Nahar Polyfilms Ltd Management Discussions

ECONOMIC OVERVIEW

The Prevailing Geo political uncertainties, ongoing conflict between Ukraine & Russia, strained relation among several countries and inflationary pressure, have impacted the economies of the World. The imposition of Tariff plus Penalty by the United States, on exports of several countries has impacted Global Trade and World Economies are going to witness a downward trend. As per World Economic Outlook (issue April, 2025), Global Growth is projected to drop to 3% in 2026. Inspite of several Global Challenges, India, worlds fourth largest Economy, has emerged as the fastest growing economy, projected to grow at 6.50 % for FY 2026 (as per RBI). PM vision of Atmanirbhar Bharat has promoted Innovation, Entrepreneurship and New Technology, which will help Indian Economy to grow at a faster rate in comparison to the other large economies of the world, which are facing difficult times. India is on the track to become the Third largest economy by 2030.

To put the economy on the faster pace of growth and sustainability development, Government of India has introduced several path breaking initiatives and policies in the area of Infrastructure, Social Welfare and Health Care sector to support the economic activities. Moreover, India has already Signed Free Trade Agreement (FTAs) or Comprehensive Economic Partnership Agreements (CEPAs) with several countries like United Kingdom, Sri Lanka, Nepal, Bhutan, Maldives, Thailand, Singapore, Malaysia, Japan, South Korea, Mauritius, United Arab Emirates (UAE), Australia, ASEAN bloc (10 nations under goods/services/investment FTA), which will help the country to boost its exports to these countries. The negotiation with the European Union, United States, Canada and others are still going on and we are hopeful that agreement will be finalized shortly and will benefit the Indian Economy to grow at much faster rate.

INDUSTRY STRUCTURE AND DEVELOPMENTS

BOPP films are widely used in flexible packaging for food, tobacco, beverages, pharmaceuticals and industrial products due to their moisture resistance, high clarity and sealability. The growing demand of food & beverages, tobacco, healthcare and the e-commerce sectors are propelling the Bopp film demand. The Bopp films are often a cost effective alternative to other packaging materials. There is a growing push for sustainable and recyclable packaging options, leading to increased adoption of Bopp films. These films serve various purposes, including extending shelf life, preserving freshness, enhancing visual appeal, and food safety. Due to the growing consumption and increased demand for prepared foods, consumers have become more aware of food hygiene and its quality, leading to the significant growth of BOPP Films market.

The Global BOPP market is projected to grow by USD $26.07 billion in 2025 to USD $38.40 billion by 2032 with growth rate of CAGR 5.69% (Source: https://www.fortune businessinsights.com/bopp-films-market). The Asia-Pacific BOPP films market held the largest Global market share, as countries such as China, India, Japan and South Korea are experiencing rapid industrialization and urbanization, leading to increased demand for packaged goods in the region. The food and beverage sector is a major BOPP films consumer influenced by changing dietary habits of the population and increasing preference for convenience in food products.

The Indian BOPP films market is expected to witness a CAGR of 5% during the period (2025-2030).(Source: https://www.mordorintelligence.com/industry-reports/india-bopp-films-market). This has pushed manufacturers to come up with new techniques pertaining to the manufacturing of BOPP films to serve the demand of various industries and also toincrease itscapacities.Seeing the good prospects of the BOPP Films Industry and to capitalize on emerging market opportunities, your Board has decided to increase its production capacity by installing Third line of BOPP films with production capacity of 36000 MT per annum at Village Simrai, Hoshangabad Road, Mandideep, Distt. Raisen, Madhya Pradesh. The Capital outlay of the Project will be financed by way of Term Loan as well as internal accruals of the Company. This project of BOPP film is expected to be fully implemented by 2027 to 2028. On completion of the said project, Companys Capacity will stand increased to 96000 MT per annum, which will enable Company to capitalize on emerging market opportunities and also to reap the benefits of economies of scale.

OPPORTUNITIES AND THREATS

The Indian Bopp Films Market is poised for significant growth driven by countrys expanding economy and increasing demand for innovative packaging Solutions. Based on end use, the market is segmented into food [bakery & confectionary, dairy, meat, poultry & seafood, fruits & vegetables, others], tobacco, medical & pharmaceutical packaging, printing & stationery, beverage, and others. The food segment accounts for the largest market share. BOPP film is widely used in the packaging of food and beverage products due to its high durability and strength, as well as its moisture resistance. This packaging helps safeguard food products from damage during transportation and storage, increasing the shelf life of products and enhancing this segments growth.

Likewise, tobacco is also dominating segment of this market. With the increased consumption of tobacco products, especially cigarettes, the demand for BOPP Films is Likely to increase in the Coming periods, which will benefit the industry.

The other factor that will lead to the growth of BOPP films use is their relatively low carbon footprint compared to other plastic films. Because of its low melting point, BOPP films require lower energy to get converted from one form to another. Further, BOPP film is part of the wider polyolefin chemical family, which means it can be laminated with polyethylene film and still widely accepted in the recycling waste stream. In many applications, the consumption of BOPP film has benefitted from the sustainability drive.

Even though opportunities for the industry are more but still it is not immune from various threats. The BOPP Industry is facing threats including fluctuating raw material prices. Be competitions as the cost of polypropylene, a key raw material, can be volatile due to changes in crude oil prices and competitions from alternative packaging materials, can also impact the industrys growth and profitability. Inspite of the threats, we are of opinion that the industry will perform reasonable well in the coming periods.

FUTURE OUTLOOK

The future of the Indian BOPP film market looks promising with opportunities in food packaging, non-food packaging, and industrial applications. The Indian BOPP film market is forecast to reach 7.37 billion by 2030 with a CAGR of 5.0% from 2025 to 2030. (Source: https://www.researchandmarkets.com/report/india-biaxially-oriented-polypropylene-market).

The rapid growth of the countrys economy and increasing disposable income will lead to a rise in consumer spending. This will propel the demand for packaged goods, especially in urban areas, where convenience and aesthetics play essential roles.

Moreover, BOPP has become a high-growth film material due to its extreme versatility. BOPP is an essential polypropylene film which is an effective alternative to waxed paper, aluminum foil and glass. One of the primary factors that has led to BOPP film use and application growth is their relatively low carbon footprint compared to other plastic films. Because of their low melting point, BOPP films require less energy to convert from one form to another.

The increasing demand for flexible packaging solutions in diverse industries, such as food and beverage, pharmaceuticals and cosmetics will further drives the markets growth. We are hopeful that the BOPP Industry will continue to grow and thrive in the coming periods.

RISK AND CONCERNS

The BOPP films market also faces several challenges that could impact its growth and profitability in the future. These challenges include the availability of substitute packaging materials and the adoption of alternative packaging materials, such as bio-based plastics, compostable materials, and other flexible films, which threaten BOPP films. They could compete for market share if these alternatives offer comparable or superior properties while being more environmentally friendly.

In addition, changing consumer preferences and behaviours can influence packaging trends. If consumers demand alternative packaging formats or materials due to health concerns, convenience, or sustainability, the market for BOPP films might be affected.

The BOPP film market is experiencing significant capacity additions, which could lead to oversupply and price instability. This can negatively impact profitability. Bopp film production relies on Polypropylene a crude oil derived raw materials, making it vulnerable to price volatility. Fluctuations in crude oil prices can directly affect production costs and profit margins. The packaging film industry is highly competitive with numerous players vying for market share which can lead to price pressure and margin erosions.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company is maintaining an efficient and effective system of Internal Financial Control for facilitating accurate compilation of financial statements. The companys Internal Control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with procedures, laws and regulations. The Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company. The Companys internal Financial Control system commensurate with the nature of its business and the size of its operations. In order to further strengthen the Internal control system and to automate the various processes of the business, the company is making use of SAP S4 HANA application, which is based on SAP Hana database. It keeps all the data processing that is magnitude faster than that of disk based system, allowing for advanced, real time analytics.

The Company has also appointed Piyush Singla & Associates, Chartered Accountants Firm, as Internal Auditors of the Company. The Company is also having Internal Audit Department to test the adequacy and effectiveness of Internal Control Systems laid down by the Management and suggests improvement in the systems. Internal Audit Reports are discussed with the

Management. During the year, Companys Internal Controls were tested and no reportable weakness in the system was observed.

Apart from this, an Audit Committee consisting of three non-executive directors has been constituted. All the significant audit observation and follow up action thereon are taken care of by the Audit Committee. The Audit Committee met four times during the financial year under review. The Company has also established a Vigil Mechanism as per section 177(9) of Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE AND FINANCIAL/OPERATIONAL PERFORMANCE

The Company is operating in single segment i.e. BOPP Films as such disclosure requirements of Ind AS-108, issued by the Institute of Chartered Accountants of India are not applicable on the company. During the year under review, Company has achieved a total income of Rs. 684.87 Crores with a net Profit of Rs. 36.36 Crores. The detailed performance has already been discussed in the Directors Report under the column "Financial Performance".

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS

Beyond Balance Sheet lies Companys singly biggest Asset Human Resources. The Company is of firm belief that the Human Resources are the driving force that propels a Company towards progress and success. The Company continued its policy of attracting and recruiting the best available talent so that it can face business challenges ahead. The Company also offers attractive compensation packages to retain and motivate the professionals so that they can give their best.

The Company has also ensured that Companys factories and offices are sanitized at regular interval to safeguard its worker/ employees. The total permanent employees strength of the Company was 325 as on 31st March, 2025. The industrial relation continued to remain cordial during the year.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Ratio	31.03.2025	31.03.2024
Operating Profit	14.28%	5.50%
Net Profit	7.86%	-1.91%
Return on capital Employed	9.10%	-1.88%
Return on Equity	7.53%	-1.76%
Debt Service coverage ratio	2.43(times)	1.05(times)
Interest Coverage ratio	9.3 (times)	2.74(times)

The Operating Profit ratio, Net Profit ratio, Return on Capital Employed, Return on Equity, Debt Service Coverage Ratio, Interest Coverage ratio changed significantly due toIncrease of profits in comparison to that of previous year. The Company earned net profit of Rs.36.36 crores as against loss of Rs. (8.49) Crores in the previous year.

CAUTIONARY STATEMENT

Statements in this report on Management discussion and analysis relating to the Companys objectives, opportunities, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based upon certain assumptions and expectations of future events. Actual results may however differ materially from those expressed or implied.

	FOR AND ON BEHALF OF THE BOARD
	JAWAHAR LAL OSWAL
PLACE : LUDHIANA	(CHAIRMAN)
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DATED : 31 JULY, 2025	(DIN: 00463866)