Kuantum Papers Ltd Management Discussions

1. Overview

This Management Discussion and Analysis (MDA) outlines Kuantum Papers Limiteds strategic response to the shifting business environment during FY 2024–25. It provides an integrated view of the Companys operating context, domestic and global economic scenarios, industry dynamics, operational and financial performance, risks, opportunities and human capital development initiatives. The MDA should be read, in conjunction with the audited financial statements and disclosures in the Annual Report. All financial statements have been prepared in compliance with Ind AS and relevant provisions of the Companies Act, 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015.

2. Global Economy¹

In Calendar Year 2024, the global economy demonstrated resilience, recording a growth rate of 3.3%, despite navigating macro headwinds such as ongoing geopolitical tensions, steep inflation for a predominant part of the year, re-alignment of supply chains, shifting trade patterns and alterations in monetary policies. The US economy performed well, driven by a strong corporate sector and high employment levels. In contrast, Europe, particularly Germany, underwent an economic slowdown due to slackened manufacturing and export performance.

Emerging markets performed better than developed countries, growing at 4.3%, compared to 1.8% in advanced economies. This disparity was primarily due to robust domestic demand and heightened foreign investments in emerging markets. Concurrently, Chinas economy grew by 5.0%, lower than predicted.

Akeydriverforglobaleconomicstabilitybeingthedisinflation. Global inflation declined from 6.6% in the year 2023 to 5.7% in the year 2024, stabilising prices and strengthening economic activity. The disinflation was supported by timely monetary policies and steady energy supplies, thereby, building business confidence and maintaining the economys growth trajectory.

Outlook

The global economy is projected to grow by 2.8 % in the year 2025 and 3.0% in the year 2026, supported by accommodative monetary policies. However, new U.S. tariffs hinder global trade flows, driving higher costs and supply chain challenges. Measures are undertaken to ease these tensions via negotiation. The outlook for Emerging Markets and Developing Economies (EMDEs) remains positive, with growth forecasted at 3.7% in 2025 and 3.9% in 2026. In contrast, advance economies are projected to exhibit gradual growth, at 1.4% in year 2025 and 1.5% in year 2026.

3. Indian Economy²

In FY 2025, Indias economy grew by 6.5%, despite global challenges such as geopolitical tensions, supply chain disruptions and shifting trade dynamics. The services sector being a key growth driver, significantly contributed to economic activity, due to improving Indias digital infrastructure, which provided access to financial services and credit for individuals and businesses. This infrastructure upgrade spurred broader economic participation, thereby, escalating demand across various sectors.

Inflation eased from 5.4% in FY 2024 to 4.6% in FY 2025, providing economic stability.³ The decline in inflation supported consumer confidence, driving demand in several industries. Moreover, the Indian government played a crucial role in this growth via key reforms, business-friendly regulations and substantial investments in infrastructure development, thereby, propelling Indias economic expansion. The government further expanded Indian industrial sectors growth, through the Production Linked Incentive (PLI) Scheme, particularly with a significant hike in the budget allocation for the textile sector. It is therefore, in line with Indias broader strategy to bolster domestic manufacturing and global competitiveness, which positions India as a global manufacturing hub.

The education sector progressed significantly with programmes such as Samagra Shiksha and Pradhan Mantri Schools for Rising India (PM SHRI) schemes, which led to the establishment of over 12,000 exemplar schools nationwide, thereby, enhancing the learning environment.⁴ The growing demand for educational materials and infrastructure, such as textbooks, digital resources and school supplies, has strengthened the paper industry. Moreover, the expansion of school facilities and the introduction of new educational programmes have driven the sectors growth, reinforcing the strong link between education sector reforms and the paper industrys expansion.

Outlook

India has emerged as the worlds fourth-largest economy, with per capita income doubling since 2014, a testament to its sustained economic progress. Despite global headwinds, the way forward remains optimistic, due to sustained domestic and foreign investments, robust manufacturing growth and improvement in trade and financial services.

Indias economic outlook, therefore, remains positive with a projected growth rate of 6.5% in FY 2026, catalysed by sustained public investment in infrastructure, robust manufacturing growth and expanding trade and financial services. The governments sustained focus on capital expenditure, improving rural demand and the rapid growth of digital and physical infrastructure is predicted to further enhance industrial activity. As supply chains stabilise and input costs remain at a measured pace, industries integrated with essential services and everyday consumption are well-positioned to benefit from heightened demand and bolstered operational efficiency. The recent rate cuts by the Reserve Bank of India (RBI) is set to inject liquidity, enhance credit access and market sentiment.

Simultaneously, the government undertakes protectionist measures for shifting global tariff landscape, safeguarding national economic interests. Despite global uncertainties, India is predicted to sustain its growth trajectory, supported by strong domestic demand, disinflationary trends and a moderate macro-economic environment.

The global pulp and paper industry is expected to grow steadily in the coming years, mainly due to rising demand for sustainable packaging, hygiene products and eco-friendly alternatives to plastic. In 2024, the industry was valued at approximately USD 379.58 billion and is projected to reach USD 551.15 billion by 2034, growing at a compound annual growth rate (CAGR) of 3.8%. This growth reflects a global shift toward more environmentally responsible products, especially in packaging and consumer goods.

Asia Pacific remains the leading region in the global pulp and paper market, contributing around 56.27% of global revenue in 2024. Countries like China, India and Japan are driving this growth, supported by expanding economies, growing populations and rising demand for food packaging and printed materials. Additionally, Southeast Asian countries such as Malaysia, Indonesia and Vietnam are witnessing increased paper consumption due to rapid urbanization and lifestyle changes.

A significant portion of this growth comes from the wrapping and packaging paper segment, which held the largest market share in 2024. This segment is expected to grow at a CAGR of 5.3% between 2024 and 2034, as businesses and consumers move away from single-use plastics toward recyclable and biodegradable paper solutions. The rise in e-commerce, food delivery services and demand for safe and sustainable packaging materials further boosts this trend.

Overall, the pulp and paper industry is evolving through innovation, greater environmental focus and increased adoption of paper-based products in sectors like food, healthcare and retail. With global awareness about sustainability on the rise, the industry is likely to remain an essential part of the green economy in the years ahead.

5. Global Writing and Printing Paper Industry⁶

The global printing paper market is projected to experience steady growth over the next decade. The market was valued at approximately USD 126.91 billion in 2024 and is expected to reach around USD 161.06 billion by 2034, registering a compound annual growth rate (CAGR) of 2.4% during this period.

This growth is driven by several factors, including the increasing demand for sustainable and eco-friendly paper products. The sustainability segment, encompassing recyclable, compostable and FSC-certified papers, is projected to reach USD 20.5 billion by 2024, growing at a CAGR of 4.2%. This trend is fuelled by stringent government regulations promoting sustainable practices and a growing consumer awareness of environmental issues.

Regionally, the Asia-Pacific (APAC) area is expected to witness significant growth, propelled by rapid industrialization, urbanization and rising literacy rates in countries like China, India and Southeast Asian nations. North America and Europe also maintain substantial market shares, supported by established educational institutions and corporate sectors.⁷

In summary, the global printing paper market is poised for moderate yet consistent growth, supported by the rising demand for sustainable products and expanding applications across various industries. The emphasis on environmental responsibility and innovation in paper production is expected to shape the markets trajectory in the coming years.

6. Global Specialty Paper Industry⁸

Global Specialty Paper Industry Growth Trend

Size, By Type, 2024-2033 (Billion Metric Tons)

The global specialty paper market is experiencing steady growth, driven by increasing demand for sustainable and high-performance paper solutions across various industries. The market reached 36.7 billion metric tons in 2024 and is projected to grow to 48.7 billion metric tons by 2033, registering a compound annual growth rate (CAGR) of 3.17% during the forecast period. Europe currently leads the market, accounting for over 33.8% of the global share in 2024, due to robust demand across key sectors such as food and beverage, construction and packaging.

The growth of the specialty paper market is largely attributed to the rising preference for eco-friendly and biodegradable materials, particularly in the packaging industry. The expanding e-commerce sector is also fuelling demand for specialty papers used in packaging and wrapping solutions. Advancements in printing technologies have further enhanced the applications of specialty papers in high-quality printing, labelling and graphics. Additionally, innovations in coatings and finishes are improving paper durability and functionality, supporting diverse applications across industries.

In summary, the specialty paper industry is set to experience robust growth, fuelled by the global shift towards sustainable materials, technological advancements and the increasing demand for high-performance paper solutions across various sectors.

7. Global Paper Industry Trends

Shift toward Sustainability: There is growing demand for recyclable, biodegradable and compostable paper products, especially in packaging as governments and companies move away from plastic.

Growth in Specialty Papers: Specialty papers used in applications like food packaging, labels, medical uses and industrial processing are witnessing steady demand. These papers often have unique properties like water resistance, durability, or barrier coatings.

Packaging Boom: E-commerce, food delivery and consumer goods sectors are driving strong demand for paper-based packaging boards, including folding box board (FBB), solid bleached sulfate (SBS) and kraft paper.

Decline in Writing & Printing Paper in Developed Markets:

Digital substitution in education, offices and publishing continues to reduce the demand for traditional printing and writing paper in North America and Europe.

Technological Advancements: Automation, AI and Industry 4.0 tools are being adopted to improve operational efficiency, reduce waste and enhance customization in paper manufacturing.

Regional Growth in Asia-Pacific: Countries like China, India, Indonesia and Vietnam are emerging as key producers and consumers due to industrial expansion, population growth and increasing consumer awareness.

Volatile Raw Material Prices: Fluctuations in pulp prices and energy costs are impacting profitability, prompting investmentsinin-housepulpingandalternativerawmaterials.

8. Indian Pulp and Paper Industry⁹

The Indian pulp and paper industry is one of the fastest-growing sectors globally, currently ranking as the 15th largest paper producer in the world. Despite having nearly 15% of the global population, India accounts for only 5% of global paper output, indicating significant growth potential. The industry caters to various segments, including writing and printing paper, packaging, tissue and specialty papers. Key drivers of demand include rising literacy rates, increasing school enrollments, higher education spending, the nationwide ban on single-use plastics and the rapid expansion of e-commerce.

In FY 2024-25, Indias paper consumption reached approximately 24 million tonnes. This has created a growing reliance on imports to meet local demand. With per capita paper consumption in India still at 15–16 kg compared to the global average of 57 kg, there is a large untapped market. Demand is expected to grow at a steady rate of 6–7% per year, with total consumption projected to exceed 35 million tonnes by 2035. The market value of the Indian paper industry is forecasted to reach USD 19.1 billion by 2033, with an estimated CAGR of around 7.5%.

Over the past 5-7 years, the industry has seen investments of over _25,000 crore in expanding production capacity and adopting modern technology. However, it still faces significant challenges, particularly in sourcing raw materials.

India experiences an annual wood shortage of around 2 million tonnes, which increases production costs by roughly USD 150 per tonne compared to other Asian producers. Additionally, the countrys wastepaper recovery rate is just 15%, far below the global average of 30-85%. The absence of a structured agroforestry policy also limits sustainable raw material sourcing and hinders further investment, especially among small and medium paper mills.

Despite these obstacles, the Indian pulp and paper industry contributes significantly to the economy and sustainability goals. It is one of the few sectors that is "wood positive," meaning it plants more trees than it uses. The industry supports over 1.2 million hectares of agroforestry and provides employment to more than 2 million people, both directly and indirectly. It also contributes around _5,000 crore annually to the national exchequer. With the adoption of automation, energy-efficient technologies and integrated systems, the sector is becoming more competitive and environmentally responsible. These strengths position Indias pulp and paper industry for long-term growth, driven by strong domestic demand, innovation and alignment with national goals like "Make in India" and "Atmanirbhar Bharat."

. Indian Writing and Printing Paper ¹⁰

The Indian writing and printing paper industry is growing steadily due to rising literacy levels, government policies like the National Education Policy (NEP) and increasing demand for education-related materials. According to the Indian Paper Manufacturers Association (IPMA), the writing and printing paper market is growing at a rate of 3% per year. Within this market, copier paper is growing even faster, at a rate of 4.5% annually and now makes up about 25% (one-fourth) of the total domestic demand for paper, paperboard and newsprint.

Indias total paper consumption is around 22 million tonnes per year and the writing and printing paper segment plays a significant role in this. The implementation of the NEP is leading to the printing of new books and learning materials, which has increased the demand for such paper. The start of the academic year in April-June usually brings a seasonal rise in demand.

On the other hand, the Indian industry is facing challenges from cheaper imported paper, which puts pressure on local producers by bringing down prices. This has led to a 10-15% drop in domestic prices in recent months. At the same time, the cost of raw materials and logistics remains high, squeezing profit margins for Indian manufacturers.

Despite these difficulties, the industry is trying to grow stronger by improving product quality, increasing production and promoting the use of domestically made paper. Overall, the Indian writing and printing paper sector is evolving steadily, supported by educational needs and growing local demand, though it must continue to tackle pricing and competition issues.

10. Indian Specialty Paper ¹¹

Indias specialty paper industry is growing quickly because of rising demand in areas like hygiene, packaging and food safety. Specialty papers include products like tissue paper, decor paper, thermal paper, filter paper, cigarette paper and fine printing papers. Among these, tissue paper is seeing the fastest growth due to people becoming more health-conscious and needing better hygiene products. The specialty paper segment in India was estimated to be around 1.3 to 1.5 million tonnes in 2022 and it is expected to grow by 11% to 13% every year, reaching about 1.9 to 2.3 million tonnes by 2027. This shows that more people and industries are using specialty paper for everyday use and packaging needs.

At the same time, the larger packaging paper and paperboard market, which includes many types of specialty papers, was valued at around USD 12.87 billion in 2024. This market is expected to grow to USD 17.74 billion by 2029, with a yearly growth rate of about 6.6%. The main reasons for this growth are the ban on single-use plastics, the rise of e-commerce and the need for eco-friendly and recyclable materials. As a result, specialty paper is becoming an important part of the Indian paper industry, offering good opportunities for future expansion.

11. Indian Paper Industry Trends

High Growth Potential: India is one of the fastest-growing paper markets globally, with paper consumption expected to reach around 30 million tonnes by FY 2026–27, growing at 6–7% CAGR.¹²

Low Per Capita Consumption: Indias per capita paper consumption (15-16 kg) remains significantly lower than the global average (57 kg), indicating ample room for growth as literacy, urbanization and income levels rise.¹³

Rise in Writing & Printing Paper Demand: Despite global declines, the Indian market is expected to remain resilient due to increasing school enrollments, government education programs and the New Education Policy.

Boom in Packaging Boards: The demand for premium packaging boards is growing rapidly, fuelled by e-commerce, FMCG, pharma and foodservice sectors shifting toward eco-friendly alternatives.

Focus on Sustainability and Agro-Forestry: Paper manufacturers are investing in backward integration through agro-forestry, water conservation and renewable energy to ensure raw material security and regulatory compliance.

Increased Investment in Capacity Expansion: Companies are expanding production, especially in tissue, specialty and packaging papers, to cater to rising demand and export opportunities.

Regulatory Push: The ban on single-use plastics, along with environmental and packaging norms, is boosting the market for fibre-based alternatives in India.

11https://thepulpandpapertimes.com/news/my-knowledge/indian-paper-industry

12. Opportunities and Threats

Opportunities

Supportive Government Policies

Government measures such as the ban on certain plastics and heightened education expenditure will potentially bolster long-term growth. These policies offer innovative uses for paper products, thereby, propelling businesses and institutions towards more sustainable packaging and communication methods.

NEP Bolstering Printing and Writing Paper Demand

The National Education Policy (NEP), with a surging literacy rate and funding for education, is expected to drive heightened demand for notebooks, textbooks and other printed materials in the printing and writing paper segment.

Shift towards Sustainability

A rise in environmentally conscious consumers and businesses is strengthening the demand for eco-friendly products, thereby, enabling the paper industry to capitalise on the shift from plastic to paper packaging.

Circular Economy and Recycling Initiatives

Emphasis on reuse, recycling, and waste minimization aligns with circular economy models, encouraging innovation in sustainable product design within the paper sector.

Biorefinery and Bio-based Products

The developing biorefineries within pulp and paper mills allows for diversification of products such as bio-based chemicals, fuels and wood-based textile fibres, thereby, supporting the low-carbon economy.

Threats

High Raw Material Costs

The cost of key materials such as wood pulp has escalated sharply. Moreover, with other industries competing for the same raw materials and supply issues from past years, the prices remain high, thereby, financially straining the budgets of paper companies. However, backward integrated wood & agro pulp mill backed paper plants have mitigated impact to some extent.

Declining Sale Prices

The companies have witnessed a decline in average prices of paper goods. Concurrently, they remain incapable in conveying the rising input costs to customers due to cheap imports flooding the market and hindering their profits.

Impact of Digital Alternatives

With a growing population opting for digital learning, cloud communication, and e-governance, a gradual de-escalation is witnessed in the demand for traditional printing and writing paper, posing challenges for the segment.

13. Risks & Concerns and Risk Management

Risk Category	Description	Mitigation Strategy
Raw Material Supply	Seasonal availability of agro residue and	The Company ensures efficient supply through farmer
	surging demand for wood from other	tie-ups in-house production, buy-back programs and
	industries can cause supply shortages and	backward integration in terms of pulping.
	escalate prices.
Energy Dependence	Rising power costs and fossil fuel	The Company has established an in-house power plant
	dependence can impact operational	and chemical recovery systems to reduce external
	efficiency and heighten expenses.	dependence and minimise expenses.
Environmental	Strict pollution and water usage rules	Investments in effluent treatment, afforestation
Regulations	require consistent compliance.	and resource-saving practices ensure adherence to
		environmental standards.
Import Competition	Cost-effective paper imports from ASEAN	The Company is aided by government policies like
	and East Asia may negatively impact sales	the Paper Import Monitoring System by prioritising
	and profit margins.	product quality and cost efficiency.
Market and Policy	The dynamic nature of government	The Company consistently monitors policy updates
Changes	regulations and education policies can	and aligns its product strategy in accordance
	regulate the demand for paper products.	with standards such as NEP 2024 and plastic ban
		regulations.
Price Volatility	Fluctuations in pulp, bamboo and imported	Smart pricing strategies, regular reviews and partial
	materials can significantly impact profit	backward integration limit the impact.
	margins.
Currency Fluctuations	Conducting international trade exposes the	The Company utilises hedging and other financial tools
	Company to exchange rate changes.	to manage foreign exchange risks.
Interest Rate Surge	Higher interest rates can escalate	The Company maintains a low-risk debt profile and
	borrowing costs and reduce profits.	meticulously plans borrowings to ensure financial
		stability.
Workforce Challenges	Challenges in identifying and retaining	Nationwide recruitment, career growth opportunities
	skilled employees can impact operational	and employee incentive programs are instrumental in
	efficiency.	the attraction and retention of key talent.
Health and Safety Risks	Employees are subject to safety risks in the	Adherence to strict safety standards, regular training
	operation of machinery.	and proactive risk identification are instrumental in
		maintaining a safe work environment.
Digital Substitution	Digitalisation may reduce paper demand.	The Company is identifying growth opportunities in
		emerging segments such as sustainable packaging
		and specialty papers to adapt to the evolving needs.
Old Technology Risk	Outdated machinery may not align with	The Company is modernising infrastructure and
	the future global standards, resulting in	facilitating digital transformation through Project
	inefficiencies.	Nirmaan.
Transportation and	Port congestion or freight disruptions can	The Company operates with a strong logistics
Logistics Delays	hinder seamless delivery.	network and substantial storage capacity. It ensures
		efficient functioning through meticulous supply chain
		monitoring.
Economic Slowdowns	Inflation or declining consumer expenditure	Flexible manufacturing and a diverse product portfolio
	can lower demand rates.	enables the Company to adapt to dynamic market
		changes.
Legal and Compliance	Legal non-compliance can result in penalty	A dedicated compliance system and regular audits
Risks	charges and reputational damage.	ensure legal adherence.

14. SWOT Analysis

Strengths	Elaboration
Integrated pulp	The Company produces its own pulp using agro waste and wood, minimising costs and ensuring
manufacturing	consistent raw material supply.
Wide product range	The Company offers a diverse range of writing, printing, copier, premium maplitho, cup stock
	base and specialty papers.
Focus on technology and	Investments in automation, advanced control systems (QCS/DCS) and digital tools through
automation	Project Nirmaan bolsters productivity and operational efficiency.
Strong sustainability	Through surface water utilisation, afforestation programs and chemical recycling, the Company
practices	reinforces its strong commitment to the environment.
Strategic location	The Companys strategic location in Punjabs agro belt ensures seamless production through
	reliable access to key raw materials such as wheat straw and Sarkanda grass.
Weaknesses	Elaboration
High investment and	Establishment of advanced paper production machinery and utilities demands substantial
prolonged setup period	resources and considerable time. However time planning and cost benefit can have positive
	impact.
Seasonal supply and higher	Seasonal availability of agro-based raw materials and high transportation cost is a challenge
transportation cost for agro-	which can be mitigated to some extent by better planning.
residues
Exposure to global pulp price	Exposure to global pulp price volatility for non-integrated operations may impact profitability
changes	and cost stability which can be reduced by integrated operations.
Dependence on fossil fuels	Sector-wide dependence on coal and fossil-based energy sources is still prevalent.
Opportunities	Elaboration
Growing demand for high-	Rising demand for premium copier paper, maplitho, and export-grade writing and printing paper
quality paper	presents strong growth prospects.
New product categories	The Company is steering growth by diversifying its product portfolio in the notebook, branded
	stationery, tissue paper and other value added products.
Export potential	The Company cost-efficient manufacturing offers export opportunities, predominantly in Asia
	and Africa where demand is surging.
Eco-friendly packaging	Restrictions on single-use plastics are boosting demand for sustainable paper-based products
market	like Kupstock (cup base) and Sipps (straw paper).
Industry 4.0 and AI	Through Project Nirmaan, the adoption of AI, IoT, cloud computing, and automation will enhance
integration	operational efficiency, minimise costs and improve product quality.
Custom production for niche	The Companys flexible production process facilitates the manufacture of tailored products for
clients	schools, publishers and high-margin markets.
Threats	Elaboration
Cheap imports from FTA	Influx of low-cost paper imports from ASEAN and East Asian countries, particularly China and
countries	Indonesia, exerts downward pressure on domestic prices and market share.
Rising raw material costs	Escalating demands from biomass, MDF and plywood industries may raise wood and agro raw
	material prices.
Stricter environmental laws	The enforcement of stringent pollution and water use regulations will require additional
	investment in pollution control and sustainability measures.
Digitalization	Growing digitalization and cloud-based information management may reduce corporate printing
	demand.

15. Companys Segment-wise Financial Performance & Analysis

Kuantum Papers Limited, with a legacy spanning over four decades, is a leading manufacturer of agro and wood-based Writing & Printing, Copier, and Specialty papers. The Company operates under a single business segment as per Indian Accounting Standards — the manufacturing and sale of paper. During FY 2024–25, the end-use distribution of Kuantums paper products was approximately: 38% for printing and publishing, 28% for notebooks, 19% for photocopier paper, 5% for diaries, with the remainder catering to various other applications.

Kuantums writing and printing papers serve a wide range of end uses, including books, notebooks, annual reports, directories, account books, envelopes, calendars, and general office stationery. In addition to its core offerings, the Company has built a strong portfolio of specialty products such as thermal paper, bond paper, parchment, azurelaid, cartridge, coloured, ledger, and stiffener papers. A key area of focus has been the development of sustainable specialty papers like base paper for cup stock and carry bags, which support the reduction of single-use plastics and reinforce the Companys commitment to environmental responsibility.

The broader Indian paper industry experienced a difficult year due to cyclical pressures. An influx of low-priced imports led to oversupply and muted realizations in the domestic market. Concurrently, raw material costs, especially for domestic wood, escalated significantly due to limited availability and increased demand from competing wood-based industries. These developments exerted considerable pressure on industry profitability.

Despite these external challenges, Kuantum Papers delivered a resilient and benchmark-setting performance, underscoring its operational agility and strategic depth.

Through continuous cost optimization, backward integration, and efficient operations, the Company maintained strong margins. While Net Sales Realization declined by approximately 13–14%, the impact on profitability was effectively contained, with EBITDA margin reducing by only 5.5%. The Company closed the year with an EBITDA margin of 22.4%, positioning it among the highest-performing paper manufacturers in India and reaffirming its cost leadership in the sector. During the year under review, Kuantum achieved highest-ever paper finished production of 160,861 MT (previous year 153058 MT), reflecting efficient utilization of all paper machines.

The summarized financial performance of the Company for the financial year 2024-25 is given hereunder:

Particulars	2024-25	2023-24
Sales & other income	1,11,312.38	1,21,693.66
EBITDA	24,867.58	33,870.49
Profit before tax	15,537.79	24,761.06

The financial details and performance highlights are further elaborated in the Directors Report and Financial Statements sections of this Annual Report. 19. Accounting Treatment

16. Accounting Treatment

The Financial Statements of the Company for the year under review have been prepared in accordance with Indian Accounting standards (Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standard) Rules, 2015, Companies (Indian Accounting Standards) Amendment Rules, 2016 and subsequent amendments. The adoption of Ind AS ensures consistency, transparency and comparability of the Companys financial reporting aligning with global accounting standards.

17. Significant Change of Key Financial Ratios

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the year, the significant changes in the financial ratios of the Company, which are more than 25% as compared to the previous year, are summarised below:

Ratios	FY 2024-25	FY 2023-24	% Change
				more than 25%
Current Ratio (in times)	0.83	1.02	-18%	-
Current Ratio (in times)-without considering	1.47	1.63	-10%	-
current maturity of debts.
Debt Equity Ratio (in times)	0.54	0.46	18%	-
Debt service coverage ratio (in times)	1.50	2.97	-49%	Note 1
Return on Net Worth (%)	9.86	17.59	-44%	Note 1
Inventory Turnover (in times)	6.02	7.18	-16%	-.
Trade receivables turnover (in times)	33.70	42.86	-21%	-
Trade payables turnover (in times)	17.37	20.48	-15%	-
Net capital turnover (in times)	12.71	10.22	24%	-
Interest Coverage Ratio	7.09	9.49	-25%	Note 1
Operating profit margin	22.34	27.83	-20%	-
Net Profit Margin (%)	10.42	15.19	-31%	Note 1
Return on capital employed (%)	9.66	16.35	-41%	Note 1

18. Outlook

India is the worlds fastest-growing paper market, with a projected demand of 30 million tonnes by FY 2026-27, growing at an annual rate of 6-7%. This development is fuelled by factors such as increasing literacy rates, economic expansion, education expenditures, augmenting e-commerce and government restrictions on single-use plastics. Consequently resulting in a surging demand for writing, printing, packaging and specialty papers.

Kuantum Papers is poised to utilise these conditions by harnessing its strong in-house pulp manufacturing capabilities. By prioritising sustainable operations through agro-forestry and efficient water and energy usage, the Company aims to diversify its product portfolio through integrated operations, thereby, minimising production expenses and reducing environmental impact. It enables the Company to maintain a competitive edge in a capital-intensive and regulated industry.

By augmenting investments in capacity expansion, primarily in high-margin areas like tissue and specialty paper, through advanced paper machinery installation, recovery system upgradation and increasing pulp production, the Company is reinforcing its commitment to long-term, value-driven growth.

In addition to manufacturing upgrades, Kuantum is integrating digital transformation and Industry 4.0 technologies to improve operational efficiency, minimise expenses and bolster real-time decision-making. The Company maintains its commitment to product innovation and customer requirements, predominantly in premium segments.

Despite global trade issues, raw material price fluctuations and regulatory pressures, Kuantums robust long-term strategy is centred on sustainable growth, operational efficiency and value-creation for all stakeholders.

Conclusion

Kuantum is aligned with the evolving paper industry through its focus on cost leadership, sustainability, innovation and digitalization. With robust presence in the writing and printing segment, expanding operations in specialty packaging papers and a commitment to environmental responsibility, Kuantum is poised to meet domestic and global requirements, support rural employment and promote a sustainable economy.

19. Human Resources and Industrial Relations

Kuantum Papers Limited acknowledges its employees as its greatest strength. As of March 31, 2025, the Company had 1,356 employees across various roles including managerial, technical, supervisory and operational staff. Kuantum Papers Limited follows effective human resource policies that promote performance, fairness, inclusion and consistent development.

During the year, several career- oriented training programs were conducted to prepare the employees for Industry 4.0. These included practical sessions on data integration, automation, smart maintenance and control system operations. Additional training focused on improving quality, safety and processes, with support from both external consultants and internal teams. Kaizen initiatives encouraged continuous improvement within production and quality departments, while cross-functional knowledge sharing enhanced collaboration and flexibility across the organization.

To promote employee engagement, Kuantum Papers Limited conducted its annual employee satisfaction survey to gather feedback and improve the work environment. The Company also celebrated key milestones, safety week and cultural events. Mechanisms were established to address employee grievances, gather suggestions and ensure workplace safety through dedicated committees.

Throughout FY 2024-25, industrial relations at Kuantum Papers Limited remained harmonious. The Company maintained regular dialogue with union leaders and worker representatives and discussions regarding wages and benefits were managed amicably. Kuantum Papers Limited prioritises open communication, fair practices and workforce welfare.

Moreover, Kuantum Papers Limited is dedicated to the growth and development of its employees. It has implemented structured systems for career planning, regular evaluations and job rotations. As the Company expands and adopts automated processes, it is proactively engaged to reskill its workforce to fulfil operational requirements.

20. Internal Control Systems and their Adequacy

Kuantum Papers Limited has established a robust and well-structured internal control system designed to provide reasonable assurance regarding the safeguarding of assets, the reliability of financial reporting and compliance with applicable laws, regulations and internal policies.

The Company has implemented SAP as its integrated ERP platform, further strengthening internal controls and ensuring seamless, real-time monitoring of business processes. Annual business plans are prepared and from these, detailed quarterly budgets for both revenue and capital expenditure are formulated. Actual performance is closely tracked against these budgets and any deviations are promptly analysed and addressed.

Internal controls are supported by regular management reviews and an independent internal audit mechanism conducted by a reputed firm of Chartered Accountants. These audits cover a wide range of operational areas and assess the adequacy and effectiveness of existing controls. The internal audit scope includes evaluating policies, practices, procedures, authorisation protocols, reliability of the management information system and the safeguarding of assets.

Internal audit reports are presented to the Audit Committee, which closely monitors the effectiveness of the control systems, reviews audit findings and guides implementation of corrective measures. The Statutory Auditors also regularly interact with the Audit Committee to ensure alignment in audit observations and progress on recommended improvements. The internal financial control systems of the Company were independently reviewed and the same were adequate and were operating effectively for the year ended 31st March, 2025.

The Company maintains a formal Code of Conduct, well-documented policies and standard operating procedures across departments to reinforce the internal control environment. Overall, the internal control framework is geared towards ensuring accuracy in financial reporting, operational efficiency, statutory compliance and asset protection thereby contributing significantly to sound corporate governance and risk mitigation.

21. Cautionary Statement

This Management Discussion and Analysis contains forward-looking statements that reflect the Companys current views, expectations and projections with respect to future performance, business strategies and market conditions, as permitted under applicable laws and regulations. These statements are based on certain assumptions and are subject to known and unknown risks, uncertainties and other factors - many of which are beyond the Companys control.

Actual results, performance, or achievements may differ materially from those expressed or implied in these forward-looking statements due to various factors, including but not limited to: fluctuations in global and domestic demand and supply dynamics, volatility in raw material availability and pricing, changes in finished goods pricing, evolving regulatory and tax frameworks, environmental and economic conditions, judicial outcomes, industrial relations and other unforeseen events.

The Company undertakes no obligation to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these statements, which are made based on information available as of the date of this report.