💰 Financial Performance

Revenue Growth by Segment

Total Operating Income grew by 17.77% YoY, reaching INR 225.81 Cr in FY25 compared to INR 191.74 Cr in FY24. Segment-specific growth for Katha and Cutch is not explicitly broken down, but overall growth was driven by improved operational performance and scale.

Geographic Revenue Split

Not explicitly disclosed in percentage terms, but the company operates manufacturing plants in Bareilly (UP), Baroda (Gujarat), Jammu (J&K), and Daman (Contractual), serving the pan-India Paan Masala industry.

Profitability Margins

PAT Margin improved to 1.63% in FY25 from 1.35% in FY24. Gross profitability was impacted by flat average realizations for Katha at INR 5.44 lakh per metric ton against rising production costs.

EBITDA Margin

EBITDA Margin stood at 6.98% in FY25, a decrease of 43 bps from 7.41% in FY24. This slight compression was primarily due to stagnant realization prices for Katha and increased raw material costs.

Capital Expenditure

The company is not foreseeing any major debt-funded capex in the medium term. Historical capex is reflected in the maintenance of its 4,000 MTPA Katha and 1,350 MTPA Cutch capacity.

Credit Rating & Borrowing

Infomerics reaffirmed the long-term rating at IVR BBB-/Stable in December 2025. Total debt stood at INR 76.40 Cr in FY25. Interest coverage improved to 1.99x in FY25 from 1.69x in FY24.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Khair wood (timber) and Gambier. Gambier is a critical input, representing approximately 50% of the final Katha product composition.

Import Sources

Gambier is primarily imported (source countries not specified, but typically Southeast Asia). Khair wood is sourced domestically, often subject to seasonal availability pre/post-monsoon.

Key Suppliers

Not specifically named in the documents; however, procurement involves a mix of timber contractors for Khair wood and international vendors for Gambier.

Capacity Expansion

Current installed capacity is 4,000 MTPA for Katha and 1,350 MTPA for Cutch. No immediate expansion plans were disclosed for the medium term.

Raw Material Costs

Raw material costs are volatile due to the natural produce nature of Khair wood and Gambier. Gambier imports expose the company to forex risk, which can squeeze margins if not passed on to customers.

Manufacturing Efficiency

The company utilizes a mix of owned plants and contractual manufacturing (e.g., Nanhemal Agro in Daman) to optimize production across regions.

Logistics & Distribution

The company utilizes a robust marketing network to distribute products to major Paan Masala hubs, though specific costs as a % of revenue are not provided.

📈 Strategic Growth

Expected Growth Rate

17.77%

Growth Strategy

Growth is driven by leveraging a 100-year track record and established relationships with top-tier Paan Masala brands. The strategy focuses on maintaining a leading position in the Katha industry and improving the operating cycle (reduced from 192 to 171 days) to free up working capital.

Products & Services

Katha (primary product used in Paan Masala) and Cutch (by-product used in tanning and additives).

Brand Portfolio

IWP

New Products/Services

Not explicitly disclosed in the provided documents.

Market Expansion

The company is focusing on deepening its presence in the Indian Katha market, which has a matured demand profile.

Market Share & Ranking

The company holds a leading position in the organized Katha industry in India.

Strategic Alliances

Maintains a 50% ownership in Agro and Spice Trading Pte Ltd., accounted for via the equity method.

🌍 External Factors

Industry Trends

The Katha industry is growing but faces intense competition from unorganized players. Future outlook is stable due to steady demand from the Paan Masala sector, though it remains under strict government regulatory scrutiny.

Competitive Landscape

Intensely competitive with many unorganized players who impact pricing flexibility.

Competitive Moat

Durable moat based on a long track record (since 1919), established brand 'IWP', and deep-rooted relationships with major Paan Masala manufacturers. This is sustainable due to the high barriers to entry in sourcing and the specialized 45-day manufacturing process.

Macro Economic Sensitivity

Sensitive to agricultural cycles (for Khair wood) and consumer spending on FMCG/Paan Masala products.

Consumer Behavior

Demand is tied to the consumption of Paan Masala, which is a traditional and matured habit in the Indian market.

Geopolitical Risks

Import dependencies for Gambier make the company vulnerable to trade disruptions or changes in import duties.

⚖️ Regulatory & Governance

Industry Regulations

The business is highly exposed to government regulations concerning the Paan Masala industry. Any restrictive policies on the sale or composition of Paan Masala directly impact Katha demand.

Environmental Compliance

Not explicitly disclosed in INR Cr.

Taxation Policy Impact

Financial statements are prepared under IndAS; specific effective tax rate % not provided in the summary.

Legal Contingencies

BSE imposed a fine of INR 59,000 for non-compliance with Regulation 19 (paid). A further fine of INR 2,17,120 was levied for Regulation 20(2)/(2A) non-compliance; the company has filed a waiver application which is currently pending.

⚠️ Risk Analysis

Key Uncertainties

Regulatory risk regarding end-user products (Paan Masala) and raw material price volatility (Khair wood/Gambier) are the primary uncertainties.

Geographic Concentration Risk

Manufacturing is concentrated in Northern and Western India (UP, Gujarat, J&K).

Third Party Dependencies

Significant dependency on the Paan Masala industry as the primary customer base.

Technology Obsolescence Risk

Low risk as Katha manufacturing is a traditional process, but efficiency improvements in the 45-day cycle are critical.

Credit & Counterparty Risk

Receivable days are a key component of the 171-day operating cycle; however, the company deals with reputed brands like Rajnigandha, mitigating default risk.