It gives me a great pleasure to present before you the performance of your Company for2017-18. Over the years we have established ourselves as a strong player in the paperindustry and are now steadily moving ahead with conviction and vigour. So what definesthis optimism?
Positive macro trends
India's domestic paper industry has been growing steadily. Packaging and Kraft paperconstitute an important share amongst the different segments of the industry. 90% of thedemand for packaging and Kraft paper is met by the corrugated box manufacturers. Hencehigher the demand for such packaging boxes more would be the requirement of Kraft paper.Consider this fact on how the retail industry has witnessed a massive turnaround and isinclined towards e-commerce from the traditional brick and mortar stores.
Today's time-constraint consumer is preferring the comforts of online shopping. Thisautomatically necessitates the delivery of product from one end to the other which issupposed to be packed carefully to avoid damages. Besides this there is large demand fromthe FMCG segment followed by pharmaceuticals garments textile and footwear amongothers. As such the overall demand for the Kraft paper is expected to outpace theindustry with a CAGR of 89% (packing paper) and 6.6% (Kraft paper) for 2016-19.
We are strategically located in the Northern region of India which gives us access toboth good quality raw materials as well as our end users. The market size of thecorrugated boxes is estimated to the tune of ' 18000 Crores with Northern Indiacomprising 35% of this demand. Being strategically placed in this region provesadvantageous to us as several consumer durable manufacturers are located around ourfacility. Besides this of all the Kraft paper production units in North India only 5%have large capacities to cater to the voluminous demand. Going ahead the demand for Kraftpaper is expected to outpace the supply owing to strong growth outlook of the end-userindustries that I mentioned above.
We are perfectly positioned to seize this opportunity through our value-added productssuch as multi-layered Kraft paper with High Tear Factor (TF) and High Burst Factor (BF)which help us gain better realisations and utilisation of our large capacities. We haveadopted an asset-light strategy to move faster and build a sustainable business model aswe expanded our presence and capacity at Kashipur (Uttarakhand) plant. This will help usoperate at optimum level and reduce cost through economies of scale.
We are equipped with Sweden-based triple-wired machines which help us produce highquality paper using low cost waste paper. We are further upgrading our technologyinfrastructure to improve our output through de-bottlenecking our pulp mill process. Thiswould lead to stronger efficiencies and better productivity.
As a growth-driven organisation we constantly explore organic as well as inorganicexpansion opportunities. We have entered into non-binding MoUs with the Government ofMaharashtra and the Government of Uttar Pradesh to set up Kraft paper plants. We also haveplans for brownfield expansions with a capacity of 50000 mtpa at our Moradabad (UP)facility.
Future proofing and self-sustainability
The paper industry is expected to consolidate and only players with eco-friendlytechnology will survive. We have already taken steps in that direction through ourzero-liquid discharge plant and full-fledged waste water treatment facility. For paperprocessing we have our captive water requirement in place for paper processing. We havealso set up 12 MV co-generation captive power plant for Kraft paper processing. It alsoserves as an input for the production of Mild Steel Ingots our second business division.With positive economy and industry sentiments we expect a strong and sustainable growthgoing forward.
I am grateful to our shareholders customers our Board of Directors and our employeesfor their faith in us. It gives us immense strength and confidence to focus to pursue thisjourney in a bigger and better way going ahead.
Mr. Ishwar Chand Agarwal