INDUSTRY STRUCTURE AND DEVELOPMENT
The rapid growth of the packaging industry in India is a signifi cant driver for the
Kraft paper market. The increased demand for packaged food, beverages, e-commerce,
pharmaceuticals, and other consumer goods fuels the need for Kraft paper packaging
solutions. Additionally, the rise of e-commerce in India has led to a surge in online
shopping and package deliveries. Kraft paper is extensively used for packaging products
sold online due to its strength, durability, and cost-effectiveness. Besides this, Indias
industrial and manufacturing sectors, including cement, textiles, FMCG, and electronics,
require packaging materials like Kraft paper for transportation, storage, and protection
of goods. The expansion of these sectors accelerates the adoption of Kraft paper. In line
with this, the shift from traditional mom-and-pop stores to organized retail formats like
supermarkets and hypermarkets increases the demand for attractive and functional
packaging. Kraft paper is preferred for its natural and rustic appeal, making it a popular
choice for packaging in organized retail stores. Other than this, India is a major
exporter of various goods, including textiles, handicrafts, and pharmaceuticals. These
industries require robust packaging materials like Kraft paper to ensure the safe
transportation of products. As a result, the increasing export opportunities contribute to
the demand for Kraft paper. Moreover, the government of India has implemented various
policies and initiatives to boost domestic manufacturing, promote sustainable packaging,
and reduce plastic waste. These initiatives are expected to create a favorable market
outlook. Looking forward, the market value is projected to reach 15.6 Million Tons by
2028, expanding at a CAGR of 8.9% during 2023-2028.
The paper industry can be classifi ed into 4 categories namely, paperboard and
industrial packaging paper, writing and printing papers, newsprint, and specialty papers.
Kay Power and Paper Ltd is a paper mill which is strategically located at Satara and is
manufacturing Kraft paper using Indian and imported waste paper. Kraft paper has the
largest consumption (52.5%) in the paperboard and industrial packaging market in India.
The investments would create a multiplier effect on the economy through gross capital
formation of Rs 8,500-crore every year, direct employment to 15,000 people every year and
further giving additional livelihoods of 72-million men days per year (for people involved
in Agro/ farm forestry).
While the industry has already made signifi cant capital investments to ramp-up
capacities, the gestation period is long and the economic viability of the investments has
been impacted signifi cantly by raw material shortage and rising imports.
Over the years the company has focused on stringent quality measures, which help meet
all our customers needs. Our focus on quality has helped us in building strong
relationship with customers and eliminated supplementary cost.
OPPORTUNITIES AND THREATS:
Indias paper industry is expected to grow at 8 to 9 percent year over year, with the
packaging industry poised to grow at 22 to 25 percent annually. Advances in education, a
fast-growing middle class, strong growth in sectors like fast-moving consumer goods
(FMCG)—pharmaceuticals, liquor, cosmetics, and organized retailing are the main
drivers of demand for paper and packaging products.
Per capita consumption of paper in India remains woefully low at 22 lbs. compared to
770 lbs. in the United States and 363 lbs. in the European Union in 2010. India has 15
percent of the worlds population but consumes less than 2 percent of the worlds paper.
But Per capita consumption of paper has almost doubled in the last decade.
Under the baseline scenario, by 2024-25, domestic consumption is projected to rise to
23.5-million TPA and production to 22.0-million TPA. About one million TPA of integrated
pulp, paper and paperboard capacity is required to be created in India on an annual basis
over the current capacity to meet the growing demand.
The company has adequate infrastructure facilities such as land, water & power.
Apart from this company has the fl exibility of various grades of paper, which gives the
company a distinct competitive advantage.
The availability of raw material has always been a matter of concern for the industry.
In India about 850,000-1,000,000 tons of waste paper is being currently recovered
annually. The recovery rate works out to about 20% which is much lower in comparison with
65% recovery achieved by many global players. Low recovery is on account of alternate use
of paper in wrapping, packing, etc. The utilization rate of recovered fi ber is only 47%.
Paper mills are heavily dependent on imported waste paper which commands exorbitant price
due to inadequate availability. India needs a well-defi ned and aggressive system for
collection, sorting, grading and utilization of recyclable waste paper to contain imports.
At the same time, it may face competition due to proliferation of capacities in the
country.
Current Business Scenario
The paper industry is growing day by day but simultaneously the industry is facing
various problems like waste paper supply shortage as well as non-availability of shipping
containers.
SWOT analysis – Indian paper industry
Competitive strengths
1. Large and growing domestic paper market
2. Up to date research institute (CPPRI)
3. High Employability
4. Recyclability of Waste Paper
5. Know how in non-wood pulping and applications
6. Well-developed printing industry
7. Local market knowledge
Competitive weaknesses
1. Fiber shortage, especially virgin wood Fiber
2. Small and fragmented industry structure, many non-competitive mills/machines.
3. Highly skilled and job specific manpower is not available
4. Low Capacity Utilization
5. Quality and availability of some of the domestic pigments and chemicals
6. Scarcity of water according to demand
7. Highly polluting
8. Environmental problems of most of the small pulp mills and also some big mills
9. Low standard of converting industry 10. Industrial sickness 11. Infrastructure,
transportation
12. High cost of raw material including wood, non-wood and waste paper
13. High energy costs 14. High cost of financing 15. Impact of high local taxes 16. Low
input into mill level R&D
Competitive opportunities
1. Domestic market growth potential
2. Modern, world scale paper machine would be cost competitive in most grades
3. Forest plantation potential
4. Output recyclability
5. Integration of combined wood and agro based paper making.
6. Government literacy program – increasing demand for printing/writing papers
7. Low labor costs (allow eg. cost effective sorting of imported mixed waste)
8. Export potential
Competitive threats
1. Unprepared mills for international competition (WTO entry) both on price and quality
2. Decline in capacity due to environmental pressures
3. Decline in capacity as some of the segments/group of mills are unable to compete at
national and international levels with respect to quality and cost of products.
4. Delayed forest plantations, deficit of wood fiber
5. Technological obsolescence
6. Entry of substitutes like e-paper, plastic and other products
7. Weakening competitiveness of domestic industry due to shortage and cost of basic
input
SEGMENT-WISE OR PRODUCT WISE PERFORMANCE
The company has paper division only. The company has a well-established network of
dealers all over western and southern India for sale of its paper products and is
continually working to strengthen the network and to get the new orders for Karft paper.
The Company could sell its entire output without any diffi culty. The Company produces
wide range of Kraft paper from 80 gsm to 180 gsm, to meet the requirements of all the
market segments.
REVIEW OF PERFORMANCE
During the year, Companys Sales and other operating income were Rs. 4344.89 Lakhs. The
management of the Company is engaged in to improve the performance further.
STRATEGIES
The company is continuously increasing its quality of paper as per the requirement in
the market and to compete with other market players. Further the company has been adopting
the latest technology for production of various grades of paper in the plant. During the
year company has supplied the highest quality of Kraft paper to the customers and our
customer base is increasing day by day.
OUTLOOK, RISK AND CONCERN MANAGEMENT PERCEIVES
The Paper Industry is understood to be cyclical in nature and its performance depends
on global pulp and paper demand supply situation. However, given the growth potential,
outlook of the paper industry is promising. Considering the positive outlook company is
ready to face new challenges.
The company is deriving its revenue from paper/paperboard manufacturing. The
availability of raw material and rates of raw material due to competition among the
related paper mills are matters of concern.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The company has adequate system of internal control to safeguard and protect for loss,
unauthorized use or disposition of its assets. All the transactions are properly
authorized, recorded and reported to the management, the company is following all the
applicable accounting standard for properly maintaining the books of accounts and
reporting fi nancial statement. The company has appointed an independent fi rm of
Chartered Accountants for conducting internal audit. The Audit Reports are reviewed by the
Management and the Audit committee of the Board from time to time
HUMAN RESOURCE DEVELOPMENT/ INDUSTRIAL RELATIONS
The Company follows fair ‘human resource practices providing equal opportunity to
all its employees. The policy includes on the job training, progressive and performance
driven remuneration, talent retention and some work-life balance programs. The Company
believes in offering full opportunity for growth to employees demonstrating positive
attitude and initiative to accept challenge and responsibility.
The company has drawn a specifi c program to improve the skill of the workers to
rationalize the manpower. Further it is providing necessary training to the manpower.
There is continuous interaction between the management and employees. The number of people
employed during the year were 49.
FINANCIAL PERFORMANCE WITH R E S P E C T T O O P E R A T I O N A L PERFORMANCE.
Financial performance with respect to operational performance is explained in detail in
the beginning of the Directors Report. The management is taking continuous efforts to
improve upon its fi nancial and operational performance.
There were signifi cant changes in following ratios (i.e. change of 25% or more as
compared to the immediately previous financial year) during the financial year 2022-23
compared to immediately previous fi nancial year.
Ratio |
31st March, 2023 |
31st March, 2022 |
Percentage of change (+) Increased and (-) decreased |
Reasons for change |
1 Debtors Turnover |
4.76 |
9.63 |
-4.87 |
Mainly due to increase in sales as compared to the last year |
2 Inventory Turnover |
8.16 |
18.91 |
-10.75 |
Mainly due to increase in sales as compared to the last year |
3 Interest Coverage Ratio |
131.36 |
49.65 |
81.71 |
Company is not paying interest on unsecured loans taken from related
parties. Hence, ratio is increased. |
4 Current Ratio |
0.56 |
2.57 |
-2.01 |
decreased mainly due to decreased in Inventory and Trade receivables
as compared to the previous year |
5 Debt Equity Ratio |
5.37 |
6.25 |
-0.88 |
Debt equity ratio of the company has decreased during the year due to
current year profi t. |
6 Operating Profi t Margin |
0.051 |
0.027 |
0.024 |
Increased due to incease in sale |
7 Net Profi t Margin |
3.24 |
0.27 |
2.97 |
Mainly due to decrease in other income of the company. |
8 Return on Net Worth |
0.71 |
0.16 |
0.55 |
Mainly due to higher profi t as compared to last year |
CAUTIONARY STATEMENT
The management discussion and analysis report contain forward looking statements based
upon the data available with the company, assumptions with regards to economic conditions,
the government policies etc. The company cannot guarantee the accuracy of assumptions and
perceived performance of the company in the future, therefore, it is cautioned that the
actual result may materially differ from those expressed or implied in the report.
For and on behalf of the Board
Niraj Chandra
Chairman and Managing Director
DIN: - 00452637
Place: - Satara
Date: - 11th August, 2023
+91-9892691696
