Kanpur Plastipack Ltd Management Discussions

Management Discussion & Analysis

GLOBAL ECONOMIC OVERVIEW

The global economy is witnessing a gradual deceleration, with GDP growth expected to moderate from 3.2% in 2024 to 3.0% in 2025, and further to 2.9% in 2026. This slowdown is largely driven by tighter monetary conditions in advanced economies, softening global demand, and escalating geopolitical and trade-related uncertainties. Advanced economies are projected to grow at a subdued pace of around 1.3%, reflecting the continued impact of high interest rates and cautious consumer sentiment. Meanwhile, emerging markets are expected to remain relatively resilient, with projected growth of 4.1% in 2025, although some moderation is likely as global financial conditions tighten and export momentum stabilizes.

On the policy front, central banks are proceeding cautiously with interest rate normalization. While global inflation is gradually easing - from 4.5% in 2024 to an estimated 3.6% in 2025 - it continues to pose challenges in select regions, particularly where tariff-related pressures and commodity price volatility remain elevated. Protectionist policies, such as increased tariff rates in some advanced economies, have distorted trade flows and introduced new uncertainties, forcing businesses to reassess their sourcing strategies and invest in more resilient supply chains.

In this evolving environment, supply chain resilience has become a strategic imperative. Companies are placing greater emphasis on building shock-absorbing capabilities and ensuring business continuity through diversified sourcing and agile operations. Agility, cost efficiency, and market diversification are emerging as key themes across industries. The company continues to closely monitor these global developments and remains focused on aligning its operations, investments, and long-term strategy with the dynamic macroeconomic landscape.

REGIONAL HIGHLIGHTS

• US: Growth slowing from 2.8% (2024) to 1.5% (2025) and 1.3% (2026); labor and capex expected to soften under tariff pressure

• Euro Area & UK: Modest growth (1.0-1.3%) amid disinflation; cautious ECB/BoE easing expected

• China: Facing domestic headwinds, growth tapers to 4.4% in 2025

• India: Sustains robust momentum at 6.6% growth.

• Other regions: Mixed outlook - ASEAN (4.5%), MENA (3.6%), Sub Saharan Africa (3.1%)

INDIAN ECONOMIC OVERVIEW

India continues to lead the global growth narrative, having emerged as the worlds fourth-largest economy in 2025, propelled by domestic reforms and strategic global positioning under the Aatmanirbhar Bharat vision. According to IMF projections, India is expected to remain the fastest-growing major economy, with GDP growth forecast at 6.2% in 2025 and 6.3% in 2026.

Provisional estimates from the Ministry of Statistics indicate real GDP growth of 6.5% in FY 2024-25, supported by strong construction (+9.4%), services, robust private consumption (+7.2%), and healthy investment activity (+7.1%). Inflation has moderated, with headline CPI easing to 3.6% in February 2025, while RBI projects inflation to average around 4.0-4.2% in FY 2025-26.

External sector performance remains solid: Exports have surged to a record US$ 825 billion in FY 2024-25, reflecting a 76% increase over the past decade, driven by engineering goods, electronics, pharmaceuticals, and services. With inflation in check and banks in good health (public sector NPLs around 2.6%), macroeconomic fundamentals remain sound.

Overall, Indias strong growth trajectory, anchored by resilient domestic demand, controlled inflation, rising exports, and progressive reforms, positions it well to sustain momentum, building on its role as a key engine of global economic growth.

Global Economic Growth Rates (2025 - 2026)

PLASTIC PACKAGING INDUSTRY OVERVIEW

Global Market Overview Global Plastic Packaging Market

Market size in Million Tons

The global plastic packaging market is expected to grow from 107.06 Million Tons in 2025 to 125.99 Million Tons by 2030, at a CAGR of 3.31%. This growth is occurring amid significant shifts driven by evolving regulations and sustainability imperatives.

Regulatory frameworks across countries are becoming increasingly comprehensive, driving a shift toward circular economy models and sustainable packaging solutions. The industry is under growing pressure to transition to recyclable and reusable materials, with sustainability commitments from major stakeholders prompting increased investments in recycling infrastructure - particularly for food-grade applications. This transition is also fostering innovation in packaging formats that meet both environmental and performance criteria.

Technological advancements in materials and manufacturing are further enabling the broader application of sustainable packaging across sectors such as food, beverages, cosmetics, and pharmaceuticals. Innovations like bioplastics, active packaging, and heat-resistant materials are helping the industry address regulatory, environmental, and consumer demands - while ensuring cost-effectiveness and functionality.

• Growing Usage of Convenient Packaging

• Growth of Consumer Electronics and Appliances

• Stringent government regulations regarding plastic waste disposal

• Volatility in raw material prices

• Growth prospects in emerging economies

• Development of recyclable & sustainable packaging solutions

Global Plastic Packaging Market: Key Drivers, Restraints, Opportunities, and Regional Dynamics

Source: https://www.mordorintelliaence.com/industry-reports/ plastic-packaging-market

https://www.coherentmarketinsiahts.com/market-insiaht/plastic- packaaina-market-394

INDIA MARKET OVERVIEW

India Plastic Packaging Market

Market size in US$ Billion

The Indian plastic packaging market is projected to be valued at US$ 22.44 billion in 2025 and is expected to grow to US$ 26.13 billion by 2030, registering a CAGR of 3.09% during the forecast period (2025-2030). Plastic continues to be one of the most widely used materials in packaging, primarily due to its lightweight nature and cost-effectiveness, making it a preferred choice across diverse end-user industries.

Plastic packaging is at the forefront of innovation in the Indian packaging landscape. Its versatile applications have made it a cornerstone for packaging across multiple sectors. Compared to alternative packaging materials, plastic offers distinct advantages such as high impact strength, rigidity, and excellent barrier properties, contributing significantly to its growing adoption in recent years.

Polyethylene is a dominant material used in the manufacture of plastic bags, films, and geomembranes. As a partially crystalline thermoplastic resin, it is valued for its lightweight, high resistance, low moisture absorption, and sound-insulating capabilities. Among its variants, Low-Density Polyethylene (LDPE) is extensively used for producing plastic bags. These bags are soft, flexible, and available in translucent forms.

The market is increasingly being shaped by regulatory challenges, as environmental concerns about plastic waste grow. The Indian government is responding with stricter policies aimed at reducing packaging-related environmental impact and promoting more effective waste management practices. These evolving regulations may significantly influence the trajectory of the plastic packaging industry in the coming years.

Source: https://www.mordorintettiaence.com/industry-reports/india- Dtastic-packaaina-market

BUSINESS OVERVIEW

Established in 1971, Kanpur Plastipack Ltd. (KPL) is one of Indias most respected and long-standing players in the industrial bulk packaging segment, with over 50 years of legacy. The company has emerged as a fully integrated manufacturer and exporter of a wide array of Flexible Intermediate Bulk Containers (FIBCs), PP woven fabrics, PP multifilament yarns, and UV masterbatches, catering to a diverse global customer base across 60+ countries.

With four strategically located manufacturing units, KPLs operations are designed for process automation and global quality compliance. KPLs in-house ERP systems support real-time decision-making, while its BRC, ISO and food-grade-certified facilities allow it to serve premium segments such as food, pharma, and agro-based exports.

In FY 2024-25, KPL reported record revenues of Rs. 600+ Cr. and a net profit of Rs. 10.7 Cr., reflecting its strong order book, operational improvements. The strategic divestment of the CPP films business allows it to focus on its high-margin core Raffia segment.

HOW WE OPERATE

1. Vertically Integrated Manufacturing

From polymer extrusion to yarn, fabric, and final FIBC conversion - all processes are in-house, enabling cost control, quality assurance, and flexibility.

2. FIBC as the Core Growth Driver

FIBC/Jumbo Bags contribute the highest margins. The company is strategically shifting more fabric into finished FIBC conversion to improve profitability.

3. Export-Led Business Model

Over 75% of revenues come from exports across 40+ countries. KPL has dominant share in key markets like Germany, Brazil, and is growing rapidly in Japan.

4. Customer Retention & Customization

Operating on a B2B model via distributors, 80% of business is repeat. The company manages over 2,500 SKUs, offering customized packaging solutions globally.

5. Lean, Scalable Operations

Focus is on OPEX-led scaling (more stitching, skilled manpower) rather than high capex. Cash velocity and asset efficiency are actively monitored.

6. Sustainability at the Core

Approx. 50% energy via solar, zero liquid discharge, 100% plastic waste recycling. Certified for global food-grade packaging standards (BRCGS, AIB, etc.).

FIBC AND FABRICS

The Flexible Intermediate Bulk Container (FIBC), Fabric, and Small Bags segment continues to anchor companys operations, with a combined volume of 26,007 MT in FY 2024-25, up 5.5% From 24,643 MT in the previous year. This growth reflects sustained demand from global customers, increasing traction in new markets, and operational improvements. The Company continues to command a leadership position in the FIBC segment, contributing 44% of total revenues, supported by its world-class, food-grade certified facilities and strong compliance with global safety and hygiene standards. Strategic efforts to expand market share in India and abroad most, notably through successful entry into Japan, are expected to further enhance volumes and profitability. With clear focus on customization, geographical diversification, and high-margin product variants, this segment is well-positioned to sustain growth and reinforce KPLs leadership in industrial bulk packaging solutions.

MULTIFILAMENT YARN (MFY)

The Multifilament Yarn (MFY) segment continues to play a critical backward-integrated role companys manufacturing ecosystem. In FY 2024-25, MFY production stood at 3,864 MT, reflecting a marginal increase from 3,777 MT in the previous year. The in-house production of MFY not only ensures consistent supply and quality for captive consumption in the FIBC and fabric divisions but also contributes to better cost control and operational efficiency. The Company continues to invest in process improvements and quality enhancements in this segment to support higher throughput and meet evolving technical specifications of its downstream applications.

TRADING OF PLASTIC GRANULES

The Company has been operating as a Dealer Operated Polymer Warehouse (DOPW) of Indian Oil Corporation Limited. During the year, this activity faced headwinds due to heightened competition and evolving market dynamics. Despite these challenges, the Company remains committed to strengthening this vertical by enhancing customer engagement and expanding logistical capabilities. The recent establishment of a new warehouse in Bareilly is expected to improve service efficiency and support future recovery in performance.

RENEWABLE ENERGY

The company continues to advance its sustainability agenda by integrating renewable energy across its operations. The company has strategically adopted a combination of rooftop solar installations and long-term power purchase agreements to increase its share of clean energy consumption. 47% of the companys total power consumption is met through solar energy.

Installed Solar Capacity (as of FY 2025)

Location / Model	Capacity (KW)	Model
Unit 3 - Rooftop Solar (New)	1,000	OPEX
Unit 3 - Rooftop Solar	2,750	OPEX
Long-Term Open Access	12,375	OPEX (Open Access)
Unit 3 - Solar Carport (Parking Area)	71.6	CAPEX
Total Installed/Contracted Capacity	16,197.6 KW

Segment-wise performance

Products	FY 2023-24			FY 2024-25
	Quantity (MT)	Amount (Rs. in Lacs)	(%) of total revenue	Quantity (MT)	Amount (Rs. in Lacs)	(%) of total revenue
FIBC	13,546	25,487	50.56%	13,913	28,289	44.02%
Small Bags	884	1,099	2.18%	690	999	1.55%
Fabric/Liner	10,213	13,088	25.96%	11,404	15,722	24.46%
MFY	3,777	4,936	9.79%	3,864	5,324	8.28%
CPP	1,601	1,877	3.72%	4,909	6,671	10.38%
Others	1,660	3,923	7.79%	4,343	7,266	11.31%
Total	31,681	50,410	100.00%	39,123	64,271	100.00%

Divestment of CPP segment:

The divestment of the CPP (Cast Polypropylene) division was a strategic decision aligned with companys long-term vision. As a non-core, low-margin business, the CPP segment was not in sync with the Companys strategic focus on its high-performing Raffia segment. Additionally, the land and infrastructure vacated through this divestment will be repurposed for expanding core operations, supporting the Companys future growth plans.

FINANCIAL PERFORMANCE OVERVIEW

Particulars (in W Lacs)	FY 2023-24		FY 2024-25
	Standalone	Consolidated	Standalone	Consolidated
Net Worth	18,006	17,999	20,526	20,556
Total Income	50,411	50,887	64,271	64,312
Profit Before Tax	103	152	2,389	2,435
Net Profit	36	81	1,070	1,111
EBITDA	3,068	3,119	5,902	5,948
EPS	0.17	0.38	4.92	5.11
Gross Block	36,172	36,605	30,296	30,704

On a standalone basis, total income increased from Rs. 50,411 Lacs to Rs. 64,271 Lacs, with net profit jumping from Rs. 36 Lacs to Rs. 1,070 Lacs. PBT reached Rs. 2,389 Lacs, EBITDA rose to Rs. 5,902 Lacs, and EPS improved sharply from Rs. 0.17 to Rs. 4.92. These results reflect a strong turnaround and improved shareholder value.

KEY FINANCIAL RATIOS OVERVIEW

Products	FY 2023-24	FY 2024-25
Net Worth	18,006	20,526
Total Income	50,411	64,271
Profit Before Tax	103	1,227
Net Profit	36	1,070
EBITDA	3,068	5,902
Gross Block	36,172	30,296
Debtors Turnover Ratio	7.93	7.63
Inventory Turnover Ratio	5.45	6.14
Interest Coverage Ratio	1.12	2.35
Current Ratio	1.07	1.21
Debt Equity Ratio	0.59	0.39
Operating Margin Ratio	3.62	7.13
Net Profit Margin Ratio	0.07	1.72
EBITDA %	6.09%	9.18%
EPS	0.17	4.92

The Company reported notable improvements in key financial ratios, reflecting enhanced operational efficiency and financial health.

STRATEGIC & OPERATIONAL HIGHLIGHTS

During FY 2024-25, the company undertook several strategic shifts aimed at enhancing profitability, deepening export penetration, and repositioning the business around high-value product lines. A major focus was placed on increasing the share of FIBC (Flexible Intermediate Bulk Containers) in the revenue mix, which contributed significantly to operating margins also improved realizations without proportional capital expenditure. Exports remained a key strength, contributing over 75% of revenues. The company strengthened its market share in key global territories such as Germany, Brazil, and Japan establishing itself as a reliable partner in tightly regulated, high-compliance markets.

Operationally, the company emphasized an asset-light, OPEX-led expansion strategy by adding skilled manpower and debottlenecking production capacities, which allowed topline growth without significant capex. Companys unique "mass-boutique" model, is supported by strong customer retention, where almost 80% of the business comes from repeat orders. The company also retain a healthy network of global distributors, with continuous churn to maintain profitability.

The company is certified under BRCGS A+, AIB, Kosher, and Halal, enabling exports to food, animal feed, and chemical segments. The company is now sharpening its focus on core packaging solutions and exploring new opportunities in distribution and B2C expansion for future value creation.

SUSTAINABILITY OVERVIEW

The company continues to demonstrate a strong commitment to environmental responsibility through a focused sustainability strategy. In addition to approx 50% power need sourcing through solar power, compliance with compliance with environmental regulations, the company adheres to the Extended Producer Responsibility (EPR) framework under Indias Plastic Waste Management Rules. All products are designed to be fully recyclable, aligning with the Companys sustainable manufacturing philosophy. In addition, the company follows a Zero Liquid Discharge (ZLD) practice, reinforcing its efforts to minimize environmental impact and promote responsible resource use.

STRENGTHS, CHALLENGES & OPPORTUNITIES

• Vertically integrated manufacturing ensures efficiency, quality control, and customization.

• Strong export orientation, backed by long-standing relationships in global industrial packaging markets with strong customer retention.

• Holds international certifications (BRCGS, AIB, ISO, SEDEX, Kosher, Halal), enabling participation in regulated food and pharma sectors.

• Sustainability-driven operations with focus on renewable energy, waste recycling, and zero liquid discharge.

• Raw material price volatility, particularly in polypropylene, influenced by crude oil trends and global supply dynamics.

• Foreign exchange fluctuations and currency instability impacting export margins and pricing consistency.

• Geopolitical uncertainties which also lead to freight cost volatility and container availability and may impact global shipping and delivery timelines.

• Evolving global regulations around plastic usage, recyclability, and environmental compliance require continuous adaptation and investment.

• Growing global demand for flexible and sustainable industrial packaging, especially in food, agri, and chemicals.

• Benefiting from the global "China+1" strategy, shifting sourcing preference toward Indian manufacturers.

• Potential to enter distribution and downstream models, moving closer to end-use markets.

• Rising emphasis on ESG-aligned supply chains, reinforcing KPLs position as a responsible global partner.

Internal Control System and Their Adequacy

The Company has a robust internal control system in place concerning its financial statements. All transactions are duly authorized, accurately recorded, and reported to the management. It adheres to all relevant Accounting Standards for maintaining its books of accounts and preparing financial reports. The internal auditor regularly reviews and evaluates these controls to ensure compliance with the Companys established policies.

Risk Management

The company actively monitors a range of external and operational risks that influence its performance, particularly as an export-driven industrial packaging company. Foreign exchange risk is a key area of focus due to the companys significant overseas exposure. This is managed through a clearly defined policy, overseen directly by senior leadership and supported by external advisors, with regular reviews to guide hedging and pricing strategies.

Human Resources

The company recognizes its workforce as a vital pillar of its operations, particularly given the labour-intensive nature of its manufacturing processes. The companys shift in strategic focus from fabric sales to finished FIBC conversion has increased its dependence on semi-skilled and skilled manpower.

The company remains committed to strengthening its human capital through focused investments in training and skill development. Employee retention levels remain strong, underpinned by consistent demand, repeat business, and a trusted operational environment. The companys industrial relations framework remains stable, with a continued focus on skill development, productivity enhancement, and workforce alignment with its evolving product mix. As of 31^st March, 2025, the company has 1,308 number of employees.

Outlook

A major milestone during the last year was the divestment of the under performing CPP division, which has enabled the Company to concentrate on its core, margin-accretive businesses and adopt a more disciplined capital allocation approach. The vacated land and infrastructure from this division will be effectively repurposed to support the expansion of core operations, ensuring optimal asset utilization in line with long-term strategic goals.

The company is scaling up the Raffia division to bridge the volume gap from the divestment by debottlenecking and undertaking productivity enhancements across business verticals. These efforts, are expected to improve production flow, asset efficiency, and overall throughput - strengthening the Companys operating leverage and margins.

The company is also seeing positive momentum across key business areas. Sales realizations in the FIBC division are improving, and the companys strategic foray into the Japanese market - one of the largest global importers of FIBCs - has begun to gain traction, with regular shipments now underway.

With a reinforced balance sheet, sharpened business focus, and a commitment to innovation and execution, we are well-positioned to capitalize on emerging opportunities and solidify its leadership in the global industrial bulk packaging space.

Disclaimer

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward-looking within the meaning of applicable securities laws. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. Factors such as economic conditions, price conditions, in domestic and overseas markets, competition, government regulations, tax laws, and other factors could impact the actual results.