B & A Packaging India Ltd Management Discussions

INDUSTRY OVERVIEW, STRUCTURE AND DEVELOPMENTS

The Indian Packaging Industry stands as the fifth largest sector in the Indian economy, with an annual growth rate of 22-25%, the industry has become a preferred hub for packaging solutions, bolstered by advancements in technology and infrastructure.

The Road Ahead

The outlook for the paper and packaging industry in India is optimistic, driven by several factors including the countrys growing population, increasing urbanization and rising disposable incomes.

Government initiatives like "Make in India" and infrastructure development projects are expected to boost manufacturing activities and streamline supply chains.

Technological advancements are enhancing productivity and quality, while rising export potential offers opportunities for market expansion.

Despite challenges such as fluctuating raw material prices and competition from alternative materials, strategic investments and a commitment to sustainability can help the industry capitalize on opportunities and strengthen its position in the global market.

Drivers of the Market

1) Increasing Demand from Retail Industry due to its reusability, durability & efficiency which makes them an ideal choice for retail applications. Moreover, various environmental concerns related to non-biodegradable plastic materials have further propelled demand for paper-based solutions with a higher capacity & strength required for heavy duty usage in retail industry. The rapid expansion of E-commerce is fueling demand for packaging materials including paper sacks.

2) Growing Consumer Awareness regarding Sustainable Packaging Solutions with rising environment consciousness among customers around the globe about reducing carbon footprint through sustainable packaging solutions; there has been a surge in demand for ecofriendly paper-based packing materials.

Foreign Direct Investment (FDI) and Innovations

The governments progressive policies, including permitting 100% FDI through the automatic route, have stimulated foreign investments in the packaging sector.

Sustainability Initiatives and Market Trends

In response to global sustainability imperatives, the packaging industry in India is undergoing a paradigm shift towards eco-friendly practices and materials. Government initiatives aimed at minimizing plastic packaging and promoting sustainable manufacturing methods are driving industry-wide transformation. Additionally, the industrys focus is on food safety and quality aligns with the burgeoning food processing sector amplifying demand for innovative packaging solutions.

India continues to lead the global paper market, with domestic consumption of packaging paper and paperboard growing at 8.2% in 2023-24.

Market Dynamics and Future Projections

The expansion of the middle class, enhancements in supply chain infrastructure and the rise of e-commerce platforms are primary factors driving the packaging industrys growth trajectory. As the industry continues to evolve, leveraging technological innovations and sustainable practices, it is poised to contribute significantly to Indias economic landscape.

Flexible packaging has emerged as a preferred choice for various industries, including the personal care sector, due to its numerous advantages. This type of packaging offers superior protection, flexibility and lightweight properties, making it an ideal solution for a wide range of applications.

The use of different types of flexible packaging, including bags/sachets, film, foil, tubes and wrappers has become essential in various industries. The use of raw materials such as plastic, paper, and metal along with advanced printing techniques and innovative packaging types, is shaping the future of this industry.

Urbanization and consumer preferences for convenience have led to an increase in demand for pouches, stand-up pouches, and bags/sachets.

Consumer awareness of plastic pollution and the importance of packaging sustainability is driving the market for sustainable packaging materials.

Paper Sacks

The India paper bags and sacks packaging market was estimated at USD 2.53 billion in 2025 and is expected to grow at a CAGR of 8.5% during forecast period 2025-2031. The demand for these products has been increasing due to their recyclable nature, efficient product branding, low cost, convenience, lightweight yet durable properties. Additionally, initiatives taken by the government such as plastic ban in some parts of India are also driving the growth of this market.

Flexible Packaging

The Indian flexible packaging market is projected to experience substantial growth over the next five years (2024-2028) at a CAGR of 12.7%, driven by factors like the FMCG sectors demand, e-commerce growth and improved supply chains.

Government Initiatives

The government has launched the National Packaging initiative which focuses on various measures to promote the sector.

Trends of the Market

1) Paper bags and sacks are becoming increasingly popular amongst businesses especially those dealing with retail sector due customizations offered through variety colors, designs, prints available offering great opportunities towards market efforts undertaken by Companies.

2) Manufacturers across the world have started investing heavily into research & development activities aimed towards developing new products to cater to the need of the customers.

Key Drivers/Opportunities

FMCG Sector: The increasing demand from the Fast-Moving Consumer Goods (FMCG) sector is a major driver.

E-Commerce: The rise of e-commerce and its impact on packaging needs is another key factor.

Improved Supply Chains: Enhancements in supply chains are also contributing to the growth of the packaging industry.

Food Safety and Quality: The growing focus on food safety and quality is projected to fuel the food processing sector, leading to increased packaging demand.

Rising Logistics Costs: The increasing logistics costs are leading businesses to shift towards flexible packaging solutions.

Increasing Adoption of Pouches: The increasing adoption of pouches which offer improved product protection and convenience for consumers, is also influencing market growth.

The implementation of a new recycling policy in India has resulted in increased operational costs for companies, necessitating the development of more sustainable and cost-effective packaging. These trends are shaping the future of the market and are expected to continue driving market growth in the coming years.

Market Segmentation: The flexible packaging market in India is segmented by end-user (food and beverage, pharmaceutical, personal care, etc.), material (plastic, paper, aluminum) and product (pouches, bags, films, etc.).

THREATS / CHALLENGES OF THE MARKET

1) High Cost Associated with Production Process due to high energy consumption associated with production process followed by manual labour costs involved.

2) Many countries including India are looking forward towards completely eliminating use of plastics however recycling process involved requires additional investment on part of manufacturer.

3) Implementation of a new recycling policy in India is increasing operational costs for vendors.

SEGMENT WISE PERFORMANCE REVIEW

Paper Sacks division recorded marginally reduced turnover and flexi division could achieve higher turnover compared to previous year. Paper Sacks revenue accounted for 61.23% of the total revenue while Flexible Division accounted for 38.77% of the total revenue during the year under review.

COMPANY OUTLOOK AND PROSPECTS

The Company has been facing multiple challenges over the last couple of years. Your Company will continue to focus on margin improvement through product optimisation and cost efficiency. With supply chain easing, the Company aims to optimize capital allocation by sharply reducing inventory and further spreading its assets. Your Company will continue to focus on customer conversion to sustainable solutions, making B & A Packaging even more sustainable. The Company has developed a long-term strategy driven by a 4X4 mantra for growth that aims to deliver profitable growth.

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 adequate internal control system 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 W I T H R E S P E C T TO O P E R AT I O N A L PERFORMANCE

In the financial year 2024-25, your Company achieved a nominal revenue growth of Rs. 219.95 lakhs, an increase of 1.71% on year-on-year basis. The EBIDTA margin stood at Rs 1601.46 lakhs and it was 7.68% 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 156 employees were on the Companys payroll as on 31st March 2025.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS

As on 31st March 2025, following were the significant changes i.e. changes of 25% or more as compared to previous financial year, in the key financial ratios of the Company alongwith explanations:

Particulars	2024-25	2023-24	Variance (%) Favourable (+) Adverse (--)	Reasons
Trade Payable Turnover Ratio	9.04	6.14	(--) 47.16%	Average Trade Payable increased due to open usance LC

DISCLOSURE OF ACCOUNTING TREATMENT

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