The Indian Wood Products Company Ltd Management Discussions

FY2026 represents the fiscal year 2025-26, from 1 April 2025 to 31 March 2026, and analogously for FY2025 and previously such labelled years.

GLOBAL ECONOMIC OVERVEW

The global economy demonstrated resilience during FY 2025 26 despite continuing geopolitical uncertainties, trade realignments, evolving monetary policy dynamics and climate-related disruptions. It grew marginally at a 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty. While inflationary pressures moderated across several advanced and emerging economies compared to previous years, the pace of disinflation remained uneven, prompting central banks to adopt a cautious approach towards monetary policy easing.

Economic growth in advanced economies remained subdued, reflecting the impact of elevated interest rates, moderation in consumer spending, and weaker manufacturing activity. Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, while emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024. Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024. The United States continued to exhibit relative resilience, supported by robust labour market conditions and sustained domestic consumption. In contrast, economic activity in the Euro Area remained constrained by weak industrial output and subdued investment. Chinas economic recovery progressed at a slower-than-anticipated pace amid continued stress in the real estate sector, soft domestic demand and slowing external trade.

Emerging Market and Developing Economies (EMDEs) continued to outperform advanced economies, driven by resilient domestic demand, improving fiscal positions and sustained public investment. However, global trade growth remained below its long-term trend due to geopolitical fragmentation, supply chain diversification and increasing protectionist measures.

Performance of the major economies, 2025

United States: GDP growth of 2.1% in 2025 compared to 2.8% in 2024. China: GDP growth was 5.0% in 2025 compared to 5.0% in 2024. United Kingdom: GDP growth was 1.3% in 2025 compared to 1.1% in 2024.

Japan: GDP growth was 1.2% in 2025 compared to (0.2) % in 2024. Germany: GDP growth was 0.2% in 2025 compared to a -0.5% in 2024. (Source: IMF April 2026 Outlook, World Bank) Commodity markets experienced intermittent volatility during the year, particularly crude oil and energy prices, influenced by geopolitical tensions and disruptions in major shipping routes. Financial markets remained sensitive to changes in interest rate expectations, geopolitical developments and currency movements, resulting in periodic volatility in capital flows across emerging markets.

Despite these headwinds, the global economy continued to benefit from sustained investments in digital transformation, artificial intelligence, renewable energy, infrastructure development and technological innovation, which are expected to remain important drivers of long-term productivity and economic growth. Looking ahead, while the global economic outlook remains subject to risks arising from geopolitical developments, inflationary pressures and financial market volatility, gradual monetary policy normalisation and easing supply-side constraints are expected to support moderate global growth over the medium term.

The Indian Economy

India continued to consolidate its position as one of the worlds fastest-growing major economies during FY 2025 26, supported by strong macroeconomic fundamentals, resilient domestic demand, prudent fiscal management and sustained public investment in infrastructure.

The Indian economy grew at an estimated 7.6% in FY 2025-26), compared to 7.1% in FY 2024-25. This growth was driven by strong consumption and increasing investments, reafIrming Indias position as the fastest-growing major economy. Indias Real GDP at Constant Prices was estimated at Rs. 322.58 Lakhs Crores in FY 2025-26, against the First Revised Estimate of Rs. 299.89 Lakhs Crores for FY 2024-25.

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 H94.78 against the US dollar. This reflected global capital flows, geopolitical uncertainties.

Economic activity remained broad-based across key sectors of the economy. Government capital expenditure continued to provide a strong impetus to growth through in transportation, logistics, urban significant infrastructure, renewable energy and digital public infrastructure. Policy initiatives aimed at strengthening domestic manufacturing, enhancing ease of doing business and promoting industrial competitiveness continued to reinforce investor confidence.

Foreign portfolio investors remained risk-averse, withdrawing a record H1.8 trillion during FY 2025- 26 the largest outflow in 36 years. However, strong domestic institutional inflows of H8.55 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. On the last trading day of the year, the BSE Sensex fell 5.36%, or 4,076.96 points, compared with a rise of 5.10%, or 3,763 points, in the same period last year, while the Nifty 50 declined 3.6%, or 834 points, 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 61.47% during FY 2025-26 reflecting global risk aversion and safe-haven demand. Indias fiscal position continued to strengthen, with net direct tax collections rising 7.19% to H22.8 trillion as of 17 March 2026. Contributions from corporate and non-corporate taxpayers remained nearly balanced, reflectingsustained formalisation other economy, improved compliance, and the success of digitisation led reforms.

Indias financial sector remained stable and well-capitalised throughout the year. 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 thereby facilitating increased investment across manufacturing, infrastructure, MSMEs and retail segments. This stability was mirrored in profitability strong metrics,dollar environment, and 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 FY 2025-26, underscoring sustained operational efIciency and a healthier balance sheet trajectory. The banking system continued to witness healthy credit growth, improved asset quality and stronger profitability. The continued expansion of digital infrastructure, increasing adoption of Unified Payments Interface (UPI), rapid growth in e-commerce and fintech, and widespread digitalisation across businesses significantly enhanced economic efIciency and financial inclusion.

The Reserve Bank of Indias calibrated stance, with the repo rate at 5.25%, balances inflation risks with growth support, ensuring macroeconomic stability. Improved banking health and liquidity conditions are expected to sustain strong credit growth across MSMEs, housing, and retail segments.

The Union Budget maintains fiscal discipline while prioritising infrastructure, MSME support, skilling, and innovation key levers for long-term productivity. Going forward, favourable demographics, rising urbanisation, increasing private sector investment, continued infrastructure development, structural reforms and expanding manufacturing capabilities are expected to sustain Indias medium-term growth trajectory. 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. 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.

Accordingly, the Company believes that Indias long-term economic outlook remains positive and continues opportunities for growth across the toprovidesignificant manufacturing sector.

Indian Katha Industry

Katha manufacturing in India has been an important part of forest based chemical industry. Katha was in use before the Maurya Dynasty as Ayurvedic medicine. However, initially the manufacturing of Katha was carried out by an organised sector. Only in British era manufacturing of Katha with scientific method starts. Katha is prepared mainly by crystallisation in cold from the water extractives of the heartwood of Acacia Catechu, commonly known as the Khair Tree. Acacia Catechu is widely distributed in India from the northwest plains to eastwards in Assam and throughout the country, particularly in drier and deciduous region. The process of Katha making is long and arduous process which takes upto 45 days. Each step in the production process is closely monitored and proper climatic conditions are maintained for optimum colour and quality. Katha is extracted from Khair Tree and while producing Katha Cutch is also produced as by-product. Cutch also has various industrial applications. It is one of the important sources of vegetable tanning materials, used extensively as an additive to the drilling mud used for oil drilling and for the preservation of sailing rods, finishing nets, mail bags etc. Katha has evolved into a widely consumed product in India owing to its indispensable role in the preparation of paan (betel leaf), a traditional chew enjoyed across the country. The widespread consumption of paan, cutting across diverse geographical regions and cultural preferences, has ensured a stable and consistent demand for Katha over the years.

Katha is one of the principal ingredients used in the preparation of paan. When combined with slaked lime (chuna), it imparts the characteristic reddish colour and distinctive flavour that are highly valued by consumers. The consumption of paan is particularly prevalent in the eastern states of Assam, West Bengal, Bihar and Odisha, while it also significantpopularity enjoys in Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and several other parts of India.

Apart from its traditional culinary application, Katha possesses recognised medicinal properties and has been used for centuries in Ayurvedic formulations. It is valued for its therapeutic benefits in the management of ailments such as indigestion, itching, bronchitis, throat disorders, ulcers, boils, piles and certain skin diseases. The growing consumer preference for natural and herbal products is expected to further support the demand for Katha in pharmaceutical and wellness applications. The dual utility of Katha as a key ingredient in the paan industry and as a valuable constituent in traditional Ayurvedic medicine provides a diversified demand base, contributing to the long-term sustainability and resilience of the industry.

Operations Katha

The Indian Wood Products Co. Ltd. (IWP) has earned a distinguished reputation for manufacturing premium-quality Katha for several decades. Over the years, the Companys products have established a strong market presence across India and are widely recognized for their consistent quality, purity, and reliability. The IWP brand has become synonymous with superior Katha, enjoying the trust and confidence of customers throughout the country.

The Company remains committed to delivering products that meet the highest standards of quality and performance. To realize this vision, we have implemented stringent quality control measures that span the entire production process from the initial input of raw materials to the final output of finished Every batch of Katha and Cutch is subjected to rigorous quality testing at various stages of the manufacturing process using modern laboratory equipment and scientifically established quality parameters.

IWP follows a comprehensive Quality Management System encompassing the entire production cycle from the careful selection and procurement of raw materials to processing, manufacturing, packaging, storage, and dispatch of finished products. Strict quality control measures are implemented at every stage to ensure consistency, safety, and compliance with applicable standards. Through these rigorous quality control tests, we aim to foster trust and loyalty among our customers, reinforcing our reputation as a leader in our industry. Our dedicated team of 20 qualified engineers and chemists plays a crucial role in this commitment. They meticulously monitor every stage of our operations, ensuring that our quality standards are not only met but consistently exceeded. By leveraging their expertise, we ensure that our customers receive only the best. We are well equipped with laboratory facilities and modern equipment such as HPTLC, GLC, Polarimeters, TLC, Spectrophotometer, Moisture meter, Hygroscopes besides Kjeldahl extractor etc. The Company also owns a research lab having plant & equipment for Pilot Plant scale research for improving quality & research and is investing heavily with topmost priority to stay ahead of the curve.

During the financial year 2025 26, the Company recorded a turnover of Rs. 22,918.46 lakhs, as against Rs. 22,646.54 lakhs in the previous financial year, registering a modest growth primarily driven by improved average realizations despite a marginal decline in Katha sales volume.

The Company achieved a sales volume of 3,846.699 MT of Katha during FY 2025 26 as compared to 3,983.240 MT in FY 2024 25. While Katha volumes witnessed a slight decline, the sales of Cutch (a by-product) increased significantly from 977.975 MT in FY 2024 25 to 1,105.300 MT in FY 2025 26, reflecting improved byproduct utilization and market demand.

During the year under review, the Companys EBITDA declined compared to the previous year, primarily on products account of higher input costs, increased operating expenses, and changes in the product mix. Nevertheless, the Company maintained operational stability through continuous focus on process improvements, cost optimization initiatives, and efIcient utilization of manufacturing resources.

The Profit Before Tax (PBT) for FY 2025 26 stood at Rs. 545.96 lakhs, as compared to Rs. 506.41 lakhs in the previous year, reflecting improved operating profitability. The Profit After Tax (PAT) for the year was Rs. 355.31 lakhs, as against Rs. 367.79 lakhs in FY 2024 25. The marginal decline in PAT, despite higher PBT, was mainly attributable to a higher tax outgo during the year.

Overall, the Companys financial performance demonstrates the resilience of its business model and its ability to sustain revenues amidst changing market conditions. Improved realizations, increased contribution from by-products, and continued emphasis enabledon operational the CompanyefIciencies to deliver healthy financial results despite pressures on operating margins.

The operational performance of the Company during the period under review was good. We intend to achieve sustainable and profitable growth through our consistent efforts.

Operating Results:

Key highlights of financial performance for the Company for FY2025-26 on a standalone basis are tabulated below:

(Rs. in Lacs)

Particulars	FY2026	FY2025	FY2024
Sales and Other Income	22918.46	22646.54	19241.53
Earnings before interest, tax, depreciation and amortisation	1587.83	1631.01	1489.20
Profit before Tax	545.96	506.41	325.90
Profit after Tax	355.31	367.79	259.01
EPS	0.56	0.57	0.40

However, on a consolidated basis, revenue from operations for FY2025-26 at Rs 22918.46 Lakhs. Profit after tax ("PAT") for the year was Rs. 529.15 Lakhs.

Risks and Concern

Risk and its Management: Risk accompanies prospects. As a responsible corporate, it is the endeavor of the management to minimize the risks inherent in the business with the view to maximize returns from business situations. The architecture: At the heart of the Companys risk mitigation strategy is a comprehensive and integrated risk management framework that comprises prudential norms, structured reporting and control. This approach ensures that the risk management discipline is centrally initiated by the senior management but prudently decentralized across the organization, percolating to managers at various organizational levels helping them mitigate risks at the transactional level. The discipline: The Company has clearly identifiedand segregated its risks into separate components, namely operational, financial, strategic and growth execution. All the identified risks are inter-linked with the Annual Business Plans of the Company, so as to facilitate Company-wide reviews. The review: A Risk Management Committee of the Board of Directors, comprising Board Members, has been constituted to review periodically updates on identified risks, implementation of mitigation plans and adequacy thereof, identification of new risk areas etc. The Board of Directors also reviews the Risk identification process and mitigation plans regularly. A senior executive has been entrusted at all the levels of business operation in the Company whose role is not only to identify the Risk but also to educate about the identifiedrisk and to develop Risk Management culture within the business.

Key counter measures: The Company institutionalized certain risk mitigation procedures as under:

Roles and responsibilities of the various relation to risk management have been down. A range of responsibilities, from to the operational, is specified therein role definitions, inter alia, are aimed formulation of appropriate risk management and procedures, their effective implementation, independent monitoring and reporting by audit.

Appropriate structures are in place to monitor and manage the inherent risks in with proper risk profiling.

Wherever possible and necessary, appropriate insurance cover is taken for financial risk Confirmation of compliance with applicable requirements are obtained from the respective divisions and subjected to an elaborate process.

Quarterly reports on statutory compliances, certified, are submitted to the Audit Committee as the Board of Directors for review.

Status of Demand/Notices on the Company, various Acts and Rules, as well as status of are reported to the Board of Directors every

Internal Control Systems

The Company has both external and internal audit systems in place. Auditors have access to all records and information of the Company. The Board recognizes the work of the auditors as an independent check on the information received from the management on the operations and performance of the Company. The Board and the management periodically review the findings and recommendations of the statutory and internal auditors and take corrective actions whenever necessary. The Company maintains a system of internal controls designed to provide reasonable assurance regarding:

Effectiveness and efIciency of operations. Adequacy of safeguards for assets. has Reliability of financial controls. outline Compliance with applicable laws and regulations.

Corporate Social Responsibility entities in clearly The companyslaid CSR policy covers activities in the fieldstrategic of eradication of extreme hunger and poverty, .promotion of education, promotion of gender equality, These empowerment of women, improvement of mental health, ensuring slum area development and rural development projects,policies employment enhancing vocational skills, ensuring environmental sustainability, sanitation including contribution to Swachh Bharat Kosh set up by the Central Government, ensuring animal welfare, contribution to the Prime Ministers National Relief Fund or any other project set up by the Central Government.

The Company has created a trust in the name of IWP CSR Trust for undertaking CSR activities for and on behalf of the Company. During the financial year 2025 26, the Company was required to spend Rs. 6.76 lakhs towards Corporate Social Responsibility (CSR) activities in accordance with the provisions of Section 135 of the Companies Act, 2013.

The Company has fully complied with its CSR obligation by spending the entire amount of 6.76 lakhs during the year. The expenditure was incurred towards Animal Welfare initiatives. Accordingly, there was no unspent CSR amount as at 31 March 2026.

Further, the Company has opted not to carry forward or set off the excess CSR expenditure incurred in previous financial years against its CSR obligation for the current year. Accordingly, any excess CSR amount available for set-off from previous years has been waived, and the current years CSR obligation has been discharged independently.

Human Resources and Industrial Relations

Our employees are our core resource and the Company has continuously evolved policies to strengthen its employee value proposition. Your Company was able to attract and retain the best talent in the market and the same can be felt in the past growth of the Company. The Company is constantly working on providing the best working environment to its Human Resources with a view to inculcate leadership and autonomy and towards this objective; your company spends large efforts on training. Your Company shall always place all necessary emphasis on the continuous development of its Human Resources. The belief "great people create a great organization" has been at the core of the Companys approach to its people.

Key Ratios

Particulars	FY 2026	FY2025
Revenue (Rs. in Lacs)	22646.54	22918.46
Net Profit After Tax (Rs. in Lacs)	367.79	355.31
Earnings per share	0.57	0.56
Operating Profit Margin (%)	5.75%	5.06%
Net Profit Margin (%)	1.63%	1.55%
Return on Net worth	1.03%	0.98%
Current Ratio (times)	1.42%	1.47%
Debtors Turnover (times)	4.62%	5.13%
Debt-equity (times)	0.30	0.22
Interest Coverage Ratio(times)	1.64	2.42

Cautionary Statement

Statements in this Management Discussion and Analysis report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference operations include global and Indian demand-supply conditions, raw material prices, finished goods prices, cyclical demand and pricing in the Companys products and their principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other factors such as litigation and/or labor negotiations.