Paper Products Impresses
However, the company was marginally short of its projections. Actual sales fell short by 1.7 per cent and PAT was lower by 12.2 per cent.
Sales growth has also seen a decline compared with last year's 50 per cent. The company attributes the decline in sales
value, despite good growth in terms of volume, to lower price realisation.
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The lower prices was due to a decline in raw material costs which was passed on to the customers.
Operating profit margins improved considerably from 14.11 per cent to 17.76 per cent. However, interest burden increased substantially by 153 per cent to Rs 9.31 crore. This was due to the huge borrowings to fund the on-going expansion programmes.
The first phase of the expansion at Silvassa commenced operations in June 1996 due to which depreciation increased 61 per cent to Rs 6.65 crore. The second phase, supposed to be commissioned in April, has been delayed and is now expected to go on stream in the second quarter of the current fiscal.
The 2,400-tonne per annum Rs 28-crore project will be mainly funded through debt and internal accruals.
The commissioning of the Silvassa plant (phase I) cushioned the company's bottomline through tax exemptions. Tax liability declined by 15.14 per cent to Rs 2.97 crore including dividend tax.
The Paper Products scrip has always moved in a narrow range. The current market price of
Rs 140 discounts earnings around 10 times.