Uflex Ltd Management Discussions

Geopolitical Tensions and Energy Market Volatility

At the core of the deteriorating outlook is the transition of the energy crisis from a cyclical disruption to a structural constraint. The extended closure of the Strait of Hormuz has effectively evolved into a sustained blockade, compounded by damage to critical infrastructure, including liquefied

natural gas facilities in Qatar and key regional pipeline networks.

This has entrenched a supply-side shock that now acts as a principal driver of global inflation, limiting the effectiveness of conventional monetary policy without risking deeper economic contraction.

This has introduced a fragile interim peace process, where a newly proposed UN-backed transit corridor faces immediate suspension after localized drone

attacks. The contraction in available oil and gas supply has triggered a large-scale and costly reconfiguration of global energy logistics. Persistent volatility across energy prices, elevated input costs, and reinforced inflationary pressures remain structurally detached from historical norms.

Beyond immediate shortages, the current environment signals the emergence of a prolonged phase of systemic volatility, where economic predictability is significantly reduced due to the convergence of geopolitical conflict, climate-related disruptions, and intensifying technological competition.

Trade Realignment and Diverging Growth Trends

Amid an increasingly unstable global environment, international trade is undergoing a more fundamental fragmentation rather than a gradual realignment. Tariff measures introduced in 2025, initially assessed as manageable distortions, have converged with sharply elevated freight and insurance costs to impose a sustained cost burden on global supply chains. The earlier resilience driven by corporate hedging strategies is beginning to weaken as legacy contracts

expire and are renegotiated under significantly higher, risk-adjusted pricing frameworks.

Structural risks have now become fully embedded in the global system. Rising protectionist policies, reinforced by national energy security priorities, are accelerating the segmentation of trade into regional blocs. The growing emphasis on friend-shoring over efficiency is reshaping production networks, often at the expense of cost optimization and productivity. In advanced economies, persistently high energy input costs are offsetting a substantial portion of productivity gains derived from artificial intelligence and automation. Meanwhile, emerging markets, though relatively more resilient, are facing increasing constraints as demographic advantages are counterbalanced by elevated debt servicing costs in a prolonged high-interest- rate environment.

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Outlook

The near-term global economic outlook has become increasingly fragile, with downside risks now dominant. Key vulnerabilities, particularly the deepening of trade fragmentation and the erosion of fiscal buffers in major economies, have shifted from contingent risks to active constraints. Financial markets are increasingly exposed to the likelihood of repricing under a sustained higher-for-longer energy cost regime, raising the probability of meaningful corrections.

At the same time, the rapid advancement and diffusion of

artificial intelligence remain a limited but important source of resilience. By enhancing supply chain efficiency and reducing the energy intensity of certain processes, AI is partially mitigating the impact of ongoing supply-side disruptions. However, elevated capital costs and persistent uncertainty are slowing the pace of adoption. As a result, the benefits of technological progress are becoming concentrated within a narrower set of sectors and economies. While a systemic collapse remains unlikely, the path forward is expected to be uneven, gradual, and highly contingent on the evolution of geopolitical risks.

Indian Economy

The Indian economy continued to demonstrate strong resilience and a steady growth trajectory, with real GDP reported at 7.7% in FY 2025-26, as per the Second Advance Estimates of the National Statistics Office (nso). This robust performance reflects the underlying strength of the countrys macroeconomic fundamentals despite a challenging and volatile external environment. Easing inflationary pressures, improving labor market conditions, and strengthened external sector buffers have collectively enhanced macroeconomic stability.

Union Budget 2026-27 and Structural Reforms

The Union Budget 2026-27 outlines a broad-based growth strategy anchored in manufacturing expansion, infrastructure development, and human capital formation. A key pillar remains the sustained increase in public capital expenditure, with infrastructure outlay rising to Rs. 12.2 lakh crore from Rs. 11.2 lakh crore in FY 2025-26. This continued emphasis on capex is intended to crowd in private investment, strengthen supply-side capacity, and support medium-term growth.

A central reform underpinning this framework is GST rationalization, commonly referred to as GST 2.0.

By consolidating multiple tax slabs into two principal rates of 5% and 18%, the reform has simplified the indirect tax structure and reduced classification complexities. The transition of a large share of goods from the highest tax bracket to the standard rate has lowered the effective tax burden on several consumption categories, including essential goods and insurance services, thereby supporting domestic demand and improving compliance.

However, the transition phase has not been without short-term disruptions. Domestic demand, particularly for packaging-related SKUs, experienced a temporary slowdown as dealers and stockists deferred fresh procurement while actively destocking existing inventories. This adjustment period reflected both uncertainty around revised pricing structures and efforts to realign supply chains with the new tax regime. While transitory, these effects created near-term demand softness before normalization began to take hold.

Complementing tax reform, the full implementation of the New Labor Codes in November 2025 represents a significant structural shift in the labor market. By consolidating 29 central laws into four unified codes, the reform reduces regulatory fragmentation and compliance costs. Provisions such as the introduction of a national floor wage, formalization of gig and platform work, and enhanced flexibility in workforce management are expected to improve labor market efficiency and support industrial growth.

Further, the expansion of Extended Producer Responsibility (epr) frameworks marks a decisive move toward integrating sustainability into fiscal and industrial policy. Effective April 1, 2026, EPR mandates have been extended to additional sectors, including non-ferrous metals, paper, and glass. New requirements such as minimum recycled content thresholds for rigid plastic packaging and the removal of disposal-based compliance mechanisms are accelerating the transition toward material circularity. This is expected to reshape industrial logistics, promote resource efficiency, and align growth with long-term environmental objectives.

Sectoral Growth Drivers

Indias economic expansion in FY 2025-26 is underpinned by a well-diversified sectoral base, with agriculture, industry, and services contributing in a balanced and mutually reinforcing manner.

This broad-based performance highlights the structural strength of the economy and its ability to sustain growth across multiple demand and production channels.

The services sector continued to be the primary driver of economic growth. Among the major service segments, Trade, Hotels, Transport, Communication, Services related to Broadcasting, and Storage recorded the strongest growth of 11%, a sharp increase from 6.6% in FY 2024-25. Financial, Real Estate,

IT, Professional Services, and Ownership of Dwellings grew by 10.4%, slightly higher than 10% in FY 2024-25, reflecting sustained strength in financial and digital services. Public Administration, Defence, and Other Services expanded by 5%, maintaining the same growth rate as in FY 2024-25.

Agriculture, Livestock, Forestry, and Fishing grew by 3% in FY 2025-26, compared with 4.2% in FY 2024-25. Although growth moderated from the previous year, the sector

continued to play a vital role in supporting rural livelihoods and ensuring food security.

The industrial sector exhibited mixed performance during FY 2025-26. Manufacturing remained a key growth driver, expanding by 10.7%, up from 9.3% in FY 2024-25. Construction grew by 7.4%, remaining broadly stable compared with 7.3% in the previous year, supported by continued infrastructure development and real estate activity. Mining and Quarrying recorded growth of 5.2%, lower than the strong 11.7% growth achieved in FY 2024-25. Meanwhile, Electricity, Gas,

Water Supply, and Other Utility Services slowed to 1.7% from 2.9% in the previous year. Overall, the industrial sector continued to benefit from investment initiatives, infrastructure development, and production-linked incentive (pli) schemes, with manufacturing and construction providing the strongest support to overall sectoral growth.

Consumption Trends: Rural vs. Urban

A defining feature of FY 2025-26 was the evolving consumption pattern between rural and urban markets. For much of the year, rural demand outpaced urban growth, reflecting a meaningful recovery in the hinterlands. This momentum was supported by lower food inflation, which improved real disposable incomes for rural households, along with a favorable agricultural outlook that strengthened farmer sentiment.

While urban demand remained stable, the acceleration in rural spending, particularly on fast-moving consumer goods (fmcg) and entry-level durables, provided a strong underpinning for overall private final consumption expenditure, helping sustain aggregate demand across the economy.

Monetary Policy & Inflation Dynamics

Inflation in India remained well contained in FY 2025-26, contributing to overall macroeconomic stability. Retail inflation, as measured by the Consumer Price Index (cpi), stood at 3.93% in May 2026, reflecting price pressures across food and beverages, clothing, housing, and utility services.

Despite these category-specific increases, headline inflation has largely remained within the lower band of the Reserve Bank of Indias 2-6% target range, indicating a stable price environment. This moderation in inflation has been supported by improved supply conditions, effective policy management, and easing cost pressures in key segments.

In response to the benign inflation environment, the Reserve Bank of India adopted a more accommodative monetary policy stance. After a series of calibrated rate cuts during 2025, the repo rate was brought down by 125 basis points to 5.25% by December 2025, with the rate maintained at the same level in April 2026. The continuation of a neutral stance in early 2026, alongside lower policy rates, has eased credit conditions, reduced borrowing costs for MSMEs, and supported increased private sector participation.

For FY 2025-26, CPI inflation stood at approximately 2.1%, reinforcing the outlook of benign price dynamics. This provides policymakers with greater flexibility to support growth while maintaining price stability, thereby strengthening the overall macroeconomic framework.

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External Sector Performance

The Indian rupee faced sustained depreciation pressures throughout FY 2025-26, with the USD/INR exchange rate notably breaching the 95 mark in late March 2026.

This shift was primarily driven by geopolitical tensions in West Asia, which propelled Brent crude above USD 100 per barrel and heightened global risk aversion, favoring safe-haven assets like the US dollar.

These pressures were compounded by widening external imbalances, as the overall trade deficit for the full fiscal year reached USD 119.30 billion. This expansion reflected a significant rise in total imports which grew by 6.47% to reach USD 979.40 billion. Simultaneously, foreign portfolio investment (FPI) outflows added to currency volatility as investors sought higher yields in advanced economies amidst divergent monetary policies.

Despite these headwinds, Indias external sector showed remarkable resilience. Cumulative exports (merchandise and services combined) for FY 2025-26 reached a record USD 860.09 billion, marking a 4.22% growth over the previous year. This growth, particularly in services and engineering goods, highlights Indias deepening integration into global value chains even in a restricted trade environment.

Indias stability is further anchored by a formidable foreign exchange buffer. Reserves stood at approximately USD 701.4 billion by late March 2026 due to RBI interventions to curb volatility. This robust reserve position ensures the economy remains well-equipped to absorb external shocks and maintain orderly market conditions.

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Outlook

As the worlds 6^th largest economy, India is positioned to sustain a medium-term growth trajectory of around 7% through 2028. While growth for 2026-27 is expected to moderate slightly to 6.6-6.9% due to geopolitical tensions and energy volatility, the nations macroeconomic fundamentals remain robust. This outlook is boosted by tax rationalization and expanding trade engagements with the UK, EU, and USA. Supported by a resilient digital economy,

India continues to leverage strong domestic drivers to balance external uncertainties and maintain its global competitiveness.

Company Overview

Since beginning operations in 1985, UFlex has evolved into Indias largest multinational flexible packaging and solutions company, with a strong and expanding global presence. Over nearly four decades, the Company has consistently shaped the packaging industry through innovation, setting benchmarks across domestic and international markets. Today, UFlex operates an integrated business spanning PET and recycled chips, packaging films, flexible packaging, aseptic packaging, recycling solutions, specialty chemicals, printing cylinders, and engineering solutions, enabling it to serve customers across the packaging value chain.

With manufacturing and business operations across four continents and nine countries, UFlex partners with leading international, regional, and domestic converters and brands across food & beverages, pharmaceuticals, healthcare, personal care, home care, dairy, edible oils, pet food, industrial, and agricultural sectors. Supported by a diversified global footprint, the Company delivers advanced packaging solutions that enhance product safety, preserve freshness, and extend shelf life, while continuing to redefine industry standards through advanced materials, technologies, and sustainable innovations.

The Companys strategy is centred on strengthening leadership across its core businesses while accelerating growth in value-added, sustainable, and high-performance packaging solutions. Through continuous innovation, operational excellence, expanded recycling capabilities, and deeper customer partnerships, UFlex remains committed to delivering resilient growth, creating long-term value for stakeholders, and shaping the future of the global packaging industry.

Packaging films & PET Resin

UFlex is Indias largest end-to-end provider of flexible packaging materials and solutions, serving diverse industries worldwide. Its Packaging films business combines innovation with scale, offering a comprehensive portfolio of BOPET, BOPP, CPP, metallized, AlOx-coated, ultra-high barrier, recycled, and other specialty value-added packaging films tailored to evolving global packaging requirements. Backed by an integrated polyester packaging films value chain and deep supplier relationships, the business benefits from enhanced control over raw material sourcing, product quality, supply reliability, and cost efficiencies, enabling it to consistently deliver high-performance packaging solutions. The Company addresses diverse customer requirements across food, beverages, pharmaceuticals, personal care, industrial, and other high-growth packaging segments.

The business is backed by its Testing and Research Center (TARC), accredited with ISO/IEC 17025:2017 by NABL. This certification highlights TARCs technical expertise and its commitment to precise, reliable testing and calibration aligned with international standards.

PET Resin

UFlex manufactures Polyethylene Terephthalate (PET) resin, a critical component that supports both internal and external market demand. The Company produces a range of PET resin grades for packaging films, bottles, sheets, and other industrial applications.

Shaping the Value Chain

UFlex Ltd is reshaping its packaging films & PET resin business by moving beyond scale-driven manufacturing toward a value-led, solutions-oriented model that actively influences the evolution of the value chain itself. This transformation is anchored in a combination of advanced material capabilities, customer-centric innovation, vertical integration, and sustainability-driven product development.

A key pillar of this shift is the focus on high-value, performance-oriented packaging films solutions, particularly in segments such as barrier packaging films. These packaging films, which compete not only with conventional plastic substrates but also with alternatives like aluminium foil, represent a structurally higher-margin category and are increasingly critical for recyclable-ready packaging structures. UFlex has made significant progress in this portfolio, particularly in developed markets where large consumer brands are driving adoption of advanced, sustainable packaging formats. The Companys strategy reflects a deliberate move toward smaller but faster-growing and more profitable segments, rather than competing in large, low-growth commodity categories.

This evolution is closely linked to a material science-led approach, where innovation is focused on engineering polymer performance to meet emerging customer and regulatory requirements. Developments such as heat-sealable polyester and advanced barrier structures are helping simplify packaging designs, enabling customers to transition from multi-layer to fewer-layer configurations without compromising functionality.

UFlex offers a comprehensive range of PCR PET packaging

films, including food-safe variants, supporting brands in achieving their sustainability and regulatory goals while maintaining product performance. In parallel, the Company is developing mechanically recycled, potentially food-safe solutions for polyethylene and polypropylene, addressing one of the most complex challenges in flexible packaging today.

Sustainability and innovation are increasingly converging, with customers demanding recyclable, cost-effective, and high-performance solutions.

In response, UFlex is not only developing materials that meet these requirements but also enabling compliance with established regulations, including EPR. Its expanding recycling capabilities and integrated PET Resin operations further strengthen the transition toward circular packaging solutions by increasing the availability of recycled materials for high-performance applications.

Operating

Environment

In FY 2025-26, the Packaging Films and PET Resin businesses operated in a dynamic environment shaped by regional supply-demand dynamics, evolving customer expectations, regulatory developments, global trade policy and tariff developments, and supply chain disruptions. While Packaging films continued to respond to changing demand across end-use industries and increasing preference for value-added, recyclable solutions, the PET Resin business was influenced by feedstock availability, pricing movements, and downstream demand across packaging and industrial applications. Across geographies, market conditions varied significantly, reflecting differences in consumption patterns, regulatory priorities, and competitive intensity.

India & Emerging Markets

In India and other high-growth markets, demand remained structurally anchored to FMCG consumption, which continued to be the dominant end-use driver. Growth moderated due to softer consumption trends and the industry continued to operate under persistent overcapacity in segments such as polyester and CPP, resulting in increased competitive intensity and pressure on realizations. The PET resin market exhibited similar dynamics, with pricing influenced by excess regional capacities and fluctuations in downstream demand from packaging and beverage applications. Despite these conditions, long-term demand fundamentals remained supported by increasing consumption of packaged foods and beverages, urbanization, and the growing adoption of recyclable PET-based packaging.

This situation was further influenced by import competition, particularly from China, where excess capacity has led to aggressive pricing in export markets. In this context, there was increasing emphasis on potential supply-side discipline measures in China (often referred to as

anti-involution), where producers may rationalize output to stabilize global pricing. While the extent and durability of such actions remain uncertain, any sustained production cuts or pricing discipline could improve industry realizations globally, including in India. In parallel, domestic stakeholders continue to engage with regulators on anti-dumping measures to address pricing distortions.

Sustainability regulations, including EPR mandates, have increasingly influenced material choices across both packaging films and PET resin. The growing adoption of food-grade recycled PET (rPET), supported by regulatory developments, brand-owner commitments, and strengthening waste collection infrastructure, continued to accelerate the transition toward recyclable and low-carbon packaging solutions.

Europe

Europe presented a structurally different environment, characterized by mature demand conditions and strong regulatory influence. Demand remained stable but modest, closely aligned with macroeconomic conditions such as employment levels and consumer spending. Customer requirements in this region are evolving rapidly, with a strong emphasis on simplified packaging structures, recyclability, and cost-performance balance.

Regulatory developments, including evolving packaging frameworks, influenced material choices and accelerated the shift toward recyclable solutions, although implementation pathways remain under discussion. At the same time, recent geopolitical disruptions reinforced the importance of localized and reliable supply chains, with customers increasingly preferring suppliers that are geographically closer and operationally dependable.

Longer-term structural trends, such as reshoring of manufacturing and increased regional production, are expected to support packaging demand indirectly by strengthening industrial activity and employment levels.

The Middle East & Raw Material Supply Hubs

The Middle East plays a critical role in the global packaging materials ecosystem as a major supplier of petrochemical feedstocks, making it central to global supply dynamics. Recent geopolitical disruptions constrained supply flows, leading to higher raw material prices, elevated logistics costs, and increased supply chain uncertainty. These developments also impacted the PET resin value chain, with fluctuations in feedstock availability and pricing driving higher production costs

and reinforcing the importance of integrated manufacturing, supply chain resilience, and disciplined procurement strategies.

These constraints have not only impacted direct supply from the region but have also disrupted downstream value chains globally, including alternative production routes dependent on feedstock availability. As a result, the entire plastics and packaging ecosystem has experienced cost inflation and supply uncertainty.

Global Markets (USA, Asia & Interconnected Trade Flows)

Across global markets, including the USA and broader Asia, the industry was increasingly influenced by evolving global trade policies, tariff developments, and interconnected supply chains. During FY 2025-26, tariff announcements and reciprocal trade measures heightened uncertainty, disrupted global trade flows, and influenced export demand, logistics, and pricing across packaging films markets. Regional imbalances in supply or demand were quickly transmitted across geographies, amplifying volatility in both pricing and availability.

In this environment, customers placed greater emphasis on supplier reliability, proximity, and continuity of supply, in addition to traditional cost considerations. This shift elevated the importance of a diversified manufacturing footprint and localized sourcing strategies, particularly for large global buyers seeking to mitigate disruption risks.

Performance & Strategy

The Packaging films & PET Resin businesses delivered a stable performance in a challenging operating environment, supported by disciplined execution, improved pricing trends, and a continued focus on operational excellence. While the Packaging films business strengthened its product mix through value-added offerings, the vertically integrated PET Resin business ensured a reliable

supply of critical raw materials, improved cost predictability, and enhanced supply chain resilience. Together, the integrated business model enabled UFlex to effectively manage raw material volatility while maintaining operational flexibility and long-term competitiveness.

- Polyester packaging films, the largest segment, operated in an oversupplied market; however, improved pricing discipline post FY 2023-24 lows and gradual recovery in realizations supported performance

- The BOPP segment witnessed temporary supply disruption followed by rapid normalization, with current market conditions stabilizing but expected to face surplus-led pressure in the near term

- The CPP segment continued to operate in a structurally oversupplied environment, with focus on high-value products and strategic customer segments supporting profitability

- PET resin operations were aligned with downstream demand and prevailing market conditions through disciplined capacity utilization, process optimization, and a continued focus on operational efficiency, supporting stable raw material availability for the Companys integrated packaging

films business

- Raw material price increases of ~35-50%, driven by geopolitical disruptions, led to a corresponding increase in realizations (~50-60%), supporting margins albeit with some impact on demand volumes

- Supply chain volatility was effectively managed through calibrated pricing actions, operational flexibility, and disciplined customer prioritization

- Operational strategy remained centered on profitability

over volume, with selective capacity utilization aligned to high-value opportunities

Latest Value-added Offerings

F-HHS - High Seal Strength Polyester Packaging films

High-performance transparent polyester packaging films with strong heat sealability (>1.5 kgf/ in). Offers excellent clarity and handling performance.

B-THU-M - Metallized High-Barrier BOPP Packaging films

Robust sealable BOPP packaging films with excellent oxygen and moisture barrier properties. Performs well across a wide temperature range with reliable sealing.

F-PDC - PVDC-Coated BOPET Packaging films

Transparent, high-barrier polyester packaging films designed for see-through packaging with strong resistance properties.

B-PHT - White Voided Sealable BOPP Packaging films

White, high-yield BOPP packaging films treated on both sides for heat sealability and enhanced surface performance.

B-TVU-M - Metallized Barrier BOPP Packaging films

High-performance metallized BOPP packaging films delivering strong oxygen and moisture barrier with reliable sealability.

C-CGB-M - Metallized High-Barrier CPP Packaging films

Advanced metallized CPP packaging films designed for strong seals and smooth processing on high-speed packaging lines.

B-DSC-PA - Dual- Coated High-Barrier BOPP Packaging films

Transparent BOPP packaging films with PVOH coating on one side and acrylic coating on the other for enhanced barrier and sealing performance.

C-CGB - High-Barrier Coated CPP Packaging films

Transparent CPP packaging films with a high-barrier coating on one side and a heat-sealable surface on the other.

F-PPP - PVDC-Coated BOPET Packaging films (Heat-Resistant)

Durable PVDC-coated BOPET packaging films designed for high-temperature applications including pasteurization and hot filling up to 100?C.

Outlook

The outlook for UFlexs packaging films and Pet resin business is shaped by a combination of gradual market normalization, sustainability-driven opportunities, and continued external uncertainties.

Across segments, polyester packaging films are expected to move toward improved balance over the medium term as demand growth absorbs excess capacity, with potential upside from regulatory actions on imports. BOPP is likely to face near-term pressure due to anticipated oversupply, although regional positioning and integrated offerings provide a pathway for long-term growth. CPP is expected to remain structurally constrained.

A significant growth driver is the accelerating transition toward sustainable packaging, with increasing regulatory enforcement

and customer demand for recyclable and simplified material structures. Globally, demand for PCR packaging films continues to strengthen, driven by rising brand commitments toward recycled content incorporation, evolving global regulations, and growing consumer preference for sustainable packaging solutions. UFlexs capabilities in barrier packaging films, recyclable solutions, and PCR packaging films position it strongly to benefit from this shift. The companys ability to align innovation with both regulatory requirements and customer expectations will be critical in capturing these opportunities.

Demand trends are expected to remain broadly aligned with economic activity, with additional support from structural factors such as reshoring of manufacturing in developed markets, which could drive higher consumption of packaging materials over time.

Flexible Packaging

UFlex is Indias leading flexible packaging company, headquartered in Noida, delivering fully integrated, end-to-end packaging solutions across high-demand sectors such as food and beverages, home and personal care, pharmaceuticals, and industrial applications. Backed by advanced manufacturing facilities in Noida and Jammu, with a combined production capacity exceeding 100,000 MTPA, UFlex ensures consistent supply reliability, operational agility, and superior cost efficiencies across the value chain.

Shaping the Value Chain

During FY 2025-26, UFlexs Flexible Packaging business continued to strengthen its position across the value chain by moving decisively beyond traditional converting solutions, where margins remain relatively constrained, toward a portfolio anchored in high-value, innovation-led offerings.

A key pillar of value chain evolution has been sustainability-led integration. The business has accelerated the adoption of eco-friendly materials by incorporating recycled content and utilizing approximately 1,200 tonnes of recycled material during the year, in line with its Extended Producer Responsibility (EPR) commitments. This is further supported by investments in in-house post-consumer recycled (PCR) capabilities, enabling tighter control over supply, quality, and regulatory compliance while simplifying adoption for brand owners. Complementing this, the Company continues to drive the transition from conventional multi-layer and aluminium-based structures to recyclable formats, particularly for export markets with stringent environmental norms.

The business has also strengthened its innovation pipeline with the development of robust and sustainable oil packaging solutions and expanded its presence in high-regulation segments such as pharmaceuticals, where product integrity and traceability are critical. In this context, UFlex has deployed QR code-based solutions to enhance traceability in export markets, while aligning similar digital capabilities with emerging regulatory frameworks such as the Deposit Refund Scheme (DRS) introduced by the Government of Goa.

Alongside, premiumization continues to be a key lever, particularly in segments such as

flexible tubes, where advanced printing technologies, superior aesthetics, and functional features like holography enable differentiation and higher value realization.

Operating

Environment

The flexible packaging business in FY 2025-26 witnessed a confluence of regulatory developments, evolving customer expectations, and stable demand conditions.

The most significant shift was the implementation of Extended Producer Responsibility (epr) and Plastic Waste Management regulations, particularly the mandate for incorporating recycled content in plastic packaging. While the year allowed limited compliance flexibility, obligations remain cumulative and enforceable over subsequent years, effectively accelerating the industrys transition toward PCR-based solutions. This has increased compliance complexity and raised entry barriers, favoring players with integrated capabilities and technological readiness.

At the same time, brand owners prioritized sustainability, regulatory compliance, and packaging innovation, although adoption remained uneven across segments. Global and premium brands are leading the transition toward recyclable and sustainable formats, while cost-sensitive players are progressing more gradually. This divergence is creating a differentiated demand landscape where innovation, scale, and compliance readiness are key competitive factors. Additionally, the growing emphasis on traceability, particularly in regulated and export markets, is driving adoption of digital solutions such as QR code-enabled packaging.

From a demand perspective, the flexible packaging industry remained stable, supported by

steady growth in end-use sectors such as FMCG, food, personal care, pet food and pharmaceuticals. Packaging volumes improved toward the latter part of the year and are expected to sustain into FY 2026-27. Structural trends, including the migration from rigid to flexible formats, increasing preference for convenience-driven packaging such as spouted pouches, and the shift toward sustainable materials, continue to reinforce long-term growth prospects.

Performance & Strategy

During FY 2025-26, the flexible packaging business demonstrated strong progress in advancing its strategic priorities and strengthening its market positioning.

* Achieved strong traction in differentiated product segments such as anti-counterfeiting packaging, spouted formats, pouches, and WPP bags, which contributed to improved capacity utilization.

- Growth momentum was supported by rising demand for value-added, aesthetically superior, and functionally enhanced packaging across personal care, pharmaceuticals, and food segments.

+ Capital allocation was primarily directed toward sustainability infrastructure, advanced packaging technologies, and strengthening the global manufacturing footprint.

- Mitigated cost pressures through strategies such as backward integration, achieving scale efficiencies, and improving process optimization.

* New product formats and expanded capacities, including specialized packaging solutions, undergoing customer validation, particularly in international markets.

Latest Value-added Offerings

Anti-Counterfeit Tubes

Counterfeiting poses a serious risk to Indias pharmaceutical sector, undermining trust and revenue. To address this, UFlex partnered with MacLeods Pharma to safeguard the Panderm brand using a robust three-layer anti-counterfeit system:

- Custom holographic packaging films for visual authentication

- Fresnel lens to add complexity and deter duplication

- Registered lens featuring the MacLeods logo for verification

Security-enhanced Alu-Alu Printed Blister

A high-end blister packaging solution that blends brand protection with visual appeal and structural integrity.

Engineered for zero print distortion during thermoforming.

Pierceable Lidding Laminate

Designed for durability and ease of use, this laminate offers reliable protection with convenient access.

FlexFresh

An eco-friendly packaging innovation using Controlled Breathing Technology to extend shelf life and maintain freshness of perishable produce. Ideal for global distribution.

Outlook

The outlook for UFlexs Flexible Packaging business remains positive, underpinned by structural growth drivers, regulatory tailwinds, and continued progress in moving up the value chain. Regulatory mandates around recycled content are expected to further accelerate adoption of PCR and recyclable packaging solutions, reinforcing the competitive advantage of integrated players with established capabilities in recycling, material innovation, and compliance management.

The upcoming WPP bags facility in Mexico represents a strategic step in strengthening UFlexs global manufacturing footprint, with a planned capacity of 80 million bags. Once operational, the facility is expected to support growth across key markets in the Americas, enhancing regional access and enabling the Company to better serve evolving customer requirements.

Sustainability will remain a central theme, with increasing demand for eco-friendly materials,

traceable packaging solutions, and formats aligned with circular economy principles. At the same time, the shift toward premium, functional, and convenience-driven packaging such as spouted formats, specialty pouches, and high-performance packaging films is expected to continue, supported by evolving consumer preferences and brand differentiation strategies. Opportunities are also emerging from conversion of traditional packaging formats to flexible alternatives, as well as from expansion in regulated and export markets where compliance and traceability requirements are becoming more stringent.

In the near term, stable demand conditions, improving capacity utilization in high-value segments, and continued innovation are expected to support performance in FY 2026-27.

Over the medium term, the Companys strategic focus on sustainability, premiumization, and integrated capabilities positions it well to strengthen its role as a global provider of advanced and value-added flexible packaging solutions.

Aseptic Packaging

At Asepto, the aseptic packaging business of UFlex, has established ourselves as a global leader in delivering end-to-end liquid packaging solutions. Driven by innovation, sustainability, and operational excellence, we consistently adapt to the evolving demands of our customers and consumers. Our solutions are designed to ensure precision, reliability, and superior product integrity across every stage of the packaging process.

Shaping the Value Chain

UFlexs aseptic packaging business reflects a clear progression toward higher-value, technology-led offerings within its portfolio. This positioning is being strengthened through a deliberate shift toward improved product mix and deeper customer integration.

A key driver of this transition has been the increasing focus on exporting larger pack formats, which support improved realizations. In parallel, the business is expanding its presence in export markets, with a focused push toward international sale.

This broader application footprint supports sustainable growth and helps mitigate category concentration risk.

At the same time, UFlex is strengthening its machinery and solutions ecosystem, with high-speed filling lines and evolving equipment formats that deepen its role across the value chain. UFlex is among the few global players offering high-speed filling lines with speed of up to 25,000 packs per hour, reinforcing its integrated position across the value chain.

Supporting this evolution is a strong focus on talent, with the Company building a global pool of highly skilled technical and commercial professionals who enhance customer engagement, provide operational support, and reinforce long-term partnerships.

Operating

Environment

The operating environment for aseptic packaging in FY 2025-26 remained dynamic, shaped by global supply chain disruptions and geopolitical developments.

A major constraint has been the limited availability of specialized

polymers, driven by production disruptions in key petrochemical regions and logistical bottlenecks affecting global trade flows. This has shifted industry priorities from price optimization to securing raw material supply, with availability becoming a critical concern for manufacturers.

Despite these near-term pressures, the fundamental demand drivers for aseptic packaging remain strong, supported by its advantages in safety, shelf life, cost efficiency, and suitability for a wide range of applications. Increasing adoption, along with regulatory support in certain categories, continues to reinforce its long-term relevance.

Performance & Strategy

The business also maintains a balanced domestic and export mix, while the machinery segment is gaining traction with increasing acceptance of high-speed lines and initial inroads into new geographies, opening additional growth avenues.

FY 2025-26 reflected a year of strategic capacity expansion, product mix optimization, and sustained operational resilience for the business.

+ Sustained healthy growth momentum during the year and delivered stable margins, despite facing elevated input costs and ongoing supply chain uncertainties.

- A major milestone was achieved with the commissioning of

a 5 billion packs per annum brownfield expansion at Sanand, which increased total installed capacity from 7 billion to 12 billion packs per annum.

* High-speed filling solutions, including the Asepto Speed 25,000 and 10,000 packs-per- hour machines, witnessed

positive market traction during the year.

*- A notable shift in the product mix was the increasing focus on larger pack formats, which contributed to higher realizations, improved margins, and better shelf visibility, especially in international markets.

- Operationally, the vertical maintained a well-balanced domestic and export portfolio while leveraging its integrated material sciences ecosystem.

Outlook

Looking ahead, the outlook for UFlexs aseptic packaging business remains positive despite near-term uncertainties. Supply chain pressures related to polymer availability are expected to ease gradually as global production stabilizes, which should improve operational consistency.

The Egypt greenfield plant marks a significant step in UFlexs global expansion strategy, with a capacity of 12 billion packs, and has already commenced commercial trials during its stabilization phase, indicating strong early traction.

The facility is expected to emerge as a key growth driver, enabling expansion across North Africa, the Middle East, Europe, and eventually into the Americas, thereby strengthening the Companys global footprint.

Demand fundamentals remain robust, driven by continued substitution from traditional packaging formats, increasing penetration across product categories, and growing preference for safe and efficient packaging solutions. At the same time, ongoing investments in technology, product innovation, and new filling lines are expected to enhance competitiveness and support movement toward higher-value opportunities.

Chemicals

Since its inception in 1994, UFlex Chemicals has played a pivotal role within the UFlex packaging ecosystem, catering to both internal demand and an expanding global clientele across India and more than 20 countries. Backed by advanced manufacturing facilities in Noida and Jammu, along with a dedicated Research & Development Center, the Company consistently delivers innovative and sustainable chemical solutions.

Shaping the Value Chain

FY 2025-26 marked a phase of strategic strengthening for the Chemicals business, with a clear shift toward value-added growth, solution orientation, and portfolio optimization. The business continued to evolve from a product-centric model to a technology-led, solution-driven partner for the flexible packaging industry.

A key pillar of this transition has been portfolio diversification into high-value and specialty segments such as coatings, UV and LED-based chemistries, and narrow web solutions. These segments complement the existing inks and adhesives portfolio while offering superior margins and stronger differentiation. Increased focus on specialty coatings and performance inks reflects a conscious move to enhance value realization while addressing evolving customer needs.

Customer engagement has deepened significantly, with the business increasingly delivering application-driven solutions rather than standalone products. Innovations such as white adhesive technology, which reduces ink consumption by up to 70% and improves converter economics, demonstrate the shift toward measurable customer value creation. Similarly, the transition toward LED-based ink systems enables substantial energy savings and operational efficiency for end users.

Sustainability-led innovation is also shaping the value chain.

New product development is increasingly aligned with sustainable chemistries, including energy-efficient systems and the growing use of environmentally aligned raw materials. While legacy formulations remain stable, newer product categories are driving a higher share of sustainable inputs, supporting long-term regulatory and market alignment.

The business also benefits from integration within the broader UFlex Ltd. ecosystem, enabling collaboration across packaging films, packaging, and chemicals. This integrated positioning allows delivery of end-to-end solutions, strengthening customer relationships and enhancing competitive advantage.

Operating

Environment

The Chemicals business operated in a challenging and volatile environment during FY 2025-26, shaped by supply-side disruptions, raw material inflation, and evolving regulatory expectations.

Global geopolitical developments led to significant disruptions in the availability of key solvents and petrochemical derivatives. Imports from major sourcing regions were impacted, resulting in sharp cost escalations, along with elevated freight costs. At the same time, demand patterns became unpredictable, with customers placing significantly higher orders to mitigate supply risks. The business responded effectively through strategic sourcing, formulation optimization, and strong technical agility. In-house R&D capabilities enabled rapid substitution of raw materials and development of alternative chemistries, ensuring continuity of supply and minimal disruption to customers.

The industry landscape remained competitive, particularly in traditional inks and adhesives, where product differentiation is limited. This has reinforced the strategic focus on specialty and high-performance segments. Additionally, increasing regulatory scrutiny around solvent usage and environmental compliance is gradually influencing product development priorities.

From a technology standpoint, the market witnessed early-stage shifts toward more sustainable and efficient solutions. While gravure printing continues to dominate, there is increasing adoption of flexographic printing and UV/ LED-based systems. These trends are expected to accelerate over time, driven by sustainability requirements and efficiency gains.

Geographically, the business has built a diversified customer base across the Far East, Middle East, Africa, and Latin America, which has helped mitigate regional volatility. While certain markets such as the Middle East experienced short-term disruptions,

growth in other regions, particularly the Far East, helped maintain demand stability.

Performance & Strategy

The Chemicals business delivered a resilient performance during the year, supported by strategic execution and improved business mix.

* Exports recorded strong growth, driven by deeper penetration across key international markets

* Revenue mix improved, with increased contribution from value-added segments such as coatings, UV/LED systems, and narrow web applications

* Focused investments were made in strengthening technical teams, enhancing R&D capabilities, and improving manufacturing discipline.

* R&D efforts were directed toward formulation optimization, development of alternative solvent systems, and enhancement of product performance for demanding packaging applications.

* Operational excellence initiatives, including tighter quality systems, improved supply chain planning, and enhanced manufacturing processes, ensured consistent product delivery despite external disruptions.

* Strengthened backward integration in selected areas by developing critical intermediates in-house.

* Customer-led innovations enabled tangible efficiency gains, including reduction in input consumption through advanced formulations and significant energy savings through adoption of LED-based systems

Latest Value-added Offerings

FLEXPACK 5680

FLEXPACK 5680 is a polyurethane resin currently under commercial trials, specifically developed for plasticization in flexographic surface printing applications. It is compatible with alcohols, esters, and co-solvent systems, making it well-suited for use in flexographic ink formulations.

FLEXCOTE RE 2250 / 9081LE

FLEXCOTE RE 2250 / 9081LE is a high-performance, two-component solvent-based polyurethane adhesive, specifically engineered for retort packaging applications.

It offers excellent chemical and thermal resistance, making it ideal for packaging aggressive or heat-processed products.

UV-LED Dual Cure Ink Series

The next-generation UV-LED Dual Cure Ink Series is designed for narrow web flexographic label printing on hybrid presses, supporting both UV and UV-LED curing systems. It offers seamless adaptability along with enhanced operational flexibility.

UV-Curable IML Matt Coating

UFlexs UV-Curable Matt Coating is a high-performance overprint varnish developed for narrow web flexo IML applications. It delivers a premium matt finish combined with reliable functional performance.

FLEXCOTE HSLV 1170/ FL-HF0200

FLEXCOTE HSLV 1170/FL-HF0200 is a two-component solvent-based reverse system Polyurethane adhesive designed for medium to high-performance applications.

This is a high solid low viscosity product. It is particularly suited for aggressive filling materials such as hot-filled ketchup, offering excellent

corrosion resistance on metallic surfaces and reliable performance on foil-based laminates. The product can be used at 45-50% solids and gives substantial savings in solvents.

FLEXPAK 5300

FLEXPAK 5300 is a high-solid polyurethane resin designed as an ink binder for white flexographic printing. It enhances surface print quality by preventing speckling caused by ink-adhesive incompatibility, ensuring a smooth and consistent finish.

FLEXCOAT Soft-touch Coating - 1034

FLEXCOAT SOFT TOUCH COATING- 1034 is an eco-friendly, water-based coating that delivers a premium soft-touch feel along with a refined matte appearance. Designed for paper and paperboard, it is compatible with various offline coating processes.

FLEXCURE NW Flexo Scratch-off Silver Ink & Coating

FLEXCURE NW FLEXO SCRATCH-OFF SILVER INK & COATING is a UV-curable system developed for label, promotional, and gaming ticket applications. It delivers high metallic opacity with controlled scratch-off performance and clean removability.

FLEX Aqualabel Ink

FLEX AQUALABLE INK is developed for surface printing applications and is ideal for narrow web flexographic printing on a wide range of coated papers and boards. It delivers excellent printability with precise dot reproduction and low odour characteristics.

CI FLEXGLIDE CTP INK

CI FLEXGLIDE CTP INK is NC-PU based, non-toluene and non-ketone ink system, specifically developed for flexographic printing followed by adhesive lamination (both solvent-based and solvent-less).

CI FLEXSHEEN DP Inks

CI FLEXSHEEN DP INKS are NC-PU based, non-toluene and non-ketone ink systems designed for flexographic surface printing on breathable PE packaging films. These inks deliver excellent print quality with reliable performance.

FLEXCOAT Soft-touch Coating - 1035

FLEXCOAT SOFT TOUCH COATING - 1035 is primarily recommended for BOPET and BOPP packaging films, delivering a premium soft-touch finish. It ensures a uniform coating with excellent lay, wetting, and leveling properties.

FLEXGREEN NW UV-LED Laminating Adhesive (NY)

FLEXGREEN NW UV-LED Laminating Adhesive (NY) is a non-yellowing adhesive designed for next-generation high-speed machines. It offers excellent lamination performance with fast curing and broad substrate compatibility.

FLEXCURE Offset Invisible Inks

FLEXCURE Offset Invisible Inks are radiation-curable inks developed for lithographic applications with built-in security features. These inks enable anti-counterfeiting by producing hidden marks visible only under specific UV light.

FLEXCURE Lamitube Gloss Coating

FLEXCURE Lamitube Gloss Coating is a UV-curable, high-slip coating specifically developed for white base lamitube applications. It combines performance and sustainability with efficient curing and low emissions.

FLEX AQUA Aseptic Ink

Water-based FLEX AQUA Aseptic ink has successfully undergone commercial validation. The product demonstrated reliable performance under high-volume production conditions, confirming its suitability for aseptic packaging applications.

CI FLEXGLIDE HD

CI FLEXGLIDE HD ink has successfully completed industrial trials. The trials validated its performance and consistency, establishing its effectiveness for flexographic printing applications in demanding production environments.

CI FLEXSHEEN PP

CI FLEXSHEEN PP ink has successfully completed trial runs. The trial reflects strong customer acceptance and reliable product performance in real-world applications.

CI Flexo 2K Matt OPV

CI Flexo 2K Matt OPV has successfully completed trials.

The results confirm its suitability for delivering consistent matte finishes in flexographic printing applications.

Blister Coating

The solvent-based blister coating has been approved by industries after meeting required performance standards. This approval highlights its effectiveness for blister packaging applications.

Extrusion Lamination Ink

Extrusion lamination inks have been successfully established at industries, demonstrating stable performance and process compatibility in extrusion lamination applications.

Corrugation Ink

Water-based corrugation inks have been validated and are now in continuous commercial supply. The product has shown consistent performance, supporting ongoing production requirements.

Outlook

The outlook for the Chemicals business remains positive, supported by strengthened internal capabilities, a differentiated product portfolio, and expanding global opportunities.

Growth will be driven by continued focus on specialty and high-performance segments,

including advanced coatings and UV/LED-based systems. Increasing demand for sustainable and efficient packaging solutions is expected to create new opportunities, particularly as industry adoption of these technologies accelerates.

The business will continue to deepen its customer base in international markets, particularly across the Far East, Middle East, Africa, and Latin America, leveraging its expanding export capabilities and strong customer relationships.

Key strategic priorities include further strengthening R&D capabilities, expanding the portfolio of specialty and sustainable products, and building deeper technical expertise across teams to support application-driven customer solutions. Operational efficiency will remain a focus area, with continued emphasis on process improvements, supply chain optimization, and cost management to navigate potential raw material volatility.

In the medium term, capability development in advanced chemistries, including water-based systems, will be critical in preparing the business for entry into more regulated global markets.

Holography

At UFlexs Holography Business, we deliver advanced anti-counterfeiting and brand protection solutions to clients worldwide. Serving a wide spectrum of industries, including pharmaceuticals, textiles, FMCG, automotive, consumer electronics, food and beverages, publishing, premium packaging, government institutions, and education, we combine innovation with precision to help customers strengthen integrity, elevate packaging, and build enduring consumer trust in a highly competitive landscape.

As a certified MICR instrument printer accredited by the Indian Banks Association (iba), we partner with leading banks and government bodies to deliver secure, high-quality print solutions. This recognition reflects our commitment to precision, reliability, and trust.

Shaping the Value Chain

UFlexs holography business is steadily repositioning itself from a traditional security feature provider to a value-driven solutions partner embedded deeper into customers product ecosystems. The shift is visible in two parallel directions.

Firstly, the portfolio architecture has evolved beyond conventional holograms into a multi-product platform comprising security labels, holographic films, stamping foils, and textile applications. Within this mix, newer segments such as stamping foils and textile-linked solutions now contribute nearly half of the business, indicating a structural pivot toward higher utility

and application-specific offerings rather than standalone products.

Secondly, the business is consciously moving upstream in customer engagement. Instead of supplying standardized features, it increasingly co-develops customized, high-security and aesthetic solutions aligned to specific use cases such as anti-counterfeiting, brand authentication, and visual differentiation. This is particularly evident in collaborations with large brands, where solutions are tightly integrated into product design and distribution systems, even though such engagements remain confidential due to the sensitive nature of security features.

A critical enabler of this value-chain shift is technology-led differentiation. Investments in high-definition mastering capabilities, significantly enhancing resolution and visual complexity, have strengthened the businesss ability to create features that are difficult to replicate. This positions holography not just as a deterrent to counterfeiting, but as a continuously evolving security layer.

Additionally, the business is exploring new application domains such as specialty materials for gifting and packaging accessories, including holographic packaging films for premium bags and decorative formats.

These initiatives extend the value chain from functional security to experiential and aesthetic applications, opening new revenue pools.

Operating

Environment

In FY 2025-26, the holography business operated in a complex and often non-linear demand environment shaped by its positioning as a value-added, non-essential component. A key structural characteristic was demand sensitivity. Unlike core packaging, holographic features are often discretionary, making them vulnerable to cost optimization decisions by customers during periods of inflation or economic uncertainty. Rising raw material prices or macro disruptions can lead to substitution with lower-cost alternatives such as printing, directly impacting volumes in certain segments.

The competitive landscape is equally nuanced. The industry is fragmented, with numerous small and niche players catering to localized demand. These players often exhibit higher agility, while larger integrated players like UFlex must balance scale with responsiveness. At the same time, competition also comes from packaging films manufacturers who treat holography as an ancillary offering, intensifying pricing pressure in commoditized segments.

Another defining aspect is the dynamic nature of counterfeiting. Security solutions tend to get imitated over time, forcing continuous innovation cycles.

This creates a perpetual need for feature upgrades, both from the supplier and the customer,

making the business inherently innovation-driven rather than static.

Geopolitical and macroeconomic factors further influenced performance. Export-linked segments such as textiles are exposed to global demand cycles, trade policies, and geopolitical tensions. Events such as regional conflicts or tariff shifts directly affect both export demand and domestic consumption through interconnected economic channels.

At the same time, emerging trends offer structural tailwinds. Increasing awareness around brand protection, regulatory scrutiny in sectors like pharmaceuticals, and the need for authentication in high-value goods continue to expand the relevance of holography solutions.

Performance & Strategy

The holography business has demonstrated resilience through a challenging operating cycle, delivering double-digit growth despite adverse pricing conditions in key inputs.

The Holography business delivered resilient performance during the year, supported by strong underlying demand, portfolio transformation, and expanding market reach.

* A significant portion of the year witnessed a decline in packaging films prices,

which required immediate pass-through to customers, effectively suppressing topline expansion potential