Gala Global Products Ltd Management Discussions

OVERVIEW OF THE INDUSTRY

The Indian stationery, printing and paper-based products industry continues to remain an important part of the education, office, institutional and commercial ecosystem. Demand for stationery products is supported by the continuing expansion of educational infrastructure, increasing enrolment, office and institutional requirements, organised retail and the growth of e-commerce channels.

The Indian stationery market is also witnessing gradual changes in consumer preferences, with increasing demand for branded, innovative, value-added and environmentally conscious products. At the same time, the industry remains highly competitive and fragmented, with manufacturers and distributors competing on product quality, pricing, product variety, distribution reach and customer service.

The printing industry is undergoing structural changes owing to the increasing adoption of digital media. While traditional print applications face pressure from digital substitution, demand for specialised, short-run, customised, educational and packaging-related printing continues to provide opportunities for industry participants. Industry estimates indicate that packaging is becoming an increasingly important application within the Indian printing industry, while digital printing is gaining importance due to its flexibility, shorter turnaround times and suitability for customised requirements.

The Indian paper industry continues to benefit from demand arising from education, packaging, retail, e- commerce and commercial applications. However, volatility in paper and other input prices remains an important factor affecting the margins of businesses operating in paper-intensive segments.

-I- BUSINESS OVERVIEW

Gala Global Products Limited (Gala or the Company) operates in the stationery, educational products and printing space. The Companys business portfolio includes school and office stationery, educational products and digital and offset printing services.

The Company has historically developed capabilities in multicolour offset printing, web offset printing, binding and design-related services. The Company seeks to leverage its experience in stationery and printing to cater to the requirements of educational institutions, offices, institutional customers and other commercial users.

During FY 2025-26, the Company operated in a challenging business environment. The significant decline in revenue during the year reflects the pressure on business volumes and the need for the Company to strengthen its operating model, improve capacity utilisation, focus on profitable business opportunities and optimise working capital.

Managements focus remains on rebuilding sustainable business volumes, improving operating efficiency, strengthening customer relationships and pursuing opportunities that provide an appropriate balance between revenue growth and profitability.

-I- FINANCIAL PERFORMANCE

The Companys financial performance during FY 2025-26 remained under pressure.

Revenue from operations stood at approximately Rs. 18.35 crore during FY 2025-26 as compared with Rs. 41.78 crore during FY 2024-25, representing a decline of approximately 56.08%.

The Company reported a net loss of approximately Rs. 7.10 crore during FY 2025-26 as compared with a net loss of Rs. 4.49 crore in FY 2024-25.

The financial performance was impacted by the significant reduction in operating revenue, the resulting pressure on operating margins and the continued burden of finance costs. The Company therefore continues to focus on improving revenue quality, controlling costs, improving asset utilisation and strengthening cashflow management.

The management is conscious of the need to improve the Companys financial performance and is evaluating measures to improve operating efficiency and develop sustainable revenue streams.

-OPERATING PERFORMANCE

FY 2025-26 was a challenging year for the Company. The reduction in business volumes resulted in lower utilisation of the Companys available operating resources and adversely affected overall operating performance.

The Company continues to evaluate its product and service mix with the objective of focusing on areas where it can achieve better margins, sustainable demand and efficient utilisation of its existing capabilities.

Going forward, management intends to focus on:

• strengthening the Companys customer and institutional relationships;

• increasing business volumes in profitable product and service categories;

• improving utilisation of existing printing and related infrastructure;

• controlling operating and administrative costs;

• improving procurement and working-capital efficiency;

• expanding opportunities in stationery and educational products; and

• identifying suitable opportunities in specialised and value-added printing.

-1- SEGMENT-WISE PERFORMANCE

At present, the Companys principal business areas comprise:

a) School and Office Stationery

The stationery business remains an important area of the Companys operations. Demand is supported by educational institutions, students, offices and institutional users.

The market is increasingly shifting towards branded and differentiated products, while customers continue to remain price sensitive. The Company will therefore focus on product quality, competitive pricing, product availability and distribution efficiency.

b) Educational Products

Educational products represent an opportunity arising from Indias large education ecosystem. The Company intends to focus on products that provide recurring demand and are aligned with changing requirements of educational institutions and consumers.

c) Digital and Offset Printing

The printing business continues to face structural pressure from digitalisation and changes in customer preferences. At the same time, specialised printing, customised requirements, educational material, commercial applications and short-run requirements continue to offer opportunities.

The Company will seek to improve the profitability of its printing operations by focusing on commercially viable assignments, better utilisation of available resources and cost efficiency.

-1- INDUSTRY OPPORTUNITIES

The Company believes that the following factors provide medium- to long-term opportunities:

Education-led demand: Indias large student and institutional base continues to support recurring demand for stationery and educational products.

Growth of organised retail and e-commerce: Increasing penetration of organised retail and online channels provides opportunities to widen product reach and access customers beyond traditional distribution channels.

Product premiumisation: Consumers are increasingly looking for innovative, attractive, functional and sustainable stationery products, creating opportunities for differentiated offerings.

Packaging and specialised printing: The growth of consumer goods, e-commerce and organised retail is supporting demand for packaging and specialised print applications.

Digital printing: The increasing requirement for customised and shorter print runs provides opportunities for digital printing and value-added printing services.

Sustainability: Growing preference for environmentally responsible products provides opportunities for paper-based, recyclable and sustainable stationery offerings.

-I- RISKS AND CONCERNS

The Company operates in an industry exposed to a number of business and operational risks.

Raw Material Price Volatility

Paper, ink, plastics and other inputs constitute important cost components. Fluctuations in raw material prices may adversely affect margins, particularly where the Company is unable to pass on increased costs to customers.

Digital Substitution

Increasing use of digital devices, digital communication and digital note-taking may adversely affect demand for certain traditional stationery and printing products.

Intense Competition

The stationery and printing markets are highly competitive. Competition from established brands, regional manufacturers, unorganised players and alternative digital products may put pressure on prices and margins.

Working Capital and Liquidity Risk

The Companys operations require prudent management of receivables, inventories and other working- capital requirements. Timely collection of receivables and efficient deployment of working capital remain important management priorities.

Capacity Utilisation Risk

Lower business volumes can result in under-utilisation of available infrastructure and fixed costs being spread over a smaller revenue base, thereby adversely affecting profitability.

Technology Risk

Rapid developments in printing technology may require periodic investment in equipment, software and related capabilities. Failure to keep pace with technological changes may affect competitiveness.

Changing Consumer Preferences

Customer preferences are evolving towards sustainable, innovative, premium and digitally integrated products. The Company will need to continuously evaluate its product portfolio to remain relevant.

Supply Chain Risk

Disruptions in the availability or pricing of paper, ink, packaging material and other inputs may affect production schedules and profitability.

The Company seeks to mitigate these risks through regular management review, cost control, customer and supplier relationships, internal controls and continuous monitoring of business and financial performance.

-1- OUTLOOK

The near-term outlook remains challenging and management continues to adopt a cautious approach.

The Company intends to concentrate on rebuilding sustainable business volumes while simultaneously improving operating efficiency and financial discipline. Managements priority is to improve the quality of revenue rather than pursuing growth at the expense of profitability.

The Company will continue to evaluate opportunities in school and office stationery, educational products, digital printing, offset printing and other related areas where it believes it can utilise its existing capabilities effectively.

The Company also intends to focus on strengthening its customer base, improving distribution reach, rationalising costs, improving working-capital management and increasing the contribution from value-added products and services.

Management believes that the Companys experience in stationery and printing, together with its existing infrastructure and market relationships, provides a foundation for pursuing sustainable growth over the medium to long term. However, the pace of recovery will depend on improvement in business volumes, operating efficiency, working-capital management and overall market conditions.

-INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control framework designed to safeguard its assets, ensure reliability of financial reporting, support operational efficiency and facilitate compliance with applicable laws and regulations.

The Audit Committee periodically reviews the financial reporting process, internal control framework and reports of the internal and statutory auditors. Corrective measures, wherever considered necessary, are monitored by the management and the Audit Committee.

The Company continues to strengthen its internal processes with emphasis on financial discipline, authorisation controls, monitoring of receivables and payables, inventory management, compliance and effective utilisation of resources.

The management remains committed to continuously reviewing and improving the internal control environment in line with the size, scale and nature of the Companys operations.

-I- HUMAN RESOURCES

Human resources continue to be an important component of the Companys operations. The Company seeks to maintain a work environment that encourages professionalism, accountability, teamwork and continuous improvement.

Management remains focused on deploying available human resources efficiently and ensuring that employees possess the skills required for the Companys evolving business requirements.

-I- DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Particulars	FY 202526	FY 202425	Change in percentage	Reason
Current ratio	3.11	1.74	78.66%	Due to decrease in Current Liability
Debt - Equity ratio	0.82	0.55	50.19%	Due to increase in Debt
Debt Service Coverage Ratio	-0.09	-0.03	180.11%	Due to decrease in EBIT
Inventory Turnover Ratio	20.67	18.54	11.49%	N.A.
Interest Coverage Ratio	-0.56	-0.23	143.48%	Due to decrease in EBIT
Net Profit Margin	-0.39	-0.11	254.55%	Due to decrease in Revenue from Operations
Operating Profit Margin	-0.14	-0.02	600%	Due to decrease in Revenue from Operations
Return on Net Worth	-0.23	-0.12	91.67%	Due to decrease in Shareholders fund

4 CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable securities laws and regulations.

These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied due to various factors, including changes in economic conditions, demand conditions, competition, raw material prices, interest rates, regulatory changes, technological developments and other risks and uncertainties affecting the Companys operations.

The Company assumes no obligation to publicly update or revise any forward-looking statements, except as may be required under applicable laws and regulations.