Astron Paper achieves 18 percent higher production Volume in FY19-20; Focus to streamline the portfolio

High growth rates in E-Commerce could be another strong driver for sustainable packaging paper demand. Packaging paper and board demand growth is primarily driven by base demand growth in FMCG, Consumer durables and Pharma with a 5 year CAGR during 2013-2018 of 9.2%, 11.4% and 5.6% respectively.

“The domestic demand for Kraft paper demand is among the highest in the sector, which has grown by over 9% CAGR over the last ten years. Industry estimates this segment to grow at higher over the next five years with the global shift in packaging away from plastics. The market is highly fragmented; most mills are located in Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Madhya Pradesh, Punjab, Haryana. Paper exports is emerging as an opportunity due to higher margins, is making Gujarat a preferred manufacturing location due to its proximity to the new modern ports,” Said Mr. Kirit Patel, Chairman & Managing Director- Astron Paper and Board Mill Limited (APBML) in the annual report for FY 19-20.

APBML has achieved a remarkable growth in production which is 18% higher to previous year FY18-19. The mill also reported Profit after Tax (PAT) of Rs. Rs. 13.51 Crores, which is also lower by 44% compared to the previous year.

Mr. Patel further said that we expect the H1FY20-21 to bear the full brunt of the COVID – 19 impacting both revenue and profitability. As we all are aware that consumer demand has declined across the sectors on a global basis. This has resulted in global kraft paper prices remaining soft and on the other hand our cost has gone up, both operational cost and raw material prices. As our raw material is imported, in lockdown period faced additional costs

“We are optimistic that we will operate at full capacity for the rest of the year and make up the short-fall. The demand for our product range remains robust increasing use of kraft paper in packaging and global move to reduce the use of plastic,

“We continue to make strategic choices to focus our resources and strengthen our company. Throughout the year, we took steps to streamline our portfolio and further focus on the businesses. I am happy to share that despite this, we were able to close FY 19-20 with production of 147,488 tons, 18% higher YoY.” He added. 

 APBML is a leading Kraft paper manufacturer in Gujarat, with installed capacity of 176,000 tons per annum. Currently the company has manufacturing at three locations in Gujarat with annual capacity: Halvad, PM1 96,000 MT and PM2 with 33,000 MT; At Bhuj 24000 MT and Mehsana 23,600 MT. APBML’s customers are PAN India manufacturers of corrugated boxes and liners, sacks and composite containers. Our product portfolio can meet customer requirements of both Ring Crust test (RCT), Gram square meter (GSM) and weight pressure. We offer varied products like High RCT, Kraft Liner, Liner to Corrugated Medium Paper, ranging mainly from 80 GSM to 350 GSM and 16-40 BF. APBML is a young company, but in a short span of time our brand is associated with quality and comprehensive range of kraft papers. We have strong relationships and developed a wide client network. Many of our end-users are large corporates and MNC’s in FMCG, Pharmaceuticals, E-commerce and Discretionary Goods.

DEMAND & SALES VOLUMES for our products from the domestic and exports remained strong in FY2019-20. Total Revenues for FY2019-20 was Rs. 359.01 crores compared to Rs. 373.95 crores in the previous year. During the year sales volume of 144,443 tons, were up 18% higher over the previous year FY2018-19. But, overall revenue growth was impacted by lower average realizations during the year, in line with soft global prices of kraft paper.

We operated at 83% capacity utilization despite the shut-down in last 8 days of the year due to Covid-19 and 15 days in PM2 plant in Q1 for plant up-gradation. Ban on waste paper in China due to environmental regulation and the US-China trade war are expected to be one of the reasons for high demand.

Profit before Tax (PBT) at Rs. 20.40 crores was 43% lower compared to the previous year. And the same is declined due to sudden reduction in global kraft paper prices in second and third quarter and comparatively waste paper prices also reduced but due to import we have higher inventory of waste paper and which was of high cost so the same has resulted in reduction of operating margin.

During the year under review the Company has achieved turnover of Rs. 358.90 Crores compared to the previous of Rs. 373.98 Crores. The total income on Consolidated basis for the F.Y. 2019-20 at Rs. 358.90 Crores has been lower by 4.03 % compared to the total income of the previous year, while the profit after tax on consolidated basis for the year was lower by 51% at Rs. 13.42 Crores compared to the previous year and profit after tax on standalone basis for the year is Rs. 13.51 Crores, which is also lower by 44% compared to the previous year. There are no material changes or commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

There is a huge demand for printed craft paper, as the packaging of products such as sandwiches or burgers or shoes also has the company name and logo printed that makes it appealing to the customers. Kraft papers are available in different forms as per the business requirement, thus ranging from kraft paper rolls to kraft paper sheets. Moreover, for packaging the metal objects, poly-coated kraft paper is largely used.

Further, the government of various countries has mandated to use paper as a packaging substitute and kraft paper can be a substitute. PM Narendra Modi ji launched a campaign to reduce consumption of plastics with a nationwide comprehensive ban on as many as six items on October 2 including single use bags, straws, small bottles & plates. These items are said to account for almost 10% of India’s annual consumption of about 14 million tons of plastic.