Indian Toners & Developers Ltd Management Discussions

Annexure - 3 to Directors Report

INDUSTRY AND OUTLOOK

The Company is engaged in the manufacturing of compatible toners for photocopiers, laser printers, and digital multi-function printers. The Company operates two manufacturing facilities located at Rampur (Uttar Pradesh) and Sitarganj (Uttarakhand), catering to both domestic and international markets.

The Companys long-term objective is to strengthen its established brand positioning by delivering high-quality products at competitive prices. The Companys quality policy is centered on achieving customer satisfaction through continuous product development, technological upgradation, and operational excellence.

The Research & Development (R&D) function continues to play a critical role in innovation, enabling the Company to introduce new products at competitive price points, thereby enhancing its ability to compete effectively in domestic as well as export markets.

INDUSTRY DEVELOPMENTS AND GEOPOLITICAL IMPACT

During the financial year under review, the compatible toner industry experienced headwinds arising from evolving geopolitical developments, particularly in key export markets. Global trade disruptions, regional conflicts, and instability in international supply chains resulted in moderation of demand and pricing pressures in export markets.

Additionally, volatility in freight costs, currency fluctuations, and uncertainties in trade policies impacted export competitiveness. These geopolitical factors led to a contraction in export volumes during the year. Despite these challenges, the Company demonstrated resilience through stable domestic performance and continues to focus on diversifying export markets, strengthening supply chain efficiencies, and improving product competitiveness to mitigate such risks going forward.

KEY STRENGTHS

The Company continues to derive competitive advantage from a combination of strong brand positioning, technological capabilities, and operational excellence, which are detailed below:

• Established Brand Presence:

The Companys flagship brand "ITDL Supremo" enjoys strong recognition and credibility in the compatible toner market, supported by consistent product quality and long-standing customer relationships. This has resulted in high customer recall and repeat business across domestic and international markets.

• Robust Research & Development Capabilities:

The Company has a well-established R&D framework supported by a team of skilled engineers and technical professionals. Continuous focus on innovation enables the development of new products, improvement in existing formulations, and cost optimization, thereby enhancing competitiveness in a dynamic market environment.

• Distribution Network & Sales Framework

Our market presence is a multi-tiered distribution strategy designed to ensure product availability across every corner of the country. The direct sales model with an expansive distributor network, we maintain a dominant position in both the retail and professional service segments.

Market Coverage & Reach

We have successfully cultivated a diverse ecosystem of partners. Our framework prioritizes high-volume users (Jobbers) and the critical service segment (Refillers), ensuring our toners are the "brand of choice" at the point of service.

• Jobber Network (40,000+): Our extensive reach into the Jobber segment—businesses operating high-volume photocopiers—provides us with a stable, recurring business.

• Refiller Community (1,600+): We maintain a strong foothold in the technical service segment, partnering with professional refillers who rely on our toners compatibility and yield to maintain their service standards.

• Wholesale Dealer Channel (600+): Our wholesale dealers facilitate bulk movement of goods, and also help in ensuring our products availability across the country thru indirect channel distribution. Indirect distribution is estimated to be double of our Direct coverage.

Authorized Distributor Footprint

To ensure seamless "last-mile" delivery and inventory management, we operate through 161 Company Authorized Distributors. This pan-India footprint allows us to mitigate supply chain disruptions and maintain high service levels.

• Customer-Centric Approach and After-Sales Support:

The Company places significant emphasis on customer satisfaction through a dedicated customer support system. Prompt after-sales service, technical assistance, and product guidance based on scientific analysis enable the Company to build long-term relationships and enhance customer loyalty.

• Experienced Management and Skilled Workforce:

The Company is supported by an experienced management team with deep domain expertise and a qualified workforce. Their strategic direction, operational efficiency, and focus on quality contribute significantly to the Companys sustained performance.

• Focus on Cost Optimization and Operational Efficiency:

The Company continuously undertakes cost rationalization initiatives across rocurement, production, and logistics. Efficient resource utilization, bulk procurement strategies, and process improvements enable the Company to maintain cost competitiveness without compromising on quality.

RISKS AND CONCERNS

The Company operates in the compatible toner industry, which is characterized by price sensitivity, technology-driven product requirements, and dependence on global supply chains for key raw materials.

Key risks specific to the industry include:

• Pricing Pressure from Low-Cost Imports:

The domestic market continues to face competition from low-priced imported toners, particularly from Asian markets. While anti-dumping measures provide partial protection, aggressive pricing by overseas players continues to exert pressure on margins.

• Raw Material Dependency and Quality Sensitivity:

The manufacturing of compatible toners requires specialized raw materials, a significant portion of which is imported. Any disruption in availability, inconsistency in quality, or increase in procurement cost directly impacts production efficiency and product performance.

• Foreign Exchange Exposure:

Given the import-intensive nature of key inputs, fluctuations in foreign exchange rates can affect input costs and overall profitability. The ability to pass on such cost variations is limited due to competitive market dynamics although we are naturally hedged.

• Technological Obsolescence and Product Compatibility Risks:

Rapid advancements in printing technologies require continuous adaptation in toner formulations. Failure to align products with evolving OEM specifications may impact market relevance and customer acceptance.

• Supply Chain Disruptions due to Geopolitical Factors:

The global supply chain for toner raw materials remains vulnerable to geopolitical developments, trade restrictions, and logistics constraints, which may lead to delays, cost escalations, and inventory challenges.

Although the Company maintains a degree of natural hedge through a balance between imports and exports, ongoing volatility in global markets and industry-specific challenges continue to require close monitoring and proactive risk management

RISK MITIGATION

The Company follows a structured and proactive approach to identifying, assessing, and mitigating the various risks inherent in the compatible toner business. Risk management is an integral part of the Companys strategic and operational decision-making framework. The senior management remains actively involved in continuously monitoring key risk areas and implementing appropriate mitigation strategies to address evolving industry challenges.

To strengthen its competitive positioning, the Company continues to invest in technology and process improvements, ensuring alignment with changing market requirements and advancements in printing technologies. A sustained focus on research and development has enabled the Company to develop innovative and cost-effective products, while also assisting customers in selecting suitable solutions through scientific evaluation and technical support.

On the procurement front, the Company adopts bulk sourcing strategies for key raw materials, leveraging economies of scale to secure competitive pricing and maintain cost efficiency.

Further, the Company maintains long-standing and stable relationships with established suppliers, which ensures reliability in supply, consistency in quality, and resilience against potential disruptions in the supply chain.

OPPORTUNITIES & THREATS

The export segment continues to offer significant growth potential for the Company in terms of improving capacity utilisation and enhancing profitability. The Company has undertaken focused initiatives to expand its presence across multiple international markets and diversify its export base.

On the domestic front, the Company is well-positioned to strengthen its market share, supported by its established brand presence and continued protection under anti-dumping duty on imported toners.

The recent expansion of production capacity to 5400 MT provides a strong platform to support future growth in both domestic and export markets.

However, the risk of low-priced imports, particularly from Asian markets, continues to exert competitive pressure on pricing. While the imposition of anti-dumping duty on black toner in powder form offers partial protection against imports from countries such as China, Taiwan, and Malaysia, the competitive environment remains dynamic.

Overall, the Company remains optimistic about its growth prospects and expects to sustain its business momentum, supported by its operational strengths, market positioning, and strategic initiatives.

QUALITY

The Company continues to strengthen its quality framework through sustained investments in processes, people, training, and technology. Standardised systems, robust quality controls, and well-defined operational practices enable consistent product performance and reliability.

The adoption of structured quality models and process-driven approaches ensures that potential risks are identified and addressed at various stages of planning and execution, thereby enhancing operational efficiency and maintaining high product standards.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company operates in a single business segment, i.e., manufacturing of compatible toners. Accordingly, there are no separate reportable segments in terms of applicable accounting standards.

DISCUSSION ON FINANCIAL PERFORMANCE

The revenue from operations for the year were Rs. 16581 Lacs. The Company earned a profit before tax of Rs. 3470.41 Lacs. The nearly debt free status of the Company has ensured negligible finance cost.

For the Financial Year 2025-26, the Board had recommended an interim dividend of Rs. 6.00/- per equity share (60% of face value of Rs. 10), which is also the final dividend for the year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with its size and nature of operations. These controls ensure safeguarding of assets, proper authorization, and accurate recording and reporting of transactions.

The Company has an effective internal audit framework, supported by periodic management reviews, to ensure adherence to defined procedures, authority levels, and compliance with applicable laws, regulations, and guidelines.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Industrial relations remained cordial and harmonious throughout the year. The Company continues to focus on maintaining a stable and productive work environment through employee engagement, training, and development initiatives.

The Company is in the process of aligning its HR policies and practices with the applicable provisions of the new labour codes, to the extent notified and made effective, ensuring compliance with statutory requirements and industry standards.

The total number of employees as on 31 March 2026 was 226.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013 and other generally accepted accounting principles in India.

The management confirms that appropriate estimates and judgments have been applied on a prudent and reasonable basis to ensure that the financial statements present a true and fair view of the Companys financial position, performance, and cash flows for the year.

By Order of the Board

For Indian Toners & Developers Limited

(Sushil Jain)

Chairman