Pudumjee Paper to focus on more biodegradable products with higher barrier properties, seeking greater opportunities in food, pharma, and hygiene segments

Pudumjee Paper to focus on more biodegradable products with higher barrier properties, seeking greater opportunities in food, pharma, and hygiene segments

- Achieved a record turnover of INR 758.68 Crores in FY22-23, Profit after tax (PAT) of INR 59 crores which is the highest profit in the history of the company
- The demand of specialty paper is expected to remain robust in FY 2024. The imported pulp and waste paper prices and the freight costs have reduced substantially but the energy prices are still high

The Pulp and Paper Times: 

Pudumjee Paper Products limited (PPPL), over the decades have continually expanded their products offering, pioneering many a product line in India and have established, in the market place, their name for quality and reliability. Despite the disrupted global supply chain, PPPL has however overcome the challenges by taking a number of proactive measures and new initiatives to reduce the cost of production timely.

The disrupted Global supply chain also improved due to softening of freight rates but the input price of some key inputs remained on the higher side. The prices of imported Pulp and waste paper, which constitutes about 55% of the cost of production, witnessed a sharp rise during the year along with higher coal prices which increase the cost of production.

In the annual report for FY 22-23, Mr Arunkumar Mahabir Prasad Jatia, Executive Chairman, Said, “Pudumjee Paper  has however overcome the challenges by taking a number of proactive measures and new initiatives to reduce the cost of production timely and judicious decision in product mix with focus on manufacturing products with higher margin and new product development. The company developed some speciality products as a replacement of single use plastic and successfully marketed them.”

As a result of these measures, it is a pleasure to report that the company in financial year 23 reported revenues of INR 759 crores and profit after tax (PAT) of INR 59 crores which is the highest profit in the history of the company

He further added, “At Pudumjee Paper Products Limited (PPPL), we are optimistic of the future prospects of specialty paper manufacturing business. The ban on Single Use Plastic (SUP), though not yet fully implemented in the country, will further enhance the use of specialty papers having barrier properties such as oil & grease resistance, OTR & MVTR properties, aroma retention etc. PPPL has developed some niche products in last 3 years to take advantage of this opportunity and is continually upgrading these products. The company will continue to have greater focus in this area and offer more such environmentally sustainable and biodegradable products in the market with higher barrier properties”.

The geopolitical tensions have raised fresh concerns and challenges which affected the business as a whole and cost of production substantially. The uncertainty in the business has increased with higher frequency of up and down cycles which were not witnessed before COVID-19. Due to pressure on the margins some of the rising costs were passed onto the consumers creating an environment of vicious circle affecting order position and sudden price fluctuations. Being in the business of speciality paper manufacturing, the company sources all of its fibrous raw material i.e mainly softwood and hardwood pulp and small quantity of pre consumer based waste paper from some select foreign countries. The specialty paper business is normally a low volume business but the value addition is high. PPPL has been in the field of specialty paper manufacturing business for last 55 years and will continue to remain a leader in this segment due to its brand image, an experienced R&D team and their constant endeavour for new product development. There are greater opportunities in food, pharma and hygiene segments to which PPPL is well positioned to serve. The company is also considering fresh investment in the field of speciality paper and related segment after carefully studying the market demand.

Mr Jatia looks optimistic about the demand prospective, added “the demand of specialty paper is expected to remain robust in FY 2024. The imported pulp and waste paper prices and the freight costs have reduced substantially but the energy prices are still high. We may witness a drop in our topline due to reduction in paper prices which have already been implemented but the overall profitability is likely to remain good. India is probably one of the few economies globally which is witnessing robust growth and is being targeted by manufacturers from other countries as a potential market due to reduction in demand for their products in their domestic markets which may affect our margins in the near term”.

OPERATIONS :

PPPL has achieved a record turnover of INR 758.68 Crores, the highest so far in its history, as against INR 555.26 Crores in the previous year with highest ever EBITDA of INR 94.80 Crores as against INR 75.76 Crores in the previous year. This performance is contributed by marketing larger quantity of papers by about 15% and passing on of price rise in input costs by about 20%. The rise in input costs was mainly caused by increase in raw material cost by 39% and energy cost by 28%. The higher quantity of marketability was as a result of manufacturing of more value added papers including those which have resulted in import substitution, change in product mix and improved operating efficiency. Of late cost of fibre is on declining trend and therefore Company is in the process of neutralizing partly the higher cost of inventory held by it, holding on to price reduction to the extent feasible with focus on marketing larger quantity of finished paper. One of the paper machines manufacturing Tissue Paper which was intermittently used since March 2020, was also run intermittently during the year under review. This resulted in the capacity utilization in terms of tonnage at 80% against 70% of last year considering capacity at 72,000 MT per annum. Plans are afoot to regularly utilize this tissue machine as the market conditions, which was subdued due to Covid conditions have improved

The Company is dependent on purchase of its fibre requirements sourced primarily from imports of pulp and waste paper. The prices of these fibres were on upward trend throughout the year where the prices of market pulp on an average ranged from INR 60,550 per MT to INR 95,350 per MT depending upon grades as against INR 50,750 Per MT to INR 84,700 Per MT witnessed in the previous year. The waste paper prices, similarly, of various grades also ranged higher from INR 23,900 per MT to INR 53,200 per MT as against INR 23,600 per MT to INR 45,450 per MT in the last year. The Company being in the Speciality Paper manufacturing requires certain speciality chemicals whose prices have substantially increased. The energy required for manufacturing papers also became expensive due to higher coal prices by about INR 7,000 Per MT over the previous year. The power supplied by Maharashtra State Electricity Distribution Company Limited also became more expensive by about 15%.
 

Web Title: Pudumjee Paper to focus on more biodegradable products with higher barrier properties, seeking greater opportunities in food, pharma, and hygiene segments