DIC India Ltd Management Discussions

Macro-Economic and Operating Environment

FY 2025 was shaped by a complex global environment marked by geopolitical uncertainty, uneven economic recovery, and prolonged monetary tightening across major economies. Against this backdrop, India demonstrated relative resilience, supported by domestic consumption, sustained government capital expenditure, and a gradual improvement in private sector investment sentiment.

Currency movements were a significant operating variable during the year. The Indian Rupee depreciated against both the US Dollar and the Euro at levels higher than long-term historical averages. While Indias macroeconomic fundamentals provided an underlying stabilising anchor, the sharper depreciation increased input cost volatility for import-dependent sectors such as packaging and printing inks. This reinforced the importance of formulation efficiency, disciplined pricing, and agile sourcing strategies.

Demand conditions across FMCG, food, personal care, pharmaceutical, and industrial segments—key end markets for packaging—showed gradual recovery during the year. Growth, however, remained value-led rather than volume-driven. Customers continued to prioritise inventory optimisation, cost transparency, and supply reliability, resulting in shorter planning cycles and greater volatility in ordering patterns.

The operating environment was further influenced by multiple short-term policy and legislative changes, particularly relating to titanium dioxide (TiO₂), a critical raw material for the packaging inks industry. Frequent changes in regulatory and trade positions introduced uncertainty around availability, pricing, and working capital planning, requiring heightened agility across procurement, manufacturing, and customer engagement.

In addition, the Governments decision to reduce GST on a wide range of FMCG items to 5% impacted demand behaviour during the July-September quarter. While channel inventory levels were largely balanced, customers deferred purchases in anticipation of price resets, resulting in a temporary moderation in off-take. This deferral is expected to normalise over subsequent quarters and should support a more positive consumer demand trend as lower effective pricing improves affordability. The full benefit of this measure is therefore expected to play out progressively rather than immediately.

Despite these near-term adjustments, Indias financial markets remained broadly stable. Capital flows into manufacturing and packaging-related sectors remained resilient, reflecting investor confidence in Indias longterm consumption and industrial growth story. Industry consolidation continued, particularly among large converters and packaging players, supported by private equity participation and strategic investments aimed at scale, compliance readiness, and long-term competitiveness.

Segment-Wise or Product-Wise Performance

Please refer note 3.11 of financial statements of segment wise reporting. The Company is into one product i.e., printing ink and relevant section of financial statements may be referred for performance of printing ink

Sustainability and Regulatory Landscape

Sustainability continued to move decisively from aspiration to execution. Greater regulatory clarity around extended producer responsibility (EPR), recyclability, and waste management sharpened customer expectations across the packaging value chain. In the Indian context, sustainability adoption is increasingly anchored in economic viability. Customers increasingly expect environmental compliance to be delivered without increasing total cost of ownership and without compromising performance. As a result, solutions that integrate sustainability with cost discipline, process efficiency, and supply reliability are increasingly favoured. This economic lens on sustainability is particularly pronounced in India, where brand owners must balance

regulatory compliance with intense local competition and price sensitivity.

Industry Structure and Evolution

The Indian printing inks industry continued its structural evolution during FY 2025. While the market remains fragmented, competitive differentiation is increasingly driven by technology depth, regulatory capability, and execution discipline rather than price alone.

A two-tier competitive landscape continues to define the industry. Organised players are investing in sustainability and new technologies, including toluene-free and low-emission solutions; however, this transition is occurring under increasing pressure from brand owners to hold or reduce price points, requiring disciplined execution and careful commercial trade-offs.

Smaller players face rising cost and compliance pressures, but are able to manage the economic trade off , accelerating structural differentiation within the industry.

Key industry trends during the year included:

• Sustained demand from flexible packaging, driven by food, personal care, pharmaceuticals, and e-commerce.

• Growing adoption of toluene-free and low-VOC ink systems, aligned with regulatory and customer requirements.

• Increasing relevance of flexo printing, digital, and high-speed gravure technologies.

• Rising focus on application-specific solutions where performance expectations and regulatory scrutiny are higher.

Customer decision-making continues to focus on performance reliability and regulatory assurance; however, customers are increasingly willing to engage in price-performance trade-offs, reflecting heightened cost sensitivity and competitive pressures in their own end markets.

Strategic Positioning: Opportunities and Challenges OPPORTUNITIES

Within this operating environment, the Company continued to strengthen its strategic positioning during FY 2025:

• Market Positioning: Focused initiatives across select segments delivered measurable improvements in market presence, supported by sharper customer engagement and differentiated value propositions.

• Sustainability at Scale: Expansion of renewable energy usage and energy efficiency initiatives reduced carbon intensity while improving cost resilience, reinforcing sustainability as a value driver rather than a cost centre.

• Innovation and Application Expertise: Regional R&D and technical teams advanced sustainable and application-specific ink systems, with particular emphasis on water based solutions for flexible packaging, packaging solutions for metal and label substrates, where technical complexity and compliance requirements continue to rise.

• Supply Chain Strengthening: Targeted investments were made to enhance supply chain responsiveness and reliability, aligning service levels with emerging customer expectations on colour accuracy, product consistency, and delivery performance.

• Operational Discipline: Initiatives in asset utilisation, formulation optimisation, and supply chain efficiency improved operational robustness.

• Digital Enablement: Continued investments in digital tools enhanced planning visibility, responsiveness, and decision quality across functions.

CHALLENGES

The year also highlighted persistent challenges inherent to the sector:

• Elevated currency volatility, particularly USD-INR and EUR—INR movements, impacting input costs.

• Raw material uncertainty, amplified by regulatory and trade-related changes around TiO₂ and other key inputs.

• Demand variability, with customers maintaining cautious inventory positions and driving sharp course corrections post-festival, requiring high operational agility.

• Competitive intensity, as both multinational and regional players continue to invest selectively in high- growth segments.

Business Strategy and Outlook

The Companys strategy remains anchored around four core pillars: Innovation, Sustainability, Operational Excellence, and Governance, with increasing emphasis on execution discipline.

During the year, the Company also established new strategic pillars designed to anchor future growth, focused on customer-centric service models, differentiated application capability, and supply chain reliability.

Strategic priorities include:

• Making Safety & Governance (Sankalp) and Quality Assurance (Vishwas in Quality) non-negotiable foundations of growth.

• Strengthening cost discipline and formulation efficiency to protect margins in a volatile operating environment.

• Expanding toluene-free and compliant product portfolios aligned with regulatory evolution and customer expectations.

• Enhancing cross-functional ownership, speed of execution, and accountability.

Looking ahead, the medium-term outlook for the Indian packaging sector remains attractive. However, the pace of transition towards sustainable technologies is expected to remain gradual, constrained by economic pressure on brand owners balancing intense local competition with global compliance and sustainability commitments.

Risks and Risk Management

Key risks include macroeconomic uncertainty, currency volatility, regulatory evolution, and execution complexity. An additional structural risk is the slower-than-expected market transition towards sustainable technologies under sustained cost pressure on brand owners. The Company continues to strengthen enterprise risk management through structured reviews, data-driven decision-making, and tighter cross-functional integration.

Internal Controls and Governance

The Company maintains robust internal financial controls commensurate with the size and complexity of its operations. Internal audits are conducted as per approved plans, and observations are reviewed periodically by the Audit Committee, with corrective actions tracked to closure.

Governance frameworks are designed to reinforce transparency, accountability, and compliance, aligned with the standards and values of DIC Corporation. The Company remains committed to ethical conduct, statutory compliance, and timely disclosures.

Discussion on Financial Performance with Respect to Operational Performance

Your Company delivered stable operational performance in FY 2025, with revenue rising to Rs. 89,178.85 lakh despite a challenging demand environment. Continued cost discipline kept total expenses at Rs. 87,185.27 lakh, supporting operating resilience. Profit before tax stood at Rs. 2,364.66 lakh, impacted by a one-time exceptional charge relating to new labour codes. Strengthened working-capital efficiencies improved operating cash flow to Rs. 4,278.43 lakh, reflecting healthy underlying operations.

Human Resources

Human Resources have been the backbone and asset of your Company for not only building a helpful environment for smooth business operations throughout the period characterized by unforeseen disruptions, but also by ensuring safety measures are in place at the workplace.

Your company will continue to strengthen its human resources by hiring critical skills as may be required to aid sustainable business growth and future readiness. The leadership of your Company strongly believes that its people are important resource. The leadership team remains focused on the health and wellbeing of all its employees.

Your Company displayed business related HR sensitivity to build and maintain a harmonious work environment for smooth business operations throughout the last performance year. As on December 31,2025 your company employs a diverse workforce of 354 people.

Significant Change in Ratios

Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof

The Net Worth of the Company as on December 31, 2025 stood at Rs. 42,864.80 lakh as against Rs. 41,525.16 lakh as on December 31,2024, reflecting an increase of 3.22%. The change is primarily attributable to (i) Profit for the year of Rs. 1,737.66 lakh, (ii) impact of re-measurement loss of Rs. 30.86 lakh arising from post-employment defined benefit obligations, which is recognized in Other Comprehensive Income (OCI), (iii) Dividend payout of Rs. 367.16 lakh.

Disclosure of Accounting Treatment

In the preparation of financial statements, no different treatment from that prescribed in an Accounting Standard has been followed.

Conclusion

Despite a volatile operating environment and near-term demand adjustments, the Company enhanced its market positioning, advanced sustainability initiatives with a strong focus on economic viability, established new strategic pillars to anchor future growth, and reinforced operational and governance foundations. Targeted investments in the supply chain have further aligned service levels with emerging customer expectations on colour performance, product consistency, and delivery reliability.

With its scale, technical capability, and disciplined strategic intent, the Company is well positioned to navigate complexity and deliver sustainable long-term value for shareholders, customers, and other stakeholders.