital through issue to right shares.
Operating Profit Margin (%) (EBIT Margin)	%	4.04%	3.06 %	32.03%	The Operating Profit Margin has increased due to increase in revenue in current year as compared to previous year.
Net Profit ratio	%	0.19%	0.20 %	-4.39 %	N.A.
Return on Investment	%	0.97%	0.80 %	22.47 %	N.A.

CAUTIONARY STATEMENT:

Certain statements in the reports of the Board of Directors and Managements Discussions and Analysis may be

forward-looking statements within the meaning of applicable securities laws and regulations. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market positioning, expenditures and financial results are based on certain assumptions and expectations of future events. The Companys actual results, performance or achievement may thus differ materially from those projected in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent developments, information or events.

	By Order of the Board of Directors
	YUG DECOR LIMITED
	Chandresh S. Saraswat
Date: 27 th August, 2026	Chairman &Managing Director
Place: Ahmedabad	DIN:01475370