Emami Paper Mills Ltd Management Discussions.



Global paper and paperboard industry is one of the largest industries in the world. Market size of paper industry is projected to reach USD 368.10 billion by 2027 exhibiting a CAGR of 0.8% despite increasing trend of digital economy and rapid penetration of internet. Increasing demand for Eco-friendly packing materials is driving the Market. Paper is the most sustainable and recyclable packaging material available in the world today. Owing to the rising environmental concerns, both manufacturers and consumers are shifting their preference towards more sustainable paper packaging solutions. The leading food, cosmetic, pharma and FMCG companies are continuously engaging with paper manufacturers to develop advanced paper packaging solutions to meet their commitment towards sustainability. North America, Western Europe and East Asia account for the majority of share of paper and paper boards. Asia pacific is the leading consumer of paper in the world and is expected to lead the global market in coming years. China is the leading producer and consumer of pulp and paper in the world. Chinas per capita paper consumption is around 76 kg. which is higher than global per capita paper consumption of 55 kg. India is projected to register strong growth due to the increasing demand of paper based products. The South East Asian countries are also projected to indicate positive growth. Healthier economic growth backed by the improving lifestyle in Vietnam, Indonesia and Malaysia is expected to create potential opportunities. E-commerce is also likely to drive the global paperboard market; the global e-commerce market is expanding at CAGR 12.9%. Online retailing in the emerging economies such as China, India and Brazil is increasing. Consumers, especially youngsters are buying groceries, food, cosmetics and many other goods online. According to India Brand Equity Foundation, online shoppers are projected to reach 220 million by 2025.

Paper industry, occupies a prestigious position, among the various manufacturing enterprises in view of its significant contribution to the society. Role of paper in promotion of literacy & education, print media for an important source of information & knowledge and in packaging of commodities of commercial value, makes it an indispensable product. Over all, the paper industry is projected to remain steady and healthy across the globe.

In short term, COVID-19 with outbreak of second wave, is expected to have a severe impact on the Global paper demand with the lockdowns, restriction in the movement of people, closure of educational institutions and offices with the steps taken by the various governments across the world to contain the spread of Corona virus. However, the long term growth will be propelled by sharp rebound in the consumption in 2021-22.


India accounts for 4% share of the global paper production even as it accounts nearly 18% of the global population. The size of the Indian paper industry was estimated at Rs 70,000 crores per annum contributing about Rs 5000 crores to the exchequer. The industry provides direct employment to 5 lac people and indirect employment to 15 lac individuals. Indias share in global paper demand is gradually increasing with the rising domestic demand while demand in western nations are contracting.

The Indian paper industry is classified into four segments, Writing & Printing Paper, Packaging Paper & Board, Specialty Papers & Others and Newsprint. Writing & Printing Paper segment forms 29% of domestic paper market. Rising income levels, growing per capita expenditure, likely pick up of the education sectors covering more rural areas will boost the demand with focus under various educational schemes by Central and State Governments. Packaging Paper and Board segment accounting for 52% of the total demand in India and the largest segment in the industry. High growth in FMCG, Pharmaceuticals, processed foods, requirement of quality packaging products marketed through organized retail and increasing preference to ready to eat foods by rapid urbanization, increasing preference of consumers for e-commerce for almost all consumer products and ban on single use of plastic proposed by the Government of India are the main factors for increasing demand of this segment. Newsprint segment comprises 13% of the Indian paper demand and grew at a CAGR of 2.5% on the backing of improving literacy and increasing circulation of vernacular dailies. Specialties paper & others is the smallest segment of the industry accounting for 0.45%, includes especially tissue paper which is the fastest growing segment considering a huge focus on health and hygiene awareness during COVID-19 arena.

The per capita paper consumption in India stands at a little over 13 kg which is relatively lower compared to the global average of 57 kg and significantly below 200 kg in North America and the Asian Countries average of 40 kg leaving scope for big rise in demand in India. A culmination if all these factors is expected to drive the overall demand at a rate of 6%-7% for the next two to three years after recovery from the disruption of demand due to COVID-19 which is considered a short term challenge.

Demand Drivers can be divided into two major sectors, i.e., Demography & Finance and Downstream Sector as explained below:

A. Demography and Finance:

Urbanization: By 2030, approximately 40% of the global population could reside in urban India (34% today) catalyzing paper demand.

Age: Approximately 66% of the Indias population is below 35 years; the median age of the country is estimated at 28 years (global average 30 years). This youthful population is driving the use of writing and printing paper by students and through e-commerce.

Increasing Incomes: The nominal per capita net national income in 2019-20 was estimated at Rs 1,35,050/- a rise of 6.8% compared to earlier year, strengthening paper demand. Rising literacy levels: Government initiatives (Sarva Siksha Abhiyaan and Mid-Day Meal Scheme) helped strengthen Indias literacy rate from 65% in 2001 to 74% in 2011 to ~ 78% in 2018.

B. Downstream Sector:

Newspaper circulation: The readership of newspapers increased from 407 million in 2017 to 425 million readers in 2019, strengthening the demand of newsprint.

E-Commerce boost: The e-commerce is expected to grow on the back of urbanization and internet penetration, strengthening packing paper demand with retail online sales increasing everyday.

Health and hygiene awareness: with increasing hygiene awareness in urban and rural India, the demand of medical grade paper (tissue) is gaining huge demand.

Education: Both Central and State Government allocate huge funds for education sector in their respective Budgets. With the increasing spending on education, the demand of writing paper is expected to grow further.

Challenges for Indian Industry facing COVD-19:

COVID-19 has severally disrupted the demand of paper and paper board across all segments since March, 20 and during the financial year 2020-21. For the year as a whole, the demand contracted approximately by 10-15% compared to financial year 2019-20. i) Writing & Printing Paper and Newsprint: Demand remained seriously affected due to disruption in the consumption of printed books, note books and commercial grade printing as most of the educational institutions, Government and Commercial establishments reduced drastically. However, in long run, demand will revive due to Government spending education under Right to Education Schemes and gradual revival of economy. Demand of Newsprint is also affected due to reduction of circulation to semi-urban areas, increased circulation of E- Newspapers and decline in advertisement revenue of the newspaper publishers which is likely to reach to the Pre-COVID level with the revival of economy and withdrawal of restrictions in the movement of people. Demand of Printing Paper also affected due to lower spending on calendars, brochures, magazines etc. which is expected to rise with the increased government spending, corporate supplies and jobbers requirements. ii) Packaging Grade: Demand is expected to be positive for pharmacy, food and essential packaging segment. Overall demand growth will be better due to increase in e-commerce, pharmacy, FMCG and other consumer packaging. Demand of single use paper cup and disposables are expected to be high.

However, post COVID-19 pandemic, there will be growth opportunities for the Indian Paper, print and packaging industry, disposable cups, bowls and cartons, corrugated boxes and branded packaging for online delivery and sealable paper products as substitute for single use plastics. Demand from the education sector will also get momentum once the situations normalize after COVID-19.


Your Company has paper mills located at Balasore (Odisha) and Dakshineswar (W.B., Kolkata), are most environment friendly paper mills in Eastern India. Considering the changed and challenging scenario, the Company has incorporated flexibility in paper machines to manufacture value added writing and printing paper. The Company is now having flexibility to manufacture premium grade kraft papers, newsprint and writing & printing paper on all paper machines up to 1,60,000 TPA capacity. Our Packaging Board Plant with an installed Capacity of 2,00,000 TPA Manufactures Consumer packaging board of recycle grade as well as that of virgin grade. Companys diversification into paperboard segment is now most discussed success story in the paper industry because of the tremendous performance of its board machine, appreciated market acceptance of the companys paperboard. Our paperboard has also a good reputation in export market and about 40% of its recycle grade paperboard is exported to overseas market.



Strategic location – proximity to raw materials and nearness to the market. Large and growing domestic paper market and increasing export market for its products.

Pan India presence with best logistic companies to cater fast track delivery of its products Close proximity to Mahanadi Coalfields Ltd (MCL) for Balasore plant and Raniganj-Asansol (ECL) belt for Kolkata unit for procurement of coal and also proximity to Haldia port for import of pulp, wastepaper, chemicals, spares & machineries. Strong team having sound technical knowledge and visionary managerial capabilities to ensure production of world class quality products and best business operation. Strong customer base and dealers/distributors network. Governments thrust for education and literacy coupled with increasing disposable income in developing economy. Availability of sufficient good quality ground water with the required permissions from Central Groundwater Authority as well as from Odisha State level authorities Well established Research and Development (R&D) facilities/activities encouraging innovation, product development and cost saving.

Steady increase in preference to branded products by consumers, booming e-commerce and healthy growth in organized sector are the driving force for robust demand for paper and paperboard.

Lowest cost manufacturer with advanced technology for manufacturing of writing & printing paper, newsprint and multilayer paperboard with self-sufficient captive power plants.

E- commerce is growing rapidly, translating into increased traction for packaging paperboard With a number of countries replacing plastic bags with paper equivalents, paper industry opportunities are growing Preferred supplier status amongst leading end-use customers and brands


Quality and cost competitive raw material Numerous Regional Trade scheme (RTs)/Free Trade Agreement (FTAs) and competition from imports without adequate safeguard to the domestic industries.

Increasing competition from electronic media and digitalization (for newsprint).

Fragment nature of industry having small and unorganized industry players Capital-intensive industry and high cost of technology


The details have already been covered in the Boards Report.


Your Company identified various risks and implemented its Mitigation Plans. Risk Policy and monitored frameworks has been approved by the Audit Committee and the Board of Directors of the Company. Risk reporting and monitoring is being conducted regularly by Governance Risk and Compliance Committee (GRCC) at all the operation levels and reporting directly to the Audit Committee and the Board on half-yearly basis.


Your Company has an adequate and effective Internal Control Mechanism in place to ensure efficient conduct of its operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information as per its Management Information System (MIS). These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations and protecting assets from unauthorized use or losses, compliances with regulations. The an Company has continued its efforts to align all its processes and controls with global best practices.

Apart from strong internal control, your Company has also appointed external and independent Audit Firms as its Internal Auditor for periodical checking and monitoring the Internal Control Measures for both its plants at Balasore and Kolkata.

Internal Auditors are present at the Audit Committee Meetings where Internal Audit Reports are discussed alongside of management comments and the findings and observation of the Internal Auditors. The Terms of Reference of the Audit Committee inter alia includes reviewing the adequacy of the internal control environment, monitoring implementation of the action plans emerging out of Internal Audit findings including those relating to strengthening Companys Risk Management Systems and discharge of statutory mandates. Your Company has a Comprehensive Budgetary Control System in operation and its Key Performance Indicators (KPI) are set for all important operational parameters. These are monitored and reviewed regularly by the management in Management Committee Meetings, which is chaired by the Executive Director of the Company and participated by all departmental heads and necessary corrective and preventive actions are being initiated.


Financial Performance has been detailed in the Boards Report.


Highly capable and skilled human resources with strong motivation and dedication is the backbone of your companys success and growth. From its foundation, companys employment philosophy and practices have been based on the recognition that its people are the primary source of its competitiveness.

Your Company consistently abides by human resources policy that is found on a set of following principles: equality of opportunity, continuing personal development, fairness, mutual trust and teamwork. The company takes several measures for suitable appointment, skill development and retention of human resources including but not limited to effective appointment system, employee training (on duty as well as structured trainings), goal setting, performance based appraisal, retention by creation of a nice work place, employee engagement activities and leadership development.

Your Companys employees have collectively envisioned the future with commitment to realise your Companys vision of creating enduring value for the company as well as for the society at large.

Number of people employed: 1,312


Sr. No. Particulars Key Financial Ratios Changes between current F.Y. and Previous F.Y
2019-20 2020-21 Explanation
i Debtors Turnover 7.25 5.93 -1.32 Improvement in the operating performance and reorganisation of capital
ii Inventory Turnover 5.78 5.91 0.13
iii Interest Coverage Ratio 2.47 2.29 -0.18
iv Current Ratio 0.69 0.68 -0.01
v Debt Equity Ratio 3.56 0.75 2.81
vi Operating EBITDA Margin (%) 16.36% 14.92% -1.44%
vii Operating Profit Margin (%) 14.28% 12.86% -1.42%
viii Net Profit Margin (%) -0.69% 4.20% 4.89%


Sr. No. Particulars

Key Financial Ratios

Changes between current F.Y. and Previous F.Y
2019-20 2020-21 Explanation
i Return on net worth 6.90% 8.75% 1.85% Improvement in the operating performance and reorganisation of capital


Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. The important factors that could make a difference to the Companys operations include global and Indian demand and supply conditions, finished goods prices, raw material availability and prices, cyclical demand, changes in government regulations, environmental laws, tax regimes, economic developments within India and the world, as well as other factors such as litigation and industrial relations.

Your Company has maintained its leadership position in the high-end packaging board segment and continues to consolidate its preferred supplier status amongst leading end-use customers & brands