Aeroflex Neu Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economy

During FY 2025-26, the global economy demonstrated resilience despite geopolitical tensions, trade policy uncertainties and evolving monetary conditions. Growth was supported by robust services activity, resilient labour markets, easing inflation and continued demand for technology products, semiconductors and AI-related equipment. Major central banks adopted a gradual policy easing approach, supporting financial stability and economic activity.

However, geopolitical developments, including the West Asia conflict, heightened uncertainty and raised concerns regarding energy security and global trade routes, particularly the Strait of Hormuz. The resulting volatility in commodity markets and inflation expectations continues to pose risks to global economic growth. As per the IMF World Economic Outlook (April 2026), Global Economies GDP growth is projected at 3.1% in 2026 and 3.2% in 2027, reflecting continued resilience despite elevated geopolitical tensions and trade uncertainties. Growth is expected to be supported by easing inflation, gradual monetary policy normalization and sustained investment in technology and artificial intelligence. Nevertheless, downside risks remain from geopolitical conflicts, trade fragmentation, supply chain disruptions and commodity price volatility.

Emerging markets and developing economies are projected to remain the primary drivers of global growth, with GDP expected to expand at 4.4% in 2025, moderating to 3.9% in 2026 and recovering to 4.2% in 2027. In contrast, advanced economies are anticipated to grow modestly at around 1.9% in 2025, tapering to 1.7% by 2027, resulting in overall world growth stabilizing near 3.2% by 2027. This divergence underscores the resilience of emerging markets in sustaining global expansion.

(Source: IMF World Economic Outlook April 2026)

Indian Economy

India continued to be one of the fastest growing major economies during FY 2025-26, supported by strong domestic demand, resilient consumption, sustained infrastructure spending and continued growth in the services and manufacturing sectors. Structural reforms, favourable demographics and increasing integration into global supply chains further strengthened economic momentum.

According to the IMF, Indias economy is expected to grow by 7.0% in 2026 and 6.4% in 2027, driven by robust domestic fundamentals, rising investments and expanding industrial activity. While global trade uncertainties and fluctuations in commodity prices may present challenges, Indias long-term growth outlook remains positive.

Going forward, continued infrastructure development, manufacturing-led growth initiatives, policy reforms and increasing participation in global value chains are expected to support sustained economic expansion and strengthen the countrys economic fundamentals.

Global FIBC Market Outlook

The global Flexible Intermediate Bulk Container (FIBCs) market size is projected to grow from USD 6.4 billion in 2026 to USD 11.87 billion by 2036 at a CAGR of 6.4%. The market is projected to create an absolute dollar opportunity of approximately USD 5.49 billion between 2026 and 2036, reflecting the continued adoption of FIBCs as a preferred packaging solution due to their cost efficiency, durability, handling convenience and suitability for transportation and storage of bulk materials.

The growth outlook is further supported by increasing focus on sustainable packaging solutions, rising demand for recyclable and reusable packaging products, expansion of global trade in bulk commodities and growth in manufacturing activities across emerging economies. However, factors such as volatility in polypropylene resin prices, fluctuations in crude oil prices, logistics cost pressures and evolving environmental regulations may continue to influence industry dynamics.

Also, sustainability has emerged as a key factor influencing the future direction of the global FIBC industry. Growing emphasis on circular economy principles, reduction of packaging waste, recyclability and responsible resource utilization is encouraging manufacturers to develop reusable, recyclable and technically advanced FIBC solutions. Customers, particularly in developed markets, are increasingly seeking packaging products that combine operational efficiency with environmental responsibility.

(Source: Flexible Intermediate Bulk Container (FIBC) Market Global Market Analysis Report - 2036)

Indian FIBC Market Dynamics

The Indian FIBC market is expected to witness strong growth, driven by increasing demand for bulk packaging solutions across the chemicals, pharmaceuticals, agriculture and food processing sectors. Indias competitive manufacturing capabilities, cost advantages, skilled workforce and integration with global supply chains continue to strengthen its position as a preferred sourcing destination for FIBCs.

The industry is projected to benefit from rising exports, growing adoption of sustainable packaging solutions and increasing industrial activity. However, challenges such as volatility in polypropylene resin and crude oil prices, logistics costs, regulatory changes and global trade uncertainties may impact profitability and growth.

certifications, innovation-led product offerings and robust customer relationships are expected to be well positioned to capitalize on the long-term growth opportunities in the sector. India continues to emerge as one of the fastest growing FIBC markets globally.

Source: IFIBCA - Indian FIBC Association; Flexible Intermediate Bulk Container (FIBC) Market Reports (2023-2036).

BUSINESS OVERVIEW

Aeroflex Neu Limited (formerly Sah Polymers Limited) is engaged in the manufacture and export of Flexible Intermediate Bulk Containers (FIBCs), and Polypropylene (PP) woven packaging products. With over 25 years of industry experience, the Company has established a strong presence in the industrial packaging sector, supported by advanced manufacturing capabilities, technical expertise and a commitment to quality and customer satisfaction.

The Companys product portfolio includes FIBCs (Jumbo Bags), PP woven fabrics and bags, BOPP laminated bags, PP box bags, silt fences and ground covers, catering to diverse industries such as chemicals, pharmaceuticals, fertilizers, food products, textiles, cement, metals and agriculture.

The Company remains focused on delivering high-quality, customized packaging solutions while strengthening its market position through innovation, operational excellence, capacity expansion and sustainable manufacturing practices to capitalize on the growing demand for flexible packaging solutions in domestic and international markets.

FINANCIAL PERFORMANCE

During FY 2025-26, the Companys consolidated revenue remained largely stable at 12,916.50 lakhs during FY 2025-26 (FY 2024-25: 12,923.53 lakhs) whereas the Company delivered a significant improvement in profitability driven by enhanced operational efficiencies, disciplined cost management, improved manufacturing productivity and better control over operating expenses.

The Companys focused efforts on operational efficiency, cost optimization and disciplined financial management resulted in a significant improvement in performance. Profit Before Tax (PBT) increased to

302.73 lakhs from 38.05 lakhs in FY 2024-25, while Profit after Tax (PAT) rose to 175.13 lakhs from 23.03 lakhs.

Consequently, EBITDA improved to 851.38 lakhs from 622.11 lakhs in the previous year, with EBITDA margin strengthening to 6.59% from 4.81%, reflecting enhanced operational efficiency and improved profitability.

Financial Ratios

The key financial ratios of the Company for FY 2025-26 and FY 2024-25 are presented as below:

Particulars	As at 31st March 2026	As at 31st March 2025	Explanation for any change in ratio by more than 25% as compared to previous year
Current ratio	3.10	2.07	Significantly Improved due to increase in current assets along with reduction in current borrowings.
Debt equity ratio	0.17	0.31	Due to decrease in borrowings.
Debt Service Coverage Ratio	1.40	0.97	Due to increase in repayment portion
			of borrowings.
Return on Equity Ratio	1.27%	0.21%	Significantly Improved in profit during the year compared to the previous year.
Inventory turnover ratio	2.55	2.74	-
Trade Receivables turnover ratio	5.49	5.78	-
Trade payables turnover ratio	8.72	9.45	-
Net capital turnover ratio	2.45	3.28	Decrease due to increase in working capital.
Net profit ratio	1.11%	0.15%	Significantly Improved in profit during the year compared to the previous year.
Return on Capital employed	3.39%	2.69%	Significantly Improved due to increase in earnings before interest and tax (EBIT) during the year.
Return on investment	-	-	Not calculated as no investment was made for the purpose of earning returns. Investment was made for acquisition of business in the subsidiary company.

SUSTAINABILITY OVERVIEW

Sustainability remains a key pillar of the Companys long-term strategy, with a continued focus on integrating environmental, social and governance (ESG) principles across its operations. The Company continues to benefit from its renewable energy initiatives, including the operation of its 500 kWp on-grid solar power plant, which supports cleaner energy consumption and contributes to reducing its carbon footprint. The Company also strengthened its sustainability framework through investments in operational efficiency, environmental management, workplace health and safety, and process improvements. Supported by a robust governance structure and ongoing monitoring mechanisms, the Company remains committed to responsible business practices, regulatory compliance and sustainable value creation.

Going forward, the Company will remain committed to reducing its environmental footprint through increased renewable energy adoption, efficient resource utilization, waste minimization and continuous improvement in environmental performance.

INTERNAL CONTROL AND ADEQUACY

The Company has established a robust internal control framework commensurate with the size and nature of its operations. The framework is designed to safeguard assets, ensure the accuracy of financial records, facilitate regulatory compliance and support effective risk management. Internal controls are supported by well-defined policies, standard operating procedures and periodic reviews by the Internal Auditor, Management and Audit Committee. During the year, no material weakness was observed in the design or operating effectiveness of the Companys internal control systems. The Company remains committed to continuously strengthening its governance and control environment through process improvements and technology driven initiatives.

STRENGTHS AND OPPORTUNITIES

The key strengths and opportunities for the Company are outlined as below:

Strengths

Extensive experience in manufacturing FIBCs, PP/HDPE woven bags, and other industrial packaging solutions.

Diversified product portfolio serving multiple industries, including chemicals, pharmaceuticals, food products, fertilizers, and agriculture.

Strong export presence with an established international customer base.

Integrated manufacturing facilities supporting operational efficiency, quality assurance, and customized solutions.

Focus on sustainability through energy efficiency, responsible resource utilization, and environmental management initiatives.

Opportunities

Growing global demand for FIBCs and bulk packaging solutions across various industries.

Increasing export opportunities driven by supply chain diversification.

Rising demand for specialized and compliant packaging solutions in food and pharmaceutical sectors.

Expanding domestic demand supported by growth in Indias chemical, pharmaceutical, food processing, agriculture, and infrastructure sectors.

Indias competitive manufacturing ecosystem positioning it as a preferred global sourcing destination.

KEY RISKS AND MITIGATION MEASURES

The Company has implemented a structured risk management framework to identify and mitigate key business risks.

Risk	Mitigation
Commodity Price Volatility	Strategic sourcing, diversified supplier base, inventory optimization, and
	efficient production planning.
Supply Chain Disruptions	Supplier diversification, long-term vendor relationships, inventory
	management, and multiple logistics partnerships.
Health, Safety and Environmental	Comprehensive SHES framework, regular training, workplace
Risks	inspections, and compliance monitoring to ensure safe and sustainable
	operations.

HUMAN RESOURCE

TheCompanyconsidersitsemployeesakeydriverofsustainablegrowthandoperationalexcellence.Itcontinues to invest in employee development through training programs focused on technical skills, operational efficiency, safety awareness and compliance. The Company remains committed to attracting, developing and retaining talent while fostering a culture of accountability, innovation and continuous improvement.

FUTURE OUTLOOK

The global FIBC industry is expected to witness sustained growth, driven by increasing demand for efficient and sustainable bulk packaging solutions across the chemicals, pharmaceuticals, food products, agriculture and construction sectors. Indias competitive manufacturing capabilities, skilled workforce and growing integration with global supply chains continue to create significant opportunities for domestic manufacturers. While raw material price volatility, geopolitical uncertainties and evolving trade policies may pose challenges, the Company remains focused on driving sustainable growth through operational excellence, product innovation, prudent risk management and a customer-centric approach. The Company will also continue to leverage its BRC Packaging Certification, ISO Certifications and other internationally recognized quality standards to strengthen its presence in food, pharmaceutical and other quality-sensitive industries, while expanding its export footprint and creating long-term value for all stakeholders.

DISCLAIMER

This Management Discussion and Analysis contains forward looking statements based on the Companys current expectations, assumptions and projections. Actual results may differ materially due to various risks, uncertainties and external factors. The Company undertakes no obligation to publicly update any forward-looking statements to reflect future events or developments.