Yug Decor Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT:

At the outset we would like to highlight that we primarily operate in two divisions i.e. Plywood and Adhesives. Both the segments are inter-dependent and inter-operable. Our Industry is experiencing significant by advancements in technology, increasing demand across various sectors, and a shift towards sustainable practices. 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:

? Sustainable Adhesives: There is a growing demand for eco-friendly adhesives, including water-based and bio-based options, due to environmental regulations and consumer preferences

? Automotive & EV Sector: The rise of electric vehicles (EVs) and lightweight automotive designs is increasing the need for high-performance adhesives that offer heat resistance and structural integrity.

? Construction Boom: Urbanization and infrastructure development, supported by government initiatives like the Pradhan Mantri Awas Yojana, are driving demand for adhesives in building materials and construction applications.

? Packaging Industry Growth: The expanding packaging sector, fueled by e-commerce and retail, is a significant consumer of adhesives, particularly for secure and reliable packaging solutions.

Threats to the Adhesive Industry are as follows:

? Raw Material Price Volatility: The cost of essential raw materials like resins, solvents, and additives can fluctuate due to factors such as These price variations can lead to increased production costs and reduced profit margins for manufacturers.

? Stringent Environmental Regulations: Increasing environmental awareness has led to stricter regulations on the use of volatile organic compounds (VOCs) and other harmful chemicals in adhesive products. Compliance with these regulations often requires significant investment formulate eco-friendly adhesives, which can be costly and time-consuming.

? Competition from Substitutes: Traditional bonding methods such as welding, mechanical fastening, and soldering continue to compete with adhesives, especially in applications where these methods are well-established and cost-effective. Adhesive manufacturers must continuously innovate to offer superior performance and cost advantages to replace these conventional methods.

? Economic and Geopolitical Factors: Global economic downturns and geopolitical tensions can disrupt supply chains and affect the availability and cost of raw materials. For instance, the war between Russia and Ukraine has impacted the supply of essential minerals like limestone and silica sand, leading to price volatility and market instability.

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:

? Urbanization & Infrastructure Development: Government initiatives like the Pradhan Mantri Awas Yoja-na and increased infrastructure projects are fueling demand for plywood in residential and commercial construction.

? Furniture & Interior Design Trends: The growing preference for modular, lightweight, and aesthetically appealing furniture is boosting the demand for plywood.

? Technological Advancements: Innovations in production processes, such as mechanized veneer production and advanced adhesives, have enhanced plywood quality and durability.

Threats to the Plywood Industry are as follows:

? Raw Material Shortages and Price Volatility: The plywood sector is heavily reliant on timber, and fluctuations in timber prices pose a substantial challenge.

? Market Fragmentation and Unorganized Sector: The Indian plywood market is characterized by a high degree of fragmentation, with numerous small and unorganized players. This fragmentation leads to price wars, compromised product quality, and challenges in establishing brand loyalty.

? Supply Chain Disruptions: The plywood industry faces challenges related to supply chain management, including delays in raw material procurement and distribution. These disruptions can lead to increased costs and delays in product delivery, affecting overall market competitiveness.

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: Out of the total Gross Sales from operations of approximately 3319.71 lakhs around 2573.87 lakhs was attributed to the Speciality Chemicals-Adhesives division which is approximately 77 % of the total revenue during the current financial year 2024-25, while our plywood division stands at approximately 23 % of the total revenue during the current financial year 2024-25. However in the previous financial year i.e. our companys 100 % revenue was attributable to Adhesives division. Hence we can draw the conclusion that year on year, our plywood division is slowly and steadily gaining traction as far as our total revenue is concerned. (as given in the chart below)

Future Outlook of our Industry:

As far as future outlook of our Industry is concerned we are highly optimistic about the growth of both our divisions. We are looking forward to taking maximum advantage of hedging through steady expansion of our plywood division while simultaneously maintaining the growth of our adhesives division. Furthermore we will actively evaluate the performance of various regions all over India. Our strategy is to capitalize those regions that have contributed significantly to our growth and take necessary actions for those regions that are contributing less to our Companys performance.

Through "EAT" formula of: "Evaluate", "ACT" & "Transform" we have determined our future course of action in order to improve revenue and profitability margins of our Company.

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, 2025 Significant accounting policies used in the preparation of the financial financial statements. The following table gives an overview of the annual financial performance of the Company:

(Amount in000 )

Particulars	31/03/2025	31/03/2024
Net Revenue from operations	3,31,971.43	2,80,633.04
Add: Other Income	130.78	373.18
Total Revenue	3,32,102.21	2,81,006.22
Expenditure	3,13,768.22	2,56,031.60
Profit/ (Loss) before Finance Cost, Depreciation	18,333.99	24,974.62
& Amortization and Tax Expenses
Less: Finance Cost	9,249.55	3,254.87
Less: Depreciation & Amortization	8,178.93	4,315.97
Profit/ (Loss) Before Tax	905.51	17,403.78
Less: Taxation
i) Current Tax	257.77	4,679.44
ii) Earlier Year Income Tax	176.50	-
iii))Deferred Tax	(206.07)	(265.28)
Total Tax (i+ii-iii)	228.20	4,414.16
Profit/ (Loss) after Tax	677.31	12,989.62
Add: Balance brought forward from previous year	8275.14	11,860.34
Less: Right Issue and Share Capital Increase expenses	(975.51)	9,381.97
Less: Utilized for Interim Dividend	-	7,192.85
Balance carried forward to next years accounts	7976.94	8,275.14

The Key points pertaining to the business of the Company for the year 2024-25 and period preceding thereto have been given hereunder:

The Total revenue of the Company during the Financial year 2024-25 was 3,32,102.21 (‘000) against the total revenue of 2,81,006 . 22 inthepreviousfinancial year 2023-24 The Total expenses of the Company during the financial year 2024-25 was3,31,196.70 (‘000) against the expenses of 2,63,602.44 (‘000) in the previous financial year 2023-24.

The Profit after tax was 677.31 (‘000) for the financial year 2024-25 as compared to the Profit after tax of 12,989.62 (‘000) in the previous financial year 2023-24.

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

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 purchases raw materials which are prone to price fluctuations. Most of the raw material that the Company puts in use is imported. Shipping line disruptions and global demand-supply gaps, results in shortage of raw materials supply which then contributes to the increase in raw material cost.The increase/ decrease in the cost of raw materials have a direct impact on profitability.

Mitigations: The Company tracks the changes in the price of raw material and maintains adequate inventory to avoid purchasing them at higher prices.

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:

There is a possibility that the anticipated demand for emerging products may not materialize as expected in the initial forecast.

Mitigations: Diversification of customer base will reduce reliance on few customers and ensure proper hedging when we will face shortage in demand.

Geographic risk:

The Companys over reliance on few regions might affect the future prospects for the growth of the Company. Mitigations: We have ensured our presence in regions all over India through the strategy of Diversification and mitigated the risk of over reliance on few regions.

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 roll of the Company as on 31st March, 2025 was 107.

Key financial ratio - Significant changes and explanations

Ratio	Unit	FY 2024-25	FY 2023-24	% Variance	Explanations for change of 25% or more
Current Ratio	Times	1.67	2.30	- 27.39 %	Refer note (a)
Debt Equity Ratio	Times	1.59	0.85	87.06 %	Refer note (b)
Debt Service Coverage Ratio	Times	0.07	0.90	-92.22 %	Refer note (c)
Return on Equity Ratio	%	0.58 %	16.2 %	-96.41 %	Refer note (d)
Inventory Turnover ratio	Times	4.87	11.39	-57.24 %	Refer note (e)
Trade Receivable Turnover Ratio	Times	2.87	2.62	9.54 %	NA
Trade Payable Turnover Ratio	Times	6.88	4.47	53.91 %	Refer note (f)
Net Capital Turnover Ratio	Times	3.9	4.08	-4.41 %	NA
Net Profit ratio	%	0.20 %	4.62 %	-95.59 %	Refer note (g)
Return on capital employed	%	5.84 %	21.68 %	-73.06%	Refer note (h)
Return on Investment	%	0.80 %	53.62 %	-98.52 %	Refer note (i)
Operating Profit ratio	%	0.27 %	6.19 %	-95.63 %	Refer note (j)

Notes:

(a) The current ratio has decreased due to increase in current liability as compared to current assets over previous year.

(b) The Debt Equity ratio has increased due to increase in term liabilities against fixed assets.

(c) The Debt Service Coverage ratio has decreased due to increase in finance cost and decrease in earnings before interest and tax as compared to previous year. (d) The Return of Equity has decreased due to increase in shareholders fund and decrease in earnings available to equity shareholders.

(e) The Inventory turnover Ratio has decreased due to increase in cost of goods sold as compared to average inventory.

(f) The Trade Payable Turnover Ratio has increased due to increase in purchase of goods as compared to previous year.

(g) The Net Profit ratio has decreased due to increase in raw material cost, employee cost, finance cost and other expensesincurrent year as compared to previous year.

(h) The Return on Capital Employed has decreased due to decrease in earnings due to increase in raw material cost, employee cost, finance cost and other expenses and increase in capital employed in current year as compared to previous year.

(i) The Return on investment in decreased due to decrease in profit after tax and increase in fixed assets in current year as compared to previous year.

(j) The Operating Profit ratio has decreased due to increase in raw material cost, employee cost, finance cost and other expenses in current year as compared to previous year.

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, expendituresandfinancialresults 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

Chairman &Managing Director

DIN: 01475370

 

Date: 27th August, 2025

Place: Ahmedabad