Emami Paper Mills Ltd

Dear shareholders

The principal message that we wish to communicate is that Emami Paper is acquiring a holistic well rounded personality that strategically positions it to enhance long-term stakeholder value.

This positioning is crucial in a world where the sustainable servicing of all stakeholders' needs is imperative, and where any imbalance in delivering value to even a single stakeholder segment can jeopardise business stability, security, and sustainability.

During the last few years, the Company strengthened its business model that deepened this multi-stakeholder relevance. This business model over the next few years will be progressively deepened, strengthening a commitment to responsibility, profitability and sustainability.

Emami Paper is aligned with significant global trends, reinforcing its dedication to enhance stakeholder value across market cycles. The followings are some of the broad trends influencing the Company's business model:

De-plasticisation: The visible trend the world over has been de-plasticisation. As the world graduates from plastic packaging towards biodegradable and recyclable packaging options, there will be a growing need for paper manufacturers to plug the gap with specialised alternatives. These specialised alternatives will warrant an understanding of customer needs, coupled with the development of customised paper alternatives. As a forward-looking Company, Emami Paper recognises the importance of seizing this opportunity. This initiative is aligned with government policies directed to moderate plastic waste and the need for regulators to see companies enhance the recyclability of their products.

Digitalisation: The onset of digitalisatior across the last decade moderated the use of writing and printing paper. More transactions and engagements are conducted across digitalised formats, eliminating paper use. This is visible across a range of applications: physical books have been replaced by the virtual; transportation tickets have been replaced by digital alternatives; e-governance has eliminated the use of paper; a number of processes and companies have turned paperless. As a future-facing company, Emami Paper is moderating the proportion of revenues derived from the writing and printing paper segment, as a hedge against declining demand and realisations.

Automation: There is a growing movement away from manual engagement to automation. Companies are seeking to automate the routine, making it possible to generate operational data. As a forward-looking company, Emami Paper invested in advanced systems like SAP S4 Hana for accounting automation. The Company is data-driven with credible systems- generated information being the basis of informed decision-making.

Virtual media: There is a greater prevalence of a digitalised media today than ever. More news is consumed through telephones and laptops than ever; this is moderating the influence of print-based media. Besides, preference for print-based media has declined across the younger generation, who would rather read modular content than long copy and who would rather see televised content than read. This trend is affecting the circulation of print media the world over, including offtake and realisations. Emami Paper is committed to moderate the proportion of revenues being derived from newsprint manufacture.

Cleaner world: In a resource-intensive paper manufacturing process, there is a premium on the need to moderate the consumption of water, power and wood-based resources. Over the years, the Company invested in modern manufacturing technologies with the objective to rationalise resource consumption. The Company moderated water consumption by approximately 16% per ton of the final product, reduced power consumption per ton and minimised chemical use per ton of the final product. Besides, the Company consumed FSC-certified imported pulp and wastepaper as its principal raw material and manufactured products with FDA and FSC certifications, emphasizing operational recyclability and decarbonisation.

Decommoditisation: There is a growing need for companies to engage in the manufacture of value-added products.

This commitment makes it possible for companies to generate a superior return on invested capital, and put adequate surplus on the table to service the needs of all stakeholders. Emami Paper is engaged in transforming its DNA with the objective to manufacture niche value-added and low grammage speciality paper products, graduating its business model from one-off transactions to relationship-based annuity engagements.

Supply chain security: There is a growing respect for companies that have created secure supply chains within the proximity of their manufacturing plants. This preference is being validated for reasons of proximate logistics leading to lower carbonisation, immediate resource access leading to a lower inventory and captive resource availability leading to value-addition. Emami Paper has embarked on a medium-term exercise to commission a pulp mill that provides it with effective access to a critical resource, moderating its exposure to sectorial volatility and helping the country reduce imports.

By being completely aligned with the demanding requirements of a rapidly transforming world, Emami Paper is deepening its commitment to drawing from the past, remaining connected to the present and increasing relevance to the future.

This relevance is expected to deepen corporate responsibility, revenue visibility and holistic sustainability that enhances value for all the stakeholders of our Company.