Shree Rajeshwaranand Paper Mills Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

The paper and pulp industry in India has been undergoing a structural shift driven by sustainability concerns, digitisation trends and evolving consumption patterns. Demand for writing & printing paper remains subdued; however, packaging paper and board continue to witness healthy traction owing to e- commerce growth, FMCG expansion and increased environmental focus on recyclable packaging solutions.

The industry faced its own headwinds during the years of economic slowdown and supply chain disruptions, including volatility in pulp prices, energy costs and availability of working capital.

For companies emerging from stressed operations or insolvency processes, industry re-entry requires calibrated capital allocation, strong operational discipline and focused revival efforts. Against this backdrop, the Company is currently in an early revival phase following the approval of its Resolution Plan under the Insolvency and Bankruptcy Code (IBC).

OPPORTUNITIES & THREATS

Opportunities

• Approval of the Resolution Plan provides the Company with a clean and sustainable capital structure, enabling operational re-start and long-term planning.

• Growing domestic demand for packaging grades presents an opportunity for product diversification in future phases.

• Government focus on reducing single-use plastic enhances prospects for paper-based alternatives.

• Optimisation of assets and processes under new management may unlock efficiencies.

Threats

• Prolonged suspension of trading and regulatory constraints until the capital-reduction formalities and new ISIN activation are completed.

• Highly competitive market structure with established players and capital-intensive entry barriers.

• Continued volatility in input costs (pulp, chemicals, coal, power).

• Macro-economic uncertainty and margin pressures in the near term.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company is currently not operational and therefore has no segment-wise revenue for the year. The focus during FY 2025-26 remained on compliance with the Resolution Plan, asset preservation and transition to the new management team.

OUTLOOK

• With the Resolution Plan approved by the Honble NCLT and the new Board constituted, the Company is positioning itself for a structured revival. Key priorities include:

• stabilising the financial position post capital restructuring;

• completing statutory and exchange-related formalities (listing, trading, ISIN activation);

• evaluating feasibility of resuming operations in a phased manner;

• exploring strategic alliances and potential product diversification.

• The outlook remains cautiously optimistic, subject to availability of working capital, market conditions and infrastructure readiness.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has internal control systems commensurate with the size and phase of its operations. Post CIRP, the new management has initiated strengthening of process-level controls, updating of documentation and enhancement of authorisation protocols. The Internal Auditor reports periodically to the Audit Committee, and corrective actions are implemented promptly.

The Company continues to review and improve its internal control environment to ensure reliability of financial reporting, safeguarding of assets and compliance with statutory requirements.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, the Company earned Rs. 0.02 lakhs as total income, primarily from nonoperational sources. The Company incurred a net loss of Rs. 30.46 lakhs, largely due to recognition of exceptional items arising from adjustments required under the approved Resolution Plan.

As operational activities remain suspended, the financial performance does not reflect core business operations. Net worth continues to remain impacted by accumulated losses; however, capital restructuring under the Resolution Plan places the Company on a more sustainable footing for future revival.

RESEARCH & DEVELOPMENT

During the FY 2025-26, the Company did not undertake any R&D activity due to non-operational status. The revival strategy may include assessment of modern paper-making technologies, sustainability practices and energy-efficient manufacturing processes in subsequent phases.

QUALITY, ENVIRONMENT & SAFETY

Even though production activities were not undertaken during the year, the Company remains committed to world-class standards in product quality, workplace safety and environmental compliance. Operational SOPs, safety protocols and pollution-control mechanisms will be re-evaluated and upgraded prior to commencement of manufacturing activities.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Since the Company was under CIRP for most of the year, employee strength remained minimal. As the revival process progresses, the Company intends to build a performance-driven and skilled workforce. The Management acknowledges human capital as a critical asset for future operations.

Industrial relations remained cordial during the year.

RISKS AND CONCERNS

The Company has identified the following key risks:

• Revival Risk: Timely completion of statutory formalities and procurement of working capital is essential for operational restart.

• Market Risk: Competitive pressure and price fluctuations in the paper industry may impact profitability.

• Compliance Risk: Delay in regulatory approvals, including listing and trading permissions, may impact timelines.

• Operational Risk: Restarting a non-operational unit requires significant investment in maintenance, modernisation and manpower mobilisation.

The Company is strengthening its risk-management framework to systematically identify and mitigate such risks.

KEY FINANCIAL RATIOS

In accordance with SEBI (LODR) Regulations, the following ratios are provided. Since the Company was non-operational during the year, most ratios are not meaningful:

Ratio	FY 2025-26	FY 2024-25	Remarks
Debtors Turnover	0	0	No operations
Inventory Turnover	0	0	No operations
Interest Coverage Ratio	Negative	Negative	Losses + exceptional items
Current Ratio	1.96	1.96	Improvement due to CIRP adjustments
Debt-Equity Ratio	0	0	Debt extinguished under Resolution Plan
Operating Margin (%)	NA	NA	No operations
Net Profit Margin (%)	NA	NA	No operations
Return on Net Worth (%)	Negative	Negative	Impacted by exceptional loss

FORWARD-LOOKING STATEMENTS

Statements in this MD&A may include forward-looking views based on current expectations. Actual results may differ materially due to economic conditions, market dynamics, regulatory developments or other factors beyond the Companys control.