MIRA INFORM REPORT

Report Date :

26.05.2012

IDENTIFICATION DETAILS

Name :	SUN PAPER MILL LIMITED
Registered Office :	No.86, E V K Sampath Road, Chennai – 600007, Tamilnadu
Country :	India
Financials (as on) :	31.03.2011
Date of Incorporation :	11.07.1961
Com. Reg. No.:	18-4531
Capital Investment / Paid-up Capital :	Rs.88.673 Millions
CIN No.: [Company Identification No.]	L21011TN1961PLC004531
TAN No.: [Tax Deduction & Collection Account No.]	CHES00550E
PAN No.: [Permanent Account No.]	AAACS5044B
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchange.
Line of Business :	Manufacturer of Newsprint, Printing and Writing Paper.
No. of Employees :	Not Available

RATING & COMMENTS

MIRA’s Rating :

B (28)

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 410000
Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is an established company having moderate track. The company has incurred some losses during the year. However, trade relations are reported as fair. Business is active. Payments are reported to be slow. The company can be considered for business dealings with some cautions.

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 – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
India	A1	A1

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

LOCATIONS

Registered Office :	No.86, E V K Sampath Road, Chennai – 600007, Tamilnadu, India
Tel. No.:	91-44-26648503/ 26618504/ 25388203/ 204
Fax No.:	91-44-25383159/ 26618259/ 26618254
E-Mail :	sunpaper@bsnl.in sunpaper@sanchernet.in cfo@sunpaper.in spmfm@eth.net
Factory :	Post Bag No.2, Chernmahadevi, District Tirunelveli – 627414, Tamilnadu, India

DIRECTORS

(AS ON 10.09.2011)

Name :

Dr. Sivanthi Adityan Balasubramanian

Designation :

Chairman and Managing Director

Address:

86, EVK Sampath Road, Chennai-600007, Tamilnadu, India

Date of Birth/ Age:

24.09.1936

Date of Appointment:

28.12.1978

DIN No.:

00037717

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Date of cessation	Company Status	Defaulting status
1	U22121TN1959PTC003861	NELLAI MURASU PRIVATE LIMITED	Director	4/8/1959	4/8/1959	-	Active	NO
2	U90009TN1958PTC003669	EDUCATIONAL TRUSTEE COMPANY PRIVATE LIMITED	Director	30/12/1962	30/12/1962	-	Active	NO
3	U15421TN1960PLC004255	ARUNA HOTELS LIMITED	Director	5/9/1963	5/9/1963	31/01/2009	Active	NO
4	L26942TN1946PLC000931	THE INDIA CEMENTS LIMITED	Director	7/3/1967	7/3/1967	-	Active	NO
5	U63040TN1970PTC005875	GAY TRAVELS PRIVATE LIMITED	Director	31/01/1977	31/01/1977	-	Active	NO
6	U99999DL1951PLC002023	THE INDIAN NEWSPAPER SOCIETY	Director	17/11/1977	17/11/1977	-	Active	NO
7	L21011TN1961PLC004531	SUN PAPER MILL LIMITED	Managing director	1/7/2010	28/12/1978	-	Active	NO
8	L65191TN1985PLC012362	INDIA CEMENTS CAPITAL LIMITED	Director	8/11/1985	8/11/1985	-	Active	NO
9	U15130TN1978PTC007438	SIVANTHI FARMS PRIVATE LIMITED	Director	4/7/1991	4/7/1991	-	Active	NO
10	U85110TN1994PLC026791	MIOT HOSPITALS LIMITED	Director	12/12/1994	12/12/1994	-	Active	NO
11	U63040TN1996PTC034878	INDIA CABS PRIVATE LIMITED	Director	29/03/1999	29/03/1999	-	Active	NO
12	U67200TN2002PTC048428	UNIQUE RECEIVABLE MANAGEMENT PRIVATE LIMITED	Director	26/06/2006	26/06/2006	27/05/2011	Active	NO
13	U45201TN2004PTC054407	SUBASRI REALTY PRIVATE LIMITED	Director	12/12/2007	12/12/2007	-	Active	NO
14	L99999TN1987PLC082730	TRINETRA CEMENT LIMITED	Director	30/09/2010	25/03/2010	-	Active	NO

Name :

Mr. Balsubramanian Adityan Sivanthi

Designation :

Director

Address:

No. 13 (Old No. 17), Barnaby Road, Barnaby Avenue, Kilpak, Chennai-600010, Tamilnadu, India

Date of Birth/ Age:

06.03.1965

Date of Appointment:

09.09.2005

DIN No.:

00036898

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Company Status	Defaulting status
1	U63040TN1996PTC034878	INDIA CABS PRIVATE LIMITED	Director	29/03/1999	29/03/1999	Active	NO
2	U15122TN2000PTC046054	SAMS SEA FOODS PRIVATE LIMITED	Director	7/11/2000	7/11/2000	Active	NO
3	U45201TN2004PTC054407	SUBASRI REALTY PRIVATE LIMITED	Director	7/10/2004	7/10/2004	Active	NO
4	L21011TN1961PLC004531	SUN PAPER MILL LIMITED	Director	20/04/2005	20/04/2005	Active	NO
5	U22121TN1979PLC007728	MALAR PUBLICATIONS LIMITED	Managing director	5/11/2005	5/11/2005	Active	NO
6	U93090TN1993PTC025346	SOVEREIGN MEDIA MARKETING PRIVATE LIMITED	Director	3/12/2007	3/12/2007	Active	NO
7	U22121TN1972PTC006256	RUKMANI PUBLICATIONS PRIVATE LIMITED	Director	17/08/2009	17/08/2009	Active	NO
8	U99999DL1951PLC002023	THE INDIAN NEWSPAPER SOCIETY.	Director	25/10/2010	24/09/2009	Active	NO

Name :

Mr. Kannan Perumal

Designation :

Director

Address:

156-B, Palaniappa Nagar, Sooramargala, Salem-636005, India

Date of Birth/ Age:

17.07.1939

Date of Appointment:

26.03.1988

DIN No.:

00150641

Name :

Mr. Uthirapandian Iyamperumal

Designation :

Director

Address:

115, Veeragavapuram Street, Tiruchandur-628415, Tamilnadu, India

Date of Birth/ Age:

04.01.1930

Date of Appointment:

28.12.1978

DIN No.:

00147227

Name :

Mr. Anbalagan Vaithialinga Nadar

Designation :

Director

Address:

18A/ BI, Dr. Thirumurthi Nagar, Frish Street, Nlungambakka, Chennai-600034, Tamilnadu, India

Date of Birth/ Age:

15.06.1949

Date of Appointment:

28.12.1978

DIN No.:

00059007

Other Directorship :

S.No.	CIN	Name of the Company	Current designation of the director	Date of appointment at current designation	Original date of appointment	Company Status	Defaulting status
1	L21011TN1961PLC004531	SUN PAPER MILL LIMITED	Director	28/12/1978	28/12/1978	Active	NO
2	U45201TN2004PTC054407	SUBASRI REALTY PRIVATE LIMITED	Director	7/10/2004	7/10/2004	Active	NO
3	U63090TN2005PTC058266	ANIMATED TRAVELS PRIVATE LIMITED	Director	9/12/2005	9/12/2005	Active	NO

KEY EXECUTIVES

Name :	Mr. Viswanathan Ganapathy
Designation :	Company Secretary
Address:	Flat No. F-1, 1^st Floor, Supraja Apartment, No. 125 and 126 Kamarajar Salai, Ramakristna Nagar, Alwarthiru Nagar, Chennai – 600 087, Tamilnadu, India
Date of Birth/ Age:	22.02.1963
Date of Appointment:	06.12.1995
PAN No.:	AADPV2749J

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(AS ON 10.09.2011)

Names of Shareholders	No. of Shares
Sivanthi Adityan Balsubramanian	778610
Balsubramanian Adityan Sivanthi	38100
Kannal Perumal	500
Uthirapandian Iyamperumal	750
Anbalgan Vaithialinga Nadar	2805

(AS ON 30.09.2011)

Equity Shares Break – up

Category	Percentage
Public Financial Companies	0.49
Bodies Corporate	45.20
Directors or relatives of directors	11.24
Other top fifty Shareholders (Other than Listed above)	13.49
Others	29.58
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer of Newsprint, Printing and Writing Paper.

Products :

Products Description	Item Code No.
Newsprint in Rolls or Sheets	4801
Uncoated Paper and Paper Boards used for Writing and printing	4802
Ligno Sulphonate	3804

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Paper	Tones	--	11000	24478

GENERAL INFORMATION

No. of Employees :

Not Available

Bankers :

· Indian Bank,

Credit Intensive Branch, 5-J, Madurai Road, Tirunel Veli Junction, Tirunelveli – 627001, Tamilnadu, India

· Indian Overseas Bank

Facilities :

Secured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Rupee term loans banks secured	204.686	48.251
Working capital loans banks secured	63.411	59.320
Hire purchase installment payable secured	0.447	1.037
Interest accrued due secured loans	2.321	0.558
Total	270.865	109.166
NOTE: Term Loans From Indian Bank Machinery Loan Rs.5.120 Millions Deinking Project Loan Rs.190.986 From Indian Overseas Bank Rs.8.580 Millions Total Rs.204.686 Millions Working Capital Limits From Indian Bank Open Cash Credit Rs.41.838 Millions Short Term Loan I Rs.2.500 Short Term Loan II Rs.19.073 Millions Total Rs.63.411 Millions
Unsecured Loans	31.03.2011	31.03.2010
	(Rs. In Millions)
Other Debt Unsecured	37.000	37.000
Total	37.000	37.000

Banking Relations :	--
Auditors :
Name :	Krishanan Retna and Associates Chartered Accountant
Address :	48 Jawahar Street, Ramavarmapuram, Nagercoil – 629001, Tamilnadu, India
PAN No.:	ADIPK5471A
Enterprises where no control exists:	· The Daily Thanthi · Malar Publications Limited · India Cabs Private Limited · Gay Travels Private Limited · Sun Paper Mill Employees Co-Operative Stores Limited
Other entities under control of the company:	· Sivanthi Matriculatin Higher Secondary School

CAPITAL STRUCTURE

(AS ON 31.03.2011)

Authorised Capital :

No. of Shares	Type	Value	Amount
14750000	Equity Shares	Rs.10/- each	Rs.147.500 Millions
250000	Preference Shares	Rs.10/- each	Rs.2.500 Millions
	Total		Rs.150.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
8867321	Equity Shares	Rs.10/- each	Rs.88.673 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2011	31.03.2010	31.03.2009
SHAREHOLDERS FUNDS
1] Share Capital		88.673	88.673	88.673
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		14.851	49.222	19.091
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		103.524	137.895	107.764
LOAN FUNDS
1] Secured Loans		270.865	109.166	118.309
2] Unsecured Loans		37.000	37.000	8.500
TOTAL BORROWING		307.865	146.166	126.809
DEFERRED TAX LIABILITIES		38.632	57.054	80.172
TOTAL		450.021	341.115	314.745
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		273.361	296.121	315.148
Capital work-in-progress		178.650	1.481	0.000
INVESTMENT		0.205	0.205	0.205
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	81.829	98.837	96.480
	Sundry Debtors	97.556	67.720	64.718
	Cash & Bank Balances	22.967	1.514	2.265
	Other Current Assets	0.000	0.000	8.409
	Loans & Advances	29.104	34.144	7.204
Total Current Assets		231.456	202.215	179.076
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditor	141.795	92.197	104.641
	Other Current Liabilities	72.895	44.936	58.266
	Provisions	18.961	25.684	16.777
Total Current Liabilities		233.651	162.817	179.684
Net Current Assets		(2.195)	39.398	[0.608]
MISCELLANEOUS EXPENSES		0.000	3.910	0.000
TOTAL		450.021	341.115	314.745

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2011	31.03.2010	31.03.2009
	SALES
		Income	758.032	773.987	683.105
		Other Income	25.472	17.738	10.488
		TOTAL (A)	783.504	791.725	693.593
Less	EXPENSES
		Consumption Materials Changes Inventories	418.059	383.104
		Manufacturing Service Costs	281.448	254.330
		Employee Related Expenses	68.148	66.048	720.497
		Administrative Selling Other Expenses	29.760	28.309
		Research Development Expenditure	2.295	2.298
		TOTAL (B)	799.710	734.089	720.497
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		(16.206)	57.636	(26.904)
Less	FINANCIAL EXPENSES (D)		8.319	11.440	13.461
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		(24.525)	46.196	(40.365)
Less/ Add	DEPRECIATION/ AMORTISATION (F)		28.268	28.345	28.271
	PROFIT BEFORE TAX (E-F) (G)		(52.793)	17.851	(68.636)
Less	TAX (H)		0.000	3.600	0.617
	PROFIT AFTER TAX (G-H) (I)		(52.793)	14.251	(69.253)
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		8.441	2.328	71.581
Less	APPROPRIATIONS
		Transfer to General Reserve	0.000	0.900	0.000
		Proposed Divined	0.000	6.207	0.000
		Tax on Proposed Dividend	0.000	1.031	0.000
	BALANCE CARRIED TO THE B/S		(44.352)	8.441	2.328
	IMPORTS
		Raw Materials	116.695	66.599	86.426
		Stores & Spares Parts	145.340	117.923	1.844
		Capital Goods	59.251	0.000	0.000
	TOTAL IMPORTS		321.286	184.522	88.270
	Earnings Per Share (Rs.)		(5.95)	1.61	--

KEY RATIOS

PARTICULARS		31.03.2011	31.03.2010	31.03.2009
PAT / Total Income	(%)	(6.74)	1.80	[0.10]
Net Profit Margin (PBT/Sales)	(%)	(6.96)	2.31	[10.05]
Return on Total Assets (PBT/Total Assets}	(%)	(10.46)	3.58	[13.89]
Return on Investment (ROI) (PBT/Networth)		(0.51)	0.13	[0.64]
Debt Equity Ratio (Total Liability/Networth)		5.23	2.24	2.84
Current Ratio (Current Asset/Current Liability)		0.99	1.24	0.99

LOCAL AGENCY FURTHER INFORMATION

Check list by info Agents	Available in Report (Yes/ No)
Year of Establishment	Yes
Locality of the Firm	Yes
Constitution of the Firm	Yes
Premises details	No
Type of Business	Yes
Line of Business	Yes
Promoter’s Background	Yes
No. of Employees	No
Name of Person Contacted	No
Designation of Contact person	No
Turnover of Firm for last three years	Yes
Profitability for last three years	Yes
Reasons for variation <> 20%	-----
Estimation for coming financial year	No
Capital in the business	Yes
Details of sister concerns	Yes
Major Suppliers	No
Major Customers	No
Payments Terms	No
Export/ Imports Details (If applicable)	No
Market Information	-----
Litigations that the firm/ Promoters Involved in	-----
Banking details	Yes
Banking Facility Details	Yes
Conduct of the Banking Account	-----
Buyer visit details	-----
Financials, if provided	Yes
Incorporation details is applicable	Yes
Last Accounts filed at ROC	Yes
Major Shareholders, if available	Yes

REVIEW OF OPERATIONS:

During the year the Company achieved a production of 24478 tonnes of paper as compared to the production of 26524 tonnes in the previous year. The total production achieved during the year was lower than the previous year due to intermittent stoppages reported Capacity utilization during the year was 111%. The gross turnover achieved was Rs 758.032 Millions for the current year as against the turnover of Rs.773.988 Millions achieved during the previous year. The company had sustained a loss of Rs 16.206 Millions before interest, depreciation and tax as compared to the profit of Rs 57.636 Millions achieved during the previous year.

The turnover achieved for the year was lower than the previous year, mainly due to lower productivity due to intermittent stoppages. The lower productivity and lower turnover added with the steep increase in the cost of all the input materials had affected the performance of the company and the operations for the year ended with a loss. Some of the unfavourable factors that had affected the performance are increase in the prices of raw materials, fuel especially imported coal and chemicals.

After absorbing interest and depreciation of Rs 8.319 Millions and Rs 28.268 Millions respectively, the operation has ended with a Loss of Rs.52.793 Millions, as compared to the profit of Rs.17.851 Millions achieved during the previous year.

Due to the losses suffered the Company has not provided for any tax liability. 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 38.632 Millions. Since adequate provision is already made and available, excess provision available amounting to Rs.18.422 Millions has been transferred to the General Reserves account.

MARKET CONDITIONS:

The first half of the financial year under review started with a positive note indicating the beginning of the recovery of the paper market. However that was a short lived one, since new capacities that were created had flooded the market with additional quantity.

With the reduction in international prices and competition from the other domestic suppliers, mill had to maintain the prices despite increase in the cost of production.

With further increase in the prices of secondary fibres, price correction had to be effected to partially neutralize the increasing cost of production. During the II half of the financial year under review, the prices of recycled fibres had further gone up and some of the manufacturers were forced to cut their production due to unviable prices of raw materials. The international prices of paper remained at lower levels only forcing the local manufacturers to stick to lower prices. Fourth quarter commenced with a slight improvement with price corrections to partially meet the continuously increasing cost of production.

CURRENT YEAR OPERATIONS AND THE FUTURE OUTLOOK:

The market still continues to be in a subdued condition. With the higher inflation rate, revision in the fuel prices and revision in the lending rates 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 very slow 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 increased demand and higher freight rates had made the imported waste paper 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 6077 tons of production was reported for the period April -June 2011 as compared to 5894 tons achieved during the same period in the previous year.

Total Sales turnover was Rs.63.584 Millions during April-June 2011 when compared to Rs 57.167 Millions during the same period in the previous year. The production levels achieved during the first three months was better when compared to the previous 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 the sale of SLS powder 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 2010 to carry out modification works for improving the operational efficiency of the plant. There were some stoppages in the intervening period and the problems were set right. The operations had been kept under optimum levels for ensuring continuous and trouble free. The total generation during the year had come down due to the stoppages reported. With steep increase in the fuel cost, the cost of generation had gone up substantially. A total of 386.53 lacs units were generated and a total of 54.90 lacs units of surplus power was exported to the TNEB grid during the financial year under review. 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 refaced by TNERC during the previous year.

MILL DEVELOPMENT PLAN:

The company had completed the necessary formalities for setting up the deinking facility to expand and strengthen the pulping facilities and increase the pulping capacity.

Necessary orders had been placed with suppliers and supplies had started to come in. The civil works are under progress and it is expected that all these works will be completed by Sept 2011 and this facility will become operational by October 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. The total consumption of paper worldwide has grown from the levels of 169 million tons in 1981 to 253 million tons in 1993 and to the levels of 352 million tons in 2005 Current consumption level is estimated around 400 million tons.

While the developed markets may see only a flat or negative growth rate, the developing markets are expected to grow at a CAGR of 4-5%. In India, the growth is expected to be around 6-7%. China and Russia are expected to register an impressive growth in the coming years.

The product segments in the paper industry can be broadly classified as Newsprint, Printing and Writing Paper, Industrial Paper and Paper and Boards for packing applications. The growth rates for these segments will vary by grades. Tissue and Packaging segments are expected to put up a higher growth rates. Geographically, three major regional blocks are operating in these segments viz North America, Europe and Asia. Based on the primary raw materials used, the companies in the Paper Industry can be 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 Japan accounts for a sizeable portion of global consumption. China has registered the fastest growth in

recent times. India with approximately 10.0 million tons of consumption is witnessing an average growth rate of 7 - 8% per annum.

Unlike consumption trends in the other mature commodity sectors, paper consumption follows closely the economic growth. Per capita consumption of paper has grown in Western Europe and North America and reached the levels of approx 190 kgs and 300 kgs respectively. In the case of developing economies, paper consumption is growing rapidly; but the per capita consumption is much lower at 17.5 kgs. per annum. The paper and board consumption in Asia had already exceeded Europe. This growth rate will eventually make the Asian region, the largest paper consumer in the world.

DOMESTIC

Though India ranks 15 thin productions globally, it is highly fragmented with capacities ranging from 5 tons to 1000 tons. There are more than 1000 paper mills in the country which can be classified into three broad operating segments viz large integrated mills using bamboo and hardwood and large mills using waste paper/ recycled fibre, medium mills using agricultural residues and smaller mills using waste paper / recycled fibre.

Paper Industry in 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 Literacy Mission. Indian Paper Industry is a rural based industry with linkage to Agriculture and Agro Forestry.

In the domestic front, the Industry's current installed capacity is around 11.0 million tons. The annual output is in the order of 8.5 million tons. The total consumption is estimated at around 10.0 million tons. This is expected to grow to 20 million tons by 2020. Of the total consumption in India, Printing and Writing Paper accounts for about 35%, 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% 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 9 kg in India is far lower when compared to the Asian and the World average. An increase in consumption by 1 kg per capita will lead to an increase in demand of more than one million tons. There 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.

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 and 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 India to developed and developing countries. Newsprint imports are sourced mainly from Canada, Russia, China and Korea. Other grade papers are sourced from China, Finland, Germany, Indonesia, Sweden, UK and USA.

The industry is open to competition from the global players. Imports are freely allowed. The import duty on paper has been gradually reduced to lower levels.

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 lower 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% of the total estimated consumption of 18.00 lakh tons of newsprint is met through imports. Though the prices are ruling at moderate levels, the increase in the raw material prices are a concern. With expected increase in the selling prices, to match increasing input costs, the general outlook for the newsprint market is good.

b) PRINTING AND WRITING SEGMENT:

Till 2001, Printing and Writing Paper was under protection with higher level of import duty. The same has been reduced gradually. The union government had reduced the Excise duty on Printing and Writing Paper to lower levels. During the last financial year, due to uneconomic conditions and strong rupee, the exports have come down.

Pulp prices have also started to go up due to the closure of facilities in Chile. This had pushed up the prices since the overall availability of pulp had come down. With the Government's emphasis on literacy higher disposable income etc. will boost the demand for this segment and is expected to grow faster in the coming years.

c) OPPORTUNITY AND CHALLENGES:

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 9.0 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.

OUTLOOK FOR 2011 - 2012:

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 and are eroding the paper demand.

Consequently production, shipment and revenues of the paper industry is affected badly and are on the decline. The coated mechanical grades, uncoated wood free sheets and uncoated mechanical grades like newsprint are the major segments which were affected. This had led to manufacturers taking a market related action like slow down / shut down or idling some capacity.

There are signs of recovery and signs of optimism for certain grades and regions. The forecast shows a significant recovery rebound in 2011-2012 with no recession in next 5 years with only a mid cycle slow down in 2013.

In the domestic front, a stable outlook for the year 2011 is projected although concerns are expressed about consumption growth, capacity utilization and profitability. Prices are under pressure since the cost of input materials are in the increasing trend. 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. Price corrections were carried out in 2010 which was due to high cost of input materials, chemicals and energy. While the Indian Paper Industry is expected to operate under stable conditions, the new capacities that have come on stream will enhance the competition amongst the domestic manufacturers. This coupled with raising input prices of raw materials, coal, chemicals; etc will exert pressure on the margins. The industry will once again had to look for avenues to eliminate waste and improve productivity in their manufacturing operations, to keep the margins under control.

DISCUSSION ON FINANCIAL PERFORMANCE:

During the year the company produced 24478 tons of paper compared to the installed capacity of 22000 tons per annum, thus achieving a capacity utilization of 111%. The production levels achieved was lower than the previous year, which was due to intermittent stoppages reported during the year.

The total sales effected during the year was 24802 tons as against 26524 tons in the previous year. The gross turnover was Rs.758.032 Millions as against Rs.773.988 Millions achieved in the previous year. Due to lower productivity, overall sales had come down. With increase in the prices of all the input materials, the operations had suffered a loss. The Company had sustained a loss of Rs 16.206 Millions for the year. Interest and Depreciation was Rs 8.319 Millions and Rs 28.268 Millions respectively for the year as against Rs.11.440 Millions and Rs. 28.345 Millions respectively in the previous year. The year ended with a loss of Rs.52.793 Millions as against the profit of Rs.17.851 Millions achieved in the previous year. The company is taking necessary steps to control the cost to turn around the situation and improve its operations to achieve a better performance in the coming years.

No provision for income tax has been made due to losses suffered during the year. The excess provision of Rs 18.422 Millions available under Deferred Tax Liability has been transferred to General Reserves, since it is no longer required.

FUTURE PLANS

Under the Mill Expansion Plan, SPM is in the process of implementing the 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 supplies had already started. Civil and other related works are under progress. The project is expected to be completed by September 2011. 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 is being 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 India of the company	86, E V K Sampath Road, Chennai – 600007, Tamilnadu, India cfo@sunpaper.in
This form is for	Modification of Charge
Charge identification number of the charge to be modified	10017182
Type of charge	· Immovable Property · Book Debts · Movable Property
Particular of charge holder	Indian Bank, Credit Intensive Branch, 5/6-J, Madurai Road, Tirunedl Velli Junction, Tirunelveli – 627 001, Tamilnadu, India citirunelveli@indianbank.co.in
Nature of instrument creating charge	Indian Bank letter CI: TVLJN: ADV: 311: 2011-12 dt 24.01.2012 regarding the closure of Short Term Loan of Rs 20.000 Millions availed from them.
Date of instrument Creating the charge	24.01.2012
Amount secured by the charge	Rs.99.800 Millions
Brief of the principal terms and conditions and extent and operation of the charge	Rate of Interest Open Cash Credit -13.75% Bonus Loan – 16.00% Terms of Repayment Open Cash Credit – Repayable in one year Bonus Loan – Repayable in six monthly installments with a holiday period of one month commencing from December 2010 Margin Open Cash Credit – 25.00% Import/ Inland L/C – 10.00% Bonus Loan – 20.79% Extent and Operation of the charge Open Cash Credit – Rs. 42.500 Millions Import/ Inland L/C – Rs. 50.000 Millions Bonus Loan – Rs. 7.300 Millions
Short particulars of the property charged	All the immovable and 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	18.10.2011
Particulars of the present modification	Present modification is for the decrease in the total working capital facilities sanctioned by Indian Bank, CI Branch, Tirunelvei Junction, Tirunelveli due to the closure of short term loan of Rs.20.000 Millions availed from them. Now the limits are reduced to Rs.99.800 Millions from the present level of Rs.119.800 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, 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.55.73
UK Pound	1	Rs.87.26
Euro	1	Rs.69.89

INFORMATION DETAILS

Report Prepared by :

NIT

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	4
PAID-UP CAPITAL	1~10	3
OPERATING SCALE	1~10	3
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	3
--PROFITABILIRY	1~10	3
--LIQUIDITY	1~10	3
--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	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		28

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.