SMVD Poly Pack Ltd Management Discussions

Industry Structure and Development, Opportunities and Threats

Global Outlook and India

Global growth is slowing following a sharp rise in trade barriers and heightened policy uncertainty. Growth is expected to weaken to 2.3% in 2025 - a significant downtrend from previous forecasts with only a tepid recovery expected in 2026-27. Growth could be lower if trade restrictions escalate or if policy uncertainty persists. Other downside risks include weaker than expected growth in major economies, worsening conflicts and extreme weather events. Multilateral policy efforts are needed to foster a more predictable and transparent environment for resolving trade tensions.

(https://www.worldbank.org/en/publication/global-economic-prospects)

As per the April 2025 edition of World Economic Outlook after several years of overlapping shocks, the global economy has entered a phase of cautious stabilisation. Growth remains modest and projections for global output have been revised downward from the January 2025 update. This reflects a steep rise in tariff rates, policy uncertainty, and slowing progress in international cooperation. Global inflation is expected to decline, although at a slower pace than previously anticipated, and downside risks such as trade tensions and volatile financial markets continue to weigh on the outlook.

For India, however, the growth outlook is relatively more stable. The IMF projects steady expansion for the Indian economy, supported by firm private consumption, particularly in rural areas. In a global environment marked by uncertainty and subdued growth, Indias resilience stands out, reinforcing its role as a key driver of global economic activity. India is projected to remain the fastest-growing large economy for 2025 and 2026, reaffirming its dominance in the global economic landscape. The countrys economy is expected to expand by 6.2 per cent in 2025 and 6.3 per cent in 2026, outpacing many of its global counterparts. In contrast, the IMF projects global economic growth to be much lower, at 2.8 per cent in 2025 and 3.0 per cent in 2026, highlighting Indias exceptional outperformance. The IMF has also revised its growth estimates for other major global economies. Chinas GDP growth forecast for 2025 has been downgraded to 4.0 per cent, down from 4.6 per cent in the January 2025 edition of the World Economic Outlook. Similarly, the United States is expected to see a slowdown, with its growth revised downward by 90 basis points to 1.8 per cent. Despite these revisions, Indias robust growth trajectory continues to set it apart on

the global stage. ( https://www.pib.gov.in/PressReleasePage.aspx?PRID=2123826)

Recent Trend & Future Outlook

The flexible intermediate bulk container market size reached USD 8.63 billion in 2025 and is on course to touch USD 10.96 billion by 2030, reflecting a 4.88% CAGR across the period. Demand continues to come from chemicals, agriculture and construction, but stronger growth now comes from sustainable packaging mandates. North America held the largest flexible intermediate bulk container market share at 38.74% in 2024 on the back of stringent safety rules and sizeable agricultural exports, whereas Asia-Pacific is expanding at 8.12% CAGR through 2030 on the strength of capacity additions in China, India and Southeast Asia. Tightened global hazardous- goods regulations have lifted premium demand for Type C and Type D electrostatic-safe bags, while circular-economy policies accelerate adoption of recycled-content polypropylene variants. (Source: https://www.mordorintelligence.com/industrv-reports/fibc-market)

The Indian packaging sector is projected growing at a CAGR of 12.60% during its forecast period (2023-2028 ) possibly making it one of the largest contributing sector of the Indian economy.

(https://www.mordorintelligence.com/industry-reports/packaging-industry-in - india#:~:text=India%20Packaging%20Market%20Analysis,period%20(2023%2D2028).

Indias escalating consumer market, rising population and changing lifestyles are the various factors leading to surge in demand for packaging industry especially in the end user industries.

The FIBC trend in the woven sacks industry is expected to stick to its trend of higher graph. Further rise in the FIBC demand would definitely lead to new innovations by manufacturers for catering to specific requirements. The expanding industries, including food products & agriculture, pharmaceutical products, and chemicals and fertilizers, the Make in India initiative have resulted in the establishment of numerous manufacturing enterprises in India, further boosting the demand for FIBC, for effective storage, cost effective solution for bulk packaging and transportation of goods. Along with FIBC, PP, HDPE, Leno bags are also in demand on account of their use as fatigue resistance, high chemical resistance and durability thereby making it a suitable material for packaging. It is majorly utilized as a packaging material as it is waterproof and resistant to moisture, resistant to wear, tear and fatigue which makes it suitable for applications that require a high level of physical stress.

Risks and Concerns

One of the most pressing concerns is the volatility in raw material prices. Since PP and HDPE are petroleum-based products, their prices are directly influenced by fluctuations in global crude oil prices. The industry has seen sharp swings in polymer prices, particularly post-pandemic and amidst ongoing geopolitical tensions, which has made cost forecasting extremely difficult. Manufacturers operating on thin margins are especially vulnerable to these price movements, and many are unable to pass on the increased cost to customers in such a competitive market.

Lastly, safety risks, especially related to fire hazards, remain a real threat. The industry deals with flammable materials like plastic granules, inks, and films, and many units still lack robust fire safety infrastructure or regular safety audits. Incidents of fire not only cause direct loss of assets but also lead to long business interruptions. Those without proper insurance coverage or risk management systems find it extremely difficult to recover from such events.

In essence, the PP and HDPE bag manufacturing industry is operating in an environment marked by rising costs, regulatory headwinds, operational inefficiencies, and heightened market competition. To survive and grow in such conditions, manufacturers will need to adapt quickly· by strengthening quality control, improving operational efficiency, investing in compliance and sustainability, and finding ways to differentiate their offerings in both domestic and global markets.

Internal control systems and their adequacy

The Company maintains adequate internal control systems commensurate with the Companys size and business, which provide, among other things, reasonable assurance of recording the transactions of its operations in all material aspects and providing protection against misuse or loss of the Companys assets. The systems and processes are continually reviewed for their effectiveness by the company and augmented by documented policies and procedures.

Financial and Operating Performance

The operating revenue stood at Rs. 37.42 Lakhs (Rs. 2479.32 Lakhs in FY 2023-24) and operating profit/(loss) at Rs. 1191.55 Lakhs (Rs. (5612.14) Lakhs loss in FY 2023-24) respectively. The

gross profit margin has decreased from (8.53)% last year to gross loss (424.59)% in the present year. An overview of the financial performance can be seen as follows:-

A brief note on the Companys Segment operations was provided as notes to Financial Statements.

Material developments in human resources & industrial relations including number of people employed

Human Resources are considered to be the most important and vital asset not only for your Company but also for every other Organsiation. The Company emphasises its People Development Processes and strives to upgrade skill sets to motivate the workforce to contribute towards organisational goals. During the year under review there was no such possibility to conduct regular training in order to upgrade the skills of workers. Rather during the last years maximum of the temporary and permanent workers left the job on account of the situation caused by the fire.

Your Company continuously takes adequate and necessary steps to maintain a competitive, healthy and harmonious work environment and cordial industrial relations with all its customers, suppliers etc. As on 31st March 2025, there were 12 permanent employees in the Company.

Disclosure of Accounting Treatment

In the preparation of the financial statements, the Company has followed the Accounting Standards referred to in Section 133 of the Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities, laws and regulations. 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 realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors such as cost of raw materials, tax laws, interest and power cost and economic developments and such other factors within the country which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.

Annexure - E to Directors Report

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (Appointment and Remuneration of Managerial Personnel) Rules, 2014)

The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2024-25 and the ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2024-25 are as under:

• On account of the unforeseen circumstances as the Company was not able to carry on the business hence no

comparison could be drawn on KMP remuneration against the Companys performance.

Note:

i) No other Director other than the Managing Director received any remuneration during the financial year 2024-25.

ii) The median remuneration of employees of the Company during the financial year was 2.81 Lakh;

iii) In the financial year, there was an increase of 430.19% in the median remuneration of employees;

iv) There were 12 permanent employees on the rolls of Company as on 31st March, 2025;

v) Average percentage increase already made in the salaries of the employees other than the managerial personnel in the last financial year 2024-25 was 15.89% whereas the percentile increase in the managerial remuneration for the same financial year was 8.68%

vi) It is hereby affirmed that the remuneration paid during the year ended 31st March, 2025 is as per the Remuneration Policy of the Company.

Statement pursuant to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

A. LIST OF TOP TEN EMPLOYEES IN TERMS OF REMUNERATION DRAWN :

A. Employees, if employed throughout the financial year, was in receipt of remuneration for that year which in aggregate, was not less than Rs. 102.00 lakhs per annum.: None

B. Employees, if employed for a part of the financial year was in receipt of remuneration for any part of that year, at a rate which in the aggregate was not less than Rs. 8.50 lakhs per month. : None

C. Employees, if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the Managing Director or Whole-time Director or Manager and holds by himself or along with his spouse and dependent children, not less than two per cent of the equity shares of the Company. There are employees in receipt of remuneration more than the Managing Director but they does not hold any equity shares of the Company by himself or along with his spouse and dependent children.