Astron Paper & Board Mill Ltd Management Discussions.


Indias share in global paper demand is gradually growing as domestic demand is increasing at a steady pace while demand in the western nations is contracting The domestic demand in India grew from 9.3 million tonnes in FY08 to 15.3 million tonnes in FY16 at a CAGR of 6.4%. In spite of the sustained growth witnessed by the industry, the per capita paper consumption in India stands at a little over 13 kg which is well below the global average of 57 kg and significantly below 200 kg in North America.

As per IPMAs (Indian Paper Mills Association) estimates, this industry contributes approximately Rs 4,500 crore to the exchequer and provides employment to over 5 lakh people across approximately 750 paper mills. The broad characteristics of the industry are that it is capital, energy and water intensive and highly fragmented (small units account for ~60% of the industry size).

The paper industry is classified under four segments: Printing & Writing (P&W), Packaging Paper & Board, Specialty Papers & Others, and Newsprint.

Pulp (over 40% of raw material cost) is the primary raw material used for manufacturing of paper, and is obtained from wood, wastepaper, agriculture residues etc. Wood accounts for 30-35% of raw material usage, while wastepaper and agri-residues account for 45-50% and 20-22%, respectively.

CARE Ratings expects that the overall paper demand growing at a CAGR of 6.6% is likely to touch 18.5 million tonnes in 2018-19

The demand drivers include 1) rising income levels, 2) growing per capita expenditure, 3) a likely pick-up from the education sector, 4) requirement of better quality packaging of FMCG products marketed through organized retail, and 5) increasing preference for ready-to-eat foods.

The Indian Paper & Paperboard industry is one of the oldest organised manufacturing industries in India and the first paper mill was started in 1812 in Serampore, West Bengal. The industry accounts for approximately 4% of the worlds production of paper. IPMA (Indian Paper Mills Association) estimates the industry turnover at approximately Rs 50,000 crore which year contribution of Rs 4,500 crore to the exchequer while providing employment to over 5 lakh people across approximately 750 paper mills.

Industry Segmentation: Packaging paper & board segment demand is growing at a faster pace as compared to Printing & Writing and the Newsprint segments

The paper industry is classified into four segments, Printing & Writing (P&W), Packaging Paper & Board, Specialty Papers & Others, and Newsprint. The chart depicts the variation of the consumption across the segments globally and in India. The table below illustrates the sub-segments and movement in share of total demand over the years.

India vs. World - Segment wise consumption

Packaging paper & board segment caters to industries such as FMCG, food & beverage, pharmaceutical, textiles, etc. Demand for Packaging Paper & Board segment is expected to grow due to factors such as increased urbanization, requirement of better quality packaging of FMCG products marketed through organized retail, and increasing preference for ready-to-eat foods and e-commerce. (Source: Report of CARE Ratings on Paper Industry) and plastic restrictions by government.


Incorporated in 2010, our Company, Astron Paper and Board Mill Limited is engaged in manufacturing of kraft paper. Within a short span of time, our Company has developed a name for itself in kraft paper industry and we have been able to establish a brand associated with qualitative and comprehensive range of kraft papers. We mainly cater to packaging industry and have been able to develop a loyal clientele network consisting of various packaging companies and MNCs Currently we are operating in domestic markets with our products being supplied on pan India basis. We are also in the process of exploring export markets with the step we have exported directly as well as through merchant exporter 12% in FY 18-19.

We believe that we are one of the major kraft paper manufacturers in Gujarat with our manufacturing facility having an installed capacity of 174600 mtpa as on the date with four machine and three locations in Gujarat with manpower of 594 as at 31st Mar 2019 including 342 employees on pay roll and 252 on contractual basis.

Our manufacturing facility is well equipped with requisite plant and machineries and other facilities. We also have in house testing laboratory for quality control checks and testing of our products. We endeavour to maintain safety in our premises by adhering to key safety norms. Our manufacturing and dispatch process has been assessed and certified as meeting the requirements of ISO 9001: 2015, ISO 14001: 2015 by an international organisation viz. SGS United Kingdom Ltd. With increasing environmental awareness, our Company has since its inception adopted the use of waste paper as raw material instead of traditional usage of wood. The process of manufacturing Kraft paper involves recycling of waste paper and with many organisations, now supporting the Go Green Campaign, it increases the demand of FSC certified Kraft paper as the same is eco-friendly. We have been environmentally conscious and our products have been certified as meeting relevant FSC Standards since 2014 by SGS South Africa (Pty) Ltd.

Our product Kraft paper is used by packaging industry for manufacturing corrugated boxes and liners, corrugated sacks and composite containers.We offer varied products like High RCT, Kraft Liner, Liner to Corrugated Medium Paper, ranging mainly from 80 GSM to 350 GSM and 16-40 BF.


The clients of Astron Paper convert kraft paper into cartons and supply to companies in FMCG, Home appliances, Pharmaceuticals, Auto, Food & Beverages, E-Commerce etc including large MNCs. These vendors prefer larger Kraft paper manufacturers, who can supply entire range of packaging paper, who also as required get their paper pre-approved by the client for paper quality and specifications.The demand for Kraft paper is strong and increasing with every year from new applications like fruit vegetables, groceries, plastic ban, e-commerce for repackaging and shipping.The Kraft paper and Corrugated Box industry is fast becoming a sunrise industry. We are also focusing on products which replaces plastic bags by considering the government policies.

We endeavor to serve our customers, each having different requirements of Ring Crust test (RCT), Gram square meter (GSM) and weight pressure. Our Company mainly imports raw material for ensuring better quality of output. We have also been accredited with Authorised Economic Operator- T1 Certificate (Importer and Exporter) which provides us with certain benefits in relation to our imports and helps in cost savings.

Our Company is promoted by Kirit G. Patel, Ramakant Patel, Karshanbhai Patel and Asian Granito (India) Limited.Our Individual Promoters manage and control the major affairs of our business operations with their dedication and commitment, our Company has shown an increasing trend in our business operations which is evidenced by the growth in our financial performance.

Our registered office is situated at Ahmedabad.We have a dedicated marketing team who continuously interacts with customers to understand their requirements and analyse the market dynamics. We have also been actively participating and associated with the Federation of Corrugated Box Manufacturers of India and Indian Corrugated Case Manufacturers Association. We aim to establish our brand as a distinguished name in industry.


• Astron Paper & Board Mill limited has started its commercial production in Dec 2012 So from the First full financial year 2013-14 to 2018-19 company has achieved revenue from Rs 10583 lakh to Rs37395 lakh with CAGR of 28.72% and with EBITDA CAGR of 37.26%.

• For year under review Astron Paper & board Mill Limited reported total revenue of Rs37395 Lakh as against Rs25293 lakh in the corresponding previous year registering 47.85% growth and with PAT of Rs2841 lakh as compare to Rs2090 lakh in previous year registering 35.93% growth in PAT.

• Growth of revenue by 47.85% achieved due to increase in production by 53%.

• Company has achieved EBITDA of 14.34% compare to 12.50% in corresponding previous year and the growth of revenue and EBITDA has reflected in PAT. And company is able to increase the EBITDA due to purchase discounts and also by using DPD facility in importing raw material waste paper and also by increasing quantity to dilute fix costs and company has also focused on increase in export market and achieved 12% of total turnover of FY 18-19 as export sales.

Key Financial Ratios

Particulars FY 2018-2019 FY 2017-2018
Operating Margin 13.29% 11.39%
EPS 6.11 5.77
Net Profit Margin 7.60% 8.26%
RONW 18.60% 16.58%
Interest Coverage Ratio 4.56 2.91
Current Ratio 1.16 1.37
Debtors Turnover 5.17 5.38
Inventory Turnover 8.20 6.74
Debt Equity 0.64 0.59

There is significant improvement in interest coverage ratio compare to FY 2017-18 due to increase in earnings of the company without comparative extra borrowings because company has invested IPO proceeds so interest cost has not been increased compare to increase in earinings, other than that there is no significant change in other ratios (i.e change of more than 25% compared to FY 2017-18)

Ratio Calculation

Operating Margin : Used to analyse percentage earnings before interest on turnover Calculated by dividing PBIT by turnover.

EPS : Used to analyse per share earning calculated by dividing total comprehensive income by total number of shares.

Net Profit Margin : Used to analyse percentage earning on turnover calculated by dividing total comprehensive income by turnover.

RONW : Used to analyse percentage earning on amount invested by company calculated by dividing total comprehensive income by net worth on the last date of financial year.

Interest coverage Ratio : Used to analyse number of times company can able to make interest payment calculated by dividing PBIT by finance cost.

Current Ratio : Used to analyse liquidity of the company calculated by dividing current assets by current liabilities.

Debtors Turnover : Used to analyse performance of recovery from customers i.e credit period given to customers calculated by dividing turnover by average trade receivables.

InventoryTurnover : Used to analyse performance of inventory cycle calculated by dividing turnover by average inventory.

Debt Equity : Used to analyse debt against net worth of the company calculated by dividing long term debts plus working capital limits of bank by total net worth of the company.