Nath Industries Ltd Management Discussions

1. INDUSTRY OVERVIEW A. PAPER INDUSTRY

Global pulp & paper market was ~USD 356 Bn in 2024, projected ~USD 362.41 Bn in 2025. India 2026 Snapshot:

Industry Size: ?90,000-95,000 crore

Installed Capacity: ?30-32 million tonnes. Actual production: ?25-26 million tonnes Per Capita Consumption: ?16?17 kg

Segment Growth: Packaging Paper & Board: 55-60% of total demand. Fastest growth driver due to e-commerce, FMCG, food delivery and Real Estates.

India Paper Packaging Market is estimated CAGR 19.16% during 2026-2031. Out of which Tissue Paper CAGR is alone 4.11%. driven by hygiene awareness followed by Kraft Paper: CAGR 6.94% and Specialty Paper: CAGR is roughly 2.71%.by 2034.

Key Drivers: E-commerce, plastic-use restrictions in all 28 states, rising FMCG, healthcare, and organized retail.

Raw Material: Recycled paper 52%, Wood 28%, Agro-residues 20%. High import dependence for pulp and wastepaper remains subdued.

In India, the per capita paper consumption is around 15 kg, against Global average of 57 kgs, this figure is likely to grow to over 30 kg in the next few years, these numbers itself shows the scope for the Indian paper industry. Domestic consumption will help to achieve the growth, and objective of GOI to become a 5 trillion-dollar economy through various growth aspects including exports.

The demand for tissue paper is expected to increase due to growing awareness of personal hygiene and sanitation, especially in emerging economies. The two most promising growth sectors in the market that are currently receiving more attention from the industry are packaging materials and sanitary goods. As of 2018, packaging accounted for 58% of all paper and board production worldwide.

India ranks among the worlds top 15 paper producers and is the fastest-growing major paper market globally, per the IBEF February 2026 update. Domestic production reached about 25 million tonnes per year across more than 850 paper mills, of which 526 are currently operational. The sector is the countrys fifth-largest industrial segment by contribution and supports about 500,000 direct jobs, with several million more in upstream collection, logistics, and converting (IBEF, 2026; IPMA) .

What makes India unusual is the structural mismatch between demand growth and per-capita consumption. The country consumes about 16 kg of paper per person per year, roughly a third of the global average of 57 kg, and one-sixth of developed-economy consumption above 100 kg (IPMA) . Closing that gap, even partially, against a population of 1.4 billion translates into millions of tonnes of additional annual demand, the basis for the 6-8% sustained growth rate that has held for over a decade.

The composition of demand is shifting too. Packaging now accounts for around 65% of total paper consumption and is growing at 8.2% per year, faster than any other major paper economy (Business Standard, 2025) . Tissue and specialty grades are growing even faster (13.3% and 10.5% respectively), while writing and printing paper sits at a modest 3%, reflecting the same digital-substitution pressure seen in mature markets, though tempered in India by continued growth in education and government consumption.

The packaging industry in India has emerged as a key driver of innovation and value creation across manufacturing sectors, particularly in FMCG, agriculture, and food processing. As of September 2024, India became the third-largest packaging market globally, surpassing Japan, with the industry exceeding Rs. 7,36,246 crore (US$ 86 billion). Packaging now ranks as the fifth-largest sector of the Indian economy, expanding rapidly at 22-25% annually. This growth is fuelled by rising middle-class consumption, the boom in e-commerce, improvements in supply chains, and an increasing emphasis on food safety and quality. Indias food processing sector is adopting smart and innovative packaging, boosting food safety and positioning the country as a global hub for packaging materials.

The strong export performance of value-added paper grades and sustained import demand for specialised paper products highlight the sectors expanding integration with global markets and its growing role in supporting Indias packaging and printing ecosystem.

A notable feature of Indias paper industry is its reliance on sustainable raw materials. Around 74-76% of production in 2024-25 came from recovered paper and recycled fibre, 18-20% from wood and bamboo, and 6-8% from agro residues like bagasse and wheat straw. This shift aligns with the countrys growing green packaging market, projected to expand at a CAGR of 7.24% during 2023-28.

Technology adoption is also shaping the sector. Smart packaging solutions, including RFID, NFC, and QR codes, are increasingly being used to enhance product authentication and supply chain efficiency. Flexible packaging, driven by strong demand from the FMCG sector, is expected to expand by Rs. 1,35,642 crore (US$ 15.6 billion) during 2024-28, growing at a CAGR of 12.7%.

B. CHEMICAL INDUSTRY

Sulphuric acid (H2SO4) is a core industrial chemical mainly used in the production of phosphate fertilizers, metal processing (including leaching), petroleum refining, chemical intermediates such as detergents and pigments, and water treatment. It is a highly corrosive, colorless inorganic acid that plays a foundational role in the global chemical industry. It is primarily manufactured using the contact process from elemental sulfur, smelter off-gases, or pyrite ore. The market is closely linked with the performance of fertilizer, chemical, petroleum refining, and metal processing industries. Among these, phosphate fertilizer production accounts for the largest consumption share, as sulphuric acid is essential for producing phosphoric acid. Growing

agricultural demand, combined with industrial expansion and infrastructure development, continues to support consistent sulphuric acid usage.

Sulphuric Acid is a colorless, highly corrosive diprotic acid finding various applications in the chemical industry due to its extraordinary oxidizing and dehydrating properties. The surge in the consumption of Sulphuric Acid in India is augmented by the overall growth of the Indian chemical industry wherein it is widely utilized for synthesizing myriad derivatives. Sulphuric Acid is primarily being used as a feedstock for the synthesis of nitrogenous and phosphatic fertilizers against the backdrop of its abundant demand from the fertilizer industry. Besides this, the growing consumption of Sulphuric Acid in the water treatment process and metal processing is anticipated to contribute well to propel its demand in the forecast period. Demand fundamentals for Sulphuric Acid are expected to showcase a V-shaped recovery with scheduled capacity additions in its downstream derivatives under the government initiative of self-reliant India.

Additionally, sulphuric acid is widely used in water treatment, detergents, pigments, and industrial cleaning applications. Its broad industrial applicability ensures stable baseline demand across regions.

Sulphuric acid is extensively used in various industrial sectors, including chemicals, petroleum refining, and wastewater treatment. The growing production of specialty chemicals, such as detergents, synthetic fibers, and pharmaceuticals, significantly increases the consumption of sulphuric acid in India. Its role in metal processing, particularly in the leaching of non-ferrous metals like zinc and copper, is also gaining traction due to increased mining activities. Additionally, Indias rapid industrialization and infrastructure development projects further contribute to rising sulphuric acid demand. According to an industry report, India is experiencing swift urbanization. By 2036, approximately 600 million people, approximately 40% of the population, will reside in its towns and cities, an increase from 31 percent in 2011. Urban regions are expected to account for nearly 70 percent of the countrys GDP. With the governments push for urbanization, smart city initiatives, and the expansion of industrial corridors, the need for sulphuric acid in steel manufacturing, cement production, and water treatment is growing. The sulphuric acid industry India faces stringent environmental regulations on effluent treatment and pollution control result in a higher demand, as sulphuric acid is widely used in wastewater treatment plants to neutralize contaminants. Additionally, the rise of the electric vehicle (EV) sector also leads to a surge in battery manufacturing, where sulphuric acid plays a key role in lead-acid battery production. As India continues to promote clean energy and industrial selfreliance, the diverse applications of sulphuric acid are expected to keep growing, which is facilitating the India sulphuric acid market growth.

The global sulphuric acid market size was valued at USD 35.13 billion in 2025. The market is projected to grow from USD 36.61 billion in 2026 to USD 52.86 billion by 2034 at a CAGR of 4.7% during the 2026-2034 forecast period. Asia Pacific dominated the global market with a market share of 50.58% in 2025.

Indias Sulphuric Acid market stood at 14.15 Million Tonnes in FY2021 and is forecast to reach 24.40 Million Tonnes by FY2030, growing at a healthy CAGR of 6.24% until FY2030.

2. Opportunities and Threats PAPER INDUSTRY OPPORTUNITIE S: -

By 2030, three structural drivers will shape returns for paper-mill investments in India:

1. Packaging shift. The paper-packaging market is projected to grow from US$ 22.7 billion (2025) to US$ 25.2 billion (2030) at 8.1% CAGR, with packaging-paper specifically growing at 14.2% CAGR to US$ 19 billion by 2030 (IBEF, Feb 2026) . E-commerce, FMCG, and food- service packaging account for the majority of incremental demand.

2. Plastic substitution. EPR Rules 2024 (effective April 2026), single-use plastic restrictions, and corporate sustainability mandates are pushing measurable volume from plastic to paper packaging. The F&B packaging market alone is projected at ?4,53,625 crore (US$ 52.5B) by 2030, with paper capturing a rising share (IBEF) .

3. Per-capita consumption catch-up. At 16 kg per person, India sits around a third of the global average. A move to even 22-25 kg by 2030, consistent with comparable emerging-economy paths, implies an additional 8-12 million tonnes of annual demand, requiring roughly 200-300 new mid-scale mills or capacity expansions of equivalent size.

Expansion of Sustainable and Recycled Paper Products

The Indian paper industry is witnessing a surge in the production of sustainable and recycled paper products. Environmental concerns and stricter regulations on plastic packaging are driving the shift towards eco-friendly alternatives. Additionally, advancements in recycling technologies have improved the quality of recycled paper, making it a viable substitute for virgin paper. The governments focus on promoting circular economy practices has further propelled this trend. For instance, in March 2025, the Indian Recovered Papers Traders Association (IRPTA) proposed a reduction in GST on waste paper in the upcoming Delhi budget. The meeting highlighted the importance of the waste paper recycling sector in supporting the livelihoods of underprivileged individuals. The associations role was further emphasized in waste management and suggested that their involvement could significantly reduce Delhis garbage issues. The proposal aims to promote sustainable waste recycling and strengthen the circular economy in the paper industry. Large corporations and retailers are also opting for sustainable paper solutions for their packaging needs, which has increased the demand for biodegradable and recyclable paper products in the Indian market. Amcor, a global packaging leader, aims to achieve 30% recycled content across its portfolio by 2030 through strategic partnerships and investments. In FY24, it used 10% post-consumer recycled resins a year ahead of its 2025 target. The company invested USD 100 Million annually in R&D, supporting innovations like AmFiber Performance Paper and recycled packaging for food and healthcare.

Growth in E-commerce and Demand for Packaging Paper

The exponential growth of the e-commerce sector has significantly increased the demand for paper-based packaging solutions. For instance, as per industry reports, Indias paper market remains the worlds fastest-growing, with packaging paper and paperboard consumption rising by 8.2% in 2024, reaching 15 million tonnes, which is 65% of the total 23 million tonnes. With more consumers shopping online, companies require durable and sustainable packaging

materials to ensure the safe delivery of products. Corrugated boxes, paperboard cartons, and Kraft paper are widely used for this purpose. Additionally, increasing consumer preference for eco-friendly packaging has led companies to adopt recyclable paper materials. Innovations in lightweight and moisture-resistant paper packaging have further enhanced its application in e- commerce. As logistics and warehousing sectors expand, the demand for paper packaging is expected to grow, further cementing its role as a critical component in the supply chain.

Growth in Packaging Industry

The Indian paper and paper products market are currently experiencing a significant growth trajectory, driven by a multitude of factors that are reshaping the industry landscape. Among these factors, one key driver is remarkable growth in the packaging industry. This growth is fueled by a convergence of various trends and developments, each contributing to the increasing demand for paper and paper products in packaging applications.

One of the most notable trends driving the surge in demand for paper packaging is the growing environmental consciousness among consumers and businesses alike. As awareness about environmental sustainability continues to rise, there is a noticeable shift towards sustainable and eco-friendly packaging solutions. Paper, being biodegradable and recyclable, has emerged as a preferred choice for packaging materials, garnering significant traction in the market. This shift towards eco-friendly packaging is propelled by concerns over plastic pollution and its adverse impact on the environment, prompting businesses to explore alternative packaging options.

Rise in Disposable Income

The rise in income levels and the expanding middle class in India are contributing to the growth of the paper packaging industry. As consumers lifestyles evolve and purchasing power increases, there is a corresponding increase in the demand for packaged goods across various sectors. This surge in consumer demand for packaged products, ranging from food and beverages to personal care and household items, is driving up the need for paper-based packaging solutions, thereby bolstering the demand for paper and paper products in the market.

Government initiative for Curbing usage of Single Use Plastic

Government regulations and policies aimed at curbing the usage of single-use plastics are also playing a pivotal role in driving the growth of the paper packaging market in India. With the Indian government implementing stringent regulations against the use of plastic packaging, businesses are compelled to seek alternative packaging materials that are in compliance with these regulations. Paper, with its eco-friendly properties and versatility, has emerged as a viable alternative to plastic packaging, further stimulating its adoption in the market.

Technological Advancement and Innovations

Technological advancements in the paper manufacturing process have significantly enhanced the quality, efficiency, and versatility of paper production. Innovations in manufacturing technologies have led to the development of advanced paper products that meet the diverse needs and requirements of various packaging applications. These technological advancements have not only improved the quality and performance of paper-based packaging materials but have also expanded the range of available paper products in the market, offering businesses a wider selection of options to choose from.

The paper and paper products industry in India has witnessed a surge in innovation, with manufacturers continuously developing specialized papers tailored to specific packaging applications. From food packaging to pharmaceutical packaging and industrial packaging, manufacturers are investing in research and development to create specialized paper products that offer enhanced functionality, performance, and sustainability.

This proliferation of innovative paper-based packaging solutions is driving further growth and diversification within the paper packaging market, attracting investments and opportunities for businesses operating in the industry. Thus, the growth of the packaging industry, fueled by changing consumer preferences, environmental concerns, government regulations, technological advancements, and product innovation, is playing a pivotal role in propelling the Indian paper and paper products market forward. As these trends continue to evolve, the paper industry in India is poised for continued growth, offering significant opportunities for businesses to capitalize on emerging market trends and meet the growing demand for sustainable packaging solutions.

Rise in Literacy Rate

Indias paper and paper products market is witnessing a significant surge in demand, driven by the countrys remarkable progress in literacy rates. Over the past few years, India has made substantial strides in improving literacy levels, owing to increased awareness and the governments steadfast commitment to education. This concerted effort has not only resulted in a more educated populace but has also spurred a notable uptick in the consumption of essential educational materials like notebooks and textbooks, which are indispensable tools in the learning process. As literacy rates continue to rise across the nation, the demand for these paper-based educational materials is experiencing a corresponding growth trajectory, thereby bolstering the demand for paper and paper products in the market.

The positive ramifications of escalating literacy levels extend beyond the domain of education, significantly impacting the newspaper industry. With a higher proportion of the population attaining literacy, more individuals are equipped to read and comprehend written content, leading to a substantial uptick in newspaper readership. This trend is particularly pronounced in India, where newspapers continue to thrive despite the global trend towards digital news consumption. The enduring popularity of newspapers in the Indian market can be largely attributed to the nations burgeoning literacy rates, as a larger readership base translates into heightened circulation figures and increased advertising revenue for newspapers.

The upward trajectory of literacy rates in India is not only serving as a key driver of growth for the paper and paper products market but is also reshaping the landscape of the newspaper industry. As educational attainment becomes increasingly widespread and newspaper readership continues to ascend, the demand for paper-based products is poised to experience a further surge, presenting lucrative opportunities for businesses operating within the paper industry to invest and expand their operations in the Indian market. This optimistic outlook underscores the promising future of the paper industry in the country and underscores the critical importance of sustained support for education initiatives and literacy programs.

Challenges Towards Paper Industry in India

Raw material shortage

India has no commercial industrial forestry of scale; the Forest (Conservation) Act effectively rules out captive plantations. Three-quarters of Indias paper production already comes from recycled fibre, but domestic waste-paper collection is only ~50% versus 80-90% in developed markets, so the country imports about 7 million tonnes of waste paper annually, exposing mills to international price volatility

Energy and water intensity

A modern paper mill requires about 60 m³ of water per tonne of paper and is one of the most energy-intensive industrial processes. Power-cost volatility and water-availability restrictions in industrial corridors are the single largest opex variables.

Environmental compliance

Paper-and-pulp is in the "red" category of the Central Pollution Control Board, requiring Consent to Establish (CTE) and Consent to Operate (CTO) approvals, effluent treatment investment, and continuous emissions monitoring. EPR Rules 2024 add fresh compliance load on packaging-grade mills.

Aging equipment in the legacy base

Many older mills run sub-optimal machinery with capacity utilisation below 70%, where the unit economics break down. Modernisation capex is concentrated among the top 20 producers; the long tail struggles to refinance retrofits.

Import competition

Paper imports rose roughly 34% in 2023-24 to 19.3 lakh tonnes, pressuring domestic margins particularly in coated paper and certain board grades

CHEMICAL INDUSTRY OPPORTUNITIES:

Agricultural and Industrial Expansion to Ensure Sustained Demand

The market is primarily driven by increasing demand from the global fertilizer industry. Rising population levels, increasing food consumption, and the need to enhance crop yields have intensified demand for phosphate fertilizers, which in turn directly supports product consumption. Another important driver is the expansion of petroleum refining capacity, which generates sulphur as a by-product and supports H2SO4 production. Industrial growth in developing economies has also increased demand from chemical manufacturing, metal processing, and infrastructure-related activities. Additionally, the product remains a critical input for water treatment and industrial cleaning, supporting consistent baseline demand. The availability of sulphur from oil and gas refining further strengthens supply stability. These combined drivers ensure continuous consumption across multiple industries, thus supporting the steady growth of the market.

Emerging Industrial Applications Creating New Growth Avenues in Market

The market presents significant growth opportunities due to the expansion of industrial applications beyond traditional fertilizer usage. One major opportunity lies in the growing demand for sulphuric acid in the processing of battery metals, particularly for the extraction of lithium, nickel, and cobalt used in electric vehicles. This trend is strengthening demand from the energy storage and clean mobility sectors. Another opportunity is the increasing adoption of spent acid regeneration technologies, which enable industries to reuse product while reducing waste and dependency on raw materials. Additionally, infrastructure development and mining expansion in emerging economies are increasing product consumption in ore leaching and metal processing. The growth of chemical manufacturing clusters in Asia and the Middle East further enhances market potential. These expanding application areas are creating diversified demand channels, thereby strengthening the long-term prospects for the sulphuric acid market growth.

Diversification of chemical processing

Diversification of India‘s chemical manufacturing sector includes creating uniform demand for Sulphuric Acid in end-use applications such as dyes, pigments, detergents, and pharmaceuticals. Make in India, along with evolving global value chains, is attracting investments into industrial and specialty chemical production. Sulphuric Acid plays a critical role as both catalyst and input material in such processes. This develops new synergies in downstream industries and helps regional industrialization. The scale and specialization likely to be generated are anticipated to render Indian chemical clusters more competitive on a global level while guaranteeing consistent Sulphuric Acid utilization.

Growth in textile and leather processing

Sulphuric Acid finds applications in various stages of textile and leather production, ranging from dyeing and finishing to pH regulation. India‘s textile and leather export sectors are gaining from rising international demand, official incentives, and sustainability overhauls. Process improvement, modernization, and adaptation to international standards are leading to higher quality production, which indirectly leads to greater stability of dependability on regular chemical inputs. The role of Sulphuric Acid in water-intensive, quality-sensitive processes makes it inseparable. Expansion in these industries, especially in the south and west of India, is converting into consistent demand for Sulphuric Acid in industrial hubs.

These strategic opportunities in fertilizers, chemicals, mining, textiles, and water treatment are transforming Sulphuric Acid ‘s market position in India. Industrialization, government support, and infrastructure growth are driving consumption growth over the long term. Integrated applications are enhancing market robustness while optimizing operating efficiency. With the growth of these industries, Sulphuric Acid will experience diversified, stable, and high-volume demand, cementing India as a key market and manufacturing destination.

CHALLENGES TOWARDS SULPHURIC ACID INDUSTRY

Regulatory and Operational Complexities Limiting Market Flexibility

Despite strong demand fundamentals, the market faces notable restraints related to safety, environmental, and operational challenges. Strict regulations governing sulphur dioxide emissions, hazardous chemical handling, and waste disposal increase compliance costs for

manufacturers. The transportation and storage of acid require specialized infrastructure due to its highly corrosive nature, which adds to logistical expenses. Additionally, volatility in sulphur feedstock availability, influenced by fluctuations in crude oil refining activity, impacts production economics. Smaller manufacturers often struggle to absorb rising compliance and infrastructure costs, limiting their expansion capabilities. Community opposition and environmental scrutiny around chemical plants further slow project approvals. These factors collectively restrict operational flexibility and expansion potential, hence posing challenges to market participants, particularly in highly regulated regions.

Supply Imbalances and Logistics Constraints Affecting Market Stability

The market faces several challenges, including regional demand concentration and logistical limitations. Due to safety risks and high transportation costs, the product is typically consumed near production sites, limiting long-distance trade. This leads to regional oversupply in some markets and shortages in others. Another challenge is overcapacity in fertilizer-linked regions, which results in price pressure and margin volatility. Dependence on cyclical industries, such as agriculture, mining, and metals, further exposes the market to fluctuations in demand. Additionally, aging infrastructure in certain regions increases maintenance costs and operational risks. These structural and logistical challenges require careful capacity planning and regional alignment strategies, which in turn impact overall market stability.

Trade Protectionism and Geopolitical Impact

Trade protectionism and geopolitical developments have influenced product supply dynamics by affecting sulphur availability and cross-border trade. Export restrictions, sanctions, and regional conflicts have disrupted the supply routes for sulphur. Markets dependent on imported sulphur are more exposed to supply risks. In response, manufacturers are prioritizing domestic sourcing, captive production, and long-term supply contracts. These factors are reshaping global trade patterns in the market.

EXPORTS

India Exports of paper and paperboard, articles of pulp, paper and board was US$2.61 Billion during 2025, according to the United Nations COMTRADE database on international trade. Global growth is projected to moderate to 3.1% in 2026 before edging up marginally to 3.2% in 2027. At the same time, inflation is expected to rise slightly to 4.4% in 2026 before resuming its downward trajectory the following year. However, risks arising from escalating geopolitical tensions and potential trade disruptions will severely impact the global growth.

However. export growth is likely to be more attractive in specialty papers, coated paperboard, packaging grades, cup stock and value-added products, rather than purely commodity grades. With an export presence spanning more than 22 countries, the Company has established a global footprint and continues to strengthen its position across international markets.

Total exports for chemicals and allied products stood at US$ 20.54 billion. Global buyers continue to de-risk supply chains by shifting sourcing away from China toward Indian manufacturers which has opened up new opportunities to increase chemical exports globally.

3. Internal Control Systems and their adequacy

The Company has an adequate system of internal controls commensurate with the size and nature of its operations. The Company has established and documented policies and procedures covering its financial and operational functions. These controls are designed to provide reasonable assurance regarding the accuracy and reliability of financial reporting, safeguarding of assets, prevention and detection of unauthorised use or losses, monitoring of operations and compliance with applicable laws and regulations.

The internal control systems are reviewed and monitored periodically to assess their adequacy and effectiveness. The Audit Committee reviews the adequacy and effectiveness of the internal control framework and oversees the implementation of corrective measures, wherever required. The Company continues to strengthen and align its processes and controls with appropriate industry practices, with a view to ensuring operational efficiency, transparency and sound corporate governance.

4. Financial performance with respect to operational performance

The Company achieved EBIDTA of Rs. 29.21 Cr on total income of Rs. 494.87 Crores as against the EBIDTA of Rs. 34.67 Cr achieved on total income of Rs. 432.55 Cr in previous year. The EBIDTA for the current year was reduced to 5.90% from 8.11 % achieved in the previous year. Profit after tax recorded for the year is Rs 6.68 Cr as against Rs 9.74 Cr recorded in the previous year.

5. Development in human resources/industrial relations front

The Company recognises its human resources as a key driver of its growth and sustained business performance. The Company remains committed to fostering a work environment that promotes employee engagement, commitment and development, enabling employees to contribute effectively towards the achievement of organisational objectives.

The Company continues to undertake various initiatives aimed at enhancing employee engagement, capability building and professional development. Being a people-centric organisation, the Company places due emphasis on developing internal talent and nurturing the next generation of leadership to support its long-term organisational objectives.

The Human Resources function continues to align its policies, processes and initiatives with the evolving needs of the organisation and its stakeholders, while maintaining a balanced approach towards employee costs and operational efficiency.

The Company continues to maintain cordial and harmonious industrial relations across all its manufacturing units.

	For and on behalf of the Board,
	Akash Kagliwal
Place: Mumbai	Managing Director
Date: 31.08.2026	(DIN:01691724 )