TAMIL NADU NEWSPRINT AND PAPERS LIMITED
ANNUAL REPORT 2003-2004
SPEECH BY THIRU RAMESHRAM MISHRA, I.A.S., CHAIRMAN AND MANAGING DIRECTOR
(I/C) AT THE TWENTY FOURTH ANNUAL GENERAL MEETING OF SHARE HOLDERS OF THE
COMPANY ON FRIDAY, THE 20TH AUGUST 2004 AT 10.00 AM AT MUSIC ACADEMY, 168,
T.T.K. ROAD, CHENNAI - 600 014.
LADIES AND GENTLEMEN,
I have great pleasure in welcoming you all to this, the 24th Annual General
Meeting of the company. The Directors' report and the Audited Accounts for
the year ended 31st March 2004 have been with you for sometime and with
your permission, I shall take them as read.
I am happy to inform you that during the year under review your company has
produced 1,70,634 MT of Printing and Writing paper and 11,581 MT of
Newsprint. The production was up by 14,337 MT compared to the previous
year. During the year, your Company had faced many hurdles right from
stoppage of production for 37 machine days due to water shortage, the steep
hike in coal prices, since December 2003. Despite these major shortcomings,
your company has posted a healthy Pre Tax profit of Rs.68.58 crores after
providing Rs.60.15 crores for Depreciation, Rs. 16.25 crores for Interest
and Financial charges and Rs.3.31 crores for Prior Period from 12:88 in
2002-2003 to 6:94 in 20032004 has enabled your company to contain the
adverse effects to a certain extent.
Your company has been increasing the inhouse hard wood pulp production
every year for the past five years. The hardwood pulp production during the
year was 35,852 MT against 33,533 MT in 2002-2003 and 28,937 MT in 2001-
2002. During the year, your company has augmented the windfarm capacity
from 18 MW to 21.75 MW and exported 2.83 crore units of wind power and 9.81
crore units of surplus captive power to the State Grid.
The restructuring of the debt profile by swapping the multi-currency loan
of USD 45 million availed from the World Bank with FCNR(B) Loan availed
from a consortium of banks led by State Bank of India during December 2002,
has enabled your company to overcome the adverse effect of USD weakening
against Yen and Euro during the year. But for the timely swapping of the
multicurrency loan, the loan liability at the end of the year would have
been higher by USD million equivalent to Rs.23.57 crores.
Further, the swapping has facilitated your company to reduce the interest
burden during the year by USD 2.75 Million equivalent to Rs.11.90 crores.
Your company has reduced the water consumption from 105 KL per MT of paper
production in 2002-2003 to 83 KL per MT in 2003-2004. The Bio-Methanation
Plant commissioned during the year has generated 41.45 lakh cubic meter
methane gas. The bio gas was used as a fuel in the limekiln replacing the
usage of 2165 kilo litres of furnace oil, saving Rs.2.48 crores.
The profit during the first quarter of the current year was lower compared
to the previous year due to cost escalation. The adverse impact on account
of the increase in coal price reflected in steam, power and bagasse cost
and the shortfall in bagasse during the first quarter of the current year
compared to the previous year due to drought in the Cauvery river fed areas
could have been managed with higher production. However, the production
during the first quarter of the current year was also low at 36,955 MT on
account of shut down of paper machines for 57 machine days due to water
shortage during April - May 2004 and consequent loss of production of
18,530 MT The water supply has improved since July 2004. Consequently, the
production during current and subsequent quarters will be higher.
CURRENT STATUS OF PAPER INDUSTRY
After a period of two years, the imported newsprint price improved from USD
420 per MT at the beginning of the year to USD 510 per MT at the end of the
year. The price has further improved to USD 540 per MT for April-June 2004
quarter and to USD 570 per MT for July-September 2004 quarter. Even with
the above price increases and levying of customs duty on imported newsprint
at the lowest slab of 5%, the domestic newsprint production is not
economical. Your company has therefore reduced the newsprint production
further during the. current year. The demand for Printing and Writing Paper
during the year in the domestic market was stable. The market absorbed the
price increase of Rs.1000/- per MT effected from 1.4.2004. The prices of
Printing and Writing paper in the international market softened from July
2003 till February 2004 and started firming up again from larch 2004. The
Government of India has reduced the DEPB benefit for Newsprint and Printing
and Writing paper export from 8%a to 4% from 9.02.2004. This has affected
the export realisation to a certain extent. During the year, your company
has exported 30,098 MT of Printing and Writing Paper. CAPEXIL, an
organisation sponsored by the Ministry of Commerce, Government of India has
bestowed on your company the best exporter award for the fifth consecutive
year. With the uptrend in the export prices for printing and writing paper,
your company is confident of increasing the exports to around 36,000 MT
Per capita consumption of paper in India at 5.6 kgs is far below the global
average of 60 kgs and Asian average of 45 kgs. An average growth rate of 6%
in demand for the next 5 years is anticipated. The current year is expected
to be a better year for the global paper industry in terms of demand and
price. In line with the general trend, your company has increased the
export prices since March 2004 and domestic price by Rs.500/- per MT with
effect from May 2004. A price increase of Rs.600/- per MT is contemplated
from 1.9.2004. The market for surface sized papers and copier papers are
expected to grow by 10-15%. Your company has increased the copier
production from 15,262 MT in 20022003 to 19,311 MT in 2003-2004 and set the
target of 30,000 MT for 2004-2005. The newsprint price in the global market
is expected to reach USD 600 per MT by the end of the current year.
M/s. AMEC, Canada, who were engaged as consultants for preparing the
Detailed Project Report (DPR) and Detailed Market Survey (DMS) for the
expansion plan have submitted the report. After taking into account the
feasibility and economics of various alternative your companys has drawn up
a development plan which focuses on modernisation and expansion of the
pulp mill with facilities that are environmentally compliant, operationally
efficient and cost effective, minimal water consumption, selfsufficiency in
energy besides enhancing the paper production capacity by 15,000 MT per
Your company has proposed to increase the wind farm capacity by 6 MW during
the current year.
During the year, your company has planted pulpwood seedling in 204 acres of
wasteland allotted by the Government of Tamil Nadu. The planting in another
552 acres of wasteland will be undertaken during the current year. In
addition, your company proposes to implement a farm forestry scheme in
2,500 acres of uncultivated farm lands by supplying seedling / clones at
the subsidised rates, arranging loan assistance from banks and assurance to
lift the pulpwood at the price prevailing at the time of harvest with
minimum guaranteed price fixed upfront.
Your company is totally committed to care for the Environment, uphold Human
Safety and Health. Your company has evolved policies on Environment,
Energy, Safety and Quality. Effluents from the plant totally conform to the
standards of the Tamil Nadu Pollution Control Board. The recommendations of
Justice K.A Swami Committee for improving the effluent system has been
Your company has taken various steps to comply with all relevant
legislative requirements, by reducing the pollution load in terms of liquid
discharge, air emission and land conservation and by saving energy and
preserving natural resources. Installation of the Bio-methanation Plant for
generation of methane gas from bagasse wash water and use it as a
substitute for furnace oil in the lime ,kiln is a step in the right
direction on environment care.
Pith and the Bio-sludge generated from the effluent treatment plant are
judiciously used as fuel in power boilers. Around 39,974 MT of Pith and
68,133 MT of Bio-sludge were used as fuel in power boilers during the year.
Your company has taken several steps for promoting the overall development
of its neighbourhood. The treated effluent water which conforms to the
standards prescribed by TNPCB is utilised for irrigating around 1,500 acres
of land adjacent to the factory.
Your company has identified itself with the local community by taking part
in water supply schemes, road developments, organising medical camps etc..
Your company has contributed liberally to the social events, cultural
programmes and sports activities in the neighbourhood.
I take this opportunity to place on record my sincere thanks to the Central
and State Governments, IDBI and the Banks for their valuable support and
I also thank my colleagues on the Board for their valuable advice and
I take this opportunity to place on record my sincere appreciation for the
efforts put in by all the officers, staff and workers of the company.
I also wish to thank all the shareholders and other investors for their
I thank you all for having attended this Annual General Meeting, sparing
your precious time.
Source : 24th AGM
Date : 20th August, 2004