Your Company, a Public Limited entity established in the year-1979 is engaged in the
manufacturing of Writing and Printing Paper with present capacity of 94,000 MTs per annum.
The manufacturing units are located at (i) Ahmedgarh, District Malerkotla, Punjab and (ii)
Village Banah, District S.B.S. Nagar, Punjab.
India ranks as the 5th largest producer of paper in the world. However, the Indian
Paper Industry accounts for a mere 5.3% of global paper demand. Paper industry in the
country is highly fragmented with around 900mills across the country with capacity ranging
from 10-15 MTs per day to 1000 MTs plus per day. Out of this, nearly 370 mills are closed.
While total annual installed capacity is estimated at 29 Million Tons approximately but
the operating capacity at present is estimated at 24 million tons per annum. Considering
estimated capacity utilization at 89%, production of paper, paper board and newsprint is
estimated at 21.70 million tons/year while consumption is estimated at 21.50 million
tons/year. Exports at 2.50 Million tons/year almost match the imports. Based on the raw
material used, Paper Mills are divided into three categories namely wood-based, agro-based
and waste paper based [recycled fiber]. Your Company uses agro residues, viz. wheat straw,
kangaroo grass, baggase as the primary raw material. In our country almost 75% of paper
production comes from waste paper based mills while agro based mills contribute hardly 6%
and balance is contributed by wood based mills.
The four key Paper and Board categories are: Newsprint, writing and printing papers,
Paper Boards for packaging applications, Tissue Papers & other Specialty Papers. The
global paper industry continues to grow at a compounded annual growth rate of 0.5% to 1.0%
though largely due packaging segment. The industry has witnessed some decline in the
writing & printing paper segment, a paradigm shift from the demand perspective due to
rising impact of digitization. On the other hand, packaging paper segment is rising with
growing demand for packaging from e-commerce, food and food products, FMCG and the
pharmaceutical sector.
The Indian paper market is the fastest growing market largely on account of packaging
segment. The domestic market for writing & printing is still growing although long
term perspective for newsprint & cream wove is not that bright. Market share of these
categories has come down from roughly 50% to 30% in the last decade. The paper consumption
in India is likely grow @ 6 % annual and may reach around 30 million tons in the next
5years. This is likely to occur due to mainly emphasis on education and literacy coupled
with growth in organized retail/e-commerce. The paper industry holds immense potential for
growth in India as its per capita consumption is one of the lowest at 15 kgs as against
worlds average of around 57kgs. Besides this, ban on single use plastic, being harmful
from environmental aspect, is expected to gradually create more avenues for paper
specially packaging sector.
Paper industry is facing challenges on technical front to bring out new products,
innovate and transform for green manufacturing. In the coming years, sustainability shall
be defined by capability to innovate, adapt and transform from time to time. Obligations
towards Environment and society will immensely impact the operational viability.
Post Covid-19 pandemic, the Russia-Ukraine conflict derailed the world economies,
causing uncertainty and inflationary conditions all around. Though GDP output in many
countries rebounded after the waning of covid and International trade had picked up yet
high commodity prices and rising interest rates continue to put pressure on the growth
outlook.
The Paper industry has finally recovered post Covid and even weathered past the global
impact of Russia-Ukraine war. With the initiatives of Indian Government like National
Education policy (NEP) 2020, Samagra Shiksha Scheme, National Initiative for Proficiency
in Reading with Understanding and Numeracy (NIPUN) Bharat Mission etc and higher budgetary
allocation for education sector in Union Budget, it is expected that the demand for
writing and printing paper will continue to increase.
One of the main challenge faced by domestic Paper industry is availability of raw
materials in adequate quantity. India is a fiber deficient county whether it is wood,
agricultural residue or recycles fiber/waste paper. Since the raw material is a major cost
component of the production of paper, this lone component adversely affects the cost
competitiveness of the Indian Industry as compared to others competing countries.
The paper industry is working in the direction of adopting innovative technologies
which could enable it to increase the production with better efficiencies. With more
emphasis on proper utilization of agro-residuals which are typically burnt, the
availability of agricultural waste can be further improved for the paper industry.
Innovations are taking place for proper utilization of agro-residuals, which shall instead
be used in the paper industry, and will further supplement farmers income while also
regulating pollution levels.
FINANCIAL PERFORMANCE AND ANALYSIS
The discussions in this section relate to the financial results pertaining to the year
ended March 31, 2023 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 financial statements.
The following table gives an overview of the financial results of the Company.
(Rs. in lakhs)
|
Year ended |
% of |
% |
Year ended |
% of |
|
31 March 2023 |
Revenue |
Growth/(Fall) |
31 March 2022 |
Revenue |
| Revenue from operations |
86,553.04 |
100.00% |
48.10% |
58,443.34 |
100.00% |
| Earnings before interest, tax, depreciation and amortisation (before other income) |
10,675.32 |
12.33% |
965.20% |
1,002.19 |
1.71% |
| Profit Before Tax (PBT) |
9,372.54 |
10.83% |
681.92% |
1,198.66 |
2.05% |
| Profit after tax attributable to shareholders of the Company |
7,280.42 |
8.41% |
641.64% |
981.66 |
1.68% |
| Earnings per share (in Rs.) |
53.14 |
- |
638.05% |
7.20 |
- |
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 |
Year ended |
|
|
Unit |
|
|
% Change |
|
|
31 March 2023 |
31 March 2022 |
|
| Current Ratio |
times |
1.84 |
1.29 |
42.32 |
| Debt-equity Ratio |
" |
0.14 |
0.27 |
46.53 |
| Debt service coverage Ratio |
" |
7.46 |
0.82 |
812.41 |
| Inventory turnover Ratio |
" |
11.92 |
9.88 |
20.68 |
| Trade Receivable turnover Ratio |
" |
25.11 |
20.03 |
25.37 |
| Trade Payables Ratio |
: |
10.01 |
7.81 |
28.14 |
| Net Profit Ratio |
% |
10.83 |
2.05 |
427.97 |
| Return on Capital Employed |
% |
28.73 |
6.11 |
370.21 |
RATIOS WHERE THERE HAS BEEN A SIGNIFICANT CHANGE AS COMPARED TO PREVIOUS YEAR
The repayment of Non Current borrowings resulted in improvement in Debt Equity Ratio.
The Current ratio improved due to increase in investments. Faster Recovery of Receivables
improved Trade receivable turnover ratio. Trade Payable Ratio improved significantly
during the year as the performance during the year was better. During the year, the
situation improved Post Covid-19 and cash flows, turnover and earnings of the Company have
improved as compared to the previous year resulting improvement in Debt Service coverage
Ratio, Net Profit Ratio and Return on Capital employed.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has well defined internal control system that corresponds to the size,
scope and complexities of its activities. The
Company takes abundant care to design, review and monitor the working of its internal
control system. Internal controls are also in
place to guarantee that all assets are safeguarded and protected against loss due to
unauthorized use or disposition, and that
transactions are properly authorized, recorded, and reported. 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.
HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS
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 undue stress and 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
the 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 programs. The total
number of permanent employees in the Company is 1355 as on 31st March, 2023. The
employee relations continue to be cordial and
harmonious at all the locations of the Company.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The discussion under this section mentions and specifies the CSR policies of the
company. Through the year 2022-2023, the company
took the following initiatives to make positive contributions in the society:
1) Promoting education and literacy by bearing the education expenses of girl students,
offering free of cost skill training such as
computers, stitching etc. to women, setting up a library and science lab at Guru Jagtar
Singh Model High School and distributing
over 12000 notebooks to needy students in surrounding schools.
2) Providing better medical care and aid to the needy patients at DMCH Ludhiana,
providing latest ophthalmic instruments to the local
eye hospital, by organizing medical camps for blood donation and eye care
OUTLOOK
Soon after the Covid-19 showed signs of waning, the market for writing & printing
paper started opening up & demand started
improving. It sprung up with full force and enthusiasm during the year. The industry
recovered well from economic downturn and
uncertainty caused firstly by covid pandemic and then by Russia-Ukraine war.
There are some positive developments for the paper industry in India. There are some
mega trends influencing the paper industry such
as rapid urbanization, increase in disposable income and sustainable trends. After
recording sterling performance during the year
2022-23, we are expecting repeat performance of the industry in FY 2023-24 too.
Implementation of National Education Policy (NEP)
2020 and Samagra Shiksha Scheme along with other measures by Indian Government in field
of education should also significantly
contribute to the demand for writing and printing paper thereby giving boost to
expectations of rewarding years ahead.
Attempts by the Government to aggressively push substitute to single use plastic is
going to support sustainable products such as
paper. In recent years, India has become one of the largest consumers of paper and
paper board products though per capita
consumption in India is much lower than worlds average. Although packaging is leading
the growth story yet writing & printing paper is
also proliferating due to increasing business activity and development of education
sectors. The market size for writing & printing
paper is quite good but not as big as the packaging segment. Thus domestic market
opportunities are quite promising and healthy.
Further cost of manufacturing in India is quite competitive as compared to China and
thus India may gain and corner major chunk of
global demand.
CAUTIONARY STATEMENT
Statements in this report on Management discussion and analysis relating to the
Companys objectives, 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.
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