Kanpur Plastipack Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The global economy demonstrated resilience in 2025 amid heightened geopolitical tensions, including ongoing conflicts between Russia and Ukraine and in key regions such as West Asia, which have contributed to supply chain disruptions, elevated energy prices, increased shipping costs and uncertainty in global trade. These disruptions, besides challenges such as increased tariffs, trade policy issues, and fiscal consolidation across major economies, created near-term growth pressure. However, according to the International Monetary Fund (IMF), global growth remained steady from 3.3% in 2024 to 3.4% in 2025. Headwinds from shifting trade policies are offset by surging technology-related investment, including artificial intelligence (AI), fiscal and monetary support, and supply chain diversification.

The advanced economies expanded at a moderate pace, at approximately 1.9% in 2025, driven by relatively stable labour markets, accommodative financial scenarios, and recovering demand. Similarly, Emerging Markets and Developing Economies (EMDEs) experienced steady growth, rising to 4.4% in 2025, led by improving manufacturing and services activity, infrastructure investment and domestic consumption.

REGIONAL HIGHLIGHTS

? The United States economy demonstrated resilience in 2025, recording a 2.1% growth, driven by investment in technology, favourable financial conditions, policy support, and the adaptability of the private sector. This is likely to grow by 2.3% in 2026 and 2.1% in 2027

? Euro Area & UK: Continues to experience subdued growth (1.4% and 1.3%, respectively), primarily due to persistent structural headwinds, rising energy costs and weak demand conditions

? China achieved 5.0% growth in 2025, supported by proactive government measures, credit flow towards infrastructure, and strong export performance

? Indias growth is likely to remain strong at 7.6%

? Other regions: Mixed outlook - ASEAN (4.5%), MENA (3.2%), Sub-Saharan Africa (4.5%)

INDIAN ECONOMIC OVERVIEW

The Indian economy remained one of the Fastest-growing major economies in FY 2025-26, supported by resilient domestic demand, infrastructure-led investment and policy reforms. According to the Second Advance Estimates released by the National Statistical Office (NSO), real GDP is estimated to grow by 7.6% in FY 2025-26, driven by strong private consumption and investment activity. The services sector remained the key growth driver, while manufacturing witnessed continued improvement supported by government-led production initiatives and infrastructure spending. Real Gross Value Added (GVA) is estimated at 294.40 Lacs Cr., reflecting growth of 7.7% over FY 2024-25.

India continues to remain among the worlds largest economies, currently ranking as the sixth-largest economy globally in nominal GDP terms as per the IMF. Structural reforms such as GST, Production Linked Incentive (PLI) schemes, and Make in India 2.0 continue to improve formalization, manufacturing competitiveness and ease of doing business, while strengthening Indias position within global supply chains. Manufacturing activity remained strong, with the HSBC India Manufacturing PMI rising to 54.7 in April 2026, supported by domestic demand and higher output levels.

The conflict in West Asia and disruptions across global trade routes have created fresh uncertainty around energy prices, logistics and availability of critical industrial inputs. As an import-dependent economy for crude oil and intermediate goods, India remains exposed to global supply chain disruptions and commodity price volatility. However, diversified sourcing strategies, domestic manufacturing capabilities and integration with emerging markets are helping mitigate external risks and support industrial continuity.

The governments large-scale investments, reforms and flagship initiatives, such as Make in India, Product-Linked Incentive (PLI) Schemes have been instrumental in fostering industrial growth. The PLI scheme has attracted investments of approximately 2.16 Lacs across 14 key sectors, in line with the national goals like Atmanirbhar Bharat and Indias vision of a US$ 5 trillion economy.

Indias Index of Industrial Production (IIP) registered a growth of 4.1% in March 2026, supported by 4.3% growth in the Manufacturing sector and 5.5% growth in Mining activity, reflecting continued resilience in industrial and infrastructure-led economic activity.

Inflation moderated significantly during the year, with the RBI lowering its CPI inflation forecast for FY 2025-26

to 2.0%, supported by favourable supply conditions and easing food prices. In response, the RBI reduced the repo rate cumulatively to 5.25%, supporting credit availability and investment activity. Indias exports are projected to approach US$ 1 trillion in FY 2026-27, strengthened by trade agreements, manufacturing scale-up and improving export competitiveness.

(Source: Tradingeconomics, Tradingeconomics, MOSPI, RBI, PIB, Fortuneindia)

The global plastic packaging market size is estimated at US$ 509.4 billion by 2026, growing from US$ 493.42 billion in 2025. The industry is projected to reach US$ 597.43 billion in 2031, increasing at 3.24% CAGR over 2026-2031. The global plastic packaging market is poised for evolution, driven by heightened regulatory scrutiny, rising convenience food consumption, cost-competitive advantages over alternative substrates, and an accelerating shift toward sustainability.

With an aim of reducing plastic waste and promoting the circular economy, governments across regions are progressively reinforcing policy frameworks. These measures are influencing material choices, reshaping production processes, industry dynamics and long-term investment decisions.

Sustainability emerges as a crucial driver of growth in this sector, as leveraging recyclable and reusable packaging solutions is increasingly emphasized. Environmental responsibility initiatives integrated by major brand owners have supported expanding advanced recycling systems, strongly emphasizing food-grade and premium packaging requirements. Similarly, packaging formats are re-engineered to offer functional performance and environmental compliance.

Owing to technological advances in materials and manufacturing, this transition is further strengthened. Advances in bio-plastic innovation, smart packaging technologies, and high-performance materials are broadening the use of sustainable packaging in food, pharmaceutical, beverage and personal care industries. Collectively, these factors are expected to strengthen the industrys growth outlook, bolstered by innovation, regulatory compliance, and evolving customer expectations.

Drivers

? Growing demand from the pharma, food, and personal care sectors

? Advances in processing technology and packaging materials

? Growth of consumer electronics and appliances Restraints

? Stringent environmental regulations on plastic markets ? Volatile raw material prices

Opportunities

? Increasing integration of sustainable and recyclable materials in developed and emerging markets

? Expanding circular economy initiatives

Regional Insights, 2026

Total Market Size: US$ 429.89 Bn

GLOBAL OVERVIEW OF THE FIBC MARKET

The global Flexible Intermediate Bulk Container (FIBC) market continued to witness steady growth during 2025, driven by rising demand from industries such as chemicals, food, agriculture, pharmaceuticals, construction and mining. The Global International trade in FIBCs during 2025 is estimated at over US$ 1.75 billion, 65% of which is accounted for by imports within the USA, Canada & the EU countries.

India continued to strengthen its position as the leading global supplier of FIBCs across all the three major markets. In 2025, India accounted for nearly 78.2% of FIBC imports in the United States, 50.0% in Canada, and 66.4% in the European Union, highlighting its strong manufacturing base, cost competitiveness, and global supply capabilities.

The global market also witnessed shifting sourcing patterns, with countries such as Vietnam and Bangladesh increasing their market presence, particularly in North America. Similarly, Chinas share in global FIBC exports continued to decline due to changing trade dynamics and tariff-related developments.

Going forward, the FIBC industry is expected to remain positive driven by growth in global trade, industrial packaging demand, supply chain diversification, and preference for sustainable bulk packaging solutions. However, evolving tariff structures and geopolitical developments may continue to influence sourcing strategies across international markets.

INDIAN MARKET OVERVIEW

Indian Plastic Packaging Market, 2021-2033

The Indian plastic packaging market generated a revenue of US$ 37.9 billion in 2025 and is expected to reach US$ 53.5 billion by 2033, growing at a CAGR of 4.3% from 2026 to 2033. As a packaging material, plastic remains the most widely used product in India, primarily due to its cost-effectiveness, adaptability, and lightweight characteristics, making it suitable for a broader range of end-use industries. Indias domestic packaging market has witnessed an evolution with plastic having a major role in various applications across consumer goods, food, industrial packaging and pharmaceuticals.

Additionally, plastic emerges as a key driver of innovation in Indias packaging industry. With flexibility in functionality and design, plastic combines advantages, including durability, rigidity and stronger barrier properties. The Indian Plastics packaging is dominated by the use of Polypropylene used for 50 Kg sacks and FIBCs, Films on the one hand and PE films for flexible packaging on the other hand. However, the industry is being shaped by heightened regulatory oversight. Concerns related to environmental sustainability and plastic waste are growing. This has prompted the government to include stricter regulations aimed at protecting the environment and reinforcing waste management. Kanpur Plastipacks export production remains outside the ambit of these regulatory contitions. (Source:grandviewresearch, mordorintelligence)

BUSINESS OVERVIEW

Since its establishment in 1971, Kanpur Plastipack Limited (KPL) has built a strong reputation as a well-recognized name in Indias industrial bulk packaging sector. Backed by more than five decades of manufacturing expertise and operational excellence, the Company has evolved into an integrated manufacturer, exporter, and packaging solutions provider, serving diverse industries across global markets. Its diversified product portfolio includes Flexible Intermediate Bulk Containers (FIBCs), PP woven fabrics, PP multifilament yarns, small bags, and UV masterbatches, catering to the packaging requirements of customers in more than 40 countries worldwide. Through its focus on quality, innovation, and customer-centric solutions, KPL continues to strengthen its position as a trusted partner and end-to-end packaging solutions provider, delivering value to customers and stakeholders alike.

The Companys manufacturing footprint comprises four strategically located facilities, equipped to drive operational excellence, innovation, and adherence to global quality standards. Supported by robust in-house ERP systems, Kanpur Plastipack ensures real-time monitoring, enhanced traceability, and efficient management of its end-to-end manufacturing and supply chain operations.

The Company continues to maintain internationally recognized certifications for food-grade packaging products, and is audited and certified by globally reputed agencies such as SEDEX, Kosher, and Halal. Additional certifications and compliance frameworks, including BRCGS A+ and HACCP, enable the Company to serve a broad spectrum of industries while strengthening its presence in value-added, premium, and regulated market segments where quality, safety, and traceability are critical requirements.

In FY 2025-26, the Company earned a revenue of 726.67 Cr., and a net profit of 36.89 Cr., reflecting strong growth momentum both in revenues and profits.

HOW WE OPERATE

? Vertically Integrated Manufacturing: An integrated manufacturing set up encompassing polymer processing, flat tape, fabric production, MFY Yarns and UV master batch which finally culminates into the conversion to FIBCs and small bags. This enhances cost management, operational agility and consistent quality standard.

? FIBC-led Growth Strategy: FIBC remains an important contributor to profit as the Company increasingly converts fabric output into finished FIBC products with improved margins.

? Export-driven Business Model: Exports contributing to approx.75% of manufacturing revenues, is reinforced by the Companys presence in more than 40 geographies. During the year, Europe accounted for 56.5% of our exports, followed by South America at 21.8% and North America at 16.9%. The Company continues to maintain a strong presence in the EU countries, USA and Brazil. Despite the onset of US tariffs, during the year, the share of USA in our FIBC exports dropped only marginally and was more than offset with increased penetration in the EU and steps taken in other geographies.

? Customization and Customer Engagement:

The Companys B2B distributor-led model provides repeat businesses with more than 2,500 customized packaging configurations, meeting various consumer requirements globally.

? Scalable Lean Model: Growth is shaped by operational leverage, higher throughput rather than capital-intensive expansion and skilled workforce deployment. The Company closely monitors cash flows with working capital efficiency and asset utilization.

? Sustainability-focused Operations: Sustainability is embedded across operations, with over 50% of energy requirements addressed through solar power, enhanced by zero liquid discharge practices, plastic waste recycling and compliance with global environmental and food-grade standards.

FIBC AND FABRICS

The Flexible Intermediate Bulk Container (FIBC), small bags and fabric segments remain critical to the Companys operations, International demand increased operational efficiencies across manufacturing units and improved expansion into new markets shaped this performance. The Company lays emphasis on the FIBC segment, which amounted to approx. 53% of total manufacturing revenues. The companys world-class state-of-the-art infrastructure and certified food-grade facilities, further strengthened by its adherence to international safety and hygiene standards has immensely helped in its growth. The proposed capacity expansion of FIBCs will further improve the product mix which will help not only higher value addition but also better profitability. A conscious decision has been taken to ensure a slow and steady growth to ensure adequate manpower availability. Moreover, the Company focuses on expanding its presence in export markets, including successful entry into Japan. A continued focus on geographical diversification, customization and high-margin product variants positions the segment to sustain growth and strengthen KPLs competitive standing in industrial bulk packaging solutions.

MULTIFILAMENT YARN (MFY)

The Multifilament Yarn (MFY) segment continues to remain as a separate business vertical. In FY 2025-26, MFY output representing around 10% of the companys total manufacturing revenues. Owing to its in-house manufacturing units, the Company ensures consistent quality and credible availability for captive consumption in the FIBC and fabric divisions. The Company optimizes incremental processes and upgrades quality, with an aim to enhance throughput and to support the changing technical requirements of downstream manufacturing processes.

DEALER OPERATED POLYMER WAREHOUSE (DOPW) OF IOCL

Kanpur Plastipack Limited operates as a Dealer Operated Polymer Warehouse (DOPW) of Indian Oil Corporation Limited for its Polymer division. During the year, there has been a significant improvement in the volumes by 65%. KPL focuses on reinforcing this business vertical by improving distribution efficiencies and enhancing customer interactions. An additional DOPW in Bareilly, Uttar pradesh began operation during the year. Going forward, both its DOPWs, situated at Kanpur and Bareilly are projected to reinforce regional expansion, increase service levels and improve operating performance gradually.

RENEWABLE ENERGY

The Company constantly emphasizes strengthening its sustainability framework and expanding the use of renewable energy across its operations. Combining rooftop solar installation and long-term power purchase agreements enhances the clean energy share in the overall power mix. Consequently, the Companys solar sources now account for more than 55% of its total electricity consumption, highlighting its commitment to environmental responsibility, energy efficiency, and sustainable long-term functions.

During the year, we have all together received 238.31 Lacs Units of Solar Power at all our units which has saved emission of carbon by 19,064 MT.

SEGMENT-WISE PERFORMANCE OF MANUFACTURING DIVISION:

FINANCIAL PERFORMANCE OVERVIEW

Particulars	FY 2024-25	FY 2024-25	FY 2025-26	FY 2025-26
	Standalone	Consolidated	Standalone	Consolidated
Net Worth (?)	20,526	20,556	26,542	26,893
Total Income (?)	57,551	57,591	72,667	73,132
Profit Before Tax (?)	2,834	2,880	5,108	5,419
Net Profit (?)	1,070	1,111	3,689	3,950
Net Profit Margin (%)	1.90%	1.97%	5.14%	5.50%
EBITDA (?)	5,421	5,467	7,476	7,770
EBITDA (%)	9.42%	9.49%	10.29%	10.62%
EPS (?)	10.45	10.64	16.29	17.40
Gross Block (?)	30,207	30,615	30,687	30,879

Note: Previous period figures have been reclassified/re-presented pursuant to compliance with Ind AS 105, to present discontinued operations separately. This reclassification is a presentation change only and has no impact on profit/(loss) or total comprehensive income.

On a standalone basis, total income increased from 576 Cr. to 727 Cr. with net profit jumping from 10.70 Cr. to 36.89 Cr., PBT reached 51.08 Cr., EBITDA rose to 74.76 Cr. and EPS improved sharply from 10.45 to 16.29. These results reflect a strong turnaround and improved shareholder value.

KEY FINANCIAL RATIOS OVERVIEW

Products	FY 2024-25	FY 2025-26
Net Worth (?)	20,526 Lacs	26,542 Lacs
Total Income (?)	57,551 Lacs	72,667 Lacs
Profit before Tax (?)	2,834 Lacs	5,108 Lacs
Net Profit (?)	1,070 Lacs	3,689 Lacs
EBITDA (?)	5,421 Lacs	7,476 Lacs
Gross Block (?)	30,207	30,687
Debtors Turnover Ratio	6.85	7.79
Inventory Turnover Ratio	5.51	6.75
Interest Coverage Ratio	1.59	5.40
Current Ratio	1.21	1.69
Debt Equity Ratio	0.39	0.13
Operating Margin Ratio	7.54	8.74
Net Profit Margin Ratio	1.90	5.14
EBITDA %	9.42%	10.29%
EPS (?)	10.45	16.29

The Company witnessed improvement in key financial ratios, indicating strengthened operational efficiency and overall financial performance.

SUSTAINABILITY OVERVIEW

The Company remains committed to environmental stewardship through a well-defined sustainability approach, integrated across its operations. More than 50% of the Companys energy consumption is sourced from solar power, minimizing reliance on conventional energy sources. The Company complies with applicable environmental regulations and the Extended Producer

Responsibility (EPR) obligations mandated by Indias Plastic Waste Management Rules. Keeping recyclability at the core, the Company designs its product portfolio, consistently emphasizing responsible and sustainable manufacturing processes. Additionally, adopting the Zero Liquid Discharge (ZLD) system highlights KPLs contribution to minimize environmental impact, conserve water resources and promote utilising natural sources. In terms of energy, the Company has significantly increased its reliance on renewable sources through long-term open access agreements aggregating to 12,375 KW, along with solar energy sourcing through various modes of 16,167 kWp.

STRENGTHS, WEAKNESSES AND OPPORTUNITIES

Strengths

? Established and credible presence in the industrial bulk packaging segment enables the Company to build strong technical expertise and long-standing customer relationships

? Vertically integrated manufacturing capabilities ensure quality, consistency, and cost efficiency

? Strong quality and compliance model, including international certifications such as BRCGS, ISO, SEDEX,

Kosher, and Halal, allowing the Company to serve a variety of sectors

? Strong export-driven business framework, supported by long-standing relationships with global packaging distributors

? Adoption of renewable energy, sustainability-focused operations and addressing stakeholder expectations

Weaknesses

? Volatile prices of raw material, particularly polypropylene, are driven by fluctuating crude oil prices and global supply-demand dynamics

? Fluctuating foreign exchange and unstable currency may affect pricing structures

? Geopolitical uncertainties may lead to demand contraction and contribute to logistics challenges

? Evolving international regulatory frameworks around environmental compliance, plastic usage and recyclability standards necessitate further investment and operational adjustments

Opportunities

? Increasing global demand for sustainable and flexible industrial packaging, particularly across agriculture, chemical products and food processing segments

? The Global China +1 strategy, providing opportunities as international customers favour Indian manufacturers for supply diversification

? Potential to expand into a distribution-led downstream model, enhancing closer engagement with end users

? Increasing focus on ESG-aligned supply chain and circular packaging solutions, strengthening KPLs position as a responsible global partner

? India Trade Treaties with most global economies

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a sound and effective internal control system in place, governing its financial statements. All financial transactions are duly authorized, appropriately recorded and reported to the management. The Company adheres to all relevant accounting standards for maintaining its books of accounts and preparing the financial reports. The internal auditor periodically reviews and evaluates these controls, ensuring compliance with the Companys established policies.

RISK MANAGEMENT

The Company maintains a structured approach to monitor a range of external and operational risks affecting its performance-driven presence as an export-driven industrial packaging Company. Exposure to foreign exchange risk remains significant due to the Companys expansion of international operations. This risk is addressed by a well-defined foreign exchange policy, overseen directly by its senior leadership and supported by expert external advisors. Regular assessments align hedging mechanisms and pricing strategies with ongoing market conditions, ensuring disciplined risk management.

HUMAN RESOURCES

The Company recognizes its people to be pivotal to its operations, particularly considering the labour-intensive nature of its manufacturing processes. The Companys transition to higher FIBCs sales has increased its need for trained, skilled, and semi-skilled personnel across operations. To respond to this, the Company remains committed to enhancing workforce competencies through investing in structured training and capability initiatives. Employee retention remains stable, led by steady demand, a credible workplace environment, and long-standing customer relationships. Owing to its sustained emphasis on skill enhancement, productivity improvement and workforce alignment with its evolving product mix, the Company maintains harmonious industrial relations. As of 31^st March 2026, the Company has 1,491 number of employees.

OUTLOOK

The Company remains focused on strengthening its core FIBC business, which continues to be the primary growth driver of operations. Growth is expected to be supported by ongoing brownfield capacity expansion, improved capacity utilization and a higher contribution from value-added and customized FIBC products. The expansion at Unit 3 is progressing as planned and is expected to gradually add upto 6,000 MT per annum capacity over the next five years, supporting future scale-up and margin improvement.

The Company will continue to leverage its export-led business model, backed by long-standing customer relationships across regulated global markets. Alongside its strong presence in Europe, the Company is actively expanding its footprint in North America, South America, and Japan. Strategic initiatives such as the acquisition of Valex Ventures in the UK will enhance our potential to tap the customers directly into the UK market and the joint venture with

Essegomma will mark an entry of the Company in premium and specialized product segments.

A key focus area for the coming years will be diversification into technical textiles through the upcoming non-woven business, where commercial production is expected to commence from September, 2026. The new facility will cater to applications such as automotive interiors, geo-textiles, artificial leather, carpets, footwear and industrial filtration products. Management believes this segment offers significant long-term growth potential and is expected to become a meaningful contributor to revenue and profitability over time.

The Company also remains focused on operational efficiency, automation, warehouse modernization and sustainability-led manufacturing practices to strengthen long-term competitiveness. With a balanced approach towards growth, diversification and disciplined execution, the management remains confident of sustaining steady growth and improving the overall business profile in the coming years.

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 security 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.