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Pudumjee Paper Products Ltd Management Discussions

Jul 19, 2024|09:44:56 AM

Pudumjee Paper Products Ltd Share Price Management Discussions


The Company has two business divisions, namely, ‘Paper Division and ‘Hygiene Division. The Paper Division manufactures Specialty Papers and markets these throughout the country and exports small quantity. These products comply with special requirements of the customers for application in Packaging of Food products, require oil and grease resistance, papers for industrial application, household and personal hygiene application meeting requirements in daily life. Examples of such products are:

1. Laminating Base used with functional lamination for packaging of food grade products, pharma products, mouth fresheners, etc.

2 Glassine Paper, Oil & Grease resistance paper, Vegetable Parchmentine, etc. used for Packaging of food products, oily products, packaging of butter, cheese, etc.

3. Papers for Cake Baking application.

4. Dcor Papers for use in Decorative laminates for furniture, Base Paper for Melamine Tableware, etc.

5. Kraft Paper used as Release Liner for labels, etc. Kraft Interleaving for Steel and Glass Industry, Kraft Paper for electrical insulation, etc.

6. Fine Printing Papers for Bible Printing, Dictionary, Books, Pharma lea" ets as insert & outserts.

7. Creped Tissue products for hygiene application viz. Napkins, Kitchen Towel, Toilet Rolls Paper for baby diapers, sanitary napkins etc.

The Hygiene Division of the Company undertakes conversion of tissue products to value add a part of the production and its marketing together with dispensers and other Hygiene products.

The Company is entirely dependent on imports of its fiber requirement viz. Market Pulp and Waste Paper, the prices of which have been witnessing continual increase, during the year, in the International market. The Market Pulp prices combined with the effect of weakening of Rupee against Dollar have risen from Rs 39,300 per MT to Rs 53,900 per MT for receipt during April-2017 compared with April-2018 respectively. Since the fiber raw material constitutes about 55% of the sales value, this has made substantial impact. Companys efforts, however, continue to be made through:

(i) Choice of product mix with better realization, price correction etc., and

(ii) cost reduction initiatives in the energy supply through investment on a 100 KV Substation and investment on a Supercalendar project which became operational during the year which have successfully supplemented the income.

The Companys manufacturing facilities currently located in Pune are saturated and progressive urbanization around the factory site restricts future growth prospects. The Company have already invested in large industrial site admeasuring about 75 acres at MIDC, Mahad in Maharashtra State which would offer future growth opportunities. The Company is examining options in regard to new products besides proposed relocation of existing machines from Pune to Mahad, evaluating market growth potential and required investment.Mahad location already offers State Government incentives corresponding to the capital expenditure incurred.

The Hygiene Products Division of the Company markets its ‘Away-from-Home converted tissue products such as Bathroom roll, Kitchen towel, Napkins, dispensers and other hygiene products under brand name ‘Greenlime, to Institutional buyers such as Luxury Hotels, Airports, Corporate Offices, Facility Managers as the main customers.

Prior to introduction of GST regime the products of the Division were at disadvantage in as much as the Company, following transparent policies, was not able to fully face competition from unorganized sector resorting to unfair trade practices. The GST regime has given a level playing field against this disadvantage and consequently not only its turnover began to go up but also the division reported net profit for the first time.

Company Performance

During the year under review, the Company has achieved turnover of Rs 504.40 Crores (Previous year Rs 542.01 Crores) resulting in EBIDTA at Rs 45.68 Crores (Previous year Rs 51.07 crores) and a Net Profit after tax & other Comprehensive Income at Rs 19.51Crores (Previous year Rs 19.76 Crores).

Human Resources

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 and talent retention. The Company believes in offering full opportunity for growth to employees demonstrating positive attitude and initiative to accept challenge and responsibility.

The Company employs about 630 employees and the Industrial relations with the employees remained cordial during the year. A wage agreement which will remain in force till 31st March, 2020 has recently been signed with the Workers Union.

Opportunities of the Company

Having established itself as pioneers in Specialty Paper products and preferred supplier of quality products in India, the Company is poised for growth with its wide range of Products. Rising urbanisation in India currently estimated over 35% and expected to grow 2.5% (above the 1.3% growth in total population) with expanding middle class is likely to be almost 1 billion people (almost 70% of the population) by 2025.

Spending on education has also been rising both in rural and urban areas with, on an average, all-India spending on education about 5% of the overall household spending.

Rising proportion of working age population and Indias median age of 27 makes it a young Country with large productive workforce. This increase in disposable incomes and changing consumer behaviour, greater penetration of education, print and media, demographic transformation towards a younger population and a shift towards more aspirational life style are other factors.

Besides, there are already signs of growing popularity of ready-to-eat products, liquid packaging and other perishable products all result in higher demand for packaging. The growing intolerance and statutory compulsions against the use of plastics would give way to paper based packaging offering growth opportunities to Pudumjees planned range of ‘functionally coated packaging paper to enter into " exible packaging applications. Growing hygiene awareness in general and personal hygiene shall support Pudumjees business objectives for Crepe Tissue products.

Competitive strengths of the Company

• Research & Development.

• Extensive distribution network.

• Strong brand recall.

• Relevant expertise, experienced work force and agile management team.

• Cost efficient sourcing and locational advantage and effective cost management.

• Wide range of Product Portfolio.

• Ability to change product mix.

Business Strategy of the Company

• Continuous strengthening of in-house R & D set up and products innovation.

• Build stronger ties with the users & prospective customers.

• Standardizing products specification.

• Identify market opportunities for growth.

• Continuous emphasis on cost reduction and develop ability to design product mix, optimizing input costs, maintain quality and improve margins.

• Relocation of manufacturing facilities with technology upgradation and expanded capacity.

Concerns and threats

In the absence of its own source of fiber, the Company is heavily dependent on bought out fiber for its raw material and majorly imports them from overseas markets. Due to cyclical nature adverse " uctuations in market pulp prices and foreign exchange volatility substantially impacts its working. Further due to lack of potential Co-generation facilities the Company necessarily depends on costlier purchased energy. Installation of ‘100 KV Substation and

‘open access power purchase arrangements made have helped reduce energy cost. However, this con" icts with the earnings of the State Electricity Boards and often impose levies / change tariff to discourage such arrangements. The paper industry also faces shortage of talented and experienced workforce due to shortage of good institutes offering technical courses for the Pulp and Paper industry and general aversion to seeking career in the industry and working on the shop " foor.

Though the Company meets stringent norms of pollution laid down by the Government but the deteriorating quality of the water in the adjacent ‘Pawna river from which it draws its water requirement by agreement having contributed towards proportional cost of ‘Pawna Dam to the State Irrigation Department, could become a cause of concern towards enhanced treatment cost.

Internal Control System and their Adequacy

The Company has adopted internal control procedures commensurate with its size and operations. The Company‘s internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the safeguard of the Companys assets so that the main company risks (operational, compliance-related, economic and financial) are properly identified and managed over time. The Board of Directors takes stock of internal control measures taken from time to time.


Companys Mill site in Chinchwad, Town Pune, over the years has seen rapid growing urbanization which imposes enhanced responsibility on the Company towards Compliance. Through proper operations and control, the Company has been fully complying with the regulations governing discharge of treated waste water, emission of dust particulate in " ue gas etc which are being constantly monitored on-line by the Mill and the State and Central Pollution Control Boards.

The Mills draw their water requirement from adjoining Pawana River wherein water is released from the ‘Upstream Pawana Dam by the Irrigation Department as per sanctioned quota through an arrangement based on the proportional contribution made by the Company towards the cost of the dam. The quality of water upstream of Pudumjees drawal point has considerably deteriorated due to discharge of untreated waste water from upstream consumers which is a matter of concern for the Company in terms of increasing cost of treatment.

Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. The Companys actual results, achievement might differ materially from those projected in any such forward looking statements.

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