G K P Printing & Packaging Ltd Management Discussions

[Pursuant to Regulation 34(2)(e) read with Schedule V (Para B) of the SEBI (Listing Obligations and

Disclosure Requirements) Regulations, 2015]

1. INDUSTRY STRUCTURE AND DEVELOPMENT

The global packaging business has experienced consistent growth over the last decade, driven by changes in substrate choice, the opening up of new markets and evolving ownership dynamics within the industry. Sustainability and environmental considerations continue to be emphasised, particularly in the developed regions, and a range of innovations catering to both paper-based and plastic packaging are being witnessed in the market.

The size of the global packaging industry has crossed USD 1 trillion, growing at a compound annual growth rate of approximately 4%. This growth is attributable to sustained demand from the e-commerce, transport and shipment, food and beverage, personal care, household care and healthcare industries for convenience-based packaging. Advancement in packaging technology to make products more attractive to the end consumer, the adoption of eco-friendly packaging, and continuing investment in research and development of new and innovative packaging solutions remain the principal factors driving growth across the globe.

In India, the demand for corrugated packaging is closely linked to the performance of the fast moving consumer goods, e-commerce, food processing, pharmaceutical, textile and engineering sectors. The progressive substitution of single-use plastics by paper-based and recyclable packaging, together with the growth of organised retail and online commerce, continues to support the medium-term demand outlook for corrugated boxes. At the same time, the industry remains sensitive to the price of kraft paper and other paper-based inputs, which constitute the largest element of cost.

Your Company is engaged in the manufacture of corrugated boxes and in trading in allied paper and packaging products, operating from its facility at Palghar, Maharashtra. The Company also holds a unit at Vapi, Gujarat. The Companys products are supplied principally to customers in the fast moving consumer goods, garments, food and beverage, liquor and allied industries.

2. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year 2025-26, your Company recorded revenue from operations of Rs. 2,724.14 Lakhs as against Rs. 3,012.31 Lakhs in the previous year, a decline of approximately 9.57%. Total income, including other income, stood at Rs. 2,758.38 Lakhs as compared with Rs. 3,038.13 Lakhs in the previous year. The Company earned a Profit Before Tax of Rs. 52.18 Lakhs and a Profit After Tax of Rs. 51.43 Lakhs, as against Rs. 85.26 Lakhs and Rs. 85.16 Lakhs respectively in the previous year.

The reduction in profitability is principally attributable to the lower volume of revenue during the year, coupled with an increase in finance costs from Rs. 35.82 Lakhs to Rs. 57.12 Lakhs. These were partly offset by a reduction in depreciation and amortisation expense from Rs. 87.01 Lakhs to Rs. 80.54 Lakhs and by continued control over manufacturing and administrative overheads. Notwithstanding the softer year, the Company sustained profitable operations and strengthened its balance sheet, closing the year with Other Equity of Rs. 91.83 Lakhs as against Rs. 40.41 Lakhs at the beginning of the year, and a net worth of Rs. 2,291.71 Lakhs.

A summary of the financial performance for the year, with the corresponding figures for the previous year, is set out below:

Particulars	FY 2025-26	FY 2024-25
Revenue from operations	2,724.14	3,012.31
Other income	34.24	25.82
Total income	2,758.38	3,038.13
Employee benefit expenses	198.66	189.96
Finance costs	57.12	35.82
Depreciation and amortisation expense	80.54	87.01
Other expenses	368.03	356.43
Total expenses	2,706.20	2,952.87
Profit before tax	52.18	85.26
Profit after tax	51.43	85.16
Equity share capital	2,199.88	2,199.88
Other equity	91.83	40.41
Net worth	2,291.71	2,240.29

3. OUTLOOK

Your Company continues to leverage product quality assurance and sound trade practices in order to move progressively towards higher value-added products, and to operate its facilities at optimum scale. The emphasis of the management remains on operating the manufacturing facility at optimum capacity utilisation, servicing customers consistently and reliably, and maintaining sound financial discipline through the timely servicing of the Companys obligations.

The Company has pursued, and will continue to pursue, alternative sourcing strategies in order to reduce its exposure to volatility in the price of kraft paper and other paper-based inputs. Measures have also been put in place to mitigate the risk of an increase in inventory carrying cost and material handling charges, and to reduce the risk of bad debts through closer monitoring of receivables and credit exposure. The Company maintains a satisfactory solvency position and a viable outlook in respect of its ability to meet its long-term and short-term obligations, and continues to observe good financial discipline through the timely payment of interest and other liabilities.

With the continued increase in government support and initiatives to promote micro, small and medium enterprises through investment incentives, tax benefits and subsidies, the industry is expected to grow over the coming years. Your Company always strives to cater to customised requirements, and has achieved its target revenues with a high level of customer satisfaction. With robust underlying demand for the Companys products, the Company has the potential to add capacity in the coming period.

As explained in the Notice convening the ensuing Annual General Meeting, the Board has proposed the divestment of the Companys manufacturing unit at Vapi, Gujarat, which has remained under-utilised, and the redeployment of the proceeds in the Companys working capital requirements, the reduction of its borrowings and its existing operations at Palghar. The proposal is subject to the approval of the Members and to the other approvals referred to in that Notice.

4. COMPETITIVE LANDSCAPE

The Indian corrugated box market is highly fragmented, with the presence of around 30,000 organised and unorganised players. There are no regulations in the market governing the entry of players and, since it is a relatively low capital-intensive business, new participants continue to enter the market. Competition is accordingly driven by price, consistency of quality, reliability of delivery and proximity to the customers own manufacturing location.

With a diverse geographical presence across India, your Company fulfils the requirements of its customers for both carton and flexible packaging, which affords the Company a competitive advantage. The Company has been continuously striving to keep its costs to the minimum possible level in order to compete effectively with both Indian and global competitors. India is progressively becoming more competitive in relation to global manufacturers as environmental regulation in other jurisdictions becomes as stringent as that in India.

5. OPPORTUNITIES AND THREATS Opportunities

(a) Sustained growth in e-commerce, organised retail and food processing, each of which is a significant consumer of corrugated packaging.

(b) The progressive substitution of single-use plastic packaging by paper-based and recyclable alternatives, which favours the Companys product range.

(c) Continued government support for micro, small and medium enterprises through investment incentives, tax benefits and subsidies.

(d) The opportunity to move up the value chain through better printing, higher grade board and value-added packaging solutions.

(e) The Companys ability to serve requirements for both carton and flexible packaging from a single source.

Threats

(a) Volatility in the price of kraft paper and other paper-based inputs, which constitute the largest element of the Companys cost of materials.

(b) The highly fragmented nature of the industry, with a large unorganised segment and consequent pressure on realisations.

(c) Dependence on the growth of the underlying end-user industries, including food and beverage, chemicals, glassware, ceramics, paper, electronics, textiles, personal care and household products.

(d) The working capital intensity of the business and the risk of delayed realisation from customers.

(e) The risk that customers may seek alternative packaging technology, and the Companys ability to anticipate and respond to such change.

6. RISKS AND CONCERNS

The Company has in place a framework for the identification, assessment and mitigation of the risks to which its business is exposed, which is reviewed by the Audit Committee and the Board. The principal risks identified, and the manner in which the Company seeks to address them, are set out below.

(a) Raw material price risk. The price of kraft paper and other paper-based inputs is subject to fluctuation. The Company mitigates this risk through diversified sourcing, negotiated supply arrangements and the periodic revision of selling prices.

(b) Credit and receivables risk. The Trade Receivables Turnover Ratio declined from 2.44 times to 1.95 times during the year, and the Company recognised bad debts of Rs. 7.47 Lakhs. The Company monitors credit exposure on a customer-wise basis and carries an allowance for expected credit loss determined in accordance with Ind AS 109.

(c) Interest rate and liquidity risk. Finance costs increased from Rs. 35.82 Lakhs to Rs. 57.12 Lakhs during the year. The Company manages this exposure by keeping its borrowings at a modest level relative to net worth, the Debt-Equity Ratio having improved from 0.09 times to 0.06 times.

(d) Customer concentration risk. A portion of the Companys sales is concentrated among a limited number of customers. The Company seeks to broaden its customer base progressively.

(e) Demand cyclicality. Any significant decline in demand from the end-user industries served by the Company may materially and adversely affect its business, results of operations and financial condition.

(f) Regulatory and compliance risk. The Company is subject to the Companies Act, 2013, the Listing Regulations and a range of environmental, labour and tax legislation. Compliance is monitored by the management and reported to the Board.

7. SEGMENT REVIEW AND ANALYSIS

The Chief Operating Decision Maker reviews the Companys financial and operating performance as a single operating segment and allocates resources accordingly. Accordingly, the Company has only one reportable operating segment, namely its principal business activity, and one geographical segment, substantially all of its operations being carried out in India. The disclosure requirements of Ind AS 108 relating to multiple reportable operating segments are therefore not applicable. Reference is invited to Note 34 of the audited financial statements.

The Company is engaged in the production of corrugated boxes, which are used mainly in the packaging industry, and its products are sold principally to customers operating in the fast moving consumer goods, garments, liquor and allied sectors. Any slowdown in these sectors may adversely affect the Companys business operations. A decision by customers to seek alternative technology, coupled with the development of further alternatives and any inability on the part of the Company to respond to such changes, may adversely affect its business and results of operations. The Companys ability to anticipate changes in technology, and to supply new and enhanced products successfully and on a timely basis, will be a significant factor in its ability to grow and to remain competitive. In addition, the Companys business, operations and prospects may be affected by policies, statutory and regulatory requirements and developments affecting its customers industries in India.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a well-established and comprehensive internal control system and structure across the value chain, to ensure that its assets are safeguarded, that transactions are authorised, recorded and reported correctly, and that operations are conducted in an efficient and cost-effective manner. In order to ensure the orderly and efficient conduct of business, the Company has put in place systems which include documented policies and procedures, information technology systems, delegation of authority, segregation of duties, internal audit by a third party and a review framework.

M/s. Makwana Sweta & Associates, Chartered Accountants, have been appointed as the Internal Auditors of the Company pursuant to Section 138 of the Companies Act, 2013. In order to maintain its objectivity and independence, the internal audit function reports to the Chairman of the Audit Committee. Significant audit observations, and the corrective action taken thereon, are presented to the Audit Committee, and the Company undertakes corrective action in the respective areas so as to strengthen its controls. The Statutory Auditors have also reported on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting, and their report does not contain any adverse remark in this regard.

9. DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company enjoyed cordial and harmonious industrial relations at all levels of the organisation throughout the year under review. The Company believes that the industry has tremendous potential to have a positive impact on society, the nation and the world. Its employees are major stakeholders and their efforts have a direct bearing on the business prospects of the organisation. The employees have extended very productive cooperation to the efforts of the management to carry the Company to greater heights, and the Company considers its employees to be its biggest competitive advantage.

The Company takes initiatives such as training and development in order to improve the performance of its people, and has taken various steps to improve and enhance their skills. Industrial relations remained cordial at the Companys plant. The Company has continued to give special attention to human resources and to overall development. Employee benefit expenses for the year amounted to Rs. 198.66 Lakhs as against Rs. 189.96 Lakhs in the previous year.

The number of permanent employees on the rolls of the Company as at 31st March, 2026 was 14.

The Company has in place a policy on the prevention of sexual harassment at the workplace, in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The disclosure in respect of complaints received and disposed of during the year forms part of the Directors Report.

10. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The key financial ratios for the financial year 2025-26, compared with the financial year 2024-25, are set out below. Reference is invited to Note 43 of the audited financial statements.

Ratio	FY 2025-26	FY 2024-25	% Change
A Current Ratio (times)	2.60	2.39	8.61%
B Debt-Equity Ratio (times)	0.06	0.09	(28.80%)
C Debt Service Coverage Ratio (times)	1.75	2.12	(17.68%)
D Return on Equity (%)	2.27%	3.87%	(41.43%)
E Inventory Turnover Ratio (times)	3.56	4.06	(12.40%)
F Trade Receivables Turnover Ratio (times)	1.95	2.44	(19.78%)
G Trade Payables Turnover Ratio (times)	2.09	2.27	(8.00%)
H Net Capital Turnover Ratio (times)	1.50	1.74	(13.84%)
I Net Profit Ratio (%)	1.89%	2.83%	(33.22%)
J Return on Capital Employed (%)	4.49%	5.05%	(11.16%)
K Return on Investment (%)	11.24%	5.40%	108.32%

Reasons for variance of more than 25%

(a) Debt-Equity Ratio decreased from 0.09 times to 0.06 times, on account of a decrease in the borrowings of the Company.

(b) Return on Equity decreased from 3.87% to 2.27%, on account of the decrease in the net profit of the Company from Rs. 85.16 Lakhs to Rs. 51.43 Lakhs.

(c) Net Profit Ratio decreased from 2.83% to 1.89%, on account of the decrease in revenue from operations as compared with the previous year.

(d) Return on Investment increased from 5.40% to 11.24%, on account of an increase in the income generated from invested funds together with a decrease in the invested funds as compared with the previous year.

11. RETURN ON NET WORTH

The Return on Net Worth of the Company, measured as Profit After Tax as a percentage of average net worth, was 2.27% for the financial year 2025-26 as against 3.87% for the financial year 2024-25, a decrease of 41.43%. The decline is attributable entirely to the reduction in the Profit After Tax of the Company from Rs. 85.16 Lakhs to Rs. 51.43 Lakhs, which in turn arose from the lower volume of revenue during the year and the increase in finance costs, the net worth of the Company having in fact increased from Rs. 2,240.29 Lakhs to Rs. 2,291.71 Lakhs over the same period. There has been no return of capital, no impairment of assets and no change in accounting policy contributing to the decrease.

12. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company for the financial year ended 31st March, 2026 have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, read with Section 133 of the Companies Act, 2013. The Company has not adopted any treatment different from that prescribed by the applicable Indian Accounting Standards, and no explanation in that regard is therefore required.

13. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report which describe the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Such statements are based upon certain assumptions and expectations of future events, and actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand and supply and the price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations and tax laws, and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or event.