South India Paper Mills Ltd Directors Report

To

The Members

Your Directors hereby present the 67th Annual Report of the Company along with the audited accounts for the year ended 31st March, 2026.

The Company has adopted Indian Accounting Standards (Ind AS), from the financial year 2017-18 as mandated by the Ministry of Corporate Affairs (MCA), in place of Indian GAAP, followed earlier. Financial statements for the current year, including figures of the previous year are based on IndAS and this adoption has no major impact for the Statement of Profit and Loss.

WORKING RESULTS	FY 2025-26	FY 2024-25	FY 2023-24	FY 2022-23
Finished Production of Paper & Paperboards	90,457 MTs	76,721 MTs	69,833 MTs	50,867 MTs
Conversion Quantity at the Box Plant (PPD)	25,709 MTs	23,918 MTs	25,789 MTs	28,068 MTs
	( in lakhs)	( in lakhs)	( in lakhs)	( in lakhs)
Revenue from Operations	43,381.21	36,931.47	31,230.62	28,785.11
FINANCIAL RESULTS:
Profit/(Loss) before interest, depreciation & tax	5,126.63	2,252.99	1,870.57	(502.35)
Less : Finance costs	2,027.08	1,962.27	1,838.27	1,624.38
Gross/Cash Profit/(Loss)	3,099.55	290.72	32.30	(2,126.73)
Less : Depreciation	1,664.68	1,657.10	1,789.45	1,603.39
Profit/(Loss) before Exceptional items & Tax	1,434.87	(1,366.38)	(1,757.15)	(3,730.12)
Add : Exceptional income/(Loss)	---	87.89	(30.01)	1,327.50
Profit/(Loss) after Exceptional items, before tax	1,434.87	(1,278.49)	(1,787.16)	(2,402.62)
Tax( Paid )/ Refund of earlier years	0.84	---	---	---
Less/(Add) : Deferred Tax (charge)/ credit	(361.60)	314.42	444.64	752.38
Profit/(Loss) after tax for the year	1074.11	(964.07)	(1,342.52)	(1,650.24)
(Less) / Add : (Tax Provision for earlier years)/ Reversal	---	---	(0.25)	(16.95)
Net Profit/(Loss) after Tax	1074.11	(964.07)	(1,342.77)	(1,667.19)

OPERATIONS

Revenue from operations for the financial year 2025-26 at Rs. 433.81 crores, increased by 17.46% from Rs. 369.31 crores in the previous year.

Operation at the Paper Mill improved to 78.32% of the new capacity of PM6 (the only machine operating after scrapping the old machines) from 66.43% in the preceding year.

At the Printing & Packaging Division, Conversion tonnage was higher @ 71.41% of the capacity as against 66.44% in the preceding year.

Profit before interest, depreciation, tax (PBDIT) in FY 2025-26 improved to Rs. 5,127 lakhs, as against Rs. 2,253 lakhs, in the preceding year. Profitability improved substantially on account of higher volumes and improved product mix which comprised of higher value added grades.

Finance costs increased slightly to Rs. 2,027 lakhs (for working capital : Rs. 620 lakhs and other Loans : Rs. 1,407 lakhs) from Rs. 1,962 lakhs ( for working capital : Rs. 582 lakhs and other loans : Rs. 1,380 lakhs).

After making a depreciation provision of Rs. 1,665 lakhs (Previous year 1,657 lakhs), Profit before Exceptional Income & Tax was Rs. 1,435 lakhs (Previous year loss of Rs. 1,366 lakhs). Exceptional Income was Nil as against Insurance claim and salvage receipts towards building and machinery damage caused by fire accident in FY 2023-24, treated as Exceptional income to the extent of Rs. 88 lakhs in the previous year. Profit before tax was Rs. 1,435 lakhs (previous year loss Rs. 1,278 lakhs).

Company has opted for new regime of Income tax, wherein effective tax rate is 25.17% sans certain exemptions and allowances like additional depreciation, from FY 2021-22. Due to carry forward losses, cash outflow was NIL and provision for tax in the Profit & Loss statement is a deferred liability. Profit after tax is Rs. 1,074 lakhs.

Provision for current tax Nil (Nil) & deferred tax charge Rs. 362 lakhs as against deferred tax assets credit of Rs. 314 lakhs in the previous year due to loss incurred). Net profit for the year, after income tax refund of Rs. 1 lakh, was Rs. 1,074 lakhs. (Previous Year loss Rs. 964 lakhs).

Considering the prevailing economic environment and the internal and external factors, the Company has assessed the carrying amount of property, plant & equipment, receivables, inventories, investments and other assets as at the Balance Sheet date, the current liquidity position including its cash flows, the business outlook and has concluded that no material adjustments are required in these financial results and the Balance Sheet as at 31-3-2026.

FINANCES

During the year, cash flow & liquidity remained comfortable for most of the time.

Operating Profits (EBITDA) for the year 2025-26 increased to Rs. 5,126.63 lakhs. Loan Repayments for the year was Rs. 2,496.04 lakhs and interest/ finance charges Rs. 2,027.08 lakhs, resulting in surplus balance of Rs. 603.51 lakhs towards working capital and capex needs.

For the FY 2026-27, minimum operating profits required to meet debt obligations is about Rs. 4,020 lakhs, comprising of Loan Repayments Rs. 2,100 lakhs and interest Rs. 1,920 lakhs. Company is planning capital expenditure of about Rs. 2,400 lakhs, for energy saving, process efficiency and achieving reduction of down time, with a Term Loan of Rs. 1,800 lakhs.

	31.03.2026	31.03.2025
Long Term Gross Debt to Equity Ratio	0.53	0.63
Current Ratio	1.14	1.00

Installments of Term Loans and Interest on Term Loans and Working capital borrowings were paid within due dates. DIVIDENDS & RESERVES

With a view to conserve funds for operations & important capex requirements, the Directors have not recommended payment of Dividend for FY 2025-26 (Previous year Nil Dividend).

No amounts are proposed to be transferred to Reserves.

CURRENT PROSPECTS

New challenges have cropped up on account of the West Asia war, leading to higher fuel prices and input costs. Company is able to pass on the input costs thus far. However, continued volatility in input costs is a matter of concern. Expectation of higher inflation is yet to kick in. Effect of rise in petrol, diesel prices will be felt in Q1. Demand for Companys value-added products is robust. And with optimum scale of operation, the Company expects to improve the earnings.

The market conditions for paper, though generally competitive, as the industry capacity has increased substantially over the years, is favorable for quality products in the segment in which the Company can operate with the new plant. The market for corrugated boxes has become extremely competitive, as more players shift towards the new technology paradigm in corrugation even as demand growth remains lackluster. The Company is exploring opportunities in new areas of value added grades.

DEPOSITS

The Company has neither accepted nor renewed any deposits within the meaning of Section 73 of the Companies Act, 2013 and rules framed there under, during the financial year.

CREDIT RATING

ICRA has downgraded in June 2024, the Companys Long term Credit rating (for Fund based limits i.e. Term Loans and CC limits) from [ICRA]BBB- with negative outlook to [ICRA]BB+ (pronounced ICRA double B plus)with negative outlook and a short term rating (for Non Fund based limits i.e LC & BG facilities) of [ICRA]A3, to [ICRA] A4+ (pronounced ICRA A four plus) in view of the losses incurred. Company discontinued the assignment with ICRA due to above downgrade, despite the timely debt servicing and showing adequate funds to service the debts for subsequent year also.

Company approached Acuite Ratings & Research Ltd in September 2025, with Company coming to profits in FY 2025-26 Q1 hoping for better rating with improved performance and profits. Despite the profits reported every quarter during the year, rather than holding the rating, an irrational lower rating of BB was given. A representation was made to the Rating Committee explaining specific business factors that resulted in the improved workings. This representation was ignored by the Rating Committee. Company has not accepted this irrational downgrade.

In the current year, Company will be in process to get proper credit rating in line with improved performance.

DIRECTORS

During the year under review, the shareholders have approved the appointment of Mr Gomatam Raghavan Ravi (DIN 06662567), Mr Nagaraja Srivatsa (DIN 02805712), Mr Purushotham Javaregowda (DIN 03332807) & Mrs Gargi Ojha (DIN 11024179) as Independent Directors of the Company for a period of 5 years by way of Special resolution through Postal Ballot on 29th June 2025. In terms of Section 152 of the Companies Act 2013, Mr. Ajay D Patel (DIN 00466905), retires by rotation and he, being eligible offers himself for re appointment. Your Directors recommend his re-appointment as Director.

Further Mr. Harshad Natvarlal Modi (DIN 0167613) was reappointed on 18th September 2025, as a director liable to retire by rotation. Since Mr. Harshad Natvarlal Modi would be attaining the age of 75 years on 18-08-2027 his appointment /reappointment/continuation of appointment is subject to approval of the Shareholders of the Company by a special resolution. Since the next Annual General Meeting (AGM) of the Company would only be in September 2027, it is now proposed to obtain approval for the continuation of appointment of Mr. Harshad Modi at the ensuing AGM. Your directors recommend continuation of his appointment as Director (notwithstanding Mr. Harshad Modi attaining the age of 75 years) considering his vast experience & knowledge of the Paper industry.

Meetings of the Board

The number of meetings of the Board held and details thereof are mentioned in the Report on Corporate Governance forming a part of this Annual Report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors under Section 149(7) of the Companies Act 2013, in respect of meeting the criteria of independence as provided under Section 149(6) of the Act.

BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its performance, Board Committees and Individual Directors pursuant to the provisions ofthe CompaniesAct and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board has recorded overall satisfaction.

In a separate meeting of Independent Directors held on 28-03-2026, the performance of Non-Independent Directors, Board as a whole and the performance of the Chairman was evaluated. They have expressed overall satisfaction.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Companys Policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters as provided under Section 178(3) is annexed hereto and forms part of this Annual Report.

Criteria for performance evaluation of Independent Directors as required by the Listing Regulations also forms part of this report.

Directors Responsibility Statement :

As required by Section 134(5) of the Companies Act 2013, we state that :

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards;

The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2026 & of the profits of the Company for the financial year 2025-26.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

The Directors have laid down internal financial controls to be followed by the Company and the controls are adequate and operating effectively.

The Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and these systems are adequate and operating effectively.

Managerial Remuneration

Requisite details as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith and forms a part of this Annual report.

The company has no subsidiary or holding company and hence receipt of remuneration by the MD or WTD does not arise.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

There are no changes in Key Managerial Positions during the year.

PARTICULARS OF EMPLOYEES

Particulars of employees as prescribed under the Companies Act, 2013 are annexed.

CORPORATE GOVERNANCE

As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 separate Report on Corporate Governance, along with Secretarial Auditors Certificate confirming the compliance is attached.

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The Report on Managements Discussion and Analysis, as required under clause 2(e) of Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 covering industry structure and developments, opportunities and threats, outlook, discussion on financial performance, etc., is contained in “Management Discussion and Analysis Report” that forms an integral part of this Report.

INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

AUDITORS

There are no adverse comments by the Auditors in their report on the Financail Statements for the year under report.

SECRETARIAL AUDIT

Pursuant to Section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr S N Hitaish Kumar, Practicing Company Secretary (C P No. 6553), to conduct the Secretarial Audit of the Company for Financial Year 2025-26. The Secretarial Audit Report in Form MR 3 is annexed.

Explanation for observation / comments made by the Company Secretary in Practice

One day delay in filing the Compliance certificate under Regulation 74(5) of SEBI (Depositories and Participants) Regulations, 2018, for the Quarter ended 31st March 2025 is due to non-receipt of the Compliance certificate from the Companys Registrars & Share transfer Agents in time. The filing has been completed the next day.

INTERNAL AUDITOR

Pursuant to Section 138(1) of the Companies Act, 2013, the Company has appointed M/s Rau and Nathan Chartered Accountants (Firm Regn. No.003178S), Mysore, to conduct Internal Audit of the functions and activities of the Company for Financial Year 2025-26.

COST AUDIT

Companys products are not notified for Cost Audit in FY 2025-26.

Annual Return

Copy of the Annual Return for the financial year ended 31-3-2025 is available on our website www.sipaper.com.

Copy of the Annual Return for the financial year ended 31-3-2026 will be placed on our website www.sipaper.com after the conclusion of AGM.

Risk Management

The Company has a risk management framework to identify and evaluate business risks and opportunities. It seeks to create transparency, minimise adverse impact on the business objective and enhance the Companys competitive advantage. It aims at ensuring that the executive management controls the risk through means of a properly defined framework.

The Company has laid down appropriate procedures to inform the Board about the risk assessment and minimization procedures. The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

The Board of Directors have constituted a Risk Management Committee as required under the Listing Regulations, vide Board Meeting held on 27.01.2015, to frame, implement and monitor the risk management plan of the Company. The Committee was reconstituted w.e.f. 31-3-2025 and presently, comprises of the following Directors.

Mr. Manish M Patel	- Chairman
Mr. Gomatam Ravi	- Member
Mr. Nagaraja Srivatsa	- Member

The terms of reference of risk management committee include review of Risk management policy and its development within the Company, to monitor the effectiveness of risk management policy, review major risks of the Company and to advice on mitigation to the Board.

Whistle Blower Policy

In deference to Section 177 (9) of the Act,read with relevant Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations the Company has established a vigil mechanism overseen by the Audit Committee. The Company has formed Whistle Blower policy as required under the Companies Act 2013 and Listing Regulations and no personnel has been denied access to the Audit Committee.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company did not give any Loan / Guarantee or any security or make investment covered under Section 186 of the Companies Act, 2013. The Company has complied with the provisions of section 186 of the Companies Act, 2013 in respect of the Investments made in the earlier year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

None of the transactions with any of the related parties was in conflict with the interests of the Company. Details of transactions with related parties are furnished as an annexure in Form AOC-2.

CHANGES IN NATURE OF BUSINESS OF THE COMPANY

There was no change in the nature of business of the Company during the year.

MATERIAL CHANGES & COMMITMENTS

There was no change in the nature of business of the Company during the year.

There was no material changes and commitments in the business operations of the Company since the close of the financial year on 31st March 2026 to the date of this report.

GENDER BASED EMPLOYEE DISCLOSURES

As on 31st March 2026, the employee strength is 344 numbers out of which 338 are male employees and female employees are 6. There are no transgender employees.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 the Company has formulated a Policy to prevent Sexual Harassment of Women at workplace. The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

(a) number of complaints of sexual harassment received in the year - NIL ;

(b) number of complaints disposed off during the year; - NIL and

(c) number of cases pending for more than ninety days - NIL

MATERNITY BENEFITS ACT, 1961

The Company has complied with the provisions relating to Maternity Benefits Act, 1961

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS

As per Rule 8(5)(vii) of the Companies (Accounts), Rules 2014, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations.

ISO 9001 CERTIFICATION

Companys Quality Management Systems (QMS) have been audited by Bureau Veritas Certification India Pvt Ltd and ISO 9001: 2015 Certification was awarded to the Printing & Packaging Division of the Company. This Certification issued is valid up to 17-5-2027.

FOREST STEWARDSHIP COUNCIL (FSC) CERTIFICATION

The Company continues to be certified under standards of FSC, namely FSC-STD-40-003, FSC-STD-40-004 and FSC-STD-40-007 for its product group. This is an assurance of environmental protection by providing sufficient documentary controls and traceability throughout the Chain of Custody.This certification means Company is capable of manufacturing FSC Recycled and FSC Mixed products.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavored to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. ETP facility installed in the preceding year for conserving water and meeting the pollution control norms even on the expanded capacity of the paper mill is functioning satisfactorily. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment.Fuel shed with roofing, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing Ash and plastic waste to recyclers authorized by KSPCB. Ash is used in brick manufacturing and plastic is being used in cement kilns.

The Company had engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a study of ‘Utilisation of Paper Mill Effluent for Agricultural Purpose. After 4 years study, a final report has been issued concluding that the effluent generated by the paper mill contains small amount of nutrients, higher amount of salts and are within limits of Central Pollution Control Board norms. The finding further says that mill effluent along with additional dose of nitrogen has significant effect in increasing the crop yields.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was cordial and harmonius. A 4 year Wage settlement agreement signed with workers union at the Paper Mill was in force upto 31-3-2026. Negotiation for agreement for the subsequent period is in progress. In case of the Box unit, a 4 year Wage settlement agreement signed with workers union in April 2026 is in force upto 31-3-2028.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility Committee as mandated by Section 135 of the Companies Act 2013 vide Board Meeting held on 27.01.2015.

The broad terms of reference of the CSR Committee are as under:

• Formulating and recommending to the Board, the CSR Policy which shall indicate the activities to be undertaken by the Company.

• Recommending the amount of expenditure to be incurred on the aforesaid activities and;

• Reviewing and Monitoring the CSR Policy of the company from time to time.

The Company has no obligation towards CSR for the financial year 2025-26, on account of losses incurred during the FY 2024-25. A report on CSR Activities is not applicable and hence not annexed herewith, for the above reason.

OTHER DISCLOSURES

The Company has not made any application, nor any proceeding is pending against the Company under the Insolvency and Bankruptcy Code, 2016 during the year under review.

The Company has not made any one time settlement with any Banks or financial institution during the year under review. Hence Rule 8(5)(xii) of Companies (Accounts) Rules 2014 is not applicable.

The Company has no subsidiaries, joint ventures or associate companies as the end of the year under Report.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

	for and on behalf of the Board of Directors
Nanjangud	Manish M. Patel
28th May, 2026	Chairman & Managing Director
	DIN 00128179