JK Paper Ltd Management Discussions

Performance of the major economies, 2024

Outlook

As discussed above, this risk from frequent changes in US trade policy is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.8% for 2025 and 3% in 2026, factoring the various economic uncertainties.

(Source: IMF)

Indian economic review

The Indian economy was projected to grow at 6.5% in 2024-25, compared to a 9.2% (revised) in 2023-24. This represented a four-year low due to global economic and trade impact, resulting in slower domestic manufacturing growth, rise in imports and a decline in net investments. Despite the slowdown, India retained its position as the worlds fifth-largest economy and is likely to overtake Japan to become the fourth largest economy in the year 2025.

Indias nominal GDP (at current prices) was Rs. 331 trillion (US$3.91 trillion) in 2024-25 up from Rs. 301.23 trillion (US$3.64 trillion) in 2023-24. The nominal GDP per capita increased

from Rs. 2,15,936 (US$2,547) in 2023-24 to Rs. 2,35,108 (US$2,711) in 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in 2024-25, closing at Rs. 85.47 on the last trading day of 2024-25. However, in March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in 2024-25, driven by moderating food inflation and stable global commodity prices. This was the lowest inflation since the pandemic,

which is likely to catalyse consumer spending as well as savings creation.

Indias foreign exchange reserves stood at a high of US$676 billion as of April 4, 2025, providing enough buffer from external shocks - viz., import cover of over 11 months. This was the fourth consecutive year when Rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage

Gross inward foreign direct investment (FDI) rose by 14% year-on-year to reach US$81 billion during the 2024-25 fiscal year.

Growth of the Indian economy

E: Estimated; (Source: National Statistics Office)

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately US$20 billion by year-end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

While the U.S. trade policy has raised significant risks for global trade, as discussed above, yet Indias exposure is relatively low compared to China which has been levied with significant duties on electronics, machinery, and other industrial goods.

Securing a favourable trade agreement with the U.S., which is currently underway, would not only help India offset some

of the negative spillovers from global trade tensions but also strengthen bilateral economic ties, enhance investor confidence. This would be further bolstered by Governments strategic approach towards diversification with several other FTAs under negotiation, supporting long-term growth through greater integration into global value chains. While this would entail more imports, but it would also allow greater access to exports through reduced tariffs and other trade barriers under the bilateral trade agreements.

On the domestic front, Indias economic growth is supported by strong consumption and robust policy framework. The following are some of the key growth factors:

Union Budget 2025-26: The

Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasising agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating Rs. 11.21 Lac crores for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts, resulting Rs. 1 Lac crores in tax savings that could boost consumption This along with the sharp hike in the outgo under the Pay Commission would give a substantial boost to the demand.

Prediction of an above normal monsoon in 2025 by the India Meteorological Department augurs well for the countrys farm sector and a moderated food inflation outlook. Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, allowing RBIs Monetary Policy Committee (MPC) to reduce policy rates by 25 basis points in its April 2025 meeting . With Indias CPI inflation projected to fall further for the fiscal year 2025-26, it would give additional headroom for repo rate cuts.

Together with RBIs recalibrated approach to risk weights on bank loans by removing

restrictions on consumer credit, along with postponement of higher liquidity requirements for banks, is expected to rejuvenate retail lending.

Outlook

Indias growth outlook for 2025 remains relatively more stable, albeit a marginal downward revision, driven by strong consumption, particularly in rural areas. In contrast, Chinas GDP growth forecast for 2025 has been lowered to 4% from 4.6%, while the U.S. growth projection has been reduced to 1.8% from 2.7%.

The ongoing tariff war between the US and China presents a strategic

opportunity for India to enhance its position in global trade. As companies look to diversify their supply chains away from China to mitigate risks, India stands to benefit by positioning itself as a competitive alternative manufacturing hub.

The potential reallocation of global manufacturing orders, coupled with Indias large domestic market, skilled workforce, and policy support (such as production linked incentive schemes), makes the country an attractive destination for companies seeking to hedge geopolitical risks.

Global paper and paperboard industry review

The global paper and paperboard market was valued at US$209 billion in 2024.

The growth rate has been 4.4% in 2024 as compared to 5.1% in 2023. The lower growth rate has been mainly due to large capacity expansion in APAC region particularly China and Indonesia leading to oversupply and subdued prices.

In volume terms, the global paper and paperboard market is expected to have expanded by about 1.3% in 2024, compared to growth of 1.1% in 2023. The printing and writing segments have been on a declining trend and is estimated to degrow by around 2% in the next few years. The growth is mainly driven by the paperboard segment which is expected to grow by approximately 2%.

As concern over plastic pollution increases, both consumers and companies are actively shifting toward sustainable packaging alternatives.

This trend is reshaping supply chains and influencing product design strategies, with paper-based solutions gaining preference due to their recyclability, biodegradability, and lower environmental impact compared to plastics.

Governments across the globe are reinforcing this transition through stringent environmental regulations, including bans on single-use plastics, extended producer responsibility (EPR) mandates, and incentives for eco-friendly packaging innovations. For example, the European Unions Packaging and Packaging Waste Directive, along with similar regulations in North America and parts of Asia, is compelling manufacturers to adopt greener materials and reduce waste. In response, major corporations are making public commitments to sustainable packaging targets, further accelerating demand for recyclable paperboard, corrugated boxes, and moulded fiber products.

The total printing & writing market size is currently at ~72 Million MT in volumes which is expected to decline at a CAGR of 2.2% till 2034 due to ongoing e-media penetration & evolving demand patterns. Mature markets like North America & Europe face sharper drops than Asia pacific regions. In developing countries, despite increasing digitalisation, there remains sustained demand from educational institutions and businesses that rely on printed materials for textbooks, examinations, communication,

and record-keeping. Additionally, rising disposable incomes and improved access to education further support paper consumption. The rapid expansion of e-commerce contributes to demand, as printed labels, invoices, and packaging materials are essential components of the supply chain. Growing environmental awareness is also driving the production and adoption of sustainable and recycled paper products, aligning with global green initiatives. Technological advancements in printing processes have further enhanced the quality and efficiency of printed materials, increasing demand for specialty paper.

In Paperboard, the current market size is estimated at ~ 261 Million MT which is expected to grow at a CAGR of 2.2% till 2034. The Paperboard market is thriving due to proliferation of digital commerce, sustainability imperatives, technical innovation, sectoral packaging needs, and regulatory trends. Consumer and regulatory pressure is driving a shift to eco-friendly packaging. Growth in food, beverage, cosmetics, personal care, and pharmaceuticals is driving specialist board formats, especially for fresh, luxury, and ready-to-eat goods.

Global pulp market overview

Pulp, sourced from wood and non-wood fibers through mechanical or chemical processing, continues to witness steady demand due to its widespread applications in consumer goods, commercial printing, and industrial packaging. The demand is largely driven by the sustainable and biodegradable

nature of pulp, making it essential for sectors such as education, print media, personal care, and packaging.

The year 2024 began with high pulp prices, influenced by various factors such as the Russia- Ukraine War and the Red Sea Crisis, impacting the cost structure for pulp producers in Europe and

Canada. In the third quarter, pulp prices decreased as the demand for paper and board remained sluggish. Furthermore, integrated mills in China and Indonesia offered their products at historically low prices. However, the frequent changes in US trade policy is a major downward risk for most commodity prices.

Indian paper and packaging industry overview

Indias paper packaging segment is passing through a positive transformation, catalysed by evolving consumer preferences and regulatory initiatives supporting sustainability.

A 2023 survey (Source: Inshorts) revealed that every four out of five Indian respondents preferred replacing plastic bags with paper alternatives in retail stores, underscoring the rising demand for eco-friendly packaging. The Central Pollution Control Boards measures to curb single-use plastics accelerated the shift toward paper-based packaging, especially in organised retail and commercial markets. Government policies (Make in India, Atmanirbhar Bharat

and PLI schemes) have catalysed the packaging industrys growth.

The Indian paper and paperboard market size is estimated at US$13.7 Billion in 2025, growing at an 6.63%

CAGR and is forecasted to reach US$

18.9 Billion by 2030. The Indian paper and packaging industry has witnessed significant transformation driven by changing consumer preferences and technological advancements. Despite the growing market, Indias per capita paper consumption remains relatively low at 15 kg compared to the global average of 57 kg, indicating substantial growth potential in the domestic market.

(Source : Internal analysis)

The Indian writing and printing paper segment is expected to continue growing on the back of widening national literacy. India accounts for the worlds largest population, with approximately 580 Million individuals in the 5-24 age group. With over 250 Million school-going children, India possesses the highest number of school students the world over. Indias economic development and urbanisation are also increasing the consumption of printed material. Commercial establishments continue to rely on printed media for effective outreach, sustaining the demand for quality writing and printing paper.

SWOT analysis of the Indian paper and packaging industry

Strengths

Growing demand for packaged products

Wide range of paper varieties being produced

Expansion of sectors like FMCG, E-commerce, and pharmaceuticals

Government emphasis on educational reforms and policies

Increased income for plantation farmers Well-established manufacturing infrastructure

Presence of financially unsustainable paper

high capital intensive

Increasing need for scalability to maintain viability

Low R&D spending

Lower per capita consumption Growing demand from downstream industries

Government initiatives - PLI scheme Innovation in product development

Rising urbanisation and increased literacy Regulatory pressure on sustainable packaging.

Opportunities

Threats

Surge in lower-priced imports Rising digitalisation

High energy costs

Volatility in raw material availability & prices

Demand drivers

E-commerce

Surge

Rising Middle Class & Urbanisation

Education & Literacy Gains

Boom in Packaging Segment

Low Per Capita Usage

Policy Support & Sustainability Push

Company review (including subsidiary companies)

The Company is the largest producer of Office & Communication paper in India, second largest player in Paperboard and the largest player in Corrugated Boxes.

The Company also produces specialty papers, mono cartons and labels at its various production units.

Uncoated writing-printing and specialty papers

The writing and printing paper market has faced significant challenges, particularly in the second half of the financial year, due to a steady influx of imported paper offered at highly competitive prices. A growing number of publishers have shifted to imported materials, prompting domestic mills to slash prices sharply during 2024-25. Despite this, JK Paper managed to achieve respectable volumes, supported by strong relationships with printers and publishers and a diverse product portfolio tailored to market needs. The successful conversion of large tenders also contributed to volume growth in this segment.

The copier paper segment was similarly under pressure in 2024-25, driven by high import volumes and intense competition among domestic mills. However, JK Paper, leveraging its strong Brand salience, maintained a price premium in the market while continuing to deliver healthy volumes.

Highlights, 2024-25: The Company sold 4.19 Lac tonnes of Uncoated W&P and Speciality paper (including exports) in 2024-25.

Paperboard

Despite the Paperboard market in India remaining highly competitive in 2024-25, JK Paper achieved reasonable growth in this segment. The domestic market faced a surge of low-priced imports, creating significant pricing pressure. However, the Company successfully established sales of new products and focused on promoting value-added offerings. The Company also explored and entered new export markets where there was no presence earlier, resulting in increased export volumes. Strong and sustained relationships with

converters and distributors also played a key role in supporting the growth amid these challenging market conditions.

Highlights, 2024-25: The Company sold 3.2 Lac tonnes of Paperboard (including exports) in 2024-25.

Coated paper

Throughout the year, demand for coated paper remained stable, but increased imports exerted pressure on pricing during the year. Over 60% of the demand was met by imports.

Highlights, 2024-25: The Company sold 0.58 Lac tonnes of Coated paper in 2024-25.

Corrugated boxes

JK Papers Corrugated Box segment registered a 10% growth in volumes during 2024-25, outperforming the broader FMCG sector, which grew by approximately 2%. This performance reflects the Companys strategic efforts to expand its customer base and optimise operational efficiencies.

However, the year was marked by intense competitive pressures, driven by industry overcapacity and aggressive pricing mechanisms such as reverse auctions. These factors, combined with volatility in kraft paper prices, resulted in significant margin pressures. The frequent fluctuations in input costs posed challenges in the timely pass-through to customers, adversely impacting profitability during the year.

Monocarton and labels

The Monocarton and Labels segment demonstrated resilience during the year despite severe challenges on margins. In 2024-25, JK Paper successfully expanded its footprint by securing prestigious export orders across key international markets, including the UAE, Europe,

and Africa. Domestically, the Company pursued new opportunities in niche categories such as footwear and seafood packaging.

The Rigid Box category is poised for growth, with focused efforts on penetrating high-potential segments such as electronics, mobile devices, and personal healthcare.

Demand for the Companys products and market prices

In 2024-25, the demand for JK Papers products remained resilient despite significant market challenges, particularly in the writing and printing (W&P) and copier paper segments. However, JK Paper sustained decent volumes in W&P by leveraging strong relationships

with printers and publishers, offering a wide product range, and successfully converting large tenders. In the copier segment, although high import volumes and intense domestic competition persisted, the Company maintained a price premium owing to its strong Brand presence. The Paperboard market was also intensely competitive due to a flood of low-cost imports, yet JK Paper achieved reasonable growth by focusing on value-added products, launching new offerings, and expanding into untapped export markets. Coated paper demand remained stable overall, though pricing was impacted by increased import activity. Strong ties with converters and distributors across segments further supported volume stability in a challenging pricing environment.

Functional review

Raw material management

JK Paper Ltd. follows a strategic and proactive approach to wood procurement challenges. The Company focuses its efforts within a 200 km radius of its manufacturing units, aiming to secure a stable wood supply by promoting plantations that exceed its annual requirements. This initiative mitigates the impact of increased demand from newly established wood-based industries.

Through a comprehensive outreach program, JK Paper actively engages with farmers to promote the cultivation of pulpwood species such as Eucalyptus, Subabul, and Casuarina. This initiative includes organised visits to company facilities, clonal production centers, and demonstration plots, where farmers are educated on the economic advantages of pulpwood cultivation in comparison to traditional cash crops.

Reinforcing its commitment to community welfare and sustainable forestry, JK Paper achieved FSC? Forest Management (FM) certification for over

one-third of its plantations in 2024.

JK Papers farm forestry programme has significantly contributed to sustainable livelihoods in rural communities by ensuring farmers receive stable incomes and access to equitable markets. Concurrently, the programme has established a renewable and dependable raw material source for the Company.

Over the past two decades, nearly 100,000 farmers have benefited from these initiatives, enhancing green cover and reinforcing the Companys commitment to being both wood-positive and carbonpositive.

To enhance its initiatives, JK Paper has upgraded its infrastructure for cultivating genetically superior, fast-growing clones,

supported by comprehensive research and development efforts to boost yield and productivity. These site-specific, high-performance clones of Subabul, Casuarina, and Eucalyptus are designed for rapid growth, providing returns within a three-year rotation cycle.

India once again witnessed a year of acute pulpwood scarcity, driving wood prices to surge by over 80% compared to normal levels. While this has been increasingly recognised as a cyclical phenomenon, the impact on wood- based industries was severe. JK Paper, however, is well-positioned to navigate this challenge, owing to its industryleading long-term vision for sustainability. The situation has highlighted the urgent need for all wood-dependent industries to adopt promotional farm forestry as a path toward resource accountability and long-term viability.

Procurement

The fiscal year 2024-25 began with the anticipation of a price correction, with prices expected to return to pre-COVID

levels. This correction occurred gradually in both chemical and coal prices, which assisted in managing other input costs. The economic slowdown in China in 2024 alleviated demand pressure, significantly improving the supply situation. Overall, the impact on procurement was positive, with the exception of a few materials like starch, where the continued high demand sustained elevated price levels.

In response, the Company took measures to mitigate this impact by rapidly developing alternative sources.

Product development

In response to growing concerns about plastic-based food packaging,

In addition, JK Paper continues to strengthen its value-added product portfolio for the pharmaceutical, FMCG, and QSR segments through close collaboration with customers. Recent introductions include Antifungal Board, Antifungal Stiffeners, Cigarette Board, 2PE Coated Boards, and PFAS-free hygienic food wrapping paper under the PACK FRESH Brand, designed to offer high oil and grease resistance while adhering to global food safety and sustainability standards.

These innovations reflect the Companys ongoing commitment to responsible manufacturing and customer-centric product development.

Digital transformation

Sustainability

Sustainability is an integral aspect of JK Papers business strategy, including environmental stewardship, social responsibility, and economic growth. Multiple steps were taken to drive the sustainability journey. Basis that,

JK Paper has identified key pillars for its ESG journey, drawing baselines and competitive benchmarks for critical KPIs. This structured approach guides strategic investments toward carbon neutrality, energy resilience, and biodiversity conservation. The Company has made efforts to decrease its ecological footprint by optimising energy usage, focusing on green energy, and implementing advanced water and waste management systems. Through new technologies and modernisation efforts, coal consumption has reduced significantly. At the unit JKPM, over 70% of total energy consumption is met through green energy. Overall, almost 60-65% of total energy consumption is met through green energy. The Company has further planned to utilise 100% power requirement for the upcoming

BCTMP pulp plant at unit CPM through renewable source. JK Paper aims to adopt sustainable practices, achieving carbon neutrality across its operations and enhancing biodiversity. On the other front, the Company has been continuously targeting to reduce the water & steam consumption from current levels in the range of 5-10% to optimise the usage and become more sustainable. The plant recovers 100% of paper-machine backwater using disc filters and utilises reclaimed water across the mill. Along with this, the Companys Social Farm Forestry program spans over 500,000 ha, enabling farmers to grow sustainable pulpwood trees, enhancing yields, and increasing income. This initiative conserves natural forests and has benefited more than 75,000 farming families. Through ambitious ESG targets, JK Paper has transitioned from a traditional pulp & paper enterprise to a carbon and water-positive, ethically driven, resource-efficient manufacturer.

Human resources

At JK Paper, Human Resources serves as a strategic enabler, supporting the Organisations journey as a progressive and future-ready enterprise. Rooted in our core values and a strong people- first philosophy, HR continues to lead initiatives that strengthen our talent pool and ensure alignment with the Companys evolving business priorities.

The Company is committed to nurturing a diverse and inclusive workplace, where varied perspectives contribute to innovation, stronger decisionmaking, and long-term organisational resilience. Our structured development frameworks, performance-linked growth opportunities, and a culture of recognition empower employees throughout their professional journey.

Aligned with JK Papers digital transformation agenda, HR is actively driving the development of digital and leadership capabilities across all functions. Learning programs are designed to

enhance agility, foster innovation, and equip teams with skills for a tech-enabled future. With the Companys foray into the packaging business, there is also a renewed focus on upskilling to meet new industry challenges and opportunities.

Employee engagement continues to be a key pillar of our people strategy, with initiatives aimed at building a connected, motivated, and purpose-driven workforce. Through regular communication, feedback mechanisms, and inclusive events, we foster a sense of belonging and alignment with JK Papers vision.

By prioritising employee well-being, continuous learning, capability building, and meaningful engagement, HR remains instrumental in building a high- performing, future-ready workforce that drives JK Papers sustainable growth.

Financial overview

Analysis of the profit and loss statement

Revenues: The Consolidated Revenue increased from Rs. 7,000.26 crores in 202324 to Rs. 7,120.20 crores in 2024-25.

Expenses: Total expenses increased from Rs. 5,561.75 crores in 2023-24 to Rs. 6,299.37 crores in 2024-25.

A significant increase in raw material cost and lower realisation across all categories have impacted performance

during the quarter and year as a whole. The selling prices continued to remain under pressure due to increase in imports. However, sales volumes grew in Paper & Boards during the year and the Company continues to focus on operational efficiencies.

Analysis of the Balance Sheet

Sources of funds: The capital employed by the Company increased from Rs. 6,294 crores as on March 31,2024, to Rs. 6,934 crores as on March 31,2025. Return on capital employed stood at 7.9% in 2024-25 compared to 20.5% in 2023-24. The net worth of the Company increased by 6.67% from Rs. 5,070 crores as on March 31,2024 to Rs. 5,407 crores as on March 31, 2025. Total debt decreased 17.67% to Rs. 1,749.74 crores as on March 31,2025 mainly due to scheduled

repayment of debt and Rs. 380.23 crores of prepayment. The Companys interest cover stood at a comfortable 5.83x in 2024-25 (8.86x in 2023-24).

Applications of funds: Property, Plant and Equipment (PPE) increased from Rs. 5,437 crores as on March 31,2024 to Rs. 5,439 crores as on March 31,2025.

Working capital management

Current assets of the Company decreased by 6.4% from Rs. 3,057.64 crores as on

March 31,2024 to Rs. 2,861.88 crores as on March 31,2025 mainly due to decrease in investment and quick ratios of the Company stood at 1.87 and 1.05 respectively in 2024-25 compared to 2.07 and 1.43 respectively in 2023-24. The finished goods inventory days stood at 13 in 2024-25 compared to 11 in 2023-24.

Details of significant changes

(i.e. change of 25% or more compared to the immediate previous financial year)

Financial Ratios

Risk management

Demand risk: The growing trend of digitisation may negatively affect demand.

Mitigation: To address this, the Company has diversified into Paperboard and corrugated packaging as well as the animal nutrition sector, lessening its reliance on the writing and printing paper segment.

Resource risk: Overuse of water and inadequate discharge management could compromise resource security and environmental sustainability.

Mitigation: The Company proactively reduced water usage and invested in advanced technologies to improve consumption efficiency, while enhancing effluent recycling and treatment processes.

Regulatory risk: Failure to comply with statutory regulations could lead to penalties and damage the Companys credit rating.

Mitigation: The Company implemented a comprehensive compliance system and monitoring framework to manage regulatory requirements effectively. Certifications such as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 demonstrate the Companys commitment to maintaining high standards in quality, environmental management, and safety.

Raw material risk: Shortages of critical raw materials like wood, pulp, coal, and chemicals could impact production capacity and profitability.

Mitigation: The Company initiated strong farm forestry programmes near its manufacturing plants to ensure a stable local wood supply, reducing logistics costs. Moreover, extensive R&D has led to the development of high-yield clones with shorter maturation periods, which are offered to farmers with secure buyback agreements, ensuring both the farmers success and the Companys raw material supply. Strategic sourcing agreements with suppliers have also been established to ensure reliable volumes of other key materials.

Internal control systems and their adequacy

JK Paper has established a comprehensive internal control framework tailored to the nature, size, and risks of its business. This internal control environment facilitates efficient operations, asset security, fraud/error prevention and detection, accurate and complete accounting records, and timely preparation of reliable

to systems and processes. Operating management monitors the internal control environment closely and ensures effective implementation of audit recommendations. The Audit Committee of the Board oversees the performance of the Internal Audit Function, reviews key findings, and provides strategic guidance.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those either expressed or implied. Important factors that could make a difference to the Companys operation include among others, economic conditions affecting demand/ supply

and price conditions, variation in prices of raw materials, changes in Government regulations, tax regimes, economic developments and other incidental factors.