CHAPTER III

PROFILE OF SELECTED PAPER COMPANIES

TAMIL NADU NEWSPRINT AND PAPERS LTD (TNPL)

Company Profile

To be the market leader in the manufacture of world class eco-friendly papers by

adopting innovative technologies for sustainable development. TNPL was formed by the
Government of Tamil Nadu in April 1979. The primary objective of the company is to
produce Newsprint, Printing and Writing paper using bagasse a sugarcane residue as the
primary raw material. The registered office of the company is situated at Gundy,
Chennai. The products are being marketed throughout the country and also being
exported to 20 countries around the world. The factory is situated at kagithapuram in
Karur district of Tamilnadu. The initial capacity of the plant was 90,000 TPA of
Newsprint, Printing and writing paper, which commenced production in the year 1984.
The capacity was doubled to 1, 80,000 TPA in January 1996 after implementation of the
first project. Recently the capacity has been further enhanced to 2, 30,000 TPA in April
2003 through up gradation of both the paper machines.

Environment Protection Measures

TNPL is accredited with ISO14001:2004 certification for an effective

environmental management system. By using bagasse as primary raw material, TNPL
preserves over „‟40000 acres of forest land from depletion every year‟‟.

Solid waste management

 Fly ash generated at the power boilers is being sold to the cement plants
 Effluent sludge is being sold to the Board manufacturing units
 Lime sludge generated is being recycled in the Lime Kiln

TNPL has obtained the prestigious ISO 14001 Certification from RMTUV,
Germany for "Successfully establishing and applying environmental management system

67
for development, manufacture and supply of paper". This certification duly acknowledges
TNPL‟s commitment for environment protection and sustained efforts to minimise the
overall environmental impact. TNPL has commissioned the Bio-methanation plant,
which generates around 23000 cum of biogas (methane) per day, to be used as fuel in the
lime-kiln in replacement off urnace oil. The biogas e replaces around 10-12 KL of
furnace oil per day in the lime-kiln. During the year 2003-04, the bio- methanation plant
generated 41.45 lakh M3 of methane gas and replaced the use of furnace oil worth
Rs.2.48 crores. TNPL obtained 3 Leaves Award under the Green Rating project of
the Centre for Science and Environment, New Delhi during October 2004, in recognition
of the Environment Management System.

TNPL’s products

TNPL caters to the requirements of multifunctional printing processes like sheet-

fed, web offset, and digital printers. TNPL manufactures Printing and Writing Papers in
substances ranging from 50 GSM to 90 GSM Newsprint is normally manufactured in 49
Gsm reels and directly sold by the company to the various newspaper establishments
such as The Hindu, Malayala Manorama, Ananda Bazaar Patrika and so on. Printing &
Writing paper (PWP) is manufactured in reel and sheet forms with the Gsm (Grams per
square meter – basis weight of the paper) varying from 50 to 80. Various sizes of reels
and sheets are also cut to suit the customer requirements. Some of the major end-use
segments of PWP are printing applications, note books, computer stationery, office
stationery, etc.

 TNPL Ultra White Maplitho

 Radiant Printing
 Hardbound Notebook
 TNPL Offset Printing
 Cream wove
 Copy Crown
 TNPL Copier
 Students' Favorites

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 Super Print Maplitho
 Perfect Copier
 Ace Marvel

GROSS PROFIT, OPERATING PROFIT AND NET PROFIT OF TAMIL NADU

NEWSPRINT AND PAPERS LIMITED

Growth rate of gross profit, operating profit and net sales of TNPL shows a
fluctuating trend during the study period. Data noted in the following Table 3.1 depicts
the gross profit, operating net profit and net profit of Tamil Nadu Newsprint and Papers
Limited during 2004-2013:
Table No 3.1
Showing Gross Profit, Operating Profit and Net Profit of Tamil Nadu Newsprint
and Papers Limited [Period: 2004-2013]
GROSS PROFIT OPERATING PROFIT NET PROFIT
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 109.36 Nil 1168.59 Nil 52.80 Nil
2005-06 164.05 50.01 1362.73 16.61 37.95 -28.13
2006-07 190.82 16.32 1600.25 17.43 80.55 112.25
2007-08 229.29 20.16 1722.52 7.64 86.06 6.84
2008-09 233.16 1.69 1890.47 9.75 112.83 31.11
2009-10 262.57 12.61 2065.79 9.27 107.39 -4.82
2010-11 263.81 0.47 1968.63 -4.70 126.06 17.39
2011-12 306.04 16.01 2231.29 13.34 149.00 18.20
2012-13 264.36 -13.62 3073.60 37.75 108.94 -26.89
2013-14 349.80 32.32 3798.94 23.60 91.48 -16.03
Source: Annual Reports, Tamil Nadu Newsprint and Papers Limited for different years

Table 3.1 shows that the gross profit of TNPL was 109.36cr in 2004. Thereafter it
witnessed a significant dip and growth rate of GP came down to -13.62 per cent in 2012.
In 2013 growth rate increase to 32.32 per cent over the previous year. Operating profit
shows a very interesting trend. In the first six year i.e. from 2004 to 2009 it shows a
increasing trend. In 2004 it was 1168.59 and came down to 1968.63cr in 2010 but after

69
that it start increasing continuously and reached to 3798.94cr in 2013. In 2004 net profit
of TNPL was 52.80cr and came down to 37.95cr in 2005. But after that NP increase
tremendously and was 80.55cr in 2006 and reached to 149.00cr in 2011.

SHAREHOLDERS’ FUND AND BORROWINGS OF TAMIL NADU

NEWSPRINT AND PAPERS LIMITED

Shareholders‟ fund and borrowings of Tamil Nadu Newsprint and Papers Limited
increased tremendously. Data noted in the following Table 3.2 depicts shareholders‟ fund
and borrowings Tamil Nadu Newsprint and Papers Limited during 2004-13:

Table No. 3.2

Showing Shareholders’ Fund and Borrowings of Tamil Nadu Newsprint and Papers
Limited [Period: 2001-2010]
Share holders fund Borrowings
Absolute Increase / Absolute Increase /
figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over
Previous Previous
year in year in
percent) percent)
2004-05 448.98 Nil 253.99 Nil
2005-06 465.23 3.62 249.74 -1.67
2006-07 522.39 12.29 308.13 23.38
2007-08 576.44 10.35 559.4 81.55
2008-09 640.01 11.03 554.33 -0.91
2009-10 664.32 3.80 806.45 45.48
2010-11 804.5 21.10 1362.92 69.00
2011-12 915.8 13.83 1488.11 9.19
2012-13 970.68 5.99 1733.79 16.51
2013-14 1035.47 6.67 1500.21 -13.47
Source: Annual Reports, Tamil Nadu Newsprint and Papers Limited for different
years

The Table 3.2 exhibits an interesting trend in both shareholders‟ fund and
borrowing of TNPL. In 2004 shareholders fund of TNPL was 488.98cr. The fund
significantly increases and reached to 1035.47cr in 2013. Growth rate increases with the
increase in shareholders‟ fund and was 6.67 per cent over the previous year. Borrowings
of TNPL in the year 2004 was 253.99cr and 250.04cr in 2005 there is a decrease in

70
borrowings at 1.67 percent. After 2009 borrowings of TNPL increases continuously and
went up to 17333.79cr in the year 2012 with the increase in growth rate of 16.51 per cent
over the previous year and it declined to 1500.21cr in 2013.

NET FIXED ASSETS, CURRENT ASSETS AND CURRENT LIABILITIES OF

TAMIL NADU NEWSPRINT AND PAPERS LIMITED

Tamil Nadu Newsprint and Papers Limited made a marvelous increase in net
fixed assets, current assets and as well in current liabilities. Data noted in the following
Table 3.3 depicts net fixed assets, current assets and current liabilities Tamil Nadu
Newsprint and Papers Limited during 2004-13:

Table No. 3.3

Showing Net Fixed Assets, Current Assets and Current Liabilities of Tamil Nadu
Newsprint and Papers Limited
CURRENT
NET FIXED ASSET S CURRENT ASSETS
LIABILITIES
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 750.97 Nil 221.26 Nil 158.11 Nil
2005-06 717.81 -4.42 261.48 18.18 188.12 18.98
2006-07 702.39 -2.15 273.59 4.63 164.92 -12.33
2007-08 718.43 2.28 280.71 2.60 208.55 26.46
2008-09 992.9 38.20 274.96 -2.05 232.61 11.54
2009-10 1221.27 23.00 392.69 42.82 203.26 -12.62
2010-11 1244.1 1.87 411.79 4.86 224.97 10.68
2011-12 2193.91 76.35 452.13 9.80 294.95 31.11
2012-13 2177.93 -0.73 728.93 61.22 452.05 53.26
2013-14 2083.86 -4.32 582.65 -20.07 514.02 13.71
Source: Annual Reports, Tamil Nadu Newsprint and Papers Limited for different years

From the Table 3.3 it is examined that there is an increasing trend in net fixed
assets, current assets and current liabilities. In 2004 the net fixed assets was 750.97cr.
there was very slow progress in 2005 and 2006 but after 2007 it show a tremendous

71
increment in the net fixed assets and it went up to 2193.91cr in 2011 and growth rate also
increases with increase in net fixed assets and was 76.35 per cent over the previous year.
In the year 2013 the net fixed asset was 2083.86cr with the decrease in growth rate of
4.32 percent. Current assets in 2004 were 221.26cr. It continuously shows an increasing
trend except in the year 2008 but at end of the study period i.e. in 2013 it went up to
582.65cr. Current liabilities were 158.11cr in 2004. It continuously shows an increasing
trend and went up to 514.02cr in 2013 with the increase in growth rate of 13.71 per cent
over previous year.

BALLARPUR INDUSTRIES LIMITED (BIL)

Ballarpur Industries Limited (BILT) is India‟s largest manufacturer of writing and

printing (W&P) paper. BILT‟s subsidiaries include Ballarpur International Graphic Paper
Holdings B.V. (BIGPH); BILT Graphic Paper Products Limited (BGPPL); Sabah Forest
Industries (SFI), Malaysia‟s largest pulp and paper company; and Bilt Tree Tech Limited
(BTTL), which runs BILT‟s farm forestry programme in several states in India. Mr. R.R.
Vederah is the Managing Director and Executive Vice Chairman.

In India, the company has six manufacturing units, giving it geographic coverage
over most of the domestic market. The company has a dominant share of the high-end
coated paper segment in India. It accounts for over 53% of the coated wood-free paper
market, an impressive 80% of the bond paper market and nearly 35% of the hi-bright
Maplitho market, besides being India's largest exporter of coated and uncoated paper.

Achievements and Awards

The Mill has implemented 5S initiative with the help of a renowned consultant to
improve overall operations and housekeeping levels. Unit Ballarpur is certified for FSC
COC & CW certificate from the Forest Stewardship Council. Unit Ballarpur is also
certified for OHSAS 18001:2007 by DNV. Now, the Unit has a certified integrated
management system of ISO 9001:2008, ISO 14001:2004 & OHSAS18001:2007. Unit
Ballarpur also secured the First Prize for Excellence in Environment Management
awarded by the Greentech Foundation, New Delhi

72
Unit: Bhigwan

 Unit Bhigwan has received the following awards in the year 2009-10:
 Good Green Governance award from Srushti Publications, New Delhi.
 Greentech Environment award for Environment Excellence.
 Greentech Safety Award.

Unit: Shree Gopal

 Unit Shree Gopal undertook various quality improvement initiatives to improve

customer servicing and satisfaction. Some of these include:
 Achieved On Time In Full (OTIF) score consistently above 90 per cent
 Reduction in customer complaints by 30 per cent in 2009-10
 Installed new re-winder to improve the cut quality of reels
 Installed new single hard nip calendar to improve paper quality in terms of two
sidedness
 Replaced dryers from bush bearings to antifriction bearings to avoid oil dripping
in paper

As a part of the management commitment towards system implementation, in

2009-10, Unit Shree Gopal achieved the following in addition to existing Quality system
ISO 9001-2008:

 ISO 14001-2004 certification

 OSHAS 18001-2007 certification
 FSC – COC certification
 Implemented 5S initiative in Pulp Mill

Unit: Sewa

During 2009-10, Sewa produced 70,143 MT of paper. Major focus was on new
product development and brightness improvement at the bleaching stage, which was
achieved by changing the bleaching sequence from five stages to four stages and
replacing hypo with chlorine dioxide.

73
 Resource conservation continued to be a key focus area for the unit. Steam
consumption reduced from 3.59 MT/MT of paper in 2008-09 to 3.55 MT/MT of paper in
2009-10. In line with initiatives under the Corporate Responsibility of Environment
Protection (CREP) programme, various environmental projects were implemented.
Today, Ballarpur Industries Limited not only has the range, but also a well-entrenched
distribution network that enables it to reach customers, anytime, anyplace.

GROSS PROFIT, OPERATING PROFIT AND NET PROFIT OF BALLARPUR

INDUSTRIES LIMITED

Ballarpur Industries Limited has made a notable progress in gross profit,

operating profit, and net profit. Data noted in the following table 3.4 illustrate the gross
profit, operating profit, and net profit of Ballarpur industries limited during 2004-2013:

Table No. 3.4

Showing Gross Profit, Operating Profit and Net Profit of Ballarpur Industries
Limited [Period: 2004-2013]
GROSS PROFIT OPERATING PROFIT NET PROFIT
Increase / Increase / Increase /
Decrease Decrease Decrease
Absolute Absolute Absolute
Year (Over (Over (Over
figures figures figures
Previous Previous Previous
(in Cr) (in Cr) (in Cr)
year in year in year in
percent) percent) percent)
2004-05 395.68 Nil 3530.67 Nil 133.91 Nil
2005-06 428.83 8.38 3566.25 1.01 168.10 25.53
2006-07 473.98 10.53 3678.18 3.14 212.00 26.12
2007-08 551.30 16.31 4180.01 13.64 250.77 18.29
2008-09 151.28 -72.56 1864.27 -55.40 129.45 -48.38
2009-10 200.15 32.30 1943.39 4.24 125.39 -3.14
2010-11 207.54 3.69 2019.59 3.92 58.28 -53.52
2011-12 250.87 20.88 2070.94 2.54 30.15 -48.27
2012-13 237.00 -5.53 2170.97 4.83 6.57 -78.21
2013-14 268.27 13.19 1938.61 -10.70 33.19 405.18
Source: Annual Reports, Ballarpur Industries Limited for different years

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 Table 3.4 depicts that gross profit, operating profit and net profit was 395.68cr,
3530.67cr, 133.91cr respectively in 2004. The same reached to 268.27cr, 1938.61cr, and
33.19 in 2013 respectively. Growth in Gross profit over the previous year showing a
increasing trend this may be due to the selling price of the goods has gone up without
corresponding increase in the cost good sold or may be due to the fact that the cost of
goods sold has gone down without corresponding decrease in the selling price of the
goods.

But during in 2008 growth decline to 72.56 per cent and keeps on declining and
was 5.53 per cent in 2012 this may be due to decrease in the selling price of the goods
sold without corresponding decrease in the cost of goods sold or stock at the end may
have been undervalued or the opening stock may be have been overvalued.

The operating profit ratio shows the operational efficiency of the business. Lower
operating ratio shows higher operating profit and vice versa. Operating Profit Ratio
indicates the earning capacity of the concern on the basis of its business operations and
not from earning from the other sources. It shows whether the business is able to stand in
the market or not.

In 2004 operating net profit was 3530.37cr. It was showing an increasing trend
but was 1864.27cr in 2008 and growth rate decrease to 10.70 per cent over the previous
year. In 2004 the net profit was 133.91 cr. It declined to 129.45cr in 2008. After that it
shows a decrease in growth rate. In the year 2013 there was a tremendous growth of
405.18 percent.

SHAREHOLDERS’ FUND AND BORROWINGS OF BALLARPUR INDUSTRIES

LIMITED

Shareholders‟ fund of Ballarpur Industries Limited is continuously increasing and

borrowings showing a fluctuating trend. Data noted in the following Table 3.5 represent
the shareholders‟ fund and borrowings of Ballarpur Industries Limited during 2004 to
2013:

75
 Table No. 3.5
Showing Shareholders’ Fund and Borrowings of Ballarpur Industries Limited
[Period: 2004-2013]
Share holders fund Borrowings
Absolute Increase / Absolute Increase /
figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over
Previous Previous
year in year in
percent) percent)
2004-05 1387.84 Nil 1330.2 Nil
2005-06 1463.67 5.46 1188.9 -10.62
2006-07 1609.89 9.99 1453.6 22.26
2007-08 1988.03 23.49 1332.64 -8.32
2008-09 1262.03 -36.52 938.06 -29.61
2009-10 1346.11 6.66 887.75 -5.36
2010-11 1651.3 22.67 861.06 -3.01
2011-12 1618.61 -1.98 987.39 14.67
2012-13 1587.08 -1.95 754.6 -23.58
2013-14 1597.26 0.64 875.67 16.04
Source: Annual Reports, Ballarpur Industries Limited for different years

The Table 3.5 portrays that shareholders fund in the year 2004 was 1387.84cr and
reached to 1988.03cr in the year 2007 with the increase in growth rate from 5.46 per cent
to 23.49 per cent. There was slight decrease in the shareholders fund 1262.03cr in the
year 2008 but again it increase and was 1597.26cr in 2013. In 2004 borrowing was
1330.2cr and it declined to 754.6cr in 2012. In between there were slight increase and
decrease in the borrowings. In the year 2013 there was an increase of 16.04 percent
which is 875.67cr.

NET FIXED ASSETS, CURRENT ASSETS AND CURRENT LIABILITIES OF

BALLARPUR INDUSTRIES LIMITED

Net fixed assets, current assets and current liabilities of Ballarpur Industries
Limited increased over the period of time. Data noted in the following Table 3.6 shows
the net fixed assets, current assets and current liabilities of Ballarpur Industries Limited

76
during 2004 to 2013:

Table No. 3.6

Showing Net Fixed Assets, Current Assets and Current Liabilities of Ballarpur
Industries Limited [Period: 2004 to 2013]
CURRENT
NET FIXED ASSET S CURRENT ASSETS
LIABILITIES
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 1993.58 Nil 670.57 Nil 216.67 Nil
2005-06 2016.32 1.14 622.82 -7.12 244.3 12.75
2006-07 2014.84 -0.07 1108.9 78.05 222.06 -9.10
2007-08 1982.42 -1.61 1011.19 -8.81 228.62 2.95
2008-09 763.82 -61.47 683.5 -32.41 80.97 -64.58
2009-10 848.7 11.11 345.85 -49.40 84.82 4.75
2010-11 971.44 14.46 482.41 39.49 181.84 114.38
2011-12 949.88 -2.22 526.54 9.15 267.26 46.98
2012-13 893.2 -5.97 502.24 -4.62 223.49 -16.38
2013-14 1215.4 36.07 492.32 -1.98 215.89 -3.40
Source: Annual Reports, Ballarpur Industries Limited for different years

It is inferred from the table 3.6, net fixed assets, current assets and current
liabilities was 1993.58cr, 670.57cr and 216.67cr respectively in 2004. Growth rate of net
fixed assets went on increasing over previous year and was 36.07 per cent in 2013 except
in 2006 - 2008 and 2011 - 2012 which was -0.07,-1.61, -61.47, -2.22 per cent and -5.97
per cent respectively. Current assets of Ballarpur industries limited in the year 2004 was
670.57cr and after that it went on decreasing and increasing trend and reached to
492.32cr in 2013. Current liabilities were 216.67cr in 2004 and went up to 215.89cr in
2013. In between the study period there was increase and decrease in current liabilities of
Ballarpur industries limited.

77
INTERNATIONAL PAPER APPM LIMITED MANUFACTURES (IPAPPML)

International Paper APPM Limited manufactures, sells, and exports pulp, paper,
and paper board products in India and internationally. It offers writing and printing paper
products; specialty paper products; and copier paper products comprising office
documentation and multipurpose, and color copier products. The company‟s products are
used in account books, annual reports, bills, blade wrapping, book printing, brochures,
calendars, cash books, challans, children books, computer forms, covers, diaries,
envelopes, files/folders, foil laminates, forms, greeting cards, inkjet printing, invoices,
journals, and labels. Its products are also used in leaflets, lottery printing, laser printing,
magazine covers, magazines, note books, novels, pamphlets, paper cups, picture posters,
plotter rolls, photocopying, soap wrappers, stationary, text books, ticket, wedding cards,
and writing pads, as well as a base paper for chromo/art paper/art boards. The company
was formerly known as Andhra Pradesh Paper Mills Limited and changed its name to
International Paper APPM Limited in December 2013. The company was founded in
1920 and is headquartered in Hyderabad, India. International Paper APPM Limited is a
subsidiary of IP Holding Asia Singapore Pte. Limited.

International Paper APPM Limited reported unaudited standalone earnings results

for the third quarter and nine months ended December 31, 2014. For the quarter, the
company's net sales/income from operations was INR 2,745.21 million compared to INR
3,015.22 million a year ago. Profit from operations before other income and finance costs
was INR 85.95 million compared to loss from operations before other income and finance
costs of INR 33.37 million a year ago. Loss from ordinary activities before tax was INR
9.435 million compared to INR 147.39 million a year ago. Net profit was INR 11.58
million compared to net loss of INR 78.9 million a year ago. Basic and diluted earnings
per share was INR 0.29 compared to loss of INR 1.98 a year ago. For the nine months,
the company's net sales/income from operations was INR 8,387.33 million compared to
INR 8,043.32 million a year ago. Profit from operations before other income and finance
costs was INR 151.03 million compared to loss from operations before other income and
finance costs of INR 426.18 million a year ago. Loss from ordinary activities before tax
was INR 139.22 million compared to INR 696.2 million a year ago. Net loss was INR

78
65.5 million compared to INR 448.06 million a year ago. Basic and diluted loss per share
was INR 1.65 compared to INR 11.27 a year ago.

AWARDS:

In 2005-06
Best Management Award - 2005 for the outstanding contribution in the
maintenance of industrial relations, labour welfare and productivity from the Government
of Andhra Pradesh

1. Gold Award in the paper sector for outstanding achievement in safety

management awarded by the Greentech Foundation
2. Silver Award in the paper sector for outstanding achievement in environment
management presented by Greentech Foundation
3. During the year under review, Unit: CP received ISO 9001:2000 from DNV
Netherlands for quality management

In 2004-05

A special award by CAPEXIL (sponsored by Ministry of Commerce & Industry,

Government of India) in recognition of outstanding export performance in respect of
paper and paperboards for the year 2004-05.

Water Efficient Unit Shield & Certificate for "Excellence in Water Management
2005" by CII (SR) Andhra Pradesh Chapter. (Unit: CP)

Certificate of Appreciation in recognition of efforts of management, staff,

employees and workers in achieving Occupational Health and Safety Assessment Series
certification (OHSAS 18001) by National Safety Council, Andhra Pradesh Chapter, 2005
(Unit: APPM)

Certificate on Environmental Management System Standard: ISO 14001:2004 by

DNY BY, Netherlands. (Unit: APPM)

In 2003-04

The District Administration, Rajahmundry awarded a certificate of commendation

79
for assisting the Administration in solving the leakage of LPG tanker on a public road,
thereby avoiding a serious disaster in a busy traffic junction of Rajahmundry town. The
Company was also awarded another certificate of commendation by the District
Administration for commendable activities in the field of Social Forestry.

GROSS PROFIT, OPERATING PROFIT AND NET PROFIT OF ANDHRA

PRADESH PAPER MILLS LIMITED

Gross profit, operating profit and net profit of Andhra Pradesh paper mills
limited shows a fluctuating trend during the study period. Data noted in the following
Table 3.7 depicts the gross profit, operating profit and net profit of Andhra Pradesh
paper mills limited during 2004-13:

Table No. 3.7

Showing Gross Profit, Operating Profit and Net Profit of Andhra Pradesh Paper
Mills Limited [Period: 2004-2013]
GROSS PROFIT OPERATING PROFIT NET PROFIT
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 90.98 Nil 840.92 Nil 23.08 Nil
2005-06 108.50 19.26 923.58 9.83 25.40 10.05
2006-07 118.64 9.35 917.67 -0.64 35.03 37.91
2007-08 64.39 -45.73 1047.61 14.16 24.13 -31.12
2008-09 64.02 -0.57 1204.07 14.93 16.54 -31.45
2009-10 112.99 76.49 1230.39 2.19 18.95 14.57
2010-11 180.11 59.40 1179.10 -4.17 54.19 185.96
2011-12 169.14 -6.09 1467.24 24.44 44.94 -17.07
2012-13 28.68 -83.04 1238.05 -15.62 -97.81 -317.65
2013-14 191.89 569.07 2412.23 94.84 -23.70 -75.77
Source: Annual Reports, Andhra Pradesh Paper Mills Limited for different years

It is determined from the table 3.7, there is an increasing trend in gross profit,
operating profit and net profit during the study period. In the year 2004 gross profit,
operating profit and net profit were 90.98cr, 840.92cr and 23.08cr respectively. In the

80
year 2007 growth rate over the previous year of gross profit falls down to 45.73 per
cent. In 2013 gross profit was 191.89cr. Operating profit was 840.92cr in 2004 and went
up to 569.07cr in 2013. In 2004 net profit was 23.08cr and went up to 54.19cr in 2010.
But in 2007 it came down to 24.13cr. In 2010 it shows incredible increase and went up
to 54.19cr with the increase in growth rate of 185.96 per cent. In the year its growth rate
decreases to 75.77 percent.

SHAREHOLDERS’ FUND AND BORROWINGS OF ANDHRA PRADESH

PAPER MILLS LIMITED

Shareholders‟ fund and borrowings of International Paper APPM Limited

increased tremendously. Data noted in the following Table 3.8 depicts shareholders‟ fund
and borrowings International Paper APPM Limited during 2004-13:

Table No.3.8
Showing Shareholders’ Fund and Borrowings of Andhra Pradesh Paper Mills
Limited [Period: 2004-2013]
Share holders fund Borrowings
Absolute Increase / Absolute Increase /
figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over
Previous Previous
year in year in
percent) percent)
2004-05 193.1 Nil 139.96 Nil
2005-06 228.75 18.46 139.58 -0.27
2006-07 361.23 57.91 322.36 130.95
2007-08 381.58 5.63 498.04 54.50
2008-09 414.09 8.52 518.8 4.17
2009-10 416.54 0.59 547.71 5.57
2010-11 502.95 20.74 493.35 -9.92
2011-12 578.32 14.99 291.69 -40.88
2012-13 480.52 -16.91 479.88 64.52
2013-14 456.81 -4.93 448.76 -6.48
Source: Annual Reports, Andhra Pradesh Paper Mills Limited for different years

Table 3.8 depicts that shareholders‟ fund have tremendously increased during the
study period. In 2004 it was 193.1cr. Thereafter it witnessed a significant increase and

81
went up to 578.32cr in 2011 and growth rate went up to 14.99 per cent. But for the last
two years there is a slight decrease of 16.91 and 4.93 percent in the year 2012 and 2013
respectively. Borrowings were 139.96cr in 2004. It came down to 139.58cr in 2004. But
again the borrowing of the company increases. In 2006 it increases significantly and was
322.36cr and continues to increase and went up to 547.71cr in 2009. In the end of the
study period i.e. in 2013 it was 448.76cr with the decrease in growth rate of 6.48 per cent
over previous year.

NET FIXED ASSETS, CURRENT ASSETS AND CURRENT LIABILITIES OF

ANDHRA PRADESH PAPER MILLS LIMITED

Andhra Pradesh paper mills witness a tremendous increase in Net fixed assets,
current assets and current liabilities during the study period. Data noted in the following
Table 3.9 depicts the Net fixed assets, current assets and current liabilities of Andhra
Pradesh paper mills limited during 2004-2013::
Table No. 3.9
Showing Net Fixed Assets, Current Assets and Current Liabilities of Andhra
Pradesh Paper Mills Limited [Period:2004-2013]

CURRENT
NET FIXED ASSET S CURRENT ASSETS
LIABILITIES
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 257.73 Nil 126.55 Nil 87.3 Nil
2005-06 241.37 -6.35 131.18 3.66 95.62 9.53
2006-07 410.13 69.92 133.15 1.50 150.87 57.78
2007-08 712.27 73.67 140.23 5.32 135.66 -10.08
2008-09 733.44 2.97 174.19 24.22 140.87 3.84
2009-10 750.87 2.38 189.49 8.78 168.04 19.29
2010-11 678 -9.70 177.74 -6.20 135.55 -19.33
2011-12 858.28 26.59 199.57 12.28 284.21 109.67
2012-13 806.59 -6.02 284.44 42.53 173.49 -38.96
2013-14 820.87 1.77 228.52 -19.66 177.5 2.31
Source: Annual Reports, Andhra Pradesh Paper Mills Limited for different years

82
 The table 3.9 represents an increasing trend in net fixed assets, current assets and
current liabilities. In the year 2001 net fixed assets was 257.73cr and went up increasing
but in 2005 it was 241.37cr and made a remarkable increment and was 410.13cr in 2006
with the increase in growth rate of 69.92 per cent over previous year. In the year 2013 it
was 820.87cr in between the study period there is increase and decrease in the net fixed
asset. As the current assets increases the current liabilities also increases. In 2004 the
currents assets were 126.55cr and went up to 228.52cr in 2013. The current liabilities
were 87.3cr in 2004. In 2006 it went up to 150.87cr with the increase in growth rate of
57.78 per cent over previous year. In 2013, it was 177.5cr with the growth rate of 2.31
per cent over previous year.

CONCLUSION

Thus far, an attempt was made to study the overall profile of sample paper mills
in India. The assessment of performance of four sample companies brought into light that
Ballarpur Industries Limited (BILT) is an India based company. Another mill surveyed
for performance appraisal is Tamil Nadu Newsprint and Papers Limited (TNPL) which
was formed by the government of Tamil Nadu in April 1979 as a public limited company
under the provisions of the Companies‟ Act 1956 and it is one of the most
environmentally compliant paper mills in the world. The third company chosen for
performance appraisal is the Andhra Pradesh Paper Mills Limited (APPM). It is an
integrated pulp and paper manufactures in India. The fourth sample unit has been the
West Coast Paper Mills Limited. This company has also made tremendous contribution
in the national exchequer in a number of ways.

It has been observed through analysis that Indian paper mills are currently in the
midst of a transformation with major capital expenditure underway and improving
operating efficiencies is the major concern of the all players. All players are committing
a large amount of investment, focusing on:–Improving the operational efficiencies
through rightsizing pulping capacities–Brown-field capacity expansions– Backward
integration into captive power–Adherence to pollution norms by chemical recovery. The
paper industry would witness an investment worth INR100.0 billion capital expenditure
in next 2-3 years.

83
J K Paper Limited (JKPL)

Company Profile

JKPL was established in year 2002 by the Agarwal family based in Bilaspur and
is currently engaged in the manufacturing of poly woven sacks and fabrics. Prior to that,
since 1988, the promoters were running a rice mill under the name of Abro Foods Pvt
Ltd. During 1999-2000, the promoters exited the rice business and started trading in
mining tools and subsequently the name of the company was changed to J. K. Sons
Engineers Private Limited. In October 2008, the company exited the trading business and
entered the business of manufacturing poly woven sacks/bags with an installed capacity
of 4000 MTPA.

Fundamental and Valuation Grades

ICRA Online has assigned the Fundamental Grade „4‟ and the Valuation Grade
„C‟ to JK Paper Limited (JKPL). The Fundamental Grade „4‟ assigned to JKPL implies
that the company has “Strong fundamentals”. The Valuation Grade „C‟ assigned to JKPL
implies that the company is “fairly valued on a relative basis” (as on the date of the
grading assigned).

Strong Market Position among its key product segments:

JKPL is led by Shri Hari Shankar Singhania and is a part of JK Group. With six
decade long operating history, JKPL is the market leader in the copier paper segment and
amongst top few paper manufacturers within the country. JKPL also leads the market
position in its other product segments, i.e. coated paper and virgin fibre boards
segments. With strong market position and significant backward integration into
pulp and power capacities, JKPL is amongst the efficient paper producers in the
country.

Favourable growth Prospects for its key products:

The grade factors in JKPL‟s strong product portfolio, which has favourable
growth prospects over the medium to long term when compared to the overall paper

84
industry. While volume growth for JKPL is expected to be sluggish in near term due to
capacity constraints, the company has initiated capacity expansion programme to address
these concerns.

Proposed expansion to improve efficiencies, market position and earnings:

JKPL is currently in the midst of expanding its capacities by almost 50%, the benefits for
which will be available from FY 14 onwards.

GROSS PROFIT, OPERATING PROFIT AND NET PROFIT OF JKPL LIMITED

JKPL has made a notable progress in gross profit, operating profit, and net profit.
Data noted in the following Table 3.10 illustrate the gross profit, operating profit, and net
profit of Ballarpur industries limited during 2004-2013:

Table No 3.10
Showing Gross Profit, Operating Profit and Net Profit of JKPL Limited
[Period: 2004-2013]
GROSS PROFIT OPERATING PROFIT NET PROFIT
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 41.67 Nil 1322.18 Nil 41.22 Nil
2005-06 104.59 151.00 1348.93 2.02 38.53 -6.53
2006-07 107.71 2.98 1565.43 16.05 35.52 -7.81
2007-08 130.02 20.71 1652.84 5.58 45.91 29.25
2008-09 131.35 1.02 1349.26 -18.37 34.71 -24.40
2009-10 134.53 2.42 2274.95 68.61 38.01 9.51
2010-11 215.80 60.41 2243.01 -1.40 91.03 139.49
2011-12 229.88 6.52 2497.60 11.35 106.42 16.91
2012-13 172.25 -25.07 2872.99 15.03 49.32 -53.66
2013-14 211.25 22.64 3233.37 12.54 37.70 -23.56
Source: Annual Reports, JK Paper Mills Limited for different years

85
 The above table 3.10 depicts that gross profit, operating profit and net profit was
41.67cr, 1322.18cr, 41.22cr respectively in 2004. The same reached to 211.25cr,
3233.37cr, and 37.70 in 2013 respectively. Growth in Gross profit over the previous year
showing a increasing trend this may be due to the selling price of the goods has gone up
without corresponding increase in the cost good sold or may be due to the fact that the
cost of goods sold has gone down without corresponding decrease in the selling price of
the goods.

But during in 2012 growth decline to 25.07 per cent, this may be due to decrease
in the selling price of the goods sold without corresponding decrease in the cost of goods
sold or stock at the end may have been undervalued or the opening stock may be have
been overvalued.

The operating profit ratio shows the operational efficiency of the business. Lower
operating ratio shows higher operating profit and vice versa. Operating Profit Ratio
indicates the earning capacity of the concern on the basis of its business operations and
not from earning from the other sources. It shows whether the business is able to stand in
the market or not. In 2004 operating net profit was 1322.18cr. It was showing an
increasing trend but was 1349.26cr in 2008 and growth rate decrease to 18.37 percent
over the previous year. But after that it shows a tremendous growth.

In 2004 the net profit was 41.22 cr. It declined to 38.53 cr in 2002 and the rate
decrease to 24.40 percent in the year 2008. But in the year 2010 and 2011 it shows a good
growth rate. But after 2011 net profit falls down and was 37.70 in 2013.

SHAREHOLDERS’ FUND AND BORROWINGS OF JK PAPER MILLS

LIMITED

Shareholders‟ fund and borrowings of JKPL increased tremendously. Data noted

in the following Table 3.11 depicts shareholders‟ fund and borrowings JKPL Limited
during 2004-13

86
 Table No. 3.11
Showing Shareholders’ Fund and Borrowings of JK Paper Mills Limited
[Period: 2004-2013]
Share holders fund Borrowings
Absolute Increase / Absolute Increase /
figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over
Previous Previous
year in year in
percent) percent)
2004-05 341.47 Nil 510.67 Nil
2005-06 239.26 -29.93 620.24 21.46
2006-07 404 68.85 557.78 -10.07
2007-08 369.97 -8.42 702.8 26.00
2008-09 383.4 3.63 721.33 2.64
2009-10 401.75 4.79 695.88 -3.53
2010-11 470.07 17.01 548.21 -21.22
2011-12 584.18 24.28 538.35 -1.80
2012-13 812.81 39.14 1093.55 103.13
2013-14 840.65 3.43 1730.26 58.22
Source: Annual Reports, JK Paper Mills Limited for different years

Table 3.11 portrays that shareholders fund in the year 2004 was 341.47cr and
reached to 840.65cr in the year 2013. There was slight decrease in the shareholders fund
239.26cr in the year 2005 but again it increase to 404cr in 2006. In the year 2007 there is
a decrease in the growth rate of 8.42 percent. From that there is a increase in growth rate
from 383.4 to 840.65 in the year 2008 to 2013 respectively In 2004 borrowing was
510.67cr and it declined to 557.78cr in 2006. In between there were slight increase and
decrease in the borrowings. In the year 2013 there was an increase of 58.22 percent
which is 1730.26cr.

NET FIXED ASSETS, CURRENT ASSETS AND CURRENT LIABILITIES OF

TAMIL NADU NEWSPRINT AND PAPERS LIMITED

JKPL Limited made a marvelous increase in net fixed assets, current assets and as
well in current liabilities. Data noted in the following Table 3.12 depicts net fixed assets,
current assets and current liabilities JKPL Limited during 2004-13:

87
 Table No. 3.12
Showing Net Fixed Assets, Current Assets and Current Liabilities of JK Paper Mills
Limited [Period: 2004-2013]

CURRENT
NET FIXED ASSET S CURRENT ASSETS
LIABILITIES
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 610.76 Nil 161.16 Nil 79.78 Nil
2005-06 604.92 -0.96 169.23 5.01 94.47 18.41
2006-07 685.85 13.38 213.94 26.42 103.04 9.07
2007-08 696.04 1.49 209.06 -2.28 142.53 38.32
2008-09 949.46 36.41 277 32.50 143.75 0.86
2009-10 928.73 -2.18 262.6 -5.20 126.16 -12.24
2010-11 879.58 -5.29 249.32 -5.06 158.54 25.67
2011-12 844.45 -3.99 288.16 15.58 198.74 25.36
2012-13 807.06 -4.43 519.53 80.29 287.18 44.50
2013-14 771.03 -4.46 478.28 -7.94 322.85 12.42
Source: Annual Reports, JK Paper Mills Limited for different years

Table 3.12 depicts that the net fixed assets, current assets and current liabilities
was 610.76cr, 161.16cr and 79.78cr respectively in 2004. Growth rate of net fixed assets
went on increasing over previous year and was 36.41 per cent in 2008 except in 2005.
After 2009 the growth rate slightly decreases and in the year 2013 it was 771.03cr.
Current assets of JKPL in the year 2004 was 161.16cr and after that it went on decreasing
and increasing trend and reached to 478.28cr in 2013. Current liabilities were 79.78cr in
2004, the growth rate went on increasing over previous year and was 12.42 per cent in
2013 except in 2009 which was -12.24 per cent.

Grading Positives

The grading positive includes:

a) Strong market position, arising from its reputed brands, in its key product
segments which also have favourable growth prospects

88
b) Significant backward integration, leading to high operating efficiencies and
c) Expected improvement in cost-structure and economies of scale from the ongoing
capacity expansion cum modernisation programme.

Grading Sensitivities

Key sensitivities to our estimates include: a) Ability of JKPL to complete the

ongoing project within budgeted time and costs; b) Temporary supply side
pressures may constrain the ability of the company to pass the input costs by way of
regular price hikes in near term; c) Ability to secure adequate quantities of wood
at competitive prices which would be essential for the envisaged improvement in its
cost-structure; d) Any prolonged cyclical downturn or reduction in import duties can
impact our earnings estimates, especially in the coated paper and board segments.

Steady demand growth prospects for the paper industry

The Indian paper industry has witnessed a Compounded Annual Growth Rate
(CAGR) of around 9.4% over last four years which has been driven by a steady growth in
per capita consumption by around 7.5% over this period. Given the low domestic per
capita consumption at around 9.1 Kg, as against world average of around 58 Kg and other
developing country like China of around 55 Kg; the demand growth potential is huge
over medium to long term. This is expected to be supported by increasing literacy levels,
thrust on education sector and strong economic growth leading to increase in
consumption from industrial and consumer goods.

Leading market position with efficient operations

Expansion to keep the company amongst top players in the industry: With a
production of 2.6 lakh Metric Ton (MT) in FY 11, JKPL stood fifth in terms of paper
production as against third position during FY 10. While JKPL has lost in terms of
market position following the capacity expansions by other major industry players, it has
initiated its capacity expansion cum modernisation plan, upon completion of which JKPL
is expected to regain its leadership position in the industry. Based on our estimates, JKPL
is expected to be the third largest paper manufacturer in the country by the end of FY 13

89
(based on capacity). JKPL‟s operating efficiencies are reflected in its consistently high
capacity utilisation which has remained over 100% during past several years.

Future Outlook

At a current market price of Rs55, the stock is available at P/E of 4.7x of its
FY10E earnings, and 4.4x of its FY11E earnings. We recommend BUY with a target
price of Rs71.5, since company‟s future shows potential.

Particulars (In Rs crore) FY09 FY10E* FY11E*

Total Revenue 1226.96 1127.09 1329.97
Expenditure 1036.01 871.70 1008.11
PBIDT 190.95 255.38 321.85
Interest 67.18 46.32 82.5
Depreciation 69.69 72.92 91.2
PBT 54.08 136.15 148.15
Tax 16.07 46.18 50.36
PAT 38.01 89.96 97.8
EPS 4.86 11.51 12.51
CEPS 13.78 20.84 24.18
OPM (%) 16% 22.65% 24.20%
NPM (%) 3% 7.98% 7.35%
Source: Company Reports, Fairwealth Research Estimate
*Estimated

BUSINESS SEGMENT:

Business Communication Papers:

It covers the high-end office paper segment. 'JK Copier' continues to maintain its
leadership position in this segment while 'Easy Copier' and 'Sparkle' are also performing
well. Barring the previous year, compounded growth in this segment in the four years
before has been more than 20%.

UnCoated Paper & Board:

In this segment, Maplitho Paper has shown superior performance. Other products
such as JK Evervite and JK MICR Cheque Paper have also performed well.

90
Coated Paper & Board:

There is a wide range of products in this segment like JK Cote and JK Eco Cote.
CAGR is more than 15% in this segment.

Packaging Board:

This segment caters to wide range of high-end coated packaging boards like JK
Tuffcote, JK Ultima, JK Purefil base, JK TuffPac, JK IV Board etc. This segment is
expanding at a CAGR of more than 15%.

Stationery:

Company is also exploring the stationery segment by offering products like JK

Vista, JK Excel and various other products.

Outsourcing:

Company is also increasingly exploring opportunities for outsourcing by

importing products and selling them under their JK brand name.

Capacity Expansion Plans:

Company is planning to invest Rs. 1500 crores in the next two years to expand its
annual capacity to 400,000 tonnes. They will set up a 200,000-tonne pulp mill and
enhance captive power production to 55 mega watt from 35 mega watt.

PEER COMPARISON

Particulars (In JK BILT” TN News West Coast AP Paper

Crores) Paper Print Paper
Market Cap 429.8 2178 692.1 483.17 307.85
Sales 1074.84 3092.09 965.85 608.76 578.71
PBIDT 226.97 686.9 290.24 119.97 138.91
Net Profit 79.01 142.4 74.62 79.38 54
EPS 10.11 2.37 10.78 12.65 16.49
P/E 5.49 15.18 9.27 6.08 5.7
EV/PBIDT 4.54 8.56 4.73 10.53 5.81
P/BV 1.06 4.69 1.04 0.96 0.67
Dividend (%) 17.50% 25% 45% 100% 5%

91
Consolidated Sales Data

The company is a market leader in some segments in the Indian paper industry.
The company has been able to maintain operating margin of over 22% in the 9 months of
FY10, near to its competitors. With the emphasis on backward integration the operating
margins will improve further. Company has a lower P/E ratio of 5.49 as compared to its
peers. So, it is at attractive valuation at these levels.

Quarterly analysis

Net Sales 265.33 267.61 ‐0.85 285.35 ‐7.02

Add: Other Income 0.23 0.06 283.33 0.22 4.55
Total Income 265.56 267.67 ‐0.79 285.57 ‐7.01
Less: Expenditure 204.81 226.24 ‐9.47 222.18 ‐7.82
PBIDT 60.75 41.43 46.63 63.39 ‐4.16
Less: Interest 12.04 18.26 ‐34.06 10.34 16.44
PBDT 48.71 23.17 110.23 53.05 ‐8.18
Less: Depreciation 17.94 17.38 3.22 17.59 1.99
PBT 30.77 5.79 431.43 35.46 ‐13.23
Less: Tax 10.42 2.22 369.37 12.04 ‐13.46
PAT 20.35 3.57 470.03 23.42 ‐13.11
EPS 2.60 0.46 470.03 3.00 ‐13.11
CEPS 20.54 17.84 15.18 20.59 ‐0.21
OPM% 23 15 47.89 22 3.07
NPM% 8 1 474.93 8 ‐6.55

During Q3FY10, JK Paper has reported a decline in sales by 7% on Y-O-Y basis

to Rs 265 cr as against the same quarter in the previous year. But the operating profit of
the company increased tremendously by 8% to Rs.60.75 in the Q3FY10 crore as against
Rs.41.43 crore in the Q3FY10 of previous year. Increment is as a result of savings in cost
of power, fuel and oil and increase in efficiency. The net profit of the company jumped
from Rs.3.57 crore in the Q3FY09 of previous year to Rs.20.35 crore in the Q3FY10 of
current year, surge of 470%.

However on Q-o-Q basis, company‟s operating margin increased by 1% to 23%

and net profit margin remained stagnant at 8%

92
FINANCIALS OF THE COMPANY PAST FIVE YEARS PERFORMANCE

2007-08** (9
Particulars (In crores) 2008-09 2006-07 2005-06 2004-05
months)

Net Sales 1200.53 682.95 848.73 756.63 653.51

Stock adjustment 6.97 4.09 -0.87 5.74 -0.57
Other income 19.46 17.19 12.83 9.45 11.45
Total Income 1226.96 704.23 860.69 771.82 664.39
Less: Expenditure 1036.01 582.38 698.97 631.39 541.23
PBIDT 190.95 121.85 161.72 140.43 123.16
Less: Interest 67.18 41.07 39.56 39.23 45.21
PBDT 123.77 80.78 122.16 101.2 77.95
Less: Depreciation 69.69 45.86 50.47 46.87 39.35
PBT 54.08 34.92 71.69 54.33 38.6
Less: Tax 16.07 0.21 25.78 18.81 0.07
Net Profit 38.01 34.71 45.91 35.52 38.53
Less: Extraordinary items 0.04 0 0.17 -0.35 0.45
Adj. Net Profit 37.97 34.71 45.74 35.87 38.08
Equity Share capital 78.15 78.15 78.15 78.15 55.07
EPS 4.86 4.44 5.85 4.59 6.91
Cash EPS 13.78 10.31 12.31 10.59 13.95
Operating Profit Margins % 16 18 19 19 19
Net Profit margins % 3 5 5 5 6
Source capaitaline Database
Figures of 9 months due to change in accounting year from July-June to April-March

Net Sales of the company during the year 2008-09 were Rs.1200.5 crore. Net
profit (PAT) was affected due to higher interest and depreciation charges for the full
year on Company's new packaging board plant and substantially higher tax
provisions.

The increased depreciation and rise in the interest cost of the company has led
to a subdued bottom-line performance of the company for the last few years.
However, company is consistently reducing its operating cost through capacity
expansions by installing efficient technologies.

93
 Particulars (In crores) 2008-09 2007-08** 2006-07 2005-06 2004-05
Net Worth 408.86 392.58 379.21 415.37 254.38
Loans- Term 563.41 583.54 595.49 496.13 570.93
Loans - Working Capital 132.45 137.78 107.29 61.64 49.31
Deferred Tax Liability 109.94 94.28 95.2 68.35 50.41
Total 1214.66 1208.18 1177.19 1041.49 925.03
Net Block Including WIP 942.67 965.69 961.6 794.79 698.6
Investments 2.75 2.75 5.57 13.61 19.53
Net Working Capital 267.77 237.06 207.63 229.08 199.69
Deferred Revenue Expenses 1.47 2.68 2.39 4.01 7.21
Total 1214.66 1208.18 1177.19 1041.49 925.03

Source: Capitaline Database

FUNDAMENTALS:

Company will set up new pulp mill of 2,00,000 tons per annum and paper
capacity of 150,000 tons per annum at its Orissa unit. The project is likely to be
commissioned in the second half of 2012. This would give substantial returns in the long
term and add to its profitability.

During the year, company's new Packaging Board plant completed its first full
year of operation. They have achieved an overall 106% capacity utilization. It ranks
second in the packaging board segment with over 24% market share.

Company is reducing dependence on raw material by harvesting its own tree

plants. Procurement of woods from farm forestry sources now accounts for over 65%
of the company's total raw materials consumption. Thus, sustained supply of quality
raw material at affordable prices is a key determinant which improves its operating
efficiency and achieving cost competitiveness in the industry.

They are also working on several energy and water conservation initiatives
with the active cooperation and help from International Finance Corporation. They
have established Lime Kilns in both the manufacturing units that will be fully
operational soon. These initiatives would substantially reduce the company‟s operating
expenses.

94
 JKPL has good export footprint for high value branded products in the Middle
East, South East Asia, SAARC and various African countries.

On account of lower raw material costs and lesser interest burden this year, net
profits are expected to go up by 136% in FY10 over [Link] revenues for FY10
are expected to be more or less same as last year, its proposed expansion plans would
help JKPL grow revenues from FY11 onwards.

Key Rating Drivers

The ratings are also constrained by JKPL‟s lower-than-expected profitability in

FY13 (EBITDA margins – FY13: 8.7%, FY12: 11.4%), primarily due to a sharp increase
in raw material prices. This, along with the ongoing capex, resulted in net leverage (net
debt/EBITDA) increasing to 13.7x in FY13 (FY12: 6.4x). The ratings are also
constrained by continued high level of competition in the paper industry, with significant
capacity additions in the recent past, reflected in the inability to pass higher raw material
costs to end consumers.

However, the ratings draw comfort from JKPL‟s established position in high
value added segments of the domestic paper and paper board industry, high capacity
utilisation and pan-India distribution network. The ratings are also supported by the
likelihood of an improvement in profitability through efficiencies in operations and
technology from the upcoming paper unit.

The ratings also draw comfort from the company‟s efforts to reduce dependence
on domestic raw material sources by importing wood chips and its initiatives to explore
opportunities to import pulp.

Ind-Ra is of the view that scaling up of revenue (FY13: INR14.5bn, FY12:

INR13.3bn) and an improvement in margins, post commissioning of the upcoming unit,
would be key for deleveraging. The current capex is likely to strengthen JKPL‟s business
profile over the medium-to-long term, and help it regain its declining market share in the
copier segment due to its capacity constraints over FY07-FY12.

95
WEST COAST PAPER MILLS LTD (WCPML)

The West Coast Paper Mills Ltd. was established in 1995 by Shree Digvijay
Cement Company Limited, Sikka (Gujarat). The paper manufacturing factory is located
on the banks of River Kali in the heart of a dense forest in Dandeli (Karnataka). The
factory was established at the said location with support from the Government of
Maharashtra for assurance of ample supply of water from the river, abundant supply of
forest-based raw materials, power supply from the State Grid, and transportation link
through roadways and railways.

The products manufactured by The West Coast Paper Mills Ltd. include paper for
printing and writing, coated duplex boards for packaging requirements, and premium
products such as parchment, legend copier, SS Maplitho Classic, and many more.
Industries in India such as printing and publishing, wedding cards, stationary, cheque
leaves, soap wrapper, and various others benefit from using our paper products.

At West Coast Paper Mills (WCPM), an ISO - 14000:2004 certified company, we

believe in absolute quality products and constant innovation in the area of products and
processes. In May 1959, we began the commercial production of 18,000 TPA (tonnes per
annum) of printing, writing, and packaging paper. Since then, we have continuously
increased the production capacity for the plant from 18,000 TPA to 69,000 TPA as per
government license till 1991. In July 1997, the Paper Industry was de-licensed. With the
current capacity to produce 3,20,000 TPA, WCPM ensures good service to all its
customers and follows a pro-active approach to deal with paper manufacturing.

A part from paper the company is also into manufacture and sale of optical fibre
cable and Jelly filled telephone cables. Further the company owns six windmills with an
installed capacity of 1.75MV in Tamil Nadu and majority of this wind power is supplied
to Tamil Nadu electricity board.

Bamboo is the chief raw material. In august 1955, the government of Mumbai
granted concessions for extraction of bamboo for a period of 30 years on a royalty of Rs
3.12 per tonne of paper and pulp going out of the factory subject to revision after 5 years

96
and subsequently after every 10 years.

Initially, the plant was designed to manufacture 18000 TPA of writing, printing
and packaging paper, the commercial production of which commenced in May 1959. The
company obtained license from the Government of India in December 1954 for
enhancing the production capacity to 45000 TPA by installing balancing equipment‟s,
which has completed in 1972. Subsequently, the company had implemented crash
programme in 1974 to further increase the production capacity to 60000 TPA against the
licence issued in July 1972. The licenced capacity was re-endorsed for 60,000 TPA in
November 1991 on the basis of actual production. The paper industry has been de-
licenced from July 1997 onwards.

The West Coast Paper Mills Ltd. took over Andhra Pradesh Paper Mill Ltd.
(APPM) in 1964 and acquired Rama Newsprint & Papers Ltd (RNPL) in 2004. APPM
was owned by the Government of Andhra Pradesh. WCPM has helped the company to
increase its paper production capacity from 21,000 MT (metric tons) to 2, 41,000 MT per
annum. We also hold 36.32% share in Gujarat based RNPL.

The performance of the company during the last 5 years period was as under:
Year Ended Net Sales Gross Profit
Production (Paper&Board) [in M.T.]
31st March with Excise Duty [Rs. in Crores]
2006 1,76,221 606.84 69.22
2007 1,78,871 619.44 95.52
2008 1,69,891 653.52 114.38
2009 1,73,682 662.71 120.36
2010 1,73,638 650.50 105.24

The West Coast Paper Mills has posted a marginal 1.28 per cent rise in net profit
after tax at Rs 23.20 crore for the quarter ended September 2009, against Rs 22.90 crore
in the same period last financial year. The net sales of the company in the quarter under
consideration was nearly Rs 169 crore, against about Rs 162 crore in the corresponding
period last year, registering a rise of about 4 per cent.

This comprehensive SWOT profile of West Coast Paper Mills Ltd provides you
an in-depth strategic analysis of the company's businesses and operations. The profile has

97
been compiled to bring to you a clear and an unbiased view of the company's key
strengths and weaknesses and the potential opportunities and threats. The profile helps
you formulate strategies that augment your business by enabling you to understand your
partners, customers and competitors better.

This company report forms part of our 'Profile on Demand' service, covering over
50,000 of the world's leading companies. Once purchased, our highly qualified team of
company analysts will comprehensively research and author a full financial and strategic
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The profile contains critical company information including,

Business description

A detailed description of the company's operations and business divisions.

Corporate strategy

Analyst's summarization of the company's business strategy.

SWOT Analysis

A detailed analysis of the company's strengths, weakness, opportunities and

threats.

Company history

Progression of key events associated with the company. Major products and
services – A list of major products, services and brands of the company.

Key employees

A list of the key executives of the company.

Executive biographies

A brief summary of the executives' employment history.

Key operational heads

A list of personnel heading key departments/functions.

98
Important locations and subsidiaries

A list and contact details of key locations and subsidiaries of the company.
Detailed financial ratios for the past five years

The latest financial ratios derived from the annual financial statements published
by the company with 5 years history.

Company Description

The West Coast Paper Mills Limited engages in the manufacture and sale of
paper, paper boards, and duplex boards in India. Its product portfolio includes writing,
printing, business stationery, specialty, and packaging paper products. The company also
provides MICR cheque, parchment, azure laid, and alkali-resistant papers, as well as a
range of colored papers and boards; and single and double coated boards that are used in
pharmaceutical, apparel, match box, cigarette, liquid packaging, food packaging, and
various other packaging applications. In addition, it is involved in the production and sale
of telecommunication cables. Further, the company engages in the generation of wind
power with a capacity of 1.75 MW wind mill located in Tamilnadu, India. It also exports
its products to Africa, the Asia Pacific, the Middle-East, and Europe. The West Coast
Paper Mills Limited was founded in 1955 and is based in Bengaluru, India

Achievements and Awards

An increase in turnover from Rs 358.09cr in 2001-02 to a record Rs 396.63cr-An

increase in the production of paper and paperboard from 99648 MT in 2001-02 to a
record 104756 MT and a rise in the output of Duplex Board from 20645 MT in 2001-02
to record 46721 MT, An increase in the sales of paper and paperboard from 102706 MT
in 2001-02 to 108257 MT and of Duplex Board from 22235 MT in 2001-02 to 43789
MT, An increase in the EBIDTA from Rs 63.42cr in 2001-02 to a record Rs 69.97 cr; an
increase in the EBIDTA margin from 17.35 per cent in 2001-02 to 17.47 per cent. An
increase in net profit from Rs 31.86cr in 2001-02 to Rs 36.04cr and the earning per share
from Rs 35.64 in 2001-02 to Rs 40.31.

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2001

Installation of a new 500 TPD chemical recovery boiler for the generation of
steam and power

2000

Installation of the falling film evaporators, a modern evaporation technique for

steam recovery,

1999

Commissioning of one 4.0 MW multi-fuel-based power generating set with a

complete self-sufficiency in power requirement.

1998

Commissioning of a 250 TPD bleach plant to make High Bright paper.

Commissioning of one 3.8 MW capacity multi-fuel-based power generating set of power
self-sufficiency.

1996

Installation and commissioning of a 75 TPD Duplex Board machine, helping

develop a new product Light Weight Coated Duplex Board through the use of eco-
friendly recycled fibres. Commissioning of nine DG Sets of one MW each to augment
captive power generation.
GROSS PROFIT, OPERATING PROFIT AND NET PROFIT OF WEST COAST
PAPER MILLS LIMITED

Growth rate of gross profit, operating profit and net sales of WCPML shows a
fluctuating trend during the study period. Data noted in the following Table 3.13 depicts
the gross profit, operating net profit and net profit of WCPML during 2004-2013:

The table 3.13 depicts that gross profit, operating profit and net profit was
262.03cr, 928.06cr, 435.73cr respectively in 2004. The same reached to 894.03cr,
2808.23cr, and 1263.04 in 2013 respectively. Growth in Gross profit over the previous
year showing a increasing trend this may be due to the selling price of the goods has gone

100
up without corresponding increase in the cost good sold or may be due to the fact that the
cost of goods sold has gone down without corresponding decrease in the selling price of
the goods.
Table No 3.13
Showing Gross Profit, Operating Profit and Net Profit of WCPML Limited
[Period: 2004-2013]
GROSS PROFIT OPERATING NET PROFIT
PROFIT
Absolute Increase / Absolute Increase Absolute Increase
figures Decrease figures / figures /
Year (in Cr) (Over (in Cr) Decrease (in Cr) Decrease
Previous (Over (Over
year in Previous Previous
percent) year in year in
percent) percent)
2004-05 262.03 Nil 928.06 Nil 435.73 Nil
2005-06 351.47 34.13 1027.70 10.74 494.32 13.45
2006-07 426.10 21.23 1136.29 10.57 529.69 7.16
2007-08 531.61 24.76 1134.72 -0.14 515.46 -2.69
2008-09 590.75 11.12 1193.82 5.21 540.36 4.83
2009-10 730.70 23.69 1215.68 1.83 553.76 2.48

2010-11 708.22 -3.08 1182.10 -2.76 531.77 -3.97

2011-12 435.99 -38.44 1997.45 68.97 882.12 65.88
2012-13 558.44 28.09 2529.60 26.64 1159.05 31.39
2013-14 894.06 60.10 2808.23 11.01 1263.04 8.97
Source: Annual Reports, West Coast Paper Mills Limited for different years

But during in 2010 growth decline to 3.08 per cent and keeps on declining and
was 38.44 per cent in 2012 this may be due to decrease in the selling price of the goods
sold without corresponding decrease in the cost of goods sold or stock at the end may
have been undervalued or the opening stock may be have been overvalued. In the year
2013 it shows a positive growth rate of 60.10 percent
The operating profit ratio shows the operational efficiency of the business. Lower
operating ratio shows higher operating profit and vice versa. Operating Profit Ratio

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indicates the earning capacity of the concern on the basis of its business operations and
not from earning from the other sources. It shows whether the business is able to stand in
the market or not. In 2004 operating net profit was 928.06cr. It was showing an
increasing trend but was 1134.72cr in 2007 and also in the year 2010 the growth rate
decrease at 2.76 percent. But after that it shows a tremendous growth. In 2004 the net
profit was 435.73 cr. It declined to 515.46cr in 2007 and the rate decreases for the year
2010. Every year growth rate increases over previous year.

SHAREHOLDERS’ FUND AND BORROWINGS OF WEST COAST PAPER

MILLS LIMITED

Shareholders‟ fund of West Coast Paper Mills Ltd is continuously increasing and
borrowings showing a fluctuating trend. Data noted in the following Table 3.14 represent
the shareholders‟ fund and borrowings of West Coast Paper Mills Ltd during 2004 to
2013:
Table No. 3.14
Showing Shareholders’ Fund and Borrowings of West Coast Paper Mills Limited
[Period: 2004-2013]
Share holders fund Borrowings
Absolute Increase / Absolute Increase /
figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over
Previous Previous
year in year in
percent) percent)
2004-05 149.3 Nil 175.85 Nil
2005-06 164.67 10.29 229.21 30.34
2006-07 181.41 10.17 165.85 -27.64
2007-08 232.18 27.99 168.54 1.62
2008-09 401.97 73.13 406.17 140.99
2009-10 567.79 41.25 1173.65 188.96
2010-11 601.34 5.91 1234.71 5.20
2011-12 670.48 11.50 1212.46 -1.80
2012-13 569.53 -15.06 1263.66 4.22
2013-14 597.76 4.96 1080.62 -14.48
Source: Annual Reports, West Coast Paper Mills Limited for different years

Table 3.14 exhibits an interesting trend in both shareholders‟ fund and borrowing
of WCPML. In 2004 shareholders fund of WCPML was 149.3cr. The fund significantly

102
increases and reached to 670.48cr in 2011. In the year 2012 the growth rate decreases to
15.06 per cent over the previous year. Finally the growth rate went to 4.96 percent which
is 597.76cr in the year 2013. Borrowings of WCPML in the year 2004 was 175.85cr and
229.21cr in 2005. There is a decrease in borrowings at 27.64 percent in the year 2006.
After 2007 borrowings of TNPL increases continuously and went up to 1234.71cr in the
year 2010 with the increase in growth rate over the previous year and it declined to
1080.62cr in 2013.

NET FIXED ASSETS, CURRENT ASSETS AND CURRENT LIABILITIES OF

WEST COAST PAPER MILLS LIMITED

WCPML Limited made a marvelous increase in net fixed assets, current assets
and as well in current liabilities. Data noted in the following Table 3.15 depicts net fixed
assets, current assets and current liabilities WCPML during 2004-13:

Table No. 3.15

Showing Net Fixed Assets, Current Assets and Current Liabilities of West Coast
Paper Mills Limited [Period: 2004-2013]
CURRENT
NET FIXED ASSET S CURRENT ASSETS
LIABILITIES
Absolute Increase / Absolute Increase / Absolute Increase /
figures Decrease figures Decrease figures Decrease
Year (in Cr) (Over (in Cr) (Over (in Cr) (Over
Previous Previous Previous
year in year in year in
percent) percent) percent)
2004-05 268.04 Nil 141.72 Nil 111.02 Nil
2005-06 256.13 -4.44 183.98 29.82 82.35 -25.82
2006-07 239.18 -6.62 165.15 -10.23 90.87 10.35
2007-08 209.89 -12.25 223.08 35.08 91.19 0.35
2008-09 221.28 5.43 341.94 53.28 117.25 28.58
2009-10 206.84 -6.53 471.51 37.89 190.15 62.17
2010-11 805.63 289.49 329.89 -30.04 186.12 -2.12
2011-12 1528.32 89.70 349.9 6.07 175.8 -5.54
2012-13 1456.78 -4.68 400.26 14.39 219.07 24.61
2013-14 1317.66 -9.55 388.85 -2.85 203.86 -6.94
Source: Annual Reports, West Coast Paper Mills Limited for different years

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 Table 3.15 shows an increasing trend in net fixed assets, current assets and current
liabilities. In 2004 the net fixed assets was 268.04cr and went up to 1317.66cr in 2013
with the decrease in growth rate of 9.55 percent. Current assets in 2004 were 141.72cr. It
continuously shows an increasing trend except in the year 2006, 2010 and 2013. Current
liabilities were 111.02cr in 2004 and went up to 203.86cr in 2013 with the decrease in
growth rate of 6.94 per cent over previous year. In between the study period there was
increase and decrease in the net fixed asset, current asset and current liabilities.

104