Ecoplast Ltd Management Discussions

Ecoplast Limited is one of Indias leading manufacturer and supplier of premium lamination and surface protection films in India. Ecoplast Ltd. specializes in producing high-quality, multilayer coextruded polyethylene and co-polymer films with an annual capacity of 9600 MT.

Since its inception in 1981, the Company had played a major role in the development of the flexible packaging industry in India by supplying lamination grade films. However, in view of poor margins and fierce competition in the commodity lamination business, the company transitioned into only Value-added product business. Since 2024 the focus has been shifted to specialty films, adhesive films and surface protection films and the export market.

Since over more than four decades, the Company has been setting standards on high quality and innovation and currently serve following applications: -

- Film for Aluminum Composite Panel.

- Films for Surface Protection

- Films for specialty applications

Currently, we also export products to developing and developed countries.

Key strengths:

• Designing capabilities that create and sustain market differentiation.

• State-of-the-art and integrated manufacturing, printing, and converting capabilities.

• An engaged and experienced team.

Global economic overview:

Global growth is projected to remain resilient at 3.3 percent in 2026 and at 3.2 percent in 2027: rates similar to the estimated 3.3 percent outturn in 2025. The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 World Economic Outlook (WEO). This steady performance on the surface results from the balancing of divergent forces. Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector. Global headline inflation is expected to decline from an estimated 4.1 percent in 2025 to 3.8 percent in 2026 and further to 3.4 percent in 2027. The inflation projections are also broadly unchanged from those in

October and envisage inflation returning to target more gradually in the United States than in other large economies.

Risks to the outlook remain tilted to the downside. Revaluation of productivity growth expectations about AI could lead to a decline in investment and trigger an abrupt financial market correction, spreading from AI-linked companies to other segments and eroding household wealth. Trade tensions could flare up, prolonging uncertainty and weighing more heavily on activity. Domestic political tensions or geopolitical tensions could erupt, introducing new layers of uncertainty and disrupting the global economy through their impact on financial markets, supply chains, and commodity prices. Larger fiscal deficits and high public debt could put pressure on long-term interest rates and, in turn, on broader financial conditions. On the upside, activity could be further lifted by AI-related investment and eventually transform into sustainable growth if faster AI adoption translates into strong productivity gains and increased business dynamism. Activity could also be supported by a sustained easing in trade tensions. Policies to foster stability and sustainably lift medium-term growth prospects require a keen focus on restoring fiscal buffers, preserving price and financial stability, reducing uncertainty, and implementing structural reforms without further delay.

Indian economy:

Indian, as the worlds largest democracy possesses a rich and diverse cultural heritage, encompassing numerous languages, traditions, and communities that reflect its unique unity in diversity.

The country continues to attract significant global investments owing to its diversified industrial base, expanding consumer market, favourable investment climate, ongoing infrastructure development, and progressive government reforms. Its large and predominantly young population remains a key driver of domestic demand while providing a vast and skilled workforce to support economic growth.

India has established itself as one of the worlds fastest-growing major economies and is expected to remain among the leading global economic powers over the coming decades. Supported by strong macroeconomic fundamentals, rapid digital transformation, resilient domestic consumption, increasing manufacturing capabilities, and strategic global partnerships, the country continues to strengthen its position as a preferred destination for investment and sustainable long-term growth.

Domestic economic activity remains resilient, supported by robust private consumption and continued expansion in fixed investment, even as the external environment remains uncertain. Favourable agricultural prospects, steady services activity, elevated capacity utilisation and healthy balance sheets of corporates and banks are likely to underpin growth going forward. Continued public investment in infrastructure and recently concluded trade agreements are also expected to be conducive for medium-term growth prospects.

Headline inflation, which had declined sharply during the second half of 2025 on account of food price deflation, has begun to normalise under the revised Consumer Price Index series. Core inflation remains moderate, indicating that underlying price pressures are contained. Inflation is projected to firm up gradually during 2026-27 as base effects wane and food prices normalise, while remaining within the tolerance band over the medium term. Longer-term inflation expectations of professional forecasters remain anchored at around 4 per cent.

At the same time, risks to the outlook persist. Movements in crude oil prices and exchange rate developments warrant continued vigilance. Geopolitical tensions, volatility in global financial markets, uncertainty surrounding global trade policies and weather-related disruptions could pose headwinds to growth and inflation. The adverse impact of the conflict in West Asia is reflected in the forecasts on growth and inflation - while inflation is projected to increase albeit remaining within the tolerance band, growth is expected to moderate. Over the medium-term, the growth-inflation dynamics would be conditional on when the supply chain is fully restored as well as where energy prices settle after the end of the West Asia conflict. At the current juncture, the situation is highly uncertain and would require continuous assessment of the developments to frame the appropriate policy response. Overall, Indias strong macroeconomic fundamentals and existing buffers provide resilience in the face of destabilizing geopolitical developments and rising uncertainties.

Industry overview:

Indian Industry

Demand of plastic for industrial applications especially for aluminum composite panel and surface Protection Film, will largely depend upon the revival of infrastructure projects as well as reality sector, where the consumption is large. The Government has declared various fiscal and non-fiscal packages for the revival of these sectors.

Opportunity:

• Growing Importance of Surface Protection Films

As a well-established and recognised manufacturer of surface protection films, the Company is well positioned to benefit from the rising demand for this category. Surface protection films are increasingly indispensable across manufacturing processes such as cutting, bending, and deep-drawing, as well as in withstanding the rigours of mechanical handling during production and transportation — a trend that continues to strengthen the Companys core market.

• Glue-less Films — A First-Mover Advantage:

The Company was the first in India to establish glue-less film manufacturing capability, introducing a product free of adhesives to the domestic market. While building customer awareness and stabilising the customer base took time, the product is now witnessing strong and growing acceptance, positioning the Company favorably to capture the next phase of adoption.

• Rising Demand for Personal Hygiene Products:

Rising disposable incomes and growing awareness are driving substantial growth in the adoption of personal hygiene products such as baby diapers and sanitary napkins. This structural, consumption-led trend represents a significant growth multiplier for the Company going forward.

• Substantial Export Potential:

The Companys products are well accepted in international markets and compete effectively with global players. With the "China+1" sourcing theme continuing to gain momentum among global buyers, the Company sees substantial and growing headroom to expand its export footprint.

Threat:

• Rising input costs

Resins and adhesives, among the principal raw materials used across the packaging industry, remain exposed to volatility in crude oil prices.

• Domestic Competition

A small number of domestic players have entered the surface protection films market, gradually increasing competitive intensity.

• Export Tariffs

With the USA being a key export market, additional tariffs on Indian products pose a meaningful risk to export realizations and order flow.

Operational Performance Review:

During the year under review, the Company achieved revenue from operations of Rs. 221.08 crs as compared to Rs. 207.78 crs in the previous year. The Company earned a net profit of Rs. 11.98 crs as compared to Rs. 13.77 crs in the previous year.

Particulars (Rs. in lacs)	FY 2025-26	FY 2024-25
Revenue from Operations	22,108.23	20,778.26
Total Income	22,487.48	21,123.77
Operating Profit (before depreciation & tax)	2,168.52	2,401.15
Profit Before Tax	1,597.16	1,890.07
Profit After Tax	1,198.12	1,377.01

As noted above, the financial results for FY 2025-26, together with the comparative

figures for FY 2024-25, are presented on a merged basis pursuant to the NCLT- sanctioned merger of Kunal Plastics Private Limited, effective from the appointed date of April 1, 2025.

Kunal plastics pvt ltd, a sister concern, is one of the largest manufacturers of PE Bags in India, offering a diverse range of bags catering to a wide array of applications. Its client base includes numerous MNCs serving the hygiene sector in India. We also have exports into the United States and African markets catering to the hospitality and food industry respectively. With this merger, all the business and operating entities within the group now stand consolidated under Ecoplast Limited.

Increased trade tariffs announced by the USA on India, and the resulting uncertainty, affected export orders and realizations during the year. The Company is responding by concentrating its efforts on developing new customers across other export markets. In parallel, the Company maintained a strong focus on developing higher-value added products.

In the last quarter of the year, the escalation of conflict in West Asia significantly affected the availability and pricing of raw materials, impacting both margins and demand. The Company is mitigating this risk by securing its raw material supply chains to ensure uninterrupted production and delivery, amid ongoing global supply- chain uncertainty, and to ensure hassle-free supply of finished goods to its customers.

The Synergy Films Private Limited, wholly owned subsidiary of the Company has shut down its operations w.e.f. 7^th December 2019 for being economically unviable. The Board of Directors of the Company in its meeting held on May 22, 2024, approved the winding up/ closure of subsidiary, subject to approval of relevant regulatory authorities.

Outlook:

Since 2024, the Company has committed more than ? 75 crores towards a series of greenfield and brownfield expansions, significantly reinforcing its manufacturing capabilities for the years ahead. The combined annual production capacity will go up from ~9000 MTPA (2024) to ~13600 MTPA after full expansion is commissioned. The final tranche of machinery is currently being installed and is on track for commissioning by the end of the second quarter of FY 2026-27.

Together with the successful completion of the Kunal Plastics pvt ltd merger with the company, this expanded capacity, places the Company firmly on track to capitalize on a meaningfully broadened product portfolio spanning surface protection films, specialty films and PE bags, with the benefits expected to start flowing through progressively over the course of FY 2026-27.

The Company remains sharply focused on deepening and diversifying its export markets in response to evolving tariff developments, while proactively monitoring raw material availability and pricing amid ongoing geopolitical uncertainty.

Backed by its expanded scale, broadened portfolio and disciplined execution, the Company is well positioned to sustain its growth momentum in the year ahead.

Key Financial Ratios:

Particulars	31.03.2025	31.03.2026	% Change	Explanation
Debtors Turnover Ratio	6.90	6.98	1%	Not Applicable
Inventory Turnover Ratio	6.36	5.92	-7%	Not Applicable
Interest Coverage Ratio	29.03	37.98	31%	Refer point No. (a) stated below
Current Ratio	4.57	3.51	-23%	Not Applicable
Debt Equity Ratio	0	0.01	100%	Refer point No. (a) stated below
Operating Profit Margin Ratio	0.08	0.06	-24%	Not Applicable
Net Profit Margin Ratio	0.07	0.05	-18%	Not Applicable
Return on Net worth	0.16	0.11	-32%	Refer point No. (b) stated

Note:

a) Debt taken in current year, no debt in previous year

b) The Company has issued fresh equity during the previous year resulting in increase in total equity.

Segment information:

The Companys sole business segment is Plastic Films and all activities are incidental to this sole business segment. The Company services its domestic and export markets from India only.

Risks and Concern:

The Companys risk management is an integral part of how to plan and execute its business strategies. The Companys business activities are exposed to a variety of risks, namely liquidity risk, market risks, commodity risk and credit risk. The Companys senior

management has the overall responsibility for establishing and governing the Companys risk management framework. The Companys risk management policies are established to identify and analyze the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Audit Committee of the Company.

i. Credit risk:

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The Companys exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer and including the default risk of the industry, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit-worthiness of customers to which the Company grants credit terms in the normal course of business.

ii. Liquidity risk:

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time, or at a reasonable price. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Companys short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

iii. Market risk:

Market risk is the risk that changes in market prices- such as foreign exchange rates, interest rates and equity prices- will affect the Companys income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company operates internationally and portion of the business is transacted in several currencies. Consequently, the Company is exposed to foreign exchange risk through its sales and services in overseas and purchases from overseas suppliers in various foreign currencies. Exports of the company are significantly lower in comparison to its imports. The exchange rate between rupee and foreign currency has changed substantially in recent years and may fluctuate substantially in future. Consequently, the results of the Companys operation are adversely affected as the rupee appreciates/ depreciates against these currencies.

iv. Commodity Risk:

Principal Raw Material for Companys products is variety of plastic polymers which are Derivatives of Crude Oil. Company sources its raw material requirement primarily from US Middle East and Europe. Domestic market prices are also generally remains in sync

with international market price scenario. Volatility in Crude Oil prices, Currency fluctuation of Rupee vis-a-vis other prominent currencies coupled with demand-supply scenario in the world market affect the effective price and availability of polymers for the Company. The Company effectively manages with availability of material as well as price volatility through:

1. Widening its sourcing base.

2. Appropriate contracts and commitments.

3. Well planned procurement and inventory strategy.

Internal Financial Control Systems:

The Companys internal financial control systems are commensurate with the nature of its business and the size and complexities of its operations. These systems are designed to ensure that all assets of the Company are safeguarded and protected against any loss and that all transactions are properly authorized, recorded and reported.

Human Resources

It is your Companys belief that people are at the heart of corporate purpose and constitute the primary source of sustainable competitive advantage. Your Companys belief in trust, transparency and team work improved employee productivity at all levels. The Company has 244 employees on its payroll.

Cautionary Statement:

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on whether express or implied. Several factors could make significant difference to the Companys operations. These include climatic conditions and economic conditions affecting demand and supply, government regulations and taxation, natural calamities and so on over which the Company does not have any direct control.