Neeraj Paper Marketing Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

OUTLOOK OF PAPER INDUSTRY:

India is the 15th largest paper producer in the world. Demand for paper products, including writing papers, printing papers, and specialty papers, has been steadily increasing. India accounts for about 5% of the global paper market. The market value of the Indian paper industry is expected to reach US$ 19.1 billion in 2033. The market value of the Indian paper industry is expected to grow from 2024 to 2033 at a CAGR of around 7.5%. With the increase in literacy rate, more and more students are entering the education system and the demand for notepads, textbooks and supplementary materials is increasing and giving a positive boost to the paper industry. The future growth trend of the Indian paper industry is also being driven by the increasing demand for corrugated and household paper products.

Indias paper industry is flourishing both within the country and globally, fuelled by an increase in global demand. This growth is driven by the lifting of pandemic-related restrictions and the prohibition of single-use plastics.

Indian population is around 15% of world population but consumes only 5% of the total paper produced in the world. Indias growing FMCG sector and high spending in education coupled with growth in organised retail and demand for better quality paper as well as more health consciousness of people, etc., are triggering factors of growth prospects of Indian Paper Industry. The industry provides direct employment to 0.5 million persons, and indirectly to around 1.5 million.

Most of the paper mills are in existence for a long time and hence present technologies fall in a wide spectrum ranging from oldest to the most modern. The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat straw, and grasses. In terms of share in total production, approximately 18% are based on wood, 73% on recycled fibre and 9% on agro-residues. The geographical spread of the industry, as well as market, is mainly responsible for the regional balance of production and consumption.

The paper Industry holds immense potential for growth in India as the per capita consumption is one of the lowest at around 15-16 kg, which is way behind the global average of 57 kg (200+kg for developed countries). India is the fastest growing market for paper globally and it presents an exciting scenario; paper consumption is poised for a big leap forward in sync with economic growth. The futuristic view is that growth in paper consumption would be in multiples of GDP and hence an increase in consumption by one kg per capita would lead to an increase in demand of 1 million tonnes. Healthy demand for printing and writing paper and firm realisations are further expected to drive growth for paper manufacturing companies.

In the last five to seven years, an amount of over Rs 25,000 crore has been invested in new efficient capacities and induction of clean and green technologies. The industry size of single-use plastics is estimated to be INR 10,000 crore. This move by the government will benefit all Indian paper mills to flourish their business. In India, only 15% of total paper and paperboard production is made from recycled materials, compared to a global average of 30% to 85%. As a result, there is a lot of potential for recycling in the paper industry.

About 50% of global paper demand is in Asia of which India is the fastest growing market in the world expected to grow at about 4% to 5% compound till at least 2030. According to various studies, the consumption of paper and board in India is expected to grow to over 35 million tons by 2035 from approximately 22 million tons presently. Now there are several drivers for growth of the Indian paper industry. Greater emphasis on education and literacy by the government coupled with the growth in business and commerce and demand for better quality paper by environmentally conscious consumers are the major drivers in the writing and printing segment.

According to the IPMA, paper consumption in India will likely reach 30 million tonnes by March 2027. There is growing demand from sectors such as FMCG and retail for innovative packaging solutions as they reduce dependency on plastics. Paper stocks can also benefit from the rising e- commerce shopping as well as ready-to-eat and packaged foods.

Projections indicate a 6 to 7% annual growth in paper consumption in India, reaching 30 million tonnes by FY 2026-27. The growth is likely to be attributed to a focus on education and literacy, coupled with the rise in organised retail.

SCOPE AND DEMAND OF PAPER INDUSTRY IN INDIA

According to the Indian Paper Manufacturers Association (IPMA), the Indian paper industry boasts an annual turnover exceeding ^1,00,000 crore with production nearing 25 million tonnes

across 850+ mills. Growing at 6-8% annually, India is the fastest-growing major paper market globally, driven by rising literacy, urbanization, and packaging demand.

Market Scope & Segment Demand

• Packaging and Paperboard: The largest and fastest-growing segment, expanding at over 8% annually and covering roughly 65% of the market due to e-commerce, organized retail, FMCG growth, and single-use plastic bans.

• Printing and Writing Paper: Steady demand is supported by government educational initiatives, the National Education Policy, and rising school enrollment.

• Specialty and Tissue Paper : Emerging as a high-margin, rapidly advancing sector driven by health consciousness, institutional hygiene needs, and urban lifestyles.

• Newsprint: The only major segment witnessing flat-to-declining demand as digital media consumption rises.

Market Investments & Focus Areas

• Capacity Expansion: Private players are investing heavily in tier-2 and tier-3 cities to meet soaring demand for corrugated boxes, kraft paper, and industrial packaging.

• Green Packaging: Driven by plastic bans, investments are heavily tilted toward bio-based, lightweight, and high-strength packaging papers and specialty papers (e.g., RFID and QR-coded smart packaging).

• R&D Modernization: The Central Pulp & Paper Research Institute (CPPRI) is continuously upgrading facilities to support innovations in process technology, eco-friendly bleaching, and alternative raw materials.

INDIAN PAPER PACKAGING INDUSTRY TRENDS

Surge in Technological Advancements

The Indian paper industry has undergone a significant transformation driven by technological advancements across various fronts. Innovations spanning manufacturing processes, automation, digitalization, and artificial intelligence have reshaped the industry landscape, enhancing efficiency and productivity at every stage of production.

Automation and artificial intelligence have emerged as primary catalysts for operational enhancement within the paper industry. Automated machinery has replaced manual labor, reduced errors and boosting productivity substantially. This transition has not only elevated operational efficiency but has also elevated quality standards across the board. Artificial intelligence has played a pivotal role in predictive maintenance, minimizing downtime, and optimizing overall efficiency. By harnessing AI algorithms, manufacturers can foresee maintenance requirements proactively, mitigating potential issues before they escalate. This predictive maintenance strategy ensures smoother operations and enhances productivity while maintaining consistent quality standards. Digitalization has become a cornerstone of modern paper manufacturing, enabling real-time monitoring and management of operations. Through digital platforms and technologies, manufacturers can monitor processes in realtime, identifying bottlenecks swiftly and implementing corrective measures promptly. This real-time data tracking facilitates efficient decisionmaking, improving overall operational performance. Also, digital technologies have revolutionized supply chain management in the paper industry. Real-time visibility into the supply chain allows for effective inventory management, logistics optimization, and streamlined operations. These digital advancements not only drive cost reductions but also enhance customer service through timely deliveries and minimized disruptions. Beyond operational enhancements, technology has propelled the paper industry towards sustainability. New technologies enable manufacturers to reduce their environmental impact by minimizing waste and energy consumption during production. Innovative pulping technologies increase pulp yield from raw materials, reducing waste and promoting resource efficiency. The energy-efficient equipment and processes lower energy consumption, contributing to a greener and more sustainable industry. As the Indian paper industry continues to embrace technological advancements, it is poised for a future characterized by enhanced efficiency, sustainability, and innovation. By remaining at the forefront of technology adoption, the industry is primed for continued growth and prosperity, catering to evolving market demands while upholding sustainability principles.

Segmental Insights & Raw Material Insights

The Indian paper and paper products market witnessed the waste and recycled paper segment emerged as a dominant force, marking a significant shift towards sustainability in the industry. This dominance stems from several key factors, with environmental consciousness at the forefront. Concerns regarding deforestation and environmental degradation associated with traditional paper-making processes have prompted a growing demand for sustainable alternatives. Waste and recycled paper offer a solution by reducing the need for virgin pulp derived from trees, thus mitigating the environmental impact and promoting a circular economy. Economic considerations also contribute to the popularity of waste and recycled paper in India. Urban centers serve as hubs for waste paper collection, providing a readily available and cost- effective raw material for recycling. The recycling process requires less energy compared to traditional paper production methods, resulting in cost savings for manufacturers. This economic viability makes waste and recycled paper an attractive choice for businesses and consumers alike, further driving its dominance in the market. Government policies have played a pivotal role in fostering the growth of the waste and recycled paper segment. India, among other countries, has implemented regulations and incentives to promote recycling and reduce waste generation. These policies create a supportive framework for businesses and individuals to adopt sustainable practices, thereby accelerating the adoption of waste and recycled paper in the market. Overall, the waste and recycled paper segments dominance underscores a broader trend towards sustainability in the Indian paper industry, with environmental, economic, and regulatory factors converging to drive its growth and adoption.

GOVERNMENT INITIATIVES & INVESTMENTS

• Make in India: Government push for local manufacturing and 100% Foreign Direct Investment (FDI) has spurred investments in modern, high-capacity paper mills.

The Indian paper industry receives strong policy support and investment attraction under the Make in India initiative. Key government efforts feature 100% Foreign Direct Investment (FDI) allowance, Extended Producer Responsibility (EPR) guidelines for paper packaging, and research backing via the Central Pulp & Paper Research Institute (CPPRI)

• Technological Upgrades: Adoption of smart packaging (incorporating QR codes and RFID), automation in paper mills, and digitized production processes are reducing waste and boosting industry efficiency

Key Government Initiatives

• 100% FDI Allowance: The Indian government permits 100% Foreign Direct Investment (FDI) under the automatic route in the pulp and paper sector, attracting significant global capital and technology transfer.

• Extended Producer Responsibility (EPR): Mandated phased recycling targets for producers, importers, and brand owners. This promotes a circular economy and massive investment in paper recovery and recycling infrastructure.

• National Policy on Biofuels & BioE3: Promotes the use of agricultural residues and non-wood renewable materials for paper production, decreasing reliance on traditional wood sources. Infrastructure & Export Promotion: Schemes like the Export Promotion Capital Goods (EPCG) allow duty-free import of capital goods for paper production, making Indian paper highly competitive abroad.

Opportunities

The paper industry in India is poised for significant growth and transformation, driven by emerging opportunities that promise to reshape its future. With increasing demand for paper products, particularly in the packaging and specialty paper segments, the industry is well-positioned to capitalize on new trends and technologies. The growing awareness of environmental issues and sustainability is also creating opportunities for companies to develop eco-friendly products and practices. Furthermore, government initiatives and investments in infrastructure are expected to boost the industrys competitiveness and exports. Few opportunities are :

• Growing Demand for Packaging Papers

• Increasing Demand for Specialty Papers

• Sustainable Products and Eco-Friendly Solutions

• Export Potential and Global Market

• Innovation and Technology Adoption

Challenges

The paper industry in India faces a multitude of challenges that threaten its sustainability and growth. From navigating complex environmental regulations and trade policies to managing raw material costs and competition from imports, the industry must contend with a range of obstacles. Additionally, the industrys environmental impact and sustainability concerns pose significant challenges, requiring companies to adopt eco-friendly practices and reduce their carbon footprint. Few major challenges are -

• Raw Material Sourcing and Sustainability

• Environmental Concerns and Regulations

• Digitalization and Changing Consumer Preferences

• Competition from Imports and Market Saturation

• Energy and Water Costs

SEGMENT -WISE /PRODUCT WISE PERFORMANCE

Company is engaged in trading of paper, waste paper and chemical. During the year-2025-26, turnover of Paper, Paper Board, chemical and Other Paper items contributed in the gross turnover of the Company which is as follows:

Revenue from products
S.No	Products	Total (in Rs.)
1	Duplex	125882678.36
2	Kraft Paper	1048949226.12
3	Paper Waste	425096043.00
4	Poster Paper	14818721.68
5	Maize Starch Unicorn\u201d	46692650.00

OUTLOOK

Market Outlook 2026-2034:

The India paper packaging market is set for steady growth over the forecast period, driven by the expansion of e-commerce, restrictions on single-use plastics, and increasing FMCG volumes boosting demand for lightweight, recyclable materials. Advances in sustainable substrates and digital printing technologies are expected to improve product variety and efficiency across the supply chain, supporting innovation while meeting evolving environmental and consumer requirements in packaging. The market generated a revenue of USD 19.42 Billion in 2025 and is projected to reach a revenue of USD 28.55 Billion by 2034, growing at a compound annual growth rate of 4.38% from 2026-2034.

RISKS AND CONCERN

The Indian paper industry struggles with high raw material costs, rising imports, and supply chain issues, while outdated technology, poor fiber quality, and strict environmental norms further pressure profitability and sustainability.

• Rise in imports & market competition: Paper imports rose 7.1% in FY25, with duty-free supplies from China and ASEAN. Lower prices and superior quality of imports are making domestic production less competitive for Indian manufacturers.

• Supply chain disruptions: The sector remains volatile due to global conflicts, shipping disruptions like the Red Sea crisis, and port strikes, which raise freight costs and disrupt supply chains, affecting efficiency, costs, and timely delivery.

• Outdated technology and inefficient operations: Many Indian paper mills use outdated machinery with limited automation, causing low productivity, high costs, and environmental inefficiency. Technology upgrades demand heavy investment, posing major challenges for smaller mills.

• Poor availability and quality of domestic fiber: India faces fiber deficiency due to restrictions on industrial plantations and an inefficient wastepaper collection system, leading to greater dependence on imports and reduced industry profitability.

• Environmental concerns and regulatory pressure: The paper industry faces major environmental challenges from deforestation, water and air pollution, and waste. Chemical use, including chlorine compounds, contributes to water contamination and poses serious health risks.

The company has instituted a robust risk management framework to proactively identify, assess, and mitigate potential risks, ensuring sustainable growth and operational resilience.

In accordance with Companies Act, 2013 and listing Regulation, the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the company. In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has adequate internal control procedures commensurate with the size of the Company and the nature of its business. These systems are designed to ensure that all the assets of the company are safeguarded and protected against any loss and that all the transactions are properly authorized recorded and reported. The internal audit is entrusted to M/s VPSJ & Co. a firm of Chartered Accountants.

The main thrust of internal audit is to test and review controls, appraisal of risks and business practices. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvements to strengthen the same. The Board of Directors has framed a policy which ensures the orderly and efficient conduct of its business, safeguarding of its assets, to provide greater assurance regarding prevention and detection of frauds and accuracy and completeness of the accounting records of the company. Further your company has adequate internal financial control with reference to its financial statements.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

PARTICULARS	CURRENT YEAR	PREVIOUS YEAR
	31.03.2026	31.03.2025
Share Capital	1100.00	1100.00
	0.00
Other Equity	1736.54	1675.87
Property, Plant & Equipment	525.46	556.79
Trade Receivables	3901.86	4373.12
Cash and Cash Equivalents	6.96	20.62
Long Term Loans	309.49	588.34
Current Liabilities	2793.82	2953.45

OPERATIONAL HIGHLIGHTS:		(Rs. In Lakhsl
PARTICULARS	CURRENT YEAR	PREVIOUS YEAR
	31/03/2026	31/03/2025
Net Sale/Income from Operations	16722.80	19686.63
Other Income	26.53	3.86
Total Income	167.49.32	19690.49
Profit before Finance Charges, Depreciation & Tax	174.70	330.61
Finance Charges	73.89	254.62
Depreciation	28.35	32.99
Profit Before Tax before exceptional items	72.47	43.00
Exceptional items	0	0
Profit Before T ax afte r exceptional items	72.47	43.00
Provision for Tax	21.02	18.34
Profit After Tax	51.45	24.66

HUMAN RESOURCES

The Company recognizes the importance of a productive workforce and strategically invests in the attraction and retention of talented individuals who can contribute to the companys success. To ensure that its human capital remains skilled and competent, the Company implements effective talent management practices, leadership succession planning, and organisational assessments. The 3C rule—Character, Capability, and Catalyst—is integrated into employee development processes and tools, ensuring alignment with organisational objectives. Furthermore, The Company enhances its organisational effectiveness by employing career planning along with training and skill development programs. The safety of employees is of paramount importance at Neeraj Paper. The organisation fosters a positive and inclusive work environment that expressly prohibits any form of discrimination and rigorously enforces a policy aimed at preventing sexual harassment. Total number of employees as of March 31, 2026 is 20.

KEY FINANCIAL RATIOS

The details of changes in Key Financial Ratios as compared to the immediately previous financial year along with explanations are as follows:

Nature of Ratios	For year ended 31 st March 2026	For year ended 31 st March 2025	Changes%	Explanation for the changes more than 25%
Debtors Turnover (in days)	90.31	78.10	15.64%	NA
Inventory Turnover (in days)	NA	NA	NA	NA
Interest Coverage Ratio (in times)	1.98	1.17	69.30%	The ratio increased primarily due to significant reduction in finance costs (interest expense) during the year.
Current Ratio (in times)	1.80	1.80	0.23%	NA
Debt Equity Ratio (in times)	0.27	0.54	-49.91%	Ratio has reduced on account of repayment of term loans and reductions in cash credit facility
Operating Profit Margin (in %)	0.80%	1.38%	-41.69%	The Operating Profit Margin declined due to lower operating profits resulting from reduced turnover and higher operating expenses during the current year.
Net Profit Margin (in %)	0.36%	0.09%	303.14%	The Ratio has increased due to a significant increase in profit during the year as compared to the previous year.
Return on Capital employed (in %)	4.00%	8.00%	-50.00%	The decrease is mainly attributable to lower EBIT during the current year as compared to the previous year.
Return on investment	NA	NA	NA	NA
Trade payables turnover ratio	44.94	23.23	93.49%	The ratio increased due to higher average trade payables and longer credit terms availed from vendors during the current year.
Net capital turnover ratio (in times)	7.46	8.38	-10.93%	NA
Debt Service Coverage Ratio (in times)	1.38	1.40	-1.66%	NA
Return on Equity Ratio (in %)	2.00%	2.00%	0.00%	NA

CHANGES IN RETURN ON NET WORTH

The return on net worth for the financial year 2025-26 and for the financial year 2024-25, it is 2.14% and is 0.64 % respectively. The change in return on net worth as compared to the immediately previous financial year is 234.23%. The Ratio has increased due to a significant increase in profit during the year as compared to the previous year.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis and in the Directors Report, describing the companys objectives, projections and estimates, results may vary materially from those expressed or implied by the forward looking statements due to risks or uncertainties associated therewith depending upon economic conditions, government policies and other incidental factors. Readers are cautioned not to place undue reliance on these forward-looking statements.

	By the order of the Board For NEERAJ PAPER MARKETING LIMITED
	Sd/-	Sd/-
	Deepak Goel	Parveen Kumar Goel
	(Whole-Time-Director)	(Whole-Time-Director)
	DIN:00200527	DIN: 00014638
	Add: 218-222, Agarwal	Add: 218-222, Agarwal
DATED: 13th August 2026	Prestige Mall, Near M2K Cinema	Prestige Mall, Near M2K Cinema
PLACE: DELHI	Pitampura, Delhi-110034	Pitampura, Delhi-110034