Shreyans Industries Ltd Management Discussions.

Your Company is a public limited Company established in 1979 to manufacture Writing and Printing Paper with a capacity of 10,000 MTs per annum. The mill is located at Ahmedgarh, District Sangrur [Punjab]. In 1994, your Company purchased the paper division of M/s Zenith Limited situated at village Banah, District S.B.S. Nagar in Punjab. After certain modifications in both the paper divisions, the combined present capacity for manufacture of Writing and Printing Paper stands at 94,000 MTs per annum.

The Indian Paper Industry accounts for about 4% of the Worlds production of paper. Paper industry in India is highly fragmented. There are over 750 mills spread across the country, capacity ranging from 5 TPD to over 1200 TPD. Total installed capacity is estimated at 17-18 million tonnes with production of more than 17 million tonnes. The products are broadly classified as [1] Newsprint, [2] Writing and Printing Paper, [3] Packaging Paper and Board, and [4] Specialty Papers and others. Your Company produces Writing and Printing Paper.

Based on usage of raw material, Paper Mills are divided into three categories namely, wood-based, agro-based and wastepaper based [recycled fiber]. Your Company uses agro residues, viz. wheat straw, sarkanda as the primary raw materials.

Writing and Printing Paper accounts for about 35%, Newsprint 20% and Industrial and speciality papers 45%. The per capita consumption of paper in India stands at a little over 13 Kgs. which is well below the World average of 57 Kgs. India remains the fastest growing market for paper globally and has grown from 9.3 million tones in FY08 to 17.1 million tones in FY18 witnessing a CAGR of 6.3 percent. The demand for Writing and Printing Paper in India is expected to grow on account of rapidly improving literacy rates and increasing office documentation needs.

Paper industry in India witnessed improved performance which is attributable to better realizations driven by high input cost. International pulp prices, key raw material continued to inch up till September end pushing up the paper prices. China, the largest importer of waste paper globally, announced a ban on certain grades of waste paper in July last year which came into force in January 2018. The move led to increased demand for pulp pushing up the global pulp prices. However, pulp prices have softened during last couple of months, which in turn has affected paper prices also.

Financial Performance and Analysis

The discussions in this section relate to the financial results pertaining to the year ended March 31, 2019, prepared in accordance with the Indian Accounting Standards (referred to as Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements. The following table gives an overview of the financial results of the Company:

(Rs in lakhs)

Year ended 31 March 2019 % of Revenue % Growth Year ended 31 March 2018 % of Revenue
Revenue 57,390.91 100.00% 23.80% 46,357.47 100.00%
Earnings before interest, tax, depreciation and amortisation (before other income) 8,025.79 13.98% 43.78% 5,582.01 12.04%
Profit Before Tax (PBT) 7,048.39 12.28% 53.13% 4,602.83 9.93%
Profit after tax attributable to shareholders of the Company 4,665.75 8.13% 46.49% 3,184.97 6.87%
Earnings per share (in F) 33.96 - 50.53% 22.56 -

Previous years figures have been regrouped for comparison with current years presentation where ever necessary.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios. The Company has identified the following ratios as key financial ratios:-

Year ended 31 March 2019 Year ended 31 March 2018 % Change
Debt Equity Ratio Unit times 0.16 0.30 45.97
Current Ratio " 1.69 1.35 25.46
Receivables Outstanding in Days to Sales days 25.07 24.95 0.45
Inventory in days to Cost of goods sold " 28.74 27.07 6.17
Interest Coverage Ratio times 14.20 10.61 33.81
Operating Profit Margin % 12.17 9.84 23.66
Net Profit Margin % 8.13 6.87 18.33

Ratios where there has been a significant change as compared to previous year

Paper Industry maintained a healthy trend during the year and witnessed increase in Prices of Paper (including writing and printing paper). Also increase in total Production of the company by 10.50% contributed significantly to the Operating profits. Increase in Margins/earnings on account of above reasons resulted in improvement it the profitability ratios and Earning per share as compared to the previous year. In addition to the repayments of borrowings (term loans) falling due during the year, the company also partly prepaid the installments of Term loans falling due during the succeeding years due to better liquidity. This resulted in improvement in debt equity ratio and interest coverage ratio. The Company managed the surplus funds through Investments in various securities. These investments (current) significantly improved the Current ratio of the Company.


The Company has well defined internal control system. The Company takes abundant care to design, review and monitor the working of internal control system. Internal Audit in the organization is an independent appraisal activity and it measures the efficiency, adequacy and effectiveness of other controls in the organization. All significant issues are brought to the attention of the Audit Committee of the Board.


The human resources development function of the Company is guided by a strong set of values and policies. Your Company strives to provide the best work environment with ample opportunities to grow and explore. Your Company maintains a work environment that is free from any harassment. Company enjoys excellent relationship with its personnel and considers them as an essential part of the organization.

Development and well being of people working for the Company has been a corner stone of management policy. This is reflected through very low employees turnover at all levels including workers, staff, officers and managers. Company lays special emphasis on staff training and retraining through internal workshops and also nominating staff/officers to various training programmes. As on 31st March 2019, Company has 1339 employees consisting of 93 managers, 334 staff/officers and 912 workers.


Your Company, in collaboration with a local NGO in Ahmedgarh, has set up an Eye Hospital. Besides contributing in setting up of this hospital, financial assistance is extended on monthly basis. Eye care is provided to needy persons on subsidized rates/free of cost.

Your Company is also involved with various educational institutions for providing scholarship/financial assistance to deserving students on recommendations of the managements of such institutions.

Your Company actively participates with number of NGOs for holding medical check-up camps, sports events and other social activities. Your Company provides fire fighting services, as and when need arises, in nearby areas through its own fire tender and fire fighting staff.


As mentioned in the earlier part of the report, the supply and demand for writing and printing papers in India is already fairly balanced. While demand for writing and printing papers is showing negative or no growth in different parts of the World due to digitization, the growing emphasis on education sector in India is expected to result in a growth of at least 4 to 6%. Since there are no new major capacities in the offing in the near future, the market for writing and printing papers should remain fairly firm in the near future. Major issues confronting Indias Pulp and Paper industry are high cost of production caused by inadequate availability and high cost of raw materials, power cost and concentration of mills in one particular area, non-availability of good quality fibre, uneconomical plant size, technological obsolescence and environmental challenges. Compliance with increasingly stiffer environmental standards has been another challenge for the Paper industry. However at Shreyans, we have taken adequate steps to meet or exceed all environmental norms. A close watch is constantly kept on various developments and diversification of product range whenever found necessary will be undertaken. Company shall also look forward business opportunities, if situation so warrants. Eco-friendly technology adopted by the Company, motivated manpower and market leadership vision makes future outlook quite optimistic.


Statements in this report on Management discussion and analysis relating to the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based upon certain assumptions and expectations of future events. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and domestic demand-supply conditions, selling prices, raw material costs and availability, changes in government regulations and tax structure, general economic developments in India and abroad, factors such as litigation, industrial relations and other unforeseen events.

The Company assumes no responsibility in respect of forward looking statements made herein which may undergo changes in future on the basis of subsequent developments, information or events. Market data and product information contained in this report is gathered from published and unpublished reports and their accuracy cannot be assured.