Emami Paper Mills Ltd Management Discussions

Global economic review

Overview:

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably. The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023).

On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation as well.

The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty and emerged as the largest singular uncertainty in 2025.

Regional growth (%)	2024	2023
World output	3.2	3.3
Advanced economies	1.7	1.7
Emerging and developing economies	4.2	4.4

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Performance of the major economies, 2024

United States: Reported GDP growth of 2.8% in 2024 compared to 2.9% in 2023. China: GDP growth was 5.0% in 2024 compared to 5.2% in 2023.

United Kingdom: GDP growth was 0.8% in 2024 compared to 0.4% in 2023. Japan: GDP growth was 0.1% in 2024 compared with 1.9% in 2023.

Germany: GDP contracted by 0.2% in 2024 compared to a 0.3% decline in 2023. on a gross basis declined

(Source: CNBC, China Briefing, Ons.gov.uk, Trading Economics, Reuters)

Outlook: The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7 per cent for 2025 and 2026, factoring the various economic uncertainties.

(Source: IMF, United Nations)

Indian economic review

Overview

The Indian economy grew at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net in check investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was Rs.330.68 trillion in FY 2024-25 (Rs.301.23 trillion in FY 2023-24). The nominal GDP per capita increased from Rs.2,15,936 in FY 2023-24 to Rs.2,35,108 in FY 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in FY 2024-25, closing at Rs.85.47 on the last trading day of FY25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in FY was the lowest since the pandemic, catalysing savings creation.

Indias foreign exchange reserves stood at a high of $676 billion as of April 4, 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Gross foreign direct investment (FDI) into India rose 13.6% to $81 billion during the last financial year, the fastest pace of expansion since 2019-20. The increase in the year was despite a contraction during the fourth quarter of 2024-25 wheninflows to $17.9 billion due to the uncertainty caused by Donald Trumps election and his assertions around getting investments back into the US.

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%)	8.7	7.2	9.2	6.5

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1	Q2	Q3	Q4
	FY25	FY25	FY25	FY25
Real GDP growth (%)	6.5	5.6	6.2	7.4

(Source: The Hindu, National Statistics Office)

The banking sector continued its improvement, with gross non-performing assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services reached $824.9 billion in year. FY 2024-25, up from $778 billion in the previous fiscal The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports grew 6% YoY, reaching $374.1 billion.

Indias net GST collections increased 8.6%, totalling Rs.19.56 lakh crore in FY 2024-25. Gross GST collections in FY 2024-25 stood at Rs.22.08 lakh crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in FY 2024-25. The industrial sector grew by 6.5%, supported by growth in construction activities, electricity, gas, water supply and other utility services. Indias services sector grew at 8.9% in FY25 (9.0% in FY24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in FY25, compared to 8.6% in FY24. Meanwhile, the construction sector expanded at 9.4% in FY25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in FY25, with growth at 4.5%, which was lower than 12.3% in FY24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY25, compared to 8.1% in FY24.

The agriculture sector grew at 4.6% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24).

From a demand perspective, the private final expenditure (PFCE) exhibited robust growth, achieving 7.2% in FY 2024-25, surpassing the previous financial years rate of 5.6%.

The Nifty 50 and SENSEX recorded their weakest annual performances in FY 25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of $3,070 per ounce, the highest increase since FY 2007-08, indicating global uncertainties. Total assets managed by the mutual fund (MF) industry jumped 23% or Rs.12.3 lakh crore in fiscal 2025 to settle at Rs.65.7 lakh crore. At close of FY25, the total number of folios had jumped to nearly 23.5 crore, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to Rs.24,113 crore.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately $20 billion by year-end. However, there was significantselling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

Outlook

India is expected to remain the fastest-growing major economy.

Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY26.

Tariff-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential.

(Source: Niti Aayog)

Union Budget FY 2024-25: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of GDP, the government reinforced fiscal prudence while Rs.11.21 lakh crore for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to Rs.12 lakh annually will be fully exempt from income tax. Economists estimate that the resulting Rs.1 lakh crore in tax savings could boost consumption by Rs.3-3.5 lakh crore, consumption potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current Rs.200 lakh crore.

Free trade agreement: In a post-Balance Sheet development, India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewellery sectors. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Pay Commission impact: The 8^th Pay Commissions awards salary revision could lead to a significant for nearly ten million central government employees. Historically, Pay Commissions have granted substantial pay hikes along with generous arrears. For instance, the 7^th Pay Commission more than tripled its monthly salaries, raising the range from Rs.7,000 to Rs.90,000 to Rs.18,000 to Rs.12.5 lakh, triggering a widespread ripple effect.

Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34 per cent, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India.

Deeper rate cuts: In its February 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 2025-26. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Global paper industry overview

Pulp, the fundamental raw material in paper manufacturing, is derived from sources such as wood, recycled paper, and agricultural residues. The paper production process begins with the conversion of these materials into pulp through mechanical or chemical treatment, separating cellulose fibres essential for paper formation. This pulp is then processed, refined, and, where necessary, bleached to meet specific quality standards.

It is subsequently formed into sheets, pressed, and dried to produce finished paper products. As a key input in a wide array of applications, from packaging and publishing to hygiene products, pulp forms the backbone of our operations and supports our commitment to sustainable, high-quality paper solutions. Eco-friendliness has become a key focus, with a growing demand for sustainable packaging solutions. Leading paper manufacturers are investing in renewable energy initiatives and developing environmentally friendly packaging products. In the food and beverage sector, there is a clear shift toward paper-based packaging solutions, fuelled by consumer preferences and the movement against plastic usage.

The global pulp and paper market size was valued at USD 340.1 billion in 2024 and is expected to grow from USD 343.0 billion in 2025 to USD 391.39 billion by 2032, exhibiting a CAGR of 1.0% during the forecast period.

The industry grew steadily due to rising demand for paper-based packaging, driven by the boom in e-commerce and the global push to replace plastic with eco-friendly materials. Growth in emerging markets like China and India, along with increased use of paper in hygiene and food products, also boosted demand.

Regional analysis

The Asia Pacific packaging materials market generated a revenue of USD 260.8 billion in 2024. The market is expected to grow at a CAGR of 6.5% from 2025 to 2030. The rising adoption of pulp and paper-based products, improving lifestyles, and healthier economic growth will provide lucrative opportunities for paper-based products in the country.

The China, the paper packaging market size stood at USD 91.30 billion in 2025, growing at an 4.37% CAGR and is expected to hit USD 113.07 billion by 2030.

In Europe, the paper packaging market size stood at USD 95.81 billion in 2025, growing at an 4.47% CAGR and is expected to hit USD 119.22 billion by 2030. With growing focus on sustainability, paper and paperboard packaging are gaining popularity as eco-friendly alternatives to plastic, especially in industries like healthcare, food, retail, and e-commerce. Rising demand from the e-commerce sector is expected to further boost market growth.

In Japan, the paper market stood at USD 25.60 billion in 2025, growing at an 5.37% CAGR and is expected to hit USD 33.26 billion by 2030.

E-commerce expansion

The rise of e-commerce has greatly increased the demand for paper-based packaging like cardboard boxes and paper fillers.

As more people shop online, companies need more packaging materials to safely deliver products. This trend has led to a 12% rise in demand for such materials globally, especially in sectors like electronics, fashion, and groceries.

To meet growing environmental concerns, e-commerce companies are switching to more sustainable packaging. For example, Amazon has started replacing plastic air pillows with recycled paper fillers, cutting out nearly 15 billion plastic pieces annually. This shift reflects a wider global move toward using eco-friendly, recyclable materials instead of plastic.

E-commerce growth in regions like Asia-Pacific particularly China and India has further boosted paper consumption.

These countries are seeing fast growth in online shopping, increasing the need for innovative and sustainable packaging solutions. As a result, the paper industry is investing in new materials and technologies to support this shift while reducing its environmental impact.

(Source: Precedence Research, Economic Times, Financial Times, Bonafide Research, Mordor Intelligence, Fortune Business Insights, Global Growth Insights, AP News, Grand View Research)

Indian paper industry overview

The pulp and paper industry in India play a key role in supporting education, packaging, and hygiene needs. It relies on wood, agro-residues, and recycled paper. Though challenged by resource constraints and environmental concerns, the industry is steadily moving towards more sustainable and efficient practices.

Indias paper industry, ranked 15^th globally, is growing rapidly with a demand of 23 million tonnes and a capacity of 25 million tonnes. By 2047, the industry is expected to embrace a circular economy with increased recycling, sustainable practices, and use of alternative fibres. As digital transformation evolves, the focus will shift to high-value, eco-friendly products. Technological advancements and consumer demand for sustainability will drive innovation. The industrys future will depend on adapting to changing regulations, consumer behaviour, and market opportunities.

The pulp and paper market in India are expected to be valued at USD5.83 billion in 2025 at a CAGR of 3.45% (2025-2029). The value added per capita in the pulp and paper market is projected to amount to USD4.01 in 2025. The market value of the Indian paper industry was forecast to peak USD 19.1 billion in 2033. Among the various business segments within the paper industry, the packaging industry fared well across application segments like the pharma sector and FMCG, catalysed by e-commerce.

Outlook

Indias pulp and paper market are growing fast, driven by the shift to eco-friendly products and rising demand for paper-based packaging. Government bans on single-use plastics have boosted the use of paper in packaging for food, retail, and e-commerce. At the same time, higher literacy rates and urban growth are increasing the need for writing, printing, and tissue papers.

The industry is investing in new technologies to improve efficiency and reduce pollution. More companies are using recycled and agricultural waste materials to make paper, which is better for the environment and helps deal with raw material shortages.

With low per-person paper use compared to global levels, India has a lot of room to grow. The market is set to expand further, becoming more modern, sustainable, and competitive globally.

(Source: CRISIL, IBEF)

Global paper and paperboard packaging industry overview

Paper and paperboard packaging refer to packaging materials made from cellulose-based fiber, widely used for wrapping, protecting, and transporting goods. Known for being lightweight, recyclable, and biodegradable, these materials have gained popularity across industries such as food and beverages, healthcare, personal care, and e-commerce. As global awareness of environmental issues grows, paper and paperboard packaging are increasingly preferred over plastic alternatives, making them a key solution in the shift toward sustainable and eco-friendly packaging practices.

The paper and paperboard packaging market size are expected to grow from $422.32 billion in 2024 to $447.11 billion in 2025 at a CAGR of 5.9%. Paper packaging is a versatile and cost-efficient method to protect, preserve, and transport a wide range of products. In addition, it can be customized to meet the customers or product-specific needs. Attributes like lightweight, biodegradability, and recyclability are the advantages of paper packaging, making it an essential component.

Paper and paperboard packaging global market report 2025

The food and beverage sector have emerged as a primary growth driver for the paper and paperboard packaging market, with manufacturers making significant efforts to provide sustainable materials and packaging solutions. The industry is witnessing a fundamental shift in consumer preferences, particularly in the quick-service restaurant segment and food delivery services, where paper food packaging is increasingly replacing traditional plastic containers. This trend is further amplified by the growing popularity of on-the-go meals and the expansion of food delivery services, creating substantial demand for biodegradable paper packaging solutions.

The global food and beverages market size will grow from USD 6962.47 billion in 2024 to USD 7,400.31 billion in 2025 at a CAGR of 6.3%. In the packaged food industry, paperboard packaging is widely favoured. It is used for various food products such as soups, seasonings, and dairy items. The paperboard is coated with polymers or plastics to preserve its cleanliness and integrity. When compared to glass and metal, it significantly reduces the total weight of the final product while ensuring the freshness of the food. Its neutrality in odour and taste makes paperboard an ideal packaging material.

Food and Beverages Global Market Report 2025

India paper and paperboard packaging industry

The paper sector in India is experiencing a shift toward value-added products and specialized solutions. Companies are increasingly investing in research and development to create innovative packaging solutions that address specific industry needs while maintaining environmental sustainability. The industry has seen the introduction of various specialized products, including cup stock, pharma print, and high BF virgin kraft, catering to diverse end-user requirements. This evolution is supported by automated manufacturing processes and quality control systems, enabling producers to meet international standards while maintaining cost-effectiveness and environmental responsibility.

The adoption of sustainable packaging is further reinforced by the materials inherent recyclability and its alignment with modern business sustainability goals. Packaging paper materials are becoming increasingly popular due to their eco-friendly properties and ability to be easily recycled and reused. This trend is particularly visible in the food and beverage industry, where manufacturers are setting ambitious targets to reduce plastic usage in favor of paper-based alternatives. The industrys commitment to sustainability is reflected in the development of innovative solutions, such as paper in packaging tubes for dry goods and specialized cartons for dairy products, which combine environmental responsibility with functional efficiency in protecting and preserving product quality.

The India paper and paperboard packaging market size is worth USD 13.72 billion in 2025, growing at an 6.63% CAGR and is forecasted to hit USD 18.92 billion by 2030. The Indian paper and packaging industry witnessed significant transformation driven by changing consumer preferences and technological advancements.

Technological innovation and product development have become cornerstone strategies for industry players seeking competitive advantages. Paper-based packaging solutions have advanced significantly, particularly in food preservation applications, with corrugated board packaging gaining popularity for fresh produce transportation. The industry has witnessed the emergence of sophisticated manufacturing processes, including high-temperature bonding techniques for bacterial elimination and the implementation of aseptic packaging technologies utilizing hydrogen peroxide sterilization methods to enhance product shelf life.

The Indian flexible packaging market size is worth USD 20.41 billion in 2025, growing at an 11.46% CAGR and is forecast to hit USD 35.11 billion by 2030. The increasing demand for lightweight and convenient packaging solutions is a primary driver, as consumers seek products that are easy to handle and store. Flexible plastic packaging dominates Indias plastic packaging market, comprising 75% of total usage. The FMCG sector prefers this packaging type for its versatility and cost-effectiveness. Small-scale manufacturers, focusing on cost, produce diverse multi-layered packaging compositions. This results in a wide range of non-recyclable entering the market.

Flexible packagings adaptability to various shapes and sizes allows for versatile product presentations, while its cost-effectiveness appeals to businesses looking to optimize their packaging expenses. In addition, the ease of transport associated with flexible packaging contributes to its growing popularity in the Indian market. These factors collectively contribute to expanding the industries increasingly adopt these solutions to meet consumer preferences and operational needs.

(Source: Mordor Intelligence)

Wastepaper-based paper manufacturing in India

The India wood pulp market size reached USD 15.70 billion in 2024. Looking forward, the market is expected to reach USD 19.70 Billion by 2033, CAGR of 2.30% during 2025-2033. The rising demand for sustainable packaging, increasing adoption in the textile sector for viscose fiber production, government initiatives promoting domestic pulp manufacturing, and growing environmental concerns boosting recycled pulp usage are supporting the market expansion. Overall corrugated waste paper collection from various sources has plummeted by 55-60% at the beginning of 2025.

(Source: IMARC)

80%	25-28%	67%
Domestic pulp production is based on recycled paper in India	Indias average waste paper utilisation rate	Recycling rate of paper and paperboard in the United States

Environmental and financial advantages of utilizing waste paper

Conservation of resources: When paper is recycled, it bypasses the most energy-intensive stages required for manufacturing from raw materials. Since the fibres have already been processed once, less electricity and water are needed, making recycled paper production significantly more efficient often requiring just a fraction of the energy, sometimes as little as 30% compared to virgin paper.

Minimizing environmental damage: Choosing to recycle paper means contributing to cleaner ecosystems. This process reduces the release of pollutants into water systems, cuts down on overall water usage, and eliminates the generation of toxic gases. By easing the demand for logging, recycling helps preserve natural forest cover and supports biodiversity.

Lowering greenhouse gas output: The steps involved in producing paper directly from timber such as converting wood into chips, turning it into pulp, and then drying it demand considerable energy, releasing substantial amounts of carbon into the atmosphere. Switching to recycled paper helps shrink this carbon footprint, aligning industrial practices with global climate goals.

Economic efficiency: Recycled paper pulp brings down both production and infrastructure costs. The raw materials are more economical, the process consumes less energy, and the setup required for treating wastewater is less capital-intensive. This translates into lower manufacturing expenses when compared to creating paper from untreated wood pulp. (Source: Pulp and Paper Technology, IMARC)

Writing and printing paper industry in India

The Indian writing and printing paper market, valued at USD 2,660 million in 2021, is projected to grow to USD 4,502.48 million by 2029, registering a CAGR of 6.80% between 2022 and 2029. This growth is driven by the rapid adoption of packaging solutions and the rising demand for home delivery services across the country.

Writing and printing paper demand is expected to increase 3-5% CAGR over the current demand by fiscal 2025. Enrolment of students (schools as well as higher education) is expected to increase at a relatively faster pace of 1.5-2% CAGR over the next years.

The demand for specialty paper is set to increase, mainly due to the rising need for tissue paper. From fiscal 2023 2025, this segment is expected to grow at a strong rate of 11-13%, reaching 1.9-2.3 million tonnes by fiscal 2027, 1.3-1.5 million tonnes in fiscal 2022. Specialty paper includes tissue, decor, thermal, fine printing, cigarette, and business card paper. Factors like urbanization, a focus on hygiene through government initiatives like Swachh Bharat, and the growing demand from healthcare and hospitality sectors will drive tissue paper consumption. The rise in cashless transactions and more billing from the growth of organized retailing will increase the demand for thermal paper.

(Source: The Pulp and Paper Times)

Growth drivers

Growing literacy: In 2025, Indias literacy rate is expected to be between 80-85%, which will increase the demand for educational materials, books, notebooks, and other printed items,

Opportunities leading to higher paper consumption in the education sector.

Food packaging and beverage: Indias food and beverage packaging market are expected to reach USD 38.27 billion in 2025, growing at a 6.52% CAGR. By 2030, it is forecast to grow to USD 52.49 billion. This growth is driven by the rising consumption of packaged food, greater awareness of quality products, and a growing demand for sustainable packaging solutions.

Growing population: Indias population in 2025 stood at 1.46 billion. The growth of the paper industry will help meet the increasing demands of this expanding population.

Rising income levels: Indias per capita income has risen compared to previous years. In the financial year 2024, it reached $2,500 (around Rs.1.8 lakh), up from approximately Rs.1.6 lakh in 2023. Back in 2015, Indias per capita income was Rs.86,647, marking an increase of nearly 188% over the past in income 10years.Thissignificant is driven by a growing population and increased demand for employment, which has boosted the countrys GDP per capita.

E-commerce expansion: The rapidly growing e-commerce sector drives the demand for strong packaging solutions. As online shopping increases, there is a rising need for corrugated boxes, wrapping papers, and other paper-based packaging materials.

Sustainability trends: Rising environmental concerns are encouraging both companies and consumers to look for more eco-friendly alternatives to plastic packaging. Paper is increasingly seen as a sustainable option, driving its use in packaging applications.

Government policies and regulations: Government initiatives that promote education and literacy are expected to increase the demand for paper products like textbooks, notebooks, and fiscal other educational materials. The policies supporting sustainable packaging solutions will further benefit the paper industry. from (Source: Mint, Mordor Intelligence, Worldometer, ClearTax)

Company overview

Emami Paper, established in 1981, is a prominent player in the Indian paper industry, known for producing newsprint, packaging boards, and writing and printing paper. The Company is committed to environmental sustainability, incorporating eco-friendly practices in its operations. With a diverse product range, expanded production capacities, and a strong presence in both domestic and international markets, Emami Paper has built a solid market position. Its focus on customer satisfaction and its trusted reputation have further cemented its leadership in the industry.

Focus on sustainable packaging: The increasing focus on environmentally sustainable packaging driven by both government regulations and evolving consumer preferences offers a valuable growth opportunity for the Company. Paper-based packaging, recognized for its eco-friendliness compared to plastic and other non-biodegradable materials, resonates well with these concerns. By strategically enhancing its investments in sustainable packaging solutions, the Company is well-positioned to leverage this emerging trend and strengthen its market relevance.

Rising demand for paper products: The rising demand for paper products in India presents substantial growth potential for the Company. This surge is fueled by factors such as population growth, greater awareness of environmental sustainability, and the ongoing expansion of the Indian economy. These dynamics collectively create a favorable environment for the Company to expand its operations and capture new market opportunities.

Growing e-commerce sector: The rapid growth of the e-commerce sector is fueling increased demand for paper-based packaging materials. This presents a strategic opportunity for the Company to strengthen its presence in the e-commerce packaging market. By tailoring and optimizing its product offerings to align with the specific needs of this expanding sector, the Company can effectively capture a larger market share and enhance its competitive edge.

Expansion of the digital printing industry: The rising popularity of digital printing valued for its precision and high-quality output, has led to an increased demand for specialized paper. This emerging segment presents a valuable opportunity for the Company to expand its product portfolio by catering to the unique requirements of the digital printing industry. By doing so, the Company can further diversify its offerings and broaden its customer base, strengthening its position in a dynamic and evolving market.

Threats

Raw materials: The rising costs of essential raw materials such as wood, hardwood, and softwood pose a potential challenge by increasing overall production expenses. Limited availability driven by reduced plantations, environmental concerns related to deforestation, or disruptions in international supply chains can adversely affect the Companys production capabilities and operational efficiency.

Imports: Low-cost imports, particularly from countries like China and Southeast Asia, present significant competitive threat by driving down domestic market prices. These imports, often priced aggressively, can undermine the Companys pricing power. The variations in quality or cost may influence customer preferences, potentially shifting demand away from domestically produced goods toward imported alternatives.

Environmental regulations: Tightening environmental regulations concerning emissions, waste management, and water usage can result in increased compliance costs for the Company. The growing emphasis on sustainability and eco-friendly operations may necessitate substantial investments in advanced technology and infrastructure to meet regulatory standards. While these changes support long-term environmental goals, they can also impact short-term profitability and operational flexibility.

Technological disruption: Technological advancements in alternative materials such as bioplastics and other innovative eco-friendly packaging solutions pose a potential threat to the demand for traditional paper products. As consumer and industry preferences evolve, the Company risks losing market share if it does not adapt. A lack of investment in modern, energy-efficient production technologies could diminish operational competitiveness, making it harder to sustain profitability in a rapidly changing industry landscape.

Risk management

The Company is exposed to various risks and has implemented robust systems, review mechanisms and procedures to identify and effectively manage these risks.

Raw material risk:

The Companys operations are significantly reliant on imported pulp, making its paper manufacturing processes vulnerable to supply disruptions.

Mitigation:

To counter this risk, the Company secures pulp from multiple sources, employs effective hedging strategies, and makes strategic purchases based on prevailing market conditions during supply shortages.

Asset utilisation risk:

Fluctuations in market demand can affect the optimal utilization of the Companys manufacturing assets.

Mitigation:

The Companys diversified product portfolio including newsprint, as well as writing and printing paper enables agile adjustments to market changes, supporting efficient asset utilization.

Talent risk:

The loss of skilled personnel may disrupt operations and affect productivity.

Mitigation:

By cultivating an engaging and supportive workplace culture, the Company has achieved high employee retention and reduced attrition.

Regulatory compliance risk:

Operating within a highly regulated sector, the Company is exposed to risks of non-compliance, which could lead to penalties and reputational harm.

Mitigation:

A dedicated compliance team ensures strict adherence to all regulatory requirements, maintaining timely and accurate compliance across all operations.

Currency risk:

Fluctuating foreign exchange rates can impact profitability due to the Companys dependence on both exports and imported raw materials.

Mitigation:

The Company proactively hedges all foreign currency exposures including loans through forward contracts to manage and minimize currency risks.

Economic risk:

Economic downturns or slowdowns can result in reduced demand for paper products, affecting revenue and profitability.

Mitigation:

By diversifying its product mix, the Company has reduced its reliance on any single segment, enhancing resilience against economic volatility.

Quality risk:

Inability to meet customer expectations in terms of product quality could damage the Companys reputation and diminish demand.

Mitigation:

The Company maintains rigorous quality assurance by adhering to international standards, as demonstrated by certifications such as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.

Liquidity risk:

A high debt burden can constrain liquidity and negatively impact profitability.

Mitigation:

Through timely debt repayments, the Company has effectively moderated its debt levels, thereby improving its liquidity position.

Cyber security risk:

Cyber threats such as data breaches and unauthorized access to sensitive information could lead to serious financial and reputational consequences.

Mitigation:

The Company has implemented a robust IT security framework, including a comprehensive security policy, access controls, firewalls, and endpoint protection to guard against malware, viruses, ransomware, and trojans.

Financial ratios

Particulars	2024-25	2023-24	Change in ratio	Explanation
Debtors turnover	7.50	7.62	(0.12)	Remain stable since last year.
Inventory turnover	7.36	7.09	0.27
Interest coverage ratio	2.36	3.55	(1.19)	Decrease in profitability.
Current ratio	1.04	1.02	0.02	Remain stable since last year.
Debt-equity ratio	1.14	0.78	0.36	Terms of certain optionally convertible preference shares are modified to be redeemable leading to their reclassification from equity to debt.
Operating EBITDA margin (%)	7.65%	12.04%	-4.39%
Operating profit margin (%)	6.30%	10.16%	-3.86%	Decrease in profitability.
Net profit margin (%)	1.35%	4.23%	-2.88%
Return on net worth	3.58%	11.45%	-7.87%

Human resource

The Company places strong emphasis on fostering an inclusive and engaged workforce, recognizing its employees as a vital asset to its success. It is committed to promoting diversity across the workplace and creating an environment that encourages participation and collaboration. To support continuous growth, the Company provides regular training and development programs, empowering employees to enhance their skills and advance professionally.

Sustainability

The Company has long been a proponent of environmental responsibility, actively implementing recycling techniques to minimize its ecological footprint. It is committed to sourcing wood pulp exclusively from suppliers certified by the Forest Stewardship Council (FSC), ensuring sustainable and ethical practices. The Companys dedication to responsible business practices is further demonstrated by its robust measures to protect and preserve the environment, highlighting its ongoing commitment to sustainability.

Internal control systems

The Company has implemented a robust internal control mechanism designed to ensure the efficient and secure execution of its operations. This system aims to prevent and detect fraud and errors, while maintaining accurate and complete accounting records in accordance with the Management Information System (MIS). The primary objective of these controls is to provide reasonable assurance regarding proper accounting practices, safeguard the companys assets from unauthorized use or loss, and ensure compliance with relevant regulations. To further strengthen its internal control processes, the company has engaged an independent external audit firm serve as its internal auditors. These auditors are tasked with periodically assessing the effectiveness of the companys internal control measures. Their audit reports, along with management comments and observations, are reviewed during audit committee meetings.

The audit committee plays a crucial role in reviewing the adequacy of the internal control environment, ensuring that the companys risk management systems comply with statutory mandates, and monitoring the implementation of corrective actions based on internal audit findings. The Company operates a comprehensive budgetary control system, with key performance indicators (KPIs) setforallsignificantoperational parameters.

These KPIs are regularly reviewed by the management team during management committee meetings, which are chaired by the whole-time director and attended by all departmental heads.

Cautionary statement

The MDA section may contain forward-looking statements regarding prospects. These statements involve various known and unknown risks and uncertainties, which may result in material differences between actual results and the forward-looking statements. In addition to changes in the macroenvironment, the emergence of a global pandemic like COVID-19 can introduce unforeseen, unprecedented, unascertainable, and continuously evolving risks to the Company and its operating environment. The estimates and figures presented in the report are based on certain assumptions made by the company, considering internal and external information that is currently available. However, the factors underlying these assumptions can change over time, leading to corresponding changes in the estimates on which they are based. It should be noted that forward-looking statements only reflect the Companys current intentions, beliefs, or expectations as of the date on which they were made.

The company is not obligated to revise or update any forward-to looking statements in light of new information, future events, or other factors.