N R Agarwal Industries Ltd Management Discussions

Management discussion and analysis Report

Global economic review

Global economic grew marginally at an 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty.

Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, while emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

Regional growth (%)	2025	2024
World output	3.4	3.3
Advanced economies	1.9	1.8
Emerging and developing economies	4.4	4.3

Performance of the major economies, 2025

Outlook

Given the challenge of forming stable, real-time assumptions for projections, the IMF World Economic Outlook report adopted a reference forecast instead of a conventional baseline, assuming the war remains contained in duration, intensity, and reach, with disruptions easing by mid-2026, in line with commodity futures as of March 10, 2026.

Under this reference view, global growth is projected at 3.0% in 2026 and 3.4% in 2027. Global inflation is expected to rise to 4.7% in 2026 before easing to 3.9% in 2027.

(Source: OECD Interim Economic Outlook, IMF, World Economic Forum, Federal Reserve, Bank of England, European Central Bank, Bank of Japan)

Indian economy review

The Indian economy grew at an estimated 7.7% in FY 2025-26, compared to 7.1% in FY 2024-25. This growth was driven by strong consumption and increasing investments, reaffirming Indias position as the fastest-growing major economy.

Indias Real GDP at Constant Prices was estimated at Rs. 323.12 lakh cr in FY 2025-26, against the First Revised Estimate of Rs. 299.89 lakh cr for FY 2024-25.

Growth of the Indian economy

	FY23	FY24	FY25	FY26E
Real GDP growth (%)	7.2	7.2	7.1	7.6

E: Estimated. Note: FY 2023-24 figure restated under new base year FY 2022-23. {Source: MoSPI (February 27, 2026)}

Growth of the Indian economy Quarter by quarter, FY 2025-26

	Q1FY26	Q2FY26	Q3FY26	Q4FY26E
Real GDP growth (%)	7.8	8.4	6.7	7.3

Note: Q2 revised upward from 8.2% and Q3 from 7.35% under the new base year FY 2022-23 series released February 27, 2026. Q4 remains an estimate. (Source: MoSPI, February 27, 2026)

Inflation, policy and currency dynamics

Inflation remained benign through much of FY 2025-26, with full-year CPI estimated at an exceptionally low 2.1%. This created room for 125 basis points of cumulative rate cuts, supporting consumption and investment.

However, macro stability was accompanied by currency volatility. The Indian rupee depreciated sharply by 9.88% during FY 2025-26-its steepest fall since FY 2011-12-touching Rs.94.78 against the US dollar. This reflected global capital flows, a strong dollar environment, and geopolitical uncertainties.

Capital flows and market behaviour

Foreign portfolio investors remained risk-averse, withdrawing a record Rs.1.8 trillion during FY 2025-26-the largest outflow in 36 years. However, strong domestic institutional inflows of Rs.8.55 trillion provided a crucial counterbalance, highlighting the growing maturity and depth of Indias domestic capital markets.

Equity markets corrected amid global volatility:

• Market capitalization declined 7.2% to US$ 4.5 trillion

• Sensex fell 5.36%

• Nifty 50 declined 3.6%

• India VIX surged 119%, signalling heightened uncertainty

Gold prices surged 61.47% during the year, reflecting global risk aversion and safe-haven demand.

Fiscal strength and formalization

Indias fiscal position continued to strengthen:

• Net direct tax collections rose 7.19% to Rs.22.8 trillion (as of March 17, 2026)

• Corporate and non-corporate contributions were nearly balanced

This reflects sustained formalization, improved compliance, and the success of digitization-led reforms.

Banking sector: A pillar of stability

The Indian banking sector emerged as a key enabler of growth:

• Gross NPAs declined to 2.1% (multi-decadal low)

• Return on assets: 1.3%

• Return on equity: 12.5%

Strong balance sheets and capital adequacy position the sector to support the next investment cycle.

Indias growth story is increasingly services-led:

• The Tertiary (Services) sector grew 9.0% in FY 2025-26, with its share in nominal GVA rising to 54.3% - up from 52.8% in FY 2024-25

• Broad-based expansion across all sub-segments: Financial,

Real Estate, IT & Professional Services grew 9.9%; Trade, Hotels, Transport, Communication & Broadcasting grew 10.1%; and Public Administration & Other Services grew 5.8%

At the same time, manufacturing demonstrated renewed strength:

• Manufacturing GVA grew 11.5% in FY 2025-26 (at constant prices), delivering double-digit growth for the second time in three years - up from 9.3% in FY 2024-25

• The Secondary sector grew 9.1% in FY 2025-26 - accelerating from 8.0% in FY 2024-25 - driven by manufacturing alongside construction growth of 71%

This dual-engine growth - services scale and manufacturing acceleration-creates a balanced and resilient economic structure.

Consumption and investment balance

Private consumption remained robust, with Private Final Consumption Expenditure (PFCE) growing 7.7% in FY 2025-26 (at constant prices), while Gross Fixed Capital Formation (GFCF) grew 71%. Both PFCE and GFCF maintained above-7% growth, reflecting a well- balanced demand composition across household spending and investment activity.

Growth catalysts Policy-led consumption boost:

The Union Budget FY 2026-27s tax relief measures, particularly income tax exemptions up to Rs.12 lakh are expected to stimulate discretionary spending and reinforce consumption-led growth.

Anticipatory Pay Commission impact:

The 8^th Pay Commission, though expected to be implemented from FY 2027-28, is already shaping consumer sentiment, creating a forward consumption impulse.

Monetary stability:

The Reserve Bank of Indias calibrated stance, with the repo rate at 5.25%, balances inflation risks with growth support, ensuring macroeconomic stability.

Credit expansion:

Improved banking health and liquidity conditions are expected to sustain strong credit growth across MSMEs, housing, and retail segments.

Fiscal prudence with growth focus:

The Union Budget maintains fiscal discipline while prioritizing infrastructure, MSME support, skilling, and innovation - key levers for long-term productivity.

Outlook

The year under review underscores a defining divergence: a world grappling with uncertainty, and an India navigating it with confidence.

In a global environment marked by fragmentation and caution, India stands out as a rare convergence of stability, scale and structural opportunity. The World Bank has revised its FY 2026-27 growth estimate upward to approximately 6.6%, reflecting resilient domestic momentum even as growth moderates from the previous year. India is expected to retain its position as the fastest-growing major economy.

Growth will be shaped by a combination of:

• Strong domestic demand

• Resilient private consumption supported by low inflation and GST rationalization

• Stable export performance with improved access to key markets

• Policy support and continued economic reforms

• Demographic advantage

While risks persist, particularly from elevated energy prices, subsidy pressures on government spending, and uncertainty in global demand, Indias macroeconomic fundamentals remain strong.

Over the medium term, sustained consumption, gradual investment recovery, and expanding global trade linkages are expected to reinforce Indias position as a key driver of global economic growth.

(Source: MoSPI, Business Standard, Press Information Bureau, Business Standard, IMF, OECD, Deccan Chronicle. NDTV Profit, Outlook Business)

Global paperboard packaging industry overview

Paperboard packaging refers to the use of thick, paper-based materials to manufacture cartons, boxes, and other protective or decorative packaging formats. It is widely used across food and beverages, pharmaceuticals, cosmetics, and consumer goods due to its versatility, printability, lightweight nature, and recyclability. As brands increasingly prioritize sustainable alternatives to plastic, paperboard has emerged as a preferred packaging solution that balances functionality with environmental responsibility.

The global paper and paperboard packaging market is witnessing steady growth, supported by strong structural demand drivers. The market is estimated at US$ 436.59 billion in 2026, up from US$ 417.31 billion in 2025, and is expected to reach US$ 547.27 billion by 2031, reflecting a CAGR of 4.62% over 2026-2031.

Regionally, Asia-Pacific dominated the market in 2025, accounting for 43.89% of global demand, supported by large-scale capacity additions across China, India, and Southeast Asia, along with policy measures that promoted domestic recycling and reduced dependence on imported wastepaper.

Developed markets such as Japan and South Korea further contributed with efficient recycling systems, achieving collection rates exceeding 80%. North America and Europe together accounted for approximately 35% of global volumes in 2025, benefiting from mature markets and strong regulatory frameworks, although rising energy and labour costs increased conversion expenses. Africa emerged as the fastest-growing region, with an expected CAGR of 5.67% through 2031, driven by rapid urbanization, expanding retail networks, and growing investments in recycling infrastructure.

The markets growth is underpinned by three key tailwinds: tightening recycling regulations, the rapid expansion of e-commerce requiring durable shipping formats, and ongoing capacity additions, particularly across Asia-Pacific. Sustainability regulations continue to shape market dynamics, especially in Europe, where stricter policies are pushing higher recycling targets and encouraging innovation in lightweight, high- performance board grades. At the same time, global brands are increasingly shifting toward biodegradable and recyclable materials, reinforcing paperboards role in circular packaging systems.

E-commerce growth remains a significant demand driver, with rising online retail and food delivery increasing the need for protective, lightweight, and customizable packaging formats.

Overall, the paper and paperboard packaging market is undergoing a structural transformation, driven by sustainability imperatives, evolving consumer preferences, and technological advancements, positioning it as a resilient and future-ready segment within the global packaging industry.

(Source: Mordor Intelligence, Precedence Research)

Indian paperboard packaging industry overview

Packaging has emerged as one of the largest and fastest-growing sectors of the Indian economy, currently ranking as the fifth- largest industry. It plays a critical role in driving industrial growth, innovation, and value creation across key sectors such as FMCG, agriculture, and food processing.

The industry is expected to expand at a strong CAGR of 26.7%, supported by rising consumption, organized retail expansion, and increasing formalization of supply chains.

Within this broader landscape, the paper and paperboard packaging segment is witnessing steady and sustained growth. The market is estimated at US$ 14.57 billion in 2026, up from US$ 13.72 billion in 2025, and is expected to reach US$ 19.66 billion by 2031, reflecting a CAGR of 6.18% over 2026-2031. Paper-based packaging accounts for approximately 15.5 million tons of annual consumption in India, representing nearly 65% of the total packaging market, underscoring its dominance as a preferred material.

Growth in the segment is being driven by a combination of regulatory, consumer, and industry shifts. The nationwide push to reduce single-use plastics, coupled with rising environmental awareness, is accelerating the transition toward recyclable and biodegradable alternatives. At the same time, brand commitments to circular-economy packaging and government regulations banning certain plastic formats are reinforcing demand for paper- based solutions.

E-commerce and logistics have emerged as major demand catalysts. The rapid expansion of online retail and quick-commerce platforms has significantly increased the need for durable, lightweight, and cost-efficient packaging. Corrugated boxes dominate this space, offering the strength and protection required for transit, while also being recyclable. Leading e-commerce players have already transitioned toward paper-based materials such as corrugated boards, packing paper, and paper cushions for secondary and tertiary packaging. Frequent deliveries of food and groceries are further amplifying demand, making e-commerce a key volume driver for the segment.

The food and beverage industry represents another major growth pillar. Increasing consumption of packaged foods, coupled with the expansion of organized retail and food delivery services, is driving demand for safe, hygienic, and sustainable packaging formats.

The India food packaging market generated revenues of US$ 22.9 billion in 2025 and is expected to reach US$ 39.6 billion by 2033, growing at a CAGR of 6.9%. Paper and paperboard products captured 39.18% of the India food and beverage packaging market size in 2025. Within this, there is a clear shift toward recyclable monomaterial packaging, alongside rising adoption of liquid cartons supported by growth in premium beverages and aseptic packaging technologies.

In parallel, the e-commerce packaging segment is witnessing exponential growth. The market generated revenues of US$ 4,866.3 million in 2025 and is expected to reach US$ 32,659.5 million by 2033, expanding at a CAGR of 26.9%. India accounted for 4.6% of the global e-commerce packaging market in 2025, highlighting significant headroom for future expansion as digital adoption deepens across Tier-1 and Tier-2 cities.

Overall, the India paper and paperboard packaging market is evolving rapidly, supported by regulatory tailwinds, strong end- use demand, and shifting consumer preferences toward sustainability. With its cost efficiency, scalability, and environmental advantages, paper-based packaging is well positioned to remain a cornerstone of Indias packaging ecosystem while supporting the countrys broader sustainability and growth ambitions.

(Source: IMARC, IBEF, Research and markets, Grandview research, Parason)

Government policies

The Government of India has introduced several initiatives to promote sustainable and standardized packaging practices across industries. Key policies include:

National packaging initiatives

The government has launched the National packaging initiative to strengthen and modernize the sector, by establishing clear guidelines and requirements for packaging design and materials, promoting the movement of goods in bulk quantities, and encouraging centralized industrial activity through the development of advanced infrastructure such as specialized logistics parks and packaging laboratories for design and testing. The initiative also emphasizes reducing packaging waste by setting up material recovery facilities, supporting domestic businesses in manufacturing sophisticated packaging materials, and creating high-quality training facilities and certified programs to ensure the continuous availability of skilled labor.

Extended producer responsibility (EPR)

Indias Extended Producer Responsibility (EPR) framework is set to tighten further by 2026, with broader accountability across producers, brand owners, and importers. The scope of EPR is expanding to include additional materials such as paper, glass, and metals, strengthening formal recycling systems. Regulatory oversight is increasing through stricter audits and improved verification mechanisms led by the CPCB, while digital compliance and traceability systems are being scaled up.

These developments are accelerating Indias transition toward a circular economy and encouraging greater adoption of recyclable materials like paper and paperboard packaging.

Policy framework for foreign investment in packaging

The Indian government has liberalized foreign direct investment regulations, permitting 100% FDI through the automatic route to attract overseas capital into the paper and packaging sector. This policy framework is designed to expand manufacturing capacity, encourage global participation, and accelerate the adoption of advanced technologies, thereby positioning India as a competitive hub for sustainable and innovative packaging solutions.

(Source: IBEF, India Briefing, Attero)

Growth drivers of Indias paperboard industry

Economic growth

Indias strong economic momentum is directly supporting growth in the paperboard industry. With a GDP of approximately US$ 4.15 trillion and a expected growth rate of 7.6% in 2026 the highest among major economies-rising consumption levels are increasing demand for paperboard across packaging applications. Higher economic activity is driving greater usage of cartons, boxes, and other paperboard formats, while growing environmental awareness is further accelerating the shift toward sustainable, recyclable materials. Together, these factors are reinforcing steady demand expansion for the paperboard industry in India

Rising sustainable packaging demand

The increasing shift toward sustainable packaging is a key growth driver for the paperboard industry in India. The Indian sustainable packaging market reached US$ 10.23 billion in 2025 and is expected to grow to US$ 17.73 billion by 2034, at a CAGR of 6.31% over 2026-2034. This growth is being driven by stringent government regulations, including extended producer responsibility (EPR) mandates and recyclable content requirements, which are compelling companies to adopt environmentally friendly packaging solutions.

As a result, paperboard being recyclable, biodegradable, and widely accepted within circular systems- is gaining prominence as a preferred material, accelerating its demand across packaging applications.

Cost-effectiveness and versatility in paperboard

Paperboard is a cost-efficient and highly versatile packaging material. Its ease of printing and ability to be customized make it an ideal choice for branding and marketing. Industries such as pharmaceuticals, cosmetics, and consumer goods, each experiencing strong growth in India- are increasingly adopting paperboard packaging to enhance product appeal and meet evolving market demands.

Food and beverage packaging demand

The expansion of the food and beverage sector is a key growth driver for the paperboard industry in India. The food and beverage packaging market is estimated at US$ 40.73 billion in 2026, up from US$ 38.27 billion in 2025, and is expected to reach US$ 55.67 billion by 2031, growing at a CAGR of 6.44%. Rising consumption of processed foods, along with stricter safety and recycled-content requirements, is increasing the need for reliable and compliant packaging formats. Paperboard, with its strength, printability, and suitability for food-safe applications, is well positioned to meet these requirements. Moreover, the growth of e-commerce and food delivery services is further driving demand for durable, lightweight, and sustainable paperboard packaging solutions.

Regulatory push driving the ban on single-use plastics

The nationwide ban on single-use plastics has become a pivotal driver of growth in Indias paperboard and packaging paper market. With paper offering a recyclable, biodegradable, and renewable alternative, industries are increasingly turning to paper-based solutions to align with sustainability mandates. This regulatory shift not only reduces environmental impact but also accelerates adoption across food, retail, e-commerce, and consumer goods sectors. In addition, government initiatives promoting circular economy practices and rising consumer awareness of ecofriendly packaging are reinforcing the momentum, positioning paperboard as a cornerstone of Indias sustainable packaging future.

(Source: Mordor Intelligence, Economic Times, Papermart, PBI, IMARC, Clear Tax)

Company overview

N R Agarwal industries limited, founded in 1993, is a prominent manufacturer of high-quality finished paper products catering to both domestic and international markets. Headquartered in Mumbai, the Company operates modern manufacturing facilities in Vapi and Saigram, Gujarat. Its diverse product portfolio encompasses paper used in FMCG packaging, textbooks, print media, and notebooks. With a strong focus on innovation, quality improvement, and cost efficiency, the Company produced 4,73,965.40 MT of paper and paperboard during FY 2025-26.

Financial analysis

Balance Sheet

For FY 2025-26, borrowings amounted to Rs.788.91 compared with Rs.621.09 cr reported in FY 2024-25.

Total Non-current assets during FY 2025-26 stood at Rs.1463.66 cr, against Rs.1258.91 cr in the previous year.

Profit and loss statement

Revenues in FY 2025-26 were Rs. 2,145.45 cr, reflecting a change of 29.32% from Rs.1,659.03 cr in FY 2024-25.

EBITDA for the year stood at Rs.192.42, marking a 35.09% variation compared to Rs.142.44 cr in FY 2024-25.

Profit after tax stood at Rs.43.70 cr, representing a 147.59% change from Rs.17.65 cr in the prior year.

Total expenses during FY 2025-26 reached Rs. 2,103.83 cr, versus Rs.1,674.47 cr in FY 2024-25.

Depreciation and amortization for FY 2025-26 stood at Rs.68.65 cr, compared with Rs.65.57 cr in FY 2024-25.

Risk management

Economic slowdown risk

A downturn in the economy could weaken consumer spending power, which may translate into lower demand for paper-based products.

Mitigation: Indias GDP growth of 7.6% in FY 2025-26 reflects strong resilience and consumption potential, offering the Company wider opportunities despite cyclical pressures.

Digitalization risk

The growing shift toward digital platforms, threatens to reduce reliance on traditional paper consumption.

Mitigation: By diversifying into high-quality packaging solutions tailored for e-commerce and quick-commerce, the Company has positioned itself to capture rising demand for paper packaging across varied order sizes.

Raw material risk

Constraints in raw material availability could disrupt production schedules and impact operations.

Mitigation: The Company mitigates this by sourcing waste paper locally, thereby reducing exposure to external supply fluctuations and ensuring greater stability.

Financial risk

Escalating input costs have the potential to erode margins and weaken profitability.

Mitigation:

Effective cost-control measures and disciplined debt repayment have supported improvements in profitability, reflected in stronger EBITDA and PAT performance.

Product dumping risk

Unfair competition from imported paperboard sold at artificially low prices can damage domestic industry, leading to closures and job losses.

Mitigation: Protective measures such as anti-dumping duties and tariffs imposed by the government act as a safeguard, helping to maintain a level playing field for local producers

Key numbers

Particulars	FY26	FY25
EBITDA/Turnover (%)	9.03	8.70
Debt-equity ratio	0.80	0.70
Return on Equity (%)	2.57	1.04
Book value per share (Rs.)	479.11	455.73
Earnings per share (Rs.)	25.68	10.37
Interest coverage ratio (x)	3.09	2.34
Current ratio (x)	1.15	1.34
Net profit margin (%)	2.05	1.08

Human resources

The Company places strong emphasis on its employees, recognizing them as central to its success and future growth. It remains committed to equipping its workforce with the skills required to adapt to evolving technological advancements. During the year, a series of training programs were conducted, focusing on behavioural development, technical expertize, leadership, customer orientation, safety practices, organizational values, and adherence to the code of conduct. As of March 31, 2026, the Company employed 1460 individuals across its operations.

Internal control systems

The Company is committed to maintaining the highest standards of corporate governance, supported by robust internal controls and comprehensive risk management systems. The Board of Directors plays a pivotal role in providing strategic direction to the executive leadership, while closely supervising risk committees, control mechanisms, and the audit function. In addition, statutory auditors independently review these processes, further strengthening accountability and ensuring full compliance with regulatory requirements.

Cautionary statement

The management discussion and analysis report containing your Companys objectives, projections, estimates, and expectations may constitute certain statements, which are forward-looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied.