Ganga Papers India Ltd Management Discussions

1. OVERVIEW & OUTLOOK

1.1 Global and Indian Economy

Ganga Papers India Limited (GPIL) is a leading manufacturer of kraft paper, newsprint, and writing and printing paper in India. With a steadfast focus on quality and innovation, the Company has made significant investments in advanced machinery, modern technology, and enterprise resource planning (ERP) systems to ensure superior product quality and operational efficiency. GPIL is listed on the Bombay Stock Exchange and is recognized for consistently delivering high-quality paper products and reliable service.

Employees are regarded as the cornerstone of GPILs success. The Company fosters a culture of continuous improvement by encouraging employee development through structured training programs and enhanced benefits. GPIL is equally committed to social responsibility, investing in environmental protection initiatives and supporting community welfare and relief efforts.

The Companys business philosophy emphasizes delivering a world-class customer experience by maintaining rigorous quality standards, ensuring timely deliveries, and building strong partnerships with clients. With a reputation for consistency, responsiveness, and reliability, GPIL is a trusted name in the Indian paper industry.

1.2 INDUSTRY STRUCTURE AND DEVELOPMENTS

Industry Structure

India ranks as the 15th largest paper producer globally, contributing approximately 5% to global output. In FY24, the Indian paper industry recorded revenue of 80,000 crore, growing at a CAGR of 8.2%. This is expected to reach 1,00,000 crore by FY28, with a projected CAGR of 6 7%. The industry has a production capacity of 25 million tonnes, with 526 operational mills out of a total of 900. Key manufacturing hubs include Gujarat and Tamil Nadu (Packaging), Andhra Pradesh and Odisha (Specialty), and Uttarakhand (Printing & Writing).

The industry is segmented as follows: Packaging Paper & Board (57%), Printing & Writing Paper (30%), Newsprint (8%), and Specialty Paper (5%). Raw material sourcing is dominated by recycled paper (70 75%), supplemented by wood pulp and agro-residues. Per capita paper consumption in India is 15 kg, significantly below the global average of 58 kg, and much lower than the USA (320 kg), EU (129 kg), and China (75 kg).

Industry growth is being driven by e-commerce expansion, demand for sustainable packaging, increased government spending on education, and enhanced recycling policies. However, challenges include high import dependence (particularly on China and ASEAN), increased competition from Free Trade Agreements (FTAs), currency volatility, and a declining demand for newsprint. In Q3 FY24, revenue declined by 9.1%, operating profit dropped by 58.7%, and net margins fell to 3.7% from 9.9% in the previous year. Imports surged by 44% in the first half of FY24, prompting calls for higher import duties. Despite these headwinds, margins are expected to improve by 2 3% in FY26, supported by capacity expansion and sustainability efforts.

Government Initiatives

Indias paper industry is at a pivotal juncture, shaped by a combination of government policy, sustainability imperatives, and evolving market demands. The governments ban on single-use plastics and its push for sustainability have notably accelerated the shift toward paper-based packaging, particularly in sectors such as FMCG, food and beverage, healthcare, and personal care. Rising literacy rates and expanding manufacturing activities, supported by targeted policies and increased education spending, are further accelerating demand for writing, printing, and specialty papers. To ensure environmental compliance, stringent standards under the Environment (Protection) Rules, 1986, and SOPs for managing industrial waste have been implemented, reinforcing the sectors commitment to responsible growth.

The National Packaging Initiative is driving modernization across the packaging value chain. By setting guidelines for design and material standards, promoting bulk transportation, and establishing specialized logistics parks and packaging labs, the initiative aims to streamline operations and encourage centralized industrial activity. A strong emphasis on sustainability is evident in the promotion of material recovery facilities (MRFs) and support for domestic manufacturing of advanced packaging materials. Additionally, the focus on workforce development through high-quality training and certification programs addresses the sectors skill gap, ensuring a steady pipeline of qualified labour to meet future demands.

Technological innovation is becoming central to the industrys evolution. Traditional testing methods are being augmented by modelling and simulation (MODSIM) techniques, enabling manufacturers to create virtual models that predict packaging performance, optimize material use, and accelerate product development. Automation and advanced labelling solutions are increasingly deployed to enhance efficiency, accuracy, and scalability, particularly as the industry faces workforce attrition and rising labour costs. As Indias paper and packaging sector continues to expand driven by domestic consumption and global export opportunities its future will hinge on the successful integration of sustainability, innovation, and skill development.

New Development

The Indian paper industry is navigating an era defined by volatility, uncertainty, complexity, and ambiguity (VUCA), alongside disruptive innovations and increased regulatory compliance. To thrive in this environment, the sector is rapidly embracing advanced technologies such as artificial intelligence (AI), machine learning (ML), deep learning (DL), robotics, big data analytics, and the Industrial Internet of Things (IIoT) to enhance productivity, optimize operations, and foster creativity. Automation and smart factory integration are revolutionizing paper manufacturing, allowing for real-time monitoring, precise quality control, and seamless handling of diverse packaging materials. These initiatives not only improve efficiency and reduce operational costs but also help address skills gaps and lay the groundwork for long-term competitiveness.

Growth in the Indian paper industry is being drived by rising literacy rates, universalization of education, the implementation of the New Education Policy (NEP), and surging demand for packaging and household paper. The sector is at a critical juncture, with revenues expected to reach 1 lakh crore by 2030. To capitalize on this opportunity, a multi-pronged strategy focusing on sustainability, technological modernization, and global competitiveness is essential. Reducing import dependency especially for wood pulp and newsprint remains a priority, with agro-forestry expansion in states like Chhattisgarh, Madhya Pradesh, and Telangana poised to add 2,500 crore in domestic wood pulp production annually. Government-backed technological upgrades, including a 3,000 crore allocation, are expected to enable 60% of small and medium-sized mills to adopt energy-efficient machinery by 2027, potentially reducing production costs by 8 10% and boosting output.

Sustainability is gaining momentum through increased adoption of recycled fibre and biodegradable materials, aiming to raise Indias paper recycling rate from 43% to 55% over the next five years potentially saving 2,000 crore in raw material costs annually. Strategic investments in research and development, automation, and Industry 4.0 technologies such as AI-driven process optimization, IoT-enabled monitoring, and automated supply chains could increase productivity by up to 15%. The development of bio-based, water-resistant, and greaseproof paper products is expected to unlock new market opportunities worth 10,000 crore annually. With the right policy interventions and private-sector innovation, the Indian paper industry can strengthen its global position, adapt to digital disruption, and achieve sustainable, long-term growth.

Growth Drivers

a) Rising Literacy and Education Initiatives: The surging literacy rate, universalization of education, and the implementation of Indias New Education Policy (NEP) are significantly increasing demand for writing, printing, and educational paper products.

b) Boom in Demand for Packaging Paper: The rapid expansion of e-commerce, the ban on single-use plastics, and the growth of the Fast-Moving Consumer Goods (FMCG) and organized retail sectors are significantly increasing demand for various types of paper, including packaging, specialty, and printing papers.

c) Household and Hygiene Paper Consumption: There is a rising demand for household paper products, driven by increasing health awareness and rising disposable incomes.

d) Sustainability and Circular Economy: Regulatory pushes for eco-friendly packaging, increased recycling, and a shift toward biodegradable and compostable materials are aligning the industry with global sustainability trends.

e) Technological Innovation: Adoption of automation, digitization, and Industry 4.0 technologies (such as AI, IoT, and advanced analytics) is enhancing productivity, optimizing operations, and enabling efficient, flexible manufacturing processes.

f) Agro-Forestry and Raw Material Security: Expansion of agro-forestry initiatives in states like Chhattisgarh, Madhya Pradesh, and Telangana is reducing dependence on imported wood pulp and supporting domestic raw material availability.

g) Low Per Capita Consumption: With per capita paper consumption at just 15 16 kg (compared to the global average of 57 kg), there is significant headroom for growth as economic development and urbanization continue.

h) Export and Global Competitiveness: Growing exports and the industrys increasing global competitiveness are opening new markets and opportunities for Indian paper producers.

2. GPIL MARKET POSITION AND PRODUCT LEADERSHIP

GPIL stands as one of Indias leading paper and packaging innovators, delivering a comprehensive range of high-quality solutions across newsprint, writing and printing paper, and packaging paperboard segments. With a strong focus on technological advancement and sustainability, the company leverages modern manufacturing processes and recycled raw materials to meet the evolving needs of diverse industries. Our commitment to quality, operational excellence, and customer-centricity has enabled it to serve top domestic and international clients, positioning the company at the forefront of Indias paper and packaging sector. Through continuous innovation, strategic investments, and a focus on eco-friendly practices, our company is shaping the future of paper and packaging solutions in India.

3. FINANCIAL PERFORMANCE & HIGHLIGHTS

Table 4.1: Statement of Profit and Loss

		(Rs. In Lakh)
PARTICULARS	FY 2024-25	FY 2023-24
Revenue from operations	25,769.13	24549.87
Other Income	38.08	32.08
Total Income	25,807.21	24,581.95
Total Expenses	25,602.40	24381.03
Profit Before Tax	204.82	200.91
Add/less: Exceptional items	-	-
Tax expense	49.55	53.13
Profit After Tax	155.27	147.78

For the year ended 31st March 2025, the Company demonstrated steady growth in its core operations and overall financial performance, with revenue from operations increasing by

4.97% to 25,769.13 lakh compared to 24,549.87 lakh in the previous year. Other income rose significantly by 18.70% to 38.08 lakh, as against 32.08 lakh recorded in the preceding financial year, contributing to a total income growth of 4.98% to 25,807.21 lakh up from 24,581.95 lakh in the prior year. Total expenses increased by 5.01% to 25,602.40 lakh, compared to 24,381.03 lakh in the preceding year, closely aligning with the growth in income, reflecting efficient cost management. Profit before tax rose modestly by 1.95% to 204.82 lakh from 200.91 lakhs in the previous fiscal year. supported by a 6.74% reduction in tax expense to 49.55 lakh from 53.13 lakh in the previous year, resulting in a 5.07% increase in profit after tax to 155.27 lakh compared to 147.78 lakhs recorded in FY 2023 24. With no exceptional items recorded during the year, these results underscore the Companys stable profit margins, prudent financial management, and ability to deliver sustainable growth while maintaining healthy financial stability.

4. OPERATIONAL PERFORMANCE HIGHLIGHTS

During the financial year ended 31st March 2025, Ganga Papers India Limited demonstrated steady operational performance despite a challenging industry environment. The Company achieved a 4.97% increase in revenue from operations, reaching 25,769.13 lakh compared to 24,549.87 lakh in the previous year. This growth was supported by efficient capacity utilization, a well-diversified product portfolio, and a strong distribution network that enabled our company to meet evolving customer demands across multiple market segments.

Operational efficiency initiatives, including investments in modern machinery and process automation, contributed to improved productivity and cost management. The Company maintained stable production levels and ensured consistent product quality, which helped strengthen its market position. Total expenses increased in line with revenue growth, reflecting prudent cost control measures and effective resource allocation.

Furthermore, our company continued to prioritize workplace safety, employee training, and environmental sustainability as integral parts of its operational strategy. These efforts not only enhanced operational reliability but also reinforced the Companys commitment to responsible manufacturing practices. Overall, the operational performance for the year underscores our ability to adapt to market changes, optimize resources, and deliver value to its stakeholders.

5. SEGMENT WISE PERFORMANCE

Ganga Papers India Limited operates solely in the paper industry, focusing on the manufacturing and sale of various paper products which include kraft papers, newsprint papers and writing printing papers. During the financial year ended 31st March 2025, the paper segment continued to be the primary driver of the Companys revenue and profitability.

The segment witnessed steady demand growth, particularly in the packaging paperboard category, driven by the rapid expansion of e-commerce, Fast-Moving Consumer Goods (FMCG) sectors, and increased consumer preference for sustainable packaging solutions.

Despite challenges such as rising raw material costs and competition from imports, the Company maintained consistent production volumes and optimized operational efficiencies to meet market requirements.

The Companys focus on quality, innovation, and customer service within the paper segment has helped strengthen its market position and build long-term relationships with key customers and distributors. Going forward, our company aims to leverage emerging opportunities in eco-friendly and specialty paper products to sustain growth and enhance shareholder value within this core segment.

6. SWOT ANALYSIS

STRENGTHS	WEAKNESSES
Diverse product range including kraft paper, newsprint, and writing paper catering to multiple sectors. Continuous investments in automation, modern machinery, and ERP systems enhance operational efficiency and quality.	Smaller scale compared to large industry peers makes the Company more vulnerable to market volatility. High PE (67.22) and EBITDA (23.25) multiples indicate overvaluation and raise sustainability concerns.
Strong brand reputation and credibility, supported by decades of experience and listing on BSE.	Decline in net sales from 297.95 crore in FY23 to 257.69 crore in FY25 despite marginal PAT growth.
	No dividend declared during FY 2024 25, which may not appeal to income-focused investors.
OPPORTUNITIES	THREATS
Growing export potential due to global demand for eco-friendly and recycled paper.	Intense competition from domestic manufacturers and low-cost imports in a fragmented industry.
Extensive dealer and distributor network ensures broad market penetration.	Increasing environmental compliance requirements may lead to higher costs.
Government initiatives in education and literacy are driving paper consumption.	Declining demand for newsprint due to digital media remains a long-term risk.
Sufficient capacity and infrastructure available to scale up operations.	Recent underperformance of stock and overvaluation warnings from analysts increase downside risk.
Rising preference for branded paper enhances premium product demand.	Trade pacts (FTAs/RTAs) enabling unchecked paper imports challenge domestic growth.
Booming e-commerce and retail sectors driving kraft and packaging paper demand.
Shift from plastic to paper packaging due to environmental regulations.

Strategic Outlook Based on SWOT Analysis

The Companys diverse product portfolio and long-standing market presence provide a solid foundation to capitalize on emerging opportunities in eco-friendly packaging and global sustainability trends. With robust infrastructure and an expansive distribution network, Ganga Papers is well-positioned to scale operations and tap into growing demand across both domestic and international markets.

However, the Company must address its high valuation metrics and earnings inconsistency to retain investor confidence. Strategic efforts to reduce dependence on low-growth segments like newsprint, enhance cost efficiency, and declare stable returns to shareholders could mitigate perceived weaknesses. Furthermore, the management should proactively monitor regulatory developments and global trade dynamics to counter the threats posed by cheap imports and rising compliance costs.

By leveraging its strengths and seizing opportunities while actively mitigating threats and addressing internal limitations, the Company can ensure sustainable growth and strengthen its competitive positioning in the evolving paper industry landscape.

7. RISKS & CONCERNS

The paper industry is inherently cyclical, with its performance closely tied to global trends in pulp and paper demand and supply. Currently, the sector is experiencing a slowdown in demand, which can lead to periods of price volatility and pressure on margins. However, Ganga Papers India Limiteds well-diversified product portfolio that is producing kraft paper, newsprints and writing printing paper which help us to insulate the company from the full impact of these cycles by tapping into segments with varying demand drivers and growth prospects.

A significant risk facing the industry is the rapid advance of digital technologies, such as e-books and online content platforms, which continue to erode demand for traditional writing and printing paper. As more consumers and businesses transition to digital formats, the relevance of paper-based products in certain segments, particularly newsprint and office paper, is diminishing. Despite these challenges, the digital era has also opened up new avenues for growth, especially in packaging, specialty paper, and paper-based electronics, as e-commerce and sustainability trends drive demand for innovative paper solutions.

To navigate these risks, our company is embracing digital transformation and smart manufacturing practices to enhance operational efficiency, reduce costs, and foster innovation. By leveraging advanced technologies, data analytics, and supply chain transparency, the company is better positioned to respond to shifting market dynamics and evolving customer needs. While digitalization poses certain threats, it also offers opportunities for value creation and market expansion, supporting a promising outlook for the companys products in a changing industry landscape.

Moreover, Ganga Papers India Limited faces several key risks and concerns that could impact its operations and growth. Risks such as raw material price volatility, stringent environmental regulations, intense competition, and supply chain disruptions, all of which can impact costs and operations. Additionally, workforce challenges, evolving sustainability expectations, and changing government policies require ongoing adaptation. Maintaining quality and compliance is crucial to protect the companys reputation and ensure long-term growth. Our company is actively implementing strategic measures to address these risks and concerns. Through continuous improvement and innovation, we remain committed to overcoming challenges and ensuring sustainable growth.

8. INTERNAL CONTROL SYSTEM & ITS ADEQUACY

Ganga Papers India Limited remains committed to continuously enhancing its internal control systems to ensure robust governance and operational excellence. Over the past year, the Company has undertaken significant initiatives to strengthen these controls, resulting in improved transparency and efficiency across all levels of the organization. Our internal control framework is designed not only to enforce strict compliance with management policies and regulatory requirements but also to promote ethical conduct and accountability among employees, fostering a culture of integrity and responsibility.

The Companys internal control systems are regularly reviewed and updated to keep pace with evolving business dynamics and emerging risks. This proactive approach enables us to identify potential vulnerabilities early and implement corrective measures promptly. By integrating advanced monitoring tools and process automation, we have enhanced the effectiveness of our controls, ensuring that operations are streamlined and risks are mitigated effectively. These measures contribute to safeguarding the Companys assets and maintaining operational continuity in a competitive and dynamic industry environment.

Furthermore, our internal control mechanisms are meticulously designed to ensure the accuracy, completeness, and reliability of financial and operational records. This foundation supports the preparation of timely and transparent financial information, which is critical for informed decision-making by management, investors, and other stakeholders. By maintaining high standards of data integrity and reporting, our company reinforces stakeholder confidence and upholds its commitment to sound corporate governance and sustainable growth.

9. HUMAN RESOURCE DEVELOPMENT

Ganga Papers India Limited places strong emphasis on human resource development as a cornerstone of its operational success. The Company has implemented targeted programs aimed at enhancing the skills and competencies of its workforce, with a focus on rationalizing manpower and optimizing productivity. Regular training activities sessions are organized to ensure employees are equipped with the latest industry knowledge, technical expertise, and safety practices. These initiatives not only improve the individual performance but also contribute to overall efficiency and adaptability of the organization.

A culture of open communication and collaboration is fostered through continuous interaction between management, the workers union, and employees at all levels. This approach helps in addressing concerns proactively, building trust, and maintaining industrial harmony. As of 31st March 2025, the Company employed 169 people, each playing a vital role in driving the Companys growth and upholding its values. By investing in its human capital, our company is committed to nurturing a motivated, skilled, and engaged workforce capable of meeting future challenges and supporting the Companys long-term vision.

10.KEY FINANCIAL RATIOS

Particulars	2024-2025	S2023-2024
Current Ratio (times)	1.13	1.21
Debt-Equity Ratio (times)	1.16	1.27
Debt Service Coverage Ratio (times)	0.83	0.84
Return on Equity Ratio (%)	5.20	5.21
Inventory Turnover Ratio (days)	25.41	31.65
Trade Receivables Turnover Ratio (days)	53.10	54.97
Trade Payables Turnover Ratio (days)	19.93	22.28
Net Capital Turnover Ratio (times)	29.03	24.73
Net Profit Ratio (%)	0.60	0.60
Return on Capital Employed (%)	11.87	14.41
Interest Coverage Ratio	150.60	2.69
Operating Profit Margin (%)	0.65	1.73
Return on Net Worth	6.68%	5.08
Return on Investment	-	-

11.BUSINESS OUTLOOK

During the year under review, Ganga Papers India Limited has made commendable strides in fulfilling the diverse and growing demands of our valued consumers. Our relentless focus on quality, innovation, and customer-centricity has enabled us to strengthen our market presence and build lasting relationships across various segments. We are proud of the progress achieved so far, which reflects the dedication and hard work of our entire team. As we look ahead to the financial year 2025-26, we remain optimistic and committed to accelerating our growth path by expanding our product portfolio, enhancing operational efficiencies, and adopting cutting-edge technologies to meet future market challenges.

Our vision is clear to emerge as one of the biggest and most trusted paper manufacturing companies in India. To realize this ambition, we are continuously investing in modernizing our production facilities, improving sustainability practices, and nurturing talent within the organization. We believe that embracing innovation and sustainability is key to staying competitive in a rapidly evolving industry. Our commitment to eco-friendly manufacturing processes and responsible resource management underscores our dedication to not only business growth but also environmental stewardship. Through these efforts, we aim to deliver superior value to our customers, shareholders, and the communities we serve.

We pledge to put forth our best efforts to run our plant efficiently, maintain the highest standards of quality, and foster a culture of continuous improvement. With the unwavering support of our stakeholders and the dedication of our workforce, we are confident that we will continue to grow stronger and achieve new milestones in the years to come. Together, we will shape the future of the Indian paper industry and uphold the trust placed in us by our customers and partners.

12.ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the applicable Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended), and other relevant provisions of the Companies Act, 2013, as applicable. There has been no deviation in the accounting treatment prescribed under the applicable Accounting Standards during the year under review.

13.CAUTIONARY STATEMENTS

The management of Ganga Papers India Limited has prepared this report and is responsible for the same. Statements in this Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable laws and regulation and the management has based them on its current expectations and its projection about future events. Actual result might differ materially from those either expressed or implied.

Place: Pune
Date:
	By Order of the Board of Directors
	Sd/-
	Ramesh Kumar Chaudhary
	(Chairman & Director)
	DIN: 00080136