Seshasayee Paper reported Net profit of INR 174 Cr. for FY 19-20; Mill Development Plan-III kick started to Increase Capacity

                     

Seshasayee Paper reported Net profit of INR 174 Cr. for FY 19-20; Mill Development Plan-III kick-started to Increase Capacity

Chennai | 24 July 2020 | The Pulp and Paper Times:

“The year 2020 began on a strong note for the Paper Industry, continuing with the strong market sentiments witnessed during the earlier year. Realisations in Domestic and International Markets continued to be favourable in Q1 of 2019-20,” Said by N Gopalaratnam Chairman of Seshasayee Paper and Boards Limited, in Annual reports of FY 2019-20.

He accepts that consequent pressure on the selling prices commenced in the latter half of the 2nd Quarter and continued thro’ to the subsequent 2 quarters due to deceleration in the growth of Indian Economy with falling GDP growth, month after month; Reduction in prices of pulp and consequent reduction in prices of paper in the overseas markets, triggering larger imports into India and creating price-war with domestic suppliers and huge increase in imports of paper by Traders, from ASEAN countries, China, Korea, etc, taking advantage of Import Duty concessions available for such imports.

Further revealing the capacity enhancement plan of the Seshasayee Paper, Mr. Gopalaratnam said, the Company has now embarked on a Mill Development Plan - III (MDP - III) at Unit : Erode at a Cost of INR 315 crores.  The execution of the Project, MDP-III, has commenced with July 01, 2020 as the Zero Date with an originally planned project execution period of 21 months. However, with some of the major suppliers and service providers, both globally and in India, located in Covid-19 lockdown areas Company expects a delay in the execution of the project.

The MDP - III at Unit : Erode will consist of : Upgradation and Modernisation of the Paper Machines to increase the Capacity from 1,32,000 tonnes per annum to 1,65,000 tonnes per annum. 

- Upgradation and Modernisation of the RDH Pulp Mill to increase the Capacity to 1,54,000 tonnes per annum.

- Upgradation of the Recovery Island and augmentation of Waste Water Treatment Plant.

PRODUCTION ( FY 19-20)

During the year, the production at Unit : Erode was 1,25,313 tonnes of paper, as compared to 1,32,379 tonnes, produced in the previous year. Production was lower by 7,066 tonnes, compared to the previous year. Reduction was mainly due to shuts availed in the Paper Machine during the year for upgradation works, poor market conditions and also on account of plant operations being shut down in the last week of March 2020 due to Covid-19 lockdown.

Unit : Erode also produced 35,083 tonnes of Wet Lap Pulp to augment the Pulp requirements of Unit : Tirunelveli. 

Unit : Tirunelveli produced 72,234 tonnes of Paper during the year, as compared to 76,636 tonnes, produced in the previous year. The production was lower by 4,402 tonnes, compared to the previous year. The reduction was mainly due to planned shuts, for maintenance activities and also on account of plant operations being shut down in the last week of March 2020 due to Covid-19 lockdown. 

Overall Production for the Company was 1,97,547 tonnes of Paper and Boards for the year, as compared to 2,09,015 tonnes produced, in the previous year.

SALES 

After taking into account 443 tonnes towards in-house consumption, Unit : Erode sold 1,17,576 tonnes, against the production of 1,25,313 tonnes. 

Unit : Tirunelveli sold 69,695 tonnes after taking into account 2 tonnes towards in-house consumption. 

The overall sale of Paper and Paper Boards effected by the Company during the year, was 187271 tonnes, compared to 207971 tonnes, sold during the previous year. 

PROFITABILITY :

The Revenue from Operations of the Company for the year was INR 1183.98 crores, as against INR 1325.24 crores, in the previous year. 

Profit before interest, depreciation, exceptional item and tax was INR 290.71 crores, for the Company as a whole, compared to INR 318.90 crores, in the previous year. 

Profit after tax for the year ended March 31, 2020 was INR 174.60 crores, as compared to INR 190.00 crores, in the previous year.

EXPORT PERFORMANCE 

Unit : Erode exported 15,324 tonnes of paper during the year, as compared to 16,993 tonnes, exported during 2018-19. 

For Unit : Erode, the value of exports amounted to INR 88.40 crores (Previous Year INR 107.03 crores). For Unit : Erode, by volumes, exports constituted around 12.23% of the Production as against 12.84% in the previous year. 

Unit : Tirunelveli exported 21,089 tonnes of Paper during the year, as against 17,825 tonnes, exported during 2018-19. For Unit : Tirunelveli, the value of exports amounted to INR 120.51 crores (Previous Year INR 111.01 crores). For Unit: Tirunelveli, Exports, by volumes, constituted around 29.20% of the Production as against 23.26% in the previous year. Unit : Tirunelveli also sold 33 tonnes during the year, under deemed exports whose proceeds amounted to INR 0.19 crores.

Higher prices, productivity improvements and synergies from recent acquisitions, as well as stronger wood product, paper packaging and market pulp demand, will drive profit growth, said Moody’s outlook report. “This will be partially offset by lower paper demand and rising freight, labour, energy and chemical costs. Fibre prices, typically the largest input cost for most of the industry’s products, will be volatile, but average 2018 costs will be flat compared to average 2017 costs” annual report says.

                     

Report further quote that according to RISI, in China, graphic markets have transformed because of use of electronic media and economic restructuring in recent years. China’s economic growth has slowed from 9% - 10% per annum in 2009-10 to close to 7% in 2014-15 and to less than 7% in 2018-19, as the Government seeks to re-orient the economy from investment-driven growth to consumption-driven growth. This, combined with a major shift toward digital media usage has slowed Chinese graphic paper demand growth. RISI estimates that demand declined 1% - 2% from 2014-15, a strong contrast to the 6% - 7% demand growth that the market experienced from 2009-10, onwards.

Web Title: Seshasayee Paper reported Net profit of INR 174 Cr for FY 19 20 Mill Development Plan III kick started to Increase Capacity