Polyplex Corporation Ltd Management Discussions

<dhhead>Management Discussion and Analysis</dhhead>

I. Corporate Overview

In this document, the terms ‘Company’, ‘Polyplex’ and ‘Group’ refer to the consolidated operations of Polyplex Corporation Limited. Polyplex is a leading Biaxially Oriented Polyethylene Terephthalate Film (BOPET) film producer with a global footprint in an attractive Industry. It offers a wide range of polymeric films across various substrates including BOPET (thin and thick), Biaxially Oriented Polypropylene Film (BOPP), Cast Polypropylene (CPP) and Blown Polypropylene/Polyethylene (Blown PP/PE). Its portfolio of specialty, innovative and differentiated products are used across packaging, electrical & electronic and other industrial applications. The Company has a unique value proposition of on-shoring, off-shoring and near-shoring for a global customer base, while maintaining cost leadership. Polyplex will have the second-largest global capacity ex-China (post its ongoing expansion in the US) in its core business of thin polyester (BOPET) films.

Polyplex is the only global player with resin plants at all manufacturing locations. Backward integration enables it to develop resins required for specialty products, apart from enhancing cost competitiveness and ensuring supply security. Forward integration provides an ability to undertake one or more downstream processes on the base film in a cost-efficient manner leading to higher innovation, value addition and reduced volatility. The downstream businesses like metallizing, silicone coating, extrusion coating, holography, TMP/DMP and offline chemical coating have enabled the Company to offer products for a variety of applications. The Company believes that its differentiated position in combination with its other strengths like integrated manufacturing operations, global sales & distribution network, customer access & intimacy and wide offering of specialty products shall continue to be the key enablers for outperformance and earnings stability. BOPET film, also known as polyester film, was invented in the mid-1950s. It is a flexible, clear or translucent material produced from PET polymer, a linear, thermoplastic polyester resin. BOPET film is a high-performance film with a unique combination of qualities like high tensile strength, durability, high heat resistance, excellent gas-barrier properties, dimensional stability, chemical inertness, clarity and recyclability. BOPET film is known for its versatility with a wide and growing range of applications. These diverse applications and intrinsic product characteristics lead to a constant pipeline of new product variations and applications thus reducing dependence on any one application or product.

BOPET film is available commercially in varying thicknesses, widths and properties depending upon the needs of end users. It can be produced as a single layer (mono) or can be coextruded with other copolymers into a multilayer film with various functional properties encompassing the desired characteristics of each material. The polymeric films business is quite different from a pure play commodity business like its precursor inputs - PTA, MEG, PP/PET resins, due to a combination of several factors: a) The product is almost always ‘made to order’ as contrasted with ‘made to stock’ b) Multiplicity of SKUs (based on unique combinations of length, width, thickness, surface treatment during process as well as downstream treatments and Core ID) c) Fragmented customer base d) Quality and customer service also form important differentiators e) Differing buyer behavior across markets f) Pricing is influenced by a host of factors as stated above besides import parity i.e. Logistics cost differentials and varying customs duties – both normal and trade defense measures like anti-dumping, countervailing and safeguard duties. The above factors can create significant differences in regional price levels as well as between standard products and value-added/specialty products.

There is an increasing concern by all stakeholders and environmental groups on sustainability with the focus being primarily on reusability and recyclability of plastics. Flexible packaging is mostly multi-layered plastic (MLP) laminate, and it offers a number of sustainability benefits when compared with rigid forms of packaging. These include resource efficiency, reduced material to landfill, high product to package ratio, cost competitiveness, lower carbon footprint throughout the life cycle of packaging, etc. Given its myriad benefits, there is no ban on MLP in any country/ region, unlike several other single use plastic (SUP) items. The Company continuously strives to work on providing sustainable solutions (products and processes) as a commitment towards a sustainable environment. The expansion of recycling operation in Thailand provides sustainable solutions for film-based process waste as well as post-consumer plastic waste. BOPET film is made from Polyester resin (chips), which in turn is produced from Purified Terephthalic Acid (PTA) and Mono-Ethylene Glycol (MEG). The Company produces its own film grade PET resin.

The value chain for the Company’s main businesses is depicted below:

II. Global Operations

Polyplex is the first Indian producer to set up manufacturing facilities in multiple countries with market share of ~9% (ex. China) in thin BOPET Films globally. The Company has a global manufacturing footprint across 7 locations in five countries – India, Thailand, Indonesia, Turkey, and the US supplemented with an extensive sales & distribution network in key demand centers. The Company also has additional warehouses in Poland, Germany & Netherlands and liaison offices in South Korea and Japan in order to enhance its sales capability. This ensures a reliable supply chain and helps capitalize on the increasing preference of customers to source locally. Polyplex has the ability to supply customers from its global supply network, offering a built-in resilience to any disruption.

Polyplex Group Structure (as on March 31, 2024)

Note – From July 18, 2024 onwards, PCL has an Associate Company named BECIS SOLAR 1 PRIVATE LIMITED with 26% shareholding. The Associate Company is formed for the purpose of sourcing captive solar power for its operations at Bazpur, India.

Global Sales Force

Polyplex has a direct presence primarily through its own sales team (many of local origin) in all the key regional markets complemented by an extensive global agent network, which helps develop strong customer relationships. Within each key market, presence in multiple locations maximizes customer coverage efforts. Relationship with most key customers is deep-rooted and spanning over 10+ years.

Particulars	India	Other Asia	Europe2	North America
Sales and Marketing Team Size	29	23	28	14
#of Locations	4	9	9	6

Global Customer Base

The Company has a well-diversified customer base with an even distribution of sales globally across the Americas, Europe, India and Other Asia. The Company is a Tier I supplier to leading global and regional converters who cater to global Consumer Product Group Companies (CPGs)/ Original Equipment Manufacturers (OEMs).

Integrated Manufacturing Capacities across Geographies

	Resin			Base Films					Value Added Films
Location	PET Film Resin (MT)	Recycled Resin (MT)	PET Thin (MT)	PET Thick (MT)	BOPP (MT)	CPP (MT)	Blown PP (MT)	Metallizer (MT)	Holography (MT)	Coating (Mn Sqm)	TMP (Mn Sqm)
India	77,600	-	55,000	-	35,000	-	-	32,500	5,040	383	152
Thailand	106,050	59,700	42,000	28,800	-	10,000	17,245	21,700	480	985	-
Turkey	75,850	-	58,000	-	-	-	4,392	20,700	-	320	-
USA	86,000	-	81,000	-	-	-	-	9,250	-	120	-
Indonesia	90,000	-	48,000	-	60,000	-	-	18,000	-	-	-
Polyplex Group	435,500	59,700	284,000	28,800	95,000	10,000	21,637	102,150	5,520	1,808	152

Notes:

1. Capacity of all product lines is in MT per annum except Coated Films and Transfer Metallized Paper where the capacity is in Million SQM per annum.

2. Include projects under implementation viz new BOPET Film Line, Offline Coater & Debottlenecking of Resin Plant in USA and rPET extrusion capacity in EcoBlue, new Offline Coater & Laminator in India and new Blown Film Line in Thailand.

III. BOPET Film Industry Overview

BOPET film is an attractive, vibrant and growing USD 11 billion industry, growing at ~2x of global GDP growth rates since the turn of the millennium. The traditional segmentation of BOPET films has been thin and thick films based on distinct applications and lack of supply side substitutability. Thick films generally refer to films with a thickness range of 50-350 microns whereas films below 50 microns are characterized as thin film. In recent years, several intermediate thickness lines (with thickness ranging between 8-150 micron) have also been installed. The BOPET film industry has seen various structural changes over the last seven decades with an inexorable move from West to the East with Asia accounting for ~81% of demand and ~86% of capacity. Film producers from Asia (mostly headquartered in India) have become major global players. There has also been a dispersion of technology with progressive orientation towards higher productivity assets for standard films. BOPET film growth has been driven by the shift away from rigid packaging formats (e.g. stand-up and retort pouches for cans and blow molded bottles), as well as the drive for additional packaging to preserve food products and provide retail packaged convenience foods to an ever more affluent global consumer base. Polyplex has traditionally operated predominately in the area of thin BOPET films, which accounts for ~81% of the overall global PET film demand. Higher growth in flexible packaging relative to other applications has gradually shifted the production and usage patterns of thin BOPET films. Packaging & Industrial (including electrical) segments constitute almost 100% of the Company’s thin film sales.

Thin BOPET Film Market The largest application of thin BOPET films is flexible packaging, which accounts for 76% of the total thin film used. Flexible packaging plays a key role in source reduction based on the principle of ‘use less packaging material in the first place’.

Advantages of flexible packaging versus conventional alternatives are overwhelming, including:

• Lowest carbon footprint

• Low resource intensity

• Consumer convenience

• Highest product to package ratio

• Cost competitiveness, ease of transportation, storage and use

• Design, structure flexibility, customization and shelf appeal

• Safety and product protection (freshness and extended shelf life)

• Prevention of food waste and contamination This has resulted in higher-than-GDP growth in the global flexible packaging industry. BOPET film, being a higher-end preferred substrate within packaging, has grown more rapidly than other substrates, averaging around 4-5% per annum. Packaging demand is resilient as it is driven by the consumption of food products and consumer staples, usage of which in general is non-discretionary in nature. This packaging segment characteristic along with its attributes on safety, hygiene and integrity has resulted in steady demand growth over the years. However, there has been some short-term impact on demand in 2023 due to recessionary/inflationary conditions across the globe resulting in lower apparent demand, especially due to the cumulative impact of destocking across the value chain. Demand has been normalizing over the last few quarters and should align to its usual growth trajectory. An increase in purchasing power in developing countries has been accompanied by a rise in per capita packaging material consumption. However, when compared with mature markets, per capita packaging material consumption in developing countries is still low. Asia is the largest market for thin BOPET films, accounting for more than three-fourths of global consumption. Faster growing Asian demand is the main driving force in the global markets. Within Asia, India and China are the largest and fastest-growing consumers.

Source: Updated Company estimates

A similar trend is also evident on the supply-side with most of the new capacities being installed in low-cost developing countries (mainly in China and India). Chinese players primarily cater to the domestic market with some limited presence in Southeast Asia, and have negligible presence in the US and Europe on account of factors like limited presence of front-end/post-sales or technical service team, narrow product range, trade barriers, lesser ability to offer credit, language and cultural differences etc. A large proportion of the new capacity has emphasis on productivity and cost management. This has impacted traditional large producers of PET film operating with high-cost structures, who have chosen to concentrate on niche technology-oriented segments like films for optical applications, high end release liners, solar panels and specific applications within packaging and industrial segments. The high speed and productivity of the latest 10 meter+ wide lines (same as the Indonesia line and the new US line of Polyplex) will bring more cost competitiveness and may result in closure of some old and inefficient lines. While trade defense measures like anti-dumping and countervailing duties were invoked in the past, they were unable to address the problems of inefficient assets in developed countries producing standard films.

Global thin BOPET film growth is expected at about 5% for the next few years, with demand in India expected to continue growing at ~10%. Demand growth is expected to remain resilient on account of factors including de-globalization and preference for shorter supply chains, acceleration of move from loose to packaged sales of a range of products, importance of hygiene, higher home consumption etc. Companies with global footprint, consistent quality products, diversified product portfolio, access to international customers and stronger supply chains stand a better chance of participating in market growth and delivering margins above the industry average.

The trend in global capacity utilization (CUF) for thin PET film is as under:

Source: Updated Company estimates

Since 2019, more than 2 MMT of additional capacities of Thin BOPET film have been added especially in Asia with China accounting for ~60% and India ~25% of total additions thus leading to an oversupply situation. Per industry sources, even though many additional lines are on order, mostly in China, it is expected that some of these may be canceled or postponed due to the prevailing oversupply situation.

Excluding China, the planned capacity additions are very minimal. This is reflected in the below chart for CUF which is for Ex-China.

Thick BOPET Film Market

Thick BOPET films demand is expected to demonstrate a steady CAGR of ~5% going forward. Growth has mainly come from new applications in electronics and electrical applications e.g. photovoltaic (PV) and flat panel display (FPD) applications. Typically, demand for electrical & electronics and other industrial applications grows steadily and provides stability to earnings. As the growth of thick film is mainly linked to macro-economic indicators, the growth momentum was temporarily affected by the monetary tightening and slowdown which has normalized now. China has emerged as the largest market for thick BOPET films with a market share of 54%; Japan, Korea and Taiwan contribute to another 26% of global demand.

Similar to the thin BOPET film business, the capacity addition for thick BOPET film has also been primarily in China. China has become the global leader in the manufacture of PV modules accounting for roughly three-quarters of all global PV module manufacturing and also remains a key global supplier of other electrical and electronics products. Producers in Europe and USA constitute only around 7% of world capacity in 2023.

Source: Updated Company estimates

Due to high quality standards required by optical thick film customers, manufacturers targeting this sector face higher levels of wastage due to defects, and therefore the saleable output of thick film lines is often poor relative to thin film lines. As a result, optimal utilization levels for thick film lines is often at ~70%.

The Thick Film line in Thailand has enabled Polyplex to straddle the entire spectrum of end-uses for BOPET films by accessing the traditional industrial and electrical applications for thick films, along with significant progress in catering to several new applications including sophisticated release liners for electronics and other industrial segments. The first film line in India which was revamped in 2011 and further upgraded in 2014 to produce intermediate thicknesses/specialties, also contributes to the Company’s growth/margins.

IV. BOPP Film Industry Overview

The global demand for BOPP is ~10 MMT and is expected to grow at ~4%. Food packaging accounted for ~65% and non-food packaging for 19% of the total BOPP demand in 2023. International trade in BOPP relative to production is much lower in comparison to BOPET, as BOPP capacity is dispersed geographically. Regional demand-supply dynamics plays a more important role in this industry than global demand supply balance. Feedstock of BOPP film is polypropylene (PP) resin which is a downstream product from crude oil and/or gas and is widely traded across the globe. BOPP may be preferred over BOPET in certain applications due to its high moisture resistance feature, sealing and other properties. Though BOPET and BOPP are sometimes considered as substitutes of each other, the two films have distinct individual features and are more often complimentary in a typical laminate structure.

Source: Company estimates

The industry does not run on 100% utilization on account of product mix and CUF between 75-80% is typically described as ‘full’.

Just like BOPET film, there have been capacity additions in BOPP film too with China and India together constituting ~60% of the additions. However, the incremental capacity at global level has been almost equivalent to the incremental demand keeping the CUF of BOPP Film less volatile across the period.

The BOPP line in Indonesia has helped diversify the product offering and derive cost economies. The Company is well-positioned due to the highly fragmented nature of the local market consisting of several players with small and inefficient lines besides significant duty protection on imports. Growth in demand, commonality of customers with BOPET films in flexible packaging, low cost of operations due to co-location and benefits of a high productivity line besides a global sales and distribution network provides further substance to this investment.

V. CPP and Blown PP/PE Films Business

CPP films are transparent cast polypropylene films designed to offer good optical properties and high sealing performance and easy converting for flexible packaging and other applications.

CPP films are produced from a combination of various grades of PP polymer resin. Different types of CPP film are available (multi-layer options) which are used to cater to several applications in general packaging. It is used as a sealant layer in conjunction with other polymeric substrates for packaging of food products including snack foods like chips and biscuits, retort laminates for ready-to-eat food besides usage in sterilizable pouches in medical segment like packaging of surgical equipment, etc. Given the relatively modest investment required for CPP lines, regional demand supply balances are more relevant.

Another variant of PP based film is Blown PP. PTL had commissioned the first Blown PP line in October 2013. This base film (PP) enabled better use of the silicone coating facility with a broadening of the product range (including the ‘Peel & Stick’ liner segment for the roofing market in North America). The second Blown line in Thailand was commissioned in June 2018 with a view to develop merchant markets and also produces Polyethylene (PE) based blown films. With continuous growth in these segments, the third Blown line was commissioned in Thailand in January 2021 which has helped the Company cater to new segments/ new customers. The applications serviced include agriculture usage (mulch films), labels, liner in the manufacturing of safety air bag films, preferred sealing substrates for flexible laminates (Polyplex core business segment) and many more. Moreover, Blown PE/PP films are being considered for monolayer packaging to improve recyclability of used plastic pouches. Another Blown Film line has been added in Turkey in March’22 to diversify product portfolio and market share in this high value add/specialty film segment.

CUF - Capacity Utilization Factor Base Film constitutes PET (Thin + Thick), BOPP, Blown PP/PE & CPP Films

Even while industry wide CUF for thin PET films has ranged between 67%-82% over the past 5-6 years, Polyplex has displayed an industry leading capacity utilization record as depicted above due to unmatched market access and higher productivity. Though CUF for thin BOPET film has been close to 100% since the last 5-6 years, the ramp-up factor on account of startup of new BOPP line in Indonesia as well as market forces have impacted the CUF of all base Films taken together. Higher productivity is usually a function of ability to run at higher average/peak speeds, optimal downtime and better deckle (width) utilization besides other factors.

VII.Industry Outlook

Global thin film growth has been resilient and expected to grow at more than 4%. The demand may be accelerated with growth in energy transition end-uses, such as solar panel backsheet, battery for electric vehicle and MLCC applications. The drive for sustainable packaging and evolving regulatory mandates may create additional opportunities as well as raise concerns on usage of certain substrates of plastics in flexible packaging.

The vast majority of capacity which is expected to come is in China thus extending the current oversupply status in the industry. However, market conditions and overcapacity could incentivize much of this to be postponed or cancelled. The impact of overcapacity may be significant in China with moderate influence in other regions, as Chinese players have typically focused only on the domestic market and select SEA markets due to variety of reasons. Among other reasons, trade barriers, limited product portfolios, established relationships with incumbent suppliers and an uneven quality of certain imported material are major barriers to Chinese export growth. The supply overhang is expected to impact the Industry CUF and the margins on standard products for some time before it gradually starts to improve.

The Company believes that its well-distributed manufacturing operations, diversified and increasing value-added product portfolio, quality consistency, international customer base, customer relationships, efficient supply chain and a conservative Balance Sheet will allow it to grow profitably and withstand industry volatilities much better.

VIII. Indian Flexible Packaging Market

Thin BOPET Market

The industry in India comprises of 17 players with no one having a dominant market share. Several entrants post 2010 from allied/converting business have backward integrated into BOPET films. The domestic market is competitive and volatile in nature with limited differentiation around standard films. During the last two financial years, eleven new BOPET lines have been commissioned by existing as well as new players impacting the CUF and margins. Three more suppliers are expected to add capacity in the next 1-2 years, which will accentuate the oversupply situation and thus it will take some time to absorb the incremental capacity and margin improvement. The industry has been growing at >10% CAGR over the last decade and is expected to continue to do so in the foreseeable future. Double digit demand growth is driven by demographics, urbanization, continuing movement from loose and rigid forms to packaged product, increasing income levels and consumerism and accelerating export of laminates Demand for BOPET film in India is currently estimated to be around 7,40,000 tonnes per annum. The total installed capacity for thin BOPET films in India by end of FY 24-25 will be about 12,50,000 tonnes per annum with a significant portion of the surplus being exported.

BOPP Market

The industry in India comprises of 14 players with two accounting for ~39% of capacity. The industry has grown at ~10% CAGR over the last decade aided by a new application in textile bags and is expected to continue to grow at historical rates. Industry CUF has been 83%+ over the past 5 years – which represents close to full utilization given the product mix. Around 18% of production is exported primarily to Asia, North America, Europe and Africa. Two of the existing and two new players have added capacity during the last two financial years. In the next 2-3 years, 9 new lines are expected to start production which may impact the CUF levels and margins. The Indian BOPP market is currently estimated at about 7,90,000 tonnes per annum and the capacity is expected to be about 11,00,000 tonnes by end of FY 24-25. Demand is expected to grow at around 10% annually.

This supply overhang in both PET and BOPP Films due to large capacity addition is expected to continue for the next 2~3 years.

IX. Other Businesses

Silicone Coating and Extrusion Coating Businesses

The silicone coating business produces release liner, which is used for carrying adhesive labels until these are removed from the release liner and are applied to the final surface. Other applications of siliconized films include release liner for adhesive tapes, cast polymer materials, electronic applications, medical, hygiene products, roofing and other industrial uses. The Company has three offline siliconized coating lines – one in India and two in Thailand. Polyplex also produces in-line coated silicone release liner during film extrusion process at its Thailand, Turkey and USA plants. The extrusion coating business involves a combination of PET/BOPP/Nylon film with an extruded adhesive layer to produce thermal lamination film. Thermal lamination film is used for laminating offset/digital printed documents on one/both sides to improve durability and aesthetics of the printed documents. The principal uses comprise teaching aids, maps, certificates, posters, menu cards, ID security cards, book covers, carton board boxes, food packaging and reflective insulation. There is a shift in the global markets from offset print to digital print lamination using special films for enhancing products’ appearance. Carton box packing segments are also growing due to the change of food eating habits of customers. Overall, thermal films are estimated to grow at a rate of 3-5%, mainly in BOPP and its specialty thermal films segments.

Offline Coating Business

Polyplex has successfully commercialized various specialty offline coated products for both packaging and industrial segments. These include specialties like transparent barrier films, lidding films, digital print media, matt coated films, heat transfer film, transfer metallized film/paper, UV printable metallized film etc. Digitization is rapidly growing in various application segments like photo book, labels, shrink sleeves, flexible packaging, graphics, promotional & customized digital printing, commercial printing etc. Polyplex has developed various digital print media film products to provide solutions for graphics, display, label and packaging segments. The Company has several offline coating lines across India, Thailand and Turkey to meet market demand and broaden the product portfolio. A new offline coater is under implementation in USA to service domestic demand and increase the share of specialty sales.

Metallized paper business

Polyplex has a laminating machine which was commissioned in FY 19-20 to facilitate Transfer Metallized Paper (TMP) business. TMP is Metallic Paper where the metal is deposited on it by transfer from release coated metallized PET film. Polyplex also has the capability of Direct Metallized Paper (DMP) wherein a very thin layer of aluminum is vacuum deposited onto a varnish lacquer coated paper and further print receptive lacquering is done on metal surface.

Metallized Paper is bio-degradable, has a brand appeal and is perceived to be recyclable. Major segments for metallized paper are:

1) Label face stock

2) Wet glue label

3) Gift Wrap

4) Cigarette wrap

5) Flexible packaging

6) Carton packing

7) Barrier Paper

The market potential for Transfer Metallized Paper in India is approximately 9,500 tonnes with some of the SKU’s of carton packing removed by the Brand Owners.

Holography business

Holography is the process of making holograms which are usually intended for displaying three dimensional images, security text, different unique features and images. It is a physical structure embossed on polymeric film that diffracts light into an image, text or patterns. Holography is widely used in various flexible packaging applications that provide better aesthetics, protection from counterfeiting, fraud and brand protection besides hot stamping foil, security label, holography transfer paper and other packaging applications.

Holography is produced on a thin flexible polymeric film (PET, BOPP, CPP or Nylon) which has been micro-embossed with patterns or even images. Patterns or an image are created by way of an embossing process which can provide a 3D effect and/or spectral (rainbow) coloring. In order to enhance holography effect and its suitability in packaging application, embossed film is metallized on the holographic side.

The market potential for Holographic Film in India is approximately 9,600 tonnes and is expected to grow at around 8%-10%.

Some of the Holography lines in overseas locations have been shifted to India to serve domestic demand in flexible packaging applications, gift wrap, label face stock and Carton lamination. Polyplex has installed both seamless and shim line Holo technology to cater to a wider segment of market applications.

Recycling of Plastic Waste

The Company through its subsidiary in Thailand, EcoBlue Limited, which started operations in 2013, provides sustainable solutions for film-based process waste as well as post-consumer plastic waste for varied applications. Over the years, EcoBlue has been working with different post-consumer and industrial wastes (both PET and Polyolefin based) to develop and produce high quality recycled materials which can replace virgin resin in high end applications like Bottles, PET Film, Filament Yarn etc. The rPET, rPP and rHDPE range are FDA-approved, EFSA-approved and Global Recycled Standard (GRS)-certified. The expansion with a new state of the art recycling facility for post-consumer waste, for these applications demonstrates the Company’s commitment towards sustainability. The Company is also working with the Ocean bound plastics marketplace platform and developing supply chain for ocean bound plastics. EcoBlue is now positioned amongst the leading recycling companies in the region.

Population Growth: The demand growth for polymeric films is expected to be linear and directly proportional to population growth. The world’s population has tripled since the mid-20th century. It has reached 8.04 billion in 2023. Rising life expectancy is expected to lead to an ageing of the population, especially in high income countries that will increase demand for healthcare and pharmaceutical products. Urbanization: Growth in the urban population is driven by overall population increase and by the upward shift in the percentage living in urban areas. Today, around 57% of the world’s population – 4.6 billion inhabitants – live in cities. This trend is expected to continue, and the urban population more than doubling its current size by 2050, at which point nearly 70% will live in cities. This translates into increased disposal incomes and an aspiration among a burgeoning middle class to adopt global brands and modern shopping habits. With more than 80% of global GDP generated in cities, urbanization can contribute to sustainable growth through increased productivity and innovation.

Improved quality of life: With growing life expectancy and quest for quality, consumers are expected to move towards packaged product consumption. As people adopt healthier lifestyles and consume more convenience foods, the demand for these items will continue to increase.

Increasing Environmental Awareness: Owing to increasing global environmental awareness, polymeric films are gaining popularity owing to lower environmental impact (lower resource intensity, emitting lower greenhouse gases and lighter in weight). Flexible packaging offers a number of sustainability benefits throughout the entire cycle of the package when compared to other packaging options, especially rigids. Increasing Consumerism: Income growth has led to an increase in global consumer spends, influencing in turn the Polymeric film industry. Technological developments are leading to accelerated demand in electrical, electronics and other industrial applications, along with new applications like LiB for EVs, which is expected to further increase demand. The Asia Pacific region is expected to witness the fastest growth because of the presence of two highly populated countries, i.e., China and India. In these two countries, the increase in disposable income will supplement the growth of industries such as food and beverages, pharmaceuticals, pet food, and cosmetics, which will help the polymeric film market to flourish.

E-commerce: The global e-commerce packaging market share is projected to grow from USD 45.21 billion in 2022 to USD 66.51 billion by 2029, exhibiting a CAGR of 5.7% during the 2022-2029 period. Increasing number of people depend on online shopping. Packaging plays an important role in case of e-commerce from aesthetics perspective as well as to ensure durability and quality of the product. In the era of social media marketing, many FMCG players are moving towards specialized, innovative and sophisticated packaging. Asia Pacific is likely to hold the dominant e-commerce packaging market share in the coming years owing to the expansion of the e-commerce industry in the region. As per IBEF Report, the Indian e-commerce industry has reached USD 60 billion in 2023 (22% increase from previous year) and is projected to reach USD 300 billion by 2030, experiencing significant growth.

Retail formats: Modern Trade has created a plethora of opportunities for the packaging sector as it increases the demand for retail ready packaging solutions which is space efficient and helps in reducing supply chain cost. These formats lead to impulsive buying behavior through their visual merchandising strategies, efficient sales personnel, in-store sampling and promotions with discount offers.

XI. Key Differentiating Factors for Polyplex

• On-shore presence through integrated manufacturing and distribution in all major demand centers except China

• Inherent flexibility embedded in a range of upstream & downstream assets and organizational focus ensuring expeditious as well as economic product and application development

• An appropriate combination of integrated operations, contemporary assets, repurposed older lines, consistent improvement in productivity and cost structure securing long-term cost competitiveness on a delivered basis

• Focused downstream and side-stream investments to meet customized needs of packaging and industrial markets

• Continuous investment in assets and capabilities to meet future requirements aligned to emerging trends

• Ahead of the industry in recycling initiatives and the only Company to offer mechanically and chemically recycled rPET films at scale

• A comprehensive suite of products for flexible packaging industry

• Tier 1 supplier for BOPET films to the global converters across both standard and specialty films

• Collaborative product and application development with customers

• An expanding portfolio in Thin and Thick Industrial BOPET films

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• A proven management team with 20+ years at Polyplex and an in-depth understanding of the business

• A common value system across the organization, ‘SCORE’ (Seamlessness, Care, Ownership & Responsibility and Excellence) secures the global mindset of a committed and empowered work force sensitive to all stakeholders

. Strategy and Positioning

Polyplex seeks to maximize long-term returns following a differentiated approach that responds proactively to business and environmental changes. As it seeks sustained and profitable growth i.e. a judicious balance between revenue enhancement and benchmark return on capital employed, Polyplex has often been an industry trend setter with respect to the strategy choices made in the past. The key elements of this strategy are as under:

Global and Integrated Manufacturing Set-up

• Globally Seen by Customers as a ‘Local Manufacturer’ - Seven state-of-the-art manufacturing facilities across the globe help focus on their respective domestic and regional markets

• Integrated manufacturing capacities across geographies enables the Company to provide a comprehensive suite of products in each manufacturing location. It also ensures supply chain efficiency, cost optimization and lower time to access and market new products and applications

• Backward integration into resin at all our film manufacturing locations is unique to Polyplex among the large global producers as others either do not have any captive resin facility or even if they do have, it may be at one location only and may not cover their entire requirement.

Diversified and Differentiated Product Portfolio

• The Company has the widest product portfolio in the industry across several polymeric film substrates; further enhanced due to multifarious downstream processing capabilities

• There is an increasing composition of innovative, highly customized and unique products to meet wide ranging requirements of customers

• Unique value proposition of differentiated products, applications and customers (D-PAC) has led to a healthy growth in specialty portfolio. It is a competitive advantage developed over time

• Polyplex has created a portfolio of value added and D-PAC sales to act as a twin-layer moat for preserving profitability.

International Sales & Distribution Network

Polyplex offers

• Seamless and reliable supply chain through a judicious mix of onshore, nearshore manufacturing and imports

• Customer specific stocking programs – make-and-hold, consignment and local warehousing

• Direct sales presence through employees of local origin in key geographies in Asia, Europe and North America

– Local presence in China, Japan, Korea, Malaysia, Vietnam, Philippines, Singapore besides Thailand and Indonesia

– Physical presence of European sales team in 9 countries of the EU

– North America sales team physically located in different US cities

– Customers in African and South American markets are catered directly or through agents/network

• Intricate knowledge of customer requirements and global trends - local language, cultural affinity and physical presence play an important role in developing strong customer relationships

• Strong and real time feedback loop established through the salesforce leading to prompt onshore technical support

• Comprehensive product portfolio including high value differentiated products in different lot sizes

• New product development and innovation

• Built-in resilience to any disruption - Polyplex has the ability to supply customers from its global supply network

Cost-efficient Operations & Assets

• Investment in vertical integration (both backward and forward) complemented with versatile and high productivity assets would continue to protect cost competitiveness, drive innovation and value addition

• Continuous improvements in productivity and cost optimization to maintain global cost leadership

• In order to increase the sales of specialty film and enable economic usage of the older and less productive film lines, Polyplex has been consistently repurposing its older assets to meet the growing space and demand for D-PAC products in a cost-effective manner

• Other technological improvements like direct melt casting lines, upgrades and debottlenecking have helped Polyplex to remain cost competitive

• Efficient logistics cost due to proximity of manufacturing to customers and mostly local raw material sources have contributed towards operational efficiency

R&D Capability

• Focus on innovation and collaborative application development helps the Company become a preferred supplier/partner with several large multinational customers and ensures sustained differentiation

• A well-staffed R&D centre in India supported by satellite on-shore teams ensures multiple levels of customer engagement for product and application development

• Better technical services and new products are being facilitated by leveraging in-house R&D capabilities and experience

• Collaborative Research with Government labs and educational institutions to drive innovation and new sustainability positive products

• Systems have been created and strengthened to enhance cross-learning and sharing best practices/ benchmarking across various units and businesses of the Group to enhance efficiency and synergy.

• The Company has developed many products in the last few years and for relevant markets has filed patent applications. Currently, it has 29 patents across various products/processes/countries and has filed application for 10 more patents. Further, the Company also has registered ten trademarks

Sustainability Focus

• The Company continually strives to develop sustainable products & processes and deliver more sustainable solutions for customers. There is a commitment towards sustainability with minimal environmental impact.

• Developed and optimized ‘chemical recycling’ process for manufacturing Sarafil rPET Polyester film with Post-Consumer Recycled content upto 100%.

• Increasing presence in high potential sustainability related applications (Solar PV, Lithium-Ion Batteries, Transfer Metallized film/paper)

• Promoted use of bio-based renewable raw materials and energy sources for the manufacture of polyester films

• The Company has been following best practices relating to the environment and health and safety of its employees and the society

• Large facility in Thailand for recycling in-house and sourced polymeric waste further adds impetus to the sustainability agenda

• Working in close collaboration with industry associations, brand owners, converters, recyclers and research organizations on recycling of post-consumer flexible packaging waste

Strong Financial Profile

• A liquid and strong Balance Sheet enhances flexibility to address growth opportunities

• Strong Cashflow generation with prudent capital structure:

Note:

*Polyplex (Asia) Pte. Ltd. (Singapore) is 100% owned by Polyplex Corporation Limited ^#Including non current Investment in FD’s and Bonds

• Favorable taxation regime as depicted below:

* Current tax adjusted for:

- Tax on intercompany dividend and interest as the corresponding income gets eliminated at Consolidated level

- One time special Tax in Turkey @10% on the manufacturing income of FY 22-23 to help address damage caused by earthquakes

Note: i. Coater capacities and capacity for Transfer Paper Metallized has been converted into MT based on current product mix ii. Figures include the investments which are under implementation - new PET film line, offline coater and debottlenecking of Resin plant in US and rPET extrusion capacity in EcoBlue, new Offline Coater & Laminator in India and new Blown Film Line in Thailand. iii. Figures have been restated & revised, wherever necessary for previous years.

to identify further growth avenues and is poised to enhance long-term shareholder value.

XIII. Business Process Excellence

To enhance our competitive advantage and differentiation, the Company has been continuously investing in Business Process Improvement and Excellence programs. A BPE (Business Process Excellence) team is continuously working to undertake several Group-Level initiatives to improve our business processes and optimizing cost through continuous improvement in the areas of freight, packing, inventory management, electrical and thermal energy consumption, indigenization of spares, waste reduction & reuse of waste material, CRM and customer complaint handling. The benefits from these BPE programs have been continuously accruing over the last several years and incremental benefits are expected in the future as well.

XIV. Projects Under Implementation

Projects	Location	Capital Cost (In USD million)	Likely Start Up
Brownfield -	USA	133.2	Q4 FY 24-25
Second BOPET Film,
Debottlenecking of Resin plant and
Offline Coater
Other Projects	India	4.6	Upto Q3 FY 25-26
Other Projects	Overseas	4.6	Upto Q3 FY 25-26
Total		142.4

Brownfield BOPET Film line & Offline Coater Project at Polyplex USA LLC, USA

The investment in a BOPET film project and in Offline Coater is under implementation in USA, co-located with its existing facilities on the available surplus land.

Project Details

1. Total Capital investment is about USD 133 million

2. BOPET Thin Film Line of 10.6 meters width and design speed of 650 meters/minute with an annual installed capacity of 50,000 TPA

3. De-bottleneck the capacity of existing PET Resin line from 58,000 TPA to 86,000 TPA

4. Investment in Offline Coater to curtail lead time and to increase the market share

5. Project start up expected by Q4 FY25. There has been deferment in the project start up vis-?-vis original schedule primarily on account of delay in Building Construction.

Funding of the Project proposed through internal accruals and Bank borrowings

Project Rationale

1. North America has a large domestic PET Film market which is highly dependent on imports.

2. There have been no major investments made in this industry in the US over the last few years and no known upcoming capacities. Hence, there is an attractive opportunity to capture the demand growth by being an on-shore supplier and increase our market share by leveraging on Polyplex’s existing marketing capabilities, customer relationships and long-term experience of servicing this market.

3. Develop a competitive cost structure with an optimum combination of 2 BOPET lines along with matching captive PET resin capacity. The proposed new line being world’s highest output PET film line will significantly enhance the overall cost competitiveness as compared to other domestic suppliers as well as off-shore suppliers. Post this investment, Polyplex will be the largest and most cost competitive producer of Thin BOPET films in the US.

Rational for Other Projects

• Expansion of product portfolio

• Increasing the share of Specialty films

• Growing focus on industrial applications

XV. Performance During the Year

All discussion here is in the context of the consolidated performance of the Company.

Sales and Operations

The Company has a large international presence with active sales in all major regional markets/countries (supplies to more than 85 countries) with an extensive base of about 2,675 customers and low customer concentration. The customer base is fragmented consisting of both small players and large corporates across geographies, with top 10 customers contributing about 26% of revenues in FY 23-24. Majority of the customers have an average offtake <10 TPM and prefer local manufacturer/distributor for ease of business, even if the domestic pricing is at a premium. With a diverse product portfolio, Polyplex can cross-sell different products to the same customers. Polyplex has established long-term relationships (15-20 years on an average) with key customers globally. The Company has been able to maintain strong customer loyalty with a high rate of repeat customers over the years. The breakup of the Company’s revenues from various regions, operating companies, business segments and applications are given below:

Financial Performance

A snapshot of the Income Statement for the last two years is given below:

	2023-24			2022-23
Particulars	(Rs in Lakh)		% of Total Expenses	(Rs in Lakh)		% of Total Expenses	Change (YoY)
Sales & Other Income	6,36,713	100%		7,74,746	100%		-18%
Manufacturing Expenses	4,82,965	76%	76%	5,55,421	72%	79%
Operating and other Expenses	1,11,206	17%	17%	1,15,088	15%	16%
EBITDA	42,542	7%		1,04,237	13%		-59%
Foreign exchange fluctuation loss/(gain)#	7,922	1%	1%	1,732	0%	0%
Normalized EBITDA	50,464	8%		1,05,969	14%		-52%
Interest & Finance Charges	4,238	1%	1%	3,527	0%	1%
Depreciation and Amortization	30,713	5%	5%	29,628	4%	4%
Income Before Income Tax	7,591	1%		71,082	9%		-89%
Provision for Income Tax	(1,047)	0%		9,528	1%
Net Income (Before Minority Interest)	8,638	1%		61,554	8%		-86%
Minority Interest	4,855	1%		26,719	3%
Net Income (After Minority Interest)	3,783	1%		34,835	4%		-89%

^#Unrealized portion of foreign exchange loss/(gain) on foreign curency long term loan

During the year under review, sales and other income have decreased by 18% due to softer demand resulting in lower sales volume in thin BOPET and BOPP film segment and a fall in selling prices resulting partly from lower raw material cost. The impact was partly offset by increasing share of specialty products. Normalized EBITDA is lower by 52% mainly on account of prevailing market conditions across business segments and higher fixed cost. Higher fixed cost is on account of some one-time manpower costs and higher administrative expenses offset by lower utilities cost. Several new lines have started up, mainly in China and India, which coupled with macroeconomic conditions across the globe, has impacted margins on standard films. Current tax is lower during the year under review due to lower profitability. Further, Deferred tax assets is created during the year under review due to brought forward losses and reported loss in the current year for some locations.

Tax Expenses

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Current Tax	4,069	11,049	-63%
Deferred Tax	(5,116)	(1,522)	236%
Total	(1,047)	9,527	-111%

Sales and Other Income

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Sales	6,29,439	7,64,029	-18%
Other Income	7,274	10,717	-32%
Total	6,36,713	7,74,746	-18%

The decrease in topline during the year under review was mainly due to a decrease in sales volume of BOPET, BOPP and some downstream film segments and fall in selling prices resulting from weaker market conditions and lower raw material cost.

Other income during the current year was lower on account of below reasons: a) Nil foreign exchange gains during the year – There has been a foreign exchange fluctuation loss in the current year as compared to H_1,452 Lakh gain in the previous year b) Lower Insurance claims – Insurance claims of H_587 Lakh during the current year as compared to H_3,809 Lakh in the previous year The above has been partially offset by the following: a) Higher Interest income – Higher interest income during the year due to monetary tightening across the globe resulting in high fixed deposit income and higher yields on bonds generated from deployment of surplus cash in low-risk market instruments b) Higher export incentive – Export incentive of H_1,248 Lakh during the year as compared to H_1,199 Lakh in the previous year

Manufacturing Expenses

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Raw Materials Consumed (Incl. Stock Accretion/Decretion)	3,88,832	4,52,504	-14%
Power & Fuel	44,333	52,230	-15%
Packing Material Consumed	25,663	26,793	-4%
Stores & Spares Consumed	17,082	17,463	-2%
Repairs and Maintenance	7,055	6,431	10%
Total Manufacturing Expenses	4,82,965	5,55,421	-13%
as a % of Sales and Other Income	76%	72%

Raw material expenses decreased by 14% in absolute terms mainly due to a decrease in raw material prices and reduction in sales volume. Decrease in power & fuel cost is due to normalization in price of natural gas which spiked in the FY 22-23 resulting from the Russia Ukraine war. Packing cost has decreased due to lower sales volume of thin BOPET and BOPP film segments. This has resulted in an overall decrease of manufacturing expenses by 13% in absolute terms.

Operating and Other Expenses

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Personnel Expenses	58,590	49,049	19%
Administrative Expenses	18,876	16,349	15%
Selling Expenses	23,981	48,048	-50%
Other Expenses	9,760	1,642	494%
Total Operating and Other Expenses	1,11,206	1,15,088	-3%
as a % of Sales and Other Income	17%	15%

During the year, operating and other expenses in absolute term have declined by 3%. An important factor contributing to this is lower selling expenses resulting from normalization in ocean freight rates in the current year in comparison to previous year, wherein freight rates were excessively high due to supply chain disruptions arising from COVID-19. Further, increase in personnel expenses and administrative expenses reflect the impact of inflation and some one-time manpower costs. Other expenses are higher mainly due to exchange fluctuation loss of H_8,211 Lakh in current year as compared to nil loss in previous year.

Interest and finance charges

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Interest Expense	3,922	3,205	22%
Bank & Other Financial Charges	316	322	-2%
Total Interest and Finance Charges	4,238	3,527	20%
as a % of Sales and Other Income	0.7%	0.5%

Financial expenses are higher due to the increase in interest rates globally resulting from higher USD Libor and Euro Libor and higher working capital utilization during the year. The impact was partially offset by the decrease in long term borrowings due to repayments.

Liquidity and Capital Resources

The Company ensures access to sufficient funding at acceptable costs to meet its business needs and financial obligations through business cycles. The Company relies on cash from operations and short-term/long-term debt for meeting its requirements. It continues to maintain adequate liquidity for its operations with a close watch on the debt service and leveraging ratios. Cash and equivalents together with undrawn credit lines (excluding project financing) and liquid investments aggregated to around H_2,30,808 Lakh (including unutilized working capital limits of H_1,22,754

Lakh) as at the end of the reporting period.

Cash Flows for the Last Four Financial Years

Particulars	FY (20-21)	FY (21-22)	FY (22-23)	FY (23-24)
Net Cash flow from Operating activities	1,08,455	56,002	80,150	45,522
Net Cash flow from Investing activities	(43,231)	106	(11,493)	(79,638)
Net Cash flow from Financing activities	(65,885)	(23,223)	(65,696)	(15,221)
Exchange Difference on translation of	(144)	3,970	13,055	(788)
Foreign Operation
Total Cash & Cash and Cash Equivalents	43,583	80,438	96,455	46,330
Total Cash & Bank Balance Including Investment	1,24,215	1,22,782	1,25,563	1,08,055

Net cash flow from operating activities	Net cash flow from investing activities
Net cash flow from financing activities	Exchange difference on translation of Foreign Operation
Total Cash & Cash and Cash Equivalents	Total Cash & Bank Balance including investment

( Rs in Lakh)

Particulars	As at March 31, 2024	As at March 31, 2023
Cash & Bank Balances	15,897	47,265
Fixed Deposit with Banks (less than 3 Months)	30,433	49,190
Cash & Cash Equivalent (A)	46,330	96,455
Fixed Deposit with Banks (3 to 12 Months)	23,695	1
Other Balances with Bank	595	1,548
Bank Balances other then Cash & Cash Equivalent (B)	24,291	1,548
Fixed Deposit with Banks (More than 12 Months)	9	15
Investment in Bonds	37,225	27,545
Liquid Investment	200	-
Other Cash & Bank Balances (C)	37,434	27,560
Total Cash & Bank Balance, including Investment (A + B + C)	1,08,055	1,25,563

Cash Flows from Operating Activities

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Operating Profit before Working Capital Changes	45,800	104,705	-56%
Change in Working Capital Adjustments	6,490	(5,572)	-216%
Income Taxes Paid	(6,767)	(18,982)	-64%
Net Cash Flow From Operating Activities	45,522	80,150	-43%

For the year under review, cash flow from operating activities (before change in working capital) has been lower at H_45,800

Lakh mainly due to lower margins resulting from softer market condition and higher fixed cost. Together with a decrease in net working capital of H_6,490 Lakh and net income tax paid of H_6,767 Lakh, net cash flow from operating activities (after change in working capital) is H_45,522 Lakh.

Cash Flows from Investing Activities

	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Sale/(Purchase) of Property, Plant & Equipment	(51,716)	(27,283)	90%
Deposits with Bank other than Cash & Cash equivalent	(22,736)	13,034	-274%
Sale/(Purchase) of non-current Investments	(13,900)	(471)	2,852%
Sale/(Purchase) of short term Investments	5,089	969	425%
Interest received	3,624	2,259	60%
Net Cash Flow From Investing Activities	(79,638)	(11,493)	593%

Factors impacting cash flows are:

• The cash generated was used in investment in fixed assets to the tune of H_51,716 Lakh in FY 23-24, mainly towards new PET Film line project in USA.

• During the year, investment in bank term deposits with more than 3 months maturity has been H_22,736 Lakh (net of redemption). In the previous year 2022-23, investment in bank term deposit has been mainly for less than three months maturity and thus clubbed in Cash & cash equivalent.

• H_13,900 Lakh of Investment (net of redemption) has been done in non-current bonds (maturity 2-3 years) during FY 23-24. This was to lock in the higher yields for a longer duration. Additionally, there has been a sale of short-term investments to the extent of H_5,089 Lakh.

• Interest income received during the year is H_3,624 Lakh on account of higher interest rates.

Cash Flow from Financing Activities

	2023-24	2022-23	Change
	(Rs in Lakh)	(Rs in Lakh)	(YoY)
Proceeds/(Repayment) from Non-Current Borrowings	(5,543)	(14,893)	-63%
Net Proceeds/(Repayment) from Short Term Borrowings	1,427	(4,939)	-129%
Interest paid	(4,591)	(3,528)	30%
Dividends paid (including Tax)	(5,753)	(42,025)	-86%
Principal payment of Lease Liabilities	(760)	(311)	144%
Net Cash Flow From Financing Activities	(15,221)	(65,696)	-77%

• There was a net decrease in total debt (short term + long term) by H_4,117 Lakh. This includes a decrease in net term debt by H_5,543 Lakh due to repayment of existing Euro loan in Polyplex Indonesia partially offset by drawdown of term loan in Polyplex USA for the on-going project besides higher working capital borrowings in various locations

• Interest paid during the year is higher due to increase in interest rates globally

• The Company paid a dividend of H_5,753 Lakh in FY 23-24

Exchange Difference on Translation of Foreign Operations

This is the exchange rate difference arising out of the translation of assets & liabilities of overseas subsidiaries (which are denominated in different currencies) into INR on consolidation.

Debt Profile

Total debt as on March 31, 2024, is H_72,814 Lakh (H_78,683 Lakh on March 31, 2023), a decrease of H_5,869 Lakh over the previous year. This is mainly due to net repayments of long-term loans.

XVI.Sustainability

There is concern from all stakeholders and environmental groups on the usage of plastics. The adverse perceptions on plastics usage at a macro level are driven by images of plastic litter in oceans, impact on marine life and prevalence of microplastics in the food chain, etc. This is exacerbated by usage of certain Single Use Plastic (SUP) items which contribute to the increasing amount of plastic waste reaching the landfills in absence of a comprehensive recycling ecosystem. To put into perspective, out of a global plastics consumption of more than 400 million tonnes, consumer flexible packaging accounts for ~10% and BOPET films are under 1% of the total tonnage. Due to its superior performance, economics as well as benefits on the sustainability front, flexible plastic packaging has been gradually replacing rigid forms of packaging over the last several decades. The myriad benefits over rigid include lower environmental impact and carbon footprint, resource efficiency in terms of high product to package ratio, lower energy usage, water, transport costs and landfill requirements, better performance – barrier, retort and other features besides flexibility and versatility to cater to various needs and convenience requirements. As a result, regulators and governments across the world have not come up with any measures to restrict the usage of Multi-Layer Plastics (MLPs) in packaging. It is important to note that the bans do not extend to MLPs in recognition of intrinsic benefits and the lack of viable alternatives in terms of environmental impact and cost. The Ellen MacArthur Foundation (EMF) in collaboration with the UN Environment has come up with a New Plastics Economy Global Commitment vision document wherein one of six key pillars is that all plastic packaging is 100% reusable, recyclable, or compostable. Various national and regional plastic pacts have been constituted under plastic pacts network of EMF. Plastic pacts bring together Governments and frontrunners from across the whole value chain to accelerate the transition towards circular plastics economy. Signatories include national governments, packaging manufactures, waste management businesses, plastic manufacturers, brand owners and retailers Governments are becoming an active participant in setting out the expectations and defining rules. Industry is focusing on developing viable models for collection, sorting and reuse/recycling of post-consumer plastic waste. The urgency and sensitivity on the sustainability agenda varies significantly across regions with Europe taking the lead. India has introduced a comprehensive legislation for managing plastic waste. Other regions are at varying level of regulation. Regulatory measures/guidance across the world have focused on reducing/eliminating the usage of certain SUPs and imposing special taxes. Recent significant regulatory developments are as below: a. Europe

Plastic Tax

The European Union has implemented a plastic tax €800/ton levy on non-recycled plastic waste in Jan 2021. This is being collected by the European Union from the member states.

Effective April 2022, the UK has implemented a ?200/ton tax rate for packaging with less than 30% recycled plastic imposed on producers introducing packaging onto the market. Similarly, effective January 2023, Spain has imposed a tax of €450/ton on non-recyclable plastic packaging.

Packaging & Packaging Waste Regulation (PPWR)

Recently, the European Parliament has adopted the PPWR (Packaging and Packaging Waste Regulation) iii. Mandatory Deposit Return Scheme (DRS) for plastic containers iv. Mandatory EPR and modulating EPR fee based on recyclability performance v. Limitations on substances that negatively affect recycling Detailed criteria, guidelines and secondary legislation is awaited before the impact of these regulations can be assessed in detail as the same are expected to present a complex set of challenges as well as opportunities for various market participants including substrate suppliers like us.

Type of Packaging	2030	2040
Contact sensitive (Non-PET/Non Bottles)	10%	50%
Other (plastic) packaging	35%	65%
Contact Sensitive PET	30%	50%
Single use beverage Bottles	30%	65%

Design for recycling guidelines and recyclability performance grades will be defined by the European Commission in so-called delegated acts by January 2028. ii. Minimum Recycled content requirements

Recycling Content

2030	2035	2038
A=95%	R@S>55%
B=80%	Banned: R@S<55%
C=70%	Banned: <70%	C-Banned

though it still needs to be formally approved by the European Council. The Directive lays down measures to prevent the production of packaging waste, and to promote reuse of packaging and recycling and other forms of recovering packaging waste. The provisions are designed to reduce the disposal of packaging waste and to promote a more circular economy. The initiative’s objective is to ensure that all packaging is reusable or recyclable in an economically feasible way by 2030.

The proposed legislation requires all packaging to be recyclable by design, recycled at scale and incorporate recycle content over a given timeline. This regulation, while still to be formally approved by European Council, focuses on following i. All packaging to be Designed for recycling (2030) and Recycled at scale (2035) Recyclability Grades b. USA

Recycling-based legislations are issued at the state and local level. Four states have already passed, and 11 states have introduced EPR bills c. India

The Indian flexible packaging industry (like the global industry) is also exposed to certain environmental and sustainability related risks. The Plastic Waste Management Rules (PWMR), 2016 and Solid Waste Management Rules, 2016 issued under the Environment (Protection) Act, 1986 define responsibilities and actions required by municipal authorities, manufacturers, producers, importers and brand owners. Amendments to these Rules made in March 2018 have relaxed the regulations on usage of MLPs, factoring in lack of alternatives. While further amendments made in 2021 specify ban on certain SUPs these are not applicable to MLPs for flexible packaging. The most recent amendments to the regulation were made on March 14, 2024. Real emphasis has come out on effective collection, recycling and sustainable waste management system.

The current legislative framework has clarified that every producer, importer or brand owner (PIBO) will have primary responsibility for plastic waste and will have to register themselves with concerned authorities like SPCB/CPCB. They need to establish a system for collecting back the plastic waste generated due to their products and this plan of collection has to be submitted to CPCB while applying for Consent to Establish or Operate or Renewal. It is important to note here that Polyplex is categorized as a producer where the ‘producer’ is defined as a person engaged in manufacture or import of carry bags or multilayered packaging or plastic sheets or like and includes industries or individuals using plastic sheets or like or covers made of plastic sheets or multilayered packaging for packaging or wrapping the commodity. The registration as a Producer, an Importer and a Recycler has already been received. The Ministry of Environment, Forest & Climate Change(MOEFCC)hasalsocomeoutwithGuidelines for a uniform framework for EPR implementation as per which the primary responsibility for collection of post-consumer waste and creating a recycling ecosystem with producers, importers and brand owners. Recently, guidelines have been issued in India mandating Extended Producer Responsibility (EPR) obligations, recycling, and use of recycled content with a defined timeline (these guidelines are covered in the Sustainability Section).

In January 2022, Food Safety and Standards Authority of India (FSSAI), issued a directive permitting use of rPET for food contact applications in both flexible and rigid packaging application. These changes will accelerate the usage of PET films with rPET content in flexible packaging.

PWMR mandates EPR obligations, recycling, and use of recycled content with a defined timeline. As per PWMR, Flexible plastic packaging of single layer or multilayer has been identified as ‘Category II’ item. Obligations for Different Categories under PWMR:

A. EPR Obligation – It is applicable for all the Categories

Category	Year	EPR Target
I	2021-22	25%
II	2022-23	70%
III	2023-24	100%

B. Recycling - Plastic to Plastic recycling obligations*

Plastic Packaging Category	2024-25	2025-26	2026-27	2027-28 and Onwards
Category I (Rigid Packaging)	50	60	70	80
Category II (Flexible Packaging)	30	40	50	60
Category III (Multi Layer packaging)	30	40	50	60
Category IV (Compostable packaging)**	50	60	70	80*

*Remaining EPR obligation can be met based on alternate use, energy etc.

**Category IV: Compostable packaging obligation implies processing plastic packaging waste for composting through industrial composting. EPR certificates are required from industrial composters.

C. Recycled content

Plastic Category	2025-26	2026-27	2027-28	2028-29 Onwards
Category I (Rigid Plastics)	30%	40%	50%	60%
Category II (Flexible Packaging)	10%	10%	20%	20%
Category III (Multi Layer Plastics)	5%	5%	10%	10%

Recycled Content Obligation is not applicable for Category IV (Compostable Plastic) and Category V (Biodegradable Plastic)

These regulatory actions provide an opportunity for companies to differentiate by addressing sustainability concerns. Accordingly, industry leaders across sectors have announced clear strategies to show their commitment to the environment – mostly by focusing on a higher share of recycled content, design change to make packaging more sustainable and reduce consumption of packaging material. Global consumer product companies have come out with their sustainability pledges which with regard to plastics, are centered around making their packaging recyclable, reusable or compostable, usage of recycled content, reduction in usage of unnecessary plastics and drive projects around circularity besides other objectives like reduction in water/fossil fuel-based energy usage, etc.

PPWR and PWMR aim to reinforce the essential requirements for packaging to ensure its reuse and recycling, boost the uptake of recycled content, and will promote growth of the RPET market as drop in solutions. In light of the above, each industry participant is challenged with both threats as well as opportunities. The Company strives to partner with all stakeholders in the value chain on sustainability developments. It represents the PET film industry at various national and International Industry Associations, the details of which are as below:

Industry Associations	Objective
PETCORE – Europe	PET Sustainability & Recycling
CEFLEX _Europe	Flexible packaging circular economy
BOPET FILM - Europe	PET film
PET Europe- Flake Injection Consortium	PCR PET Circularity
IFCA –India	Flexible packaging and folding carton

There is an ongoing debate as to whether mono polyolefin structures could be a solution to the need for recycling. MLP Laminates (mono material or multi material) can be down-cycled into low end products like pots, pans, chairs etc. besides some end-of-life applications such as usage in road construction and waste to energy (cement kiln and incineration). focus is now on full circularity through chemical recycling/ pyrolysis of MLP waste. Even if mono materials are used in flexible packaging, issues will largely remain the same with only very limited incremental applications as well as issues of collection, segregation/sorting, etc.

There is no existing stream to collect, sort and recycle mono-olefin MLP laminates for flexible packaging. Existing streams are only for rigid PE/PP and single layer unprinted PE/PP films for agriculture and secondary packaging applications such as shrink wrap. Unlike Olefins, where mechanical recycling leads to deterioration of properties and degraded components making it unsuitable for food grade flexible packaging and pharma applications, PET resin produced through mechanical recycling process can be used to produce BOPET films for such applications.

Given the inherent limitations of mechanical recycling, industry and governments are increasing acknowledging the necessity of chemical recycling to achieve true circularity. Further, LCA studies have established that chemical recycling has a significantly lower carbon footprint in comparison with fossil fuel-based polymer production for polymer like PET.

In conclusion, the entire issue of Sustainability w.r.t. flexible packaging can be encapsulated as under:

Rigid vs Flexible Packaging	The compelling benefits of flexible packaging would discourage the conversion back to rigids (glass/tin/foil/cardboard) in any material manner.
	The ongoing shift from rigids to flexibles is expected to continue, particularly in the developing world
PCR Content	BOPET films made from Post Consumer Recycled (PCR) PET Resin are the only commercially viable solution at present
	There is increasing visible momentum in the last few years for usage of rPET films
	This will also improve recovery rates for post-consumer PET bottles and likely initiate recycling of APET trays
Chemical Recycling	Chemical recycling is integral to any sustainable solution for post-consumer flexible packaging waste to ensure true circularity.
Mono Structure	Within the limitations on functionality, costs and likelihood of increased material usage, some formats may be shifted to Olefin based structure and some to PET-based
	However, there is no established collection, sorting and recycling streams for flexible packaging laminates
	Given contaminations of inks and adhesives only down cycling is possible with limited end use. However upcoming chemical recycling/pyrolysis can ensure full recyclability
Other Considerations	An effective collection and sorting infrastructure coupled with chemical-based recycling to recover feedstocks/monomer from MLP would provide a true ‘Circular’ solution
	Pledges by brand owners, technological developments and government actions would be an important consideration

Sustainable Products & Solutions Polyplex has successfully adopted the 5R (reduce, reuse, recycle, remove and renewable) concept while coming up with new-age packaging substrate solutions. It has taken various initiatives to recycle waste, save energy and use clean technology to reassert its environmental commitment and continually strives to manufacture sustainable products which can gain global acceptance.

Polyplex is aligning with the UN’s Sustainable Development Goals (SDGs) to better understand global challenges that need to be solved. We set a goal to align our innovation portfolio to meaningfully advance the UN SDGs and create value for our customers with minimal environmental impact and providing the highest standards of health and safety to the workforce.

As an organization, the Company continually strives to develop sustainable products and deliver more sustainable solutions to our customers. Polyplex has undertaken the following decisive initiatives in the realm of environmental conservation:

• Developed and optimized ‘chemical recycling’ process for manufacturing Sarafil rPET Polyester film with post-consumer recyclate content of upto 100% for packaging applications. The film has been made available commercially using post-consumer PET bottle flakes as input material. The rPET resin has properties same as that of virgin PET resin and the resultant PET film is compliant with regulatory requirements.

Product Compliance Certification: rPET (Chemical)

S. No. Location	ISCC Plus certification	Recycled Content Verification	US FDA	EFSA	Customer/Country Specific Requirements
		(RCV)			Recycled Claim Standard (RCS)	RECYCLASS	FSSAI (India)
1 PTL (Thailand)				*		-	-
2 PE (Turkey)				*	-	*	-
3 PU (USA)	*			-	-	-	-
4 PCL (India)	*			*	-	-	*
5 PFI (Indonesia)	*	*	*	*	-	-	-

*Under progress -Not Required

• Developed Monomeric PET film with high sealability for use in mono and multilayer packaging and other industrial applications. These monomeric range of PET films are recyclable and conform to the definition of circularity

• Developed various biodegradable films (PET, Blown PP/PE, CPP) which meet the requirements of anaerobic biodegradation either in accelerated landfill or high solids anaerobic conditions complying to ASTM D5511 & D5526 standards. These films are also compliant to current PWMR regulations of India.

• Transfer metallized films & paper and direct metallized paper for plastic free cartons which is 100% recyclable. Paper is considered a more environment-friendly substrate being bio-degradable and recyclable solution for many packaging applications. Metallized paper offers dramatic benefits over the use of foils and metallic inks on reduction of carbon foot print and is easily recyclable along with conventional paper or board. It is qualified as mono-material, so considered as environmentally sound compared to other available substrates for these applications. PCL India is FSC certified for specialty paper and transfer metallized paper products.

• Increasing focus on high potential sustainability related applications including Solar PV, liner for Lithium-ion Batteries etc.

• Thermoformable Films as a safer and environment friendly solution for replacement of PVC films

• Polyplex has promoted the use of bio-based renewable raw materials for the manufacture of polyester films

• Antimony free (heavy metal free) films

• High barrier metallized film for aluminum foil replacement suitable for milk, coffee segments

• Chlorine free transparent barrier PET film for see through and convenience packages

• Recycling of Silicone Liners, a step towards true circularity

• Dedicated recycling unit in Thailand which provides sustainable solutions (mechanical recycling) for both post-industrial film waste (difficult to recycle materials like silicone coated, printed, metallized etc.) and post-consumer waste polyester fiber waste, bottles as well as olefinic waste. A CircuLiner program for PET filmic liner waste has also been launched with some global companies to provide desired circular recycling solutions. EcoBlue rPET film is in compliant with US FDA 21, Regulation (EU) 10/2011, EU REACH Regulation (EC) No 197/2006 Article 33 (1), RoHS Annex II of 2011/65/EU and meet the requirements of Japan Regulations (JHOSPA) and GRS

• Digital printing offers high-quality graphics without the usage of solvents unlike conventional printing techniques such as Flexo and Rotogravure. With a lot of technologies available for digital printing itself, Polyplex has been able to develop products for most segments suitable for different digital technologies such as inkjet, dry toner, liquid electro-photography, etc.

• Conversion of general packaging laminate structures from 3 layers to 2 layers, which basically contributes to both source reduction as ^{well as CO}2 footprint reduction. With this idea in mind, Company now has a high barrier PE which is successfully being used in shampoo and detergent packaging where it is essentially converted a 3-layer structure to 2 layers

• Down-gauging of PET film has resulted in immediate environmental benefits through reduction of packaging weight

Sustainable Processes

• Operationalized latest technologies like Direct Melt Extrusion, Twin screw extrusion systems etc. to save power across plant locations which resulted in substantial improvements in terms of energy efficiency

• Reduced greenhouse gas generation by using husk-fired heaters at its Indian facilities

• Switched to LED lighting across plants

• Improve production and operational efficiencies to ensure optimal consumption of resources like electricity, water and raw materials

• Usage of solar power for renewable energy and cost optimization at its plants in Thailand, India, Turkey and Indonesia

• Limiting the impact on the environment by reducing emission levels, industrial waste and effluents coupled with measures for waste treatment and water conservation

• Improve safety and health standards by continuously improving working conditions, minimizing workplace hazards and raising awareness through involvement, participation and continuous training of the shop floor workforce

• Engaged with stakeholders to promote sustainable business practices

• Measure and monitor carbon footprint through LCA studies

The Company has been following best practices relating to the environment, health and safety and has been diligently following the guidelines that have been set out as per the following certifications:

Management System	India (Khatima)	India (Bazpur)	Thailand	Turkey	USA	Indonesia
International Standards
Quality Management	Certified since	Certified since	Certified since	Certified since	Certified since	Certified since
System	1996	2010	2003	2006	2018	2020
Environment	Certified since	Certified since	Certified since	Certified since	Certified since	Certified since
Management system	2002	2010	2004	2009	2018	2020
Occupational health & safety management system	Certified since 2004	Certified since 2012	Certified since 2008	Certified since 2009		Certified since 2020
Food Safety	Certified since	Certified since	Certified since	Certified since	Certified since	Certified since
Management System	2008	2012	2009	2006	2021	2021
Energy Management	Certified since	Certified since	Certified since	Certified since		Certified since
System	2013	2013	2023	2014		2021
Greenhouse Gas			Certified since
Emissions			2021

The Company’s Sustainability report for the year 2021-2023 as per the Global Reporting Initiative (GRI) standards is available on Company’s website. The objective of the Sustainability Report is to disclose its Environmental, Social and Governance (ESG) performance to the stakeholders and to set benchmarks for each sustainability indicator with improvement and intervention areas.

In recognition of its efforts, Polyplex Thailand has been awarded for the following awards:

• Esteemed title of ‘Green Innovation Award’ at the prestigious Asia Corporate Excellence & Sustainability Awards 2021

• Prime Minister’s Award for Innovation – Chemical Recycling in Thailand

• Best Public Company of 2021 – Industrial Group at Money & Banking Awards

• Thailand Greenhouse Gas Management Organization for complying with the standard requirements of GHG emissions

• Green Industry Level 3 (Green System) for systematic environment management with continuous monitoring respectively Additionally, our locations in Turkey, Thailand and India are awarded Eco Vadis CSR Awards for environment, labour & human rights, ethics and sustainable procurement. Eco Vadis assessment is under process for USA and Indonesia.

XVII. Corporate Social Responsibility

Corporate social responsibility has been an important part of the mission of the Company. The Company has been undertaking various initiatives to help communities in areas adjoining to its plants and improve the quality of life of its employees. The Company across all its locations make monetary as well as contributions in kind to Educational Institutes, NGOs, Hospitals, Rural Development projects and Government relief funds.

The Company has been running a school at its Khatima plant for the past almost three decades. The school provides 2,067 students with best-in-class educational facilities. Under a PPP model at Bazpur and Khatima, Polyplex has adopted two local schools and provides them with the necessary infrastructure. Polyplex also offers a slew of sports and educational sponsorships as well as full scholarships to the school-going children of deceased employees and have made contributions to various other schools/educational institutes in order to promote education and help contributing to a better society. Polyplex promotes religious harmony through its even-handed support to local religious activities and celebrations. Polyplex has also contributed to the Rekhta Foundation, which is a non-profit organization established to promote and disseminate literature and culture. In line with the requirements of Companies Act, 2013, the Company has also constituted a CSR Committee with a keen emphasis on delivering a positive impact across social, economic and environmental parameters. A detailed report on CSR expenditure is provided in the Directors’ Report section.

XVIII. Innovation

Polyplex leverages the concept of co-creation while working on various innovation and sustainability programs with its stakeholders – converters and brand owners from the value chain.

The Company owns 29 granted Patents spread across various products, processes and countries and an additional 10 applications have been filed. Further, ten trademarks have been registered.

Consumers have become highly demanding and are looking for more and more convenience features in packaging formats. ‘Reclosability’, ‘Easy to tear’, ‘Ready to Eat’, ‘see through’ and ‘Higher shelf life’ have become regular concepts in the packaging market.

Innovative Products

S. No	Applications	Substrate
. Products	Packaging
1 Holographic films	Brand protection, aesthetics, security and tamper evident	PET Film
2 Specialty-coated	Wet wipes (aesthetically pleasing packaging structures, natural and paper-like look )	PET Film
3 High barrier metallized	Aluminium foil replacement for coffee, milk powder packaging	PET Film
4 Susceptor film	Microwave food application	PET Film
5 High barrier AlOx	See through, transparent barrier for enhanced shelf life	PET Film
6 High performance thermo-formable	Thermo-formable lid for shallow draw lidding ,Kinder Joy	PET Film
7 Monomeric range with high heat seal strength	Monomeric laminate structure (Mono PET Recyclable)	PET Film
8 Cold formable film	Pharma blister	PET Film
9 Bio-degradable film	Food packaging	PET Film
10 rPET range (100% PCR)	Food contact packaging	rPET Film
11 Anti-Fog heat sealable	Food packaging overwrap	BOPP Film
12 Ultra-High barrier metallized	Replacement for Barrier PET & aluminium foil	BOPP Film
13 Matte finish	Snack packaging (natural paper look)	BOPP Film
14 Specialized Overwrap	Cigarette pack overwraps	BOPP Film
15 Pearlized white (Low Density)	Ice-cream packaging	BOPP Film
16 High performance blown retort	Ready to eat and ready to cook foods	Blown PP Film
17 Specialized papers like Holographic and silver metallized paper	Tobacco packaging	Paper
18 Heat sealable barrier paper	Plastic free bio-degradable for food packaging Industrial	Paper
1 Inline siliconized	Release liner for label, electronics, EV applications	PET Film
2 Film for Lithium Ion Battery (LIB)	Pouch Cell for Lithium Ion Battery (LIB) in EV applications	PET Film
3 Specialized back-sheet films	Back Sheet for Solar Panel	PET Film
4 Low Metallized	Electronic component packaging	PET Film
5 Anti-fog	Face Shield applications	PET Film
6 Eco Friendly (Heavy Metal Free)	Battery labels	PET Film
7 VIF/TIF embossed PE films	Agriculture Mulch Film	Blown PE Film
8 CPP Films for medical applications	Surgical tools packaging	CPP Film
	Label
1 Label face film	Durable label face film for transport, automobile, pharma, appliances, lawn fertilizer, medicals etc	PET Film
2 High Shrink	Shrink Sleeve labels for bottles and jars	PET Film
3 Pearlized white (Low density)	Wrap around labels	BOPP Film
4 Label face film (White opaque, transparent, silver)	Cosmetics, pharma, food containers made with HDPE & PP bottles	Blown PE Film
5 Specialized papers like Holographic and silver metallized paper	Labels for Liquor, ketchup, pharma etc	Paper
	Digital
1 Digital printable films	Various printing applications	PET Film
2 Digital films (HP Indigo, Laser, Inkjet, UV)	Photo albums, tags, certificates, promotional leaflet, banners, backlit etc.	PET Film
3 Synthetic paper for commercial segments	Brochures, menus, door handles Thermal	PET/BOPP Film
1 Specialty-coated thermal films	Documents & certificates lamination, carton lamination	PET/BOPP Film

XIX. Human Resources

Polyplex Group employs over ~2750 people across the globe. The Company closely monitors employee performance and accordingly creates career progression paths. Greater emphasis has been given to the following initiatives:

• Internal Growth and Development: Expansion in multiple geographies/product categories has resulted in the team stepping into leadership roles organically

• Retention of Key Employees: The leadership retention scheme has been broad based to include many future leaders. Over the last few years, there is little or no attrition at the leadership level. The Company strongly believes in managing operations through a stable management team

• Localization: There is greater emphasis on developing and promoting local leaders having potential to deliver by providing more opportunities of learning and growth. This has positively impacted the morale and participation of local employees in improvement initiatives and programs. Attrition rate at managerial level at all the units is also minimal

• Performance Management System: Special emphasis has been given to improve the robustness of performance feedback across the hierarchy

• Employee Welfare and Engagement: The Company believes in having strong institutionalized employee engagement schemes/programs specially designed to meet the aspirations of local environment, culture and social practices. The attempt is to promote the health of all employees holistically. Physical, mental, emotional and spiritual health of employees is monitored to ensure higher engagement. Employee engagement and employee welfare schemes continue to play its pivotal role in improving employee bonding. Polyplex has more than 50 structured and institutionalized employee engagement/welfare schemes covering employees at all plants and head office

• Diversity and Inclusiveness: To promote diversity and inclusiveness, conscious efforts are made through participative management

• Employee-related Insurance Cover: The Company has well-established medical insurance policies for employees and their families. The Company also takes accidental insurance and term life insurance for its employees. This has helped the family of many employees in case of unforeseen situations.

• Healthy IR Situation: Overall IR situation in all the plants is healthy. Employees participate in decision making process through employee welfare committees. Polyplex has not lost a single day of production since inception due to labor strike

• Growth Opportunities: Business growth opportunities, integration of functions to reduce managers/supervisors, delayering of structures, positions opening up due to employees leaving at senior level being filled up by growing people from within has helped provide opportunities on one hand and rationalization of cost on the other hand. In order to fill the positions emerging out of resignation, a pool of resources is hired at the entry-level and developed through structured development programs.

• Systems and Process Institutionalizations:

Polyplex believes in institutionalized mechanism of managing all the benefits related to human resources. Employees have full access to these documents in HR portal (HRIS) for their ready reference

• Hiring of Future Leaders: The Company continues to employ graduates from various premier institutions of the country. This initiative, over the last five years, has helped young engineers and management professionals take up middle level leadership positions. Under this program, they are given direct exposure through structured role change for faster and all-round growth. This has helped in improving the available talent pipeline and employee retention

• Training & Skill Development: People Development Cell set up to identify function-specific classroom/ on the job training needs of the employees

• Caring Culture: Care is one of the four core values of Polyplex’s value system. Polyplex believes in the holistic development of our employees. Focus is on developing a culture to Attract, Develop and Retain Employees

• Long-serving Employees: To appreciate the contribution of long serving employees, following initiatives have been taken during last financial year:

– Direct family members of employees are given opportunity of employment

– Employees at operating level are given growth to play larger role at the plants

XX. Information Technology

During the year under review, the Company continued to implement IT enablement initiatives for improving and optimizing business processes. The new application platform has been successfully running in three locations. The roll out at another unit has been completed and is live since April 2024.

The Company is working on improvement programs in the IT applications and communication infrastructure supporting the business operations. The Company continues to invest in upgrading older networks and infrastructure components to contemporary standards with secured infrastructure. The Managed Detection and Response (MDR) system has also been deployed during the year under review to strengthen cyber security practices.

XXI. Risk Management

Risk management is a central part of the Company’s strategic management. It is the process whereby the Company addresses the risks attached to its activities with the goal of achieving sustained benefit within each activity and across the portfolio of all activities. The focus of good risk management is the identification and treatment of these risks and to add maximum sustainable value to all the activities of the organization, thus optimizing operational efficiency. Effective risk management ensures continuity of the Company’s operations and protection of the interests of its stakeholders.

The Company has a Board-approved ‘Risk Management Policy’ in compliance with Regulation 21 and Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") and provisions of the Companies Act, 2013 ("the Act"), which requires the Company to lay down procedures about risk assessment and risk minimization.

Objective of the Policy

• To enable visibility and oversight of Board on risk management system and material risk exposure of the Company

• To define and document the risk management methodology

• To improve decision making, planning & prioritization by comprehensive and structured understanding of risks faced by the Company The Company’s risk management program comprises of a series of processes, structures and guidelines which assist the Company to identify, assess, monitor and manage its business risk, including any material changes to its risk profile. To achieve this, the Company has clearly defined the responsibility and authority of the Company’s Risk Management Committee, to oversee and manage the risk management program, while conferring responsibility and authority on the Company’s Chief Risk Officer and senior management/ business managers to develop and maintain the risk management program in light of the day-to-day needs of the Company. Regular communication and review of risk management practice provides the Company with important checks and balances to ensure the efficacy of its risk management program and to promote a strong risk culture. The risk management program is regularly reviewed by the Committee and their recommendations are incorporated by the Company.

Competition and Business Cycle Risk

The industry margins in standard thin PET films hinge on Value Addition ‘VA’ i.e. the difference between PET film prices and raw material (PTA and MEG) prices. Whenever the demand-supply balance favors the suppliers, VA usually widens and thereby encourages manufacturers to increase production by expanding capacities. On the contrary, if PET film supply exceeds market demand, prices drop, thereby narrowing the gap. This inevitably affects every producer’s revenue and profit, though the impact varies considerably depending upon the product mix, market positioning and other factors. Similar factors are at play for the BOPP and CPP films business also.

Risk Mitigation

Polyplex is well placed to counter the adverse effect of any exposure we may have to business volatility risk due to our inherent strengths:

• Capability to diversify the risk given its fragmented and well spread customer base, diversified product portfolio and applications, evenly distributed sales mix and fully integrated operations

• Downstream businesses like Saralam, Saracote, OLC, Holography, TMP etc. usually help in stabilizing the overall margins as for many products, the end pricing remains largely stable

• Another key point is the significant and consistently higher material margins in Europe and North America markets as compared to Asia for the standard product, which the operations in Turkey and USA are able to leverage upon. The European and North American markets have high dependency on imports and logistics/duty differentials play a large role in the pricing differences besides premium for local players, faster deliveries, smaller delivery lots, etc. The European market has become more balanced now given new capacities added in the region

• Judicious share of raw material linked sales helps in generating stable margins

• Strengthening of D-PAC (Differentiated Product, Application and Customer) portfolio drives Polyplex’s rights to win in a competitive Industry. It helps the Company de-risk earnings. Focus is on constant addition of new products to the differentiated portfolio, effectively ‘replacing’ older and standard products

Increasing contribution of D-PAC sales over the period:¹

1 The contribution from D-PAC sales to the overall EBITDA represents "incremental" margin over and above standard products net of additional costs (raw materials, differential productivity, wastages and conversion costs). As an illustration, if standard film price is 100, D-PAC product price is 200 and additional cost is 30, then the resulting incremental margin would be 70;

The below graph demonstrates the superior and relatively more stable VA of Polyplex on a consistent basis, as compared with the Industry benchmark margin (China) for standard Thin BOPET films.

It may also be observed that the variability in VA across quarters is much more than the yearly averages due to many other factors like: a) Seasonality impact (Chinese New Year holidays for Asia, July/Aug due to vacation period for European operations, Christmas/New Year for US operations etc) b) Sharp Raw material price movements whereby selling prices for standard products take between 1-3 months to adjust c) Start-up of new capacity can impact the regional pricing for the first couple of quarters before stabilizing d) Additionally, sharp movement in FX rates and/ or freight rates can also impact the short-term VA given the existing order book and lag in pricing adjustments.

Price Volatility Risk

The basic raw material for production of PET film is PET resin, which in turn is produced from PTA and MEG. Being components of the petro-chemical chain, the prices of PTA and MEG are impacted by Global crude oil prices, apart from demand-supply within its own industry. The cost of resin is the single-largest component of the total production costs. Hence, any adverse fluctuations in the cost of PET resin can impact the Company’s operating margins depending upon the Company’s ability to pass on cost increases to its customers. As selling prices are usually negotiated on a monthly/ quarterly basis, in a balanced demand supply situation, the Company is able to adjust the selling prices following any changes in PET resin costs and other operating costs, although this happens usually with a time lag varying between one to three months depending on the region and prevailing demand supply conditions. The margins on the D-PAC products tend to be more stable and even counter-cyclical

Risk Mitigation

The following graph illustrates the influence of crude oil prices on the raw material costs and consequently the selling prices of BOPET film, and also establishes the low co-relation between Crude Oil and Industry benchmark (China) value additions.

As can be seen above, crude oil prices have an important bearing on PTA & MEG melt cost and is directly proportional. Raw material movements tend to be ‘pass through’ in film prices. However, the value addition of the PET film industry (12-micron standard film) is more influenced by the industry demand-supply scenario rather than the crude or melt cost. As can be seen from the chart above, the impact of capacity additions is significant in China, as Chinese players have typically focused only on the domestic market and select SEA markets with standard products only. The Company’s geographical and product diversification helps in sustaining pricing/margins much better than other participants. The prices of downstream products like silicone-coating, extrusion-coating, holography and other specialty/D-PAC films are less susceptible to changes in raw material prices and thus reduce the Company’s vulnerability in the face of volatile resin costs.

Further, Asia is a dominant player in PTA as well as MEG thus affecting prices of these key raw materials globally. Having raw material prices aligned to Asia is important from two reasons - 1) these affect raw material prices (including resin) for players in different regions and 2) raw material cost of Asian film producers would be linked to Asian indices. Polyplex has followed a strategy whereby the raw material sourced by different units have some sort of linkage to Asian prices to be aligned to other competitors. The Company monitors global and local input price trends carefully and determines its procurement plans accordingly. Moreover, unpredictable price movements of raw materials affect all industry participants and thus does not put Polyplex in a materially advantageous or disadvantageous position vis-?-vis its competitors.

Trade Defense Risk

Trade defense measures (Anti-dumping duties, countervailing duties, safeguard measures etc.) are imposed to protect local producers against unfairly traded or subsidized imports. Anti-dumping duties are imposed on imports if the ex-factory prices of such imported products are proved to be lower than the local selling prices of similar products in the respective exporting country or if the product is being sold below cost. Countervailing duties are tariffs levied on imported products to offset the impact of subsidies applicable for exporters in those nations. Such tariff measures increase prices of imported products, usually rendering exporters uncompetitive and thus protecting the domestic industry.

PET Film: International trade in PET film has been subject to trade defense measures for more than three decades through the imposition of anti-dumping duties and countervailing duties. The important markets adopting this measure are the EU, the US, Korea, Indonesia, Turkey and Brazil. Since the occurrence of COVID-19, Turkey has imposed additional custom duty (40% till 31st Dec 2020 and thereafter 10%) on all countries with the following exceptions:

• Not applicable on those with FTA’s and Custom Union

• UAE – 8.2%

• Pakistan – Nil

Additionally, in Turkey there is a minimum import price for all custom duties (Basic, Additional & CVD) and VAT which is USD 3.0/kg and there is no credit for differential VAT, thus leading to effectively much higher duty rates.

Risk Mitigation

Polyplex has an advantage in key target markets. Owing to its global manufacturing presence, it can minimize duty incidence thereby achieving most competitive delivered cost for customers.

Polyplex’s Relative Advantage in Key Markets for Select BOPET Films

Importing	Lower Duty Countries	Medium Duty Countries	Higher Duty Countries
				Polyplex Advantage
Country	(0%-5%)	(5%-10%)	(10%+)
Indonesia		Thailand/1 supplier of China	Rest of China, India	- Local Producer
South Korea	Indonesia, Thailand	Pakistan	India, China, UAE	- No duty from Indonesia
				- Lowest duty from Thailand
Turkey	Egypt, Poland, Hungary,		India, Bahrain, Peru,	- Local Producer
	Pakistan		China

Importing	Lower Duty Countries	Medium Duty Countries	Higher Duty Countries
				Polyplex Advantage
Country	(0%-5%)	(5%-10%)	(10%+)
USA	GSP (0%)## - Indonesia,	India (Select producers)	India, China	- Onshore
	Pakistan, Nigeria			- GSP from Indonesia##
	FTA - Bahrain, Peru, Columbia, South Korea			- AD/CVD rates for PCL amongst the lowest
	Normal (4.2%) - Thailand, Turkey
Brazil*	Peru, Columbia	Thailand, Indonesia,	India, China, Egypt, UAE,	Thailand, Turkey and
		Pakistan, Turkey	Bahrain	Indonesia with no ADD
EU	0% - Turkey, Pakistan, Egypt,	China, Thailand, Columbia, India**		Duty free access from Turkey,
	GSP (3%) - Indonesia			GSP from Indonesia
Thailand	Indonesia, China	India, UAE		- Local producer
				- No duty from Indonesia
Japan	Indonesia, Thailand, India, Pakistan	China		- Multiple Locations with zero duty
				- Incumbent supplier position

*Since ADD rate is in US$/Kg, categorization has been done considering relative duty rates

## Currently Suspended since Jan 2021

**Suspension of GSP concessions for India covering Chapter 39 products entirely (PET, BOPP and PET Resins) effective 01st Jan 2023

The Company undertakes the required steps to insulate itself against risks arising out of any such anti-dumping actions and other trade barriers imposed by importing countries. A well-diversified manufacturing presence and an end-to-end product portfolio also helps mitigate fallout from such actions. As a local producer in many countries, it is also evaluating actions for protection against unfairly traded or subsidized imports from other countries.

BOPP Film: The key markets imposing trade defense measures on imports of BOPP films are Indonesia, Thailand, Vietnam, Turkey and Korea. Our existing operations in India for BOPP film are not subject to these trade defense measures. The brownfield expansion in Indonesia for BOPP film which was started in FY 21-22 is subject to Anti-Dumping duties on exports to Korea and Thailand. On the other hand, the Indonesian market is protected against imports from other key exporting countries like Thailand and Vietnam. In Turkey, safeguard measures are in place on imports from Iran and a new AD investigation has been initiated in February 2024 against imports from China, Egypt and Russia.

PET Film Resin: In case of PET film resin, there are not many trade defense measures across the globe except the safeguard duties imposed by Turkey on imports from all countries.

PTA: Earlier there were AD duties on imports of PTA in India from countries like Thailand, Korea, China, Indonesia, Malaysia, Taiwan and Iran but effective February 2020, these duties have been revoked as PTA has been designated as a critical input for textile fibers and yarn. MEG: Effective June 2021, anti-dumping duties have been imposed on USA and Saudi Arabia origin MEG by the EU for five years.

Internal Controls

Strong internal controls are required to provide assurance regarding the accurate recording of all transactions, safeguarding of assets, effective and efficient use of the Company’s resources, and compliance with applicable laws and regulations.

Risk Mitigation

The Company has established a robust Internal Financial Control (IFC) system, which is in line with the requirement of the Companies Act 2013. Risk and Control Matrix (RCM) has been prepared for all the key processes and business transactions. The Design and operating effectiveness of control matrix is tested by Corporate Internal Audit Team every year to ensure compliance with IFC framework of the Company.

The Company places great importance on designing and maintaining a strong internal control system which is commensurate with the size of its business comprising various levels of authorization, supervision, checks and balances through standard operating procedures (SOPs), delegation of authority (DOA) matrix, policy guidelines, and manuals. The Company has a dedicated Internal Audit department that operates independently. To further strengthen the Internal Audit function, the Company has engaged external firms to conduct comprehensive reviews alongside the internal audit team of the Company. The Internal audit team develops a comprehensive risk-based annual audit programme which is approved by the Audit Committee. The Audit Committee also reviews compliance with the said plan.

Internal Audit function prepares a report for each audit undertaken and submits it to the management for discussion. The Corporate Internal Audit team ensures regular follow-up with the concerned process owners to ensure the timely implementation of agreed-upon action plans and further strengthening of controls. Significant audit observations and corrective action suggested are presented to the Audit Committee. The Company has a robust ERP system with in-built IT controls for all major business processes. The transactions are executed through ERP setups to ensure reliable and timely financial reporting. IT controls are also tested by internal and external audit teams during audits. The Company regularly updates its ERP system. The Company remains committed to ensuring an effective internal control environment that provides assurance to the Board of Directors, Audit Committee, Management and protects the interest of all stakeholders.

Cyber Risk

Cyber risk refers to the losses related to phishing attacks, malware, social engineering, data breach, cyber extortion, ransomware, business interruption resulting from cyber events etc. As Polyplex has operations in multiple countries with global customer base, there is a need to contain the impact of potential cyber-security events and losses through criminal activities. Also, with increasing dependence on digitization, the probability of cyber/crime event increases.

Risk Mitigation

The Company has a comprehensive Corporate IT policy and procedures in place which are continuously updated. IT Reviews are generally done with the help of external agency. There is a shift in the focus towards proactive security monitoring from reactive monitoring. A Managed Detection and Response (MDR) system has been deployed during the year to strengthen cyber security practices. We ensure that firewalls of contemporary standards are upgraded at all external connectivity points with additional security components. Repeat communications, one-on-one user awareness sessions, global/focused password reset exercises are held regularly. In the case of Data Privacy matters, the policies and procedures have been updated in line with respective regulations. We continue to monitor regulatory changes and comply with the requirements. We also have Cyber & Crime Insurance in place to take care of any extreme losses.

Liquidity and Solvency Risk

Liquidity implies the ability to meet debt obligations and finance future investments. Generally, if the cost of debt is lower than the return on investments, by increasing the financial leverage, a corporate can enhance return on equity. However, since there is an obligation to make fixed interest and principal repayments, volatile cash flows could strain the liquidity of a corporate. Also, higher debts could limit the ability to finance further investments.

Risk Mitigation

The Company has sufficient cash reserves significantly exceeding the level of debt. Cash and equivalents together with undrawn credit lines (excluding project financing) and liquid investments (current and non-current) aggregated to more than H_ 230,808 Lakh. The Company has been able to maintain healthy cash balances inspite of dividend payments and Capex. Free cash flows along with large unutilized credit lines available at Polyplex’s disposal are expected to be quite adequate to manage various ongoing expansions and to deal with any unforeseen contingencies. Accelerating cashflow generation with low gearing showcases potential for exponential self-sustaining growth.

Exchange Rate and Interest Rate Risk

FX risks arise on account of unanticipated changes in exchange rates. As the Company deals in multiple currencies due to its operations across different locations, the Company is exposed to risks on account of currency mismatches. Interest rate risk is the risk borne by interest bearing debt and investments due to variability in interest rates. In case of financing done at floating rates, as the interest rates change, cost of borrowing also changes, thus impacting the cash flows. The year under review has seen increase in interest rates globally arising from inflationary pressures thus impacting the cost of borrowings as well as the Investment income.

Risk Mitigation

Since the currency markets are highly volatile, the Company minimizes such risks by adopting a consistent hedging strategy. A natural hedge is created by choosing the right currencies for taking loans. Thus, the Company fixes the currency of the liability in order to match with the currency of operational surplus. The remaining mismatched exposures are optimized by the Company by carefully identifying, measuring, monitoring and hedging the net exposures by using simple instruments like forwards with a 3-month rolling time horizon. This ensures that the maximum potential loss remains within defined limits. As there is a natural hedge available for most of the long-term borrowings, the Company does not cover the exchange rate risk on these liabilities. Therefore, the foreign exchange translation gain/loss on these liabilities, as reported in the financial statements, may not have a corresponding impact on the cash flows of the Company as the payments for these loans are met via future receivables in the same currency. The forex risk is managed on a standalone basis as cash flows are not freely transferable between Group entities. The currencies used for external borrowing by the Company are US Dollar, Euro, INR and THB. Depending on the net FX surplus on a standalone basis, the currency for external borrowings is chosen. As of March 31, 2024, majority of the long-term external borrowings were in Polyplex Indonesia and Polyplex USA which is in USD. Apart from this, there are related party borrowings in Thailand, Indonesia and the US which are in Euros. Any spike in EUR & USD value against the local currency has a negative impact on loan liabilities. But, as the impact of USD & EUR is generally offsetting in nature, the net MTM impact is minimal. Also, as majority of the Company’s exports are denominated in USD and EUR, the impact on the Company’s cash flow is minimized.

The structural currency for the business is USD, even where the invoicing is done in local currencies (EUR, THB, INR, IDR). Given USD forms the basis for raw material costs (the key cost component) as well as sales (more than 50%), cash flows are not exposed to any significant currency risk.

During the year, Turkish Lira (YTL) has seen its value losing significantly against USD and EUR. However, as the exposure of Polyplex Turkey in YTL is minimal, the impact of currency depreciation is low.

There are various reasons for interest rate changes like economic growth, inflation expectations and unemployment, among others. All these factors are external and uncontrollable. In order to have a more balanced loan portfolio and considering the cost benefit analysis, the Company continuously evaluates shifting some of its floating rate debt to fixed rate. The Company has also prepaid some of the long-term loans in order to minimize the impact of higher interest cost. Moreover, as the Company is net cash positive, the impact of interest rate hike across the globe is minimal.

Credit Risk

Credit risk refers to the risk of non-payment by debtors. This risk increases in the case of unsecured or open payment terms. As the Company caters to customers globally spanning across ~85 countries, managing the credit risk becomes essential. In the current scenario whereby, many countries are facing political crisis, the risk of defaults are high.

Risk Mitigation

The Company has a well-defined and robust internal credit management system to monitor unsecured sales. The Company also has a global credit insurance cover to secure non-payment risks of customers. During FY 23-24, the Company had 2,675 customers (including the customers serviced by a large distributor) and 26% of the total revenues were contributed by the top 10 customers. A strong internal credit risk management framework and credit insurance policy has enabled Polyplex to manage credit risk prudently. The average credit period during FY 23-24 stood at 56 days as compared to 44 days in FY 22-23. With a strong credit risk management system and strong relationship with customers, Company has been able to mitigate the risk of default and is confident of doing so in the future as well.

Project Implementation Risk

Any delay in implementation, cost overrun, inability to stabilize production from the new investment and failure to meet the target investment objectives may significantly affect future profitability. Although the Company takes into consideration various regulatory aspects at the project feasibility stage, subsequent changes during the implementation phase may lead to project delays.

Risk Mitigation

The risks are mitigated by forming a dedicated project management team, corporate management oversight, management commitment and suitable protection clauses in contractual arrangements and appropriate insurance products. The Company remains confident of successful implementation of new projects on time and within budgeted costs except for unforeseen circumstances. There have been some minor delays in the startup of some of the smaller projects due to a variety of factors including COVID-related.

The ongoing Brownfield Thin BOPET Film project at the USA subsidiary is currently the only project under implementation. Due to the ongoing inflationary pressures, there has been an increase in the project cost and significant delays in the startup, primarily due to unexpected deferment in delivery of key equipment coupled with longer construction duration. However, on account of its strong financial profile, the Company is able to retain the cost increase/time delays with minimal impact on project feasibility.

Geopolitical Risk

Geopolitical risk is about relations between nations – at the political, economic, military, and cultural/ ideological level. Risk conventionally occurs when status quos are threatened. Russia’s invasion of Ukraine is the largest, most dangerous military mobilization in Europe since WWII. Another major geopolitical event which occurred during the year under review was the Israel-Palestine War.

Risk Mitigation

Sanctions have been imposed by various countries on Russia and Belarus but the commercial import/export activities of Polyplex with Russia and Belarus is not within the scope of the prohibited transactions. Though Polyplex has stopped all sales to Russia since the start of the war, the impact on our overall sales is marginal as most of the sales are to multinational companies who have developed alternate sourcing options. In case of Ukraine, risk is minimized through sales on advance basis. In case of Israel, our exposure is minimal and is covered under insurance.

The installed capacity of base films as well as downstream units is quite evenly spread out among the five manufacturing country locations of India, Thailand, Turkey, Indonesia and the US. Though some political and economic problems have been faced in Thailand and Turkey from time to time, there has not been any significant effect on business activities. The Turkey operations are well placed to sustain any impact in the short-term arising from its location in a Free Trade Zone, high export orientation, and other mitigating steps undertaken. No adverse long-term impact is envisaged.

Supply Chain Disruption

The pandemic has resulted in increasing sea freight rates and global container and vessel shortages. It started softening during the year under review but then the Red Sea crisis has again adversely impacted the sea freight rates. This led to risk aversion towards concentrated supply chains and trend towards de-globalization, thus, bringing out the advantages of local sourcing both for costs and supply security

Risk Mitigation

Our geographically diversified manufacturing presence and business model has helped us mitigate the supply chain risks and navigate relatively smoothly through the challenge. Leveraging on our local presence in all the key demand centers, we have been able to establish ourselves as a dependable partner to all our key customers, even in the time of uncertainty. Based on a clear shift in customer preference to local supplies over imports, we have been able to demonstrate the effectiveness of our strategy. The Company shall continue to reap the benefit of a seamless and reliable supply chain through a judicious mix of onshore, nearshore manufacturing and imports.

RM is mostly procuring from local suppliers and there has been no major impact of the supply chain disruption.

Regulatory Risk

Regulatory compliance is a key consideration for the BOPET industry. In order to ensure the safety of food that is packaged and consumed, extensive regulations have been put in place by various regulatory bodies like the USFDA, the EC, among others.

Risk Mitigation

The Company stringently conforms to the relevant USFDA and EC directives for food packaging applications. Environmental and sustainability risk (please see section on Sustainability also)

Governments around the globe are playing a more active role in setting out expectations and targets on the sustainability front. Government policies are being designed to better manage waste through several mechanisms including Extended producer responsibility guidelines and imposition of various taxes.

Risk Mitigation

Flexible packaging is environment friendly compared to traditional rigid forms of packaging owing to its lower carbon footprint, light weight and lower requirement of landfill. The amendment to the PWMR in India has significantly diluted the threat to MLP as it provides for an exemption for material which is recyclable or provides for energy recovery or an alternative use. The government actions provide an opportunity for companies to differentiate by addressing sustainability concerns and will promote the growth of the rPET films. There is increasing recognition among policy makers and other stakeholders that the functional properties of flexible packaging are unmatched and alternative options are not suitable. Governments and Industry are focusing on developing economic models for collection, sorting and reuse/recycling of post-consumer plastic waste. There is an increasing trend towards identifying EPR measures to fund such initiatives and more emphasis is on alternate use of multilayer packaging waste The industry is also working on multiple fronts to provide sustainable solutions such as:

• Higher rPET content in packaging

• Single substrate packaging solutions

• Higher Bio content or Bio sourced solutions

• Several alternative usages of plastic waste are being pursued like conversion to fuel oil, incineration, road construction etc.

Cautionary Statement

This report contains forward-looking statements which may be identified by their use of words like ‘plans,’ ‘expects,’ ‘will,’ ‘anticipates,’ ‘intends,’ ‘projects,’ ‘estimates’ or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, market position, expenditures and financial results are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized.

Directors’ Report

Dear Members,

Your Directors have pleasure in presenting the Thirty-ninth Annual Report together with Audited Standalone and Consolidated Financial Statements for the financial year ended March 31, 2024.

Financial Highlights and Operations

During the year under review working results of the Company were as under: a) Standalone Working Results:

(I in Lakh)

Particulars	2023-24	2022-23
Total Income (Revenue from operations and other income)	1,45,131	1,90,503
Profit before Finance Cost, Depreciation and Amortization, Tax and Exceptional Item	3,585	37,012
Less: Finance Costs	338	71
Less: Depreciation and Amortization	4,605	4,792
Profit before Tax and Exceptional Item	(1,358)	32,149
Add: Exceptional Item – Gain/ (Loss)	-	-
Profit before Tax but after Exceptional Item	(1,358)	32,149
Less: Tax expense and prior period adjustment	(453)	2,686
Profit after Tax (PAT)	(905)	29,463
Other Comprehensive Income	(74)	53
Total Comprehensive Income for the period	(979)	29,516

b) Consolidated Working Results:

(I in Lakh)

Particulars	2023-24	2022-23
Total Income (Revenue from operations and other income)	6,36,713	7,74,746
Profit before Finance Cost, Depreciation, Amortization and Tax and Exceptional Item	42,541	1,04,236
Less: Finance Costs	4,237	3,526
Less: Depreciation and Amortization	30,713	29,628
Profit before Tax and Exceptional Item	7,591	71,082
Add: Exceptional Item – Gain/(Loss)		-
Profit before tax but after Exceptional Item	7,591	71,082
Less/(Add):Tax expense and prior period adjustment	(1,048)	9,528
Profit after Tax (PAT)	8,639	61,554
Other Comprehensive Income	390	26,064
Total Comprehensive Income	9,029	87,618
Total Comprehensive Income attributable to owner of the parent	4,388	49,930
Total Comprehensive Income attributable to Non- Controlling Interest	4,641	37,688
Earnings Per Share (of H10/- each) (Basic & Diluted) (in Rupees)	12.05	110.97

Year in Retrospect a) On Standalone basis

During tRse year under review, Company earned total income of RS 1,45,131 LakRs as compared to Rs 1,90,503 LakRs during tRse previous year on Standalone basis, including income by way of dividend from subsidiary(ies) amounting to RS1,595

LakRs (Previous Year - RS23,193 LakRs). TRsere was a loss of RS1,358 LakRs as compared to Profit of RS32,149 LakRs during tRse previous year. TRse loss after tax for tRse year was RS905 LakRs as compared to profit of RS29,463 LakRs during tRse previous year. b) On Consolidated basis

During tRse year under review, Company earned total income of RS6,36,713 LakRs as compared to RS7,74,746 LakRs during tRse previous year on Consolidated basis. Profit before Tax stood at RS7,591 LakRs as compared to RS 71,082 LakRs during tRse previous year. Profit after Tax was RS8,639 LakRs as compared to RS61,554 LakRs during tRse previous year.

Dividend

Your Board of Directors ("TRse Board") Rsas declared and paid an Interim dividend at tRse rate of RS2/- per sRsare (Record Date: November 18, 2023) during tRse year.

TRse Board Rsas also proposed payment of Final Dividend at tRse rate of Re. 1/- per sRsare, wRsicRs would be paid after its declaration by tRse Members at tRse ensuing Annual General Meeting.

Cumulatively, tRse Board Rsas declared/proposed total dividend of RS3/- per sRsare for tRse year under review. For tRse previous Financial Year 2022-23, tRse Company paid Interim Dividend (First) @ RS55/- per sRsare, Interim Dividend (Second) @ RS 30/- per sRsare and Final Dividend @ RS3/- per share, cumulatively totalling to H88/- per share.

Dividend Distribution Policy

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 (‘the Listing Regulations’), the Board has formulated and adopted the Dividend Distribution Policy. As per the Dividend Distribution Policy, the Board endeavours to ensure transparency in deciding the quantum of dividend and commit a dividend pay-out upto 20% of Profits After Tax (PAT) on consolidated financials of the Company. The Board while taking decision for recommendation of the dividend takes guidance from this policy and ensures to maintain a consistent approach to dividend pay-out plans. The Dividend Distribution Policy is available on the Company’s website at the following link https://www.polyplex.com/investors.

Transfer to Reserves

In view of the loss incurred by the Company during the current year no amount has been transferred to General Reserves. (Previous Year - H 250.00 Lakh)

Changes in the nature of business, if any

There is no change in the nature of business of your Company during the year under review.

Management Discussion and Analysis Report

As required under Regulation 34 read with Para B of Schedule V of The Listing Regulations, a detailed ‘Management Discussion and Analysis Report’ (MDA) is attached in a separate section forming part of the Annual Report.

More details on operations and views on the outlook for the current year are also given in the MDA.

Subsidiary Companies

During the year Company had following subsidiaries/ step-down subsidiaries whose performance/ results are included in the Consolidated Financial Statements: a) Polyplex (Thailand)_Public Company_Limited, Thailand; b) EcoBlue Limited, Thailand c) Polyplex (Asia) Pte. Ltd., Singapore d) Polyplex (Singapore) Pte. Ltd., Singapore e) Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi, Turkey f) Polyplex Paketleme Cozumleri Sanayi Ve Tickaret Anonim Sirketi, Turkey g) Polyplex Europe B.V., Netherlands h) PAR LLC., USA i) Polyplex America Holdings Inc., USA j) Polyplex USA LLC., USA k) PT Polyplex Films Indonesia, Indonesia, Highlights of the performance of Subsidiary Companies and their contribution to the overall performance of the Company during the period under report are discussed in MDA which forms part of the Annual Report.

As required by Section 129 of the Companies Act, 2013, (‘the Act’) and other applicable laws Consolidated Financial Statements of the Company and its subsidiaries are prepared in accordance with applicable Indian Accounting Standards (Ind-AS) issued by Institute of Chartered Accountants of India, form part of the Annual Report.

As required by Section 129 (3) of the Act, a Statement in Form AOC-1 containing the salient features of financial statements of the Company’s subsidiaries is attached and forms part of this report.

Further, pursuant to the provisions of Section 136 of the Act read with the Listing Regulations the financial statements of the Company alongwith related information and audited financial statements of subsidiaries are available on the Company’s website link https://www.polyplex.com/ investors.

The Company will make available the annual financial statements of the subsidiary company(ies) to any member of the company on receipt of written request.

The annual financial statements of the subsidiary company(ies) will also be kept open for inspection at the Registered Office of the Company on any working day during business hours for a period of twenty-one days before the date of the meeting.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the respective notes to Financial Statements.

Deposits from public

The Company has not accepted any deposits from public during the financial year 2023-24. There were no unclaimed deposits as at March 31, 2024.

Directors’ Responsibility Statement

As required under Section 134(3)(c) and 134(5) of the Act, in relation to the Financial Statements for the financial year 2023-24, the Board of Directors state that: -i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2024 and of the Loss of the Company for the financial year ended on March 31, 2024; iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) Annual accounts have been prepared on ‘going concern’ basis; v) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Directors and Key Managerial Personnel

Independent Directors and Declaration by Independent Directors

During the financial year under review following Independent Directors viz. Mr. Brij Kishore Soni, Mr. Jitender Balakrishnan, Ms. Pooja Haldea, Mr. Ranjit Singh and Dr. Suresh Inderchand Surana, served on the Board of the Company.

Mr. Brij Kishore Soni and Mr. Jitender Balakrishnan ceased to be Independent Directors on completion of their second term of five consecutive years on March 31, 2024. Dr. Suresh Inderchand Surana also ceased to be Independent Director on completion of his second term of five consecutive years on July 9, 2024. Your Directors place on record their appreciation for the valuable contribution and services rendered by them during their association with the Company. Mr. Yogesh Kapur has been appointed as an Independent Director for a period of five consecutive years w.e.f. April 1, 2024. Mr. Sandip Das has been appointed as an Independent Director for a period of five consecutive years w.e.f. July 10, 2024. Mr. Hemant Sahai has been appointed as an Independent Director for a period of five consecutive years w.e.f. August 27, 2024.

All the Independent Directors have given requisite declaration that they meet the criteria of independence as prescribed under the Act and the Listing Regulations. The Board has noted and taken on record the declaration and confirmation submitted by the Independent Directors.

Non-Independent Directors and Directors Retiring by Rotation

During the year under review following Non-Independent Directors (including one Whole Time Director) served on the Board viz. Mr. Sanjiv Saraf, Non-Executive Chairman and Mr. Sanjiv Chadha, Non-Executive Director from Promoter category, Mr. Iyad Malas, Non-Executive Director from non-promoter category and Mr. Pranay Kothari, Executive Director from non-promoter category.

Mr. Sanjiv Chadha, whose office is liable to retirement by rotation, retires at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Mr. Pranay Kothari who was appointed as Whole Time Director of the Company, designated as Executive Director (Key Managerial Personnel) for a period of three years holds office upto September 6, 2024. His reappointment has been proposed by the Board on the recommendations of the Nomination and Remuneration Committee on the terms and conditions contained in the Notice convening the 39^th Annual General Meeting.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Act, Mr. Pranay Kothari, Whole Time Director, Mr. Manish Gupta, Chief Financial Officer and Mr. Ashok Kumar Gurnani, Company Secretary are designated as Key Managerial Personnel of the Company.

Number of meetings of the Board

During the financial year 2023-24, eight meetings of the Board were held and the gap between two consecutive meetings was not more than 120 days. Details about the attendance of Directors at these meetings are given in the Corporate Governance Report which forms part of the Annual Report.

A separate meeting of the Independent Directors was held on March 29, 2024, without the attendance of non-independent directors and members of management pursuant to the provisions of Code for Independent Directors prescribed in Schedule IV of the Act.

Policy on Directors Appointment and Remuneration

The Nomination and Remuneration Committee (NRC) constituted by the Board has laid down the criteria and process of identification/ appointment of Directors and payment of remuneration. These include possession of requisite qualification, experience, ethics, integrity and values, absence of conflict with present or potential business operations of the company, balanced and maturity of judgement, willingness to devote sufficient time and energy, high level of leadership, vision and ability to articulate a clear direction for an organisation.

While selecting or recommending appointment of any Director, NRC shall have regard to the total strength of the Board prescribed under the Articles of Association and the Act, composition of the Board with respect to Executive and Non-Executive Directors and Independent and Non-Independent Directors and gender diversity.

Appointment of Independent Directors must satisfy the criteria laid down under the Act/ Rules made thereunder and the Listing Regulations.

Components of remuneration for Executive Directors would include normal Salary structure including perquisites as applicable to senior employees as per policies / schemes of the Company. The appointment and overall remuneration as far as possible be within the statutory ceilings and subject to requisite approvals of the Members of the Company. Non-executive directors would be entitled to payment of sitting fee for attending a meeting of the Board or Committee thereof of such amount as may be approved by the Board keeping in view the ceiling prescribed under the Act or Rules framed thereunder. Further, Non-executive directors may also be paid commission up to 1% of the Net Profits of the Company, subject to requisite approval of the Board and Members.

Details of Remuneration paid to Directors are available in the Corporate Governance Report which forms part of the Annual Report.

The policy on appointment of Directors and remuneration and other matters provided in Section 178(3) of the Act read with the applicable Rules and Regulation 19 of the Listing Regulations are available on the Company’s website link www.polyplex.com.

Board, Committees and Directors Evaluation

The Board has carried out annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the Corporate Governance requirements prescribed under the Listing Regulations.

The performance of the Board and Committees was evaluated by the Board after seeking inputs from all the directors on the basis of following criteria: a) Degree of achievement of key responsibilities b) Structure and Composition c) Establishment and delineation of responsibilities to Committees d) Effectiveness of Board processes, information and functioning e) Board culture and dynamics f) Quality of relationship between Board and Management g) Efficacy of communication with external stakeholders The performance of individual directors was evaluated on following criteria: a) Participation at Board/ Committee Meetings b) Knowledge and Skill c) Managing Relationships d) Personal Attributes Independent Directors of the Company in their separate meeting reviewed the performance of non-independent directors and the Board as a whole and as also the performance of Chairperson of the Company.

Particulars of employees and remuneration a) A statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5 (2) and Rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate annexure which forms part of this report and marked as "Annexure A". b) Ratio of the_remuneration_of each_director_to the median employee’s_ remuneration_ and such other details as required under Section 197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate annexure which forms part of this report and marked as "Annexure B".

Board Committees

Pursuant to the requirements under the Act and the Listing Regulations, the Board has constituted various committees of Board such as Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. The details of composition and terms of reference of these committees are provided in the Corporate Governance Report.

Corporate Social Responsibility (CSR) Initiatives

Corporate Social Responsibility Report pursuant to Section 134(3) (o) of the Act and Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 forms part of this Report and is marked as "Annexure C".

Composition and the role of the Corporate Social Responsibility Committee, number of meetings held and attendance of members thereof are provided in the Corporate Governance Report which forms part of this Report.

Corporate Social Responsibility (CSR) Policy as approved by the Board of Directors is available on the Company’s website link https://www.polyplex.com/investors.

Corporate Governance

Corporate Governance Report forms part of this Annual Report. Compliance Certificate from M/s RSM & Co., Practising Company Secretaries regarding compliance of the conditions of Corporate Governance as stipulated in the Listing Regulations is annexed with this report.

Business Responsibility and Sustainability Report (BRSR)

The Board is pleased to inform that your Company is among the top 1,000 companies as per the market capitalisation criteria at the BSE Limited and National Stock Exchange of India Limited as on March 31, 2024.

As required by Regulation 34 (2) (f) of the Listing Regulations, Company is required to include in its Annual Report, a Business Responsibility and Sustainability Report (BRSR) with effect from the financial year 2023–24. Accordingly, attached BRSR forms part of this Report.

Whistle Blower Policy / Vigil Mechanism

The Company has formulated Whistle Blower Policy in line with the provisions of Sub-section 9 and 10 of Section 177 of the Act and Regulation 4(2)(d)(iv) of the Listing Regulations. This Policy establishes a vigil mechanism for Directors and employees to report genuine concerns regarding unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct.

A copy of the said Policy is available on the website of the Company at www.polyplex.com.

Auditors

Statutory Auditors

In accordance with the provisions of the Companies Act, 2013 and Rules made thereunder M/s. S S Kothari Mehta

& Co. LLP, Chartered Accountants (Firm Registration No. 000756N) were re-appointed as Statutory Auditors of the Company for a term of five years from the conclusion of 37^th Annual General Meeting held on September 26, 2022 until the conclusion of 42^nd Annual General Meeting, to be held for the financial year 2026-27.

Further, M/s. S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration No. 301003E/E300005) were appointed on June 28, 2024 as Auditors for a period of five years upto the conclusion of 44^th Annual General Meeting to be held for the financial year 2028-29. They would act as Joint Auditors to the existing Auditors viz. S S Kothari Mehta & Co. LLP, Chartered Accountants.

There are no qualifications, reservations or adverse remarks or disclaimers requiring any explanation in their reports.

Internal Auditors

The Board of Directors on the recommendations of the Audit Committee have re-appointed M/s. PKMB & Co. (Formerly M/s Jain Pramod Jain & Co.), Chartered Accountants as the Internal Auditors of the Company for the financial year 2024-25.

Cost Auditors

Your Company is required to prepare and maintain cost records for plastic films as specified by the Central Government under Sub-section (1) of Section 148 of the Act. Accordingly, your Company has been preparing and maintaining the records as required.

In terms of Section 148 of the Act read with Companies (Cost Records and Audits) Rules, 2014, The Board on the recommendations of the Audit Committee has re-appointed M/s. Sanjay Gupta & Associates, (Firm Registration No. 000212), Cost Accountants as Cost Auditors to audit the Cost Records of the Company for the financial year 2024-25. In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be ratified by the Members. Accordingly, a resolution seeking ratification of the remuneration payable to the said Auditors has been included in the Notice convening the ensuing Annual General Meeting.

Secretarial Auditors

The Board of Directors on the recommendations of the Audit Committee have reappointed M/s. RSM & Co., (Firm Registration No. P1997DL17000) Practicing Company Secretaries, New Delhi, as Secretarial Auditors of the Company for the financial year 2023-24 pursuant to the provisions of Section 204 of the Act and Rules made thereunder read with Regulation 24A of the Listing Regulations. Secretarial Audit Report received from them is annexed herewith and marked as Annexure D.

There are no observations or other remarks in the report of the Secretarial Auditor.

Other Statutory Information

Details relating to conservation of energy, technology absorption, foreign exchange earnings and outgo prescribed under Section 134(3) (m) of the Act read with Companies (Accounts) Rules, 2014 are given in Annexure E.

Annual Return

In Compliance with the provisions of the Section 92 (3) read with Section 134(3) (a) of the Act, the Annual Return (Form No. MGT 7) of the Company is available on the Company’s website on https://www.polyplex.com/investors.

Related Party Transactions

None of the transactions with any of related parties were in conflict with the Company’s interest. Prescribed disclosures as required by the Ind AS -24 have been made in the Notes to the Financial Statements. All related party transactions entered into are at arm’s length basis and in the ordinary course of business. Therefore, provisions of Section 188(1) of the Act are not applicable to such transactions. Further, disclosure of related party transactions as required under Section 134 (3) (h) of the Act in Form AOC-2 is not applicable to Company for the financial year 2023-24.

Wherever required omnibus approval of the Audit Committee is obtained and such Related Party Transactions are reported to the Audit Committee in subsequent meeting(s) for its review.

Certain Material Related Party transaction(s) entered into between subsidiaries inter se during the year pursuant to the provisions of Regulation 23 of the Listing Regulations were duly approved by the shareholders of the Company in their Annual General Meeting held on September 26, 2022. Policy on Related Party Transactions as approved by the Board of Directors is available on the website of the Company on https://www.polyplex.com/investors.

Risk Management

The Board of Directors of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. Composition and terms of reference of Risk Management Committee are mentioned in the Corporate Governance Report. A detailed note on Risk Management has been provided under the Management Discussion and Analysis, which forms part of this report.

Internal Financial Control

The Company has laid down well defined and documented Internal Financial Controls. The Company has an overall framework for managing the risks in terms of the Risk Management Policy. In the opinion of Board Internal Financial Controls affecting the financial statements are adequate and are operating effectively.

Confirmation

Your Company follows the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

There have been no other material changes and commitments affecting the financial position of the Company which have occurred since the end of the financial year and date of this Report.

There have been no instances of fraud reported by the Auditors under Section 143 (12) of the Act and the Rules framed thereunder, either to the Company or to the Central Government.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals during the year impacting the going concern status and Company’s operations in future.

Human Resources

Your Company is committed towards creation of opportunities for its employees that help attract, retain and develop a diverse workforce. Your Company lays due importance to conducive work culture for its employees.

To reinforce core values and belief of the Company, various policies for employees’ empowerment have been framed to enrich their professional, personal and social life. In addition to above, Company has also laid down Code of Conduct for Directors and Senior Management Personnel and Whistle Blower Policy.

Your Company has also laid down a Policy under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Constituted Internal Complaints Committee to redress the complaints. There were no complaints received during the year. (Previous Year: Nil)

Listing of Shares and Depository System

Your Company’s equity shares are listed on the BSE Ltd. and the National Stock Exchange of India Ltd.

Your Company’s equity shares are being traded in ‘demat’ form since April 30, 2001. Shareholders of the Company who are still holding shares in physical form are advised to get their physical shares dematerialized by opening an account with one of the Depository Participants.

Acknowledgement

Your Directors wish to place on record their appreciation of the wholehearted and sincere cooperation the Company has received from the various departments of Central/ State Governments, Financial Institutions, Bankers and the Auditors of the Company.

Your Directors also wish to place on record their appreciation of the dedicated and sincere services rendered by the employees of the Company.

For and on behalf of the Board of Directors

	Sd/-
	Sanjiv Saraf
Date: August 27, 2024	Chairman
Place: NOIDA	DIN: 00003998