The Indian Wood Products Company Ltd Management Discussions

FY2025 represents the fiscal year 2024-25, from 1 April 2024 to 31 March 2025, and analogously for FY2024 and previously such labelled years.

GLOBAL ECONOMIC OVERVEW

The global economy grew by 3.3% in 2024, supported by regional recoveries and the easing of inflation, driven by improved supply chains and falling food and energy prices. Although the world economy remains on a positive trajectory, it is influenced by evolving trade dynamics and policy shifts in key economies.

In 2024, the volume of world merchandise trade expanded by 2.9%, and commercial services trade grew by 6.8%. Merchandise exports rose by 2% to US$ 24.43 trillion, while service exports increased by 9% to US$ 8.69 trillion, driven by strong global demand and the easing of supply chain disruptions. This rise in global trade was also supported by increased demand for services and industrial raw materials as industries ramped up production, particularly across Asia and Africa.

(Source: WTO Blog, April 2025)

However, the dynamics of global trade have shifted due to the United States implementation of new trade policies, notably the imposition of additional tariffs, and the subsequent responses from its trading partners. Economists and policymakers are closely monitoring the impacts across sectors and industries. The full effect on the global economy remains to be seen as nations adjust and adapt.

The global inflation rate stood at approximately 5.3% in 2024 and is expected to moderate to 4.3% in 2025 and 3.6% in 2026. This moderation is attributed to factors such as easing supply chain pressures, reduced energy price volatility, and the effects of monetary tightening. However, inflation in emerging markets is projected to remain higher than the global average due to domestic economic factors, including currency depreciation and evolving global trade dynamics.

(Source: Reuters/IMF, April 2025)

Prices of fuel commodities are projected to decline by 7.9% in 2025, with oil and coal prices moderating by 15.5% and 15.8%, respectively. However, natural gas prices are expected to surge by 22.8%, driven by continued disruptions in supply chains from Russia through Ukraine. Crude oil prices are forecasted to average US$ 66.94 per barrel in 2025 and US$ 62.38 per barrel in 2026.

OUTLOOK

PROJECTED GDP GROWTH IN 2025

Global growth is projected at 3.3 percent both in 2025 and 2026. The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies. Global headline inflation is expected to decline to 4.2 percent in 2025 and to 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies. Global inflation is expected to ease in 2025, with advanced economies likely to experience a faster decline in inflation rates compared to emerging markets. Commodity prices, particularly for energy, are projected to decline, while non-fuel commodity prices are expected to rise. Overall, financial conditions are generally easing in advanced economies but remain tighter in emerging markets due to trade uncertainties and currency pressures. Central banks in advanced economies are expected to continue gradual monetary policy easing over the coming quarters. Medium-term risks to the baseline are tilted to the downside, while the near-term outlook is characterized by divergent risks. Upside risks could lift already-robust growth in the United States in the short run, whereas risks in other countries are on the downside amid elevated policy uncertainty. Policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. Managing these risks requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation.

The Indian Economy

India, the worlds fourth-largest economy, has emerged as the fastest-growing major economy and is on track to become the worlds third-largest economy with a projected GDP of $7.3 trillion by 2030. India is projected to be worlds fastest growing major economy (6.3% to 6.8% in 2025-26). This transformation is the result of a decade of decisive governance, visionary reforms, and global engagement under Prime Minister Narendra Modi. Driven by robust domestic demand, a dynamic demographic profile, and sustained economic reforms, India is asserting its rising influence in global trade, investment, and innovation.

At the Kautilya Economic Conclave, renowned economist Jagdish Bhagwati remarked: "In the old days, the World Bank used to tell India what to do, but now, India tells the World Bank what to do." This statement powerfully reflects Indias shift in last Eleven years, from a dependent economy to a self-reliant, globally competitive powerhouse.

At the core of this transformation is the vision of Aatmanirbhar Bharat, a movement that promotes innovation, entrepreneurship, and technological sovereignty. Under Modis leadership, strategic initiatives like the Production Linked Incentive (PLI) schemes, revitalisation of MSMEs, and the expansion of digital infrastructure have laid the foundation for a high-growth, high-opportunity economy.

Equally central to this vision is inclusive and equitable growth. The governments policies have focused on job creation, support for small businesses, increased public investment, and financial empowerment of the middle class and entrepreneurs, ensuring that economic progress benefits every citizen. Indias economic growth under Prime Minister Narendra Modi is not just about building momentum, it is about reshaping the nations economic destiny. Today, India is a nation that is digital, green, aspirational, and future-ready, firmly advancing towards its goal of becoming a global leader.

GDP Growth: Strengthening the Economic Foundation

Indias GDP has witnessed a remarkable over the past decade. At current increased from 106.57 lakh crore in 2014 an estimated 331.03 lakh crore in 2024 approximate threefold rise in just ten years. In alone, nominal GDP grew by 9.9% over the year, while real GDP (at constant prices) 6.5%, reflecting sustained economic momentum. steep growth reflects the countrys expanding base and rising income levels. During the same Real GVA rose by 6.4%, and nominal GVA Private Final Consumption Expenditure (PFCE) grew 7.3%, driven by a recovery in rural demand, highest share of GDP (61.8%) since 2002 03. Retail inflation in India moderated significantly easing to 4.6%, compared to 5.4% in FY24, the lowest level in six years. This decline combined effect of proactive government a favourable harvest, and the RBIs calibrated policy stance. Measures such as bolstering buffer facilitating imports during shortages, and targeted market operations helped stabilise food prices. sustained moderation in inflation over the past years has contributed to a more predictable economic environment, supporting both consumption and investment sentiment.

The Index of Eight Core Industries (ICI) for 25 shows a combined growth of 4.4%. This the performance of eight key industries: coal, natural gas, refinery products, fertilizers, steel, and electricity. This growth is lower than the 7 recorded in the previous year, but it still reflects trend in these core sectors.

Sector-wise, the Indian economy is exhibiting momentum. The manufacturing sector is from improved capacity utilization, a favourable environment, and targeted government incentives initiatives such as the Production-Linked (PLI) scheme. The housing sector is projected steadily, supported by government-backed programmes promoting affordable housing, and increasing urbanisation trends. Public investments under programmes like Bharatmala Pariyojana, Sagarmala, transformation Smart Cities Mission, and UDAN have boosted GDP has infrastructure development, improved connectivity and enabling broader economic activity across sectors.

Additionally, Indias Goods and Services Tax (GST) collections continue to reflect underlying consumption strength. Gross GST revenue for FY25 stood at 22.08 lakh crore, marking a 9.4% increase over the previous fiscal year. This growth indicates both improved compliance and resilience of consumption demand, particularly in categories less exposed to discretionary cycles. While the Indian economy remains on a strong footing, emerging external risks including proposed U.S. tariffs on Indian goods and ongoing global trade realignments are being closely monitored for their potential impact in the coming quarters.

OUTLOOK

Looking ahead, Indias economy is expected to maintain its momentum, driven by strong domestic demand, a growing manufacturing base, and supportive structural reforms. The Reserve Bank of India (RBI) has revised its real GDP growth forecast for FY2025-26 to 6.5%, reflecting a calibrated response to evolving global conditions.

The economic outlook remains favourable, backed by robust fundamentals, a young and expanding workforce, formalisation of the economy, and targeted policy initiatives. Infrastructure development, higher public capital expenditure, and productivity-enhancing reforms are poised to further strengthen medium-term prospect. While global headwinds such as geopolitical tensions and commodity price volatility may pose external risks, Indias commitment to fiscal prudence, monetary stability and strategic partnerships and trade agreements, such as the recent landmark Free Trade Agreement with the United Kingdom, are expected to boost exports, attract foreign investments, and diversify market access. These developments position India to better navigate global uncertainties including geopolitical tensions and commodity price volatility while sustaining a resilient and inclusive growth path.

Indian Katha Industry

Katha and cutch are extracted from wood of Khair tree. These trees with their botanical name as Acacia are found in abundance in the forests of Uttar Pradesh, Bihar, Rajasthan, Gujarat, Himachal Pradesh and Nepal. There are varieties of this tree such as Acacia Sundra, Acacia Catechuoides and Acacia Catechu. Manufacture of Kattha is an important forest-based industry.

Katha (catechu) is one of the principal ingredients used in the preparation of PAAN from betel leaves, for chewing purposes when, in combination with lime, it gives the characteristic red colorations. Katha is extracted from Khair Tree and while producing Katha Cutch is also produced as bio-product. Cutch is used in tanning industry, and in deep oil drilling operations.

However, initially, the manufacturing of Katha was carried out by an unorganized sector. Only in British ERA manufacturing of Katha with Scientific method starts. However, the unorganized sector is still in operation and leads the industry with maximum shares. The overall size of the Katha Industry is about 3500 Crores p.a. which also includes Katha consumption in Paan etc. In India chewing paan is quite popular. This habit is predominantly followed in eastern India like Assam, West Bengal, Bihar, Orissa. It is also popular in Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra. In other words paan is consumed in nearly all parts of the country. Katha is one of the essential ingredients in preparation of paan. Paan is again a popular item people consume after food in parties, marriages. Katha is being produced in the country since long and it is a mass-consumption item as it is used in the preparation of paan throughout the country. It has got medicinal values as well and used in ayurvedic preparations as it cures itching, indigestion and bronchitis and is very effective in leprosy, ulcer, boils, piles, throat diseases etc. On the other hand, the cutch 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, fishingnets, mail bags etc. Thus, both products are versatile with varied applications.

The demand of premium Quality Katha is growing steadily with consumers disposable income on as steady rise. Our Company continues to be the leading player in Katha Industry

Operations

Katha

Our company is a well-established and influential player in the organized Katha Industry in India, currently having a substantial market share. We are optimistic that our market share will continue to grow in the upcoming financial year specially in the premium katha segment. We have witnessed an increase in EBITDA for the FY 2024-25, and we anticipate even better EBITDA margins moving forward. Our company has strategically implemented cost-effective measures and improved working conditions for our staff, which are expected to contribute positively to our financial outcomes.

At IWP our primary goal is to achieve ultimate customer satisfaction. We understand that delivering exceptional products is essential to meeting our customers needs and expectations. 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 products 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. 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. 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 year under review, the Company has achieved a sales volume of 3983.240 MT Katha in FY2025 as compared to 3337.004 MT in FY2024. EBITDA in the current year has increased on the account of economies of scale, reduction in energy cost and higher quality katha production The sales of Cutch (by-product) has slightly decreased from 1162.625 MT in FY2024 to 977.975 MT in FY2025. Good financial performance is the combined result of an increase in volume, average realization and operational efIciencies. The management is focused on achieving desired results coupled with sustained production levels. The trend is likely to continue and we are hopeful to have a better operational and financial performance in FY2025-26. The Company has recorded a turnover of Rs 22635.94 Lakhs in FY2025, as compared with Rs. 19241.53 Lakhs in FY2024 representing an increase of 17.64% because of an increase in volume, average realization and change in product mix. The Profit Before Tax (PBT) for the year, was Rs. 506.41 lakhs as compared to Rs. 325.90 lakhs for the previous year. During the financial year 2024-25, the Company earned a Profit After Tax of Rs 367.79 lakhs as compared to Rs. 259.01 lakhs in the previous year.

The better financial performance is the combined result of an increase in volume, average realization and operational efIciencies. The management is focused on achieving desired results coupled with sustained production levels. The trend is likely to continue and we are hopeful to have a better operational and financial performance in FY2025-26.

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 FY2024-25 on a standalone basis are tabulated below:

(Rs. in Lacs)

Particulars	FY2025	FY2024	FY2023
Sales and Other Income	22635.94	19241.53	18369.37
Earnings before interest, tax, depreciation and amortisation	1631.01	1489.20	1189.78
Profit before Tax	506.41	325.90	180.99
Profit after Tax	367.79	259.01	138.01
EPS	0.57	0.40	0.22

However, on a consolidated basis, revenue from operations for FY2024-25 at Rs 22635.94 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 identified and 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 identified risk 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 at 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

The companys CSR policy covers activities in the field of eradication of extreme hunger and poverty, promotion of education, promotion of gender equality, empowerment of women, improvement of mental health, slum area development and rural development projects, 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 2023-24, the Company was required to spend Rs. 0.76 Lakhs, the minimum amount to be spent on CSR activity. The Company spent an amount of Rs 40.50 Lakhs towards CSR in FY 2023-24 being Rs. 39.74 Lakhs in excess of the amount required to be spent which was available for set off during FY 2024-25, thus, no amount was required to be spent in FY 2024-25 after set-off of CSR carry forward amount. However, the Company has spent during the financial year 2024-25, an amount of Rs. 22.50 Lakhs towards towards Animal Welfare, Women Empowerment and the Upliftment of People with disability through IWP CSR Trust as against the amount require to be spent 2.59 lakhs. Accordingly Rs 19.91 lakhs in excess of the amount required to be spent which will be available for set off in subsequent years. There was no amount unspent for the year ended 31 March 2025. The Company has Rs.59.65 Lakhs as carry forward CSR amount available for set off in three succeeding financial years. difference to the Companys

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 2024	FY2025
Revenue (Rs. in Lacs)	19241.53	22635.94
Net Profit After Tax (Rs. in Lacs)	259.01	367.79
Earnings per share	0.40	0.57
Operating Profit Margin (%)	6.09%	5.75%
Net Profit Margin (%)	1.35%	1.63%
Return on Net worth	0.73%	1.03%
Current Ratio (times)	1.45%	1.42%
Debtors Turnover(times)	4.09%	4.62%
Debt-equity (times)	0.29	0.30
Interest Coverage Ratio(times)	1.39	1.64

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 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.