Ruchira Papers Ltd Management Discussions

Indian economy

The Indian economys real GDP grew at 7.7% in FY 2025-26, compared to 7.1% in FY 2024-25. 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 Rs.323.12 Lakh Crore in FY 2025-26, compared with Rs. 299.89 Lakh Crore in FY 2024-25.

Growth of the Indian economy

	FY 23	FY 24	FY 25	FY 26
Real GDP growth (%)	7.0*	7.2	7.1	7.7

* The FY23 figure (7.0%) is from the old base year series (2011–12) as the new series back-data for FY23 will only be available after December 2026.

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

	Q1 FY 26	Q2 FY 26	Q3 FY 26	Q4 FY 26
Real GDP growth (%)	6.7	8.4	7.8	7.8

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)

Inflation, policy and currency dynamics

Inflation remained benign through much of FY 2025-26, 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 FY 2025-26 - its steepest fall since FY 2011-12 - touching Rs.94.83 against the US dollar. This reflected global capital flows, a strong dollar environment, and geopolitical uncertainties.

Capital flows and market behaviour

Foreign portfolio investors remained risk-averse, withdrawing a record Rs.1.8 trillion during FY 2025-26 – the largest outflow in 36 years. However, strong domestic institutional inflows of Rs.8.50 trillion provided a crucial counterbalance, highlighting the growing maturity and depth of Indias domestic capital markets.

Indias market capitalisation declined 8% year on year in FY 2025-26 to USD 4.5 trillion from USD 4.83 trillion in FY 2024-25, marking the sharpest drop since FY 2022-23. The BSE Sensex declined 7% or 5,467 points in FY 2025-26, against a gain of 5.1% or 3,763 points, in FY 2024-25. Similarly, the Nifty 50 fell 5%, or 1,188 points, in FY 2025-26, compared to a gain of 5.3% or 1,192 points, in FY 2024-25. against a gain of 5.34%, or 1,192 points, in the corresponding period. The downturn was largely driven by the ongoing West Asia conflict and concerns around potential tariff measures under Donald Trump, which weighed on global investor sentiment.

Gold prices surged 64.1% during FY 2025-26 reflecting global risk aversion and safe-haven demand. Indias net direct tax collections rose 5.12% y-o-y to Rs.23.40 Lakh Crore in FY 2025-26, though this fell short of the Revised Estimate of Rs.24.21 Lakh Crore by approximately Rs.80,000 Crore. Corporate tax collections came in at Rs.10.99 Lakh Crore against a target of Rs.11.09 Lakh Crore, while personal income tax (including STT) stood at Rs.12.41 Lakh Crore against a target of Rs.13.12 Lakh Crore - the larger of the two misses, partly reflecting the income tax relief extended to the middle class in the Union Budget 2025–26

Banking sector

Indias banking sector reflected improving financial health, with the gross non-performing asset ratio declining to a robust 2.1% as of September 2025, indicating stronger asset quality and disciplined lending practices. This stability was mirrored in profitability metrics, as scheduled commercial banks reported a return on assets of 1.3% and a return on equity of 12.5% during the first half of 2025-26, underscoring sustained operational efficiency and a healthier balance sheet trajectory.

Indias growth story

Real Gross Value Added (GVA), which measures economic output excluding taxes and subsidies, grew 7.9% in FY 2025-26, compared with 7.3% in FY 2024-25. At current prices, nominal GVA rose 9.1% to H314.87 Lakh Crore from H288.54 Lakh Crore a year earlier.

The tertiary services sector remained a key growth driver, expanding by 9.0% in FY 2025-26 and increasing its share in nominal gross value added to 54.3% from 52.8% in FY 2024-25, supported by broad-based momentum across segments.

During FY 2025-26, 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%.

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 FY 2025-26, 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 FY 2026-27s tax relief measures-particularly income tax exemptions up to Rs.12 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 FY 2027-28, 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 long-term 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 FY 2026-27 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: Upstox, Economic Times, India Today, 5paisa, Livemint, The Logical India)

Indian paper industry overview

The Indian paper industry continues to be one of the fastest growing globally and has retained its position among the top producers worldwide as of FY 2025–26. The industry revenues are now estimated at H90,000–95,000 Crore in FY 2025–26, supported by steady demand growth of 6–8% annually. This growth momentum is expected to continue, with the market projected to reach roughly H1,00,000–1,05,000 Crore by FY 2028–29, sustaining a CAGR of around 6–7% over the medium term. The Indian wood pulp market reached a size of USD 16.1 Billion in 2025 and is expected to grow to USD 19.8 Billion by 2034, registering a CAGR of 2.34% over 2026–2034. This growth is driven by increasing demand for sustainable packaging, rising usage in the textile sector for viscose fibre production, supportive government initiatives for domestic pulp manufacturing, and a growing emphasis on recycled pulp amid environmental concerns.

Domestic consumption of packaging paper and paperboard in India is expected to reach ~24 Million Tons in FY 2025-26, with domestic production expected at 23 Million Tons. Looking ahead, total paper consumption is likely to reach 30 Million Tons by FY 2026–27, up from 16 Million Tons in earlier years. This surge is being driven by the expansion of education, organised retail, and overall economic growth. India accounts for nearly 15% of the global population while consuming only about 5% of global paper production.

Growth is being driven by rising demand for packaging solutions, the expansion of e commerce, and the strengthening of the education sector. Urbanisation, industrialisation, consumer preferences for sustainable packaging, government initiatives promoting waste paper recycling, and growing export opportunities are also contributing to the upward trajectory. Paper consumption in India is expected to reach 30 Million Tons by 2027, with per capita consumption at 16 kgs.

The industry is experiencing a surge in sustainable and recycled paper production, driven by environmental concerns and stricter regulations on plastic packaging. Advances in recycling technologies have improved the quality of recycled paper, making it a viable alternative to virgin paper. The governments focus on circular economy practices has reinforced momentum in the paper sector. In March 2025, a proposal was put forward to reduce GST on waste paper in the upcoming Delhi budget, emphasising the industrys role in supporting livelihoods and addressing waste management challenges. This initiative is aimed at strengthening sustainable recycling and advancing circular economy principles within the paper industry. At the same time, large corporations and retailers are increasingly adopting sustainable paper solutions for packaging, driving demand for biodegradable and recyclable products and further boosting the markets growth trajectory.

The Indian paper and pulp market is expected to grow at a CAGR of 13.4% and reach USD 35.57 Billion by 2030. In the longer term, it is estimated to hit USD 19.1 Billion by 2033, at a CAGR of 7.5% from 2024 to 2033. This growth reflects strong demand from sectors such as packaging, education, e-commerce, and FMCG, positioning India as a major hub in the global paper supply chain. The Indian pulp and paper market is segmented into printing and writing paper, packaging paper, newsprint, tissue paper, specialty paper, and others. Packaging paper has emerged as the dominant segment, driven by the rapid growth of e-commerce, food delivery, and FMCG sectors, all of which require sustainable and recyclable packaging solutions. Environmental regulations and bans on single-use plastics are accelerating the transition toward paper-based alternatives. Printing and writing paper continues to see steady demand from education and office sectors, though growth is moderated by digitalisation. Tissue paper and specialty paper are niche but expanding rapidly, supported by urbanisation, rising hygiene awareness, and industrial applications such as filtration and labeling. Although the industry has made significant capital investments to expand capacity, long development cycles and the high cost of raw materials, combined with escalating imports, affect economic viability. Nonetheless, the outlook remains positive, with growing demand for upstream paper products such as tissue paper, tea bags, filter paper, lightweight online coated paper, and medical-grade coated paper.

India now has 900 paper mills out of which around 553 mills are operational with a total operating capacity of around 25.6 Million Metric Tons. Indias paper packaging market is also expanding rapidly. In 2026, it is estimated at USD 22.73 Billion, up from USD 19.07 Billion in 2025, with projections reaching USD 54.67 Billion by 2031, reflecting a CAGR of 19.16% over 2026–2031. Growth is fueled by expansive e-commerce operations, restrictions on plastic use, and rising FMCG volumes, which increase demand for lightweight, recyclable substrates across primary and secondary packaging formats. Regulatory bans on selected single-use plastics across all 28 states are accelerating substitution, while brand owners invest in premium barrier-coated paperboard to meet sustainability commitments and consumer expectations. Digital printing adoption, already at 18% penetration in label lines, supports agile production, late-stage customisation, and counterfeit deterrence. However, exposure to kraft-paper price volatility and cost-competitive zero-duty ASEAN imports continues to pressure margins, prompting domestic mills to scale operations, backward-integrate, and secure recovered-fiber feedstock. Market participants are deploying capital toward coating, molded-fiber, and smart-label technologies to enhance product stewardship and capture higher-value applications across the supply chain.

Corrugated board accounted for 53.65% of Indias paper packaging market share in 2025, driven by the durability requirements of e-commerce and industrial stacking. Coated paperboard, however, is registering the fastest growth, with a CAGR of 20.95% through 2031, propelled by premium FMCG and pharmaceutical applications that demand moisture and grease barriers. The paperboard segment of Indias packaging market is projected to reach USD 18.47 Billion by 2031, up from USD 5.9 Billion in 2025. Coated variants are also benefiting from government procurement policies favouring recyclable substrates, particularly in public food-distribution programs. Investments such as ITCs H800 Crore (USD 9.011 Crore) barrier-coating line reflect this structural tailwind and highlight the industrys commitment to sustainable packaging innovation.

Paper cups represent another important segment of the Indian paper industry. These disposable cups, used for beverages such as tea, coffee, soft drinks, and soups, are coated with plastic or wax to prevent leakage and soaking. Under the plastic waste management Rules, the Extended Producer Responsibility (EPR) framework requires manufacturers to manage their products after they become waste. This regulation has encouraged businesses to shift toward paper-based products like paper cups, which are easier to recycle and dispose of compared to plastic alternatives. Growth in the paper cups market is supported by rising disposable incomes, convenience, recyclability, government regulations, and the expansion of the food services industry. The Indian paper cups market is expected to grow to 29.0 Billion units by 2033, at a CAGR of 2.38%. This comprehensive trajectory demonstrates how Indias paper industry, spanning pulp, packaging, and specialty products, is evolving rapidly under the combined influence of sustainability, regulatory support, technological innovation, and rising consumer demand.

(Source: IMARC group, brickwork ratings, Maximize market research, Mordor intelligence Expert market research, brickwork rating)

PER CAPITA CONSUMPTION
57	16
Kg, Global per capita paper consumption in FY 2025-26	Kg, India\u2019s per capita paper consumption in FY 2025-26
(Source: Brickwork rating)
LITERACY
80.9	100
%, India\u2019s literacy rate for the FY 2025-26 (Source: PIB)	%, India\u2019s literacy rate for the FY 2030-31
ECOMMERCE
1.03	1.6
Billion India\u2019s total internet user base in FY 2025-26 (Source: Data Reportal)	Billion India\u2019s total internet user base by 2050 (Source: Statista)

TOTAL PAPER CONSUMPTION
23.5	30
Million Tons, Total paper consumption of India per annum in FY 2025-26 (Source: Brickwork rating)	Million Tons, Total paper consumption of India per annum by FY 2027-28
P O P U L A T I O N
1.47	1.51
Billion India\u2019s current population in FY 2025-26 (Source: Worldometer)	Billion, India\u2019s estimated population by the year 2029-30
159.25	550
USD Billion, Market size of Indian e-commerce industry in FY 2025-26 (Source: Data Reportal)	USD Billion, Estimated market size of Indian e-commerce industry by the year 2035 (Source: Statista)

Demand catalysts

Sustainable living: The Indian paper industry is poised to benefit significantly from the global shift toward sustainable living. Rising demand for recycled and eco-friendly paper products is expected to accelerate growth, with the sustainable packaging market projected to reach H2,500 Crore by 2027, expanding at an annual rate of 15–18%.

Environmental awareness: Rising consumer consciousness around sustainability is fuelling demand for eco-friendly paper products. The recycled paper market is projected to expand to H1,050 Crore by the end of 2025, underscoring the industrys strong alignment with environmental priorities.

Expansion of Packaging and Retail: Indias paper and paperboard packaging market is projected to reach USD 14.57 Billion by 2026. The sectors rapid growth-driven by rising consumerism, booming e-commerce, and the expansion of organised retail-has become a key catalyst for the paper and pulp industry. Packaging paper is now indispensable across a wide range of applications, while increasing literacy levels and educational activities continue to sustain strong demand for printing and writing paper.

Population: Indias population reached 1,471.21 Million in 2026. With the global population continuing to rise, the demand for paper-based products has grown in parallel. Expanding educational activities and the retail sector are driving higher consumption of books, newspapers, and stationery, which in turn is providing strong momentum for the growth of the paper industry.

Urbanisation: Indias urbanisation rate will reach 37–38% by 2026, lifting the urban population to 540–550 Million. Tier-2 cities are emerging as core centers of consumption and modern living. This expansion fuels rising demand for packaged goods-food, beverages, personal care, and household products. Packaging growth translates into surging need for paper-based solutions across industries. By 2036, Indias urban population is projected to hit 600 Million, intensifying consumption trends. Urban transformation thus stands as a structural catalyst for paper industry growth.

Literacy: In 2025, Indias literacy rate for persons aged 7+ stands at 80.9% (PLFS 2023 24), higher than the 77.7% recorded in PLFS 2017 18. The government continues to expand educational access through initiatives like free and compulsory education. With the FY 2024 25 education budget expected to exceed H1,12,898.97 Crore, demand for educational materials, including paper, is set to rise.

Education sector: Indias growing population and rising literacy underpin increased demand for writing and printing paper. The education sector is estimated to account for 30–35% of total paper demand, with per capita paper consumption still only about 16 kg.

(Source: Maximize Market Research, Data Insight Market, Techsci Research, Together Buying, Primus Patner, Mordor Intelligence)

Financial performance

Revenues	Profit after tax	Production capability
During the year, the Company recorded revenues of 648.8 Crore, reflecting an marginal decline of 1.49% compared to H659.23 Crore reported in FY 2024-25.	The Company achieved a profit after tax of H44.14, as against H67.33 Crore in the previous financial year.	At the commencement of operations, the Company had a production capacity of 7 Tons per day (TPD) of kraft paper, which has now expanded to approximately 500 TPD, encompassing kraft paper as well as writing and printing paper.

Risk management

Environmental risk	Competition risk	Quality risk
Non-compliance with environmental regulations poses a serious threat to the Company\u2019s operational continuity.	The entry of new players into the market threatens the Company\u2019s share and profit margins, potentially weakening its competitive position.	Failure to uphold quality standards could reduce product demand, impacting both sales and revenue.
Mitigation:	Mitigation:	Mitigation:
To reduce environmental impact, the Company has invested in a modern effluent treatment plant and a chemical recovery unit. The recovery unit enables recycling of black liquor generated during the pulping process, ensuring sustainable operations.	The Company maintains its edge by leveraging its status as a premier Indian manufacturer of printing and kraft paper. By using agricultural residues in production, it effectively lowers raw material costs and enhances cost competitiveness.	The Company follows a rigorous quality control process and has earned certifications such as IS 14490:2024 from the Bureau of Indian Standards for plain copier paper and ISO 9001:2015, demonstrating its commitment to excellence.
Raw material risk	People risk	Liquidity risk
Interruptions in raw material supply could impair efficiency, leading to production delays, higher costs, and reduced profitability.	Inability to attract, retain, and develop skilled professionals may compromise product quality, hinder innovation, and affect overall performance.	Insufficient liquidity could restrict the Company\u2019s ability to meet financial obligations, disrupt operations, and affect long-term viability.
Mitigation:	Mitigation:	Mitigation:
The Company diversifies its raw material base by using bagasse, wheat straw, sarkanda, and recycled domestic and imported waste paper. It also maintains a substantial year-round inventory of bagasse to ensure supply stability.	The Company addresses this risk through continuous training and development initiatives, ensuring employees remain updated with industry best practices, technologies, and skills.	As of FY 2025-26, the Company maintained an inventory turnover ratio of 84 days and a debt-equity ratio of 0.23x, reflecting prudent capital management and a healthy financial structure that mitigates liquidity concerns.

Internal control systems and their adequacy

The Companys internal audit conducts regular reviews of reports maintained with both statutory framework is consistently monitored submitted by internal auditors, and internal auditors, reinforcing and updated to protect its assets, recording observations and the effectiveness and operational ensure regulatory compliance, and implementing corrective measures efficiency of the Companys internal address outstanding issues in a wherever required. Ongoing and control systems. timely manner. The audit committee structured communication is

Human resources

The Company acknowledges that the caliber of its employees is fundamental to its success and remains committed to equipping its workforce with the skills required to keep pace with ongoing technological advancements. In pursuit of this goal, the Company conducted extensive training programs throughout the year, encompassing diverse areas such as technical expertise, behavioral development, business excellence, general and advanced management, leadership capabilities, customer orientation, workplace safety, organisational values, and adherence to the code of conduct. As of 31 st March 2026, the Companys total employee strength stood at 1,042.

Cautionary statement

The Management Discussion and Analysis report containing your Companys objectives, projections, estimates and expectations may constitute certain statements, which are forward-looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, and economic developments within India and the countries with which the Company conducts business and other incidental factors