Spinaroo Commercial Ltd Management Discussions

The report contains forward looking statements, identified by words like plans, will expect, will anticipate, intends, estimates, projects and so on. All statements that address expectations or projections about the future, but not limited to the companys strategy for growth, product development, market position, expenditure and financial results are forward looking statements. They are based on certain assumption and expectation of future events, the company cannot guarantee that these are accurate or will be realized. The companys actual results, performance or achievement could thus differ from those projected in any forward looking statements. The company assumes no responsibility to publicly amend, modify or revise any such statement on the basis of subsequent development,information or events.

Despite persistent geopoliticaluncertainties, supply chain realignments and volatile global trade conditions, the Indian economy has continued to demonstrate remarkable resilience, supported by strong domestic consumption, public capital expenditure and improving macroeconomic stability. India remained the fastest-growing major economy in FY 2025-26, with real GDP growth of 6.5% 7.4% during the year, reinforcing its position as one of the key drivers of global economic growth. The Reserve Bank of India further supported economic momentum through cumulative repo rate cuts of 100 basis points during 2025, bringing the policy rate down to 5.50%, alongside a 100 basis points reduction in the Cash Reserve Ratio (CRR) to enhance systemic liquidity and improve monetary transmission. These measures are expected to strengthen credit growth, improve borrowing affordability and support investment activity across sectors. While lobal economic conditions remain uncertain, Indias structural growth drivers, stable financial system and policy support continue to provide a strong foundation for sustained long-term economicexpansion.

The Indian paper industry continues to demonstrate steady growth momentum, supported by rising demand from packaging, food services, e-commerce and hygiene-related applications. India remains the 15th largest paper producer globally, contributing nearly 5% of global paper production, with an installed production capacity of approximately 25 million tonnes annually. The industry has witnessed strong structural growth over the years, with production increasing from 20.37 million tonnes in FY 2017-18 to nearly 25 million tonnes in FY 2019-20, reflecting an annual growth rate of around 10%. Packaging paper and paperboard continue to dominate the sector with nearly 57% share of industry output, driven by sustained growth in organised retail, food delivery, FMCG and e-commerce sectors. In addition, increasing environmental awareness and the Government of Indias ban on identified single-use plastic products have accelerated the transition towards sustainable paper-based alternatives such aspaper cups and paper plates. The India paper cups and paper plates market was valued at USD 445.55 million in 2024 and is projected to reach USD 660.21 million by 2033, growing at a CAGR of 4.11% during 2025-2033. The market growth is further supported by rising hygiene awareness, increasing consumption in social and institutional gatherings, expansion of organised food services and growing preference for eco-friendly disposable products. The Governments Extended Producer Responsibility (EPR) framework for paper packaging, effective from April 2026, is also expected to strengthen recycling infrastructure and promote sustainable packaging adoption across industries.

The global paper cups and paper plates market continues to witness steady growth, driven by increasing environmental awareness, regulatory restrictions on single-use plastics and rising demand from the food and beverage industry. The global market size reached approximately USD 122.7 billion in 2025 and is projected to grow to USD 144.1 billion by 2034, registering a CAGR of 1.75% during 2026 2034. The growth is supported by the increasing adoption of sustainable and biodegradable alternatives to plastic and foam-based disposable products across developed and emerging economies. In addition, the rapid expansion of quick service restaurants (QSRs), food delivery platforms, cafes and organised retail channels has significantly increased demand for convenient and eco-friendly disposable tableware products. The availability of paper-based products through both offline retail networks and rapidly growing online distribution channels is also contributing to market expansion, while stringent government regulations promoting recyclable and compostable packaging solutions continue to accelerate the transition towards paper-based alternatives.

Despite continuing geopoliticaluncertainties in West Asia and persistent inflationary pressures on input costs, the Company demonstrated operational resilience during FY 2025-26,maintaining stable revenue at Rs. 39.26 crores as against Rs. 39.31 crores in FY 2024-25. While profitability during the year was impacted due to elevated raw material prices and limited ability to fully pass on cost increases to customers in a highlycompetitive market environment, the Companyremained focused on strengthening its operationalfoundation and long-term growth prospects. During the year, the Company undertook several strategic initiatives aimed at improving efficiency, enhancing margins and expanding future revenue opportunities. These included timely and strategic sourcing of paper and other key raw materials, increased focus on higher value-added products and continued emphasis on operational optimisation. The Company has also invested in a new printing machine, which is expected to become operational shortly and is anticipated to enhance production capabilities, improve operationalefficiency and support future revenue growth.

While global geopolitical developments and commodity price volatility continue to pose near-term challenges, the Company remains confident in its business fundamentals and is committed to pursuing prudent strategies to improve profitability, strengthen customer relationships and create sustainable long-term value forstakeholders.

Management has put in place effective Internal Control Systems to provide reasonable assurance for Safeguarding Assets and their usage. Maintenance of Proper Accounting Records, and Adequacy and Reliability of theinformation used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows: (I) Existence of Authority Manuals and periodical updating of the same for all Functions. (ii) Existence of clearly defined organizational structure and authority. (iii) Existence of corporate policies for Financial Reporting and Accounting. (v) Existence of Annual Budgets and Long Term Business Plans. (vi) Existence ofInternal Audit System. (vii) Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Internal Auditor to ensure compliance and effectiveness of the Internal Control Systems.

The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required.

Human Resource Development (HRD) is the framework for helping employees develop their personal and organizational skills, knowledge, and abilities. To enrich the skills of employees and enrich their experience, the Company arranges, Practical Training Courses by Internal and External Faculty. The Industrial Relations encompasses the relationship between the management and workmen. IR plays a significant role in todays working scenario where the harmonious relationship between the employers and employees is needed to have an uninterrupted production.

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Stakeholders are cautioned not to place undue reliance on the forward looking statements.