Virgo Polymers India Ltd Management Discussions

This Management Discussion and Analysis Report (“MD&A") provides an overview of the Companys operations, financial performance, industry trends, and future outlook in accordance with Regulation 34(2) (e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V thereof, and as per the provisions of the Companies Act, 2013.

1. Industry Structure and Developments Economic Overview:

The Indian economy continued its recovery trajectory in FY 2024-25, supported by increased manufacturing activity, export growth, and infrastructure investments. Inflation remained within a manageable range, though input cost pressures persisted for the manufacturing sector. The Governments sustained focus on Make in India and industrial reforms has boosted investor confidence.

Industry Overview:

The Flexible Intermediate Bulk Containers (FIBC) industry, also known as Jumbo Bags or Big Bags, is witnessing steady global demand due to its cost-effectiveness and adaptability in handling bulk materials. Key sectors driving FIBC demand include agriculture, food processing, chemicals, and construction.

India remains a global leader in FIBC manufacturing, with strong export orientation. However, rising raw material prices (mainly polypropylene), logistic constraints, and labor disruptions pose challenges.

2. Opportunities and Threats Opportunities:

• Expansion into new export markets amid rising global demand.

• Increasing preference for eco-friendly, reusable bulk packaging solutions.

• Growing domestic demand due to infrastructure growth and agri-logistics.

• Diversification into value-added and customized packaging products.

Threats:

• Disruption due to labor unrest, as witnessed in FY 2024-25.

• Volatility in raw material prices affecting margins.

• Competition from unorganized sector and low-cost producers globally.

• Currency fluctuation risks impacting export profitability.

3. Segment-wise or Product-wise Performance

The Company operates primarily in the segment of FIBC Jumbo Bags and PP Woven Sacks. While segment reporting as per Ind AS is not applicable due to the nature of business, FIBC Jumbo Bags remained the major revenue contributor.

4. Outlook

While the long-term demand outlook for FIBC products remains robust, the immediate- term outlook is cautiously optimistic, given the ongoing labor strike and operational disruptions. The Company is evaluating strategic options, including relocation of the manufacturing unit, to mitigate labor-related risks and ensure business continuity.

The Company is also exploring automation and capacity expansion opportunities in other regions to diversify its operational base and reduce dependency on a single facility.

5. Risks and Concerns

• Labour Unrest: The ongoing strike at the Tamil Nadu facility is a major concern, with production halted since March 2025.

• Loss of Customer Orders: The inability to meet existing orders may lead to customer attrition and potential loss of goodwill.

• Geopolitical and Regulatory Risks: Export operations are subject to international trade policies and compliance requirements.

• Insurance Gap: Operational losses due to the strike are not covered by insurance, exposing the Company to financial strain.

• Dependency on Single Facility: Overreliance on one manufacturing unit has emerged as a vulnerability.

6. Internal Control Systems and Their Adequacy

The Company has in place a robust internal control system commensurate with the size and nature of its operations. The internal audit function is carried out by independent professionals and covers all key areas of operations. The audit findings and action plans are reviewed periodically by the Audit Committee of the Board.

Despite these systems, the recent labor unrest highlights the need for stronger employee grievance redressal mechanisms and workforce risk monitoring tools, which the Company is currently evaluating.

7. Discussion on Financial Performance with Respect to Operational Performance

The Company achieved a 39.3% growth in revenue from operations in FY 2024-25 compared to the previous year, driven by stronger customer demand and improved sales. However, profit growth remained moderate (7.9%), due to increased input costs. Expenses increased proportionately with revenues, and the Company maintained tight control over non-essential spending.

8. Material Developments in Human Resources / Industrial Relations

The industrial relations environment deteriorated in March 2025 due to unresolved disputes, resulting in a full-scale strike.

Key Developments:

• Strike Initiated: On 13th March 2025, operations at the Maraimalai Nagar plant

were suspended due to safety concerns.

• Employee Safety: Threats and unrest against immigrant workers have necessitated temporary closure and are driving the Companys consideration of relocation.

• Resolution Efforts: The Company is actively engaging with labor authorities, union leaders, and stakeholders to seek an amicable resolution.

Going forward, employee engagement, grievance handling, and industrial peace will be critical areas of focus.

Cautionary Statement

Statements in this 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 various risk factors and economic conditions beyond the Companys control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on subsequent developments, information, or events.