Pudumjee Paper proposes to renew the Leave and Licence Agreement for further 5 years; defers the Relocation Plan

Pudumjee Paper proposes to renew the Leave and Licence Agreement for further 5 years; defers the Relocation Plan

Pune | 4 September 2020 | The Pulp and Paper Times:

Having established itself as pioneers in Specialty Paper products and preferred supplier of quality products in India, Pudumjee Paper Products has proposed to renew its Leave and Licence Agreement in terms of which the Company’s facility is located at Pune for further 5 years. 

The current manufacturing facility at Pune has witnessed rapid urbanization around it and faces all associated challenges including higher cost of operations. These facilities are located on the land and buildings owned by AMJ Land Holdings Ltd (Formerly known as Pudumjee Pulp & Paper Mills Ltd) and 3P Land Holdings Ltd (Formerly known as Pudumjee Industries Ltd) under Leave and License agreement.

“In view of prevailing uncertainty about growth in the economy, the plan for relocation of Pune facility to Mahad and expansion thereat continues to be in abeyance. Consequently, the Leave and Licence Agreement in terms of which the Company’s facility is located at Pune for the land and buildings owned by AMJ Land Holdings Ltd. (Formerly known as Pudumjee Pulp & Paper Mills Ltd.) proposed to be renewed for a further period of 5 years with effect from 1st February 2021 on the terms and conditions which may be mutually acceptable to the said owner of the land and buildings. Accordingly, a resolution is proposed at the ensuing Annual General Meeting, which the Directors commend for your approval,” says in Pudumjee Paper Products’ annual report for 19-20.

Pudumjee’s current manufacturing facilities are located at Thergaon, Pune on the land and buildings owned by AMJ Land Holdings Ltd (Formerly known as Pudumjee Pulp & Paper Mills Ltd.) and 3P Land Holdings Ltd. (Formerly known as Pudumjee Industries Ltd) taken by the Company on Leave and License basis the period of which agreement is expiring on 31st January 2021. 

                     

Pudumjee Paper has also invested in the industrial site of about 75 acres at MIDC Mahad in Maharashtra where long term plan is to relocate the aforesaid facilities and to capture future growth opportunities. As specialty paper market is substantially different from the commodity paper market, the Company has been evaluating options in regard to manufacturing of new additional products when the facilities are relocated at Mahad which require high investment, though eligible for State Government’s incentives corresponding to the capital expenditure. 

Besides, uncertainties arising out of Covid pandemic have also further contributed to the deferment of the project of relocation to Mahad. It is in this background that the Company proposes to renew the aforesaid Leave and License for a further period of 5 years on the mutually acceptable terms and conditions with the said owners of the land and buildings at Pune.

OPERATIONS :

During the year (FY 19-20) the Company has achieved record output at 68548 MTs of paper which is higher by about 8% over last year. The output would have been further higher by about 2000 MTs but for the Corona Virus induced ‘shutdown’ since 22nd March 2020. Consequently, the Company also achieved higher revenue at INR 604.48 crores as against INR 589.52 crores last year. As a result, the EBIDTA has also registered significant growth at INR 60.92 crores as against INR 40.83 crores last year, a rise of over 49%, which also includes gains made from higher productivity, judicious fibre management, cost reduction and lower pulp prices. The Profit before Tax at INR 41.05 crores was also higher by about 60% over last year.

The Coater Project was installed and commissioned during the year. This project aimed to take the Company into “functionally coated” paper business for food baking/packaging applications, is gradually improving its capacity utilization.

The report further says that “the sudden entry of Corona Virus into India has taken entire nation by surprise. The consequent nationwide ‘Lockdown’ has severely disrupted economic activity in the short term and created uncertainty for the Medium Term,

“The production at its factory at Thergaon, Pune, remained suspended for 51 days during the first half of calendar year 2020, whereafter the production resumed in accordance with the conditions stipulated by the Government of Maharashtra while granting permission to it since 12th May 2020. The production, whilst waiting for the demand to pick up is gradually increasing after the resumption and currently runs at about 50% capacity utilization. The Hygiene Products Division, which mainly focuses on institutional business is also witnessing a similar trend which is currently operating at about 30% of normal level and is expected to gradually move upwards as demand picks up as more and more institutions reopen their establishments”.

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