KKalpana Industries (India) Ltd Management Discussions

GLOBAL OVERVIEW :

The global plastics market size was estimated at USD 651.15 billion in 2024 and is predicted to increase from USD 678.56 billion in 2025 to approximately USD 980.86 billion by 2034, expanding at a CAGR of 4.18% from 2025 to 2034. The increasing plastic consumption in the construction, automotive, and electrical & electronics industries is projected to support market growth during the forecast period. Regulations to decrease gross vehicle weight to improve fuel e3ciency and eventually reduce carbon emissions are driving plastic consumption as a substitute for metals, including aluminum and steel, for manufacturing automotive components.

Stringent regulations regarding the depletion and recyclability of conventional materials such as metal and wood are anticipated to drive greater plastic demand from construction industries in insulation, pipes, cables, 3oorings, windows, storage tanks, and others. Polymer 3ttings are also generally quite simple and easy to install, compared to metals or wood, with a wide range of color combinations, adding to their aesthetic appeal. Plastic has 85% less speci3c gravity compared to metals. When used in the automotive and construction industries, they enable approximately 80% weight savings and 30% to 50% cost savings in individual components.

The global recycled plastic market was valued at US$ 50.80 billion in 2024 and is projected to reach US$ 102.40 billion by 2033 at a CAGR of 8.1% during the forecast period 2025–2033. Global plastic waste has been escalating at an alarming rate, with the United Nations Environment Programme reporting that the world discards around 360 million metric tons of plastic annually. Moreover, the average person in high-income nations can generate up to 130 kilograms of plastic over twelve months, re3ecting how personal consumption patterns drive the surge in plastic pollution. In 2023, global plastic production is estimated to have surpassed 430 million metric tons, indicating that the volume of new plastic entering the market continues to outpace recycling e3orts around the world.

The market has observed stable growth throughout the period and is expected to continue the same trend during the forecast period. Growing awareness among individuals regarding energy savings and government initiatives are expected to drive the growth of the market in the upcoming years.

India continues to be a bright spot in the global landscape with regard to economic growth. Indian plastic industry market is one of the leading sectors in the countrys economy. The history of the plastic industry in India dates to 1957 with the production of polystyrene. Since then, the industry has made substantial progress and has grown rapidly. The industry is present across the country and has more than 2,000 exporters. It employs more than 4 million people in the country and constitutes 30,000 processing units; among these, 85-90% belong to small and medium enterprises. India manufactures various products such as plastics and linoleum, houseware products, cordage, 3shnets, 3oorcoverings, medical items, packaging items, plastic 3lms, pipes, raw material, etc. The country majorly exports plastic raw materials, 3lms, sheets, woven sacks, fabrics, and tarpaulin. The Government of India intends to take the plastic industry from a current level of Rs. 3 lakh crore (US$ 37.8 billion) of economic activity to Rs. 10 lakh crore (US$ 126 billion) in four-3ve years.

Indias economy has been resilient in 2023. Income has increased fast in recent years and millions of Indians have been lifted out of poverty. Indias broad range of 3scal, monetary and health responses to the crisis supported its recovery and, along with economic reforms, are helping to mitigate a longer-lasting adverse impact of the crisis. India has also become a key player in the global economy. The implementation of an ambitious set of reforms has supported economic activity and lped t a break on in3ation and on both 3scal and current account de3cits.

The contribution of the plastic sector in making India a developed nation will be unparalleled and invaluable. The plastic sector has the potential to add business opportunities, jobs for the young generation and opportunities in the world. The plastic industry should have the mindset to give the best to its consumers. The plastic sector contributes to a circular economy and supports recycling of plastic waste, reuse of plastic raw material and make the disposal of plastic waste more e3ectively and e3ciently. The Government aims to boost and make in India movement in plastic sector. The plastic recycling average of 13% surpasses the global average of 9% and even outperforms some developed economies with only 4% recycling rates.

The India recycled plastic market is valued at USD 43.7 billion in 2024 and is projected to reach USD 62.6 billion by 2033, growing at CAGR 4.64% from 2025 to 2033. The India waste plastic recycling market reached a volume of 10.9 Million Tons in 2024. Looking forward, The International Market Analysis Research and Consulting Group (IMARC Group) expects the market to reach 25.4 Million Tons by 2033, exhibiting a growth rate (CAGR) of 9.37% during 2025-2033. The increasing use of recycled plastic in the packaging industry, rising focus on sustainable lifestyle, and favorable initiatives by the Government for recycling waste plastic represent some of the key factors driving the market. The Packaging industry is dominating the Plastic Recycling market with about 37% of the market share in FY2023 and is anticipated to dominate the market even in the forecast period. The plastic consumption in India has grown at a signi3cant pace over the past 3ve years, and so has its waste output. India produces 3.4 million tonnes of plastic waste in a year, only 30 per cent of it is recycled and hence the plastic recycling industry has great scope.

The plastics industry is currently home to about 50,000 industries, most of which are micro, small, and medium-sized enterprises (MSMEs). These enterprises contribute Rs. 3.5 lakh crore (US$ 42.89 billion) to Indias economy and employ large number of people. The country recycles plastic at a rate of 60%, which is higher than that of developed nations. The "Make in India," "Skill India," "Swachh Bharat," and "Digital India" initiatives of the government are increasing plastic production, and by 2027, it is expected that the plastics industry will generate Rs. 10 lakh billion (US$ 122.54 billion) annual revenue, with two lakh tons of exports.

During FY 2024-25, Indias plastic exports stood approximately at US$ 10.34 billion.

Strength

Capability of large-scale operation allowing economies of scale of production. Strong 3nancial base Proper mix of workforce (skilled, semiskilled, and diversi3ed) Availability of Raw Materials

Weaknesses

The main weakness will 3ow from deceleration in Indian Economy The supply chain will de3nitely a3ect the production line

Opportunities

The ongoing trade con3icts among major countries may be a boon for developing country like India and especially KIIL KIIL has established digital technology as a lever to enhance e3ciency and productivity. This will expand the pro3t margins Increasing awareness towards need for recycled plastics

Threats

Borrowing from Bank will be di3cult because of mounting NPAs (Non-Performing Assets) of Banks Unorganised Sectors will also eat into the demand segment of the Company Growing regulatory restrictions in the use of plastics

Product wise, your company is engaged in manufacturing of the following products, the performance of which is discussed below-Polyethylene Turnover from Polyethylene is Rs. 1,728.78 lacs in the year under review year as against Rs. 3,861.39 lacs in the previous year.

Agglomerates, Reprocessed Granules, Scraps & Others

Turnover from these items is Rs. 2,321.13 lacs as against Rs. 2,250.28 lacs in the previous year.

Poly Vinyl Chloride

Turnover from these items is none as against Rs. 97.20 lacs in the previous year.

The pressure to recycle plastic grows stronger– plastic is a global environmental problem once it is left in nature. If sustainable plastic recycling and the use of plastics are not intensi3ed, the oceans are estimated to contain more plastic than 3sh by 2050, and 15% of all greenhouse emissions will come from the production of virgin plastic. The European Union is the most advanced plastic recycler in the world, and one of its goals is to create a circular economy for plastics. The goal of the plastics strategy of the EU is to have all plastic packaging made from reusable and recyclable materials by 2030. The plastic recycling industry is driven by rising environmental awareness, government regulations, and increasing demand for recycled plastics in various sectors like packaging, automotive, and construction, aiming to reduce plastic waste and promote sustainability. Society encourages people to recycle and take part in the circular economy, but the most important thing is that the consumers have a demand for recyclable products. They can also put pressure on companies that respond to the demand for more ecological materials. Recycled plastic must be considered as appealing, sterling, and durable as virgin plastic that we are accustomed to using. The e3ciency of the recycling process a3ects the quality of the end product. The smoothest end result is achieved when the recyclable plastic waste is sorted, and di3erent types of plastics are separated from one another. Indian Government is also boosting such industries and industry reforms.

Although the Company has comprehensive risk management in place, there is concern about : -a) Supply Chain b) Fall in Demand c) Securing Finance at competitive rates.

The company has comprehensive risk management framework in place, which consists of a) Process to identity, prioritize and formulate mitigation plans for risks and b) A framework of rules and regulations for various o3cials/ employees and the Board, in discharging the risk management process, periodicity of reporting risk management.

As a part of this risk management framework, the company has identi3ed for each conceivable risk and corresponding mitigation plan to ensure continuous risk monitoring and risk mitigation.

The Company always strives to strengthen Internal Control Systems and processes for smooth and e3cient conduct of business and complies with applicable relevant laws and regulations. A comprehensive delegation of power exists for smooth decision making. Elaborate guidelines for preparation of accounts are followed for uniform compliance. Further, all the key functional areas are governed by respective operating manuals. In order to ensure that all checks and balances are in place and all Internal Control Systems are in work, regular and exhaustive internal audits are conducted by experienced 3rm of accountants in close co-ordination with the companys concerned accredited o3cials.

The Internal Financial Control are reviewed periodically and in particular the Internal Auditors ensure that the company as in all material aspects, laid down Internal Financial Controls including operational controls and that such controls are adequate and operating e3ciently.

Critical 3nancial 3gures for 2024-25 are as under: -

Gross turnover for the year is Rs. 40.49 Crore against Rs. 62.09 Crore in 2023-24. PBIDT for the year Rs. 6.48 Crore as against Rs. 9.70 Crore in 2023-24.

Pro3t before Tax for the year Rs. 0.69 Crore against Rs. 0.59 Crore in 2023-24.

Capital Structure of the Company as at 31^st March 2025 is Rs. 18.81 Cr comprising 94072930 nos. of equity shares of Rs. 2/- each.

The Company appreciates the performance of the employees for the year and anticipates much more for the years to come. Your Company believes in employee empowerment across the entire organization in order to achieve organizational e3ectiveness. The Human Resource policies are soundly drafted for all levels of employees to serve them motivation, transfer & promotions and to retain the skills. Over a period of time, your company has built and nurtured a dedicated and excellent workforce which consists of engineers, CAs, CSs, MBAs, and advance degree holders like PHDs having a big business portfolio. The Industrial relations of the Company were cordial and there were no instances of employee disputes arising during the year.

Your company has a su3cient pool of talents in various operational 3elds. The Human Resource environment has been very smooth throughout the year under review.

The company takes special care about safety, which is core value of the company, and all necessary actions are taken in the company to keep safety as priority

Important Ratios in respect of the year ended 31st March 2025 are as below: a) Debtor Turnover Ratio is 5.5 in FY 2024-25 (It was 5.2 in FY 2023-24) b) Stock Turnover Ratio is 2.7 in FY 2024-25 (It was 5.56 in FY 2023-24) c) Interest Coverage Ratio is 1.20 in FY 2024-25 (It was 1.11 in FY 2023-24) d) Current Ratio is 3.81 in FY 2024-25 (It was 8.05 in FY 2023-24) e) Debt Equity Ratio is 0.72 in FY 2024-25 (It was 1.23 in FY 2023-24) f) Debt Service Coverage Ratio is 1.46 in FY 2024-25 (It was 1.77 in FY 2023-24) g) Net Pro3t Margin (%) is 1.7% in FY 2024-25 (It was 0.40% in FY 2023-24) h) Return on Equity (RoE) is 1.88% in FY 2024-25 (It was 0.61% in FY 2023-24) i) Return on Net Worth is 1.90% in FY 2024-25 (It was 0.61% in FY 2023-24)

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, estimates, and expectations and others may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may di3er materially from those expressed or implied. Important factors that could make a di3erence to the Companys operations include economic conditions a3ecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws, natural calamities and so on over which the company does not have any direct control.

For and on behalf of the Board of Directors