Polyplex Corporation Ltd

Embracing Opportunities, Building a Resilient Future

Dear Shareholders,

The past year presented Polyplex with a dynamic business landscape, bringing forth both opportunities and challenges.

During the year, sales volume grew by 11% owing to the successful ramp-up of the BOPP line in Indonesia, enabling the Company to access new markets and customers and strengthen its presence in key regions. The sales revenue exhibited 16% YoY growth, reaching INR 76.04 billion in FY 22-23, driven by higher volumes and a rise in sales prices of BOPET film in response to increased raw material costs.

While the Company experienced growth in sales volume and revenue, it faced headwinds in margin growth. The normalized EBITDA and net profit for the year declined as inventory corrections in the supply chain, food inflation, high interest rates, high energy prices arising from geo-political disturbances like Ukraine-Russia war etc and anticipated deterioration in macroeconomic conditions impacted the margins for standard films. Further, as anticipated, bunching up of new capacity startups in the recent past, mainly in China and India, have created a situation of oversupply and the margins of all plastic film producers have come under pressure, across all geographies.

Despite these challenges, the Company remains committed to operational excellence and focuses on enhancing specialty mix and downstream operations. These efforts have played a crucial role in mitigating the impact of challenges and positioning it for continued progress.

Tapping the Growing Market Opportunity

The global BOPET films market over the medium and long term has witnessed strong demand growth for thin BOPET films, accounting for 80% of the total demand. Despite some short-term impacts, factors such as population growth, urbanization, changing demographics and increased purchasing power in developing countries continue to drive the demand for thin films. In addition, the rise in per capita packaging consumption, accelerated demand in electrical and industrial applications and the emergence of new applications in Lithium-ion batteries for Electric Vehicles (EVs) contribute to the positive outlook for the industry.

Polyplex, with its global manufacturing presence in key demand centres, is well-positioned to leverage the opportunities in the market. The Company's focus on specialty and high-value-added products, competitive cost structure will help maintain relatively stronger margins and better earnings predictability.

Leveraging Strategic Pillars for Sustained Profitable Growth

The Company remains resolute in its commitment to delivering sustained profitable growth. Its strategic decisions, efficient operations, and multi-location manufacturing advantage have helped Polyplex to maintain its industry leadership and deliver consistent value to our stakeholders.

Global Presence and Capacity Expansion: With a global integrated manufacturing set-up, Polyplex gains a distinct strategic advantage in the industry. The Company remains committed to providing a comprehensive suite of products to its customers at each manufacturing

location while ensuring a reliable supply chain through forward and backward integration.

The ongoing expansion project in the USA is behind its original schedule primarily on account of delays in construction and is expected to start commercial operations by Q2 FY25.

Differentiation through Consistent Innovation: Over the years, the Company has expanded its product offerings beyond standard and specialty base films, diversifying into high-value downstream products. Polyplex has adopted a D-PAC (Differentiated Product, Application, and Customer) strategy to enhance the specialty portfolio. The Company focuses on increasing its D-PAC sales by adding new products to the differentiated portfolio while building strong relationship with customers for joint development and co-innovation.

Diversified Approach to Meet Customer i Preferences: As a Tier Rs. supplier to leading global and regional converters catering to consumer-packaged goods manufacturers and OEMs, Polyplex has a global and diversified customer base. The Company's strong manufacturing and distribution capabilities enable it to capitalize on the increasing preference of customers for local sourcing, ensuring supply chain reliability, optimized inventory, and quick response to changing needs.

In FY 22-23, the Company demonstrated its ability to serve diverse markets and industries with over 2,660 customers in 90 countries. Packaging and industrial applications contributed to 69% and 31% of the total turnover, respectively. Moreover, it maintained a low customer concentration risk, with the top 10 film customers accounting for 25% of the total FY 2223 turnover, showcasing resilience and balanced growth.

Embracing Sustainable Practices

As a responsible corporate entity, Polyplex is deeply committed to creating a sustainable environment, driving meaningful social impact, and upholding strong governance and accountability. We continuously strive to develop sustainable products and processes, making substantial investments in recycling operations to address plastic waste challenges. Our focus on employee health and safety, contributions to NGOs and hospitals, and community support initiatives reflect our commitment to making a positive difference. Operating with honesty, integrity, and strict adherence to laws, Polyplex is dedicated to building a sustainable future for all stakeholders.

A Bright Future Ahead

Going forward, Polyplex is committed to embrace new opportunities and address challenges with determination. The strategic measures supported by its growth enablers position the Company to maintain its leadership in the industry and deliver consistent value to its stakeholders.

In conclusion, we extend sincere gratitude to our esteemed stakeholders for their continued support and trust. Together, we are confident in our ability to achieve greater heights and create shared value in the years to come.