West Coast Paper Mills Ltd Management Discussions

Overview:

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably. The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023). On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well. The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty and emerged as the largest singular uncertainty in 2025.

World output	3.2	3.3
Advanced economies	1.7	1.7
Emerging and developing economies	4.2	4.4

Outlook: The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7 per cent for 2025 and 2026, factoring the various economic uncertainties. (Source: IMF, United Nations).

Indian economic review

Overview: The Indian economy was projected to grow at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy. Indias nominal GDP (at current prices) was 331 trillion in FY 2024-25 (301.23 trillion in FY 2023-24). The nominal GDP per capita increased from 2,15,936 in FY 2023-24 to 2,35,108 in FY 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in FY 2024-25, closing at 85.47 on the last trading day of FY25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar). Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at

4.6% in FY 2024-25, was the lowest since the pandemic, catalyzing savings creation. Indias foreign exchange reserves stood at a high of US$676 billion as of April 4, 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Gross inward foreign direct investment revived in FY25, rising 20.6% YoY from US$51.8 billion in the first eight months of FY24 to US$62.5 billion during the same period in FY25. However, the net foreign direct investment in India declined from US$7.84 billion in the first nine months of FY24 to US$1.18 billion in the corresponding period in FY25, followed increased repatriation and investments by Indian firms across international geographies.

Growth of the Indian economy

	FY22	FY23	FY24	FY25E
Real GDP growth (%)	8.7	7.2	9.2	6.5
E: Estimated

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1 FY25	Q2 FY25	Q3 FY25	Q4 FY25E
Real GDP growth (%)	6.5	5.6	6.2	7.6

E: Estimated

(Source: The Hindu, National Statistics Office)

The banking sector continued its improvement, with gross non-performing assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position. Indias exports of goods and services are projected to reach US$800 billion in FY 2024-25, up from US$778 billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports were expected to grow 2.2% YoY, reaching US$446.5 billion.

Indias net GST collections increased 8.6%, totaling 19.56 lakh crore in FY 2024-25. Gross GST collections in FY 2024-25 stood at 22.08 lakh crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in FY 2024-25. The industrial sector was expected to grow 6.2%, supported by growth in construction activities, electricity, gas, water supply and other utility services. Indias services sector grew an estimated 7.3% in FY25 (9.0% in FY24), driven by public administration, defense and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in FY25, compared to 8.6% in FY24. Meanwhile, the construction sector expanded at 8.6% in FY25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in FY25, with growth projected at 4.3%, which was lower than 12.3% in FY24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY25, compared to 8.1% in FY24.

The agriculture sector growth was estimated at 3.8% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24). From a demand perspective, private final consumption expenditure at constant prices was forecast to grow 7.3%, indicating a rebound in rural demand and stronger consumer confidence.

The Nifty 50 and SENSEX recorded their weakest annual performances in FY 25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of US$3,070 per ounce, the highest increase since FY 2007-08, indicating global

Union Budget FY 2025-26

The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating 11.21 lakh crore for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to 12 lakh annually will be fully exempt from income tax. Economists estimate that the resulting 1 lakh crore in tax savings could boost consumption by 3-3.5 lakh crore, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or Rs. 12.3 lakh crore in fiscal 2025 to settle at Rs. 65.7 lakh crore. At close of FY25, the total number of folios had jumped to nearly 23.5 crore, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to 24,113 crore.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately US$20 billion by year-end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

Outlook: India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY26.

Tariff-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential (Source: Niti Aayog). 200 lakh crore.

Free trade agreement: In a post-Balance Sheet development, India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewelry sectors. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Pay Commission impact: The 8th Pay Commissions awards could lead to a significant salary revision for nearly ten million central government employees. Historically, Pay Commissions have granted substantial pay hikes along with generous arrears. For instance, the 7th Pay Commission more than tripled its monthly salaries, raising the range from 7,000 to 90,000 to 18,000 to 12.5 lakh, triggering a widespread ripple effect.

Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34 per cent, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India. Deeper rate cuts: In its February 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 2025-26. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

THE PULP AND PAPER INDUSTRY

Global pulp and paper Industry

The global pulp and paper market growth in this market is being driven by rising consumer awareness of health and wellness, resulting in an increasing demand for related products. The Pulp & Paper market is projected to reach a value of US$339.5 billion in 2025, with an expected compound annual growth rate (CAGR) of 1.41% from 2025 to 2029. Technological advancements leading to efficient and sustainable production are also contributing to market expansion. Asia-Pacific dominated the pulp and paper market with a market share of 53.3% in 2024, expected to grow to US$ 391.39 billion by 2032. The containerboard market size is worth US$149.97 Billion in 2025, growing at an 2.05% CAGR and forecast at US$165.99 Billion by 2030. Throughout the forecast period, it is anticipated that the global containerboard market will expand significantly, primarily due to rising corrugated box shipments and e-commerce shipments, increasing the demand for packaged foods and businesses, and shifting preference toward recyclable packaging options.

The global carton board market, estimated at US$76.58 billion in 2025, is projected to expand to US$104.78 billion by 2030, growing at a CAGR of 6.47% during the forecast period. With e-commerce estimated to reach over US$5,060 billion by 2025 at a CAGR of 12.7%, the carton board market is benefiting from the expansion of e-commerce logistics, which is being driven by shifts in consumer behavior and the rise of online shipping.

(Source: Fortune Business Insights, The Business Research Company, Sellers Commerce, Mordor Intelligence, Statista)

Indian pulp and paper Industry

India, the worlds 15th largest paper producer, accounts for approximately 5% of the global paper market. Driven by steadily increasing demand for writing, printing and specialty papers, the Indian paper industry is projected to reach a market value of US$19.1 billion by 2033, growing at a CAGR of around 7.5% from 2024 to 2033. In 2024, the Indian pulp and paper markets projected output is estimated to reach US$9.96 billion, reflecting a moderate growth of 4.5% in FY24. A compound annual growth rate (CAGR) of 8% is forecast from 2024 to 2033.

The increasing literacy rates and higher enrollment in the education system are driving demand for notepads, textbooks, and supplementary materials, thereby boosting the paper industry. Additionally, the rising demand for corrugated and household paper products is further. Outlook: Indias paper and paper products market is estimated to reach US$9.96 billion by 2024, with paper consumption within the country expected to hit 30 million tons by March 2027. This flourishing industry is experiencing growth both domestically and internationally, driven by increasing global demand, the lifting of pandemic restrictions, and the ban on single-use plastics. (Source: Globe News Wire, The Pulp and Paper Times)

Indian paper Industry personality

Core: The pulp and paper industry play a vital role in the Indian economy, offering employment opportunities to over 5,00,000 individuals. Their labor contributes approximately 1.6% to Indias total GDP.

Cyclical: Indias paper industry follows a cyclical pattern, with performance varying in response to economic conditions. Companies must navigate competition from alternative materials and adapt to the challenges posed by the evolving technologies.

Versatile: India now has 861 paper mills, 526 of which are operating, with a total installed capacity of 27.15 million tons. Almost 4,990 thousand tons of installed capacity are contained in the more than 900 paper units that make up the industry structure. (Source: Resource wise, Smallcase.com, IBEF)

Paper market demand drivers in India

Rise in literacy: While Indias male literacy rate stands at 84.7% in 2024, the womens literacy rate has seen significant progress, reaching 70.4%. This upward trend, with universal literacy projected by 2060, is expected to boost consumption of pulp and paper-based products.

Commercial applications: Paper plays a vital role in various commercial applications across industries. In packaging, it is used for boxes, bags, food wraps, and labels as an eco-friendly alternative to plastic. The printing and publishing sector depends on it for newspapers, magazines, and marketing materials. Specialty papers serve unique purposes, including receipts, security documents, and industrial filtration. In hygiene and healthcare, tissue and medical-grade papers are essential for sanitation and sterilization. With its versatility and sustainability, paper remains indispensable in commercial use worldwide.

Online food delivery demand: The paperboard market is expected to benefit from the rapid growth of Indias online food delivery sector. The estimated revenue for this market in 2025 is US$1.40 trillion, with a CAGR of 7.83% anticipated from 2025 to 2029. Eco-friendly packaging: The paper and packaging industry is trending towards eco-friendly materials. Expanding population: Indias growing population, estimated at 1.45 billion in 2025 (a 0.89% increase from 2024), is a significant catalyst for the paper industrys expansion.

(Source: live data of worldometers.info, Statista, India Today, Noida Business Guide).

Sectoral opportunities

Opportunities in the paper industry range from traditional uses like printing and stationery to specialized applications in hygiene, construction, electronics, and automotive.

Printing: The Indian commercial printing market, valued at US$35.5 billion in 2024, is projected to reach US$45.9 billion by 2033, exhibiting a steady compound annual growth rate (CAGR) of 2.9% from 2025 to 2033. Paper continues to be the dominant medium for printed materials such as newspapers, magazines, books, and marketing collateral.

Stationery: The stationery industry, with an estimated global market value of US$151.35 billion in 2025 and an anticipated growth rate exceeding 4.23% between 2020 and 2030, depends on paper products such as notebooks, journals, writing pads, and envelopes. The rising popularity of customizable and eco-friendly stationery presents manufacturers with opportunities to serve niche markets.

Hygiene products: The hygiene product market, valued at US$160.09 billion in 2024, relies on paper for products like tissue and toilet paper. Rising hygiene awareness drives demand for quality, soft, and eco-friendly paper products.

Specialty papers: The specialty papers market, estimated at 36.7 billion metric tons in 2024, plays a crucial role in the construction, electronics, and automotive sectors. Applications range from components in electronic devices to filter papers and specialized coatings for automotive parts. These sectors present opportunities for growth, innovation, and market expansion within the paper industry, driven by changing consumer preferences, technological advancements, and a focus on sustainability. (Source: IMARC Group, Mordor Intelligence, Grandview Research)

Sectoral threats

Raw material concerns: Limited availability and inconsistent quality of inputs like wood, recycled fiber, and water, along with supply disruptions.

Digital alternatives: The increasing adoption of digital solutions is reducing demand for traditional paper products.

Fluctuating raw material costs: Raw material price instability can squeeze paper manufacturers profit margins.

Regulatory changes: Evolving priorities in waste management and recycling may present compliance difficulties for the paper industry.

Segment mix and market outlook

Writing and printing: Writing and printing (W&P) paper, crucial for both educational institutions and businesses, maintains a substantial market share of 30%. The overall market for printing and writing paper is projected to reach US$204.07 billion in 2024, growing at a modest compound annual growth rate (CAGR) of 1.2% from 2025 to 2034. Market expansion is influenced by factors such as the development of diverse printing and writing paper types, rising demand for inkjet printing paper, and the continued use of printed catalog.

(Source: Market Research Future)

Paper cup stock: Paper cups, also known as disposable cups, are typically made from bleached virgin paper pulp and coated with plastic or wax to prevent liquids from soaking through. They are often lined with polyethylene, which enhances durability, prevents moisture absorption, and helps retain the original flavor of the beverage. In 2024, the Indian paper cups market reached 23.2 billion units and is projected to grow to 29.0 billion units by 2033, reflecting a CAGR of 2.38% from 2025 to 2033. Key drivers of this growth include increasing usage at social and public gatherings, rising demand for cost-effective and sustainable alternatives, and growing environmental awareness.

(Source: IMARC)

OPTIC FIBRE CABLE INDUSTRY Global optic fibre cable industry

The fiber optic cable market, currently at US$13.92 billion in 2025, is anticipated to expand to US$20.89 billion by 2030, a growth rate of 8.46%.

The growing demand for connectivity is fueling the expansion of the fiber optic cable market. This demand is driven by factors such as increasing data consumption, internet expansion, the rise of cloud and edge computing, smart city and IoT adoption, e-commerce growth, and the growth of digital services. Key trends supporting this growth include 5G network deployment, the increasing prevalence of the Internet of Things (IoT), data center expansion, rising cloud computing demand, and broader access to broadband internet.

Global growth drivers

Fiber to the home (FTTH): Fiber-to-the-home (FTTH) technology, with an estimated market size of US$61.69 billion in 2025, is a significant growth engine for the cable industry. FTTH delivers enhanced bandwidth and facilitates advanced services like high-speed internet, high-definition television, and digital voice communication directly to homes and businesses. Europe: The total number of homes passed with Fiber to the Home (FTTH) and Fiber to the building (FTTB) in the EU39 reached 269 million. The FTTH Council Europe projects that by 2025, more than 70% of EU homes will have access to FTTH/B coverage, representing a substantial portion of European households with fiber optic internet.

USA: More than 10.3 million people of the country will benefit from an estimated US$48,795 million in investments. These projects will provide reliable high-speed internet access, clean, safe water, and a range of support for rural families, agricultural producers, and small businesses.

(Source: vc4, Fiber Broadband Association, Credence Research, Grandview Research)

Indian optic fiber cable industry

The Indian governments investments in fiber optic cable network infrastructure through ambitious Bharatnet Project is anticipated to drive market expansion.

The Indian optical fiber market is poised for growth due to ongoing data cost reductions, growing demand for high-speed networking and services, increasing broadband access, technologies, and the expanding adoption of fiber-to-the-home (FTTH) connectivity. The Budgetary allocation under the Ministry of Electronics in the Budget for 2025-26 is Rs. 26,026.25 Cr, which is a 48.16% increase from the previous financial years budget.

(Source: Hindustan Times)

Indian growth drivers

Increased broadband penetration: Indias internet user base reached 886 million in 2024, fueled by increasing broadband adoption by homes and businesses.

With a broadband penetration rate of 52.4% at the start of 2024, and user numbers estimated to surpass 900 million by 2025, the demand for high-speed internet is surging. Fiber optic cables, essential for expanding broadband networks, provide the superior bandwidth and data transmission needed to meet this growing need.

(Source: IBEF)

Rising internet TV streaming services: The OTT market is experiencing explosive growth, projected to reach US$1346.38 billion by 2034 from US$322.66 billion in 2025, a remarkable CAGR of 17.20%. This surge, fueled by platforms like Netflix, Amazon Prime Video and Disney+, is creating significant demand for reliable, high-bandwidth internet infrastructure. Fiber optic cables are crucial for meeting this demand, enabling seamless high-definition video streaming and driving expansion in the optic fiber industry.

(Source: Market Research Future)

Sectoral opportunities

Growing demand: The expanding need for high-speed internet, telecommunications and data transmission is fueling the demand for fiber optic cables.

Infrastructure development: Infrastructure projects, supported by government initiatives and funding, such as Bharatnet and the expansion of broadband access, are creating avenues for fiber optic cable installation. Modernization of Indian Railways signaling and communication system is driving investments in fiber optical cable networks deployments.

Industrial automation: The integration of Industry 4.0 technologies, including the Internet of Things and automated systems, demands reliable high-speed data transmission, driving the need for fiber cables in industrial settings.

Utilities: The utility sectors requirement performance monitoring of power, gas and oil through Supervisory Control and Data Acquisition (SCADA) systems fuels the need for fiber optic cables.

Sectoral threats

Increasing competition: The fiber optic cable industry faces competition from alternative technologies, such as wireless communication systems, particularly in last-mile connections.

Geopolitical tension: Geopolitical instability can disrupt supply chains, impacting the availability of essential materials for fiber optic cable manufacturing.

Raw materials: Volatile raw material prices can affect production costs, creating a challenge for the sectors profitability.

Demand drop in China:

Due to several factors, optical fiber cable network deployment in China which is worlds biggest market is quite slow, this may impact global demand of optical fibers and create pressure on prices of Optical Fiber Cables due to competition from Chinese manufacturers looking for overseas customer base.

Company overview

Since its founding in 1955, West Coast Paper Mills Ltd. (WCPML), the SK Bangur Groups industrial flagship, has been a prominent sectorial force. Based in Kolkata, WCPML operates a modern manufacturing facility (Paper Division) in Dandeli, Karnataka, with a production capacity of 320,000 metric tons per year. Its integrated operations include a 255,000 MTPA pulp capacity and 74.8 megawatts of captive power generation. WCPMLs paper products are available across India through a comprehensive dealer network.

The company also comprises West Coast Optilinks, Cable Division (WCO), formerly known as Sudarshan Telecom, a leading Indian manufacturer and exporter of optical fiber cables. Established in 1996, WCO operates a state-of-the-art manufacturing facility in Mysores high-tech electronics zone, producing a diverse range of optical fiber cables for various applications.

To meet the increasing demand generated by global 5G rollouts, West Coast Optilinks has doubled its optical fiber cable production capacity with a new manufacturing unit in Fab City, Hyderabad, Telangana. Commercial production began on February 14, 2024. This expansion is in line with the companys strategic goals, Atmanirbhar Bharat and Digital India initiatives. West Coast Optilinks (WCO) is also establishing its own Optical Fiber Draw Towers factory at the same site, slated for operation during the current financial year. This will ensure a reliable raw material source for both the optical fiber cable manufacturing units in Mysore and Hyderabad.

Business segments

Paper and paperboard division (90% of revenues, FY25)

West Coast Paper Mills Ltd. markets quality paper products under the WESCO brand. The companys diversified portfolio, comprising office stationery, premium printing materials, and value-added products, generated 90 per cent of its FY25 revenue.

A separate cables division (10 per cent of FY25 revenue) operates a manufacturing facility in Mysore, producing optical fiber cables for the Indian telecom and utilities sectors, as well as exporting to Europe and the Middle-East.

COMPANY STRENGTHS

Paper segment

Market position: West Coast Paper Mills Ltd. is a key player in Indias writing and printing paper industry, backed by its experience, dealer network, and technical expertise. The companys Dandeli plant comprises a production capacity of 3.2 lakh MTPA, while the APL plant contributes 2.5 lakh MTPA. With a strategic focus on value-added products, the company aims to diversify its portfolio and strengthen its market presence.

Integrated: The companys integrated manufacturing facility includes pulp production, paper mills, captive power generation, and a chemical recovery system, a competitive structure across market cycles.

Capacity utilization: The company leverages economies of scale by utilizing [100]% of its production capacity for paper and paperboard manufacturing.

Distribution network: The Company consists of 66 established dealers and six zonal offices, with exports reaching more than 15 countries.

Optic fiber cable segment

Greenfield: The new greenfield plant in Fab City, Hyderabad, Telangana, will provide a consistent supply of optical fibersa crucial raw material for the companys optical fiber cable factories in Mysore and Hyderabad.

Robust R&D: The companys R&D team and application engineers have enabled portfolio expansion into telecom, utility and Data Center Segments.

Value-chain: The companys backward integration into optical fiber manufacturing will widen its value chain and competitive edge.

Engagement: The Companys involvement in large-scale projects like TANFINET, providing cables to major telecom companies and network integrators, serves as valuable experience and a key reference for securing future contracts.

Exports: The Company exports optical fiber cable to over 25 countries.

Our performance over the years

Operational review

	FY 2025	FY 2024	FY 2023	FY 2022	FY 2021
Production
Paper and paper board segment (Tonnes)	3,18,590	3,03,766	3,14,919	2,96,785	2,29,017
Optical fiber cable segment (Km)	105481	84,719	72,246	63,630	54,396
Sales
Paper & paper board (tonnes)	313823	3,04,950	3,10,349	3,03,715	2,34,667
Optical fiber cable (km)	108626	79,387	81,388	63,470	54,982

Value impact (production)

In FY 2025, our paper and paperboard production increased by 14824 year-on-year, totaling 318590 compared to 3,03,766 tonnes in FY 2024. We faced headwinds during the year, including rising wood costs and depressed paper prices due to market conditions. Our focus going forward is on improving operational efficiency through product mix optimization and cost reduction to strengthen financial performance. This enhanced efficiency will position us for growth, enabling us to capture a greater market share and expand our customer base.

Our Optical Fiber Cable production saw a significant year-on-year rise of 25%, increasing from 84,719 kilometers in FY 2024 to 105481 in FY 2025. This growth demonstrates our responsiveness to expand customer base & foray into new segments for optical fiber cables and underscores our dedication to remaining a leader in this dynamic market. The expanded production capacity enables us to fulfill customer needs and seize new opportunities.

Value impact (sales)

In FY2025, our paper and paperboard sales volume experienced a moderate year-on-year increase of 8873 tonnes, rising from 304,950 tonnes in FY2024 to 313823. This slight upturn was in spite of several challenges, including rising wood costs, lower paper prices due to market conditions, and a shut for annual maintenance at our Dandeli plant in Q3. Moving forward, our priority is to enhance operational efficiency by refining our product mix and reducing manufacturing costs to improve our financial performance.

Our optical fiber cable sales volume experienced a significant year-on-year increase of approximately 37% in FY2025, rising from 79,387 kilometers in FY2024 to 1,08,626 kilometers. This rise is in spite of reduced global demand, particularly in China markets. However, we anticipate a resurgence in demand in the latter half of FY2025-26, driven by initiatives such as the US BEAD program and Indias Bharatnet Project. Growth in the ASEAN, MEA, and Africa markets further supports this positive outlook.

Financial review

This has been dealt with in the Directors report.

Key performance indicators

Particulars	FY 25	FY 24	(%) change	Comments
Inventory turnover (times)	5.1	6.97	-26.83%	The decrease is due to drop in sales volume and increase in total inventory.
Interest coverage ratio (times)	24.86	39.34	-36.81%	The decrease is due to lower earnings.
Operating profit margin (%)	13.93%	24.99%	-44.26%	The decrease is due to decrease in margin owing to decreased realization and significant rise in wood prices.
Net profit margin (%)	11.34%	18.15%	-37.52%
Return on net worth (%)	11.42%	20.98%	-45.57%

Risk management

The company employs a robust risk management framework to identify, evaluate, and mitigate risks. The Board and Risk Management Committee provide oversight, recommending strategies to manage or reduce these risks, guided by a defined Risk Management Policy.

Business environment risk

The paper industry, mature and capital-intensive by nature, is challenged by intense competition and unpredictable market forces.

Mitigation: The Company mitigates this risk by securing access to low-cost resources, thereby bolstering its competitive advantage during market fluctuations.

Realizations risk

The Companys profitability is potentially vulnerable to lower realizations.

Mitigation: The Company has diversified its portfolio into writing and printing paper, packaging paper, and specialty paper to take advantage of growth opportunities presented by rising literacy rates, the expanding e-commerce sector, and the increasing need for product packaging.

Raw materials risk

A disruption in raw material supply poses a risk to the Companys operations.

Mitigation: The Company prioritizes local sourcing, procuring 75% of its pulpwood from within Karnataka, and supplements this with supplies from Andhra Pradesh and Maharashtra. In addition, farm forestry/ plantation programs have been initiated in the mills catchment area to further enhance wood availability. Imported pinewood pulp is used for specialty paper production.

Quality risk

If the Company cannot consistently deliver quality products to meet customer demand, its brand image may suffer.

Mitigation: The Company has made investments in systems and processes to ensure the production of high-quality products. Its commitment to quality is affirmed by accreditations such as ISO 9001:2015 QMS, 14001:2015 EMS, ISO 45001:2018 OHSMS, and certification for FSC-compliant products.

Human resource risk

The Companys competitiveness is vulnerable to unexpected talent loss.

Mitigation: The Company is proactively addressing talent management through various initiatives, including retention programs, structured training, and succession planning for critical positions. Attrition is analyzed through exit interviews.

Liquidity risk

The paper industrys substantial capital investment needs raise concerns about potential liquidity risks. Mitigation: The company enjoys strong cash flows from operations, a healthy cash reserve, and prudent use of its working capital limit. This allows the company to meet its immediate obligations through accruals while preserving a substantial cash reserve.

Environmental risk

The paper industry faces constraints on expansion due to the costly investments required to comply with environmental regulations.

Mitigation: The companys water-saving initiatives resulted in a decrease in water usage per tonne of product from 52 m3/MT in FY2024 to 46 m3/MT in FY2025. Pulpwood is sourced from diverse entities, including private parties, captive plantations, agricultural forestry programs, and the Karnataka State Government. The Forest Stewardship Council Chain of Custody and Forest Stewardship Council Managed Wood certifications for pulpwood validate the social and ecological responsibility of the paper produced.

Environmental sustainability

The company maintains a strict adherence to environmental regulations, including the Environment Protection Act, 1986, and CREP standards. This commitment is evidenced by significant investments in a cutting-edge effluent treatment plant in 2010 and the adoption of 100% elemental chlorine-free bleaching.

The company has upgraded its effluent treatment plant with tertiary treatment for pulp effluent and secondary treatment for paper machine effluent, demonstrating its dedication to continuous improvement in environmental performance.

Water and energy conservation

Water and energy conservation efforts have reduced the Companys water consumption and achieved PAT Cycle II energy standards.

Internal control systems and their adequacy

The company prioritizes operational efficiency, financial transparency, and regulatory compliance through a robust internal control system. This system features clearly defined managerial roles and responsibilities, ongoing monitoring of key operating parameters, and regular internal audits. In compliance with Section 134(5) (e) of the Companies Act, 2013, the company has also implemented a process-driven framework for Internal Financial Controls (IFC). The audit committee provides oversight, periodically reviewing the performance of statutory and internal auditors and assessing the effectiveness of internal controls, suggesting enhancements as needed.

Human resources

The company highly values its employees, considering them its most important asset. It prioritizes aligning human resource practices with business goals and objectives, recognizing the workforce as a key strategic driver in achieving its vision. Maintaining positive employee relations is essential, as employees are vital partners in policy implementation and target attainment. As of March 31, 2025, the companys workforce consisted of 2463 individuals.

Cautionary statement

The statements provided in this report under Management Discussion and Analysis, detailing the companys objectives, projections, estimates, expectations, or predictions, may constitute "forward-looking statements" as per applicable securities laws or regulations. These statements are based on certain assumptions and anticipations of future events. Actual results may vary significantly from those expressed or implied. Key factors that could impact the Companys operations include global and domestic demand-supply dynamics, prices of finished goods, availability and cost of raw materials, alterations in Government regulations and tax structures, macroeconomic conditions, as well as other factors such as litigation and industrial relations. The Company does not undertake any obligation to publicly amend, modify, or revise any forward-looking statements based on subsequent developments, information, or events.