B & A Packaging India Ltd Management Discussions

INDUSTRY OVERVIEW, STRUCTURE AND DEVELOPMENTS

The packaging industry in India has evolved into one of the largest and fastest-growing sectors within Indias economy. Some industry estimates project even higher expansion driven by retail penetration, e-commerce and export growth. India has already surpassed Japan to become the third-largest packaging market globally, underscoring the scale and strategic importance of the Indian packaging sector.

Unlike sectors where scale alone determines competitiveness, packaging companies differentiate themselves through material expertise, customer relationships, cost pass-through capability and compliance readiness.

Structural Shifts and Emerging Trends

The Indian packaging industry is undergoing gradual structural change. One of the most visible shifts is the growing emphasis on sustainability-led packaging solutions. Regulatory requirements around waste management and extended producer responsibility, combined with customer pressure from large FMCG and pharmaceutical companies, are accelerating the move towards recyclable, lightweight and lower-impact packaging formats. This has increased demand for paper board-based solutions, recyclable mono-material plastics and higher recycled content across packaging types. While these changes raise compliance and redesign costs in the short term, they also favour organised players with scale, technology and established customer relationships.

Technology adoption is playing a growing role in operational efficiency and product innovation. Automation, in-mould labelling, advanced printing techniques and material science innovations are improving consistency, reducing waste and enabling more complex packaging designs.

Supply chain resilience has also emerged as a strategic focus. Volatility in raw material availability and prices has encouraged companies to diversify sourcing, invest in backward integration where feasible and redesign packaging to reduce material usage. Light weighting and downgauging initiatives are not only sustainability-driven but also cost-driven, helping mitigate exposure to raw material inflation.

Technological innovation is rapidly reshaping the Indian packaging industry. Smart packaging technologies including QR codes, NFC tags, RFID tracking, and augmented reality interfaces are being deployed to improve traceability and enhance consumer engagement. Advanced analytics and AI integration are being adopted for predictive maintenance, quality optimisation and waste reduction, improving operational efficiency across large packaging suppliers. Digital watermarks and smart sorting technologies are being introduced to enhance material recovery facilities and circular recycling models.

Taken together, these structural shifts suggest that future growth in the packaging industry will be driven less by headline volume expansion and more by changes in mix, functionality and compliance readiness. Companies that adapt to these trends are likely to see relatively more stable margins and stronger customer retention, even as overall industry growth remains closely linked to end-use demand conditions.

Regulation, Sustainability and Compliance

Regulation and Sustainability considerations are increasingly shaping the trajectory of the Indian packaging industry. Environmental concerns, waste management challenges, and regulatory intervention have moved packaging from being a purely operational input to a material area of policy focus. As a result, compliance requirements are now influencing material selection, product design and long-term capital allocation across the sector.

Sustainability has become a measurable operational requirement due to stricter enforcement of Extended Producer Responsibility and bans on select single-use plastics. Government measures to curb plastic use and promote eco-friendly materials are accelerating structural change across the packaging industry.

Plastic packaging has been most directly affected by regulatory action. Extended Producer Responsibility obligations, restrictions on certain single-use plastic items and mandates around recycled content have increased compliance costs and operational complexity for manufacturers. Companies are required not only to meet production standards but also to track, collect and ensure responsible end-of-life treatment of packaging materials. This has shifted part of the regulatory burden upstream to packaging producers, particularly those operating in polymer-intensive segments.

Paper and paperboard packaging benefit from relatively favourable regulatory perception due to higher recyclability and established recovery systems. However, this does not insulate the segment entirely from scrutiny. Sustainability expectations around sourcing, forest management and energy usage are becoming more prominent, especially for companies supplying large FMCG and export-oriented customers with environmental disclosure requirements.

Glass packaging occupies a different regulatory position. High recyclability and reuse rates support its acceptance from a sustainability standpoint, particularly in beverages. At the same time, the energy-intensive nature of glass manufacturing brings increased attention to emissions, fuel usage and efficiency improvements. Compliance in this segment therefore centres more on energy optimisation and emissions management than on waste reduction.

Regulation is also influencing product innovation. Light weighting, material substitution, increased use of recycled inputs and redesign of packaging formats are becoming central to compliance strategies. While these initiatives often involve upfront investment, they can also create competitive advantages for players with scale, technical capability and integrated operations.

OPPURTUNITIES AND THREATS

The outlook for Indias paper and packaging industry remains highly promising, supported by a growing population, rapid urbanisation and rising disposable incomes. The boom in e-commerce and packaged food consumption is driving robust demand, while an increasing emphasis on sustainability is encouraging innovation in eco-friendly materials and practices. Government initiatives such as Make in India, MSME support and large-scale infrastructure development are expected to further strengthen manufacturing capacity and streamline supply chains. Advances in technology are enhancing efficiency and quality standards and rising export potential is opening new avenues for global expansion. Although challenges such as volatile raw material prices and competition from alternative materials persist, continued investments and a strong sustainability focus position the sector to consolidate its global standing and drive long-term growth.

Government Initiatives

The government has launched the National Packaging initiative which focuses on the following measures to promote the sector:

Set up guidelines and certain requirements for design and material of packaging used.

Promote the process of moving in bulk quantities.

Focus on promotion of centralized industrial activity by encouraging application of necessary and sophisticated infrastructure such as specialized logistic parks with appropriate facilities as well as packaging labs to work on designs and carry out tests.

Encourage processes to reduce packaging waste by establishing material recovery facilities (MRFs).

Support domestic business to manufacture sophisticated packaging materials.

Develop training facilities and certified programs of the highest order to maintain availability of skilled labour.

Challenges

Despite strong medium-term growth prospects, the Indian packaging industry faces several structural and operational challenges. Volatility in raw material prices particularly polymers, kraft paper, aluminium and energy inputs continues to exert pressure on margins, especially in price-sensitive segments. Compliance with evolving environmental regulations, including bans on certain single-use plastics and higher recycled content mandates, has increased capital and operating costs, particularly for MSMEs with limited financial flexibility. The supply chain for sustainable packaging materials remains under developed, with eco-friendly alternatives typically 20-30% costlier and exposed to seasonal and climatic risks. Additionally, logistics inefficiencies and high transportation costs constrain competitiveness, while recent global trade disruptions and tariffs on packaging materials have added uncertainty to export-oriented players. Balancing cost efficiency, regulatory compliance and sustainability transition therefore remains a key challenge for ensuring long-term resilience and global competitiveness of the sector.

SEGMENT WISE PERFORMANCE REVIEW

Paper Sacks division and Flexi division recorded higher turnover compared to previous year. Paper Sacks revenue accounted for 61.40% of the total revenue while Flexible Division accounted for 38.37% of the total revenue during the year under review. The Packet Tea division accounted for 0.23% of the total revenue for the year under review.

COMPANY OUTLOOK AND PROSPECTS

The long-term outlook for the Indian packaging industry is shaped by steady end-use demand rather than episodic growth spurts. Packaging will remain an essential input across consumption, healthcare, logistics and industrial activity, ensuring structural relevance even as growth rates vary by segment.

Cost dynamics will remain a defining feature of the sector. Input prices for polymers, paper, glass, and energy are expected to remain cyclical, making pricing discipline and pass-through mechanisms critical determinants of profitability. Companies with diversified material exposure, strong customer relationships, and application-specific offerings are better placed to manage these cycles than single-format, commodity-focused players.

For investors analysing the packaging sector, traditional growth metrics such as revenue expansion or capacity additions offer limited insight in isolation. A more effective frameworkis to focus on material exposure, pricing power, regulatory readiness, customer concentration and capital allocation discipline. Short-term margin movements often reflect raw material cycles rather than structural change and should be interpreted accordingly.

In essence, the Indian packaging industry is best viewed as a structurally necessary, end use-linked sector with uneven profitability across formats. It offers demand continuity but requires careful differentiation between business models to assess resilience and long-term value creation.

RISKS AND CONCERNS

The Company had a proper risk management policy to address all the risks and concern associated with the business of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company had adquate internal control systems and a defined organizational structure besides, internal rules and regulations for conducting the business. The Management reviewed actual performance with reference to budgets periodically.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL

PERFORMANCE

In the financial year 2025-26, your Company achieved a nominal revenue growth of Rs. 1119.68 lakhs, an increase of 8.55% on year-on-year basis. The EBIDTA margin stood at Rs. 1227.99 lakhs and it is 23.32% lower over the previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Industrial relations continued to remain cordial during the year under review and a total of 151 employees are on the Companys payroll as on 31st March 2026.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

As on 31st March 2026, following are the significant changes i.e. changes of 25% or more as compared to the previous financial year, in the key financial ratios of the Company alongwith explanations:

Particulars	2025-26	2024-25	Variance (%) Favourable (+) Adverse (--)	Reasons
Current Ratio	2.71	3.97	(-) 31.84%	Due to increase in current liabilities
Debt-Equity Ratio	0.21	0.02	769.50%	Due to increase in Non-current borrowing & current borrowing
Debt Service Coverage Ratio	42.03	158.29	(-) 73.45%	Due to increase in Interest on borrowings
Return on Equity Ratio	8.21	12.55	(-) 34.59%	Due to decrease in Net Profit after tax
Trade Payable Turnover Ratio	6.07	8.20	(-) 25.98%	Due to increase in trade payables
Net Profit Ratio	4.97	7.50	(-) 33.80%	Due to decrease in Net Profit after tax
Return on Capital Employed	9.74	16.61	(-) 41.38%	Due to Decrease in EBIT & Increase in Capital Employed

DISCLOSURE OF ACCOUNTING TREATMENT

In preparation of financial statements, the Company did not follow a treatment different from that prescribed in the Accounting Standards.

	For and on behalf of the Board of Directors
	B & A Packaging India Limited
	Somnath Chatterjee	Dipankar Mukherjee
Place: Kolkata	Managing Director	Chairman
Date: 25th May 2026	DIN: 00172364	DIN: 07450198