MIRA INFORM REPORT

Report Date :

25.07.2012

IDENTIFICATION DETAILS

Name :	JK PAPER LIMITED (w.e.f. 07.05.2002)
Formerly Known As :	CENTRAL PULP MILLS LIMITED
Registered Office :	P.O. Central Pulp Mills, Fort Songarh, District Tapi – 394 660, Gujarat
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	04.07.1960
Com. Reg. No.:	04-018099
Capital Investment / Paid-up Capital :	Rs. 1366.500 Millions
CIN No.: [Company Identification No.]	L21010GJ1960PLC018099
TAN No.: [Tax Deduction & Collection Account No.]	SRTJ00098A
Legal Form :	Public Limited Liability Company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturer of Paper and Paper Related Products.
No. of Employees :	500 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (50)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Maximum Credit Limit :	USD 34000000
Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is an established company having satisfactory track. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered normal for business dealing at usual trade terms and conditions.

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 – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

EXTERNAL AGENCY RATING

Agency Name	Rating
ICRA	A2+

RBI DEFAILTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAILTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

LOCATIONS

Registered Office / Factory 1 :	P.O. Central Pulp Mills, Fort Songadh, District Tapi – 394 660, Gujarat, India
Tel. No.:	91-2624-220228 / 220278-220280
Fax No.:	91-2624-220138
E-Mail :	scgupta@jkmail.com
Website :	http://www.jkpaper.com
Head / Administrative Office :	Nehru House, 3^rd Floor, 4 Bahadur Shah Zafar Marg, New Delhi – 110 002, India
Tel. No.:	91-11-23311112 / 41011116
Fax No.:	91-11-23712680
E-Mail :	marketing@jkmail.com vikasgupta@jkmail.com amitdatta@jkmail.com
Factory 2 :	JK Paper Mills, Jaykapur, Rayagada – 765 017, Orissa, India
Tel. No.:	91-6856-233303 / 233770 / 233171
Fax No.:	91-6856-222238
Zonal Offices :	Located At : New Delhi Chennai Mumbai Kolkata

DIRECTORS

As on 31.03.2012

Name :	Mr. Hari Shankar Singhania
Designation :	Chairman
Name :	Mr. Harsh Pati Singhania
Designation :	Managing Director
Name :	Mr. Om Prakash Goyal
Designation :	Whole time Director
Name :	Mr. Arun Bharat Ram
Designation :	Director
Name :	Mr. Dhirendra Kumar
Designation :	Director
Name :	Mr. M. H. Dalmia
Designation :	Director
Name :	Mr. R. V. Kanoria
Designation :	Director
Name :	Mr. Shailesh Haribhakti
Designation :	Director
Name :	Mr. S. K. Pathak
Designation :	Director
Name :	Mr. Udayan Bose
Designation :	Director
Name :	Mr. Vinita Singhania
Designation :	Director
Name :	Mr. Wim Wienk
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Suresh Chander Gupta
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2012

Category of Shareholder	Total No. of Shares	Total Shareholding as a % of total No. of Shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	1,050,000	0.77
Bodies Corporate	68,633,953	50.24
Sub Total	69,683,953	51.01
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	69,683,953	51.01
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	7,660	0.01
Financial Institutions / Banks	3,464,816	2.54
Insurance Companies	6,093,317	4.46
Foreign Institutional Investors	249,305	0.18
Any Others (Specify)	7,690,000	5.63
Any Other	7,690,000	5.63
Sub Total	17,505,098	12.81
(2) Non-Institutions
Bodies Corporate	11,035,307	8.08
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	8,854,103	6.48
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	9,287,826	6.80
Any Others (Specify)	20,254,338	14.83
Non Resident Indians	2,783,820	2.04
Overseas Corporate Bodies	2,500,000	1.83
Trust & Foundation	14,970,518	10.96
Sub Total	49,431,574	36.18
Total Public shareholding (B)	66,936,672	48.99
Total (A)+(B)	136,620,625	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	136,620,625	-

BUSINESS DETAILS

Line of Business :

Manufacturer of Paper and Paper Related Products.

PRODUCTION STATUS (As on 31.03.2011)

Particulars	Unit	Installed Capacity	Actual Production
Paper and Board including Pulp for sale	Tones	240000	286019*

* includes 27525 MT transferred to Packaging Board

GENERAL INFORMATION

No. of Employees :

500 (Approximately)

Bankers :

• State Bank of India, Bahadur Shah Zafar Marg, New Delhi, India
• Axis Bank
• Canara Bank
• IDBI Bank

Facilities :

Secured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
From Banks	6273.300	2939.000
From Financial Institutions	736.300	786.200
Working Capital Borrowings from Bank	1063.500	398.800
Total	8073.100	4124.000
Note: Working Capital Borrowings 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 movable and immovable assets of the Company.
Unsecured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Short Term Loans from Banks	0.000
Buyer’s Credit facilities from Bank	233.700
Public Deposits	9.100
Foreign Currency Term Loans from Bank	24.300
Foreign Currency Convertible Bonds (FCCB’s)	2391.900
Public Deposits	203.400
Less: Current maturities of Long Term Borrowings	1173.600
Total	1688.800	1259.600
Notes: (a) Term Loans of Rs. 3074.300 Millions (FIs – Rs. 736.300 Millions and Banks Rs. 2338.000 Millions) are secured by means of first pari passu mortgage/charge on the fixed assets of the Company. Out of the above Term Loan Rs. 1076.500 Millions (FIs - Rs. 702.500 Millions and Banks Rs. 374.000 Millions) are further secured by second charge on the current assets of the Company. These Term Loans are/shall be repayable as under :- (i) Term Loans aggregating to Rs. 224.600 Millions are repayable in 3 equal annual installments from June-2012 to June-2014, (ii) Term Loan of Rs. 378.600 Millions is repayable in 9 half-yearly installments from June-2012 to June-2016, (iii) Term Loans aggregating to Rs. 890.600 Millions are repayable in total 28 equal half-yearly installments from June-2012 to June-2018, (iv) Term Loans aggregating to Rs. 1301.700 Millions are repayable in total 51 equal quarterly installments from April-2012 to March-2018, (v) Term Loans aggregating to Rs. 44.800 Millions are repayable in June 2012, (vi) Term Loan of Rs. 234.000 Millions is repayable in 26 equal monthly installments from April-2012 to May-2014. (b) Terms Loans of Rs. 3935.300 Millions (FIs – Rs. Nil, Banks Rs. 3935.300 Millions) are secured by means of first pari passu mortgage/charge on the fixed assets, both present and future, of Unit JKPM of the Company. These Term Loans are/shall be repayable as under :- (i) Term Loans aggregating to Rs. 950.000 Millions are repayable in total 25 equal quarterly installments from September-2014 to December-2020, (ii) Term Loans aggregating to Rs. 2985.300 Millions are repayable in total 50 equal half-yearly installments from March-2013 to March-2023, (c) Certain charges have been created against which loan disbursement partially/yet to be availed. (d) Certain charges are in the process of satisfaction. (e) Secured Terms Loans from Financial Institutions and Banks include Rs. 4035.700 Millions foreign currency loans. (f) Un-secured Term Loan from Bank of Rs. 24.300 Millions is repayable in 4 equal half yearly installments from Apr-2012 (g) FCCB’s of EURO 35 Million @ 6.455% issued on 30th May, 2011 are convertible into equity shares of the Company at an initial conversion price of Rs. 65 per share, subject to price adjustment as per agreement, after 3 years and 6 months from the date of issue. If not converted then the FCCBs will be redeemed at par between 15th May 2016 to 15th May 2018 in 5 half yearly installments. (h) Public Deposits are due for repayment in 2012-13, 2013-14 and 2014-15.

Banking Relations :	--
Auditors :
Name :	Lodha and Company Chartered Accountants
Address :	New Delhi, India
Associates :	JK Enviro-Tech Limited
Subsidiaries (Wholly Owned) :	v Songadh Infrastructure and Housing Limited v Jaykaypur Infrastructure and Housing Limited
Enterprise over which KMP’s have significant influence :	Habras International Limited

CAPITAL STRUCTURE

AS ON 08.08.2012

Authorised Capital : Rs.5000.000 millions

Issued, Subscribed & Paid-up Capital : Rs.1366.206 Millions

AS ON 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
200000000	Equity Shares	Rs.10/- each	Rs. 2000.000 Millions
30000000	Redeemable Preference Shares	Rs.100/- each	Rs. 3000.000 Millions
	Total		Rs. 5000.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
136620625	Equity Share	Rs.10/- each	Rs. 1366.200 Millions
3000	Redeemable Preference Shares	Rs.100/- each	Rs. 0.300 Million
	Total		Rs. 1366.500 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		1366.500	782.400	783.500
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		7148.100	5106.600	3973.900
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8514.600	5889.000	4757.400
LOAN FUNDS
1] Secured Loans		8073.100	4124.000	3921.500
2] Unsecured Loans		1688.800	1259.600	1560.600
TOTAL BORROWING		9761.900	5383.600	5482.100
DEFERRED TAX LIABILITIES		1218.200	1284.000	1345.600
TOTAL		19494.700	12556.600	11585.100
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		8070.600	8444.600	8795.800
Capital work-in-progress		5837.500	938.900	208.000
INVESTMENT		729.600	827.700	419.400
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1641.900	1275.300	1268.900
	Sundry Debtors	1441.600	1078.700	1044.900
	Cash & Bank Balances	1476.900	308.900	78.700
	Other Current Assets	564.300	0.000	0.000
	Loans & Advances	4066.900	1717.800	1609.800
Total Current Assets		9191.600	4380.700	4002.300
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	1427.000	1415.800	1157.113
	Other Current Liabilities	2618.400	561.890	1585.400
	Provisions	289.200	67.010	257.700
Total Current Liabilities		4334.600	2044.700	1843.100
Net Current Assets		4857.000	2336.000	2159.200
MISCELLANEOUS EXPENSES		0.000	9.400	2.700
TOTAL		19494.700	12556.600	11585.100

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	13282.600	12307.200	11055.300
		Other Income	253.000	148.200	27.700
		TOTAL (A)	13535.600	12455.400	11083.000
Less	EXPENSES
		Cost of Material	7214.000	5846.900
		Purchase of Stock in trade	722.000	333.500
		Changes in Inventories of Finished Goods and WIP	(161.300)	103.700
		Employee Benefits Expenses	1261.400	1300.100
		Other Expenses	2736.400	2156.800
		TOTAL (B)	11772.500	9741.000	8628.400
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		1763.100	2714.400	2454.600
Less	FINANCIAL EXPENSES (D)		512.500	513.700	484.900
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		1250.600	2200.700	1969.700
Less/ Add	DEPRECIATION/ AMORTISATION (F)		729.400	716.200	700.400
	PROFIT BEFORE TAX (E-F) (G)		521.200	1484.500	1269.300
Less	TAX (H)		28.000	420.300	359.000
	PROFIT AFTER TAX (G-H) (I)		493.200	1064.200	910.300
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		2809.300	2029.800	1319.100
Less	APPROPRIATIONS
		Dividend		176.000	156.600
		Debenture Redemption Reserves		229.400	0.000
		Debenture Redemption Reserves Written back	N.A.	(229.400)	0.000
		Capital Redemption Reserves		1.100	2.100
		Corporate Dividend Tax		29.200	1745.100
	BALANCE CARRIED TO THE B/S		3302.500	2809.300	2029.800
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	436.100	422.534	290.543
		Interest	0.000	0.000	0.000
	TOTAL EARNINGS		436.100	422.534	290.543
	IMPORTS
		Raw Materials	2426.500	1183.971	1081.053
		Stores & Spares	189.200	148.587	149.419
		Capital Goods	2821.000	126.525	77.671
		Others	545.400	244.636	245.200
	TOTAL IMPORTS		5982.100	1703.719	1553.343
	Earnings Per Share (Rs.)
	Basic		4.41	13.62	11.31
	Diluted		3.46	13.63	11.33

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	3.64	8.54	8.21
Net Profit Margin (PBT/Sales)	(%)	3.92	12.06	11.48
Return on Total Assets (PBT/Total Assets}	(%)	3.10	11.57	9.92
Return on Investment (ROI) (PBT/Networth)		0.06	0.25	0.27
Debt Equity Ratio (Total Liability/Networth)		1.66	1.26	1.54
Current Ratio (Current Asset/Current Liability)		2.12	2.14	2.17

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	Yes
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	No
10]	Designation of contact person	No
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	--
23]	Banking Details	Yes
24]	Banking facility details	Yes
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	PAN of Proprietor/Partner/Director, if available	No
32]	Passport No of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No

COMPANY 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 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 Industries. Subject today has an combined installed capacity of 150000 tpa with two integrated Paper Mills at 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 realisation of market pulp. The plant was commissioned during the year itself. J K Paper has also been consistently 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 in respect 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 raw material 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 distributed 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 company'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 kick started 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 outsourcers domestically 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 subject from The Central Pulp Mills Limited Latest Development: subject 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’s Sales and Other Income during the year was Rs. 1,5571.000 Millions, Operating Profit (PBIDT) Rs. 1763.100 Millions and PAT stood at Rs. 493.200 Millions. The Company’s production was 2,83,038 tonnes and sales increased to 2,77,599 tonnes as against 2,67,081 tonnes.

Operating Profit (PBIDT) was considerably impacted due to increase in raw material price, lower receipt of linkage coal resulting in purchase of open market coal at much higher price and increase in other input costs. The Company was able to offset some of these cost increases by higher productivity and efficiencies. However, market conditions did not favour increase in product prices to fully compensate the cost increases during the year.

International hardwood pulp prices declined from a level of US $ 770/MT in April 2011 to as low as USD 550/MT during December 2011. Since then it has increased again by USD 150/MT. However, much of the benefits due to the drop in pulp prices were neutralized by the depreciation in rupee vis-à-vis the US Dollar.

JK Paper has been constantly creating value with its Brand driven strategy and the brands of the Company are synonymous with premium quality paper. It is the ability to understand customers’ aspirations and develop products for those needs and fulfill them which have given us the “first mover advantage” in many products.

Their long standing relations with channel partners also helped us to withstand competition. The Company is the market leader in office papers and among the top 2 players in coated paper and high end packaging board segment.

The Company was able to increase acreage under farm forestry significantly in 2011-12 by aggressive efforts. This will augment supplies of wood from our nearby catchment area and help us reduce transportation of wood from long distances.

The Company carried out some upgradation and de-bottlenecking in its Packaging Board plant at Unit CPM which enhanced its capacity from 60,000 tpa to 84,000 tpa. The Company’s factories have been consistently operating at more than 100% of its stated capacities. This is due to continuous improvements and modernisation of plant and machinery. In order to better refl ect the current production capabilities, the management considers it appropriate to re-state the installed capacity at 2,90,000 tpa.

INDUSTRY SCENARIO

India’s per capita consumption of paper and board has shown consistent rising trend in recent years and it is expected that the market size will rise to 20 million tonnes by 2020 from around 10.5 million tonnes in 2010-11. Despite the slower growth last year due to economic slowdown, medium to long term growth potential of the industry remains bright. Low per capita consumption of paper and board, at around 9.5 kg, vis-à-vis the average World consumption of 58 kg., along with increasing literacy levels, higher spending on education sector, changing urban lifestyles as well as better economic growth augur well for sustained growth of the Indian Paper industry.

Office Papers: The market for office papers was adversely affected last year due to general economic slowdown and the consequent lesser spends by corporate and other sectors. Bunching of capacity additions in recent years added to the market pressure. However, there are signs of improvement and sales have picked up to some extent in the last quarter of the year. This trend is likely to continue in the coming quarters.

Coated Papers: The two-side coated segment where your Company operates exhibited a growth of about 12% during the year and continues to grow robustly due to high growth in corporate retailing and shift in marketing and branding methodology. However, the prices were adversely impacted during much of the year due to higher imports from China and South Korea at low prices. In the recent months, steep depreciation of the Rupee coupled with reduced pressure from these sources have enabled the industry in improving realizations.

Packaging Board: The overall segment has grown at around 9-10% during the last year. The main reasons for this increase in demand are rising disposable incomes and retail boom both of which call for superior grade packaging. This is resulting in shifting of lower quality packaging board to premium quality packaging board. The Company opines that these trends are likely to sustain in the medium to long term thus making this sector poised for growth. JK Paper has been focusing on the upper end of Packaging Board which is benefitting from the shifts.

EXPANSION

JK Paper’s expansion cum modernization project is on track. It envisages enlarging the annual capacity from the current 2,90,000 tonnes to 4,55,000 tonnes per annum by early 2013. The Rs. 1,6530.000 Millions expansion project achieved financial closure with financing done through a mix of funding viz: Rights Issue, FCCBs, Internal Accruals, Rupee-debt from Indian Banks and Forex-debt from multilateral development funding institutions.

This expansion plan will enable us to retain our leadership position in the Office Paper segment. New production line will manufacture multi-purpose cut size Office Papers. The machines from Germany and Finland incorporate the latest technology and are being sourced from the world leaders in the respective fields. By introducing contemporary technology, the Company will be able to conserve water and energy besides reducing emissions and waste discharge. It will also give us scale economies, help reduce consumption of coal and lead to more efficient use of fibre which will help the Company in being more cost competitive. Physical progress of the project is as per schedule, and project is expected to be complete by end of this calendar year. Commercial production is expected during beginning of next calendar year. To part finance the above expansion at Unit JKPM, at district Rayagada, Odisha and to fund expenditure for general corporate purposes, your Company had during the year under review issued 5,84,70,686 Equity Shares of Rs. 10 each at a price of Rs. 42 (including premium of Rs. 32) aggregating to Rs. 245.58 Crore on Rights basis in the ratio of three Equity Shares for every four Equity Shares held on the Record Date i.e. 27th July 2011. Consequent to the Rights Issue, the paid-up Equity Share Capital of the Company increased w.e.f. 3^rd September 2011 to Rs. 1366.200 Millions from Rs. 781.500 Millions. The proceeds of the Rights Issue are being utilised as per objects of the issue and pending full utilisation, the balance amount are invested in mutual funds and fixed deposits with banks.

The Company had also issued unsecured and unlisted Foreign Currency Convertible Bonds (FCCBs) aggregating to Euro 35 Million (equivalent to Rs. 2261.400 Millions) to European Development Financial Institutions in May, 2011. Various loans have also been negotiated from domestic and international banks/ institutions and the project finance stands fully tied-up.

CUSTOMER-IN CULTURE AND QUALITY

JK Paper has been committed to meeting customers needs by offering them a range of products that confirm to their varied requirements. They have been doing this through regular and continual up gradation in product quality, modernization and adoption of latest technology and processes, and strict adherence to quality standards and pro active customer interaction.

Customers are periodically invited to the Mills for interaction with our workmen and staff. This makes the Company staff more quality conscious and customer focused. The Company has been taking up regular audits to identify the areas for improvement and take appropriate corrective and preventive measures. This has helped to understand customer preference and prepare ourselves to stay ahead of competition. Last year, we developed new products for specific segments like C1S coated boards (Natural shade), Playing Card Boards, and Up gradation of JK Easy copier shade etc.

AWARDS AND RECOGNITION

It is a matter of great satisfaction that your Company has continued to be conferred several awards in recognition of its commitments to excellence, efficiency and environment friendliness.

Unit JKPM has been awarded the following;

(a) Greentech Environment Excellence Award for Outstanding achievement in Safety Management.

(b) Silver Award in Paper Sector from Greentech Foundation.

(c) National Award for Excellence in Energy Management 2011 as an “Energy Efficient Unit” from Confederation of Indian Industries (CII), and

(d) Second Prize for “Best Practices in Industrial Relations” from Confederation of Indian Industries (CII), Bhubaneswar.

Unit CPM has been awarded the following;

(a) CII National HR Excellence Award – Strong Commitment to HR Excellence, 2011,

(b) Greentech Foundation CSR Gold Award – 2011,

(c) Greentech Safety Gold Award – 2011, and

(d) South Gujarat Chamber of Commerce and Industry Productivity Award – 2011.

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

Global economic recovery has seen a mixed pattern. While US has shown modest recovery, Europe is still struggling to get over its debt crisis. Emerging economies have done relatively better even though their performance has been adversely affected by slowdown in developed economies.

Though the overall sentiments improved during 2012, it would be too early to say that the global economy is out of the woods. The events in Euro Zone and indicators from China need to be closely monitored to develop any view on the future prospects. Much will depend on whether US will continue to sustain the upward trajectory of growth. Any unfavorable developments in Middle East are likely to have an impact on crude oil prices and put the recovery at a risk. Considering all this the global growth in 2012 is not expected to rise sharply and may linger around the last year rate of 2.7%. Recent years have seen emerging economies, especially Asia and Latin America driving growth of global paper and board consumption but developed economies even now contribute significant proportion of global demand. Any adverse development in this bloc impacts global performance of the paper industry and it is expected that global demand in 2011 will be around 400 million tonnes marginally higher than 395 million tonnes achieved in 2010.

Paper industry in developed economies has been hit by increasing competition from electronic media such as internet advertising, email, eBooks etc and this is likely to get accentuated in the coming years. Paper and Board

demand in emerging economies has, however, been robust thanks to increasing consumerism, purchasing power, emphasis on education and knowledge as also the relatively low per capita consumption of paper and board vis-à-vis those in developed countries.

IMPACT OF GLOBAL DEVELOPMENTS ON INDIAN PAPER AND BOARD INDUSTRY

The slowdown in global economy had its effect on the Indian economy with the GDP growth slowing down to 6.5% in 2011/12 from 8.4% in 2010-11. Consequently, the Indian paper and board industry was impacted by cost cutting by corporate sector and other end use sectors. International pulp prices softened during the period but dollar appreciation negated the possible gains to the industry. Indian industry went through a challenging period last year due to the tough market conditions and rising input costs especially of energy and to some extent chemical and other inputs. Industry’s pricing power was limited while rising costs put pressure on profit margins. We see some welcome signs of recovery both in demand and pricing in recent months and hope that this will continue in the coming quarters. The long term growth story of the industry is still intact and we expect that the industry will soon catch up with its earlier growth path.

SUPPLY AND DEMAND SCENARIO IN INDIAN PAPER AND BOARD INDUSTRY

The industry experienced an unprecedented situation in 2011-12 with growth slowdown and commissioning of new capacities in some segments by major players. This led to a temporary demand – supply mismatch and inventory buildup in the industry. With no new capacity additions likely in the near future, this mismatch will be absorbed in the next few quarters as the economy returns to trend growth.

Over the past few years, the Indian industry has grown faster at 8.5% annually as against the global paper industry growth of 2%. The long term growth drivers, which remain intact, will ensure that the Indian paper industry will continue to grow at 8-9% in this decade. Slowdown in most of the developed markets has forced major global paper manufacturers look at newer markets across the world. India with its attractive growth rate is emerging as one of the obvious choices. They expect to see some of these players in the Indian markets. Most of these players are not likely to enter the market through Greenfield projects but through acquisition of existing capacities. This could trigger a round of consolidation in the currently fragmented industry.

MARKET FOR COMPANY’S PRODUCTS

The market for Writing and Printing paper is expected to grow by about 9% annually over the next 5-7 years. As a result market size will expand from the current 4.4 million tonnes to about 8 million tonnes per year. The industry will also see acceleration in the trend that favours branded and value added products. The combined annual size of Copier and Coated Papers is expected to double over the next 5 years as a result of increasing use of electronic devices, e-ticketing etc.

Copier and Office Paper

Growth of Office Papers was sluggish last year for a variety of reasons. Demand was subdued due to growth slowdown in the economy and cost cutting across the board. At the same time there was excess supply due to recent capacity additions. The demand growth was muted in the first 9 months but the scenario improved during Jan-March 2012. Taking a medium to long term outlook, it is clear that there is a good demand growth coming from digital printing segment. This would mean greater requirement of high quality papers like ColorLok that is marketed by the Company. With the current expansion programme at JK Paper Mills getting completed soon, the Company will be able to enhance market share in Copier and Office Paper market over the next few years.

Coated Paper

Coated Paper segment maintained the strong growth in 2011-12 as well, though the market witnessed high imports of Coated Paper from China and Korea at a very cheap landed price compared to domestic prices. Due to antidumping duties imposed by US and Europe on Chinese Coated paper, the segment witnessed aggressive selling in India by Chinese producers. The situation eased to some extent, thanks to rupee depreciation that made imported Coated Paper relatively more expensive vis-à-vis the local output. This helped the Company to take some price increases in the last quarter of FY 2011-12. Growth in this segment is expected to continue on account of switch over from uncoated paper in specific applications.

Packaging Boards

Increasing disposable income and retail boom has led to increased thrust on superior product packaging in consumer goods. Consumer goods companies are increasingly focusing on improving their product packaging to increase visibility of their products and grab customer attention. This is fuelling high growth in the premium Packaging Boards segment. Most of the end-use industries like FMCG, Pharmaceuticals, Food & Beverages are experiencing good volume growth year on year. These industries are also switching from low quality Duplex Boards to high quality Virgin Fibre Boards for better visual appeal and functional properties, thus benefiting the Company. We expect the volume growth in this segment at a healthy rate of 9-10% annually with higher growth coming from premium Packaging Board segment in which the Company is present.

The Company was able to produce higher volumes this year due to the machine rebuild that was completed towards the end of last year. The Company could achieve higher capacity utilization of 106% on this expanded capacity and successfully market it in the domestic markets to achieve a market share of over 25%. The Company also optimised its product mix to achieve higher volumes in products with higher profit margins. The Company has been consistently improving its service levels to exceed customer expectations and strengthen its relationship with them.

Outsourcing

To tide over the capacity constraint and to satisfy customers’ needs for those products not manufactured in-house, the Company has been actively encouraging outsourcing as an option. Last year they increased our outsourcing activity which helped them to reach out to more customers particularly in lower GSM Coated Papers. The Company would continue to use this model to exploit opportunities available in the market.

Stationery Products

For the Company the stationery business is becoming increasingly important. Through this business the Company is supplying note books to schools and ring pads to corporate sector. This is a value added product, the market for which is growing due to thrust on education at all levels. Within a short period the Company has managed to establish its products in this market and expanded its reach in all the four regions of the country. Last year saw consolidation of our earlier efforts and entry into new markets in each zone.

UNAUDITED FINANCIAL RESULTS FOR THE FIRST QUARTER ENDED 30^TH JUNE, 2012

(Rs. in Millions)

PARTICULAR	THREE MONTHS ENDED 30.06.2012
	UNAUDITED
Income from Operations	4098.200
(a) Net Sales / Income from operations	3447.600
(b) Other Operating Income	4.200
Total Income	3451.800
Expenditure
Cost of material consumed	1933.300
Purchases of stock in trade	96.100
Changes in inventories of finished goods, work in progress and stock in trade	(47.400)
Employee benefits expenses	333.400
Depreciation and amortization expenses	182.000
Other expenses
Power, fuel and water	467.900
Others	241.900
Total	3207.200
Profit from operations before other income, interest and exceptional Items	244.600
Other income	50.900
Profit before interest and exceptional Items	295.500
Interest	130.000
Profit after Interest but before Exceptional Items	165.500
Exceptional Items	--
Profit (+)/Loss(-) from Oridinary Activities before tax	165.500
Tax expense
Provision for current tax	42.100
Mat credit entitlement	--
Provision for deferred tax	(18.000)
Net Profit (+)/Loss(-) from Ordinary Activities after tax	141.400
Extraordinary items	--
Net Profit (+) / Loss (-) for the year period	141.400
Paid up equity share capital (Face value of Rs.10/- per share)	1366.200
Reserves excluding revaluation reserves as per balance sheet of previous accounting year	--
Earnings per share (Before and After Extraordinary Items) (In Rs./ Shares) (Not Annualised)
(a) Basic	1.03
(a) Diluted	0.82
PARTICULARS OF SHAREHOLDING
Public shareholding
Number of shares	66936672
Percentage of shareholding	48.99
Promoters and Promoters group Shareholding-
a) Pledged /Encumbered
Number of shares	Nil
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	Nil
Percentage of shares (as a % of total share capital of the company)	Nil
b) Non Encumbered
Number of shares	69683953
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	100.00
Percentage of shares (as a % of total share capital of the company)	51.01
INVESTOR COMPLAINTS-THREE MONTHS ENDED ON 30^TH JUNE, 2012
Pending at the beginning of the Quarter	Nil
Received during the Quarter	Nil
Disposed of during the Quarter	Nil
Remaining unresolved at the end of the Quarter	Nil

NOTES:-

1. The Company’s expansion project of Rs.1,6530.000 Millions at Unit - JKPM Odisha, is progressing as per schedule.

2. During the Previous Year (2011-12) the Company raised funds through Issue of Equity Shares (Rights) and Foreign Currency Convertible Bonds (FCCBs) aggregating to Rs.4717.200 Millions. Out of this, Rs.4660.900 Millions has been deployed for the expansion project and specified purposes, and balance Rs.56.300 Millions has been invested in Mutual Funds.

3. The Company has redeemed 3,000 (Nos), 10% Cumulative Redeemable Preference Shares (Series “G”) of Rs.100 each along with accrued dividend of Rs. 0.44 Lac and premium payable on redemption on 30th June, 2012.

4. The figures for the previous period have been regrouped / rearranged, wherever necessary.

5. The Company has only one business segment namely, “Paper and Board”.

6. These results have been reviewed by the Audit Committee and approved by the Board of Directors, at their respective meetings held on 23rd July, 2012. Limited Review of these results has been carried out by the Auditors.

CONTINGENT LIABILITIES:

(Rs. in Millions)

Particulars	31.03.2012	31.03.2011
(a) Excise duty liability in respect of matters in appeal	98.300	96.200
(b) Sales tax liability in respect of matters in appeal	36.900	38.800
(c) Other Matters	277.800	117.500

In respect of certain disallowances and additions made by the Income Tax Authorities, appeals are pending before the Appellate Authorities and adjustment, if any, will be made after the same are finally determined.

FIXED ASSETS:

Tangible Assets:

v Land

- Freehold

- Leasehold

v Buildings

v Plant and Machinery

v Furniture, Fixtures and Equipments

v Vehicles and Locomotives

v Railway Sidings

Intangible Assets

v Performance Improvement and Development

v Software

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 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. 56.02
UK Pound	1	Rs. 86.89
Euro	1	Rs. 67.84

INFORMATION DETAILS

Report Prepared by :

BVA

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	5
--RESERVES	1~10	6
--CREDIT LINES	1~10	5
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		50

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	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.