Kokuyo Camlin Ltd Management Discussions

1. Economic Review

1.1 Global Economy

After a relatively resilient stretch in Calendar Year (CY) 2025, the global economy is entering CY2026 under renewed disruption following escalating conflict in the Middle East, compounding an already uncertain macroeconomic environment. Under the reference forecast, global growth is projected at 3.1% in CY2026 and 3.2% in CY2027, below the recent pace of ~3.4% in CY2025 and the historical (200019) average of 3.7%. It is expected to stabilise around these levels over the medium term.

The outlook is further pressured by elevated commodity prices, disrupted trade routes, and heightened financial market volatility, shaping inflation expectations and overall risk sentiment. Growth trends remain uneven across regions. Advanced economies are expected to expand by 1.8% in CY2026 and 1.7% in CY2027, with relatively limited direct impact from the conflict; however, net energy-importing regions such as parts of Europe and the United Kingdom may face greater strain. Emerging market and developing economies are projected to grow at 3.9% in CY2026 and 4.2% in CY2027, with performance varying based on energy dependence, remittance flows, and geopolitical exposure. Indias growth outlook is projected at 76% for CY2025 supported by strong domestic demand and policy momentum and is expected to moderate to 6.5% in CY2026 & CY2027 amid external headwinds.

Global inflation in 2025 was largely steady overall, though it concealed uneven pressures across economies and components of the price basket. However, Global inflation is expected to temporarily reverse its easing trend, rising to 4.4% in CY2026 before moderating to 3.7% in CY2027, reflecting upward revisions for both years and driven largely by higher energy and food prices. Inflation dynamics remain uneven across countries, reflecting differences in services inflation, domestic demand conditions, and local factors. In 2025, global trade stayed strong but was already being shaped by rising US tariff-related frictions and supply chain adjustments. Global trade growth is also projected to slow, from 5.1% in 2025 to 2.8% in CY2026 before recovering to 3.8% in CY2027, as supply chains adjust and trade linkages realign.

Over the medium term, global imbalances are expected to narrow gradually, supported in part by expansionary fiscal measures in select surplus economies, though overall adjustment will likely remain limited.

(Source: World Economic Outlook, IMF, April 2026)

• World Output# Advanced Economies

• Emerging Market and Developing Economies

• Projections 1 Estimated

(Source: World Economic Outlook by IMF, April 2026)

Outlook

The medium-term global outlook remains subdued, shaped by structural headwinds such as geoeconomic fragmentation, rising geopolitical risks, and slowing momentum across major economies. Reduced global integration manifested through weaker trade flows, constrained migration, and cautious capital deployment, is expected to weigh on productivity, innovation, and long-term growth potential. Overall, global growth is likely to remain gradual and uneven over the medium term.

1.2 Indian Economy

The Indian economy recorded a resilient performance in FY 2025-26, with real GDP growth estimated at 7.6%, supported by broad-based domestic demand and resilient economic activity. However, geopolitical tensions in West Asia have heightened global uncertainty, disrupting trade routes and elevating energy and commodity prices, particularly due to risks around the Strait of Hormuz. These factors have contributed to global market volatility, with spillover effects on India. In this context, the Reserve Bank of India has maintained a neutral stance, keeping the repo rate unchanged at 5.25%. Looking ahead, growth is projected to moderate to 6.9% in FY 2026-27, while remaining steady, supported by resilient services activity, improving manufacturing capacity utilisation, and strong corporate and financial sector balance sheets. Policy measures such as GST rationalisation and the continued focus on domestic manufacturing are also expected to provide further support to growth.

The industrial sector is gaining momentum, with growth estimated at 6.2% in FY 2025-26 (up from 5.9% in FY 2024-25), supported by sustained infrastructure activity. Manufacturing remains robust, growing 8.4% in H1 FY 2025-26, exceeding the full-year estimate of 7.0%. The Production Linked Incentive (PLI) schemes continue to drive capacity expansion, with investments exceeding 72.16 lakh crore across 14 sectors as of April 2026.

Infrastructure development remains a key growth driver, with capital expenditure budgeted at 712.2 lakh crore (3.4% of GDP) in the Union Budget FY 2026-27 Continued focus on infrastructure, MSMEs, digital and semiconductor ecosystems, ease of doing business, and employment generation is expected to reinforce Indias medium-term growth trajectory.

Outlook

Indias growth outlook remains stable, supported by resilient domestic demand, strong services performance, and improving manufacturing activity. While external risks such as elevated commodity prices, supply chain disruptions, and global financial volatility persist, robust macroeconomic fundamentals are expected to sustain growth over the near to medium term.

2. Stationery Industry Review

2.1 Global

According to Mordor Intelligence, the global stationery and supplies market is projected to grow from USD 152.43 billion in 2025 to USD 160.22 billion in 2026, reaching USD 205.64 billion by 2031, at a CAGR of 5.11% (2026-2031).

Growth is supported by rising enrolment across primary and higher education, sustaining demand for notebooks, art materials, and exam supplies. Increasing emphasis on ESG criteria is driving adoption of recycled and sustainable products, often commanding premium pricing. At the same time, omnichannel retail is reshaping consumer behaviour, blending online discovery with in-store purchase experiences.

Innovation remains a key driver, with products such as reusable cloud-linked notebooks, refillable pens, and biodegradable materials creating new value segments and helping offset input cost pressures.

37.5% of global revenue in 2025

Accounted for by paper-based stationery, driven by strong usage across educational institutions, offices, and households.

28.8% global market share in 2025

Held by the educational institutes segment, supported by steady demand for notebooks, textbooks, writing instruments, and art supplies.

38.2% share of the global stationery market in 2025

Held by Asia Pacific, driven by a large student base, rapid urbanisation, and a growing middle-class population.

Key Market Drivers

• Rising education enrolment supporting sustained demand for notebooks, art materials, and exam supplies.

• Shift towards sustainable products, driven by ESG- focused procurement and consumer preference for recycled and eco-friendly options.

• Omnichannel retail growth, blending digital discovery with in-store purchase experiences.

• Product innovation, including reusable, refillable, and eco-friendly offerings that create premium segments.

• Premiumisation trends, enabling higher value realisation despite pressure on low-cost paper products.

2.2 India

Indias stationery industry is projected to reach Rs.45,000- 48,000 crore by 2026, covering writing instruments, notebooks and paper products, art supplies, files and folders, and office consumables. The country remains one of the largest global markets by volume, driven by a large student base and an exam-oriented education system.

The industry is highly fragmented, with the organised segment·comprising branded players and established distributors·gaining traction in urban and semi-urban markets, while the unorganised sector continues to dominate price-sensitive categories in rural and local markets.

Despite rising digital adoption, stationery remains integral across schools, offices, households, and creative use cases. Core products such as notebooks, pens, pencils, and art materials continue to see sustained demand, supported by the essential role of education, examinations, and documentation in daily life.

Market Segments

• Education stationery: Largest segment; highly seasonal and linked to the academic cycle

• Office stationery: Stable demand across corporates, MSMEs, and government

• Art & creative supplies: Smaller but faster-growing, with higher value potential

Key Growth Drivers

• Large student population: Sustains consistent demand despite digital adoption

• Expansion of private schools & coaching centres: Drives bulk, branded purchases

• Continued office usage: Paper-based processes remain relevant, especially in MSMEs and government

• Premiumisation: Shift towards better quality, design, and durability

• E-commerce & modern retail: Expanding access and enabling new consumption patterns

Segment-wise Performance

Writing Instruments

Pens and pencils account for the largest share by volume, with demand remaining stable. The segment is highly competitive, with differentiation driven by branding, ink quality, and ergonomic design.

Notebooks and Paper Products

Notebooks contribute significantly to industry value, with demand peaking during academic cycles. Sustainability considerations are increasingly influencing paper sourcing and recycling practices.

Office Stationery

This segment, including files, folders, paper, and desk accessories, remains steady but grows at a slower pace. Demand is largely driven by government institutions and MSMEs, ensuring consistency.

Art and Creative Supplies

A smaller but faster-growing segment, driven by rising interest in hobbies, school art education, and creative professionals. It offers higher potential for premiumisation and value- added products.

Source: https://businessesbase.com/stationery-industry-in-india/

Outlook

In the short term (2026-2027), Indias stationery industry is expected to maintain stable demand, driven by the education sector and examination cycles. Growth is likely to be supported by gradual premiumisation, with organised players continuing to strengthen their presence, particularly in urban markets.

Over the medium term, the industry could reach approximately 760,000 crore by 2030, led by sustained education demand, expansion of premium and creative segments, and stronger brand differentiation. While volume growth may remain moderate, steady value growth is expected. Overall, the industry is evolving alongside digital adoption, with stationery continuing to play a vital role in education and daily use.

Government Initiatives

Union Budget 2026-27

The Union Budget reinforces the governments focus on education, with 71,39,289 crore allocated to the Ministry of Education, reflecting an 8.27% increase. Of this, 783,562 crore is directed towards the Department of School Education & Literacy, supporting improved access, quality, and infrastructure.

GST Rationalisation

Essential stationery items·including pencils, crayons, exercise books, and charts·have been made tax-free under the revised GST framework (earlier 12%), with erasers also exempted. This move enhances affordability and supports demand for domestic manufacturers.

PM SHRI Scheme

A centrally sponsored initiative (FY 2023-2027) to upgrade over 14,500 government schools in line with NEP 2020. As of March 2026, 13,085 schools have been onboarded, strengthening quality and inclusive education.

PM Vidyashakti Scheme

Facilitates collateral-free education loans for higher education. As of March 2026, over 3.68 lakh applications have been processed, with disbursements exceeding 713,600 crore, improving access to education.

3. Company Overview

Kokuyo Camlin Limited is engaged in the manufacturing, development, and marketing of stationery and art materials, serving a diverse consumer base of students, professionals, and creative users across India and international markets. Its evolution has been shaped by the strategic partnership with Kokuyo Co., Ltd. in 2011, combining a strong domestic legacy with global design expertise and innovation.

The Companys portfolio spans everyday writing instruments to specialised art materials, anchored by its well-established Camlin and Camel brands, which continue to enjoy strong recall while evolving to meet changing consumer preferences.

The Companys manufacturing facilities at Patalganga, Tarapur, and Jammu provide the capability to address market demand while maintaining operational efficiency and agility. Coupled with a wide pan-India distribution network and an expanding global footprint, it continues to prioritise product innovation, digital engagement, and portfolio premiumisation to enhance its market position and create long-term value.

2025-26 Highlights

During the year, the Company received the ‘India Best Design Award (IBDA) 2025 in the ‘Best Design Project category for the Camlin Scholar Pro Geometry Box and Camel ColorPAD. The awards recognised our innovation across design, development, and manufacturing. In the same year, the Camlin Spin Eraser won the CII Design Excellence Award 2025 in the Product Design category for its playful learning concept that combines an eraser with a fidget spinner and spinning top, highlighting Kokuyo Camlins in-house design and development capabilities.

The Company strengthened its brand engagement initiatives through its collaboration with Royal Enfield at the Motoverse platform, leveraging the events strong enthusiast community and experiential ecosystem. The engagement included immersive, community-driven workshops, interactive experiences and exclusive product showcases, enabling enhanced brand visibility.

The Company continued to strengthen its consumer engagement and digital outreach initiatives through innovative and interactive offerings across key product categories. During the year, the Company expanded its digital presence with the launch of the Kokuyo Camlin Kids platform, designed to engage parents and children through curated creative learning content and activity-based interactions, thereby fostering stronger brand affinity among young consumers. The Company also reinforced its focus on the colouring segment through the introduction of thematic and occasion- based kits aligned with festive celebrations such as Ganesh Chaturthi and Christmas, enhancing seasonal consumer participation and encouraging creative expression. Further, the notebook portfolio was enriched with QR-enabled covers that connected consumers to an interactive digital platform, offering engaging experiences and customised merchandise opportunities, thereby blending creativity with technology and delivering an enhanced consumer experience.

SWOT

Strengths

• Strong legacy brand in India with high trust in art materials and stationery

• Backed by Kokuyo Co., Ltd., bringing global expertise and innovation

• Wide product portfolio across student, artist, and office segments

• Extensive distribution network with deep penetration in schools and retail

• Strong recall in categories like colours, pencils, and scholastic supplies

Weaknesses

• Dependence on the academic season for sales

• Limited premium positioning compared to global art brands

• Margins impacted by commodity price fluctuations

• Lower presence in fast-growing digital/creative tech categories

Opportunities

• Growing demand for hobby, DIY, and creative art segments among youth

• Expansion into premium and professional artist categories

• E-commerce and D2C channels enabling wider reach

• Rising focus on education and stationery consumption in India

• Product innovation leveraging Japanese design and quality

Threats

• Intense competition from unorganised local players and low-cost imports

• Price sensitivity in mass-market segments

• Digital substitution is reducing traditional stationery usage in some categories

• Supply chain volatility and raw material cost pressures

4. Financial Performance

Particulars	2025-26	2024-25	Y-o-Y
Revenue from Operations	80,596.81	76,252.88	5.70
Other Income	50.87	74.86	(32.05)
Cost of Material	33,801.04	30,679.58	10.17
Employee Benefit Expenses	10,860.49	9,846.89	10.29
Other Expenses	14,301.05	13,916.18	2.77
EBITDA	4,945.13	3,165.19	56.24
Finance Cost	256.06	461.08	(44.47)
Depreciation and Amortization Expenses	2,210.28	2,120.81	4.22
Tax Expense
- Current Tax	891.53	348.27	155.99
- Deferred Tax	20.41	(56.75)	(135.96)
PAT	2,478.79	583.30	324.96

Key Ratios

Particulars	2025-26	2024-25
Debtors Turnover Ratio	10.65	9.58
Inventory Turnover Ratio	3.12	2.88
Current Ratio	2.19	1.97
Debt-to-Equity Ratio	0.08	0.14
Operating Profit Margin (%)	6.14	4.15
Revenue Growth (%)	5.70	(6.54)
Return on Net Worth	7.94	1.95

5. Risk Management

The Company operates in a dynamic environment shaped by evolving consumer preferences, supply chain volatility, and regulatory developments. A structured risk management framework is in place to proactively identify, assess, and mitigate key risks that may impact business performance. By aligning mitigation strategies with business priorities such as portfolio diversification, cost optimisation, brand strengthening, and regulatory compliance, the Company aims to enhance resilience and sustain long-term growth.

Key Risk	Description	Mitigation Measures	Severity
Shift in Consumer Preferences	Evolving consumer behaviour driven by digital adoption and lifestyle changes may impact demand for traditional stationery and art products.	• Broadening product portfolio to include digital and hybrid stationery solutions • Strengthening outreach to younger consumer segments through focused engagement initiatives
Raw Material Cost Fluctuation	Variability in global supply chains and inflationary pressures, including geopolitical disruptions, may result in increased input costs, affecting margins.	• Strategic sourcing and efficient inventory management • Increasing localisation and import substitution to manage input cost volatility
Demand Seasonality	Sales performance is influenced by academic cycles and festive periods, resulting in seasonal fluctuations in demand.	• Expanding presence in hobby and fine art categories • Diversifying customer base beyond student segments to reduce seasonality impact
Brand Relevance	Sustaining brand resonance among younger and digitally engaged consumers remains essential in a competitive environment.	• Continued investment in brand-building initiatives • Strengthening brand positioning through campaigns such as ‘Camlin X Royal Enfield & ‘Colouring as a Joy
Regulatory and Policy Changes	Changes in education policies, trade regulations, and environmental norms may impact compliance requirements and operational processes.	• Proactive monitoring of regulatory developments and ensuring compliance readiness • Aligning with government initiatives supporting domestic manufacturing and education outreach
Competitive Environment	Intense competition from domestic stationery brands may impact market share, pricing power, and margins.	Strengthening brand equity, expanding product innovation, enhancing distribution reach, and focusing on premium and differentiated offerings to sustain market competitiveness.

6. Human Resources

The Company continuous to undertake various initiatives aimed at strengthening its people practices and organisational culture. Focus remained on enhancing employee capabilities through targeted learning interventions and skill development programmes across functions and levels. A continued emphasis was also on fostering a disciplined and value-driven workplace. Regular awareness initiatives were conducted on the Code of Conduct and Prevention of Sexual Harassment at the Workplace (POSH) to reinforce ethical practices and compliance standards. The Company also encouraged a culture of engagement and collaboration through employee participation initiatives and recognition efforts. In parallel, focus on workplace safety, inclusivity, and overall employee well-being remained integral to its human resource approach. As of March 31, 2026, the Company employed approximately 1,161 individuals across its operations.

7. Internal Control & Systems

The Company has in place an internal control system commensurate with the size and nature of its operations. The system is designed to ensure the efficient conduct of business operations, the safeguarding of assets, the prevention and detection of fraud and errors, the accuracy of accounting records, and the timely preparation of reliable financial information. The internal control framework is supported by defined policies, procedures, and periodic internal reviews. The Company periodically reviews and strengthens its internal control systems to ensure their continued adequacy and effectiveness.

8. Cautionary Statement

This Management Discussion and Analysis contain forwardlooking statements that reflect the Companys current expectations, estimates, and projections. Such statements involve inherent risks, uncertainties, and factors beyond the Companys control, which may cause actual results, performance, or outcomes to differ materially from those expressed or implied. The Company undertakes no obligation to update these statements, and readers are advised to exercise caution and not place undue reliance on them.