Bai-Kakaji Polymers Ltd Management Discussions

Statemets in this report describing the Companys objectives, projections, estimates, and expectations may be forwards, and other incidental factors. The Company does not undertake to update any forward-looking statement. 1. Economic Overview

1.1 Global Economy

The global economy continued to navigate a complex environment in FY2025-26, characterised by elevated but moderating inflation across major economies, gradual monetary policy normalisation by central banks, and persistent geopolitical uncertainties. Supply chain disruptions, while easing from pandemic-era extremes, continued to influence commodity and polymer prices globally. Despite these headwinds, resilient consumer demand - particularly in emerging markets - supported industrial and consumer packaging volumes.

1.2 Indian Economy

India remained one of the fastest-growing major economies in FY26, with GDP growth estimated at approximately 6.8-7.0%, driven by sustained domestic consumption, government- led infrastructure spending, and robust manufacturing activity supported by PLI- linked investments. Organised manufacturing sectors, including FMCG, beverages, dairy, and pharmaceuticals - all key end markets for the Company - continued to record healthy volume growth. The formalisation of the economy, accelerated by GST compliance and digital procurement platforms, has structurally benefited organised, certified packaging manufacturers at the expense of unorganised players.

2. Industry Overview

2.1 Indian Packaging Industry

The Indian packaging industry is estimated at Rs. 7,36,092 Crore, with plastic packaging commanding the largest material share at approximately 50% (Rs. 3,69,000 Crore), followed by paper at 23% (Rs. 1,67,110 Crore), metal at 10% (Rs. 73,600 Crore), glass at 8% (Rs. 58,900 Crore), and others at 9% (Rs. 67,482 Crore). Plastic packagings dominance reflects its superior cost efficiency, light weight, design flexibility, and compatibility with high-speed automated filling lines.

2.2 Plastic Packaging Sub-Segments

Within the plastic packaging segment of Rs. 3,69,000 Crore, Flexible Packaging is the largest sub-segment at Rs. 1,70,000 Crore (46% share), followed by Rigid Packaging at Rs. 1,26,000 Crore (34% share), and other plastic packaging at Rs. 73,000 Crore (20% share). The Company is strategically positioned to participate in both sub-segments. Table 2.1: End-Market Distribution - Rigid vs. Flexible Packaging

End Market	Rigid Packaging Share	Flexible Packaging Share
Beverage	45%	20%
FMCG & Food	18%	40%
Personal Care	12%	15%
Pharmaceutical	8%	10%
Others	17%	15%

2.3 Structural Shift: Organised vs. Unorganised

A significant structural shift is underway across the plastic packaging sector. Of the total plastic packaging market of Rs. 3,69,000 Crore, approximately 55% (Rs. 2,03,000 Crore) remains in the hands of unorganised players, while 45% (Rs. 1,66,000 Crore) is served by organised manufacturers. Regulatory tightening around food safety standards, growing insistence by Tier-1 FMCG and beverage brands on certified supply chains, and the capital intensity of modern packaging machinery are progressively raising barriers to entry - enabling established, certified players to capture disproportionate market share.

The Company holds FSSC 22000, ISO 9001, and ISO 22000 certifications, and operates 30-plus advanced manufacturing machines sourced from globally recognised OEMs including Husky, SACMI, and ASB, positioning it favourably in this formalisation wave.

2.4 Beverage Sector - Strategic Relevance

Indias beverage industry, estimated at Rs. 5,17,000 Crore, is the primary end market for rigid plastic packaging. Dairy (Rs. 1,80,000 Crore) and alcoholic beverages (Rs. 1,60,000 Crore) account for the largest segments. A critical structural dynamic is the dominance of regional brands (55% of volumes) over national brands (35%), creating a large, fragmented demand pool that large packaging suppliers - who typically prioritise national accounts - are ill-equipped to serve consistently. This structural gap is the Companys primary addressable opportunity in the rigid packaging segment.

3. Business Overview

Bai-Kakaji Polymers Limited (BKP or the Company) is an integrated plastic packaging manufacturer incorporated in 2013 and operating from four-plus-one European- standard manufacturing facilities located in Latur, Maharashtra. Over more than a decade, the Company has evolved from a single PET Preform machine operation into a diversified packaging platform serving beverage, FMCG, edible oil, dairy, pharmaceutical, and industrial customers across India. The Company was successfully listed on the BSE SME Platform in December 2025. 3.1 Segment-wise Operations

Table 3.1: Installed Capacity and Utilisation - FY2025-26

Segment / Product	Installed Capacity (FY26)	Utilisation (FY26)	Utilisation (FY25)
PET Preforms	22,600 MTPA	-90%	91%
Caps & Closures	-500 Cr Units PA.	-84%	72%
Flexible Packaging (Aggregate)	8,460 MTPA	-90%	N/A
- Shrink Films	-4,500 MTPA	-90%	N/A
- Coating Films	-2,340 MTPA	-90%	N/A
- Stretch Films	-1,620 MTPA	-90%	N/A

Note: Flexible Packaging operations were operationalised in FY26 following incorporation of Mundada Polymers Private Limited (WOS) on 5th February 2026.

Campa, Patanjali, JSW, Carlsberg, Kingfisher, Fosters, IRCTC, Davat, Bauli, Oxyrich, Chitale Dairy, Sunrich, Manikchand, Cloud9, Nature Delight, and others across beverages, dairy, and FMCG segments.

include Tata (Consumer & Copper), Parle Agro,

The Company maintains long-standing supply relationships with over 25 established brands spanning Tier-1 corporates and leading regional market players. Key customers

4.2 Revenue

Revenue from Operations grew 12.1% year-on- year to Rs. 364.69 Crore in FY2025-26, from Rs. 325.37 Crore in FY2024-25. This growth was underpinned by volume expansion in PET Preforms and Caps & Closures, incremental contribution from the newly operationalised Flexible Packaging segment, and continued deepening of customer relationships with both Tier-1 and regional brands. Over a four- year horizon, consolidated revenue has grown approximately 34% from Rs. 273 Crore in FY2022-23 to Rs. 365 Crore in FY2025-26.

4.3 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)

E BITDA expanded materially by 43.9% to Rs. 48.78 Crore in FY26, with the EBITDA margin improving by 300 basis points to 13.4% from 10.4% in FY25. Margin expansion was driven by three primary factors: (i) a meaningful reduction in finance costs consequent to IPO-led debt repayment of approximately Rs. 64 Crore; (ii) operating leverage benefits from higher capacity utilisation across PET Preforms (-90%) and Flexible Packaging (-90%); and (iii) improved product mix. Finance costs increased in absolute terms to Rs. 787.62 Lakhs (FY25: Rs. 549.46 Lakhs) reflecting interim working capital utilisation, though the trajectory is expected to moderate significantly given the reduced debt stock.

4.4 Profit After Tax (PAT)

PAT grew 48.5% to Rs. 26.98 Crore in FY26 from Rs. 18.17 Crore in FY25, with the PAT margin improving to 7.4% from 5.6%. Depreciation and amortisation increased to Rs. 1,842.57 Lakhs (FY25: Rs. 844.87 Lakhs), reflecting the significant addition to gross block from both organic capacity investment and the consolidation of Mundada Polymers. Over a three-year period, PAT has grown approximately 6.5 times from Rs. 4.18 Crore in FY2022-23, demonstrating the sustained operating and financial leverage inherent in the business model. 4.5 Statement of Profit and Loss

Table 4.2: Consolidated Statement of Profit and Loss (Rs. in Lakhs)

Particulars	FY 2025-26 (Consolidated)	FY 2024-25 (Standalone)
Revenue from Operations	36,468.90	32,536.74
Other Income	1,008.62	589.32
Total Income	37,477.52	33,126.06
Cost of Materials Consumed	22,452.03	17,348.27
Purchases of Stock-in-Trade	4,789.73	8,871.90
Changes in Inventories	(769.65)	(637.70)
Employee Benefit Expense	1,105.75	777.36
Finance Costs	787.62	549.46
Depreciation & Amortisation	1,842.57	844.87
Other Expenses	4,012.99	2,787.00
Total Expenses	34,221.04	30,541.24
Profit Before Tax	3,256.48	2,584.82
Add: Extraordinary / Prior Period	344.26	-
Profit Before Tax (after adj.)	3,600.73	2,584.82
Current Tax	959.10	558.13
Deferred Tax	(56.05)	209.80
Profit After Tax (PAT)	2,697.68	1,816.89
Basic & Diluted EPS (Rs.)	15.69	80.75

Note: FY25 figures are standalone: FY26 figures are consolidated and include Mundada Polymers Private Limited (WOS incorporated 5 February 2026). Comparisons should be read accordingly.

4.6 Balance Sheet

Table 4.3: Consolidated Balance Sheet as at 31st March 2026 (Rs. in Lakhs)

Particulars	31 Mar 2026 (Consolidated)	31 Mar 2025 (Standalone)
EQUITY AND LIABILITIES
Share Capital	2,140.44	225.00
Reserves and Surplus	15,430.09	5,129.18
Net Worth (Shareholders Equity)	17,570.53	5,354.18
Long-term Borrowings	781.78	1,895.62
Deferred Tax Liabilities (Net)	241.17	297.22
Other Long-term Liabilities	20.16	8.17
Short-term Borrowings	5,791.03	9,006.63
Trade Payables - MSME	106.49	237.77
Trade Payables - Others	2,407.79	1,071.98
Other Current Liabilities	714.15	2,109.31
Short-term Provisions	422.88	190.09
Total Equity & Liabilities	28,055.98	20,170.97
ASSETS
Property, Plant & Equipment (Net)	14,429.34	10,307.01
Intangible Assets	0.89	0.22
Capital Work-in-Progress	622.30	-
Deferred Tax Assets	5.10	5.10
Other Non-current Assets	1,016.91	1,296.75
Inventories	5,087.09	4,075.04
Cash & Cash Equivalents	3,893.71	3,050.32
Bank Balances (other than above)	252.05	65.60
Short-term Loans & Advances	839.23	574.98
Other Current Assets	1,909.36	795.96
Total Assets	28,055.98	20,170.97

4.7 Cash Flow Analysis

The most significant development in FY26 from a quality-of-earnings standpoint is the reversal of operating cash flow from negative Rs. 9.93 Crore in FY25 to a healthy positive Rs. 28.04 Crore, yielding a CFO-to-PAT ratio of approximately 1.04 times. This demonstrates that reported profitability is backed by genuine cash generation, validating the quality and sustainability of earnings. The improvement was driven by stronger EBITDA generation, moderated working capital build, and disciplined receivables management. 5.

5.2

Table 4.4: Condensed Cash Flow Statement (Rs. in Lakhs)

Particulars	FY 2025-26 (Consolidated)	FY 2024-25 (Standalone)
Net Cash from Operating Activities	2,803.52	(992.60)
Net Cash from Investing Activities	(7,296.69)	(6,319.43)
Net Cash from Financing Activities	4,495.42	7,356.66
Net Change in Cash & Cash Equivalents	2.25	44.63
Opening Cash & Cash Equivalents	49.07	4.44
Closing Cash & Cash Equivalents	51.32	49.07

Net Cash from Investing Activities was negative Rs. 72.97 Crore (FY25: negative Rs. 63.19 Crore), primarily reflecting capital expenditure of Rs. 65.88 Crore on property, plant and equipment and capital advances of Rs. 5.73 Crore - investments that are expected to yield revenue accretion in FY27 and beyond.

Capital Structure and Liquidity

5.1 IPO and Balance Sheet Transformation

The Company completed its Initial Public Offering of Rs. 105 Crore in December 2025, listing on the BSE SME Platform. IPO proceeds were deployed as follows: (i) debt repayment of approximately Rs. 64 Crore, (ii) investment of Rs. 9.85 Crore in closure manufacturing capacity expansion, and (iii) a 3.1 MW solar power plant (bringing total solar capacity to 7.2 MW). The balance was retained for general corporate purposes.

As a direct consequence, total borrowings declined by 39.7% from Rs. 109.02 Crore to Rs. 65.73 Crore, and the Debt-to-Equity ratio improved sharply from 2.04x to 0.37x. Net Worth expanded to Rs. 176.00 Crore from approximately Rs. 53.54 Crore in FY25, providing a significantly strengthened balance sheet for the next phase of growth. The Companys deleveraged profile is expected to result in further moderation in finance costs in FY27.

Working Capital

Working capital management remained a priority during FY26. Inventories increased to Rs. 50.87 Crore (FY25: Rs. 40.75 Crore), broadly in line with revenue growth and the addition of a new flexible packaging segment. Trade payables (MSME + Others) rose to Rs. 25.14 Crore from Rs. 13.10 Crore, reflecting expanded procurement activity. The overall working capital cycle remains within acceptable parameters for a manufacturing business of this profile.

Net Cash from Financing Activities was positive Rs. 44.95 Crore (FY25: Rs. 73.57 Crore), comprising IPO proceeds of Rs. 95.19 Crore (net), partially offset by net debt repayment of Rs. 43.29 Crore and interest payments of Rs. 6.94 Crore. The net increase in cash of Rs. 0.02 Crore brought the closing cash position to Rs. 0.51 Crore.

6. Strategic Initiatives and Outlook

6.1 Phase 3 Capacity Expansion Programme ( Rs. 100 Crore)

Building on the operational foundation established in Phase 1 and the balance sheet strengthening of Phase 2, the Company is executing a Rs. 100 Crore capacity expansion programme (Phase 3) across both the rigid and flexible packaging segments:

Rigid Packaging - Bai-Kakaji Polymers Limited (Rs. 34.7 Crore): New investments include a proposed Husky injection moulding machine, a SACMI machine for caps and closures, and associated mould and ancillary equipment. These investments are necessitated by PET Preform utilisation of 90% and Caps & Closures utilisation of 84%, both of which are approaching constrained levels.

Flexible Packaging - Mundada Polymers Private Limited (Rs. 63.4 Crore): A comprehensive flexible packaging manufacturing facility is being established under Mundada Polymers Private Limited (Wholly Owned Subsidiary, incorporated 5 February 2026). Capital investments include an Alphaflex CI Flexo Printing Press, a 7-Layer Blown Film Coextrusion Line, a Stretch Film Line, a Solvent-less Lamination Line, a Slitting Line, and a new building for additional manufacturing infrastructure. The product portfolio will include barrier and non-barrier films (printed and unprinted), laminates, and

6.2 Revenue Outlook

Management has articulated a revenue aspiration of Rs. 1,000 Crore by FY2028-29, implying a compound annual growth rate of approximately 40% from the FY26 base. This roadmap is premised on: (i) organic volume growth across the rigid packaging segment as Phase 3 capacity comes on stream; (ii) ramp- up of the flexible packaging business through

Mundada Polymers; (iii) cross-selling of rigid and flexible solutions to existing customers; (iv) new customer acquisition in FMCG, dairy, food, and hygiene markets; and (v) continued market share gain from unorganised competitors.

6.3 Sustainability and Energy

The Company has invested in on-site solar power generation, with total installed capacity of 7.2 MW (4.1 MW existing and 3.1 MW added from IPO proceeds). Renewable energy integration is expected to reduce electricity costs, lower the carbon intensity of operations, and support the Companys positioning with ESG-conscious customers and investors.

7. Human Resources and Industrial Relations

The Companys manufacturing operations at Latur are supported by a skilled and trained workforce across production, quality assurance, maintenance, and support functions. Industrial relations remained cordial throughout the year. The management continued to invest

in workforce training and development, particularly in the context of commissioning new machinery under the Phase 3 expansion programme. No material labour disputes were reported during the year.

8. Risks and Concerns

The Company operates in a competitive and input-cost sensitive environment. The Board and Management periodically review risk exposures and maintain mitigation strategies for each identified risk category. Table 8.1: Risk Register

Risk Category	Description	Mitigation
Raw Material Price Volatility	PET resin is a crude oil derivative. Significant movement in global crude prices can affect material costs and compress margins if not adequately passed through to customers.	Supplier diversification, strategic inventory buffers, contractual review mechanisms with key customers, and hedging opportunities where feasible.
Customer Concentration	Revenue dependence on a defined set of beverage and FMCG customers could expose the Company to demand variability from individual account changes.	Diversified customer portfolio of 25+ brands; continuous addition of new regional accounts; expansion into dairy, pharma, and industrial segments through flexible packaging.
Execution Risk - Capex	A Rs. 100 Crore Phase 3 expansion programme entails procurement, commissioning, and ramp-up risks. Delays could defer revenue accretion.	Engagement with globally established OEMs (Husky, SACMI, Alphaflex). Phased deployment with dedicated project monitoring. Phase 1 and Phase 2 execution precedent.
Competition	Intensifying competition from other organised players and from lower- cost unorganised manufacturers, particularly in commoditised preform sizes.	Quality certifications (FSSC 22000, ISO 9001, ISO 22000) as durable barriers. Investment in proprietary moulds and precision equipment. Customer lock- in through specification approvals.
Regulatory and Environmental Risk	Evolving regulatory frameworks around single-use plastics, Extended Producer Responsibility (EPR), and sustainability norms may require product or process adaptation.	Proactive investment in food- grade, recyclable product formats. Solar energy integration. Ongoing monitoring of regulatory developments. Engagement with industry bodies.
Foreign Exchange Risk	Capital equipment and certain raw materials are imported; foreign currency fluctuations may affect procurement costs.	Forward cover arrangements where applicable. Cost-plus contractual structures for key accounts. Natural hedging through competitive export enquiries.

9. Internal Control Systems and their Adequacy

The Company has established an internal control framework commensurate with the size and complexity of its operations. Key controls are in place across procurement, production, inventory management, sales and collections, capital expenditure authorisation, and financial reporting. The internal audit function independently reviews the design and operating effectiveness of controls and reports its findings to the Audit Committee of the Board on a periodic basis.

During FY2025-26, no material weaknesses in internal financial controls were reported. The Company is in the process of enhancing its ERP- based controls and management information systems to support the significantly expanded operational scale post the Phase 3 capex programme.

10. Key Financial Ratios

Regulations, 2015, and the Companies Act, 2013. The Board of Directors is appropriately constituted with a mix of executive and non-executive / independent directors, and the Audit Committee, Nomination and Remuneration Committee, and Stakeholders Relationship Committee function in accordance with statutory requirements.

Table 10.1: Mandatory Financial Ratios - FY 2025-26 vs. FY 2024-25

Ratio	FY 2025-26	FY 2025-25	Change	Remarks
Debtors Turnover (x)	-	-	-	To be updated with final accounts
Inventory Turnover (x)	-	-	-	To be updated with final accounts
Interest Coverage Ratio (x)	-	-	-	To be updated with final accounts
Current Ratio (x)	-	-	-	To be updated with final accounts
Debt-to-Equity Ratio (x)	0.37	2.04	(82%)	Sharply improved post IPO deleveraging
Operating Profit Margin (%)	13.4%	10.4%	+300 bps	Volume growth and cost leverage
Net Profit Margin (%)	7.4%	5.6%	+180 bps	Lower finance costs and tax efficiencies
Return on Net Worth / ROE (%)	-	-	-	To be updated with final accounts

Note: Ratios marked - are to be populated from the final audited financial statements. Debt-to-Equity, Operating Profit Margin, and Net Profit Margin are sourced from the Investor Presentation for FY26.

The following ratios are disclosed in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies (Accounts) Rules, 2014, as amended: BAIKAKAJI POLYMERS LTD.

11. Corporate Governance

The Company is committed to the highest standards of corporate governance. Since its listing on the BSE SME Platform in December 2025, the Company has complied with the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements)