Ajay Goenka, Chairman and Managing Director, Rainbow Papers

Replying to Anurag More of IIFL, Mr Ajay Goenka, says "Management is exploring possibility of raising funds through capital market for expansion project."

Jun 29, 2010 04:06 IST India Infoline News Service

Ajay Goenka, Chairman and Managing Director, Rainbow Papers, started his career at a very young age of 15 years with trading in paper along with his father. Under his flagship company, Rainbow has flourished from a small production unit and today is having installed capacity of 180000 M.T. per annum. With the completion of upcoming expansion, Rainbow will reach installed capacity of 3,05,000 M.T. per annum. Rainbow is manufacturing different varieties of paper which include Duplex Paper & Board, Color Paper, Fluorescent Paper, Writing Paper & Newsprint.

Rainbow Papers incorporated in 1986 is one of the fastest growing corporations in the Indian Paper Industry manufacturing almost 186 different varieties of paper, catering to the diverse segments of the Indian as well as overseas usage market. Not only that, it has marked its presence in the global market and is currently exporting its products to various countries in the US, Middle East, South Africa, South East Asia and U.K. Company offers a plethora of world class products ranging from Duplex to File Board, from writing paper to Art Card and from packaging and Electric grade crepe to Decorative tissues crepe, which has given us a good recognition amongst our users who thirst for better and new products. The Company, with its recent and forthcoming capacity expansions, will consolidate its standings as one of the leading Paper mfg. companies in the country.

Replying to Anurag More of IIFL, Mr Ajay Goenka, says "Management is exploring possibility of raising funds through capital market for expansion project."

What are the factors which are boosting the demand for paper?
The future of the paper industry in India seems to be very bright. Demand of paper is expected to increase. There are several factors affecting the increase in demand of paper. The Government has taken effective steps for education of population by implementing the Sarv Siksha Abhiyan which would lead to substantial consumption of paper. Further the demand of paper would also increase on account of advertisement – Advertisements through magazines, hoardings. Demand of paper would increase for the packaging industries. All these factors would contribute to increase in demand of paper.

What is the estimated paper production in India and what is Rainbow’s share?
The total production of India is estimated to around 95,00,000 MT p.a. whereas Rainbow’s production is expected to be 3,05,000 MT p.a. after the proposed expansion which is around 2 to 3% of total contribution in paper industry.

Are there any new changes being witnessed in the industry?
Paper industry is mostly a static industry with not much of changes taking place. Further, the demand of the paper along with the quality has increased drastically on account of increase in awareness of consumers, development of various technologies, and increased competition in the market which resulted in increase in advertisement.

What are the steps taken to reduce the cutting down of trees?
The best substitute of wood pulp is recycled paper i.e waster paper. Waste paper is being recycled and used for manufacturing of paper. Waste Paper is comparatively available in plenty. The generation of waste paper in domestic market as well as in foreign market is in plenty. With the increased consumption of paper, the availability of waste paper would also increase and if paper industries use more of waste paper rather than wood pulp then the environment can be definitely protected.

Any fund raising plans?
The Company had acquired entire paper plant of 550 M.T. per annum from M.D. Papier, Dachau, Germany. This expansion project was carried out in two phases. Phase I of the expansion is already completed and the products are well accepted in the market. The second phase includes installation of second machine having production capacity of 350 M.T. per day and the total cost of this project is Rs3.27bn which includes the cost of installation of the plant along with Deinking Plant, ETP, Pulp Mill, 30MW Power Plant, certain technology up gradation to make the plant suitable to work in Indian climate and working conditions.

The funds of Rs1.23bn have already been raised by the company through GDR issue. The GDRs are listed at Luxembourg Stock Exchange. It is also tied up with its consortium Bankers for Term Loan of Rs2bn wherein Indian Overseas Bank is the lead banker and the balance cost of the project shall be met by the company through internal accruals.

The project is under implementation. The civil work and construction work has already started and the senior management is placing orders for various machines for completion of the project as per targeted schedule.

Who are your major customers?
The major customer includes Nirma Ltd., Wimco Boards Ltd., Navneet Publications (India) Ltd., Hindustan Unilever Limited, Life Insurance Corporation of India (LIC), Gujarat State Board of School Textbooks, M.. P. Textbook Corporation (Bhopal), Indira Gandhi National Open University (IGNOU), Assam Text Book Corporation, Jammu & Kashmir State Board, Sandesh, Divya Bhasker, Rajasthan Patrika, Sakal etc.

Do you have any imports?
The Company imported 74,324.74 M.T. of waste paper and 522.40 M.T. of chemical during the year as compared to 31,303.72 M.T. and 188.80 M.T. respectively in the previous year. The imports amounted to Rs714.3mn of waste paper and Rs22.4mn of chemicals as compared to Rs419.8mn and Rs7.1mn respectively in the previous year. The Company has been awarded as the 1st largest importer at ICD, Ahmedabad by "Container Corporation of India Ltd" for year 2009-10.

In terms of high-end quality, how comparable is India with other countries?
India was earlier importing paper. Now Indian paper industry due to increase in production capacity and demand in international markets are looking forward for supplying the paper. Rainbow has carried out technology up gradation from time to time. We are committed to manufacture international quality of paper with 35% to 45% supply to international market

Paper and pulp is in huge demand in Indian and International market. Most of the Indian copies have now started exporting the paper to foreign countries. Indian Paper companies have started carrying out technology up gradation and invest huge money so that to compete with international markets. Besides, effective logistic cost is also helping in the growth of Indian Paper Industry. Government of India is also playing positive role. It is providing various incentives to the Indian Paper manufactures for exporting their products. All this has played very important role in development of export market.

Are you looking at diluting any stake?
We have recently concluded issue of 10235455 Global Depositary Receipts (GDRS) representing 10235455 equity shares. In the near future the Management is exploring possibility of raising funds through capital market for expansion project.

Your message to shareholders?
Rainbow is eco-friendly company and we have taken appropriate measures to protect the environment. Customer satisfaction is our main motto. Rainbow is one stop solution for all kinds of papers.

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