Essen Speciality Films Ltd Management Discussions

Forward looking statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 as applicable. The Management of Creative Peripherals and Distribution Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements, reflect in a true and fair manner, the state of affairs and profit for the year.

The following discussions on our financial condition and result of operations should be read together with our audited financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Creative" are to "Creative Peripherals and Distribution Limited".

Global Plastic Industry Overview-

The global plastics market was valued at USD 712.0 billion in 2023 and is projected to grow from USD 740.48 billion in 2024 to USD 1,013.4 billion by 2032, reflecting a CAGR of 4.0% during the forecast period. This growth is driven by increasing demand across sectors such as packaging, automotive, construction, and healthcare.

The Asia-Pacific region continues to dominate the market, fueled by rapid industrialization, urbanization, and a growing middle-class population. China and India, in particular, are witnessing significant demand due to their expanding manufacturing bases and infrastructure development.

Environmental concerns are prompting manufacturers to develop recyclable and sustainable plastic products. Technological advancements in biodegradable plastics and recycling processes are gaining traction, aligning with global efforts to reduce plastic pollution.

Furthermore, the plastic waste management market is gaining importance, with a valuation of USD 37.3 billion in 2023 and projected to reach USD 50.4 billion by 2032, growing at a CAGR of 3.4% during the forecast period. This underscores the industrys shift towards sustainable practices and the circular economy.

Source: https://www.statista.com/topics/5266/plastics-industry/

Plastics Market Trends

Increasing Demand for Engineering Plastics Due to their properties to favour the market growth of engineering plastics being more robust and durable than regular ones have increased product demand. They provide better thermal and mechanical properties and are lightweight and cost-effective. The rising need for greater polymer solutions for different end-use industries, such as componentry, machinery, and construction, supports the market expansion. The rising demand for metal substitution increasingly leads to broader usage of engineering polymers in various industries. These materials offer more decisive benefits over metal structures in automotive engineering, construction, solar, and water industries.

Plastics Market Growth Factors

Rising Demand from the Packaging Industry to Drive the Consumption of Plastics

Plastics demand is advancing in widespread industries, such as food & beverage, pharma, consumer goods, automotive, and electrical & electronics. The increasing need for packaging from the food & beverage industry drives product consumption globally. Food manufacturers prefer packaging that minimizes food quality degradation and avoids contamination. The ability of plastics to act as a hurdle between food products and the external environment is fuelling the demand. Besides, the ability of polymers to defend against physical stress and offer high durability is increasing their usage in sports goods, fashion wear, toy-making, and polymer clay. Moreover, they are easy to mold and offer flexibility to produce packaging in any size and shape. Their utility is surging in the textile industry due to their high durability, elasticity, and enhanced visual appeal. Moreover, polymers are also rigid, making them suitable for packing automotive and electrical spare parts. Thus, the increasing application across food & beverage, pharma electrical & electronics, textile, automobile, and consumer goods industries is augmenting the plastics market growth.

Rising Food & Beverage Industry to Boost Packaging Segment Revenue

The packaging segment will hold the highest plastics market share and grow at the highest CAGR during the industry forecast period. This growth is associated with high product demand from the pharma, food & beverage packaging industry. The increasing use in manufacturing construction products, such as films for windows, floor covering, and pipes and fittings, is boosting product adoption in the infrastructure & construction industry.

Similarly, the rapidly growing consumer goods/lifestyle and automotive & transportation end-use industries are expected to aid the market in the assessment period. The rising adoption of polymers in the automobile industry to increase vehicle efficiency and the vehicle components life is responsible for the growth in the market. These polymers are easily moldable, flexible, and highly durable, which makes them the most favored material for manufacturing numerous products such as housewares, iceboxes, toys, packaging materials, and containers.

The increasing utilization of polymers in the healthcare sector can be credited to their property of guarding against contaminants by acting as a hurdle. Healthcare products, such as bandage strips, gloves, blood bags, syringes, and prosthetics, are manufactured using several polymers. The electrical & electronics industry produces light fittings, household appliances, and switches due to their insulating properties.

Rise in the Demand for Electric Vehicles to Drive the Plastics Market

The hike in the price of fossil-based fuels such as petroleum and diesel has created a demand for alternative energy sources in the automotive industry. Therefore, automotive manufacturers have come up with electric energy-based vehicles that deliver nearly the same output as traditional vehicles. These EVs are capable of providing great efficiency owing to the utilization of advanced plastic materials and high-power electric motors. The consumption of plastics makes the vehicle lighter, faster, and energy efficient. On the other side, the emerging trend of EVs resolves the greenhouse gas and additional toxic gas emissions in nature. Therefore, the governments of different countries are providing subsidiaries for hybrid electric vehicles (HEVs) and EV holders. These factors lead to an escalating consumption of plastics in the automotive industry.

Asia Pacific is estimated to hold the largest market share, accounting for USD 278.15 billion in 2023. China is anticipated to remain the leading country in the region due to the abundant availability of raw materials at low rates. This is further minimizing the hurdles involved in plastics production. The growth in Asia Pacific is also attributed to the strong growth in the packaging and construction industries. Additionally, rising demand from the consumer goods industry for manufacturing toys, textiles, and sports goods is expected to drive the market in the region.

Regional Insights

Asia Pacific is estimated to hold the largest market share, accounting for USD 278.15 billion in 2023. China is anticipated to remain the leading country in the region due to the abundant availability of raw materials at low rates. This is further minimizing the hurdles involved in plastics production. The growth in Asia Pacific is also attributed to the strong growth in the packaging and construction industries. Additionally, rising demand from the consumer goods industry for manufacturing toys, textiles, and sports goods is expected to drive the market in the region.

In North America, the U.S. held the largest market share, backed by increasing product demand from the electrical & electronics, healthcare & pharmaceuticals, and packaging industries. Concerns over plastics pollution and the development of recyclable technologies have increased the adoption of recycled plastics in the region.

Europe is anticipated to have substantial growth in this market, owing to the rising demand from the automotive sector in the region. Additionally, properties, including excellent heat resistance, corrosion inhibition, electric Insulation, and low density, support the adoption of polymers in Europe.

The key factor influencing the growth in the Middle East & Africa will be the growing demand from the textile and packaging industries. The surging demand for lightweight packaging and the use of polymers over metal and glass are set to boost the regional market. Furthermore, Latin America is projected to grow due to rising urbanization and the growing number of companies specializing in industrial packaging solutions.

Source: https://www.fortunebusinessinsights.com/plasticss-market-102176

India Plastic Industry Overview

The Indian plastics industry is one of the leading sectors in the countrys economy. The history of the plastics industry in India dates back to 1957 with the production of polystyrene. Since then, the industry has made substantial progress and has grown rapidly. The industry is present across the country and has more than 2,500 exporters. It employs more than 4 million people in the country and constitutes 30,000 processing units; among these, 85-90% belong to small and medium enterprises. India manufactures various products such as and linoleum, houseware products, cordage, fishnets, floor coverings, medical items, packaging items, plastics films, pipes, raw materials, etc. The country majorly exports plastics raw materials, films, sheets, woven sacks, fabrics, and tarpaulin. The Government of India intends to take the plastics industry from a current level of Rs. 3 lakh crore (US$ 37.8 billion) of economic activity to Rs. 10 lakh crore (US$ 126 billion) in 4-5 years.

Trend in Export

In FY25 (until January 2025), Indias plastic exports stood at Rs. 89,296 (US$ 10.34 billion). During this period, the exports of plastic films & sheets, FIBC woven sacks woven fabrics & tarpaulin and Packaging items flexible rigid grew by 19.6%, 17.2%, and 10.1%, respectively, over the same period last year.

The cumulative exports of plastics and related materials during FY23 were valued at US$ 11.96 billion. This was a 10.4% decrease from FY22 exports valued at US$ 13.35 billion. Plastic raw materials were the largest exported category and constituted 27.76% of the total exports in FY23; it recorded a growth of 21.5% over the previous year. Plastic films and sheets were the second largest category, comprising 15.13% of the total

exports, but declined by 10.6% over the previous year.

In June 2024, the exports of plastics and linoleum from India were valued at US$ 980.8 million. During the same period, medical items of plastics; FRP & composites; packaging items; cordage fishnets & monofilaments and floorcoverings, leather cloth, & laminates recorded strong growth. The cumulative exports for FY25 (April-January) increased by 9.6% YoY to US$ 10.34 billion.

Trend in plastics export by India

India reported merchandise exports of USD 36.4 billion in January 2025, lower by 2.4% from USD 37.3 billion in January 2024. Cumulative value of merchandise exports during April 2024 January 2025 was USD 358.9 billion as against USD 354 billion during the same period last year, reflecting a modest 1.4% growth.

Government Initiatives

The Plastic Export Promotion Council (PLEXCONCIL) has set a target to increase the plastic exports of the country to US$ 25 billion by 2027. There are multiple plastic parks that are being set up in the country in a phased manner that will help improve the plastic manufacturing outputs of the country. Under the plastic park schemes, the Government of India provides funds of up to 50% of the project costs or a ceiling cost of Rs. 40 crore (US$ 5 million) per project.

Government initiatives like "Digital India", "Make in India", and "Skill India" will also boost Indias Plastic industry. For instance, under the "Digital India" program, the government aims to reduce the import dependence on products from other countries, which will lift the local plastic part manufacturers.

The government also launched a program for building Centres of Excellence (CoEs) to develop the existing petrochemical technology and promote the research environment pertaining to the sector in the country. This will aid in promoting and developing new applications of polymers and plastics in the country. Additionally, about 23 Central Institute of Plastics Engineering & Technology (CIPET) have been approved to accelerate financial and technological collaboration for promoting skills in the chemicals and petrochemicals sector.

Source: https://www.ibef.org/exports/plastics-industry-india

Decorative Plastic Industry

The decorative plastic industry primarily involves the manufacturing, development, and application of plastics for aesthetic and protective enhancements across various sectors, with significant focus on coatings, laminates, artificial leather, and specialty films. This segment caters to both functional and visual needs in residential, commercial, and industrial spaces.

Key Highlights

Market Size & Growth: The global decorative plastic coatings market was valued at $25.45 billion in 2024, projected to reach $37.12 billion by 2033 at a CAGR of 5.5%. The decorative plastic and paper laminates market is also significant, expected to hit $112.96 billion by 2029.

Major Segments: Products include decorative coatings, PVC artificial leather, clear sheets, overlay materials, wall coverings, banner sheets, and decorative laminates. Laminates made with craft paper and printed layers are widely used for furniture, cabinets, flooring, and wall panels.

Applications:

P Automotive: Exterior and interior decoration, protection from environmental factors. P Construction: Interior/exterior surfaces, flooring, wall coverings.

P Consumer Goods: Decorative finishes to enhance marketability and appearance.

Innovation Drivers: There is a strong trend toward eco-friendly products, such as water-based coatings with reduced VOC emissions, and customization of textures and finishes. Technological advancements include scratch-resistant coatings, UV stability, and the use of 3D printing in finish applications.

Regional Leaders: Asia-Pacific, especially China and India, dominates consumption. Thailand is notable for

the production of PVC artificial leather and films, with Thai factories exporting to over 50 countries.

Leading Companies: Key global and regional players include PPG Coatings Services, BASF, Nippon Paint,

Decorative Plastic Company Limited (Thailand), and several others.

Challenges: Raw material price volatility, regulations on emissions, and the need for investments in

technology and R&D are challenges faced by manufacturers in this space.

Examples of Products & Companies

Decorative Plastic Company Limited (Thailand): Manufactures PVC artificial leather, clear sheets, overlays,

membrane wood grain PVC deco sheets, and other high-quality PVC products.

Applications in Interior Design : Decorative laminates are preferred for stylish, durable, and low-

maintenance surfaces in furniture, cabinets, and flooring.

Industry Trends :

P Rapid urbanization, growth in disposable incomes, and expanding construction activities are fueling demand.

P E-commerce facilitates broad access and customization for consumers.

P Smaller players focus on cost-competitive, differentiated products and sustainable practices.

The decorative plastic industry is integral to surface enhancement across automotive, construction, consumer goods, and furniture, experiencing healthy growth with continued innovation and expanding opportunities in global market.

Source: https://www.verifiedmarketreports.com/product/decorative-plastic-coatings-market/ https://www.openpr.com/news/3794156/decorative-plastic-and-paper-laminates-market-facts-figures https://dplast.co.th/en/about-2/ https://www.linkedin.com/company/decorative-plastic-company-limited/about/

About Essen Speciality Films Limited

Essen Speciality Films Limited (ESFL) is a leading Indian manufacturer and exporter of specialized plastic products in home improvement and home furnishings, serving numerous Fortune 500 retailers and OEMs across 24 countries. ESFL is a recognized Two-Star Export House, an exclusive global supplier to IKEA for select products (twice awarded "Best Supplier of the Year"), operates a fully-integrated, sustainable, technologically advanced plant certified to ISO 9001:2015, and is part of the Rajoo Group.

Strong & Diverse Product Portfolio

Bath Area

P PEVA Shower Curtains and Liners

P Shower Curtain Accessories - Curtain Rings, Hooks, Anti-draft clips, Magnets, Glass Stones P Bath Tub and Shower Mats

Kitchen & Dinning

P Chopping Board

P Table Cloth with NonWoven Backing P Disposable Party Table Cover P EVA foam Placemats and Coasters P PP Placemats

Storage & Organization

P Shelf Liners/ Drawer Liners P Desk Mat

Customized Products

P Delivery Bag

P Reusable Shopping Bags P Spa slippers P Baby Shower Caps P Plant Pots P Bottle carrier P Films/ Rolls

Fitness & Lifestyle

P Yoga Mats

P Interlocking Foam tiles P Kids Puzzle Mats

Home Decor

P Artificial Plant P Artificial Flowers

Outdoor & Utility

P Tarp / Tarpaulin P Vehicle covers P Pond Liner P Rain gear & Poncho

FINANCIAL OVERVIEW

The financial performance of the Company for the year ended March 31, 2025, is as follows:

Total revenue from operations at Rs. Rs. 173.00 crore in FY25, as against Rs. 142.68 crore in FY24, a YoY increase of 21.25%

EBITDA (excluding Other Income) was at Rs. 21.07 crore in FY25 as against Rs. 23.93 crore in FY24

Profit after Tax was Rs. 11.71 crore in FY25 compared to Rs. 14.24 crore in FY24

Basic EPS stood at Rs. 4.71 in FY25 as compared to Rs. 5.73 in FY24

RESOURCES AND LIQUIDITY

As on March 31, 2025, the Networth stood at Rs. 153.25 crore and the total debt was at Rs. 17.46 crore.

The cash and cash equivalents at the end of March 31, 2025, were Rs. 25.29 crore.

The debt-to-equity ratio of the Company stood at 0.11 as on March 31, 2025.

Details of Significant Changes in the Key Financial Ratios and Return on Net Worth

The detail of significant changes (25% or more) in the key financial ratios and any changes in Return on Net

Worth of the Company including explanations therefor are given below:

	FY	FY	(%)
Particulars	2024-25	2023-24	Variance
Debtors Turnover (in times)	8.02	7.89	1.59%
1 Inventory Turnover (in times)	3.04	4.08	-25.57%
2 Interest Coverage Ratio (number of times)	11.47	22.06	-48.00%
3 Current Ratio (number of times)	3.81	13.66	-72.14%
4 Debt Equity Ratio (number of times)	0.11	-	100.00%
Operating Profit Margin (%)	17.90%	20.88%	-14.29%
5 Net Profit Margin (%)	6.77%	9.98%	-32.20%
Return on Net worth (%)	7.64%	9.95%	-23.24%

Explanation :

1. It is reduced due to higher inventory holding periods during the year.

2. It is reduced due to increase in borrowings during the year.

3. It is reduced due to increase in current liability as compare to current assets.

4. Variance due to increase in borrowings during the year.

5. It is declined from pointing towards margin erosion possibly due to increased costs or pressure on sales pricing.

SEGMENT WISE BUSINESS PERFORMANCE

The company is engaged in the business of manufacturing of plastic and home decor products. The Company does not have more than one reportable segment in terms of AS 17 hence segment wise reporting is not applicable. As compared to other players in this segment, Company continues to be among the top performers in terms of growth in sales and profits and market share.

RISKS AND CONCERNS

Like every business, the Company faces risks, both internal and external, in the undertaking of its day-to-day operations and in pursuit of its longer-term objectives. A detailed policy drawn up and dedicated risk workshops are conducted for each business vertical and key support functions wherein risks are identified, assessed, analyzed and accepted / mitigated to an acceptable level within the risk appetite of the organization. The risk registers are also reviewed from time to time.

The Company faces the following Risks and Concerns:

Credit Risk

To manage its credit exposure, Essen has determined a credit policy with credit limit requests and approval procedures. Company does its own research of clients financial health and project prospects before bidding for a project. Timely and rigorous process is followed up with clients for payments as per schedule. The Company has suitably streamlined the process to develop a focused and aggressive receivables management system to ensure timely collections.

Interest Rate Risk

The Company has judiciously managed the debt-equity ratio. It has been using a mix of loans and internal cash accruals. The Company has well managed the working capital to reduce the overall interest cost.

Competition Risk

This risk arises from more players wanting a share in the same pie. Like in most other industries, opportunity brings with itself competition. We face different levels of competition in each segment, from domestic as well as multinational companies. The Company has created strong differentiators in project execution, quality and delivery which make it resilient to competition. Furthermore, the Company continues to invest in technology and its people to remain ahead of the curve. A strong, stable client base consisting of large and mid-sized corporations further helps to insulate the Company from this risk. We counter this risk with the quality of our infrastructure, our customer-centric approach and our ability to innovate customer specific solutions, focusing on pricing and aggressive marketing strategy, disciplined project executions, coupled with prudent financial and human resources management and better control over costs. Thus, we do not expect to be significantly affected by this risk.

Input Cost Risk

Our profitability and cost effectiveness may be affected due to change in the prices of raw materials, power and other input costs. Some of the risks that are potentially significant in nature and need careful monitoring are Raw Materials prices, availability of Power etc.

Liability Risk

This risk refers to our liability arising from any damage to cargo, equipment, life and third parties which may adversely affect our business. The Company attempts to mitigate this risk through contractual obligations and insurance policies.

OPPORTUNITIES:

Technology Trends

Innovation in raw materials such as Nano-composite reinforcing agents and bio-de-gradable polymers

Plastics are replacing wood, metals, natural rubber and other expensive engineered plastics

Regulatory Trends

Increasing emphasis on safe, odour-free, sustainable and green materials

Stringent CO2 emissions regulations and guidelines especially in automotive industry

Raw Material Trends

The fluctuation in the price of crude oil or natural gas has an impact on plastic industry

Plastic additives market to register highest growth in packaging and automotive applications

Application Trends

Increasing demand for lightweight materials replacing glass, rubber and wood in numerous applications is driving plastics market

Replacement of heavy metals in dyes and pigments applications by plastics

Supplier Power

Factors such as presence of few supplier and large number of buyers are leading to greater supplier power

Multiple plastics applications have spurred higher product variety demand

THREATS

Competition from local and multinational players

Execution risk

Regulatory changes

Credit squeeze on lending by NBFCs

Input Cost risk

Attraction and retention of human capital

Technological Advancements

The most critical, challenges that Indian plastic industry is facing today is the "image of plastics" and unmindful ban on some plastic products in some states in India. Some of the myths perpetuated about plastics are:

Feared as being toxic

Maybe harmful to the soil

Could cause acid rain

Is not environment friendly

Has high carbon foot print

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorized, recorded and reported correctly. The Company also implemented effective systems for achieving highest level of efficiency in operations, to achieve optimum and effective utilization of resources, monitoring thereof and the compliance with provisions all laws including the Companies Act, 2013, Listing Agreement, directions issued by the Securities and Exchange Board of India, labour laws, tax laws etc. It also aimed at improvement in financial management, and investment policy. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, information security, project appraisal, and corporate governance. A qualified and independent Audit Committee of the Board of Directors also reviews the internal control system and its impacts on improvement of overall performance of the Company.

HUMAN RESOURCES

The Companys HR philosophy is to establish and build a high performing organization, where everyone is motivated to perform to the fullest capacity: to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. As on March 31, 2025, Company is giving direct employment to 1,195 employees. Industrial relations are cordial and satisfactory.

OUTLOOK

Industry projections continue to paint a favorable medium-term landscape for the decorative plastics and home-furnishing sectors buoyed by increasing urbanisation, rising disposable incomes, and growth in organized retail and e-commerce. Globally, the decorative plastics market is expected to expand substantially in the coming years, driven by consumer demand for aesthetic, lightweight, and functional home decor solutions.

Export-led growth and diversification: ESFL has steadily diversified its customer base reduced reliance on IKEA (from ~95% in FY20 to ~34% in FY24) and broadened its client portfolio to include Decolin Inc., Shurtape Technologies, and others. This strategic diversification underpins both growth and margin resilience. Cash accruals, which stood at Rs. 25 crore in FY25 and projected to grow to Rs.26 28 crore over FY27 28, enabling self-funded growth and stability.

Strong capital structure: The company maintains a robust balance sheet with low debt and healthy liquidity, supported by IPO proceeds and consistent operating performance. With negligible reliance on external borrowings, debt coverage remains comfortable, positioning the company to pursue strategic investments without compromising financial flexibility.

Raw material and forex trends: Margin performance will remain sensitive to volatility in crude-related inputs (like EVA, LDPE, PP) and currency fluctuations. While partial hedging through forwards provides some mitigation, the Company must continue efficient RM sourcing, formulation optimization, and dynamic pricing to manage profitability.

Key growth drivers ahead:

Premiumization & innovation: Launch of eco-friendly product lines (e.g., recyclable, low-VOC films), exploration of new textures, and shopper-centric design enhancements will support premium pricing and enhance customer engagement.

Category & regional expansion: The push into adjacent categories (e.g., artificial plants/flowers, outdoor &

utility products) and deeper penetration in developed markets will offer incremental traction.

Operational excellence: Focused on productivity, automation, and working-capital efficiency to sustain

cost discipline and margin improvement.

Overall, Essen is well-positioned to capitalize on evolving consumer preferences and global demand trends balancing profitable growth, sustainability orientation, and financial prudence to deliver stakeholder value over FY26 and beyond.