Pudumjee Paper Products Ltd Management Discussions

GLOBAL ECONOMIC REVIEW

Global economy grew marginally at an 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty.

Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, While emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

Outlook

Given the challenge of forming stable, real-time assumptions for projections, the IMF World Economic Outlook report adopted a reference forecast instead of a conventional baseline, assuming the war remains contained in duration, intensity, and reach, with disruptions easing by mid-2026, in line with commodity futures as of March 10, 2026.

Under this reference view, global growth is projected at 3.1% in 2026 and 3.2% in 2027. Global inflation is expected to rise to 4.4% in 2026 before easing to 3.7% in 2027.

(Source: OECD Interim Economic Outlook, IMF, World Economic Forum, Federal Reserve, Bank of England, European Central Bank, Bank of Japan)

INDIAN ECONOMY REVIEW

The Indian economy grew at an estimated 7.6% in FY26 (official confirmations to come in following the Balance Sheet date), compared to 7.1% in FY25. This growth was driven by strong consumption and increasing investments, reaffirming Indias position as the fastest-growing major economy.

Indias Real GDP at Constant Prices was estimated at H322.58 lakh crore in FY 2025-26, against the First Revised Estimate of H299.89 lakh crore for FY 2024-25.

Growth of the Indian economy

	FY23	FY24	FY25	FY26E
Real GDP growth (%)	7.2	7.2	7.1	7.6

E: Estimated. Note: FY24 figure restated under new base year 2022-23. (Source: MoSPI (February 27, 2026))

Growth of the Indian economy quarter by quarter, FY 2025-26

	Q1FY26	Q2FY26	Q3FY26	Q4FY26E
Real GDP growth (%)	7.8	8.4	6.7	7.3

Note: Q2 revised upward from 8.2% and Q3 from 7.35% under the new base year 2022-23 series released February 27, 2026. Q4 remains an estimate. (Source: MoSPI, February 27, 2026)

Inflation, policy and currency dynamics

Inflation remained benign through much of FY26, with full- year CPI estimated at an exceptionally low 2.1%. This created room for 125 basis points of cumulative rate cuts, supporting consumption and investment.

However, macro stability was accompanied by currency volatility. The Indian rupee depreciated sharply by 9.88% during FY26 its steepest fall since FY12 touching H94.78 against the US dollar. This reflected global capital flows, a strong dollar environment, and geopolitical uncertainties.

Indias growth story

The tertiary services sector remained a key growth driver, expanding by 9.0 percent in FY26 and increasing its share in nominal gross value added to 54.3% from 52.8% in FY25, supported by broad-based momentum across segments.

During FY26, financial, real estate, IT and professional services grew by 9.9%, While trade, hotels, transport, communication and broadcasting recorded a strong 10.1% growth, and public administration and other services expanded by 5.8 percent.

At the same time, manufacturing demonstrated renewed strength, with Gross Value Added (GVA) rising 11.5% in FY26 at constant prices, marking the second instance of doubledigit growth in three years and improving from 9.3% in FY25.

The secondary sector grew 9.1%, accelerating from 8.0% in the previous year, driven by manufacturing alongside construction growth of 7.1%. This combination of services- led scale and manufacturing acceleration is shaping a more balanced and resilient economic structure.

Consumption and investment

During FY26, Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) maintained above-7% growth, reflecting a well-balanced demand composition across household spending and investment activity.

Growth catalysts

Policy-led consumption boost: The Union Budget FY27s tax relief measures—particularly income tax exemptions up to H12 lakh—are expected to stimulate discretionary spending and reinforce consumption-led growth.

Anticipatory Pay Commission impact: The 8^th Pay

Commission, though expected to be implemented from FY28, is already shaping consumer sentiment, creating a forward consumption impulse.

Monetary stability: The Reserve Bank of Indias calibrated stance, with the repo rate at 5.25%, balances inflation risks with growth support, ensuring macroeconomic stability.

Credit expansion: Improved banking health and liquidity conditions are expected to sustain strong credit growth across MSMEs, housing, and retail segments.

Fiscal prudence with growth focus: The Union Budget maintains fiscal discipline While prioritising infrastructure, MSME support, skilling, and innovation - key levers for longterm productivity.

Outlook

The year under review underscores a defining divergence: a world grappling with uncertainty, and an India navigating it with confidence.

In a global environment marked by fragmentation and caution, India stands out as a rare convergence of stability, scale and structural opportunity. The World Bank has revised its FY27 growth estimate upward to approximately 6.6%, reflecting resilient domestic momentum even as growth moderates from the previous year. India is expected to retain its position as the fastest-growing major economy.

Growth will be shaped by a combination of strong domestic demand and resilient private consumption, supported by low inflation and GST rationalisation, alongside stable export performance with improved access to key markets. This momentum is further reinforced by sustained policy support, ongoing economic reforms, and a favourable demographic advantage.

While risks persist, particularly from elevated energy prices, subsidy pressures on government spending, and uncertainty in global demand, Indias macroeconomic fundamentals remain strong.

Over the medium term, sustained consumption, gradual investment recovery, and expanding global trade linkages are expected to reinforce Indias position as a key driver of global economic growth.

(Source: MoSPI, Business Standard, Press Information Bureau, Business Standard, IMF, OECD, Deccan Chronicle. NDTV Profit, Outlook Business, The Asian Banker)

GLOBAL PAPER INDUSTRY OVERVIEW

The market has been expanding at a strong pace. Valued at USD 1,071.23 billion in 2025, it is expected to reach USD1,136.91 billion in 2026, representing a compound annual growth rate of 6.1%. This growth is rooted in several historic drivers: the expansion of publishing and printing, rising demand for consumer goods packaging, heightened awareness of hygiene, the availability of wood pulp, and the steady development of recycling infrastructure.

The specialty paper market is on a clear upward trajectory, expected to reach USD 18.9 billion by 2026 as global industries accelerate their shift away from single-use plastics. With an expected compound annual growth rate of 5.1% through 2036, the sector is set to surpass USD 31.1 billion by the end of the estimated period. This momentum is largely fueled by rising demand for high-performance cellulose substrates in food service and industrial applications.

Manufacturers are investing in biodegradable barrier coatings, seeking to align with tightening environmental regulations While maintaining product functionality. At the same time, consumer brands are pivoting from fossil- fuel-based packaging toward renewable fiber solutions, reshaping procurement practices across major economies. These shifts are prompting paper mills to expand their portfolios with advanced chemical treatments, creating functional products that meet both sustainability goals and performance expectations.

The paper and paperboard packaging sector has maintained steady growth, advancing from USD 442.34 billion in 2025 to expected USD 461.32 billion in 2026, reflecting a CAGR of 4.3%. Historically, this expansion has been driven by rising demand in food and beverage packaging, the widening reach of retail distribution networks, the ubiquity of corrugated boxes, the appeal of cost-effective packaging formats, and the ready availability of paper-based raw materials.

Looking ahead, momentum is expected to build around sustainability. The forecast period highlights a decisive shift toward eco-friendly packaging materials, surging demand from e-commerce, the strengthening of circular economy initiatives, and greater investment in recycling infrastructure. Smart packaging designs are also gaining traction, signaling a new phase of innovation.

Key trends shaping the future include the widespread adoption of recyclable solutions, growing preference for lightweight paper-based formats, the continued expansion of corrugated packaging tailored to e-commerce, the use of high-strength paperboard grades, and an intensified focus on custom printing and branding to differentiate products in competitive markets.

(Source: Business Research Company, Future Market Insight)

INDIAN PAPER INDUSTRY OVERVIEW

The Indian paper industry is undergoing a significant transformation, driven by the rising demand for sustainable and recycled paper products. Growing environmental awareness, coupled with stricter regulations on plastic packaging, is accelerating the adoption of eco-friendly paper-based alternatives across industries. At the same time, advancements in recycling technologies have enhanced the quality and usability of recycled paper, positioning it as an effective substitute for some of the virgin paper products.

India contributes nearly 5% to the global paper market and ranks among the worlds leading paper manufacturers, underscoring the sectors increasing role in the countrys industrial and economic progress. Supported by rising demand across packaging, education and commercial applications, paper consumption in India is expected to grow at a CAGR of 6-7%, reaching nearly 30 million tonnes by FY2026-27.

The India paper packaging market is charting a strong growth path, valued at USD 19.42 billion in 2025 and expected to climb to USD 28.55 billion by 2034, advancing at a CAGR of 4.38% between 2026 and 2034. This expansion is being propelled by rising environmental consciousness, government bans on single-use plastics, and the growing appetite for sustainable alternatives across industries.

The surge of e-commerce, food delivery platforms, and organized retail is intensifying the need for packaging that is both efficient and eco-friendly. Consumers are increasingly favoring recyclable and biodegradable options, pushing companies to innovate with new paper-based materials. At the same time, technological improvements in durability, printability, and moisture resistance are elevating the performance and appeal of paper packaging, ensuring its continued relevance and strengthening its market share in India.

The India paper packaging market is positioned for steady growth, supported by the rapid expansion of e-commerce, stricter regulations on single-use plastics, and rising FMCG volumes that are driving demand for lightweight, recyclable materials. Growing advances in sustainable substrates and digital printing technologies are broadening product variety and improving efficiency across the supply chain. Together, these developments are fostering innovation While ensuring that packaging solutions meet evolving environmental standards and consumer expectations, reinforcing papers role as a preferred choice in Indias packaging landscape.

Indias economic journey has been marked by rapid acceleration in recent decades. After taking six decades to reach the $1 trillion milestone, the economy doubled to $2 trillion by 2014, added another trillion by 2021, and crossed the $4 trillion threshold in 2025. Projections suggest it will advance to $5 trillion within the next two years, underscoring its position as one of the fastest-growing major economies.

Per capita income has followed a similar trajectory. It crossed USD1,000 in 2009, doubled to USD 2,000 by 2019, and is expected to reach USD 3,000 by 2026, reflecting the steady rise in individual prosperity alongside national growth. As consumer spending continues to surge, this rising purchasing power is creating stronger demand for packaging solutions across food, retail, and e-commerce sectors. The trend is expected to have a positive ripple effect on the paper packaging market, reinforcing its role as a sustainable and increasingly preferred choice in Indias consumption- driven economy.

(Source: Maximize Market Research, IMARC Group, Times of India)

INDIAN SPECIALTY PAPER AND PACKAGING INDUSTRY OVERVIEW

Indias packaging industry is witnessing significant growth, driven by the rapid expansion of e-commerce, increasing demand from the pharmaceuticals and healthcare sectors, rising urbanisation, evolving consumer lifestyles, technological advancements, and supportive government initiatives alongside growing foreign investments. As the fifth-largest sector of the Indian economy, packaging plays a vital role in supporting industrial development and fostering innovation.

In line with global sustainability trends, the industry is increasingly adopting environmentally responsible materials and manufacturing practices. Regulatory measures aimed at reducing plastic usage and promoting sustainable packaging solutions are accelerating this transition across the sector. Additionally, the growing focus on food safety and product quality, coupled with the expansion of the food processing industry, is further driving demand for advanced and innovative packaging solutions.

The Indian paper and paperboard packaging market is expected to reach USD 14.57 billion in 2026, up from USD 13.72 billion in 2025, and further reach USD 19.66 billion by 2031 at a CAGR of 6.18% over 2026-2031. Growth momentum is being fueled by the nationwide transition away from singleuse plastics, the rapid expansion of e-commerce logistics, and brand commitments to circular-economy packaging. Corrugated boxes remain dominant, serving the needs of online retail with impact-resistant yet lightweight formats, While cartons for liquid are gaining traction alongside premium beverage demand and investments in aseptic filling. Food and beverage companies are accelerating the shift toward recyclable mono-material packs, and the rise of quick-commerce hubs in Tier-1 and Tier-2 cities is expanding the market for small-format secondary packaging.

Indias per capita paper consumption stood at 16 kg in 2025, significantly lower than the global average of 57 kg, highlighting substantial growth potential for the domestic paper industry. At the same time, continuous technological advancements are reshaping the speciality paper segment, particularly in the development of innovative paper-based packaging solutions designed to enhance food preservation, product safety and sustainability.

On the supply side, recycled fiber capacity, agro-residue pulp lines, and high-speed flexo presses are strengthening production capabilities, ensuring the industry is well- positioned to meet growing demand with sustainable and innovative solutions.

The specialty papers market is on a strong growth trajectory, expected to rise from USD 2,160.6 million in 2025 to USD 3,857.0 million by 2035, reflecting a CAGR of 5.9% over the expected period. Demand is being fueled by diverse applications in packaging, printing, and labeling, as industries increasingly seek high-quality, customized paper solutions. Technological advancements are enabling manufacturers to deliver enhanced properties such as water resistance, durability, and superior printability, broadening the scope of specialty paper products.

Sustainability is also reshaping the market, with ecofriendly materials gaining prominence as companies align with environmental priorities. The rapid expansion of e-commerce is further amplifying demand for innovative packaging formats that combine functionality with aesthetic appeal. This creates opportunities in niche segments, including luxury packaging and personalized stationery, where specialty papers can deliver both performance and differentiation. Overall, the market is evolving dynamically, driven by innovation, sustainability, and shifting consumer expectations.

The printing and writing paper market size is expected to increase by USD 10.88 billion at a CAGR of 2.1% between 2024 and 2029. The Indian speciality paper industry is entering a new phase of expansion, supported by rising demand for sustainable and high-performance packaging solutions. The increasing adoption of advanced barrier paper grades, designed to replace conventional plastic-based packaging, is expected to drive both volume growth and product innovation across the sector.

The India food and beverage packaging market is expected to reach USD 40.73 billion in 2026, up from USD 38.27 billion in 2025, with USD 55.67 billion by 2031 at a CAGR of 6.44% between 2026 and 2031. Growth is being reinforced by rising processed-food penetration, mandatory recycled-content regulations, and the rapid expansion of e-commerce. These factors are driving steady demand for packaging solutions that extend shelf life and ensure compliance with safety standards, positioning paper and paperboard formats as increasingly vital in Indias evolving consumption landscape.

(Source: Mordor Intelligence, Market Research Future, Technavio)

Growth drivers for Indian paper market Population: Indias population reached 1,471.21 million in 2026, and this demographic scale is fueling parallel growth in demand for paper-based products worldwide. Expanding educational initiatives and the continued rise of the retail sector are driving higher consumption of books, newspapers,

and stationery. Together, these factors are providing strong momentum for the expansion of the paper industry, positioning it as a key beneficiary of both population growth and evolving consumer needs.

Demand momentum: India, the worlds 15^th largest paper producer, is rapidly emerging as the fastest-growing consumer market, with per capita paper use rising 10.6% between 2025 and 2032. Domestic consumption already exceeds 16 million tons per annum (TPA) and is expected to reach 30 million TPA by FY27. Backed by substantial investments in new capacity and modernization, the industry is well-positioned to meet rising demand for upstream products such as tissue paper, tea bags, filter paper, lightweight coated grades, and medical- grade coated formats. These developments highlight Indias growing influence in the global paper industry.

Regulations driving paper packaging: Indias regulatory measures against single-use plastics are significantly accelerating the shift towards paper-based packaging solutions. Following the nationwide ban implemented on July 1, 2022, enforcement efforts have intensified through the SUP compliance monitoring framework. Since the implementation of the ban, authorities have conducted over 8.61 lakh inspections, seized nearly 1,989 tonnes of prohibited single-use plastic items, and imposed penalties amounting to approximately Rs. 19.83 crore, reflecting the governments strong focus on promoting sustainable packaging alternatives. To encourage adoption of eco alternatives, the government launched a Compendium of Manufacturers/ Sellers of Eco alternatives on World Environment Day 2025.

Real estate demand: Indias growing real estate sector is fueling demand for decor and absorbent kraft paper, opening new opportunities for domestic manufacturers in a market long shaped by high imports. The Indian decor paper market is estimated to be valued at USD 256.2 billion in 2025 and is expected to grow to USD 496.4 billion by 2035, registering a CAGR of 6.8% during the period. This surge reflects rising construction activity and consumer preference for quality finishes, positioning local producers to capture a larger share of the expanding market.

E Commerce expansion: Indias e commerce market is expected to grow from USD 137.21 billion in 2025 to USD 363.30 billion by 2030, registering a CAGR of 21.5% during 2025-2030. This rapid scale up is directly boosting demand for paper based packaging, as online retail requires corrugated boxes, lightweight cartons, and specialty formats for safe and efficient delivery. Rising order volumes and the need for impact resistant yet recyclable materials are creating significant opportunities for domestic paper manufacturers. As e commerce continues to expand, the paper industry is positioned to benefit from both higher consumption and innovation in packaging solutions tailored to digital retail logistics.

(Source: Data Insight Market, IMARC Group, Brick Work Rating, Research and Markets, Maximize Market Research, PIB, Worldometer, Future Market Insights)

COMPANY OVERVIEW

Pudumjee, specializes in producing papers tailored for distinct uses, particularly in sectors where specific qualities

- like resistance to oil and grease - are essential. Its portfolio serves the food, pharmaceutical, and hygiene industries, along with select industrial applications. Operating on a business-to-business model, the company supplies products directly to clients or through a nationwide dealer network, While also exporting to neighboring countries and Europe.

Among its notable offerings are:

- Laminated papers engineered for food-grade and pharmaceutical packaging.

- Baking papers and related specialty grades.

- Decor papers for furniture laminates and base sheets for melamine tableware.

- Packaging papers designed for hygiene products such as napkins, kitchen towels, toilet tissue, and baby diapers.

- Bleached kraft papers for flexible packaging laminates, premium kraft grades for label release liners, and kraft interleaving for steel and glass applications.

- Cooling pad papers used in both household and industrial cooling systems.

- Fine printing papers suited for religious texts, dictionaries, pharmaceutical inserts, and books.

- Glassine papers adaptable to multiple uses.

- Low GSM MG papers serving a wide range of applications.

The companys specialty paper operations are characterized by machines running at comparatively lower speeds, designed to produce lighter grammage papers that yield greater length but reduced weight. Fibre requirements are met through imported pulp and limited quantities of preconsumer wastepaper sourced from select countries. Market pulp prices ranged between Rs. 47,450 per MT and Rs. 72,900 per MT depending on grade, compared to Rs. 50,700 per MT to Rs. 78,100 per MT in the prior year. Wastepaper prices across grades varied from Rs. 23,100 per MT to Rs. 32,900 per MT, against Rs. 19,100 per MT to Rs. 41,800 per MT previously.

The hygiene Products division caters to institutional clients

- businesses, hotels, airports, and corporate establishments

- by supplying tissues and related hygiene products. Dedicated verticals also serve specific customer segments such as hotels, restaurants, catering services, and SMEs.

A solar power Plant was developed during the year, despite delays arising from complexities in acquiring land directly from farmers. The project was commissioned during FY2025-26 and is expected to contribute towards reducing power costs.

Plans to relocate operations to Mahad, Maharashtra remain on hold. In the meantime, the company has secured Environmental Clearance, subject to conditions, for a capacity expansion of approximately 68000 MT at an estimated investment of Rs. 1350 crores. Management is in discussions with overseas machinery suppliers to finalize machine configurations and optimize capital expenditure. Current operations continue in Pune, on freehold land and leased buildings under agreements with AMJ Land Holdings Ltd and 3P Land Holdings Ltd. However, given the limitations of the existing site, expansion opportunities in Mahad are actively under consideration.

COMPANY PERFORMANCE

For the year under review, the company recorded turnover of Rs. 807.88 compared with Rs. 809.08 crores in the previous year. EBITDA stood at Rs. 145.01 against Rs. 145.04 crores last year, While Net Profit Before Tax amounted to Rs. 126.25 compared with Rs. 128.72 crores previously. Within this, the hygiene products division contributed turnover of Rs. 67.66 (prior year Rs. 57.84 crores, before intersegment revenue adjustments), EBITDA of Rs. 5.76 (previous year Rs. 8.12 crores), and Profit Before Tax of Rs. 5.05 (previous year Rs. 7.43 crores).

HUMAN RESOURCES

The company upholds a strong commitment to equal opportunity across its workforce. Its human resource framework emphasizes continuous training, performance- linked compensation, employee retention, and initiatives that support work-life balance. Growth and development are encouraged for all employees, including those who remain active and also those who have retired from the services of the company. As of 2026, the organizations total workforce stood at 646.

OPPORTUNITIES FOR THE COMPANY

- The rapid expansion of Indias e-commerce and FMCG sectors is creating significant growth opportunities for the packaging and paper industry. Indias e-commerce market is expected to grow from USD 137.21 billion in 2025 to USD 363.30 billion by 2030, registering a CAGR of 21.5%. Simultaneously, the Indian FMCG market, valued at USD 287.91 billion in 2025, is anticipated to reach USD 1,150.21 billion by 2034, reflecting a CAGR of 16.64% during 2026-2034. The sustained growth across these sectors is driving rising demand for innovative, sustainable and high-quality packaging solutions.

- Companies investing in corrugated boxes, cartons, and paper bags stand to benefit, especially as sustainability priorities accelerate the shift toward eco friendly paper based packaging.

- Indias urban population is expanding rapidly, with projections showing that 40% of the countrys people will reside in cities by 2036. At present, 37.6% of the population is urban, and these areas already contribute nearly 70% to national GDP. This demographic shift underscores the growing economic weight of urban centers and highlights the critical role of cities in driving Indias future growth.

- Indias youthful population is creating a powerful demographic dividend. With a median age of just 29.2 years in 2026, the country stands out as one of the youngest major economies. This large working age base provides a productive workforce that can drive consumption, innovation, and long term economic growth.

- Legal mandates requiring the replacement of plastics are opening significant opportunities for paper based packaging. This transition aligns seamlessly with the Companys existing product portfolio, particularly its functionally coated packaging papers, which are well suited to meet evolving regulatory standards and market demand. By leveraging its capabilities in sustainable paper solutions, the Company is positioned to benefit from the growing preference for eco friendly packaging alternatives.

- Indias online food delivery market was valued at USD 55.58 billion in 2025 and is expected to reach USD 337.15 billion by 2034, growing at a CAGR of 22.18% from 2026-2034. This rapid expansion is creating strong demand for sustainable packaging solutions, with paper based formats such as corrugated boxes, takeaway cartons, and coated papers increasingly preferred over plastics. Rising delivery volumes present a significant opportunity for domestic paper manufacturers to supply eco friendly packaging tailored to the needs of restaurants, cloud kitchens, and delivery platforms.

(Source: Wright Research, Worldometers, IMARC Group, Research and Market, World Bank Group, SMP IAS Academy, India Budget)

COMPETITIVE STRENGTHS OF THE COMPANY

The companys strengths can be seen across several dimensions:

- A skilled workforce guided by experienced, industry- savvy leadership.

- Flexibility to adjust product and raw material combinations in response to shifting market demands.

- Strong investment in research and development, driving customer-focused innovation.

- Effective cost control and strategic fibre sourcing, enhanced by locational advantages.

- Ongoing, meaningful engagement with customers to deliver solutions that are both practical and cost- efficient.

- A proactive, solutions-driven mindset aimed at consistently surpassing client expectations.

- Reliable, timely delivery backed by a commitment to quality and attentive after-sales service.

- A broad, adaptable product portfolio designed to meet the diverse requirements of different clients.

BUSINESS STRATEGY OF THE COMPANY

The companys strategic priorities are centered on strengthening value creation While safeguarding product quality, optimizing input costs, and improving margins.

- Product specifications are continually improved to align with evolving market requirements.

- Manufacturing facilities are upgraded with customized and sustained technologies to maximize asset utilization.

- Growth opportunities in the market are actively identified and leveraged.

- The product portfolio is expanded with value-added offerings to reinforce and extend leadership.

- Environmental responsibility is emphasized through initiatives aimed at reducing greenhouse gas emissions and supporting a cleaner future.

CONCERNS AND THREATS

The Companys dependence on purchased fibre, largely imported, remains a structural challenge as it does not have its own fibre sources. The average constitution of raw material is about 27% of sale prices, and any adverse movement in global prices, coupled with geopolitical or transportation imbalances, could disrupt fibre availability and margins. To counter these risks, the Company has consistently adopted practices such as maintaining sufficient fibre inventories, adjusting its product mix, implementing cost reduction measures through the use of appropriate fibre quality, and focusing on long term value additions aligned with evolving market requirements.

Energy reliance is another area of concern, as the Company does not have Co-generation facilities (except a small facility of 0.5mw). At present, 27% of its power is drawn from green energy, including three wind turbines and one solar plant. These initiatives not only support environmental protection but also contribute to lowering power costs. The Company continues to expand its renewable portfolio, with short and long term arrangements aimed at increasing access to green energy. A key step in this direction is the establishment of a 15.4 MW (AC) solar generation facility at Bhalwani, located about 50 kilometers from Solapur, which will further strengthen sustainability efforts. The prices of coal used by the Company stood at about Rs 11,600 per MT.

Operationally, the Company functions at about 95% of its installed capacity of 72000 MT per annum, with utilization levels improving post Covid, particularly in the hygiene products division. Compliance with stringent effluent discharge norms prescribed by the Government has always been maintained. Water requirements are met from the Pawna River through an adjacent lifting point, though growing urbanization around the plant, declining river levels, and deteriorating water quality present concerns that could increase operational costs in the future.

On the regulatory front, the Government of India issued a Gazette notification on October 8, 2025, under the Carbon Credit Trading Scheme (CCTS), titled "Greenhouse Gases Emission Intensity Target Rules 2025." Based on product output in 2023-24, the Company has been assigned emission intensity targets of 1.7275 tCO₂ equivalent per tonne of product for 2025-26 and 1.6567 for 2026-27. Given the inherent nature of operations - manufacturing specialty papers using imported pulp, purchased grid power, and coal as boiler fuel - the scope to meet these targets is limited. The Company is actively pursuing initiatives to comply, including raising objections to the methodology used for target setting in comparison with other paper mills. Regardless of the outcome of these objections, the 15.4 MW solar power Plant recently SETUP will provide interim relief, enabling the Company to meet targets in the short term While allowing time to adopt and implement further sustainability measures.

The operations upto 31^st March 2026 indicate the tCO2 equivalent/Tonne of equivalent product at 1.677. It is estimated that for 2026-27, barring unforeseen circumstances, tCO2 equivalent/Tonne of equivalent product will be about 1.6208 as against target of 1.6567 (tCO2 equivalent/Tonne of equivalent product).

KEY FINANCIAL RATIOS

Details of significant changes in key financial ratios (i.e., changes of 25% or more compared to the immediately preceding financial year), along with reasons for the changes, are provided below:

Ratio	31st March 2026	31st March 2025	% Change	Reason for change
Current Ratio	3.47	4.66	-25.54%	The Current Ratio has decreased to 3.47, primarily due to a significant increase in current liabilities by 53%, driven largely by higher trade payables, capital creditors for performance rentation for projects undertaken, current maturity of borrowings, an increase in statutory dues payble and current provisions for disputed liabilities. Current Assets: Increased by 14%, primarily attributable to a rise in trade receivables and inter-corporate loans extended during the year.
Debt- Equity Ratio	0.06	0.02	200%	Change in this ratio is primarily attributable to additional long-term borrowings mobilized to fund capital projects and recognition of new lease liabilities following the execution of new and extended lease agreements under Ind AS 116. This increase in debt was partially offset by a 15% growth in the Equity base, driven by the accretion of profits to retained earnings during the current financial year.
Debt service coverage Ratio	13.86	6.62	109.37%	The Debt Service Coverage Ratio has improved compared to the previous year. This improvement is primarily due to, significant decrease in the Scheduled repayment of public deposits during the current financial year. In the preceding year, the ratio was lower due to a substantial repayment of public deposits amounting to approximately H1,145 Lakhs. In current year there was no Schedule repayment of public deposits.

CAUTIONARY STATEMENT

Statements made in this report, especially those in Management Discussion & Analysis describing the companys objectives, estimates, projections and expectations may constitute Forward looking statements within the meaning of applicable laws and regulations. The companys actual results, achievements may differ materially from those projected in any such forward looking statements.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The company has established internal control systems proportionate to its scale and operations. These mechanisms are structured to promote efficiency in management, ensure accuracy and verifiability of processes, and maintain the integrity of accounting and management information. They also safeguard assets While ensuring adherence to applicable laws and regulations. Key risks - spanning operational, compliance, economic, and financial areas - are identified and addressed in a systematic manner. Oversight is maintained by the Board of Directors, which conducts regular reviews to confirm the continued effectiveness of these controls.