Virgo Polymers India Ltd Management Discussions

(For the Financial Year ended 31st March, 2025)

Pursuant to Regulation 34(2)(e) read with Schedule V (Para B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this Report provides an Overview of the

Companys Operational Performance, Industry Dynamics, Financial Condition, Risk Exposure and future outlook for the financial year ended March 31, 2026.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS: Economic Overview:

The Indian economy demonstrated resilience during FY 2025 26, supported by robust industrial output, public infrastructure spending and steady export momentum. While headline inflation remained manageable, key manufacturing segments experienced margin pressures due to volatility in raw material and energy costs. The Governments continuing emphasis on industrial development under the Make in India framework supported manufacturing sector activity.

Industry Overview:

The Flexible Intermediate Bulk Container (FIBC) industry (comprising Jumbo Bags and Big Bags) continues to see baseline demand across global markets due to its cost-efficiency, durability and suitability for bulk packaging. Demand is primarily driven by the chemical, agricultural, food processing and construction sectors. While India maintains a competitive position in global FIBC exports, domestic producers face ongoing headwinds from volatile polymer prices (chiefly Polypropylene), international freight costs and domestic operational disruptions.

B. OPPORTUNITIES AND THREATS: Opportunities:

Expansion into untapped export destinations seeking reliable, heavy-duty packaging solutions. Growing global and domestic transition toward reusable, eco-friendly industrial packaging. Increasing demand driven by domestic agri-logistics and infrastructure investments. Product diversification into specialized, high-margin customized FIBC variants.

Threats:

Operational and revenue losses arising from industrial disruptions and labor unrest. Raw material cost volatility, particularly Polypropylene (PP) resins, impacting gross margins. Stiff price competition from unorganized regional manufacturers and low-cost overseas suppliers. Foreign exchange rate fluctuations affecting export realization and profitability.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Company operates in a single primary business segment, the manufacture and export of FIBC Jumbo Bags and PP Woven Sacks. Consequently, single-segment disclosures apply under Indian Accounting Standard (Ind AS) 108. FIBC Jumbo Bags continued to serve as the primary source of revenue during the financial year under review.

D. OUTLOOK:

While long-term global demand for FIBC packaging remains favorable, the Companys short-to-medium-term outlook remains cautiously managed due to operational interruptions arising from industrial relations challenges at its existing manufacturing unit. To ensure long-term business continuity, mitigate geographical and workforce risks, and protect customer relationships, the Board and Management are actively evaluating strategic alternatives, including capacity diversification, automation and potential unit relocation.

E. RISKS AND CONCERNS:

Industrial Relations and Labor Unrest: Disruptions at the primary plant impact production continuity and delivery schedules. Customer Retention: Prolonged supply interruptions increase the risk of order cancellation and market share loss. Single Facility Dependency: Concentration of operations at a single location exposes business performance to local operational disruptions. Input Price Volatility: Sharp fluctuations in polymer prices directly affect manufacturing costs and margins. Uninsured Disruption Losses: Indirect business loss resulting from labor disputes falls outside standard property insurance coverage.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company maintains an adequate system of internal financial controls and operational procedures aligned with its size and business complexity. Internal controls are evaluated by independent audit professionals and key findings alongside corrective action plans are periodically reviewed by the Audit Committee. In light of recent operational disruptions, Management is taking steps to further strengthen risk monitoring systems, internal communication processes and operational contingency planning.

G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: Financial Summary (Rs. in Lakhs):

During FY 2025 26, overall financial performance was impacted by production disruptions, resulting in lower top-line revenue and net profit compared to the preceding financial year. Management maintained focus on fixed-cost control and working capital conservation to preserve financial stability during this period.

H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Industrial relations faced significant challenges during the year due to labor disputes and safety concerns at the manufacturing facility.

Key Developments:

Operational disruptions occurred due to ongoing industrial action at the manufacturing plant. Management prioritized employee safety and asset protection while engaging in mediation. The Company continues to work with statutory authorities, employee representatives and stakeholders to resolve disputes through lawful and amicable means. Going forward, maintaining industrial harmony, enhancing employee engagement, and establishing robust grievance management systems remain major operational priorities.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing 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 due to economic conditions, raw material price trends, regulatory changes, industrial relations developments and other incidental factors beyond the direct control of the Company.