Despite the hardships of Covid, Satia Industries achieved capacity utilization of 115% in FY 21; entered into agreement with a US based global brand

Despite the hardships of Covid, Satia Industries achieved capacity utilization of 115% in FY 21; entered into agreement with a US-based global brand

 -The management expects to report 50-60% growth in the Revenue and at least 150 to 200 bps EBIDTA margin accretion in FY22

Sri Muktsar Sahib | 5th January 2022 | The Pulp and Paper Times:

To become a leader in its own segment with excellence in all-round performance creating value for all stakeholders of the company, society and the economy, Satia Industries Limited (SIL) expects to report 50-60% growth in the revenue in FY22 by injecting various growth strategies. Satia Industries Limited (SIL), is one of the largest Wood and Agro-based paper manufacturers in India. 

SIL has total capacity of 1,05,000 MT and in FY21 achieved a capacity utilization of 115%. SIL supplies 50% of its production to State textbook boards. Long-standing relationship with State Text-book Corporations helps in maintain a healthy order book with more than 40% contribution in total revenue.

“This year (2020-21) was most difficult for the whole economy and especially writing and printing industry because all educational institutions remained shut throughout the year. Most of the companies shifted to the culture of work from home and paper consumption in offices too went down drastically,” said Dr. Ajay Satia, Chairman Cum Managing Director, SIL in the annual report of the company.

Dr. Satia informed that most of the mills in the industry operated at lower capacity utilisation but your company achieved a capacity utilization of 115% despite the hardships of Covid -19. “We hope to commission the new production in the financial year 2021-22 and then we shall be in the top ten writing and printing producers in India once we achieve full capacity utilisation,” He said.

SIL achieved a turnover of Rs.595.16 Cr which was down by 27.76 % than the last year because of lower price realisation which went down by 15.04 %.  SIL has entered into agreement with a US based global brand interested in sourcing of packaging products and is ready to share its patented product designs for manufacturing and supply to indigenous and the global market. The expected average realization is expected to be between Rs. 250 - Rs.300 per kg, which is higher by 40- 50% compared to local market realization.

Tapping new geographies would absorb the increased production Equipped with increased capacities, SIL aims to expand its geographical footprints. SIL currently has a presence in Sri Lanka & Nepal. SIL plans to expand its base in Middle east, African countries and also with select European and American clientele, who seem to have evinced interest in sourcing green copier paper (premium quality) from India.

To double the capacity and move up the value chain the incremental capacity comes equipped with a technology which would enable SIL to manufacture a higher quality paper at par with the best. This would help SIL to compete amongst the tier 1 Companies, in terms of quality product offerings. Also, these products command a significant premium over SIL’s current product basket.

Currently SIL commands 10- 12% market share in the State book boards market in India. However, with the new capacities coming on stream, SIL would be in a position to cater to any incremental demand from the State book boards. SIL’s open market supplies could be taken care of from the new capacity, thereby not diluting its client diversification strategy.

Supplies to State boards: 40-50% of Revenues

• SIL supplies high quality watermark paper to various state text-book boards.

• Consolidated demand from all Text-books board is approximately 5,00,000 TPA of paper.

• By supplying 50-55k TPA to various state boards, SIL boasts of a 10-12% market share in

this vertical.

• The State text-book orders are tender-driven business funded under ‘Sarva Shiksha Abhiyaan’ of Govt. of India and payment to vendors come from respective state boards, thus, the average receivable days ranges in 45-60 days.

New addition in the Revenue stream

Paper Cups & Cutlery:

- SIL has introduced a new product line of Virgin-based fibre cups. This segment is growing @ 12% p.a. These paper cups are a replacement to plastic cups (which are strictly prohibited) for water, tea or cold drinks.

- With aggressive efforts, SIL has made a strong foothold in this segment which will increase significantly once new machine commences production of cups & cutlery.

- SIL is also exploring opportunities in manufacturing specialized food packaging (pizza box) and bio-degradable table cutlery, which finds market with players like Dominos, Swiggy, Zomato etc

COMPANY PERFORMANCE

HIGHLIGHTS

Revenue for the financial year ended 31st March 2021 is INR 595 Crore as against INR 824 crore for the previous Financial Year ended 31st March 2020. Profit before Tax for the year 2020-21 is 66.83 crore as compared to 115.27 crore for the previous year. Profit after Tax for the year 2020-21 stood at 49.54 crore as against 91.83 crore in the previous year.

Web Title: Despite the hardships of Covid Satia Industries achieved capacity utilization of 115percent in FY 21 entered into agreement with a US based global brand