1. Overview
This Management Discussion and Analysis (MDA) outlines Kuantum Papers Limiteds strategic response to the shifting business environment during FY 2025 26. 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
The global economy continued to demonstrate resilience through year 2025 with global growth rate of around 3.4%, despite persistent macro-economic challenges, including heightened geopolitical tensions, evolving trade dynamics, and tighter financial conditions. However, the economic environment has become more uncertain with the outbreak of conflict in the Middle East, which has emerged as a significant downside risk to global growth and stability.
After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. This is the latest culmination in a series of events that have been re-shaping international relations and raising geopolitical tensions markedly across all regions in recent years. In year 2025, the global economy operated within a ‘growth-moderation phase. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1% in 2026 and 3.2% in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.
Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial-intelligence-driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets. Elevated public debt and eroding institutional credibility further heighten vulnerabilities. At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis.
Global growth moderated compared to previous years, reflecting the cumulative impact of restrictive monetary policies, conflicts, trade fragmentation, and elevated uncertainty. Advanced economies experienced subdued expansion amid weaker demand and tighter financial conditions, while Emerging Markets and
Developing Economies (EMDEs) remained relatively more resilient, supported by domestic demand, though increasingly exposed to external shocks particularly rising commodity prices and supply disruptions. The 2026 US-Israel war on Iran triggered a major global economic shock, characterized by surge in oil prices, significant disruption to shipping in the Strait of Hormuz, and a potential global recession. Global growth is expected to slow while inflation could exceed the previous percentages. The war could lead to potential energy crisis, supply chain disruptions, inflationary pressures and monetary policy shift. Even with a ceasefire, economists warn of long-term "scarring" on the global economy, as supply chains and infrastructure require significant time to recover.
A key trend influencing the global macroeconomic landscape has been the interruption of the disinflation process. After a period of easing price pressures, global inflation is expected to rise modestly in year 2026, driven by higher energy and commodity prices stemming from geopolitical developments, before resuming its downward trajectory thereafter. This temporary reversal in disinflation poses challenges for policymakers, requiring a careful balance between controlling inflation and supporting growth.
Outlook
According to the International Monetary Fund, global growth is projected at 3.1% in year 2026, with a marginal improvement to 3.2% in 2027, assuming that geopolitical tensions remain contained. However, risks to the outlook are firmly tilted to the downside. A prolonged or intensifying conflict, further geopolitical fragmentation, renewed trade tensions, or tighter financial conditions could significantly weaken growth prospects and disrupt global markets.
Inflation is expected to increase modestly in year 2026 before declining again in year 2027, reflecting the impact of rising commodity prices and supply-side pressures. Emerging markets and developing economies are likely to face relatively higher inflationary pressures and growth challenges, particularly those that are commodity importers or carry existing macroeconomic vulnerabilities.
Overall, the global economy remains in a fragile recovery phase, requiring strong policy coordination, credible macroeconomic frameworks, and enhanced international cooperation to navigate ongoing uncertainties and sustain long-term growth. The global economy is transitioning into a phase of moderate and uneven growth, with resilience in emerging markets offset by continued softness in advanced economies. Downside risks remain elevated, including geopolitical tensions, trade disruptions, fiscal pressures, and climate-related uncertainties, necessitating greater adaptability and strategic recalibration for businesses.
3. Indian Economy2
Indias economy continued to exhibit strong momentum in FY 2025 26, reaffirming its position as the fastest- growing major economy globally for the fourth consecutive year. Indias economy in FY 2025-26 has emerged as one of the most dynamic in the global landscape, with real GDP growth estimated at around 7.4% in FY 2025-26, driven by the twin engines of consumption and investment, making it the fastest growing major economy by a significant margin. This strong performance is being driven by a combination of resilient domestic demand, especially in consumption and services and a sustained, policy anchored push on public infrastructure and capital expenditure, which has helped crowd in private investment rather than crowd it out. The governments front loaded infrastructure roadmap, including large scale investments in roads, railways, logistics, housing, defense, manufacturing, and urban infrastructure, has not only lifted growth but also improved supply chain efficiency and regional connectivity, thereby supporting MSMEs and manufacturing clusters.
Domestic demand remained the cornerstone of growth. Private Final Consumption Expenditure (PFCE) increased its share to 61.5% of GDP, reflecting a supportive macroeconomic environment characterised by low inflation, stable employment conditions and rising real incomes. Rural consumption was supported by favourable agricultural output, while urban demand strengthened due to tax rationalisation and improved purchasing power, indicating broad-based consumption growth.
Investment activity also remained robust, with Gross Fixed Capital Formation (GFCF) accounting for 30.0% of GDP. Investment growth accelerated in the first half of FY26, expanding by 7.6%, supported by sustained public capital expenditure, infrastructure development and improving private sector participation.
On the supply side, sectoral performance remained balanced. The agriculture sector grew by approximately 3.1%, supported by a favourable monsoon, while allied activities such as livestock and fisheries continued to provide stability with growth of around 5 6%. The industrial sector showed improving traction, with manufacturing registering strong growth of 8.4% in H1 FY26, supported by robust demand and improved business activity indicators. Overall industrial growth is estimated at 6.2%, aided by infrastructure expansion and construction activity.
The services sector continued to be the primary growth driver, with Gross Value Added (GVA) growth of around
9.1%, reflecting broad-based expansion across segments such as finance, real estate and professional services.
Inflation moderated significantly during the year, with headline CPI easing to low levels (around 1.7% during April December FY26), primarily driven by a sharp correction in food prices and favourable supply-side conditions. This disinflation supported real income growth and consumption demand, while core inflation remained contained despite intermittent pressures.
Fiscal and monetary policies remained supportive of growth. Strong tax collections, rationalisation of GST rates and sustained capital expenditure ensured fiscal discipline while supporting economic activity. On the monetary front, the Reserve Bank of India implemented cumulative repo rate cuts and liquidity measures, improving credit flow and reducing borrowing costs. The banking sector remained resilient, with gross NPAs declining to multi-decade lows and profitability improving.
Indias external sector remained stable despite global uncertainties. Total exports maintained momentum, supported by strong services exports, while remittances continued to provide a stable source of external financing. The current account deficit remained moderate, and foreign exchange reserves provided a comfortable import cover, ensuring external stability. Structural reforms, including GST rationalisation, deregulation measures and the implementation of labour codes, further strengthened the business environment and enhanced economic efficiency.
Outlook
The outlook for the Indian economy remains positive, supported by strong domestic fundamentals and policy continuity. Real GDP growth for FY 2026 27 is projected in the range of 6.8% 7.2%, with medium-term growth potential estimated at around 7%.
Growth is expected to be driven by resilient consumption demand, improving private investment and continued government focus on infrastructure development. Stable inflation, strengthening balance sheets across corporates and banks and ongoing policy reforms are expected to sustain economic momentum.
While the global environment remains uncertain due to geopolitical tensions, trade fragmentation and financial volatility, India is relatively well-positioned. External risks may impact exports and capital flows intermittently; however, strong domestic demand, prudent macroeconomic management and adequate policy buffers provide resilience.
Going forward, continued emphasis on fiscal discipline, supply-side reforms and investment in infrastructure and digital ecosystems is expected to further enhance productivity and support long-term growth. Overall, the Indian economy is expected to maintain a steady growth trajectory, balancing resilience with caution amid evolving global dynamics. Behind the headline growth, sectoral patterns show a broadening recovery; services, business support activities, manufacturing and construction have also picked up, supported by policy thrusts such as the Production Linked Incentive (PLI) schemes and renewed industrial estate modernisation. On the macro- prudential side, inflation has moderated during FY 2025-26, thanks to a combination of softer food price inflation, relatively stable energy costs, and effective monetary policy management. This has allowed the RBI to avoid aggressive tightening.
Despite global uncertainties, India is predicted to sustain its growth trajectory, supported by strong domestic demand, disinflationary trends and a moderate macro- economic environment.
4. Global Pulp and Paper Industry3
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. The global pulp and paper market size was valued at USD 351.7 billion in 2025 and is projected to grow from USD 357.6 billion in 2026 to USD 416.56 billion by 2035, exhibiting a CAGR of 1.7% during the forecast period. Asia Pacific dominated the pulp and paper market with a market share of 56% in 2025.
This growth reflects a global shift toward more environmentally responsible products, especially in packaging and consumer goods.
Asia Pacific is the leading region and is projected to dominate the global market for pulp and paper during the forecast period. Asia Pacific contributed 56.40% to the global market in 2025, with a valuation of USD 198.3 billion, and is projected to reach USD 202.1 billion in 2026. In this region, China is the largest manufacturer and consumer of the product globally. China is set to stand at USD 122.9 billion in 2026. Additionally, the rising adoption of pulp and paper-based products, improving lifestyles, and healthier economic growth will provide lucrative opportunities for paper-based products in the country. India is anticipated to be valued at USD 27.2 billion in 2026, while Japan is set to reach USD 14.1 billion in the same year.
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 Industry4
According to the latest market estimates, the global paper goods market is entering a stable growth phase as increasing hygiene awareness, rapid expansion of e- commerce, and sustainability-driven material transitions reshape consumption patterns and procurement strategies. The market, valued at USD
309.30 billion in 2025, is projected to reach USD 317.03 billion in 2026 and expand to USD 405.83 billion by 2036, registering a 2.5% CAGR over the forecast period.4.1
As procurement strategies evolve, buyers are shifting from standardized sourcing toward specification- driven purchasing, prioritizing certified product performance, sustainability credentials, and supply chain traceability.
The global kraft paper market was valued at USD 66.5 billion in 2025. The market is expected to grow from USD 71 billion in 2026 to USD 128.3 billion in 2035, at a CAGR of 6.8% according to latest report published by Global Market Insights Inc.4.2
The global A4 size paper Market is set to rise from USD 15.59 Billion in 2026 to hit USD 18.17 Billion by 2035, growing at a CAGR of 1.6% between 2026 and 2035.4.3
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 Industry- Growth Trend5
The global specialty paper market is experiencing steady growth, driven by increasing demand for sustainable and high-performance paper solutions across various industries.
The global specialty paper market size reached 37.9 billion metric tons in 2025. Looking forward, the market is expected to reach 49.5 billion metric tons by 2034, exhibiting a CAGR of 2.92% during 2026-2034. Europe currently dominates the market, holding a significant market share of over 33.8% in 2025. The increasing demand for high-quality packaging material, growing adoption in the food and beverage industry, the rapid expansion of the construction industry, and rising need in the production of masking tapes are some of the factors driving the market growth.
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.
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.
4.1
https://www.morningstar.com/news/accesswire/1158200msn/global-paper-goods-market-outlook-2026-2036-china-india-lead-growth-as-procter-gamble-kimberly-clark-and-international-paper-expand4.2
https://www.gminsights.com/industry-analysis/kraft-paper-market4.3
https://www.businessresearchinsights.com/market-reports/a4-size-paper-market-119864 5https://www.imarcgroup.com/specialty-paper-marketDecline 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 investments in in-house pulping and alternative raw materials.
8. Indian Pulp and Paper Industry6
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.
Paper consumption in India is expected to grow at a rate of between 6% and 7% annually and reach 30 million tons by 2026-2027, according to Indias Business Standard.
6.1 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%.
6.2 Over the past 5-7 years, the industry has seen investments of over 25,000 crore in expanding production capacity and adopting modern technology.6.2 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 Rs. 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 “Aatmanirbhar Bharat.”
9. Indian Writing and Printing Paper7
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 25-28 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
6.1
https://www.industrialinfo.com/news/article/indias-paper-consumption-to-rise-by-2027--310801 6.2https://thepulpandpapertimes.com/news/my-knowledge/indian-paper-industry-2188 6.3https://thepulpandpapertimes.com/news/india/ipma-writing-2109 7https://thepulpandpapertimes.com/news/my-knowledge/indian-paper-industry-2188 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
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.
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.
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.
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.
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 surging demand for wood from other industries can cause supply shortages and escalate prices. | The Company ensures efficient supply through farmer tie-ups in-house production, buy-back programs and backward integration in terms of pulping. |
| Energy Dependence | Rising power costs and fossil fuel dependence can impact operational efficiency and heighten expenses. | The Company has established an in-house power plant and chemical recovery systems to reduce external dependence and minimise expenses. |
| Environmental Regulations | Strict pollution and water usage rules require consistent compliance. | Investments in effluent treatment, afforestation and resource-saving practices ensure adherence to environmental standards. |
| Import Competition | Cost-effective paper imports from ASEAN and East Asia may negatively impact sales and profit margins. | The Company is aided by government policies like the Paper Import Monitoring System by prioritizing product quality and cost efficiency. |
| Market and Policy Changes | The dynamic nature of government regulations and education policies can regulate the demand for paper products. | The Company consistently monitors policy updates and aligns its product strategy in accordance with standards such as NEP 2024 and plastic ban regulations. |
| Price Volatility | Fluctuations in pulp, bamboo and imported materials can significantly impact profit margins. | Smart pricing strategies, regular reviews and partial backward integration limit the impact. |
| Currency Fluctuations | Conducting international trade exposes the Company to exchange rate changes. | The Company utilises hedging and other financial tools to manage foreign exchange risks. |
| Interest Rate Surge | Higher interest rates can escalate borrowing costs and reduce profits. | The Company maintains a low-risk debt profile and meticulously plans borrowings to ensure financial stability. |
| Workforce Challenges | Challenges in identifying and retaining skilled employees can impact operational efficiency. | Nationwide recruitment, career growth opportunities and employee incentive programs are instrumental in the attraction and retention of key talent. |
| Health and Safety Risks | Employees are subject to safety risks in the operation of machinery. | Adherence to strict safety standards, regular training 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 future global standards, resulting in inefficiencies. | The Company is modernising infrastructure and facilitating digital transformation through Project Nirmaan. |
| Transportation and Logistics Delays | Port congestion or freight disruptions can hinder seamless delivery. | The Company operates with a strong logistics network and substantial storage capacity. It ensures efficient functioning through meticulous supply chain monitoring. |
| Economic Slowdowns | Inflation or declining consumer expenditure can lower demand rates. | Flexible manufacturing and a diverse product portfolio enables the Company to adapt to dynamic market changes. |
| Legal and Compliance Risks | Legal non-compliance can result in penalty charges and reputational damage. | A dedicated compliance system and regular audits ensure legal adherence. |
14. SWOT Analysis
| Strengths | Elaboration |
| Integrated pulp manufacturing | The Company produces its own pulp using agro waste and wood, minimising costs and ensuring 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 automation | Investments in automation, advanced control systems (QCS/DCS) and digital tools through Project Nirmaan bolsters productivity and operational efficiency. |
| Strong sustainability practices | Through surface water utilisation, afforestation programs and chemical recycling, the Company 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 prolonged setup period | Establishment of advanced paper production machinery and utilities demands substantial resources and considerable time. However time planning and cost benefit can have positive impact. |
| Seasonal supply and higher transportation cost for agro-residues | Seasonal availability of agro-based raw materials and high transportation cost is a challenge which can be mitigated to some extent by better planning. |
| Exposure to global pulp price changes Dependence on fossil fuels | Exposure to global pulp price volatility for non-integrated operations may impact profitability and cost stability which can be reduced by integrated operations. Sector-wide dependence on coal and fossil-based energy sources is still prevalent. |
| Opportunities Growing demand for high- quality paper | Elaboration Rising demand for premium copier paper, maplitho, and export-grade writing and printing 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 market | Restrictions on single-use plastics are boosting demand for sustainable paper-based products like Kupstock (cup base) and Sipps (straw paper). |
| Industry 4.0 and AI integration | Through Project Nirmaan, the adoption of AI, IoT, cloud computing, and automation will enhance operational efficiency, minimise costs and improve product quality |
| Custom production for niche clients | The Companys flexible production process facilitates the manufacture of tailored products for schools, publishers and high-margin markets. |
| Threats | Elaboration |
| Cheap imports from FTA countries | Influx of low-cost paper imports from ASEAN and East Asian countries, particularly China and 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 2025 26, the end-use distribution of Kuantums paper products was approximately: 34.51% for printing and publishing, 27.75% for notebooks, 20.34% for photocopier paper, 5.24% 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, middle east war effects, risen input costs and lower NSR. 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 in adverse market conditions. Net Sales Realization declined by approximately 3-4%. Vis-a-Vis the paper industry peers, the Company was able to maintain a satisfactory EBITDA of 15.4%. During the year under review, Kuantum achieved highest-ever paper finished production of 1,62,885 MT (previous year 160,861 MT), reflecting efficient utilization of all paper machines. The summarized financial performance of the Company for the financial year 2025-26 is given hereunder:
(Rs. in Crores)
Particulars 2025-26 2024-25 Sales & other income 1,099.56 1,113.12 EBITDA 168.24 248.68 Profit (Loss) before tax 56.55 155.38 Net Profit (Loss) after tax 41.95 115.18 The financial details and performance highlights are further elaborated in the Directors Report and Financial Statements sections of this Annual Report.
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 Standards) 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 2025-26 | FY 2024-25 | % Change | Reason for Change of more than 25% |
| Current Ratio (in times) | 0.66 | 0.83 | -20% | - |
| Current Ratio (in times)- without considering current maturity of debts. | 1.27 | 1.47 | -14% | - |
| Debt Equity Ratio (in times) | 0.71 | 0.54 | 31% | Paper mill expansion project is going on due to which overall long term debt increased. |
| Debt Service Coverage Ratio (in times) | 0.96 | 1.50 | -36% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. |
| Return on Net Worth (%) | 3.44 | 9.86 | -65% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. |
| Inventory Turnover (in times) | 6.03 | 6.02 | 0% | - |
| Trade Receivables Turnover (in times) | 29.64 | 33.70 | -12% | - |
| Trade Payables Turnover (in times) | 17.52 | 17.37 | 1% | - |
| Net Capital Turnover (in times) | 19.98 | 12.71 | 57% | Increased due to decline in net sales realisation per MT of paper by 3-4% and decrease in net current assets. |
| Interest Coverage Ratio (in times) | 3.00 | 7.09 | -58% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. Increase in debt due to Paper Mill expansion project. |
| Operating Profit Margin (%) | 15.39 | 22.46 | -31% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. |
| Net Profit Margin (%) | 3.84 | 10.42 | -63% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. |
| Return on Capital Employed (%) | 4.50 | 9.66 | -53% | Decline in Profitability on YoY basis due to decline in net sales realisation per MT of paper by 3-4% during last year and 5-6% increase in raw material prices. |
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, 2026, the Company had 1,399 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 2025-26, industrial relations at Kuantum 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, 2026.
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.
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