Ballarpur Industries Ltd Management Discussions

1 • Paperboard: The market size is estimated at

approximately 275 million MT, which is expected to grow , at a CAGR of around 2% over the next few years, fueled by

e-commerce, sustainability imperatives, and sector- i specific packaging needs.

• Wood Pulp: Demand is currently being driven by paperboard and tissue segments, while W&P demand continues to soften. In 2025, market conditions were relatively stable with price volatility moderating, although hardwood pulp prices increased recently driven largely by higher wood and logistics costs.

Indian Market Dynamics

[ The Indian paper and paperboard market is estimated at

> approximately ~25 million MT in 2025-26 and is expected to i grow steadily at around 6% over the next few years. India

remains a high-growth market due to its low per capita consumption of approximately 15 kg against the global ^ average of about 57 kg, improving literacy levels, urbanisation and increasing preference for sustainable packaging solutions.

• Writing and Printing (W&P) Segment: The Indian W&P paper market comprises approximately 7 million MT, accounting for nearly 30% of total domestic demand. The segment has been growing at a moderate rate of around 2-3% annually, supported by structural demand from education, publishing, and office stationery.

• Paperboard Segment: Accounting for approximately

65% of total industry volumes, this segment is experiencing robust growth of around 8%, supported by expansion across FMCG, e-commerce, pharmaceuticals, i and food & beverages.

• Cost & Import Pressures: Despite healthy demand fundamentals, the industry faces challenges arising from increasing wood costs, global trade uncertainty, and rising low-cost imports from China and Indonesia driven by oversupply conditions, exerting pressure on profitability.

Established brand salience and strong product acceptability across the Indian subcontinent. Fully integrated manufacturing infrastructure at Unit Shree Gopal with dedicated co-generation power and testing facilities.

Internal challenges persist, including severe reliance on indigenous pulpwood amidst escalating raw material costs, high capital intensity, and debt servicing overhang from historic expansion prior to CIRP.

Low national per capita paper usage (15 kg vs 57 kg global average), rapid urbanization, acceleration of plastic-to-paper substitution, and government incentives for domestic manufacturing.

Heavy influx of low-priced imports from ASEAN, China, and Indonesia, ongoing digital substitution impacting writing paper, and high volatility in raw wood and energy costs.

This business focuses on specialized product categories such as water marked bond paper, ledger paper, cartridge paper, envelope paper, super printing paper, rm multipurpose paper and food packaging products (such as cup stock and paper straw). Assets of this business are directly under BILT at Unit Shree Gopal (Haryana).

The company has a wide range of product acceptability and demand across entire Indian subcontinent. BILT has mega brand such as BILT Royal Executive Bond, BILT Copy Power, BILT Image Copier and BILT Matrix.

Shree Gopal Unit is located at Yamunanagar, Haryana, is a fully integrated paper mill set up on ~ 165 acre of land with Plant spread across ~115 acres and two colonies on ~ 58 acres, thereby offering expansion opportunities. The mill has a capacity of 85,000 MT per annum and Co-generation capacity of 24 MW with 6 boilers for steam generation including two recovery boilers. The unit also has a fully equipped research and testing facility for pulp testing, paper testing and material testing.

BILTs consolidated financial performance for the financial year ended 31 March 2026 is given below.

Insolvency Application has been moved against the Company and vide order dated January 17, 2020, the Company was admitted into CIRP under the provisions of Insolvency and Bankruptcy Code, 2016.

The NCLT approved the resolution plan submitted by FFSPL in its capacity as a resolution applicant under Section 31 of the Code ("Approved Resolution Plan") vide order dated March 31, 2023 ("NCLT Order").

As per the terms of the Approved Resolution Plan, a monitoring committee was constituted comprising of 1 (One) representative of the financial creditors, 1 (One) representative of FFSPL and the erstwhile Resolution Professional for the purposes of (i) managing the operations and affairs of the Company as a going concern and (ii) supervising the implementation of the Approved Resolution Plan. The tenure of the said monitoring committee was from April 16, 2023 to October 25, 2023.

Pursuant to the terms of the NCLT Order and in terms of the Approved Resolution Plan, FFSPL has acquired majority shareholding in the Company. Pursuant to the terms of Approved Resolution Plan, FFSPL was required to take over the Company on an "as-is where-is" basis.

The Approved Resolution Plan was implemented on and from June 12, 2023 (i.e. Closing Date (in terms of the Approved Resolution Plan)), and the new board of directors have been appointed vide resolution dated June 12, 2023 and September 08, 2023 passed by the Company.

Subsequent to assuming control of the Company, the reconstituted Board and the new management undertook active measures to revive the Companys operations. As part of these efforts, the existing scrap materials were sold. These initiatives resulted in total revenue of INR 6.35 crore from the sale of scrap.

The new Board, having assumed its responsibilities pursuant to the resolution plan approved by the NCLT, is unwavering in its commitment to implementing and upholding stringent internal control practices. Our priority is to ensure that the

highest standards of governance and accountability are adhered to, and we will be taking all necessary steps to evaluate and enhance our internal control systems moving forward.

In this regard, the new Board has implemented various measures to ensure effective monitoring and control over the Companys operations, with a view to safeguarding assets, ensuring the accuracy and reliability of financial reporting, and promoting compliance with applicable laws and regulations.

The Board is of the opinion that the internal control systems presently in place are adequate and commensurate with the size and nature of the Companys operations. The Board also remains committed to continuously evaluating and strengthening these systems to support improved governance and operational efficiency.

The New Board identifies the following risks and concerns for a paper manufacturing company like BILT:

Risk: Fluctuations in demand for paper products, especially printing and writing paper, can significantly impact revenue and profitability. The accelerated shift towards digital media due to the COVID-19 pandemic has reduced demand for these products.

Concern: Prolonged decline in demand for traditional paper products can affect the companys market position and financial stability.

Risk: Ballarpur Industries Limited (BILT) relies heavily on raw materials such as wood, bamboo and veener waste. 95% of the raw material supply is indigenous. Supply disruptions and import restrictions can affect production cost up to some extent.

Concern: Inconsistent supply and rising costs of raw materials can squeeze profit margins and disrupt manufacturing operations.

Risk: The paper industry faces stringent environmental regulations aimed at reducing pollution and promoting sustainable practices. Compliance with these regulations requires significant investment in eco-friendly technologies and processes.

Concern: Failure to meet environmental standards can result in legal penalties, damage to reputation, and increased operational costs.

Risk: Economic downturns and reduced consumer spending can adversely affect the demand for paper products, particularly in sectors like printing and publishing.

Concern: Economic instability can lead to reduced revenue and financial performance, impacting the companys growth prospects.

Risk: Rapid advancements in technology require continuous investment in modernizing production facilities and adopting

new manufacturing processes. Falling behind in technology can lead to inefficiencies and loss of competitive edge. Concern: High capital expenditure on technological upgrades may strain financial resources, especially if the benefits are not realized in the short term.

• The company had 794 employees as on March 31, 2026 whom are currently deployed in Shree Gopal Unit.

• There are several centralized functions, the services of which are availed by the group. Group level support is provided for the following functions:

The company undertook significant capital investments during FY 2024-25 and FY 2025-26 as part of its operational revival strategy and commenced commercial production with effect from 1st December 2025. Additionally, the higher operating costs incurred during the initial phase of operations in the current year had a consequential impact on the financial performance, leading to significant fluctuations in certain key financial ratios.