MIRA
INFORM REPORT
|
Report Date : |
23.09.2008 |
IDENTIFICATION
DETAILS
|
Name : |
J K PAPER LIMITED |
|
|
|
|
Formerly known as: |
CENTRAL PULP MILLS |
|
|
|
|
Registered Office : |
P O Central Pulp Mills, Fort Songadh, Surat District – 394
660, Gujarat |
|
|
|
|
Country : |
India |
|
|
|
|
Financials (as on) : |
31.03.2008 |
|
|
|
|
Date of Incorporation : |
04.07.1960 |
|
|
|
|
Com. Reg. No.: |
018099 |
|
|
|
|
CIN No.: [Company
Identification No.] |
L21010GJ1960PLC018099 |
|
|
|
|
TAN No.: [Tax
Deduction & Collection Account No.] |
BBNJ00250F |
|
|
|
|
PAN No.: [Permanent
Account No.] |
AAACT6305N |
|
|
|
|
Legal Form : |
Public Limited Liability Company. The Company’s shares are listed on the Stock Exchanges. |
|
|
|
|
Line of Business : |
Manufacturer and Marketer of Paper. |
RATING &
COMMENTS
|
MIRA’s Rating : |
A |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
|
|
|
|
|
Maximum Credit Limit : |
USD 16000000 |
|
|
|
|
Status : |
Good |
|
|
|
|
Payment Behaviour : |
Regular |
|
|
|
|
Litigation : |
Clear |
|
|
|
|
Comments : |
Subject is an old and well established company engaged in manufacturing and marketing of Paper and Board and Pulp. It is one of the reputed companies in the J. K. Group of Industries. The company’s products are popular in the market. The company’s overall performance and progress have been good. Trade relations are reported as fair. Payments are correct and as per commitments. It can be considered good for business dealings at usual trade terms and conditions. |
LOCATIONS
|
Registered Office : |
P O Central Pulp Mills, Fort Songadh, Surat District – 394 660, Gujarat, India. |
||||||||||
|
Tel. No.: |
91-2624-222078/9/221228/222080 |
||||||||||
|
Fax No.: |
91-2624-221138 |
||||||||||
|
E-Mail : |
|||||||||||
|
Website : |
|||||||||||
|
|
|
||||||||||
|
Administrative Office : |
Nehru House, 4, Bahadur Shah Zafar Marg, New Delhi – 110 002, India |
||||||||||
|
E-Mail: |
For Marketing enquiries: marketing@jkmail.com
For Export enquiries: vikasgupta@jkmail.com
For Purchase enquiries: amitdatta@jkmail.com
|
||||||||||
|
|
|
||||||||||
|
Factory : |
Subject Mills Phone:
91-2624-220228 / 220278 / 220279 / 220280 |
||||||||||
|
|
|
||||||||||
|
Branches : |
NORTH ZONE
|
||||||||||
|
|
|
||||||||||
|
Other Branches: |
|
DIRECTORS
|
Name : |
Mr. Hari Shankar Singhania |
|
Designation : |
Chairman |
|
|
|
|
Name : |
Mr. Harsh Pati Singhania |
|
Designation : |
Managing Director |
|
|
|
|
Name : |
Mr. Shailendra Swarup |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Dhirendra Kumar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Gajanan Khaitan |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. P. K. Kaul |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Om Prakash Goyal |
|
Designation : |
Whole-time Director |
|
|
|
|
Name : |
Mr. S. K. Pajhak |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Jitendra Balkrishnan |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Arun Bharat Ram |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. R V Kanoria |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Udayan Bose |
|
Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. S. C. Gupta |
|
Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
As on 31st March 2008
|
Category
of Shareholder |
No. of Shares |
Percentage of
Holding |
|
|
|
|
|
Shareholding
of Promoter and Promoter Group2 |
|
|
|
Indian |
|
|
|
Individuals/ Hindu Undivided
Family |
13910 |
0.02 |
|
Bodies Corporate |
37275640 |
40.31 |
|
|
|
|
|
Institutions |
|
|
|
Mutual Funds/ UTI |
10688958 |
11.56 |
|
Financial Institutions / Banks |
2746442 |
2.97 |
|
Central Government/ State
Government(s) |
2580 |
0.00 |
|
Insurance Companies |
2313763 |
2.50 |
|
Foreign Institutional
Investors |
8214846 |
8.89 |
|
|
|
|
|
Non-institutions |
|
|
|
Bodies Corporate |
10919117 |
11.81 |
|
Individuals |
|
|
|
Individuals -i. Individual
shareholders holding nominal share capital up to Rs 0.100 Million |
14677536 |
15.87 |
|
ii. Individual shareholders
holding nominal share capital in
excess of Rs. 0.100 Million |
4442648 |
4.80 |
|
Clearing member |
804 |
0.00 |
|
Market Maker |
162051 |
018 |
|
Non Resident Indians (Repat) |
563236 |
0.61 |
|
Non Resident Indians ( Non
Repat) |
64860 |
0.07 |
|
Overseas Bodies Corporate |
365820 |
0.39 |
|
|
|
|
|
Shares held
by Custodians and against
which Depository Receipts have been issued |
573740 |
-- |
|
|
|
|
|
GRAND TOTAL
(A)+(B)+(C) |
93045680 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Manufacturer and Marketer of Paper. |
||||
|
|
|
||||
|
Products : |
|
||||
|
|
|
||||
|
Brand Names : |
v J K Copier v J K Easy Copier v J K Laser, Finesse v J K Evernite, J K Excel Bond v J K Bond v J K SHB Maplitho v CPM Parchment v J K MICR |
||||
|
|
|
||||
|
Exports : |
|
||||
|
Countries : |
|
||||
|
|
|
||||
|
Terms : |
|
||||
|
Selling : |
D/A or D/P |
||||
|
|
|
||||
|
Purchasing : |
D/A or D/P |
PRODUCTION STATUS- as on 31.03.2008
|
Particulars |
|
Unit |
Installed
Capacity |
Actual
Production |
|
Paper and Board including Pulp for sale |
|
Tonnes |
240000 # |
148554 * |
# Increased w.e.f. 21st October 2007
* Includes 2231 MT (Previous year 2922 MT) consumed
during trail run of Packaging Board.
Note:
(a) Production, Sales and Closing Stock
excludes 9017 MT (Previous Year 7097 MT ) , 9051 MT ( Previous year 6466 MT )
(Value Rs. 368.147 Millions Previous year Rs. 198.476 Millions) and Nil (Previous
Year 631 MT) (value Rs. Nil, Previous Year Rs. 21.275 Millions) respectively on
account of trial run of Packaging Board.
GENERAL
INFORMATION
|
No. of Employees : |
600 |
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
Bankers : |
|
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||
|
Facilities : |
Notes:
A (i)
Term Loans of Rs. 84.092
Millions (Fls – Rs. 11.597 Millions,
Banks Rs. 72.495 Millions) are secured by first pari passu mortgage/ charge created
on the immovable and movable assets of Unit JK Paper Mills (JKPM) and
immovable and movable assets acquired after 01.04.2000 of Unit Central Pulp
Mills (CPM) of the company. (ii)
Term Loans of Rs. 4373.395
Millions (FIs – Rs. 598.233 Millions, Banks Rs. 3775.162 Millions) are
secured by means of first pari passu mortgage/ charge created on the fixed
assets of the company save and except specific assets exclusively charged in
favour of specified lenders as mentioned in clause B and C B Term Loan of Rs.
240.799 Millions from Banks and Direct discounting facility ( equipment) of
Rs. 100.048 Millions from Financial Institution are secured by an exclusive
charge by way of hypothecation on the specified assets of the company. C Term Loan of Rs.
37.500 Millions fro Bank is secured by exclusive charge on the specific and
movable assets of Unit CPM existing before 01.04.2000. the said term loan is
further secured by first pari passu charge on immovable assets of Unit CPM
existing before 01.04.2000 D Working Capital
Loans are secured by hypothecation of Stores, Raw Materials, Finished goods,
Stock in process and book debts. The same are further secured by a second
charge on the immovable assets of the company. E Installments of
Term Loans repayable within one year – Rs. 846.703 Millions F Term Loans From
Financial Institutions and Banks include Rs. 1494.024 Millions foreign
currency loans.
Note: The bondholders have an option to convert FCCB’s into equity shares at
an intial conversion price of Rs. 95 per equity share at a fixed rate of
exchange of Rs.44.69=US $ I, from April 4, 2006 to March 17, 2011. The bonds
are redeemable on March 30, 2011 at 130.441 percent of the principal amount,
unless previously converted or purchased and cancelled. Premium on
redemption, if any, will be provided in the year of redemption. |
|
|
|
|
Banking
Relations : |
Satisfactory |
|
|
|
|
Auditors : |
|
|
Name : |
S.S. Kothari and Company Chartered Accountants |
|
Address: |
New Delhi, India |
|
|
|
|
Name : |
Lodha and Company Chartered Accountants |
|
|
|
|
Membership: |
JK Organization |
|
|
|
|
Group Companies: |
v JK Tyre v JK Seeds v Fenner India v JK Dairy v JK Sugar v CliniRx Research v PSRi |
|
|
|
|
Associates/Subsidiaries : |
· J. K. Industries Limited · HJ Corp Limited · JK Lakshmi Cement Limited |
CAPITAL STRUCTURE
Authorized Capital:
|
No. of Shares |
Type |
Value |
Amount |
|
200000000 |
Equity Shares |
Rs. 10/- each |
Rs. 2000.000 Millions |
|
30000000 |
Redeemable Preferences Share |
Rs. 100/-
each |
Rs. 3000.000 millions |
|
|
Total |
|
Rs.
5000.000 millions |
Issued, Subscribed & Paid-up Capital:
|
No. of Shares |
Type |
Value |
Amount |
|
78149939 |
Equity Shares |
Rs. 10/- each |
Rs. 781.499 millions |
|
81000 |
10% Cumulative Redeemable Preferences Shares |
Rs. 100/- each |
Rs. 8.100 millions |
|
|
Total |
|
Rs. 789.599 Millions |
Notes:
a)
Includes 7700000 Equity Shares of Rs. 10/- each
allotted on conversion of Global Depository Recipts (GDR’s)
b)
These share were allotted as fully paid- up
pursuant to the scheme sanctioned by the hon’ble high court of Orissa and
Gujarat
Series C and D of
Rs. 4.000 Millions and Rs., 2.100 Millions are redeemable on 30th
day of June, 2008 and 2009 respectively alongwith premium on redemption of Rs.
54.500 Millions with each series. E,F and G of Rs. 1.100 Million, Rs. 0.600
Million and Rs. 0.300 Million are redeemable on 30th Day of June,
2010, 2011 and 2012 respectively alongwith premium on redemption of Rs. 54.600
Millions with each series.
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2008 ( 9 Months) |
30.06.2007 (12 Months) |
30.06.2006 (12 Months) |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
789.600 |
789.600 |
1317.200 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
3136.2000 |
3002.500 |
2836.500 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
3925.800 |
3792.100 |
4153.700 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
5835.4000 |
5954.900 |
4961.300 |
|
|
2] Unsecured Loans |
1377.800 |
1072.900 |
616.400 |
|
|
TOTAL BORROWING |
7213.200 |
7027.800 |
5577.700 |
|
|
DEFERRED TAX LIABILITIES |
942.800 |
952.000 |
683.500 |
|
|
|
|
|
|
|
|
TOTAL |
12081.800 |
11771.900 |
10414.900 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
9494.600 |
6960.300 |
6858.500 |
|
|
Capital work-in-progress |
162.300 |
2655.700 |
1089.400 |
|
|
|
|
|
|
|
|
INVESTMENT |
27.500 |
55.700 |
136.100 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
1203.400
|
964.100 |
896.000
|
|
|
Sundry Debtors |
1108.700
|
1072.400 |
1169.900
|
|
|
Cash & Bank Balances |
35.000
|
48.300 |
67.500
|
|
|
Other Current Assets |
417.000
|
0.000 |
0.000
|
|
|
Loans & Advances |
1317.400
|
1768.000 |
1421.000
|
|
Total
Current Assets |
4081.500
|
3852.800 |
3554.400 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Current Liabilities |
1710.900
|
1776.500 |
1263.60
|
|
|
Provisions |
0.000
|
0.000 |
0.000
|
|
Total
Current Liabilities |
1710.900
|
1776.500 |
1263.600 |
|
|
Net Current Assets |
2370.600
|
2076.3000 |
2290.800 |
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
26.800 |
23.900 |
40.100 |
|
|
|
|
|
|
|
|
TOTAL |
12081.800 |
11771.900 |
10414.900 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 ( 9 Months) |
30.06.2007 (12 Months) |
30.06.2006 (12 Months) |
|
|
|
|
|
|
|
|
Sales Turnover |
6067.200 |
7564.100 |
6637.500 |
|
|
Other Income |
78.700 |
43.100 |
71.100 |
|
|
Total Income |
6145.900 |
7607.200 |
6708.600 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
349.200 |
716.900 |
543.300 |
|
|
Provision for Taxation |
2.100 |
257.800 |
188.100 |
|
|
Profit/(Loss) After Tax |
347.100 |
459.100 |
355.200 |
|
|
|
|
|
|
|
|
Export Value |
129.102 |
0.000 |
341.981 |
|
|
|
|
|
|
|
|
Imports : |
|
|
|
|
|
|
Raw Materials |
385.368 |
62.286 |
4.388 |
|
|
Stores & Spares |
82.283 |
133.000 |
85.629 |
|
|
Capital Goods |
74.232 |
701.553 |
380.472 |
|
|
Others |
0.000 |
0.000 |
0.000 |
|
Total Imports |
541.883 |
896.839 |
470.489 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Employees |
710.000 |
898.800 |
804.700 |
|
|
Materials and Manufacturing Expenses |
4107.600 |
4850.900 |
4259.800 |
|
|
Increase or decrease in stocks |
[40.900] |
8.700 |
0.000 |
|
|
Other Expenses |
208.500 |
270.000 |
294.100 |
|
|
Depreciation |
458.600 |
504.700 |
0.000 |
|
|
Interest and Financial Charges |
352.900 |
357.200 |
0.000 |
|
Total Expenditure |
1020.000 |
6890.300 |
5358.600 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
|
30.06.2008 (1st
Quarter) |
|
Sales Turnover |
|
|
2631.300 |
|
Other Income |
|
|
0.500 |
|
Total Income |
|
|
2631.800 |
|
Total Expenditure |
|
|
2128.600 |
|
Operating Profit |
|
|
503.200 |
|
Interest |
|
|
182.800 |
|
Gross Profit |
|
|
320.400 |
|
Depreciation |
|
|
171.400 |
|
Tax |
|
|
2.500 |
|
Reported PAT |
|
|
102.900 |
KEY RATIOS
|
PARTICULARS |
|
31.03.2008 ( 9 Months) |
30.06.2007 (12 Months) |
30.06.2006 (12 Months) |
|
Debt-Equity Ratio |
|
1.88
|
1.62 |
1.80 |
|
Long Term Debt-Equity Ratio |
|
1.49
|
1.43 |
1.66 |
|
Current Ratio |
|
0.96
|
1.20 |
1.41 |
|
TURNOVER RATIOS |
|
|
|
|
|
Fixed Assets |
|
0.82
|
0.90 |
0.89 |
|
Inventory |
|
9.21
|
10.01 |
10.38 |
|
Debtors |
|
9.15
|
8.31 |
8.08 |
|
Interest Cover Ratio |
|
1.85
|
2.81 |
2.38 |
|
Operating Profit Margin |
(%) |
16.26
|
17.37 |
16.67 |
|
Profit Before Interest And Tax Margin |
(%) |
10.13
|
11.95 |
11.11 |
|
Cash Profit Margin |
(%) |
10.76
|
10.35 |
9.78 |
|
Adjusted Net Profit Margin |
(%) |
4.64
|
4.93 |
4.22 |
|
Return On Capital Employed |
(%) |
9.29
|
10.94 |
10.27 |
|
Return On Net Worth |
(%) |
12.21
|
12.60 |
12.19 |
LOCAL AGENCY
FURTHER INFORMATION
History:
Subject (formerly Central Pulp Mills), a member of HS
Singhania group is originally promoted by Parkhe Group of Pune to manufacture
Paper and Paper products. The company which fell sick and referred to BIFR was
taken over by JK Corp Limited a member of the HS Singhania Group in 1992. JK
Corp. holds 44.76% in the equity of this company as on Nov 6, 2003.
The company has turnaround in a short period of time with the rehabilitation
package by HS Singhania Group companies JK Corp Limited and JK Industries.
JK Paper today has an combined installed capacity of 150000 tpa with two
integrated Paper Mills at JK Paper Mills, Orissa(Inst. Cap 100000 tpa) and
Central Pulp Mills, Gujarat(Inst. Cap 50000 tpa). The company's paper mills are
operating with an health average capacity utilisation of 115%. Further the
company has purchased a Pulp Drying Plant from Finland in 2001 to increase the
output and realization of market pulp. The plant was commissioned during the
year itself.
J K Paper has also been consistenly exporting its products to markets such as
Sri Lanka,Bangladesh and several West Asian Countries. The company is the first
paper mill in India to have been accredited with ISO 14001.
The company enjoys the locational advantage inrespect of sourcing raw material.
It sources all its bamboo requirements with in the 200 kms radius of the plant.
Further for long term continuous source of rawmaterial the company is running
social forestry and farm forestry programmes in 11 districts of Orissa and 3
districts of Andhra Pradesh,covering a total area of over 20,000 Ha. In 2001-02
it has disturbuted 27 million saplings, covering over 5200 hectares under
plantations in Orissa,AP,Gujarat.
J K Paper has been a pioneer in every field related to the manufacture and
marketing of paper. It has the distinction of being the Largest manufacturer of
branded copier paper in India.; First to introduce surface sized maplitho in
India.; First to introduce high quality bond paper 'Finesse' in A4 size
consumer friendly retail packs of 100 sheets. ; First to introduce laser paper
in India. The company has introduced two new value added products i.e. MICR
Cheque Paper and Cup-stock Board and both of them have well received in the
market.
The company which is well known for its success in creating brand in paper
industry with having top two paper brand(i.e JK Copier[contributing 140 cr. to
co's turnover in FY02-03] and JK Easy Copier) in its basket the company has
initiated outsourcing of paper products in india. This outsourcing activity was
kickstarted in the end of 2001-02 and gathered momentum last year. The company
has outsources JK Cote(positioned in upper art paper segment) from an
international producer who produces as per the specification of JK Paper. The
company outsouces donestically JK Eco Cote(caters to price consious Chrome
paper segment) and 'JK Eco Print'.
The Scheme of Compromise and/or Arrangement between JK Corp Limited and The
Central Pulp Mills Limited was approved and sanctioned by the High Court of
Orissa and High Court of Gujarat and become effective on 5th November,2001.
Subsequent to this the name of the company was changed to JK Paper Limited from
The Central Pulp Mills Limited
Latest Development:JK Paper is planning to upgrade over half of its paper manufacturing
capacity to manufacture coated paper. The upgradation(Conversion from
non-coated to coated) to cost around Rs.600.000 Millions.
PERFORMANCE
REVIEW:
The Company continued to perform well. Sales at Rs. 7493.100 Millions grew by
7.1% over the previous year (considering current period figures on annualised
basis). During the period, Operating Profit (PBIDT) was Rs.1160.700 Millions
and Net Profit stood at Rs 347.100 Millions.
Production and Sales during the period were 1,48,554 tonnes (1,98,072 tonnes
annualised) and 1,59,613 tonnes (2,12,817 tonnes annualised) respectively. On
annualised basis these are the highest ever tonnages, reflecting strong market
demand for the Company's products.
Profit would have been better, but for the sharp reduction in price of
coated paper, substantial increase in energy costs (coal and power) and
increase in imported pulp price during the year. Interest and depreciation
charges also increased significantly due to the startup of the Company's new
Packaging Board Plant.
Overall demand for Paper and Boards in India is expected to increase
faster than hitherto as a result of robust economic growth, rising literacy and
accelerated industrial development. Growth in the coming years is expected to
be of the order of 8-8.5%, compared to 6.5% p.a. until recently.
In Printing and Writing papers, demand is being led by factors like increasing
thrust on education, growing requirements from Printers and Publishers
emanating from accelerated industrialisation, increased economic activity and
enhanced advertising and communication needs. Paper based packaging will get a
boost with increasing rural demand for FMCG and consumer durables, growing
penetration of modern and urban retailing and India's rising exports. In
addition, there is a progressive shift in consumption towards branded and value
added paper and board products.
In the Company's target product segments of cutsize and coated grades, demand
continues to be buoyant, growing in double digits. Demand for other value added
products like JK Excel Bond, MICR Cheque papers etc. also remains strong.
In the branded cut size segment, JK Paper achieved a volume growth of 21% over
the last year. This was possible because of aggressive marketing efforts both
in the value for money products as also in 'JK Copier', the Company's flagship
brand. In coated papers, the selling prices came down sharply as a result of
increasing imports at lower prices due to rupee appreciation. However the
Company's marketing strategy and the brand strength of 'JK Cote' helped stave
off this challenge. The outlook for coated paper in the current fiscal year
appears much better owing to increasing global paper prices, a depreciating
rupee and rapidly growing domestic demand.
JK Paper's entry into the high-end packaging board market will enable it to
exploit opportunities in fast growing segments of the economy like
pharmaceuticals, FMCG products, ready to eat food segments etc. and growing
exports of cartons to the West.
Significant increase in pulp prices along with energy and transport costs,
continue to cause concern. The Company's strategy in respect of its product mix
and distribution has helped in partially containing the adverse impact on
profitability.
Limited availability and high cost of domestic raw material remains an
impediment in the growth of the industry. The Company's philosophy of
aggressively pursuing its social forestry programme helped in ensuring better
availability of raw material, besides providing employment and income
opportunities to the farming community. Cumulatively, over 65,000 Ha. have been
covered under this programme.
EXPANSION - PACKAGING
BOARDS:
JK Paper's Rs. 3000.000 Millions state of the art Multi Layer Packaging Board
plant at its Unit CIPM, commenced commercial production w.e.f. 21st Oct. 2007.
The customer response to the product quality has been extremely encouraging.
The market for high end boards is growing at a rapid pace of around 15% per
annum and the Company hopes to take full benefit of this growing demand. The
Company has augmented its power generation capacity by installing a 12 MW
Turbine to fully meet the energy requirements of the board plant.
HEALTH, SAFETY,
ENVIRONMENT AND SOCIAL CAUSES:
JK Paper takes pride in providing a healthy and safe operating environment for
its employees. Constant effort is made to conserve natural resources. The
Company deploys eco-friendly technology to provide a safe and clean environment
in its neighbourhood. Both CPM and JKPM units are ISO 14001 and OHSAS 18001
certified
Rotary Lime Kiln with Producer Gas Plant is under installation at both Units -
CPM and JKPM and will become operational during the current financial year.
This will substantially reduce purchase of lime besides bringing down the lime
sludge disposal by about 75%.
Fly ash is being used increasingly in brick manufacturing.
The Company continued its efforts to increase literacy levels in its
neighbouring areas and its Social and Farm Forestry programme has provided
improved livelihood opportunities to thousands of farmers.
As a part of Social Care Activity, the company regularly organizes free camps
for health checkup and treatment of a variety of ailments in nearby villages.
There is a periodic programme of Mobile Health Care, which has helped reduce
the incidence of disease in remote places like forest areas.
JK Paper has undertaken the upgradation of Ukai ITI, which is located near Unit
CPM in Gujarat, under Public-Private Partnership (PPP). For this, the Company,
as an Industrial Partner, has entered into a Memorandum of Understanding (MOU)
with Central and State Governments and formed an IMC (Institute Management
Committee) to implement the Institute Development Plan.
AWARDS AND RECOGNITION:
Unit JKPM was awarded the prestigious 'National Energy Management Award 2007'
and 'National award for Excellence in Water Management 2007' by Confederation
of Indian Industry (CII) and 'National Energy Conservation Award 2007' by
Bureau of Energy, Govt. of India. The company is taking various energy
conservation measures and putting relentless efforts as a responsible corporate
entity to conserve energy.
Energy
Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:
A) Energy Conservation:
The Company has taken the following measures for energy
conservation:
1. Company has installed highly energy efficient high pressure Coal Fired
Boiler and 12 MW TG Set along with Board Plant, to meet 100% captive power at
reasonably competitive rate as compared to grid power.
2. Improvement in captive power generation at JKPM by improving power
factor.
3. Auto cut off of lighting.
4. Replacement of over sized and old inefficient motors with energy
efficient motors of appropriate size.
B) Research and Development:
During the year, the Company has spent approx Rs 7.300 Millions on
Research and Development.
Extensive application research through various plant trials were taken
for product development and quality improvement.
1. ASA sizing implemented on all the machines, resulting in improved
productivity of paper machines. It has also resulted in remarkable improvement
in paper brightness.
2. Introduced a new variety of copier paper Digital printing
applications.
3. A new variant of Coated Art Board was developed for playing card
segment.
C) Technology Absorption,
Adaptation and Innovation
1.
Circulating Fluidised Bed Combustion (CFBC) technology was adopted for the new High
Pressure Boiler with 12 MW TG Set. It has been commissioned successfully in
November 2007.
2. Rotary Lime Kiln is being installed with a suitable technology to use
Producer Gas as fuel to reprocess lime sludge and eliminate disposal of solid
waste.
MANAGEMENT
DISCUSSION AND ANALYSIS:
OVERVIEW:
Long
term trends for GDP indicate that the global economy is expected to grow by
around 3.5% p.a. This factors a higher growth in the emerging economies,
compared to the developed countries a phenomenon observed for the past few
years. Clearly, there is a perceptible shift in the global economic power, with
Asia emerging as a major economic block.
The short term outlook of the global economy is, however, clouded by a
diminishing economic momentum, following two straight years of robust GDP
growth. The recent global slow-down can be largely attributed to the economic
difficulties being experienced in the USA. The decline observed in the US
growth rates in 2007/08 is expected to envelope the Japanese and European
economies also; albeit to a lesser extent. The current global scenario is also
marked by unprecedented surge in crude oil prices, accompanied by a spurt in
commodity prices together with tight credit conditions. All this may lead to an
adverse impact on global demand growth for paper and boards. The year 2007, in
particular, witnessed a modest demand growth of 2.3% in the world paper and
board markets, which is much below the historical trend of 3.5% p.a. seen in
the last 5 years. This trend is likely to continue in the year 2008 also. In
respect of particular product segments and geographical regions, the global
demand outlook may vary significantly. Grades like coated woodfree papers,
cut-size copier papers and packaging boards are likely to witness higher growth
rates. Also emerging markets are likely to see good growth while mature markets
are likely to be subdued.
Arising out of the foregoing the global pulp and paper industry is witness to a
distinct shift in Consumption and Production towards the emerging markets of
Asia in particular. As it is, Asia accounts for 36% of global paper consumption
of approximately 382 Million Tonnes, while Europe and North America have a
share of only 32% and 28% respectively seen in the following graphic.
MARKET PULP:
The global pulp market, has witnessed a sharp spurt of 40% to 50% in prices,
compared to the last year. This phenomenon can be primarily attributed to shut
down of some Pulp Mills/cut-back of production in pulp mills across North America
and Western Europe as well as fastor demand growth for pulp from new paper
capacities.
Consequently, the non-integrated paper mills have been severely impacted
through shrinkage in margins from supply-demand mis-match in a number of end
product categories like coated woodfree paper. As a result of this, the impact
of pulp cost escalation could not be passed on fully. This has led to a longer
time lag between pulp and paper price increases in several other categories.
This tight pulp supply is expected to persist and current pulp price levels are
likely to remain firm throughout 2008.
As far as India is concerned, being one of the bigger paper producers in the
world; it is likely to increasingly depend on imported market pulp in the long
term future. In other words, the future investments in the Indian Paper
Industry of global scale plants are expected to be based on imported market
pulp, given the domestic shortage of raw material.
Indian Pulp and Paper Industry
vis-a-vis Global industry:
India is emerging as a major paper and board producing country in the world,
thanks to a demand upswing driven by strong domestic GDP growth, which has
crossed the US$ trillion mark and is already the 4th largest economy in PPP
terms as per International Monetary Fund. Projections suggest that India will
catch up with the GDP of USA by 2050. The demographic advantage - India's young
population and its rising aspirations will mean greater purchasing power in the
years to come.
As economic growth stabilises at 8-9% p.a, demand for Paper and Board will
increase faster than hitherto. India is poised to emerge as among the top 10
global consumers in the next few years. More importantly, demand growth will be
led by new avenues for paper use, thanks to penetration of modern technologies
and communication network. Increase in rural connectivity and greater
sensitivity for environment is driving rapid demand growth for convenient and
attractive paper based packaging. With India emerging as an outsourcing
destination for world class publications, demand for high quality printing and
writing paper should increase significantly.
MARKET FOR COMPANY'S
PRODUCTS:
With its entry into the packaging board market, JK is the only leading paper
company in India participating in ail the fast growing and value added product
segments. JK Paper has played a pioneering role in converting paper from a
commodity to a branded product. Apart from setting up new benchmarks for
product quality, the Company's focus has been on providing solutions to diverse
customers, big or small.
* Business Communication
Papers
The company serves the needs of customers in both the high-end office paper
segments as well as those who seek 'value for money' products. JK Easy Copier'
and 'Sparkle' - as the VFM brands have built up a robust customer franchise.
This strategy enables the company to participate in all the price points, while
maintaining its price leadership in the market place.
With consistent thrust on branded cut-size products, the Company has been able
to step up its volumes by 21% compared to last year. 'JK Copier' and 'JK Easy
Copier' volumes grew by 16% and 31% respectively. The Company's premium bond
paper - 'JK Excel Bond' also grew by a healthy 18% over the last year.
Recognising the popularity of the established 'JK Bond', the Company introduced
the same in a new cut-size international looking pack.
* Printing and Writing
Papers:
To retain its customers for printing and writing papers the company made
aggressive efforts to outsource Maplitho grades (with JK's quality standards)
and market these in own brand name. This strategy ensures that in the face of
its strategic focus shift towards higher value-added products, it continues to
serve the growing needs of its customers for high bright Maplitho papers.
* Coated Paper:
For most of the year the domestic prices of coated papers came under
pressure because of the strengthening of the Rupee and consequent lower cost of
imports. The marketing strategy supported by 'JK Cote' brand equity established
in the last couple of years helped face off the challenges from imports. From
early 2008 the international prices of coated papers have been on the upswing
due to increasing pulp prices, thus leading to upward price revisions in the
domestic market.
* Outsourcing:
To
augment its own production capacity and meet the customer's growing demand for
its products, the company has strengthened its outsourcing efforts from both
domestic and international markets. While doing so, care is taken to ensure
conformance to JK quality standards. With a broader product basket JK Paper has
emerged as a leading one-stop-shop Paper Company in India.
NEW
PRODUCTS:
India's young population combined with rapid economic growth is driving per
capita income and rising aspirations. With Increasing rural connectivity and
rising demand for FMCG and OTC products, consumption for paperboard based
packaging is growing at faster pace. The company identified this opportunity
and entered the market for value-added packaging boards during the year. In a
very short time the company succeeded in establishing its international quality
standards and make significant inroads in the market place. The ready customer
acceptance by leading FMCG and Pharma producers has made JK the preferred
choice among carton board users within a very short span of time. Within months
of market launch, JK TuffCote, JK Ultima and JK PureFil have been accepted as
strong brands in the packaging board market in India as well as in its select
neighbouring export markets.
Distribution Network:
The Company's established distribution network covers the length and breadth of
the country and is one of its biggest assets. JK Paper presently operates
through its 125 distributors, who have been working as the strategic business
partners, with most of them being exclusive to the Company. With entry into the
Packaging Board market, the Company has appointed additional distributors who
are focussed and exclusive to Board marketing and are therefore able to
innovatively market its brands of high value added boards, with value-added
services.
Locational advantage:
Growing consumerism and changing lifestyle is not only increasing the pace of
market growth but also resulting in changing needs of the consumers across the
country. The company is able to take full advantage of the strategic location
of both its plants - JKPM and CPM. While Unit JKPM is ideally located to cater
to the Southern and Eastern markets, Unit CPM serves the needs of customers in
the Western and Northern markets. The new packaging board plant installed at
CPM enjoys the advantage of being able to cater to the largest and fastest
growing market segment of western India.
EXPANSION:
The Company commenced commercial production at its state-of-the-art Multi-layer
Packaging Board Plant at Unit CPM 'in October 2007. The product quality has
been appreciated not only by the top end customers in India but also by
overseas customers from countries like Italy, Thailand, Korea, Sri Lanka and
Middle East countries. The Plant capacity utilization is increasing
progressively and is expected to achieve 100% during the year. With the retail
boom in the country, the market for the value added consumer packaging is
growing at 15% per annum. More than 80% of the Company's production of
packaging board is in the value added segment which is expected to contribute
significantly to the Company's growth and to bottom line in the future years.
MAJOR CONCERNS:
Escalation of the pulp price in the international market continues to be a big
concern for those dependent on Imported pulp. Besides, there is a acute scarcity
of the local fibrous raw material which is driving up the cost of production.
There is a need for a Policy recast by the Government, aimed at serving the
farming community by improving their earnings per acre, local employment,
increasing green cover, besides ensuring fibre security to the industry.
The commissioning of the mega-pulp plants in South America some time in the
beginning of next calendar year will increase the availability of traded pulp
in the international market and is expected to bring down the prices of pulp.
This will result in better stability of prices and increased return on the
investments made on the basis of market pulp.
Steep increases in costs of other inputs like coal and certain chemicals
continues to be matter of concern.
Fixed Assets
v Land and Buildings
v Plant and Machinery
v Furniture
v Fixtures
v Equipments
v Vehicles
v Locomotives
v Railway Sidings
v Intangible Assets
Website details attached:
Subject is among India’s foremost paper manufacturers. It is part of one of India’s leading Business Houses – JK Organization, which has a significant presence in Automotive Tyres, Cement, V-Belts, Oil-Seals, Agri-seeds and Pulp and Paper.
Subject, India’s largest producer of Branded papers is a leading player in the
Printing and Writing segment. It operates two plants in India, one in the East
– J K Paper Mills (JKPM) in Rayagada, Orissa with a capacity of 125,000 tonnes
per year and the other in the West – Central Pulp Mills (CPM), located in
Songadh, Gujarat with a production capacity of 55,000 tonnes per year. Both
plants are ISO 9001 – 2000 and ISO 14001 certified and operate at around 120%
capacity utilization. The aggregate annual output is over 180,000 tonnes per
year of Paper and Pulp, using contemporary technology.
The Company has commissioned a 46,000 TPA state-of-the-art Coating Plant at its
JKPM unit in July 2005. This facility employs superior blade coating technology
to produce international quality coated art paper and boards, being marketed in
the brand name of JK Cote.
About 40% of paper produced by the Company is sold under various brand names,
JK Copier, JK Excel Bond, JK Bond, JK Savannah, JK Copier Plus and JK Easy
Copier. Being the largest selling branded copier paper in India, JK Copier is
the Company’s flagship brand. The other major product is JK Maplitho, a
superior uncoated Writing and Printing paper. The Company sells through a
nationwide distribution network of over 120 distributors and 2500 dealers.
Subject enjoys highest Operating Margins and Highest Net Sales Realization
(NSR) in over 90% of the products it sells, amongst the paper mills across
India. It is the only Company in the industry with such a large share of
branded products in its portfolio.
The Company passionately
believes in Environment and Safety and has been introducing cleaner and
environment-friendly technologies. Subject Mills at Rayagada has been adjudged
as the Greenest Paper Mill in India.
The Company’s plantations, driven by in-house research programme, have covered
more than 45,000 hectares of land over the years. By providing farmers high
quality plant species through the Company’s plantation research centre, it is
helping the farmers to improve their economic well being. Very large number of
farmers in the states of Orissa, Chhattisgarh, West Bengal, Andhra Pradesh,
Gujarat and Maharashtra are benefiting from this programme. The plantation with
its superior quality plants contribute towards a strong base for high quality
raw materials.
The Company is also implementing TPM with the help of Japan Institute of Plant
Maintenance.
The Company has an export footprint for high value branded products in the
Middle East, South East Asia, SAARC and various African countries.
Manufacturing
Facilities
Subject has two large integrated paper manufacturing plants - Paper Mills in the Eastern part in the State of Orissa with 1,25,000 tons coated, uncoated and market pulp manufacturing capacity; and Central Pulp Mills in the Western part in the State of Gujarat with 55,000 tons paper and market pulp manufacturing capacity. Both the mills manufacture premium grade writing and printing papers largely branded.
Subject is a Unit of Subject Limited. is a premier integrated Pulp and
Paper Mill located at Jaykaypur, Dist. Rayagada, Orissa. Since its inception,
Subject has strived for excellence and consistently set high standards in
quality, productivity, conservation of energy and water, industrial safety as
well as pollution control and environment protection which are indicated by
achievements like:
- Manufacture of surface sized Maplitho for the first time in the country with
indigenous raw material.
- Capacity utilization of 120%.
- First Paper Mill in India to get ISO 9001 and ISO 14001.
- Adjudged First Greenest Paper Mill in India in 1999.
- Most modern and largest pulp mill in the country.
Subject was commissioned in the year 1962 with an integrated pulp and paper
plant with 15000 TPA installed capacity for manufacturing high quality writing
and printing papers. Over the years, the production capacity has been enhanced
to a level of 127,000 TPA with the addition of 4 more paper machines
manufacturing diversified product range from 29 GSM to 300 GSM of different
grades of paper. In 2005, an offline coating machine has also been set up to
manufacture premium grades of coated papers.
The secret of success of the mill is attributed to its policy for
sustained efforts for quality, new product development and continuous offering
of value added products to customers.
The company was a pioneer to introduce in market a surface sized
finished paper - JK Maplitho - equivalent to uncoated woodfree printing paper
in international parlance. Since then JKPM has further consolidated its
position in the market and has established itself as a brand leader in
different varieties of writing and printing papers like JK Copier, JK Copier
Plus, JK Bond, JK Excel Bond, Super Hibrite (SHB) Maplitho and JK Cote premium
coated paper and board. All these brands are extremely popular papers in the market
place throughout the country and are invariably the first choice of the
consumer
Central Pulp Mills
On the western coast of India, i.e. at Fort
Songadh in the State of Gujarat is located Central Pulp Mills, the other Unit
of Subject Limited. It is also an integrated pulp and paper plant with a
capacity of 53,000 TPA. It has two paper machines and manufactures premium
grade papers in writing and printing paper segment. It also manufactures
branded copier (JK Easy Copier and Sparkle Copier) and specialty papers like JK
Savannah - a premium buff-coloured stationery paper, Ledger and MICR cheque
paper. All these varieties are extremely popular amongst trade, converters and
consumers. Currently, a 60,000 TPA dedicated facility for manufacturing Premium
Hi-end Packaging Boards is being set up at this Unit.
In the year 2003, the Unit was accredited to ISO 14001 Environment Management
Systems and ISO 9001 Quality management Systems by DNV, Netherlands.
Group Companies
J.K. Organization, one of the leading Private Sector Groups in India, was founded over 100 years ago. With a century of multi-business, multi-product and multi-location business operations, the Group has Companies with a diverse portfolio including Automotive Tyres and Tubes, Paper and Pulp, Cement, V-Belts, Oil Seals, Power Transmission Systems, Hybrid Seeds, Woollen Textiles, Readymade Apparels, Sugar, Food and Dairy Products, Cosmetics, etc. All products of the Group are not only strong brand names but also reputed market leaders in their respective segments.
With its operations spread in almost every state of India, the Group employs
over 30,000 people along with a nationwide sales and service network of over
10,000 distributors and a large number of retailers and service centers.
Exports
Subject is actively involved in market expansion beyond the shores of India to ultimately have a global footprint for its products. The Company is exporting to more than 40 countries including Sri Lanka, Bangladesh, Middle East, Africa, Australia, Singapore, Malaysia etc. Subject’s flagship brand JK Copier is the largest selling copier brand in Sri Lanka.
Taking advantage of its advanced and extensive global network, Subject is today
also exporting products sourced from other Paper Mills in India and abroad.
Outsourcing
JK Paper pioneered outsourcing activity in the Indian Paper industry in
2002 with the objective of providing customers a wider variety and range of
products. For this, JK contracted the capacities of other Mills in India and
Abroad to manufacture various grades of paper, maintaining the same quality and
service assurance which JK Paper is known for.
Some of the paper grades outsourced include Chromo (one side coated), Maplitho
(uncoated woodfree), CG (copier grade) and some varieties of coated paper (C2S)
and packaging board to meet Indian market requirement. The Company is also
looking at suitable international mills to tie up for outsourcing certain
speciality grades to give the Indian consumer the complete basket of paper
varieties.
Network
In order to serve customers across India, the Company has around 126
Distributors of which 2/3rds are exclusive JK Distributors. Beyond this, JK has
over 2,500 Dealers across the length and breadth of India, including the
remotest corners, providing it the strongest depth and width of distribution in
the Industry.
Subject is now in the process of adding another 25-30 Distributors in the
coming 2 years which will include the marketing of its new Coated Packaging
Boards, Coated Papers and its Branded Papers in the Upcountry markets.
JK Paper and Technology
Over the last decade the constant endeavour of JK Paper has been to
upgrade its manufacturing processes at grass-root levels to help create
customer value. Be it the most modern Pulp Mill or an automatic cut-size line
for branded products, it has been a saga of continuous process development with
an eye on the customer.
Subject has always leveraged technology for constant product upgradation and
has been a pioneer in many arenas, of the paper industry. Some of the landmarks
which JK Paper achieved much before the rest of the Indian paper companies
are:-
• First to introduce Surface Sized Woodfree Paper
• First Paper Mill to get ISO 9001 certification.
• First Paper Mill to get ISO 14001 certification.
These
pioneering moves have given JK Paper pride of place as the change leader,
ushering in a phase of complete makeover in the Indian paper market. On the
pathway of moving focus from commodity to branded and high value categories,
subject has undergone major technical upgradation in the machines and processes
for manufacturing paper.
The Company has taken a major initiative to deliver world-class service through
implementation of an Enterprise Resource Planning system. This transformational
technology will bring in best practices across all functions of the
organization to deliver highest value to all external and internal customers.
Continuing the chain of constant technological development the operational
state-of-the-art Coated Paper manufacturing facility at Jaykaypur, Orissa, is
driving the next big revolution in the Indian paper industry. The project to
manufacture high quality coated paper was completed in a record time of just 15
months from Concept to Commissioning.
The plant manufacturing coated paper owes the excellence achieved in
manufacturing coated paper to its fully automated coating colour kitchen that
ensures world-class quality. Besides the advantage of using the high quality
base paper made in-house at JK Paper Mills, it derives its strength from the
well controlled, feature- laden coating plant with features like three-stage
online controls for GSM, coat weight, moisture etc. It is also equipped with
electronic controls for cross profile and gloss. On the other hand, due
attention has been given to the finishing and packaging end by installing
state-of-the-art synchro fly sheet cutters, ensuring perfect cutting and
finishing.
Apart from commissioning the Coating Plant, this has been a watershed year,
considering the path- breaking initiative from JK Paper in setting up a
state-of-the-art Packaging Board Plant at its Central Pulp Mills Unit, Songadh,
Gujarat at a substantial Rs.2350.000 Millions investment. This plant of 60,000
TPA capacity will be equipped with the most contemporary technology sourced
from global leaders like Voith of Germany and several other leading names in
the paper board machinery sector. Once again, technology will be the key driver
to revolutionize packaging in India.
JK Paper and
Quality
They at JK Paper have always believed that it is the customer, who is
the best teacher as he indeed, is the best critic. It is with this belief which
they have always listened to him with an open mind that has kept them constantly
ahead. Clearly, it is this philosophy that has led to the creation of the
‘Quality Culture’ placing the customer at the core of all the business plans
and strategies. Be it investments in the area of technological excellence,
continuous improvement, development of the human resource, building of brands
and customer relationships, the constant endeavour has driven them to a state
of Customer Obsession across the organization. No wonder, JK Paper Mills was
the first Paper Mill in India to attain ISO 9001 certification in 1995. Central
Pulp Mills followed in 2003.
Establishing international quality benchmarks and creating customised
products to meet the unique needs of the different consumers has been the
essence of the product development activities. It is this philosophy that has
led them to develop and enlarge the range of the products and brands to meet
the consumers’ needs across all quality and price points.
In the Printing and Writing segment, the journey which began with SS Maplitho
for the specific customer needs of quality has moved on to customers of SS
Maplitho SHB in the High Bright category and subsequently to SHB Evervite for
top end customers.
Over the last four decades, this journey covered several milestones, starting
with products like SS Maplitho. Ranging from the top end segment ‘JK Evervite’
to the middle segment Maplitho SHB, it has continuously enriched its product
portfolio, meeting the wider customer requirements. Brands like ‘JK Copier
Plus’, a multi purpose premium business paper, ‘JK Copier’ for the mid segment
high speed Copier Machines to ‘JK Easy Copier’ for the economy range, reflects
the company’s diversity of product portfolio and dominant leadership in the
Branded Segment.
In the Branded water-marked segment, ‘JK Bond’, a name synonymous with the
House of JK over the years, has led to the development of premium products like
‘JK Excel Bond’, available in international consumer friendly packs. ‘JK
Savannah’ is yet another offering of an exclusive grade of office stationery
paper just introduced in select markets.
In all its product segments, JK commands an undisputed Quality leadership
position in the Industry. No wonder, with quality being a way of life at JK
Paper, they do not attempt to restrict quality to a mere definition.
JK Paper and
Environment
Any improvement in technology has an impact on the environment. At JK
Paper, they have always been indebted to Mother Nature and have worked
ceaselessly towards employing processes that are in sync with ecology. This passion
and sense of responsibility is evident in the various initiatives that the
Company has undertaken.
The technology based plantation movement with in-house R and D along with the
involvement of thousands of farmers across several states, has aided the plans
to enhance raw material availability, greening of surroundings and livelihood
for a large number of local population. It has been part of JK Paper’s
corporate philosophy to protect the environment through process innovations
rather than end-of-the-gate treatment. The results of the investments in
environment have been widely recognized in various fora winning them numerous
awards over the years.
·
Rated as the Greenest Paper Mill of India (JK Paper Mills) by Centre for
Science and Environment (CSE) in their first study on paper industry
(1999)
·
Again won the prestigious 3 Leaves award in 2004-05 from CSE in their
second study
·
ISO 14001 Environment Management System since 1998 (JK Paper Mills) –
first in India; in 2003 (Central Pulp Mills)
Beyond Plantations, the Company’s thrust on environment is also visible
in various ecofriendly processes that it employs at its Plants like the most
modern Fibreline based on latest technology (Oxygen delignification)
Today, the Company sources nearly 60% of its raw material requirement
from man-made plantations. Side by side, it also promotes social/farm forestry
within a radius of 200 KMs from its plants. Till date, in excess of 48,000 Ha
of land has been planted with high yielding pulpwood species by the farmers in
the adjoining areas of mill locations with the assistance of the Company. Every
year it adds another 4500/5000 Ha by distributing 30 million saplings to the
farmers. Through its dedicated R and D wing, the Company has been able to
develop 6 JK Superclones for Eucalyptus, which gives 2-3 times higher yield to
the farmer.
JK Paper and Society
Subject is a member unit of JK Organisation, one of India's oldest and
well established business houses and well known for its commitment and
contribution to the society by way of initiatives supporting the social,
education, health and infrastructure sectors.
JK Paper has always been a front runner in taking initiatives for improving the
quality of life of the community, especially in the vicinity of its
manufacturing plants. Some of the initiatives taken in the last few years
towards Community Development and enhancing Community Relations include:
Education
2
full fledged schools at Rayagada (Orissa). 2600 children is the strength of the
students at present, which include children of Company employees as well as
from the community of nearby villages.
Adult
literacy programme for local community in Gujarat.
Night
schools for adults in Orissa, which are being run by unemployed youths from the
villages.
Financial
assistance for
- School construction and Furnishing
- Providing educational aids and school uniform, text books, black boards etc.
- Scholarship to students
Schools
for mentally challenged with residential care facilities.
Health
At
both the Plants, the Company has its own dispensaries, which, in addition to
the employees, also attend to residents of the communities in the vicinity.
Health
awareness programme, doctors and renowned experts are invited to organize camps
for awareness and also for cardiology, gynecology, dental, eye and family
planning programmes in collaboration with Government hospitals, local clubs
etc.
Mobile
medical dispensary run by CPM is very popular in and around Songadh. In last 6
years, 196 camps were organized through mobile medical dispensary. Over 44,000
patients were attended to.
Sports and Other Recreational Activities
Games
and sports are promoted among the village youth through local tournaments.
Similarly,
to promote sports, apart from organizing rural tournaments, sports kits are
distributed free of cost to over 25 villages in Orissa every year.
Environment
JK
Paper ensures that not only are its effluents well within the notified
parameters but it also takes proactive measures to continuously improve them
further.
The
Company has signed a voluntary Charter on Corporate Responsibility for
Environment Protection (CREP) with Ministry of Environment and Forests and is
investing in the required facilities for environment protection.
Projects
for conservation of energy and water are regularly taken up at both Mills.
In
Orissa, treated effluent water is being used for irrigation purpose.
Infrastructure
Infrastructure
development projects like building approach roads to nearby villages, providing
pipe water supply, construction of Water storage tank, Town Gate. Police
Chowki, etc. are regularly taken up around the Mills in Gujarat and Orissa.
Employment
Realising
that apart from development programmes, the communities also need source of
livelihood, the Company is promoting various ancillary industries like alum,
carton, core pipe, dry board, fly ash bricks and other industries in the
vicinity of the Mills, generating local employment opportunities.
Plantations
are a major activity at both the Plants. The Company has adopted clonal
technology and through its R and D lab, distributes eucalyptus clones which
give double the yield of wood to farmers. Plantations provide employment to
local tribal unemployed youth and at the same time, conserve soil and water
bringing greenery all around. Nearly 48,000 ha has been planted so far by the
Company in Orissa, Andhra Pradesh, Gujarat and Chhatisgarh.
Assistance for Natural Calamities
JK
has always been in the forefront of meeting the challenges of natural
calamities. Be it the recent flood in Surat, drought or super-cyclone in Orissa
or the Gujarat Earthquake, or other tragedies like tsunami elsewhere. Apart
from cash contributions by the Organization, employees have also contributed
generously from their salaries. Additionally, immediate relief material in
terms of medicines, blankets, tents etc. have also been sent to the relief
camps for distribution.
Earthquake
relief work - CPM constructed two schools containing 22 class rooms to
accommodate over 1300 students.
JKPM
opened a special nursery at Bhubaneswar to enable new plants to be planted in
places where super-cyclone had uprooted the existing trees.
JK Paper and
People
Customer obsession is at the core of JK Paper’s mission statement. Passion
to deliver highest value to all the external and internal customers has led the
Company to take major initiatives in the direction of implementing Enterprise
Resource Planning (ERP) system in the organisation. This ERP System will tie-up
the total supply chain, enabling seamless flow of information in ‘Real time’.
It will open a transparent dialogue between the supplier and the customer,
bringing in greater of efficiency, responsibility and effectiveness to the
entire system at JK Paper.
At JK Paper, they recognize the power of knowledge. Hence, extensive
investments are made toward people and people practices. Fostering the spirit
of entrepreneurship among these professionals has enabled JK Paper to establish
the role of true leadership guiding the future growth and development of the
industry. The talent pool at JK Paper would rank among the very best in the
Indian Paper Industry today.
Today, these world-class people practices have galvanized TPM (Total Productive
Maintenance) into a Truly People’s Movement at JK Paper. A practice that is
best exemplified by JK Paper’s much acclaimed ‘Quality Circle’ practice that
started way back in 80s and actually paved way for the successful
implementation of TPM. Today JKPM Orissa alone has over 66 such quality circles
that constitute of over 40% employees, ensuring active involvement in
implementation and decision making at all employee level. At JK, you can see in
practice, people of grass-root level involved emotionally and physically to
bringing up new ideas of improvement.
But, like any other movements the real momentum was fuelled from the top
management, who actually got down to the shop floor to lead by example. So
whether it was about getting involved in cleaning and maintenance of machines
and equipment every morning or helping workmen find and plug daily problems on
the shop floor, the top leaders demonstrated and practiced what they were
preaching. Finally, this TPM movement has not only helped further the cause of
quality commitment but also brought about a total transparency, Spirit of
sharing and caring and willingness to continuously improve and take on new
challenges in the Organisation.
Office Documentation
They offer a range of Office Documentation Papers from Economy to
Premium grades. They include Photocopy and Multi Purpose Papers for use in
Desktop, Inkjet and Laser Printers, Fax Machines, Photocopiers and
Multi-functional Devices.
Premium Watermarked and Laidmarked Business Stationery Papers are also being
marketed to satisfy the varied needs of Corporates and Individuals.
JK Copier Plus
Ideal for Quality Photocopying, Project Reports, Resumes, Inkjet and
Laserjet printers, Presentation copies or any aesthetic job
JK Copier
Suitable for any job on Office printers - Inkjet and Laserjet,
Photocopiers and Multi-functional Devices
Sparkle Copier
Ideal for photocopying and desktop printing
JK Copier Easy
Ideal for Photocopying
JK Excel Bond
Ideal for Letterheads, Brochures, Certificate, Presentations, Project Reports,
Envelopes, Pamphlets, Manuscript writing, Corporate Stationery
JK Savannah
Suitable for Corporate Stationery, Reports, Certificates, Presentations,
Resumes, Invitation Cards, Hotel/Airline Menu Cards, Personal Letterheads
Uncoated Paper and Board
The Maplitho paper has been acknowledged in the market for its superior
performance and they offer a range of such uncoated writing and printing paper
for varied needs including the super bright JK Evervite. Apart from this, they
also produce MICR cheque paper as well as High-end Pulp Boards, Ledger Papers
and Parchment grades
JK Evervite
Features
·
Superior brightness (brightness value 93 plus)
·
Higher strength
·
Excellent printability
·
Long lasting colour and shade
End Uses
·
Printing of Quality Books, Calendars, Maps
·
Making Premium Diaries, Hi end Exercise Book, Notepads, Scribble Pad
Sizes
·
Available in standard folio sizes as well as special sizes on order,
Also available in Reels
·
GSM-60 to 100
JK Maplitho Paper
Features
·
Long lasting shade
·
Superior strength
·
Excellent dimensional stability
·
Trouble free Printing
·
Excellent Smoothness
End Uses
·
Printing of Books, Calendars, Maps
·
Making Diaries, Notepads, Scribble Pad, Exercise Book
·
Also used in Food grade applications
Sizes
·
Available in standard folio sizes as well as special sizes on order,
Also available in Reels
·
GSM-60 to 150
JK MICR Cheque Paper
Features
·
Hi Quality Paper For Cheques
·
Lost Lasting and Strong Paper
End Uses
Used For Making Cheques
Sizes
·
Standard Sizes in Reels and Sheets
·
Gsm- 95
Coated Paper and Board
JK offers a range of coated paper and board made using superior blade
coating technology along with advanced features like 3-stage on-line controls
and made from in-house base paper for better quality control.
Both single side coated (C1S) as well as two side coated (C2S) paper and board
are offered.
JK Cote
Features
·
High Bulk
·
Excellent Smoothness
·
Good Printability
End Uses
·
Posters, Brochures, Folders, Premium Books, Calendars
·
Direct Mailer, Catalogue, Pamphlet
Sizes
·
Large Sheets, Reels
·
GSM- 125 to 300, Available in both Matt and Gloss Variety
JK Eco Cote
Features
·
Hi bright one side Coated paper
·
For Economy grades
·
Good Printability
End Uses
·
Printing of Posters, Book Jacket,
·
Direct Mailer, Pamphlet, Label
Sizes
·
Available in standard folio sizes as well as special sizes on order,
Also available in Reels
·
GSM-60 to 110
In order to provide information about the products and services and to
constantly stay close to the customers, Subject has been practicing a wide
range of advertising and promotional activities.
Some of the activities that are regularly carried out by JK Paper are:-
·
Advertising-Magazines, Radio,
Internet
Loyalty programs
Free sample distribution
Point-of-sale displays
National Consumer Promotion Schemes
Exhibitions
Roadshows
Subject regularly advertises in Magazines,
radio and internet to ensure that the valuable customers and business partners
are kept informed and updated about the innovations and improvements they bring
about in the products and services.
·
The Press and Radio Ads
Loyalty programmes are one of the ways to reward the business partners
for their association with the Company as well as for showing trust and
confidence in them and the products. In line with this, they have been running
JK Copier Super Sitare, a Trade Loyalty Programme, since 2005-06. This
Programme is the first of its kind in the Indian Paper Industry.
Free samples are mostly distributed to the customers to generate
awareness and then product trials through sampling of the various retail
brands.
Special displays using Danglers, Posters etc. are being done to display
product features and other information about the retail products in and around
the retail counters to generate awareness.
National Consumer Promotion Schemes
They periodically conduct national level sales promotion schemes, of
limited duration, to incentivise the product sales among customers. These
schemes are in various forms like gifts through scratch card coupons or lucky
draws.
The Company regularly participates in National and International
Exhibitions like Stationery Fair, Paperex and Asian Paper to promote the
Company and its Products and have first-hand interaction with prospective
customers.
This is a forum to facilitate one-to-one interaction between the Company
and its Customers - ranging from Printers to Jobbers to Trade. These Roadshows
are held periodically at various locations across India and help to exchange
information on a range of issues like the market in general or the products and
services of the Company in particular.
Trading
Subject aspires to become a humble “Global Trading House” in the Paper,
Pulp and Paper based stationery products. JK Paper has been engaged in trading of
various grades of Paper through sourcing or buying from both domestic and
international mills. Export trading was started by JK Paper in november 2005.
Through trading the company is able to get various grades of Paper from
different Paper mills. Leveraging its experience in the field of technology,
sourcing and marketing of Paper, JK Paper has thus been able to provide its
consumers, a wider variety and range of quality products. The various grades
handled are copier, newsprint, creamwove, maplitho and poster paper.
UNAUDITED
FINANCIAL RESULTS
For the First Quarter Ended 30th June 2008
(Rs, In Millions)
|
Particulars |
Quarter Ended |
|
30.06.2008 Unedited |
|
|
Gross Sales /
Income from Operations |
3144.500 |
|
Net Sales /
Income from Operations (Net of
Discounts and Excise Duty) |
2631.300 |
|
Other Income |
0.500 |
|
Total Income
(2+3) |
2631.800 |
|
Total Expenditure: |
|
|
(a) (Increase) / Decrease in stock-in-trade and work in progress |
120.400 |
|
(b) Consumption of Raw Materials |
648.600 |
|
(c) Purchase of traded goods |
232.400 |
|
(d) Employees Cost |
252.300 |
|
(e) Consumption of Stores, Spares and Chemicals |
548.600 |
|
(f) Power, Fuel and Water |
247.400 |
|
(g) Depreciation |
171.400 |
|
(h) Other Expenditure |
78.900 |
|
Total (5) |
2300.000 |
|
Profit before
Interest & Financial charges |
331.800 |
|
Interest & Financial charges: |
|
|
(a) Interest Charges |
138.500 |
|
(b) Forward Premium/Foreign Exchange Loss |
44.300 |
|
Exceptional items |
-- |
|
Profit from Ordinary
Activities before Tax |
149.000 |
|
Tax Expense: |
|
|
- Current Tax (including FBT) |
19.100 |
|
MAT Credit |
[16.600] |
|
- Deferred Tax |
43.600 |
|
Net Profit from
Ordinary Activities after Tax |
102.900 |
|
Extraordinary items (net of tax expense) |
-- |
|
Net Profit |
102.900 |
|
Paid-up Equity Share Capital (Face value Rs.10/-) |
781.500 |
|
Reserves excluding Revaluation Reserve |
-- |
|
Earnings Per Share (before/after extraordinary items) |
|
|
- Basic (Rs.) |
1.31 |
|
- Diluted (Rs.) |
1.28 |
|
- Cash (Rs.) |
3.85 |
|
Public Shareholding |
|
|
Number of Equity Shares |
47250.400 |
|
% of Shareholding |
60.46 |
EPS for the quarters and nine months are not annualised.
NOTES:-
- Commercial production
of Company's 60,000 TPA Packaging Board Plant commenced during the last
year w.e.f. 21st Oct. 2007. Therefore corresponding quarter financial
results are not comparable
- Interest
charges are higher by Rs. 34.800 Millions due to commencement of Packaging
Board operations.
- The Company
redeemed 40,000 10% Cumulative Redeemable Preference Shares (Series C) of
Rs. 100 each alongwith accrued dividend of Rs. 4.00 lac and premium
payable on redemption on 30th June 2008.
- The Company
has only one business segment i.e. Paper and Board.
- No investor
complaint was received during the quarter ended 30th June, 2008 and no
complaint was pending at the beginning and end of the quarter.
- The figures for
the previous period have been regrouped/rearranged wherever necessary.
- These results
have been reviewed by the Audit Committee and approved by the Board of
Directors at their respective meetings held on 21.07.2008. Limited Review
of these results has been carried out by the Auditors.
Press Release
GLOBAL
RECOGNITION FOR SUBJECT
The Japan Institute of Plant Maintenance
(JIPM), a public corporation under the administration of Ministry of Economy,
Trade and Industry in Japan, has honoured both Paper Mills of Subject Limited –
(1) Subject Mills (JKPM) at Rayagada (Orissa) and (2) Central Pulp Mills (CPM)
at Songadh (Gujarat) – with “Award for TPM excellence – First Category”. The
coveted honour is a rare achievement and Subject is the first integrated Indian
Paper Manufacturing Company to be conferred with this honour and it is the 3rd
Paper manufacturing company in the whole world to be in this elite club.
TPM i.e. Total Productive Maintenance is a
Japanese concept started in 1971. It addresses all facets of manufacturing – be
it operation, maintenance, purchase, sales, administration, or people related
issues such as safety, health, environment etc. It is a long but fruitful
journey towards Business Excellence.
Both the above paper mills started their TPM
journey back in 2001 at JKPM and in 2002 at CPM. Mr. Kozo Mizota, a highly
competent TPM Consultant from JIPM, Japan facilitated both the mills in their
pursuit of this venture. The methodology is based on “Seeing believes” and
everything should be tangible and not subjective. The mills could improve plant
efficiency levels, breakdown went down by about 80%, accidents by 90% and the
consistent quality level could reduce the customer dissatisfaction by over 60%.
Visible cultural change and high morale led to pride in people working in the
organization.
Subject is a member of JK Organization, is a
leading integrated Pulp and Paper Manufacturer in India with an annual turnover
in excess of Rs. 8400.000 millions and nearly 200,000 tons of sales. Subject
has been well known for its consistency in product quality and high customer
value proposition. Subject is the largest manufacturer of Photocopying Paper in
India with nearly 40% market share. It also manufactures high quality maplitho
paper, coated papers and specialties like water-marked bond and MICR cheque
papers. As a responsible corporate, it has adopted the most advanced and
eco-friendly technology at both the manufacturing units to provide a safe and
clean environment. Additionally, it promotes social and farm forestry as a
sustainable source of raw material. Subject was adjudged as the Greenest Paper
Mill of the country in 1999 by Centre for Science and Environment (CSE). No
wonder, both the units are ISO 9001 and ISO 14001 certified.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No exist to suggest that subject is or was
the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 45.40 |
|
UK Pound |
1 |
Rs. 83.15 |
|
Euro |
1 |
Rs. 65.72 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|