Mega Flex Plastics Ltd Management Discussions

Industry Structure and Development

The Indian plastics industry, which commenced operations in 1957 with the production of polystyrene, has evolved into a globally competitive sector. Entering FY26, the industrys domestic footprint comprises more than 30,000 processing units and 2,500 exporters, providing employment to nearly 4 million people. The sector remains largely driven by Small and Medium Enterprises (SMEs), which account for 85 90% of the total units.

Packaging dominates the sector with around 59% share, followed by construction, agriculture, and automotive. Polypropylene (PP) and Polyethylene Terephthalate (PET) together account for more than half of total polymer consumption. Growth is driven by rapid urbanization, rising incomes, and increasing demand from packaging and automotive segments, along with expanding production hubs in South India.

The Indian plastics market was valued at approximately US$ 26.61 billion in 2025 and is projected to reach US$ 44.59 billion by 2030, registering a strong compound annual growth rate (CAGR). Cumulative raw material and product consumption has reached approximately 22 million tons annually. This continuous expansion is actively catalyzed by key government programs such as ‘Make in India, ‘Skill India, ‘Swachh Bharat, and ‘Digital India. To strengthen structural infrastructure, the government has given final approvals for targeted Plastic Parks across states like Madhya Pradesh, Assam, Tamil Nadu, Odisha, and Jharkhand.

Your Company operates within the vibrant Indian Technical Textiles and Packaging sector, explicitly catering to agricultural logistics and storage. The domestic Leno bag industry is heavily integrated with Indias agricultural horticultu output particularly

With the Government of India scaling its emphasis on lowering post-harvest losses and expanding the cold-chain footprint via the National Technical Textiles Mission (NTTM), the demand for breathable, high-tensile packaging solutions has undergone a structural shift from traditional gunny bags to high-performance Polypropylene (PP) Leno bags.

Risk & Concern

The Company operates in a competitive and evolving business environment and is exposed to risks such as raw material price fluctuations, regulatory changes, market competition, and operational challenges. The management regularly reviews these factors and takes necessary steps to minimize their potential impact.

Adequate insurance coverage, including fire, burglary, vehicle, and intellectual property policies, has been obtained to safeguard the Companys assets. All leased premises are secured through valid Leave and Licence Agreements. The Company has obtained requisite statutory approvals and implemented internal policies such as the Code of Conduct, Prevention of Sexual Harassment Policy, and Whistle Blower Mechanism to ensure compliance and ethical operations. Pollution control systems, fire safety measures, and backup power arrangements are also maintained to support smooth and uninterrupted business operations.

Internal Control Systems and Their Adequacy

During the Financial Year 2025 26, the Company maintained an adequate and effective internal control commensurate with the size and nature of its operations. Controls are established across key functions including Finance, Production, Safety, Hygiene, Human Resources, Inspection, efficiency, safeguarding of assets, accuracy of financial reporting, and compliance with applicable laws and regulations.

Regular management reviews, meetings, and training programs were conducted to strengthen compliance and improve performance. The Company also implemented structured employee policies and procedures to optimize resource utilization, minimize wastage, and enhance productivity, thereby ensuring sustainable growth and fair returns to stakeholders.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE & DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company continues to operate in a single business segment, marketing distribution network under well-recognized brand names of leno bags such as Gold Flex, Leno Flex, Tiger, Tiranga, Kisan, and Hena.

During the Financial Year, the Company achieved sales of 83.7 million number of leno bags, reflecting steady market presence and customer acceptance of its product portfolio. For a detailed analysis of the financial performance, members are requested to refer to Note 20 of the Financial Statements.

The key performance highlights of the Company for the year under review are presented below:

Particulars	Current Year	Previous Year	% (Increase/Decrease)
Revenue from operation	7807.56	6030.75	29.46 %
Other Revenue	256.34	221.23	15.87 %
Total Revenue	8063.90	6251.98	28.98 %
EBIT	980.59	474.28	106.75 %
PAT	727.27	342.58	112.29 %

SIGNIFICANT CHANGES

Particulars	FY ended March 31, 2026	FY ended March 31, 2025	% of Variance	Explanation [if variance is >25%]
Debtors Turnover	89.10	44.23	101.42	Better Receivable Management
Inventory Turnover	16.58	11.04	50.15	Better Inventory management
Interest Coverage Ratio	128.82	41.87	207.57	Decrease in interest expenses
Current	5.35	11.75	(54.46)	Increase in current liabilities
Debt Equity Ratio	0.0196	0.0201	(2.52)	NA
Operating Profit Margin (%)	0.12	0.08	50%	Increase in Revenue and operating Profit
Net Profit Margin (%)	0.09	0.06	50%	Improved operation efficiency
Change in Return on Net Worth	1.29	1.13	14.15	Increase in net worth

DISCLOSURE OF ACCOUNTING TREATMENT

Where in the preparation of financial statements, a treatment different from that prescribed inNo such an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, treatment together with the managements explanation as to why it believes such alternative treatment followed is more representative of the true and fair view of the underlying business transaction

NO SUCH TREATMENT FOLLOWED DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED

SUSPENSE ACCOUNT: There is no such demat suspense /unclaimed suspense account.

HUMAN RESOURCE DEVELOPMENT

Your Company believes that a skilled, safety-conscious shop-floor workforce is our strongest manufacturing asset. As of March 31, 2026, the total number of permanent employees on our rolls stood at 118.

Continuous safety training drills, zero-accident milestones on the weaving floor, and performance incentives have ensured harmonic industrial relations throughout the year with zero production days lost to labor disputes.