National Plastic Industries Ltd Management Discussions

OVERVIEW:

The year under review was marked by a mixed macroeconomic environment. The global economy continued to operate under the shadow of geopolitical uncertainties, trade disruptions, volatile commodity prices and shifting monetary conditions. The outbreak and continuation of conflict in the Middle East, including tensions involving the United States and Iran, created fresh uncertainty for crude oil, freight rates, insurance costs, currency movements and global supply chains. As per the IMF World Economic Outlook, April 2026, assuming the conflict remains limited in duration and scope, global growth is projected at 3.1% in 2026 and 3.2% in 2027, with global headline inflation expected to rise modestly in 2026 before resuming its decline in 2027.

For a Company operating in plastic moulded furniture and related plastic products, crude oil and petrochemical derivatives remain important cost drivers, since polymers and plastic resins are linked directly or indirectly to global crude oil and petrochemical prices. Any prolonged disruption in energy markets, shipping lanes or the Strait of Hormuz may therefore affect raw material prices, logistics costs and margins. The management is conscious of these risks and has continued to follow a cautious approach in procurement, inventory management, cost control and working capital discipline.

However, continued to demonstrate resilience. The Economic Survey 2025-26 has highlighted robust macroeconomic fundamentals, sustained policy support and broad-based sectoral performance. As per the First Advance Estimates referred to in the Survey, real GDP and GVA are projected to grow by 7.4% and 7.3% respectively in FY26, while real GDP growth for FY27 is projected in the range of 6.8% to 7.2%. The Survey has also highlighted that agriculture supported rural incomes, manufacturing gained momentum and services continued to lead expansion. This overall resilience of domestic demand provides a supportive base for consumer and household products, though demand can still be affected by inflation, rural income cycles, input price volatility and consumer sentiment.

The management believes that the Indian economy remains fundamentally strong over the medium term. At the same time, the Company remains alert to global headwinds, including energy price shocks, geopolitical uncertainties, possible slowdown in global demand, currency volatility and changes in export markets. The Company will continue to focus on operational efficiency, product quality, better market reach and prudent financial management to protect shareholder value.

INDIAN PLASTICS INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Indian plastics industry continues to be an important part of the countrys manufacturing and export ecosystem. Plastic products are used across consumer products, packaging, agriculture, infrastructure, healthcare, automobiles, electrical and electronics, construction, logistics and household applications. The industry is also deeply connected with the MSME ecosystem and has significant employment generation potential.

Government and industry data indicate continued growth and global acceptance of Indian plastic products. As per a Press Information Bureau release dated November 16, 2025 relating to PLEXCONCIL, Indias plastics exports, which stood at USD 16.5 million at the time of PLEXCONCILs inception, today exceed USD 12.5 billion, with Indian plastic products reaching more than 200 countries. The same release noted that cumulative plastics exports from April to September 2025 touched USD 6,407 million as compared with USD 6,123 million in the corresponding previous period, reflecting 4.6% growth.

The Government has also continued to support the sector through export promotion, plastic parks, Make in India, skill development, technology development and Centres of Excellence in petrochemicals and plastics. The Indian Trade Portal, supported by the Ministry of Commerce and Industry ecosystem, notes that the Union Ministry of Commerce and Industry targets plastic exports of USD 25 billion and that multiple plastic parks are being set up in a phased manner. Under the Plastic Parks scheme, funds of up to 50% of project cost, subject to a ceiling of Rs. 40 crore per project, are available for eligible projects.

The Honble Minister of Commerce and Industry has emphasised that Indian exporters represent resilience, innovation and excellence and that Brand India stands for trust, quality and reliability. These remarks are relevant for the plastics industry, including household and consumer plastic product manufacturers, as they reinforce the need to maintain quality standards, improve design, diversify markets and strengthen competitiveness.

At the same time, the industry faces structural challenges. Raw material prices are closely linked to global crude oil and petrochemical cycles. Environmental regulations, extended producer responsibility, recycling expectations, consumer preference for sustainable products and competition from organised and unorganised players are increasing. These developments require manufacturers to improve product design, reduce wastage, optimize energy and material usage and maintain compliance with applicable environmental and product quality standards.

COMPANY OVERVIEW:

National Plastic Industries Limited, operating under the well-known “National” brand, is engaged in manufacturing and marketing moulded plastic furniture and allied products. The brand has built its position on quality, colour, finish, durability, product range and value-for- money offerings. The Companys manufacturing operations at Silvassa, Nellore and Patna support its ability to serve different markets and customer segments.

The management recognises that the current environment requires balanced communication with shareholders. While Indias long-term consumption story, urbanisation, replacement demand, government support to manufacturing and organised retail channels provide opportunities, the business is also exposed to raw material volatility, freight cost, competition, change in consumer demand and export market uncertainty. The Companys focus is therefore on preserving its strengths, managing costs, improving productivity and progressively adding products that meet changing consumer preferences.

During the year under review, the Company continued to focus on operational discipline and cost management. The decline in export sales impacted the top line; however, management efforts towards cost control, working capital management, better product mix and operating efficiency helped the Company remain profitable. The managements objective is to improve resilience without compromising quality and customer trust.

FINANCIAL REVIEW:

During FY 2025-26, the Company achieved Revenue from Operations and Other Income of Rs. 103.84 crore, compared to Rs. 97.57 crore in the previous year, registering growth of 6.42%. Profit before Finance Cost, Depreciation and Tax increased to Rs. 11.37 crore from Rs. 9.40 crore, reflecting improvement in operating performance and cost management. Despite an increase in finance cost and depreciation during the year, Profit Before Tax increased by approximately 27% to Rs. 6.44 crore, as against Rs. 5.07 crore in FY 2024-25. Profit After Tax stood at Rs. 3.46 crore as compared to Rs. 3.75 crore in the previous year. The decline in PAT, despite improvement in PBT, was primarily attributable to higher tax expenses. The Company continues to focus on operational efficiency, cost optimisation, financial discipline and sustainable growth.

CHANGES IN KEY FINANCIAL RATIOS:

Pursuant to provisions of Regulation 34(3) of SEBI (LODR) Regulations 2015 read with Schedule V Part B (i) details of the changes in key financial ratios is given in Note no. 53 in Annual accounts.

IMPACT OF GLOBAL CONFLICT, ENERGY PRICES AND RAW MATERIAL VOLATILITY:

The recent war and tensions in the Middle East, including the United States-Iran conflict, have increased uncertainty in the global economic environment. For India, which is a significant importer of crude oil and energy products, sustained higher crude prices can affect inflation, the current account, currency stability, consumer sentiment and input costs for energy-intensive and petrochemical-linked industries. The IMF has noted that rising commodity prices, firmer inflation expectations and tighter financial conditions are testing global resilience, while emerging market and developing economies that import commodities remain relatively more vulnerable.

For the plastics industry, the transmission channel is direct and indirect. Polymer prices, masterbatch, chemicals, packaging, power, transport and freight can all be affected by energy and crude oil movements. Any sharp increase in input prices may not be immediately passed on to consumers because of competition and demand sensitivity. This can compress margins in the short term. Similarly, if inflation reduces disposable income or if global growth weakens, demand in discretionary or export markets can remain subdued.

The management does not view the situation as a certainty of recession for India, but as a risk of demand moderation and margin pressure. Indias domestic consumption, government infrastructure focus, manufacturing momentum and resilient macroeconomic fundamentals provide a cushion. However, the Company has adopted a prudent approach in view of possible volatility.

To reduce the adverse impact, the Company is focusing on: (i) careful monitoring of polymer and raw material prices; (ii) calibrated procurement and inventory planning; (iii) better vendor negotiation and logistics optimisation; (iv) improvement in production efficiency and reduction of wastage; (v) review of product mix and pricing wherever feasible; (vi) tighter working capital and receivable management; (vii) focus on domestic markets and selective export opportunities; and (viii) continuous review of costs at plant, branch and corporate levels. These measures are intended to protect margins, reduce avoidable losses and improve resilience in a volatile environment.

BUSINESS OUTLOOK:

The outlook for the Company is linked to domestic consumption, rural and semi-urban demand, replacement demand for moulded furniture, institutional demand, raw material price trends and competitive intensity. The Company expects that the long-term fundamentals for plastic furniture and household plastic products remain positive, supported by affordability, durability, ease of handling, availability across price points and growing demand from households, small establishments, institutions and public utility segments.

The Company will continue to introduce new and improved products with modern designs, better utility and quality in line with customer preferences. The Company will also continue to explore opportunities in industrial and government supply segments, while remaining cautious in export markets where geopolitical factors, freight cost and global demand conditions may affect performance.

Management is taking steps to mitigate the impact of demand slowdown and margin pressure by focusing on product rationalisation, market penetration, cost control and operational efficiency. The Company believes that disciplined execution, customer trust and conservative financial management will support its ability to navigate the present environment and improve performance over the medium term.

OPPORTUNITIES:

The opportunities before the Company arise from Indias favourable demographics, growing middle class, increasing urbanisation, expansion of organised retail, rising institutional demand, government focus on manufacturing and export promotion, and the gradual formalisation of the plastics industry. Government-supported plastic parks, export promotion initiatives and the increasing global recognition of Indian plastic products provide a favourable long-term backdrop.

The Company intends to leverage these opportunities by focusing on quality, innovation, wider market reach and addition of relevant products. The emphasis on “Made in India”, quality and reliability also creates an opportunity for established brands to differentiate themselves from unorganised competition.

THREAT:

The major threats include volatility in crude oil and polymer prices, geopolitical tensions, disruption in global trade routes, exchange rate movements, slowdown in export demand, intense competition, environmental and recycling-related regulations, and shifts in consumer preferences. Product life cycles have become shorter and customers increasingly expect better design, durability and value at competitive prices. Any sustained increase in raw material cost without a corresponding ability to pass on such cost may affect profitability.

In addition, a global slowdown or recessionary conditions in major economies may affect export demand and could indirectly affect domestic sentiment. In India, a sharp rise in energy prices may lead to inflationary pressure, reduced discretionary spending and weaker demand in certain consumer segments. The management is monitoring these developments closely.

RISK AND CONCERNS:

The Company is exposed to business risks such as raw material volatility, technology changes, product obsolescence, competitive pricing, distribution risk, credit risk, regulatory changes, environmental compliance, political and geopolitical risks and broader macroeconomic slowdown. The Company has an internal mechanism to identify, assess and mitigate these risks at an early stage.

Recycling, reuse of plastics, sustainability expectations and environmental compliance are becoming more important for the industry. The Company will continue to operate within applicable laws and is conscious of the need to use resources efficiently and reduce wastage. The Board and the Audit Committee periodically review risk management procedures and take preventive measures, wherever required.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control systems commensurate with the size and nature of its business. Policies and procedures are in place to ensure that transactions are authorised, recorded and correctly reported, assets are safeguarded, wastage is controlled and financial information is reliable. The Audit Committee periodically reviews financial performance, internal controls, internal audit observations and corrective actions. The management continues to strengthen controls relating to procurement, inventory, receivables, cost monitoring and statutory compliance.

INDUSTRIAL RELATIONS AND HUMAN RESOURCE

Industrial relations remained harmonious at manufacturing units and branches. The Company considers 188 employees as key stakeholders and continues to encourage learning, skill development, discipline, safety and ethical conduct. The Company endeavours to create a work environment that supports accountability, productivity, innovation and business excellence.

POLLUTION AND ENVIRONMENT CONTROL:

Pollution control and environmental compliance remain important responsibilities for the manufacturing industry. The management is committed to operating its plants in accordance with applicable pollution control norms and waste management requirements. Adequate pollution control facilities and safety measures are maintained at the plants and employees are provided necessary safety equipment and training from time to time. The Company will continue to focus on responsible manufacturing, resource optimisation and compliance with applicable environmental laws.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied due to various factors, including global and domestic economic conditions, geopolitical developments, crude oil and raw material prices, exchange rates, consumer demand, competitive conditions, regulatory changes, environmental requirements and other factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events.

	For National Plastic Industries Limited
	Sd/-
	Paresh Vinod Parekh
	Managing Director
	DIN:00432673
Date: 28th May, 2026
Place: Mumbai