The Board of Directors has the pleasure in presenting its 62^nd Report along with the Audited Accounts for the year ended
March 31,2026.

Performance Review

The Indian Paper Industry faced significant challenges during the financial year 2025-26, primarily due to a surge in imports,
rising raw material costs and softening realizations. Amidst these challenges, your company showed resilience and posted
moderate profitability. The summary of the financial results are as follows:

Summary of Financial Results

The financial year 2025-26 was characterised by contrasting
trends of record operational performance amidst a
challenging market environment. The Indian paper industry
continued to witness pressure from elevated imports,
particularly from China and ASEAN countries, resulting in
subdued domestic price realisations. Persistent inflation in
wood and other input costs, coupled with higher depreciation
and finance costs arising from major capital expenditure
programmes, further impacted profitability.

Despite these headwinds, your Company achieved its
highest-ever annual production of 2,59,266 MT and record
sales of 2,60,438 MT, demonstrating the resilience of its
business model, manufacturing capabilities and market
reach. Revenue from operations increased to D1,701.23
Crores during FY 2025-26 as against D1,541.24 Crores
in the previous year. The record operational performance
reflects the successful execution of strategic modernisation
and capacity enhancement initiatives undertaken over the
last two years, coupled with sustained focus on operational
excellence, reliability improvement, enhanced machine
productivity and process optimisation across manufacturing
facilities. These investments have strengthened the
Company's operating platform and are expected to support
improved efficiencies, product quality and long-term value

creation. The increase in revenue is attributable to strong
market position, ability to adapt its product mix to cater to
customer preferences, and a robust dealership network
that allows flexible pivoting between domestic and export
markets based on demand.

However, EBITDA declined to C150.89 Crores from C223.29
Crores in FY 2024-25 primarily due to lower net sales
realisations, higher raw material costs and increased fixed
charges associated with recently commissioned assets.
Profit after tax stood at C18.62 Crores as compared to
C88.91 Crores in the previous year.

The Company responded proactively through stringent cost
optimisation, enhanced operational efficiencies, prudent
working capital management and an increased focus on
value-added products. The benefits of the extensive mill
modernisation programme and softening wood prices are
expected to support margin recovery over the medium term.

There was no change in the nature of business during the year.

Transfer to reserves

The Company does not propose to transfer any amount
to reserves.

Dividend

The Board of Directors at their Meeting held on May 14,
2026 recommended a dividend of C0.50/- per equity share
of C2/- each, for approval of the Shareholders at the
forthcoming Annual General Meeting, and is incompliance
with the Dividend Distribution Policy of the Company.
The said Policy is disclosed on the Company's website:
https://andhrapaper.com/wp-content/themes/andhra_
paper/uploads/investors/1645517957Dividend%20
Distribution%20Policy.pdf.

Markets, Customers and Commercial Excellence

The Company stands for its core belief in “Customer First”
and its commitment to create value for the customers,
“Serving you with Pride”.

With uncertainty as the new constant in the swiftly changing
market place, the continuous investments in upgradation of
plant and machinery warranted the Company to meet the
changing Customer needs in Writing & Printing and Value
Added application products.

The dedicated distribution network in the Domestic Market
garnered the growing preference of the Company's products
by Customers resulting in the highest domestic sales of
2,58,550 MT (YOY 19%) thereby mitigating the geopolitical
volatilities through the year. This resulted incremental YOY
Sales of Writing & Printing Products - Truprint Ultra (17%),
Truprint Ivory (28%), Primavera White (63%), Primavera
(21%), Write Choice (9%), Splendor (342%) and Value
Added Products - Pharma Print (189%), Plain Kraft NS
Hi-BF (172%), Straw Paper (257%), Coating Base (93%).

The Company's central value of “Think Customer” endures
to produce preferred products to enhance customer value
by way of offering 'right products for right applications' at an
augmented pace to meet customer requirements resulting
in new product developments - Natural Shade Maplitho and
Superprint Copier, a fighter copier brand.

The Company achieved the highest ever sales in a year at
2,60,438 MT (YOY 15%). The recent years of capex paved
way for the Company's highest Maplitho Sales at 1,47,043
MT (YOY 63%).

FY 2025-26 Highlights:

• Highest Sales of 2,60,438 MT

• Highest Domestic Sales of 2,58,550 MT

• Highest Maplitho Sales of 1,47,043 MT

• Substantial growth in Maplitho Products like Truprint
Ultra (17%), Truprint Ivory (28%), Primavera White
(63%), Primavera (21%), Write Choice (9%), Splendor
(342%) and Value Added Products like Pharma Print
(189%), Plain Kraft NS Hi-BF (172%), Straw Paper
(257%), Coating Base (93%)

Operational highlights

With the ever-changing market dynamics, the Company
increased its participation in value-added products, including
Azurelaid, Stiffener, Poster and Cupstock.

The Company had put in its vital efforts to achieve OTIF
delivery rate (On- Time-In-Full) at 94.5 %, forecast accuracy
to 94%, and improved complaint closure to 100% that is
uppermost tier in the Indian Paper Industry.

The Company is present in all segments of paper ranging
from writing, printing, industrial and copier papers.
The Company's share in the export was approximately 0.7%
in FY 2025-26. It remained focused on producing improved
quality Maplitho Products and Value-Added products with
higher Net Sales Realisations to increase profitability.

Mill Development, Capital Expenditure and
Strategic Modernisation

During FY 2025-26, your Company substantially completed
its flagship mill modernisation programme undertaken across
the Rajahmundry and Kadiyam manufacturing units with the
objective of enhancing operational reliability, productivity,
sustainability and long-term competitiveness.

Plant upgrades and de-bottlenecking totalling C520 Crores
were completed in between 2022 and 2026. RJ-3 Machine
upgrade C178 Crores is in progress with target completion
of March 2027. Tissue Paper project C270 Crores
awaiting approval from State Pollution Control Board for
commencement. In addition, Company invested C150
Crores in core manufacturing and process equipment across
its pulp, paper and finishing operations, chemical recovery
systems and C67 Crores in electrical and process control
systems, warehousing & logistics infrastructure, utilities,
buildings, environmental systems, IT and safety systems.

Key projects commissioned and operationalised during the
year include:

i) Fibre Line Expansion: Enhanced pulp manufacturing
capacity from 550 TPD to 630 TPD, strengthening
raw material integration and supporting future growth
requirements.

ii) Recovery Boiler and Ash Leaching Plant: Improved
energy efficiency, chemical recovery and operational
reliability while reducing process-related risks.

iii) Waste Paper Line Optimization: Upgraded the
secondary fiber treatment system to enhance recycled
pulp processing capacity to 110 TPD. This strengthens
sustainability initiatives and maximizes secondary fiber
utilization.

iv) Paper Machine Upgradations and Size Press
Installations: Enhanced product quality and enabled
higher participation in premium and value-added
paper grades.

v) Environmental Infrastructure Projects:

Commissioning of CNCG systems and progress on
DNCG systems further strengthened environmental
performance and statutory compliance.

The Company continues to invest in strategic growth
initiatives. The RJ-3 Paper Machine Rebuild and
Upgradation Project is progressing as per schedule and is
expected to improve machine productivity, product quality
and downstream utilisation of expanded pulp capacity.
The 100 TPD Tissue Machine Project is also advancing in
line with implementation plans and is expected to diversify
the Company's product portfolio into high-growth tissue and
hygiene segments.

In addition, the Company continued investments in process
automation, warehousing infrastructure, finishing capabilities
and reliability enhancement projects aimed at improving
productivity, reducing operating costs and strengthening
manufacturing resilience.

The cumulative impact of these investments has
significantly transformed the Company's manufacturing
platform, positioning it for sustainable growth, improved
competitiveness and long-term value creation for all
stakeholders.

Benefits Realised from Capital Investments

The extensive modernization and capacity enhancement
initiatives undertaken over the last two years have begun
yielding tangible operational and strategic benefits across
the Company's manufacturing facilities.

Enhanced Manufacturing Capability and Reliability

• The expanded Fiberline capacity and associated process
improvements have strengthened pulp availability,
improved manufacturing flexibility and supported record
production during the year.

• Upgradation of recovery and chemical recovery
systems has enhanced operational reliability, improved
steam generation efficiency and strengthened energy
self-sufficiency.

• Modernization of boiler and recovery infrastructure has
reduced process bottlenecks, improved equipment
availability and lowered operational risks.

Improved Product Quality and Value Addition

• Installation of advanced size press technologies and
paper machine upgrades has enhanced product
quality, printability and surface characteristics, enabling
greater participation in premium and value-added
paper segments.

• Strengthened finishing capabilities and process
optimisation initiatives have improved consistency in
product quality and customer satisfaction.

• The expansion of the Recycled Fiber (RCF) Plant has
enhanced the utilization of secondary fiber, supporting
sustainable manufacturing practices.

Operational Efficiency and Sustainability

• Investments in automation, process controls and
energy-efficient technologies have improved machine
productivity, reduced specific consumption and
enhanced resource efficiency.

• Environmental initiatives undertaken across
manufacturing facilities have strengthened compliance
standards, reduced emissions and improved
workplace safety.

• Stronger raw material integration and farm forestry
initiatives have improved wood security and reduced
dependence on imported inputs.

Future Growth Initiatives

The Company continues to progress with strategic projects
including the Dilute Non-Condensable Gas (DNCG) System,
the RJ-3 Paper Machine Rebuild and the 100 TPD Tissue
Machine Project. These projects are expected to enhance
environmental performance, improve downstream value
addition and diversify the Company's product portfolio
into high-growth segments. Your Directors believe that
the cumulative impact of these investments will strengthen
long-term competitiveness, improve profitability and create
sustainable value for all stakeholders.

Greenfield Expansion Project

The Company continues to evaluate long-term growth
opportunities in the paper and paperboard segments through
its proposed Greenfield Expansion Project at Unit Kadiyam,
East Godavari District, Andhra Pradesh. The proposed
project envisages significant capacity additions across
paper, paperboard, pulp manufacturing and associated
power infrastructure to strengthen the Company's integrated
manufacturing capabilities and support future growth
requirements.

The Company had initiated requisite regulatory processes
for the proposed expansion, including applications for
environmental clearances and engagement with relevant

authorities. During the year, the Company undertook a
strategic review of the timing and phasing of the proposed
expansion in light of prevailing market conditions, elevated
import pressures and subdued demand across certain paper
segments. Further, considering the ongoing stabilization
and optimization of recently commissioned capacity
enhancement projects at Rajahmundry and Kadiam unit,
the Company has adopted a calibrated approach toward
the implementation of the Greenfield Expansion Project.

The Company remains committed to pursuing the project
in a phased manner aligned with market recovery, demand
visibility and prudent capital allocation considerations.
The proposed expansion continues to be an integral part of
the Company's long-term growth strategy and is expected
to be progressed at an appropriate time to maximize
stakeholder value.

Tissue Paper Machine

In February 2024, the Board approved the installation of
a new tissue paper machine to produce various grades of
tissues including facial, napkin, toilet, and towel tissues
to capitalise on the opportunities in the growing market
demand. The Company secured the necessary Consent
to Establish from Andhra Pradesh Pollution Control Board
(APPCB) on January 5, 2024, for a production capacity of
up to 35,000 TPA. An agreement was signed in May 2024
with Valmet AB (Sweden) for the supply and commissioning
of a tissue paper production line with a maximum capacity
of 100 TPD. The power transmission lines have been
upgraded from 33KV to 132 KV potential with an additional
7 MVA load, approved by Andhra Pradesh Eastern Power
Distribution Company on November 23, 2023. The total
approved capital outlay for this project is C270 Crores, with
an expected production capacity of 100 tons per day.

Installation of the main equipment has been completed and
equipment check-out and testing activities are in progress.
Trial runs of the tissue machine commenced in May 2026,
while balance infrastructure works, including warehouse and
utility facilities, are nearing completion. The project continues
to progress substantially within the approved budget.

The Tissue Project marks a significant milestone in the
Company's long-term growth strategy by facilitating entry
into the tissue and hygiene market, thereby expanding
revenue streams and reducing dependence on conventional
paper segments. Leveraging the Company's integrated
manufacturing capabilities, strong raw material base and
operational expertise, the project is expected to strengthen
product diversification and create long-term value for
stakeholders. Post approval from the State Pollution Board,
commissioning and commercial operations are slated to
commence in Q2, FY 2026-27. The commercial stabilisation
and ramp-up of operations will be undertaken in a phased

manner, aligned with market development and customer
requirements.

Raw Material Security

The Company continues to focus on sustainable growth
while minimizing the environmental impact of its operations.
Ensuring the availability of wood which is the prime source
of fibre for the industry.

To address challenges related to raw material availability,
the Company has implemented Farm Forestry Programme
aimed at developing self-reliance through farmer-based
plantations promoted by APL. This initiative not only
secures raw material supply but also generates employment
opportunities and enhances income for rural communities.

The Company has entered into strategic collaborations
with leading research institutions to strengthen its
plantation initiatives & R&D Pragramme. A Memorandum
of Understanding (MoU) has been signed with the Institute
of Forest Genetics and Tree Breeding (IFGTB), Coimbatore,
for a five-year period (2024-2028)

A key strategic focus is the phased transition from low-yield,
seed-origin plantations to high-yield clonal plantations.
To support this transformation, the Company is strengthening
its capacity through infrastructure development and
enhanced clonal plant production. During 2025, the Company
partnered with 55 nurseries across its catchment areas to
meet the increasing demand for quality planting material.

The Farm Forestry team continues to engage actively with
farming communities by organizing village-level meetings,
conducting training programmes for nursery growers and
farmers, and sharing best practices in pulpwood plantation
development. The Company also facilitates the resolution
of farmer concerns related to wood resource development
and procurement.

During the CY 2025, the Company further expanded its
efforts by distribution of high-yield clonal plants, including
Eucalyptus and Casuarina, along with improved Subabul
seeds. Under the Farm Forestry Programme across the
catchment areas, the Company facilitated the distribution of:

• 354 Lakhs Casuarina clones

• 308 Lakhs Casuarina seedlings

• 62 Lakhs Eucalyptus clones

• 177 Lakhs Subabul seedlings

These initiatives have covered approximately 9,574 hectares
of land, significantly contributing to raw material security
while enhancing rural livelihoods. Through these integrated
initiatives, the Company remains committed to strengthening

raw material security while promoting sustainable forestry
practices.

Committed to Excellence: Our Certifications

The Company maintains internationally recognized
management systems across its operations and continues
to uphold high standards of quality, environmental
stewardship, and occupational health and safety.
The manufacturing facilities at Rajahmundry and Kadiyam,
as well as the Corporate Office (Sales & Marketing), hold
certifications under ISO 9001:2015 (Quality Management
System), ISO 14001:2015 (Environmental Management
System), and ISO 45001:2018 (Occupational Health &
Safety Management System), reaffirming the Company's
commitment to operational excellence, sustainability,
regulatory compliance, and employee well-being.

Demonstrating our commitment to energy efficiency
and sustainable operations, Our Company successfully
completed the certification of its Energy Management System
under ISO 50001:2018 during 2026. This achievement
reinforces our focus on continual improvement in energy
performance, optimization of energy consumption, and
reduction of environmental impact across our operations.

Energy Efficiency through PAT Program and CCTS

The Company has consistently pursued energy conservation
and efficiency enhancement initiatives as part of its
commitment to sustainable operations. As a Designated
Consumer under the Ministry of Power's Perform, Achieve
and Trade (PAT) Scheme, the Company has implemented
various measures to optimize energy consumption and
improve operational performance across its manufacturing
facilities.

The Company successfully achieved the stipulated energy
consumption reduction targets under PAT Cycle VII for
FY 2024-25. To ensure robust compliance and accurate
assessment of performance, the Company engaged an
authorized third-party agency for Monitoring and Verification
(M&V) of its energy performance under the PAT framework.

With effect from FY 2025-26, the Company has transitioned
to the Carbon Credit Trading Scheme (CCTS), jointly
administered by the Ministry of Power (MoP) and the Ministry
of Environment, Forest and Climate Change (MoEFCC).
The CCTS prescribes energy and emission reduction targets
over a two-year compliance period covering FY 2025-26 and
FY 2026-27. The Company continues to undertake energy
conservation initiatives, process optimization measures and
technology improvements to meet the prescribed targets
under the Scheme.

Through these initiatives, the Company reaffirms its
commitment to sustainable operations, continuous

improvement in energy efficiency and reduction of
its environmental footprint, in alignment with national
sustainability objectives and its long-term ESG aspirations.

Depository System

As on March 31, 2026, 41,161 Shareholders holding
19,81,12,685 Shares constituting 99.63% of the paid up
Equity Share Capital held in dematerialised mode and 1238
shareholders holding 7,37,510 shares constituting 0.37%
paid up Equity Share Capital held in physical mode.

Management Discussion and Analysis Report

The Report on Management's Discussion and Analysis,
as required under clause 2(e) of Regulation 34 read with
Schedule V of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 covering industry structure
and developments, opportunities and threats, outlook,
discussion on financial performance, etc., is contained in
“Management Discussion and Analysis Report” that forms
an integral part of this Report

Employee Development and Engagement

The Company's agenda for engaging and developing its
employees encompasses a range of initiatives aimed at
attracting, nurturing, and retaining talent. Key focus areas
include diversity and inclusion, succession planning, building
a strong talent pool for critical positions, implementing quality
of life programs, and investing in leadership development.

We take a professional approach to industrial relations,
consistently treating our employees with dignity and respect
while upholding the core principles of labour relations.

We believe that an engaged and motivated workforce is
essential to our continued success. As an employee-centric
organization, we are committed to promoting work-life
balance and encouraging a healthy lifestyle. In support of
this, we organize various workshops and training programs
focused on enhancing both the quality of life and leadership
capabilities of our team.

To foster employee engagement and strengthen
organizational culture, the Company promotes a vibrant and
inclusive workplace through a wide range of social, cultural,
and recreational initiatives. Throughout the year, employees
and their families participate in festival celebrations, team
gatherings, weekend movie screenings, and live telecasts
of major sporting events on large screens, creating
opportunities for interaction and camaraderie beyond the
workplace.

These efforts are further complemented by the activities of
the Staff Club and Ladies Club, which regularly organize
recreational, cultural, and community-oriented programmes.
The Company also provides extensive employee welfare
infrastructure, including a spacious community hall that

is utilized for recreational activities and family functions,
a well-equipped gymnasium, and sports facilities that
encourage physical fitness and healthy lifestyles.

Collectively, these initiatives contribute to employee
well-being, enhance morale and engagement, strengthen
interpersonal bonds, and foster a cohesive and supportive
workplace ecosystem.

Surrender of Exempted Provident Fund Trust

During the year, the Company undertook the transition
from its exempted Provident Fund Trust to the Employees'
Provident Fund Organisation (EPFO) framework with
the objective of simplifying administration, strengthening
governance and reducing compliance and fiduciary
responsibilities associated with trust management.

Pursuant to the approval of the Board and completion of
requisite formalities, the Company applied for surrender of
the exemption granted to The Employees' Provident Fund
of Andhra Pradesh Paper Mills Limited. The Employees'
Provident Fund Organisation (EPFO) has accorded
approval for the Company to operate as an un-exempted
establishment with effect from 1 May 2026, subject to
completion of statutory requirements and closure formalities.

The transition of member accounts and transfer of
provident fund accumulations to EPFO has substantially
been completed and the balance statutory processes are
being carried out in accordance with applicable regulations.
The migration is expected to enhance administrative
efficiency, strengthen compliance and align provident fund
administration with the evolving regulatory framework.
The Company remains committed to ensuring a seamless
transition for employees while safeguarding all statutory and
employee interests.

Leveraging Information Technology for Enhanced

Operations

Overview

During FY 2025-26, the Company continued to accelerate
its digital transformation journey, reinforcing its core
technological infrastructure to drive sustainable business
growth. Initiatives from the previous financial year were
systematically extended and completed, alongside a new
suite of strategic implementations designed to maximize
operational efficiency, bolster cybersecurity defenses,
automate complex workflows, and achieve structured cost
optimization.

Key Pillars of Digital & Technological Progress

1. Network Infrastructure & Connectivity Optimisation

To address service disruptions and enhance backend
application accessibility, the Company significantly
upgraded its communication fabric:

Direct Cloud Connectivity: Established a robust
Sify MPLS link providing direct connectivity between
Amazon Web Services (AWS) Mumbai and the
Rajahmundry Data Centre for seamless SAP Access.
This deployment successfully replaced the legacy
TATA link, maintaining identical bandwidth capabilities
while driving an exponential 74.1% reduction in annual
connectivity costs.

Bandwidth & Performance Amplification: Replaced
legacy Airtel ILL and MPLS links at Rajahmundry and
Kadiyam with Railtel ILL and Point-to-Point Links to
mitigate persistent service issues. This transition
achieved a 93.5% surge in internet bandwidth (from
155 Mbps to 300 Mbps) and a 150% expansion in
MPLS bandwidth (from 30 Mbps to 75 Mbps), while
simultaneously delivering a 24.8% cost saving.

2. Process Automation & Industrial Digitalization

The Company continues to advance deep automation
within its supply chain and core manufacturing
operations:

Unmanned Weighbridge Automation: Implementation
is underway for a “No-Men Weighbridge Automation”
framework across the Rajahmundry and Kadiyam
plants. Integrating RFID, FastTag, and automated
boom barriers directly into SAP, this system is
engineered to elevate transaction speed, transparency,
and operational control.

Procurement Streamlining: The automation of SAP
Requests for Quotations (RFQ) for both materials and
services is in progress to simplify vendor interactions
and cycle times.

Tissue Business Enablement: To support the
Company's strategic entry into the tissue segment,
comprehensive SAP application configurations,
bespoke customizations, custom developments, and
new hardware infrastructure additions are actively
being executed.

3. Strategic Workforce Digitisation & Workplace
Modernisation

Human capital management and modern workplace
ecosystems were enhanced through targeted software
and asset interventions:

Extended Contractors’ Attendance Management:

Scaled the digital Time & Attendance system by
procuring and on boarding 3,500 additional licenses
specifically for contract employees (non-card holders),
standardizing tracking methodologies.

Field Workforce Mobility: Successfully deployed
a dedicated Time & Attendance Mobile Application
powered by 50 mobile application licenses for Forestry
field personnel, drastically improving field visibility and
data accuracy.

Managed Print Services Lifecycle: Completed the
end-of-life replacement of legacy printing assets by
implementing HP Managed Print Services, deploying
35 advanced HP printers to ensure higher hardware
uptime and optimized operational support costs.

4. Advanced Security and Surveillance Upgrades

Physical asset protection and security compliance are
being systematically scaled:

Mill Surveillance System: Implementation is underway
for an enterprise-grade closed-circuit network,
introducing 120 high-definition CCTV cameras
alongside dedicated networks and servers distributed
mill-wise across the Rajahmundry operations.

Forward Looking Roadmap: FY 2026-27 Strategic
Initiatives

To sustain its technology-led competitive advantage, the
Company has charted out a comprehensive technological
roadmap for the upcoming financial year, focusing on
next-generation core application updates and infrastructure
cloud mitigation:

Core ERP Modernisation: Initiating the architectural
upgrade of the core enterprise platform, transitioning the
SAP S/4HANA version from 1909 to 2025 to leverage
advanced database capabilities and modern features.

Cloud Cost Containment: Implementing the SAP
Document Management System (DMS) by positioning a
dedicated server locally at the Rajahmundry Data Centre.
Moving standard SAP application attachments to this local
environment will materially reduce space procurement
dependencies on the Amazon Web Services (AWS) Cloud.

Enterprise Wireless Modernisation: Prioritizing the
complete lifecycle replacement of the existing 15-year-old
legacy Wi-Fi infrastructure across all geographic corporate
locations to satisfy modern, stringent security compliance
frameworks.

Infrastructure Relocation: Procuring high-capacity new
servers to execute the complete backend migration of
emSphere Time & Attendance applications onto upgraded,
modern infrastructure.

Application Interfacing Evolution: Converting current SAP
application extensions to the advanced ICF2 framework,
supported by parallel hardware infrastructure additions.

Through these cohesive digital investments, the Company
has structurally improved its operational resilience, fortified
information security protocols, optimized technical spending,
and laid down a robust foundation for a future-ready
enterprise.

Community Service and Engagement

The Company remains committed to fostering inclusive and
sustainable development in the communities surrounding
its areas of operation. Through its Corporate Social
Responsibility (CSR) initiatives, the Company undertook a
wide range of projects during the year across the focus areas
of education, healthcare, community development, women
empowerment and public welfare, thereby contributing to
improved quality of life and socio-economic development in
and around Rajamahendravaram and Kadiam.

Education: The Company continued its commitment
towards strengthening educational infrastructure and
promoting quality education in its operational areas of
Rajamahendravaram, Kadiam and surrounding regions.
During the year, infrastructure support was extended to
Government schools, Mandal Parishad and Zilla Parishad
schools in rural areas, colleges and educational institutions
through the construction and renovation of classrooms, dining
sheds, compound walls, sanitation infrastructure, flooring
works, provision of computers, furniture and other learning
resources. School buses and an e-auto provided to Paluku
orphanage for blind and buses were provided to APPM
Model high school which serve underprivileged students.

These initiatives benefited students across Rajahmundry,
Kadiam and surrounding rural areas improving access to
quality education. The Company also encouraged academic
excellence by awarding merit scholarships to outstanding
students from schools in Rajamahendravaram and Kadiam.

Nurturing Sports Talent: The Company extended support
to promising young women athletes in boxing and archery
through specialised training assistance aimed at enabling
participation at national and international levels.

Healthcare: Under healthcare initiatives, the Company
provided critical infrastructure, medical equipment,
furniture and patient-care facilities to Government
hospitals, Community Health Centres and veterinary
healthcare institutions in Rajahmundry and Kadiam.
Support was extended for diagnostic, treatment and surgical
facilities, including the provision of advanced medical and
veterinary diagnostic equipment. The Company organized
eye screening, eye-care, health check up camps for
underprivileged communities in urban and rural areas in
Rajahmundry and supported corrective vision treatment
including post-surgery eye lenses.

Community Engagement: The Company undertook several
community development initiatives aimed at improving
public infrastructure, sanitation facilities, sustainability and
livelihood opportunities and overall quality of life for local
communities. Major projects undertaken included support
for solid waste management through the provision of tractors
to local bodies, construction of community halls, old-age
homes and skill development centres, development of
bathing ghats, drainage systems and sanitation facilities,
desiltation and restoration of water bodies, replacement of
ageing water supply pipelines and plantation drives along
public roads. A significant intervention during the year was
the construction of a sump-cum-pump house along with a
dedicated storm-water pipeline network at Kotilingalpeta,
providing a long-term solution to recurring flooding during
the monsoon season and improving living conditions for
local residents.

Women Empowerment: The Company also supported
initiatives aimed at promoting livelihoods and social
inclusion, including tailoring and vocational training
centres for women, skill development programmes and
rehabilitation-oriented projects. Infrastructure support was
also extended to Anganwadi centres across East Godavari
district. As part of its commitment to women empowerment
and social welfare, the Company supported programmes
recognising women's achievements in international women's
day and Devi Ahilyabai Holkars Centenary Birth Celebration
commemorating significant social and cultural occasions.

Skill Development: Support was extended to correctional
institutions for inmate skill enhancement and to farmers
through the supply of treated water for agricultural purposes.
A Skill development centre was constructed in Kadiam for
upskilling the rural youth.

Through these interventions, the Company continues to
create sustainable value for communities while reinforcing
its commitment to inclusive growth and social responsibility.

The Company has adopted a CSR Policy which is
placed on the Company's website: https://andhrapaper.
com/wp-content/themes/andhra_paper/uploads/
investors/1645611255CSR%20Policy.pdf.

The Members of Corporate Social Responsibility Committee
as on March 31,2026 comprised of:

The Annual Report on CSR activities is attached as
Annexure - 1 to this report.

Awards

During the year, the Company has secured bronze medal in
the Chemical & Paper industries category, “Industrial Safety
Leadership Award” at CII (Confederation of Indian Industry)
Andhra Pradesh Industrial Safety Excellence Awards 2025
for Unit: Rajahmundry.

During the year, the Company has secured bronze medal
in the Chemical & Paper industries category, “Industrial
Safety Performer” at CII (Confederation of Indian Industry)
Andhra Pradesh Industrial Safety Excellence Awards 2025
for Unit: Kadiyam.

Appreciation certificate from BIS for “Zero failures of samples
in last two years and continuous efforts to maintain quality of
the products under licence CM/L-6600040906”.

Related Party Transactions

Your Company has in place a Policy on Materiality of
Related Party Transactions and dealing with Related
Party Transactions, which governs the review and
approval process for all related party transactions. All such
transactions are placed before the Audit Committee for
prior approval. Omnibus approvals are also obtained for
transactions that are repetitive in nature. Where the exact
value of transactions cannot be estimated, the Committee
grants approval based on reasonable projections for the
financial year.

All related party transactions entered into during the year
under review were in the ordinary course of business and on
an arm's length basis. There were no material or significant
related party transactions with promoters, promoter group
entities, directors, or key managerial personnel that could
potentially conflict with the interests of the Company at large.
Accordingly, disclosure in Form AOC-2 is not applicable.
However, Form AOC-2 is appended as Annexure 2 for
completeness.

The Board of Directors approved a Policy on Related Party
Transactions which is placed on the Company's website
https://andhrapaper.com/wp-content/uploads/2023/04/
Policy-on-related-party-transactions-1.pdf The disclosures
on related party transactions are given in Notes to the
financial statements.

Remuneration Policy

The Company has adopted the Nomination and
Remuneration Committee Charter which contains, inter alia,
framework for Directors' appointment and remuneration,
criteria for determining the qualifications, positive attributes,
independence of a director and other matters provided under
Section 178(3) of the Companies Act, 2013 (“The Act”).

Pursuant to Section 178(4) of the Act, the Company also
adopted Remuneration Policy relating to remuneration

for the Directors, Key Managerial Personnel and Senior
Executives in the rank of Vice President and above.
The Remuneration Policy is placed on Company's website
https://andhrapaper.com/wp-content/themes/andhra_paper/
uploads/investors/1599824266Remuneration%20Policy.pdf

Energy Conservation, Technology Absorption &
Foreign Exchange earnings and outgo

Particulars of conservation of energy, technology absorption
and foreign exchange earnings and outgo as required under
Section 134(3)(m) of the Act read with Rule 8(3) of the
Companies (Accounts) Rules, 2014 are given in Annexure
- 3 attached to this Report.

Risk Management

The Company has a robust enterprise risk management
framework designed to proactively identify, assess, monitor
and mitigate risks and capitalize on emerging opportunities.
The framework seeks to enhance transparency in
decision-making, safeguard business objectives, strengthen
resilience and support sustainable value creation.

The paper industry continues to operate in a dynamic
environment characterized by challenges such as raw
material availability and price volatility, increased imports,
evolving trade policies, changing customer preferences,
environmental regulations and intensifying market
competition. Industry bodies, including the Indian Paper
Manufacturers Association (IPMA), have highlighted
concerns relating to raw material security, import pressures,
trade agreements and the need for supportive policy
measures for the domestic paper industry.

The Company continuously monitors both internal and
external risk factors and implements appropriate mitigation
strategies through operational excellence, supply chain
optimization, product diversification, cost management
initiatives and regulatory compliance measures.
The Company's risk management processes are periodically
reviewed by the management and the Board to ensure
their continued effectiveness in an evolving business
environment.

The risks associated with the business, their potential impact
and the mitigation measures adopted by the Company are
discussed in greater detail in the Management Discussion
and Analysis Report forming part of this Annual Report.

Directors

During the financial year 2025-26, Mr. Virendra Sinha was
re-appointed as a Non-Executive Independent Director of
the Company for a second term of three consecutive years
commencing from April 1, 2025 and ending on March 31,
2028 (both days inclusive) pursuant to the approval of the
shareholders. Ms. Papia Sengupta was re-appointed as

Non-Executive Independent Director of the Company for a
second term of three consecutive years commencing from
September 1,2025 to August 31,2028 (both days inclusive).

Upon completion of their respective terms of office,
Mr. Sudarshan V. Somani and Mr. Arun Kumar Sureka
ceased to be Independent Directors of the Company with
effect from the close of business hours on October 29, 2025.
The Board places on record its sincere appreciation for the
valuable guidance, insights and contributions made by them
during their tenure as Directors of the Company.

Consequent to the cessation of office of Mr. Sudarshan V.
Somani and Mr. Arun Kumar Sureka, Mr. Deepak Jalan
and Mr. Ramesh Kumar Aggarwal were appointed as
Independent Directors on the Board of the Company with
effect from October 29, 2025. The Board extends a warm
welcome to them and looks forward to their valuable
contributions in supporting the Company's long-term growth
and governance objectives.

In accordance with the provisions of the Companies Act,
2013 and the Articles of Association of the Company,
Mr. Saurabh Bangur, Managing Director, retires by rotation
at the ensuing Annual General Meeting and, being eligible,
has offered himself for re-appointment.

Further, the present term of office of Mr. Saurabh Bangur
as Managing Director is due to expire on September 30,
2026. Based on the recommendation of the Nomination and
Remuneration Committee, the Board has approved, subject
to the approval of the shareholders, his re-appointment as
Managing Director of the Company for a further period
of five years commencing from October 1, 2026 up to
September 30, 2031.

Independent Directors

Mr. Virendra Sinha, Mrs. Papia Sengupta, Mr. Ramesh Kumar
Aggarwal and Mr. Deepak Jalan are Independent Directors
of the Company.

All Independent Directors have given declarations that
they meet the criteria of independence as laid down under
Section 149 (6) of the Act and Regulations 16(1)(b) and
25(8) of Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations,
2015 (“the SEBI Listing Regulations”) and that they are
independent from the Management of the Company and
they are not aware of any circumstance or situation, which
exist or may be reasonably anticipated, that could impair or
impact his ability to discharge his duties with an objective
independent judgment and without any external influence.

Further, all the Independent Directors have given
declarations that they complied with the provisions of
Companies (Appointment and Qualifications of Directors)

Rules, 2014. Further, they have given declarations that they
have complied with the Code for Independent Directors
prescribed in Schedule IV to the Act and the Code of
Business Conduct and Ethics of the Company.

A separate Meeting of Independent Directors was held
on March 18, 2026. All the Independent Directors of the
Company attended the said Meeting.

The Board is of the opinion that the Independent Directors
of the Company possess the requisite integrity, expertise,
experience and proficiency required under the provisions
of the Companies Act, 2013 and the SEBI (Listing
Obligations and Disclosure Requirements) Regulations,
2015. The Independent Directors bring with them rich and
diverse experience in the areas of business management,
finance, strategy, governance and industry, enabling them
to provide independent judgment and valuable guidance in
the deliberations of the Board and its Committees.

Details of Key Managerial Personnel

As on March 31, 2026, Mr. Saurabh Bangur, Managing
Director, Mr. Mukesh Jain, Whole-time Director (Executive
Director), Mr. Rajesh Bothra, Chief Financial Officer and
Mr. Bijay Kumar Sanku, Company Secretary are the Key
Managerial Personnel of the Company.

Meetings of the Board

During the year under review, four Board Meetings and
four Audit Committee Meetings were held. The maximum
interval between any two Meetings did not exceed 120 days,
as prescribed by the Companies Act, 2013. The details of
the Meetings held are given in the Corporate Governance
Report forming part of this Report.

Performance Evaluation

Pursuant to the provisions of the Act and SEBI Listing
Regulations, the Annual performance evaluation of Board,
Committees of the Board, Chairman, Managing Director and
Whole-time Director (Executive Director) has been carried
out based on various parameters.

A separate exercise for the financial year 2025-26 was
carried out to evaluate the performance of all individual
directors including Independent Directors who were
evaluated on parameters such as level of engagement and
contribution, independence of judgment, safeguarding the
interests of the Company and its minority shareholders etc.

Board Training and Induction

At the time of appointing a Director, a formal letter
of appointment is issued, clearly outlining their role,
functions, duties, and responsibilities as a Director of the
Company. This letter, in compliance with applicable laws,
also details the statutory obligations and compliances

expected from them under the Companies Act, 2013, the
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, and other relevant laws and regulations.
Furthermore, it explicitly covers aspects such as the Code
of Conduct, Insider Trading Code, and the policy on Related
Party Transactions, as mandated by SEBI LODR.

To foster informed decision-making and ensure good
governance, the Board of Directors and its Committees
are consistently apprised by management. These regular
updates provide a holistic view of the Company's landscape,
covering Business operations and financial performance,
Detailed insights into operational efficiency and the
Company's financial health, Progress and developments
regarding key strategic objectives and growth plans,
analysis of prevailing market scenario, competitive
landscape, identification of potential headwinds, potential
risks and mitigation strategies, opportunities and challenges
and updates on adherence to adherence to the Companies
Act, 2013, SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, and other pertinent laws
and regulations, ensuring the Company operates within the
prescribed legal framework. This continuous and critical flow
of information empowers Directors to effectively discharge
their fiduciary duties, exercise diligent oversight, and make
well-considered decisions that contribute directly to the
Company's sustainable growth and the enhancement of
shareholder value.

Details of Familiarization of Directors are disclosed on the
Company's website: https://andhrapaper.com/wp-content/
uploads/2026/04/Familiarization-Programme-during-the-
year-2025-26.pdf.

Audit Committee

As on March 31, 2026 the details of Audit Committee is
as follows.

All the recommendations made by the Audit Committee were
accepted by the Board.

Particulars of Employees

The information required pursuant to Section 197 read
with Rule 5 (1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014

in respect of employees of the Company, is provided in
Annexure-4. Having regard to the provisions of the second
proviso to Section 136(1) of the Act, the Annual Report
excluding the aforesaid information is being sent to the
members of the Company. If any Member is interested
in obtaining information on Rule 5 (2) of the Companies
(Appointment and Remuneration of Managerial Personnel)
Rules, 2014, such Member may, write to the Company
Secretary at the Registered Office in this regard or can
inspect the related documents/information at the Registered
Office of the Company.

Vigil/Whistle Mechanism

The Company has adopted Whistle Blower Policy to deal
with instance of fraud or any unethical or improper practices.
A copy of this Policy is available on the Company's website:
https://andhrapaper.com/wp-content/themes/andhra_paper/
uploads/investors/1658382966Whistle%20Blower%20
Policy%20modified%20on%2021.07.2022.

Internal Financial Controls

The Company established Internal Financial Control (s)
commensurate with the size, scale and complexity of the
operations. Internal audit function is being handled by
a professional firm of chartered accountants. The main
function of Internal Audit is to monitor and evaluate adequacy
of internal control system in the Company, its compliance
with the operating systems, accounting procedures and
policies at all locations of the Company. Based on the report
of internal audit function, process owners take corrective
action in their respective areas and thereby strengthen
the controls. Significant audit observations and corrective
actions are reported to the Audit Committee.

Statutory Auditors audited the Internal Financial Controls
(IFC) over financial reporting of the Company as of
March 31, 2026 in conjunction with audit of the financial
statements of the Company for the year ended on that date.
Unmodified opinion on IFC was given by them.

During the year, the Audit Committee and the Executive
Board Members, as Those Charged With Governance
(TCWG), held discussions with the statutory auditors
in accordance with applicable regulatory requirements.
The deliberations covered audit planning, significant audit
observations, internal controls, financial reporting matters
and auditor independence.

Statutory Auditors

The Report of Auditors for the financial Year 2025-26 does
not have any qualifications, reservations or adverse remarks.
The Report is enclosed with the financial statements in this
Annual Report.

M/s. MSKA & Associates LLP, Chartered Accountants,
Statutory Auditors of the Company have been appointed, for
a term of five years, to hold office from the conclusion of 58^th
Annual General Meeting till the conclusion of 63^rd Annual
General Meeting corresponding to the financial years from
2022-23 to 2026-27.

Secretarial Auditors

At 61^st Annual General Meeting, M/s. D. Hanumanta Raju &
Co., was appointed as Secretarial Auditors of the Company
for a period of 5 consecutive years commencing from FY
2025-26 to FY 2029-30. Secretarial Audit Report under
Section 204(1) of the Act issued by M/s. D. Hanumanta
Raju & Co., Practicing Company Secretaries, in respect
of financial year 2025-26 is attached as Annexure - 5 to
this Report.

The Secretarial Auditors, in their report, has reported
delayed compliance with Regulation 17(1A) of the SEBI
(LODR) Regulations, 2015. In this regard, the Company paid
fines of C1,10,920/- each to NSE and BSE and has filed
an appeal before the Securities Appellate Tribunal (SAT),
Mumbai. The matter is currently sub-judice.

The Secretarial Auditors has also reported that Andhra Paper
Foundation, a wholly owned subsidiary of the Company, was
converted into Andhra Paper Private Limited during the year.
Subsequently, the company applied for striking off under
Section 248 of the Companies Act, 2013, and its name was
struck off by the Registrar of Companies with effect from
June 4, 2025. Accordingly, the company stands dissolved.

Internal Auditors

M/s. Batliboi & Purohit, Chartered Accountants, Mumbai
were appointed as the Internal Auditors for FY 2025-26.
The internal audit reports and the suggestions made on a
quarterly basis by the auditors, during the year under review,
were duly noted by the Board and acted upon. The Board
of Directors, based on the recommendation of the Audit
Committee have re-appointed the said firm as the Internal
Auditors of your Company for the FY 2026-27.

Cost Auditors

In terms of Section 148 of the Act read with the Companies
(Audit & Auditors) Rules, 2014, the Board at their Meeting
held on May 14, 2026, on the recommendation of Audit
Committee, appointed M/s. Narasimha Murthy & Co., Cost
Accountants as Cost Auditors of the Company for the
financial year 2026-27, at a remuneration of C4.50 Lakhs
plus applicable taxes and reimbursement of out-of-pocket
expenses and their remuneration is being submitted for
ratification by the Members at the forthcoming Annual
General Meeting.

Cost Accounting Records and Cost Audit

Cost accounting records for the financial year under review
were maintained as per the Companies (Cost Records
and Audit) Rules, 2014. M/s. Narasimha Murthy & Co,
Cost Accountants were appointed as Cost Auditors of the
Company to audit the Cost Records for the year ended
March 31, 2025. The Cost Audit Report for the financial
year ended March 31, 2025 was filed with the Ministry of
Corporate Affairs in August, 2025. The Cost auditors have
audited and expressed satisfaction about the maintenance
of cost audit records, internal controls and issued an
unqualified report.

The Cost Audit Report for the year ended March 31, 2026
will be filed within the due date.

Public Deposits

The Company has not invited, accepted or renewed any
deposits under chapter V of Companies act, 2013. That the
company has not been accepted any deposits, so there
was no obligation arise to repay or pay any interest and no
amount on account of principal or interest on deposits was
outstanding as on the date of the balance sheet and thus
no default.

Particulars of loans, guarantees, security or
investments

The particulars of loans, guarantees, and investments
covered under the provisions of Section 186 of the Act have
been disclosed in the financial statements.

Subsidiary Company

Andhra Paper Foundation, a wholly owned subsidiary
of the Company incorporated under Section 8 of the
Companies Act, 2013, had ceased its operations and
activities as the Company directly undertook all Corporate
Social Responsibility (CSR) initiatives. Consequently,
the Foundation's original purpose became redundant.
Pursuant to the approval granted by the Regional Director
on September 19, 2024, the Foundation was converted
into a private limited company and a fresh Certificate of
Incorporation was issued by the Registrar of Companies,
Vijayawada, on November 11, 2024 in the name of Andhra
Paper Private Limited. Subsequently, Andhra Paper Private
Limited applied for striking off its name under Section 248
of the Companies Act, 2013. The Registrar of Companies,
Vijayawada, struck off the name of Andhra Paper Private
Limited from the Register of Companies with effect from
June 4, 2025 and accordingly, the company stands
dissolved.

Annual Return

In terms of Section 92(3) of the Act, the Annual Return for
the financial year ended March 31,2026 is displayed on the
website of the Company www.andhrapaper.com

Business Responsibility and Sustainability
Report (‘BRSR’)

Pursuant to Regulation 34 of the SEBI Listing Regulations,
'Business Responsibility and Sustainability Report' forms
part of this Report as Annexure - 6, which describes the
initiatives taken by the Company from an environmental,
social and governance perspective.

Material changes and commitments affecting
the financial position of the Company which
occurred between end of financial year and date
of the Report

Material Changes and Commitments Affecting the
Financial Position of the Company

Subsequent to the close of the financial year ended
March 31, 2026, and up to the date of this Report,
operations at the Company's Kadiyam Unit were affected
due to an illegal strike resorted to by certain contract
workmen engaged through third-party contractors with
effect from April 27, 2026, primarily in relation to demands
concerning revision of contractual terms with their respective
employers. The Company's permanent workforce was not
a party to the strike. During the course of discussions,
employee representatives and other stakeholders were
also involved in efforts aimed at resolving the situation and
restoring normalcy.

In view of the prevailing situation and in order to safeguard
employees, plant and machinery and other assets, the
Company declared a lockout at the Kadiyam Unit with
effect from 10:00 p.m. on May 1, 2026. The disruption in
operations resulted in loss of production at the Kadiyam Unit
and had an impact on the Company's operations during the
period. The Management continued its engagement with
contractors, workmen representatives and the concerned
authorities for restoration of normalcy and resumption of
operations.

The Company continued to closely monitor the evolving
situation and made appropriate disclosures to the stock
exchanges from time to time in accordance with applicable
regulatory requirements.

There was no change in the nature of business of the
Company during the year. Except as disclosed above, there
were no other material changes and commitments affecting
the financial position of the Company which occurred
between the end of the financial year of the Company and
the date of this Report.

Directors’ Responsibility Statement

The Board of Directors hereby confirms and declares that:

• In the preparation of final accounts for the year ended
March 31,2026 the applicable accounting standards had
been followed;

• they had selected such accounting policies and applied
them consistently and made judgements and estimates
that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company at the
financial year end March 31,2026 and of the profit and
loss of the Company for the year;

• they had taken proper and sufficient care for the
maintenance of adequate accounting records in
accordance with the provisions of Companies Act, 2013
for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

• they had prepared the accounts for the year ended
March 31,2026 on a 'going concern' basis;

• they had laid down internal financial controls to be
followed by the Company and that such internal financial
controls are adequate and were operating effectively;

• they had devised proper systems to ensure compliance
with the provisions of all applicable laws and that such
systems were adequate and operating effectively.

General

• There were no significant and material orders passed by
the regulators or courts or tribunals which would impact
the going concern status of the Company and its future
operations.

• During the year under review, neither the statutory
auditors nor the secretarial auditor has reported to
the audit committee, under Section 143 (12) of the
Companies Act, 2013, any instances of fraud committed
against the Company by its officers or employees.

• The Company has zero tolerance for sexual harassment
at workplace and has adopted a policy on prevention,
prohibition and redressal of sexual harassment at

workplace in line with the provisions of the Sexual
Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and the Rules
thereunder for prevention and redressal of complaints
of sexual harassment at workplace. Internal Complaints
Committee (ICC) has been set up to redress complaints
received regarding sexual harassment. All women
employees (permanent, contractual, temporary,
trainees) are covered under this policy. During the
year, no complaints were received by the Company
under Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.

• There is no application or proceeding pending under
Insolvency and bankruptcy code, 2016

• The company has complied with all the applicable laws,
rules, regulations and secretarial standards

• All Policies as required under the Act or the SEBI
Listing Regulations are available on the website: https://
andhrapaper.com/investors-policies/.

• Details of difference between amount of the valuation
done at the time of one-time settlement and the
valuation done while taking loan from the Banks or
Financial Institutions along with the reasons thereof:
Not applicable.

Acknowledgements

The Board of Directors wish to place on record their gratitude
to the Central Government, Government of Andhra Pradesh,
Government of Telangana and Banks for their continued
support during the year.

The Board of Directors wish to convey their thanks to the
valued customers and dealers for their continued patronage
and place on record their appreciation of the contribution
made by all the employees during the year under review.

For and on behalf of the Board

Place: Rajahmundry Shree Kumar Bangur

Date: May 14, 2026 Chairman & Non-Executive Director