MIRA
INFORM REPORT
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Report Date : |
16.05.2011 |
IDENTIFICATION DETAILS
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Name : |
SUN PAPER MILL LIMITED |
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Registered Office : |
86, |
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Country : |
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Financials (as on) : |
31.03.2010 |
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Date of Incorporation : |
11.07.1961 |
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Com. Reg. No.: |
18-4531 |
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CIN No.: [Company
Identification No.] |
L21011TN1961PLC004531 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CHES00550E |
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Legal Form : |
A Closely Held Public Limited Liability Company |
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Line of Business : |
Manufacturer of Newsprint, Printing and Writing Paper. |
RATING & COMMENTS
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MIRA’s Rating : |
B (33) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Maximum Credit Limit : |
USD 550000 |
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Status : |
Moderate |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Clear |
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Comments : |
Subject is an established company having moderate track records.
Financial position of the company is improving. Trade relations are reported
as fair. Business is active. Payments are reported to be slow but correct. The company can be considered for business dealings with some caution.
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NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – April 1, 2010
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Country Name |
Previous Rating (31.12.2009) |
Current Rating (01.04.2010) |
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A1 |
A1 |
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Risk Category |
ECGC Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
LOCATIONS
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Registered Office : |
86, |
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Tel. No.: |
91-44-26648503/ 504/ 25388203/ 204 |
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Fax No.: |
91-44-25383159/ 26618259 |
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E-Mail : |
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Factory : |
Post Bag No.2, Chernmahadevi – 627414, Tirunelveli District, |
DIRECTORS
As on 23.09.2010
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Name : |
Dr. B. Sivanthi Adityan |
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Designation : |
Chairman and Managing Director and Chief Executive Officer |
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Address: |
86, |
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Date of Birth/ Age: |
24.09.1936 |
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Date of Appointment: |
28.12.1978 |
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DIN No.: |
00037717 |
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Name : |
Mr. S. Balasubramaniam Adityan |
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Designation : |
Director |
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Address: |
No. 13 (Old No. 17), |
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Date of Birth/ Age: |
06.03.1965 |
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Date of Appointment: |
09.09.2005 |
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DIN No.: |
00036898 |
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Name : |
Mr. P. Kannan |
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Designation : |
Director |
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Address: |
156-B, Palaniappa Nagar, Sooramargala, Salem-636005, |
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Date of Birth/ Age: |
17.07.1939 |
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Date of Appointment: |
26.03.1988 |
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DIN No.: |
00150641 |
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Name : |
Mr. I. Uthirapandian |
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Designation : |
Director |
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Address: |
115, |
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Date of Birth/ Age: |
04.01.1930 |
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Date of Appointment: |
28.12.1978 |
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DIN No.: |
00147227 |
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Name : |
Mr. R. Krishnakanthan |
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Designation : |
Director |
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Address: |
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Date of Birth/ Age: |
17.03.1936 |
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Date of Appointment: |
28.12.1978 |
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DIN No.: |
00147173 |
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Name : |
Mr. V. Anbalagan |
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Designation : |
Director |
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Address: |
18A/ BI, Dr. Thirumurthi Nagar, |
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Date of Birth/ Age: |
15.06.1949 |
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Date of Appointment: |
28.12.1978 |
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DIN No.: |
00059007 |
KEY EXECUTIVES
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Name : |
Mr. G. Viswanathan |
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Designation : |
Chief Financial Officer and Secretary |
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Address: |
Flat No. F-1, 1st Floor, Supraja Apartment, No. 125 and 126
Kamarajar Salai, Ramakristna Nagar, Alwarthiru Nagar, Chennai-600087, Tamilnadu,
India |
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Date of Birth/ Age: |
22.02.1963 |
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Date of Appointment: |
06.12.1995 |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on 16.09.2009
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Names of Shareholders |
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No. of Shares |
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Sivanthi Adityan Balsubramanian |
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767110 |
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Balsubramanian Adityan Sivanthi |
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38100 |
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Kannal Perumal |
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500 |
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Uthirapandian Iyamperumal |
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750 |
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Krishnakanthan Ramalinga Athithan |
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750 |
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Anbalgan Vaithialinga Nadar |
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2805 |
Equity Share Breakup (Percentage of Total Equity)
(As on 30.09.2010)
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Category |
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Percentage
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Public Financial Companies |
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0.49 |
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Bodies Corporate |
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45.20 |
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Directors or relatives of directors |
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11.13 |
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Other top fifty Shareholders
(Other than Listed above) |
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13.49 |
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Others |
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29.69 |
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Total |
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100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of Newsprint, Printing and Writing Paper. |
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Products : |
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PRODUCTION STATUS
As on 31.03.2010
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Particulars |
Unit |
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Installed
Capacity |
Actual
Production |
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Paper |
Tones |
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22000 |
26524 |
GENERAL INFORMATION
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Bankers : |
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Facilities : |
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Banking
Relations : |
- |
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Auditors : |
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Name : |
Krishanan Retna ands Associates Chartered Accountant |
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Address : |
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Enterprises where no control exists: |
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Other entities under control of the company: |
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CAPITAL STRUCTURE
As on 31.03.2010
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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14750000 |
Equity Shares |
Rs.10/- each |
Rs.147.500 Millions |
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250000 |
10% Cumulative Redeemable Preference Shares |
Rs.10/- each |
Rs.2.500 Millions |
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Total |
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Rs.150.000
Millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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8867321 |
Equity Shares |
Rs.10/- each |
Rs.88.673
Millions |
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FINANCIAL DATA
[all figures are in
Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
88.673 |
88.673 |
88.673 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
49.222 |
19.091 |
88.344 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
137.895 |
107.764 |
177.017 |
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LOAN FUNDS |
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1] Secured Loans |
109.166 |
118.309 |
109.843 |
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2] Unsecured Loans |
37.000 |
8.500 |
8.500 |
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TOTAL BORROWING |
146.166 |
126.809 |
118.343 |
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DEFERRED TAX LIABILITIES |
57.054 |
80.172 |
79.855 |
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TOTAL |
341.115 |
314.745 |
375.215 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
296.121 |
315.148 |
337.199 |
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Capital work-in-progress |
1.481 |
0.000 |
0.000 |
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INVESTMENT |
0.205 |
0.205 |
0.205 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
98.837
|
96.480
|
101.051
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Sundry Debtors |
67.720
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64.718
|
40.572
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Cash & Bank Balances |
1.514
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2.265
|
1.892
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Other Current Assets |
0.000
|
8.409
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0.000
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Loans & Advances |
34.144
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7.204
|
19.726
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Total
Current Assets |
202.215
|
179.076
|
163.241
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Sundry Creditors |
92.197
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104.641
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84.588
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Other Current Liabilities |
44.936
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58.266
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23.048
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Provisions |
25.684
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16.777
|
17.794
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Total
Current Liabilities |
162.817
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179.684
|
125.430
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Net Current Assets |
39.398
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[0.608]
|
37.811
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MISCELLANEOUS EXPENSES |
3.910 |
0.000 |
0.000 |
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TOTAL |
341.115 |
314.745 |
375.215 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2010 |
31.03.2009 |
31.03.2008 |
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SALES |
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Income |
773.987 |
683.105 |
800.388 |
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Other Income |
17.738 |
10.488 |
7.158 |
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TOTAL (A) |
791.725 |
693.593 |
807.546 |
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Less |
EXPENSES |
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Raw Material Consumed |
263.635 |
244.273 |
242.329 |
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Stores and Spares Consumed |
122.390 |
126.586 |
137.838 |
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Power and Fuel |
219.502 |
216.786 |
215.607 |
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Salaries, Wages and Amenities Including Managing Director’s
remuneration |
67.799 |
69.885 |
72.014 |
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Repair and Maintenance |
34.828 |
40.427 |
51.300 |
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Selling and Distribution Expenses |
9.764 |
8.347 |
9.252 |
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Other Expenses |
19.092 |
19.936 |
16.403 |
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Increase/ Decrease in Stock |
[2.921] |
[5.743] |
8.750 |
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TOTAL (B) |
734.089 |
720.497 |
753.493 |
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Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
57.636 |
[26.904] |
54.053 |
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Less |
INTEREST (D) |
11.440 |
13.461 |
14.934 |
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PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
46.196 |
[40.365] |
39.119 |
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Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
28.345 |
28.271 |
27.379 |
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PROFIT BEFORE
TAX (E-F) (G) |
17.851 |
[68.636] |
11.740 |
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Less |
TAX (H) |
3.600 |
0.617 |
5.910 |
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PROFIT AFTER TAX
(G-H) (I) |
14.251 |
[69.253] |
5.830 |
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Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
2.328 |
71.581 |
69.830 |
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Add |
Excess
provision Written back |
0.000 |
0.000 |
0.000 |
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Less: |
PRIOR
PERIOD ADJUSTMENT |
0.000 |
0.000 |
1.078 |
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Less |
APPROPRIATIONS |
|
|
|
|
|
|
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Transfer to General Reserve |
0.900 |
0.000 |
3.000 |
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|
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Proposed Divined |
6.207 |
0.000 |
0.000 |
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Tax on Proposed Dividend |
1.031 |
0.000 |
0.000 |
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BALANCE CARRIED
TO THE B/S |
8.441 |
2.328 |
71.582 |
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IMPORTS |
|
|
|
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Raw Materials |
66.599 |
86.426 |
38.882 |
|
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Stores & Spares |
0.066 |
1.844 |
0.114 |
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TOTAL IMPORTS |
66.665 |
88.270 |
38.996 |
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Earnings Per
Share (Rs.) |
|
7.77 |
-- |
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KEY RATIOS
|
PARTICULARS |
|
31.03.2010 |
31.03.2009 |
31.03.2008 |
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PAT / Total Income |
(%) |
1.80
|
[0.10]
|
0.72 |
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Net Profit Margin (PBT/Sales) |
(%) |
2.31
|
[10.05]
|
1.47 |
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Return on Total Assets (PBT/Total Assets} |
(%) |
3.58
|
[13.89]
|
5.86 |
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Return on Investment (ROI) (PBT/Networth) |
|
0.13
|
[0.64]
|
0.07 |
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Debt Equity Ratio (Total Liability/Networth) |
|
2.24
|
2.84
|
1.38 |
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Current Ratio (Current Asset/Current Liability) |
|
1.24
|
0.99
|
1.30 |
LOCAL AGENCY FURTHER INFORMATION
REVIEW OF
OPERATIONS:
During the year the Company achieved a production of 26524 tonnes of newsprint
and other variety papers. The total production achieved during the year was
higher than the previous year. Capacity utilization during the year was 120%
which was better than the previous year.
The gross turnover achieved was Rs 773.988 Millions for the current year
as against the turnover of Rs 683.105 Millions achieved during the previous
year. The Profit before interest, depreciation and tax was Rs 57.636 Millions
as compared to the loss of Rs 26.904 Millions suffered during the previous year.
The turnover achieved for the year was higher than the previous year,
mainly due to improved productivity. The improved sales turnover added with
controlled cost of production has helped the company to turn around and post a
profit for the current financial year
After absorbing interest and depreciation of Rs 11.440 Millions and Rs
28.345 Millions respectively, the operation has ended with a profit of Rs
17.851 Millions, as compared to the loss of Rs 68.636 Millions suffered during
the previous year.
The Company has provided a sum of Rs 3.600 Millions towards the income
tax liability for the current financial year based on the MAT provisions. As
per the accounting standard AS 22 of ICAI, the net accumulated deferred tax
liability at the close of the year was estimated at Rs 57.054 Millions. Since
adequate provision is already made and available, no provision is made in the
current year. The excess provision of Rs 23.118 Millions made earlier and
available has been transferred to General Reserve.
MARKET CONDITIONS:
The first half of the financial year witnessed unsteady trends in the
paper market. The prices of the input materials were at higher levels only; but
no price revision could be effected to match this. During the II half of the
financial year, the prices had started to come down. With the softening of
dollar exchange rates, the cost of imported materials especially coal and waste
paper had come down. However, the paper market
witnessed no improvement due to sluggish demand prevailed in all the segments.
In an attempt to sustain the operations and continue to have reasonable
order book position, all the domestic manufacturers began to offer discounts.
Due to volatility in the exchange rates and the recessionary trends in the
overseas market, exports have become non-competitive and the domestic
manufacturers had to cut back on exports and offer these volumes in the already
depressed domestic market. This further weakened the local market sentiments.
Government had unveiled various fiscal stimulus package to help boost
output across sectors and improve growth to overcome the difficult situation.
The first three quarters of the current financial year saw weak market
sentiments resulting in the lower growth rate and sluggish demand levels.
Fourth quarter brought in some stability in demand and not further reduction in
prices.
CURRENT YEAR
OPERATIONS AND THE FUTURE OUTLOOK:
The aftermath effect, of the severe economic recession still continues and
the market is in a subdued condition only. With the higher inflation rate and
revision in the fuel prices, the cost of all the input materials are in the
increasing trend. The growth in the demand for all the industrial products are
at its low levels and there was negative industrial growth. Paper industry is
also severely affected by sluggish demand levels. The market for newsprint
continued to be there; but the growth in demand is still lacking. Prices had to
be revised and adjusted
during the first quarter of the current financial year to match the
increased cost of production. Further price revisions are expected during the
year since the cost of input materials are on the rise. The volatile exchange
rates, increase in the freight rates coupled with the increase in basic prices
had made the imports costlier. The demand supply position, international prices
of newsprint and other variety papers, cost of input materials especially fuel,
chemicals and raw materials are the major factors which will continue to have
an impact on the current year's performance.
During the current financial year, a total of 4240 tons of production
was reported for the period April - May 2010 as compared to 5175 tons achieved
during the same period in the previous year.
Total Sales turnover was Rs.124.333 Millions during April - May 2010
when compared to Rs. 133.552 Millions during the same period in the previous
year. The production levels achieved during the first two months was lower when
compared to the previous year, which was due to disturbed operations in the
cogen plant and paper plant. Due to this, the turnover had come down. The
Company is confident of achieving higher production in the coming months and
better results during the current financial year.
Sodium Ligno Sulphanate Powder plant (SLS Plant) was in operation
continuously. The plant was operated at its optimum levels. The final product,
which is having varied applications, is well received in the market. The
revenue generated from this segment had contributed for the increase in sales
turnover.
COGEN PLANT:
The plant was operated at its optimum capacity during the year. During
the year, annual maintenance shut down was carried out in August 2009 to
streamline and improve the operational efficiency of the plant. There were some
stoppages in the intervening period and the same were set right. The operations
had been kept under optimum levels for ensuring continuous and trouble free.
The total generation during the year had improved due
to this. With marginal decrease in the fuel cost during the II half of
the financial year, there is decrease in the generation cost. A total of 42.122
Millions units were generated and a total of 36.59 lacs units of surplus power
was exported to the TNEB grid during the financial year. With various energy
savings efforts taken at all possible areas, the surplus exportable power units
had increased. The rates for the export has been revised
and refixed by TNERC during the year.
MILL DEVELOPMENT
PLAN:
The company had explored various possibilities to expand and strengthen
the pulping facilities and increase the capacity. Initially it had decided to
increase the pulping capacity by introducing a new deinking facility to use
waste paper in the process. The existing pulping facilities will be kept as
standby and the same can be revived once capacity addition is made by adding
another machine. Necessary frame work for the implementation of the new pulping
line has already been started and necessary orders are placed on various suppliers
for the equipments. It is expected that this facility will be fully operational
by February / March 2011.
MANAGEMENT'S
DISCUSSION AND ANALYSIS
INDUSTRIAL
SCENARIO:
Globally Paper Industry plays a very prominent role in the world
economy. Globally India Ranks 15th among the paper producing countries. In
The product segments in the paper industry can be broadly classified as
Newsprint, Printing and Writing Paper, Industrial Paper and other papers, Sun
Paper Mill has its presence predominantly in Newsprint and in Printing and
Writing Paper segments. Based on the primary raw materials used, the companies
in the Paper Industry can he divided into wood based, agro based and waste
paper based (recycled fibre) companies. Majority of the larger mills are wood
based mills with raw materials source from captive plantations or from
suppliers with whom these companies have long term supply contracts.
The industry which is highly capital intensified is mainly dominated by
the North American and European manufacturers. Though the North American and
European sectors consume a major quantity, Asian sector including
In the domestic front, the Industry's current installed operating
capacity is around 9.0 million tons. The annual output is in the order of 7.3
million tons. The total consumption is estimated at around 8.5 million tons.
This is expected to grow to 10 million tons and further to 13.95 million tons
in 2015-2016. Of the total capacity, 39% is wood based, 31% is agro based and
the balance 30% is waste paper based. Of the total consumption in India,
Printing and Writing Paper accounts for about 3596, Newsprint 20% and
Industrial and Speciality Papers 45%.
With the continuous growth of the GDP and improvements in the literacy
rate and standard of living, the demand for paper and paper products is growing
at an average annual rate of 7-8%.
The total reported production of newsprint was 8.25 lacs tons. The
actual capacity utilization remains still lower since some of the mills are
remaining closed. The industry provides direct employment to more than 5 lacs
people
besides providing indirect employment to more than 11 lacs people. The
industry has grown at a CAGR of 6 5: in the last few years and is expected to
grow at a CAGR of 7-8% in the next few years.
The per capita consumption of 8.5 kg in
has been a steady shift in paper consumption patterns consequent to
change in the country's economic scenario. Improved standard of living and
increased urbanization have fuelled the shift in demand from low value, low
quality paper to high quality papers.
The paper industry is an important industrial sector having a bearing on
the socio-economic development of the country. It creates economic wealth in
the hands of the poor, by generating rural employment, Indian Paper Industry is
an important vehicle to drive the Government's National Literary Mission. The
Indian Paper lndustry is a rural based industry with linkages to Agriculture
and Agro forestry.
Over the years, the industry has made steady progress and in the coming
years also the growth potential is high in view of the increased demand for
paper due to industrialization arid economic reforms. With the changing
economic scenario and market dynamics, all the players have been implementing
variety of strategies to survive and grow. Raw material shortage, high capital
outlay, strict environmental regulations are the major entry barriers for the
industry. Because of these entry barriers, only very few green field projects
are coming up. Many of the A grade mills are upgrading their facilities with
cleaner technology for improving their competitiveness.
Some of the B grade mills are also improving their facilities and
expanding their capacity. However those mills which are not complying with the
environmental regulations may be forced to close down their operations in
course of time.
Different varieties of papers are being exported from
duty.
OPPORTUNITIES AND
THREATS:
The competitive strengths and the opportunities that are available to
the Indian Paper Industry are:
- Its large and growing domestic paper market and potential export
market.
- Qualified technical manpower with capability to manage world scale
pulp and paper mills.
- Relatively low employee cost - Well established Research and
Development (R and D) facilities 1 activities encouraging innovation
- Fast growing contemporary printing sector.
- Government's thrust for improving literacy in the country.
- Potential for growth of forest plantation. The competitive weaknesses
and threats that the industry is facing are:
- Inadequate availability of virgin fiber resulting in high cost of raw
materials, including wood, non-wood and waste
paper.
- Delay in creation of sustainable raw material base through industrial
plantations.
- Small and fragmented industry structure
- Many non competitive mills
- Inconsistent multi-tiered quality products
- Environmental problems of most of the small pulp mills and also for
some bigger mills.
- Poor infrastructure
- Likely closures, due to increasingly stringent environmental
regulations.
- Numerous Regional Trade agreements 1 Free Trade Agreements
without adequate safeguards.
- High Energy Cost Consumption
- With the creation of additional capacities, demand / supply mismatch
will confront the domestic manufactures impacting capacity utilization and
margins.
International competitiveness is the key issue that is confronting the
Paper Industry today, especially in the context of Government's resolve to
bring down import tariff every year and proposed to enter into Free Trade
Agreements / Regional Trade Agreements with SAARC / ASEAN countries.
Paper industry is a highly capital intensive and yields poor returns on investments. The
issues that require the attention of the Government are, creation of robust raw
material base, fiscal incentives for assimilation of eco-friendly technologies,
etc.
OUTLOOK,
OPPORTUNITIES AND CHALLENGES:
a) NEWSPRINT SEGMENT:
The newsprint import is freely allowed and the import duty on Newsprint
and LWC, grade paper was brought to Zero levels. Newsprint price in the
domestic market is linked to the International prices irrespective of the cost.
Over the years, the newsprint prices have witnessed many ups and downs.
Domestic newsprint price moves in tandem with imported prices as the major
Newsprint consumers in the country source large quantity of their requirement
from abroad. About 50 "/o of the total estimated consumption of 16.00 lakh
tons of newsprint is met through imports. Though the prices are ruling at lower
levels, the outlook for the newsprint market is good.
b) PRINTING AND
WRITING SEGMENT:
Till 2001, Printing and Writing Paper was under protection with high
level of import duty. The duty was gradually reduced to the levels of 7.5 %.
The Union Government has reduced the Excise duty on Printing and Writing Paper
from 12 9.0 to 8 ?/, and
further reduced to 4%. No excise duty is levied on the first 3500 tons of
Printing and Writing Paper made primarily out of non conventional raw material
and for the balance, duty at 4% is levied. During the last financial year, due
to uneconomic conditions and general recessionary trend prevailed added with
exchange fluctuations, the exports have come down. Pulp prices have also
started to go up due to shut down of major facilities in
c)
The Government considers the Paper Industry as one of the high priority
industries in the country. The per capita consumption in the country is at 8.5
kg which is very low compared to the Asian and World average. With the
increasing literacy level and improving standard of living the per capita
consumption of paper is likely to grow at 7-8% per annum. Almost every
manufacturer in the country is in the process of expanding their production
capacity or has some major plans to do the same in the near future.
The competitive opportunities are:
- The consistent growth in GDP and the increasing literacy rates are
likely to increase the per capita consumption.
- Government's continued thrust for improving the literacy rate in the
country
- The growing exports potential for the Indian made qoods.
The Indian Paper industry continues to be affected by the lack of Level Playing
Field in every activity of manufacture right from the availability of quality
raw materials at reasonable prices, pricing of energy to the economies of
scale. With globalisation and closer integration of the Indian economy with the
global economy, the performance of the Indian Paper Industry is getting
increasingly linked to the International paper prices, demand and supply. It is
essential that each unit produces quality paper or paper products on a globally
competitive price.
Raw materials shortage, high cost of raw materials, environmental
problems, high cost of energy, high cost of capital will be the forces that
will determine the fortunes of Indian Paper Industry Added to that Indian Paper
Industry is using obsolete technology and 'most of thk paper mills operating in
India are using old machineries.
Paper industry is highly capital intensive and yields poor return on
investments. This sector is thus handicapped which is evident from the absence
of large scale investments, in green field projects.
Added to that the domestic market performance is influenced by
Government policies like the introduction of education cess and higher
education cess in the budget, increase in the expenditure towards education,
exim policies with high degree of tariff protection. Indian Paper Industry has
maintained a growth rate of around 6 %, which is above the world average of 2.8
% and is expected to be growing better in the coming years.
Improvement in the demand and supply in the domestic markets will be
welcome sign. The prices are expected to remain under pressure due to stiff
competition and sluggish demand growth. The operating profits will also be
under pressure since there is increase in input costs, especially raw materials
and chemicals and fuels especially imported coal. Despite encouraging prospects
on the demand, supply and prices, the lndian paper industry will face
challenges from shortage of wood based raw materials and waste paper, stringent
environment protection norms involving additional capital expenditure without
returns, high cost of energy, continued reduction of peak import tariffs, spurt
in the interest rates, fluctuations in the exchange rates, failure of monsoon,
etc
SPM will continue its focus on Printing andWriting Paper, which is purely
based on the market demand with the production of newsprint as the primary one.
With the refurbishing of its paper machines and introducing waste paper
recycling process, SPM would be in a position to take advantage of the market
trend in the coming years.
OUTLOOK FOR 2010 -
2011:
The economic crisis that hit the world in the second half of 2008, had
also hit the global Pulp and Paper Industry. The forces that drive paper
consumption like publishing, advertising, media etc., were affected badly due
to negative industrial growth. There were some positive signs of recovery in
the industrial production during the IV quarter of the financial year 2009-2010
due to various stimulus packages.
In the domestic front, a stable outlook for the year 2010 -2011 is
projected although concerns are expressed about consumption growth, capacity
utilization and profitability. Prices are under pressure since the cost of
input materials had started to go up. While lower growth was seen in the recent
years, increasing government spending on education. higher disposable income
and improving standard of living will support demand growth in the Paper Sector
in the coming years.
Prices of paper had come down in the year 2009 due to slow down in
demand growth. Price corrections were carried out in April / May 2010 which was
due to high cost of input materials, chemicals and energy. In total, the
year will see the Indian Paper Industry stretched fully to maintain the
capacity utilization and will have to look for internal cost control measures
to protect the margins.
DISCUSSION ON
FINANCIAL PERFORMANCE:
During the year the company produced 26524 tons of paper compared to the
installed capacity of 22000 tons per annum, thus achieving a capacity
utilization of 120%. The production levels achieved was higher than the
previous year.
The total sales effected during the year was 26480 tons as against 22724
tons in the previous year. The gross turnover was Rs 773.988 Millions as
against Rs 683.105 Millions achieved in the previous year. Due to the increased
productivity, overall sales had increased. The improved productivity and the
cost saving efforts had helped the company to turn around and post a profit of
Rs 17.851 Millions for the year. Interest and Depreciation was Rs 11.440 Millions
and Rs 28.345 Millions respectively for the year as against Rs. 13.461 Millions
and Rs. 28.271 Millions respectively in the previous year. The year ended with
a profit of Rs. 17.851 Millions as against the loss of Rs. 68.636 Millions
suffered in the previous year. The company is taking further steps to control
the cost to sustain the present levels of operation and further improve the
performance in the coming years.
Rs 3.600 Millions has been provided for income tax based on MAT
provisions. Requisite provision was made already and available for deferred tax
liability and hence no provision was made in this year. The excess provision of
Rs 23.118 Millions available under Deferred Tax Liability has been transferred
to General Reserves.
FUTURE PLANS:
Under the Mill Expansion Plan, SPM proposes to install a Deinking Pulp
Line with a capacity of 120 tpd. The necessary works have already been started
and orders for major equipments had been placed. The project is expected to be
completed by February 201 1. Deinking is the process of removing ink and
various other contaminants from waste paper and makes reusable pulp for paper
making. The raw materials used for the Deinking Process will consist of Sorted
Office Waste, Mixed Office Waste, Coated Book Stock. This expansion programme
will be funded through borrowings and loans from promoters.
Bankers Charges
Report as per Registry
|
Corporate
identity number of the company |
L21011TN1961PLC004531 |
|
Name of the
company |
SUN PAPER MILL LIMITED |
|
Address of the
registered office or of the principal place of business in |
86, |
|
This form is for |
Modification of
Charge |
|
Charge identification
number of the charge to be modified |
10017182 |
|
Type of charge |
|
|
Particular of
charge holder |
Indian Bank, Credit Intensive Branch, 5/6-J, |
|
Nature of
instrument creating charge |
1. Demand
Promissory Note Dated 29.03.2011 for Rs. 42.500 Millions 2. Demand Promissory
Note dated 29.03.2011 for Rs. 20.000 Millions 3. Agreement for
open cash credit (Stocks and book debts) 4. Short Term
Loan Agreement 5. Agreement for
hypothecation of movables 6. Agreement for
extension of hypothecation/ Pledge of movables |
|
Date of
instrument Creating the charge |
29.03.2011 |
|
Amount secured by
the charge |
Rs. 160.500
Millions |
|
Brief of the
principal terms an conditions and extent and operation of the charge |
Rate of Interest Open Cash Credit
-13.75% Short Term Loan –
14.50% Bonus Loan –
14.75% Terms of
Repayment Open Cash Credit
– Repayable in one year Short Term Loan –
Repayable in six months Corporate Loan –
Repayable in monthly installments Bonus Loan –
Repayable in six monthly installments with a holiday period of one month
commencing from December 2010 Margin Open Cash Credit
– 25% Short Term Loan –
m25% Bonus Loan-
22.27% Import/ Inland
L/c- 10% Extent and
Operation of the charge Open Cash Credit
– Rs. 42.500 Millions Corporate Loan –
Rs. 38.000 Millions Short Term Loan –
Rs. 2.500 Millions Short Term Loan –
20.000 Millions Bonus Loan – Rs.
7.500 Millions Import/ Inland
L/C – Rs. 50.000 Millions Total : Rs.
160.500 Millions |
|
Short particulars
of the property charged |
All the movable
properties of the company situated at Cheranmahadevi in Tirunelvell district
(except assets created out of the IOB term loan) |
|
Date of
instrument modifying the charge |
22.10.2010 |
|
Particulars of
the present modification |
Present modification
is for the total working capital facilities sanctioned by Indian Bank, CI
branch, Tirunelvei Junction, Tirunelveli due to renewal and sanction of fresh
working capital limits. Now the total limits stands increased to Rs. 160.500
Millions |
|
Corporate
identity number of the company |
L21011TN1961PLC004531 |
|
Name of the
company |
SUN PAPER MILL LIMITED |
|
Address of the
registered office or of the principal place of business in |
86, |
|
This form is for |
Modification of
Charge |
|
Charge
identification number of the charge to be modified |
10017182 |
|
Type of charge |
|
|
Particular of
charge holder |
Indian Bank, Credit Intensive Branch, 5/6-J, |
|
Nature of
instrument creating charge |
Indian Bank
Letter No. CI: TVLJN:ADV:55:2009-10 Dated 04.05.2010 Regarding Closure of
Bonus Loan fo Rs. 6.985 Millions availe3d from them |
|
Date of
instrument Creating the charge |
04.05.2010 |
|
Amount secured by
the charge |
Rs. 93.500
Millions |
|
Brief of the
principal terms an conditions and extent and operation of the charge |
Rate of Interest
Terms of
Repayment
Margin
Extent and
Operation of the charge
|
|
Short particulars
of the property charged |
All the immovable
properties and movable properties of the company situated at Cheranmahadevi
Trunelveli District I |
|
Date of
instrument modifying the charge |
12.02.2010 |
|
Particulars of
the present modification |
Present modification
is for decrease of working capital limit sanctioned by Indian Bank CI Branch,
Tirunelveli Junction, Tirunelveli Due to Repayment of the bonus loan of Rs.
6.985 Millions. Now the total limits is decreased to Rs. 93.500 Millions form
Rs. 100.485 Millions |
FIXED ASSETS:
- Land
- Building
- Plant and
Machinery
- Furniture and
Fitting
- Office
Equipment
- Electric
Fitting
- Vehicles
- Laboratory
Equipment
- Sports
Rolling Cups
- Wind Mills
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records 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 records 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.44.91 |
|
|
1 |
Rs.73.06 |
|
Euro |
1 |
Rs.64.03 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
5 |
|
PAID-UP CAPITAL |
1~10 |
4 |
|
OPERATING SCALE |
1~10 |
4 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
4 |
|
--PROFITABILIRY |
1~10 |
3 |
|
--LIQUIDITY |
1~10 |
4 |
|
--LEVERAGE |
1~10 |
3 |
|
--RESERVES |
1~10 |
3 |
|
--CREDIT LINES |
1~10 |
3 |
|
--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 |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
33 |
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 |
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 |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.