TNPL: Margin losses from higher coal prices, aims to achieve over 1 million TPA by the end of 2030

TNPL: Margin losses from higher coal prices, aims to achieve over 1 million TPA by the end of 2030

- TNPL just reported INR 14.33 crore profit after tax in FY 21-22, while revenue from operation was INR 4020 crore.

Chennai | 1st November 2022 | The Pulp and Paper Times: 

Tamil Nadu Newsprint and Papers Limited (TNPL) is an acknowledged leader in the technology of manufacture of paper from bagasse and is built on the concept of inclusive growth. It utilizes pulp from agricultural waste such as Bagasse, and woody raw materials sourced sustainably from local farmers for production of paper and packaging board. Despite the entire paper industry has performed very well in terms of volume and also in terms of margin, TNPL just reported INR 14.33 crore profit after tax in FY 21-22, while revenue from operation was INR 4020 crore.

“One of my observations is the last year FY 22, the entire industry has performed very well in terms of volume and also in terms of margin. But even though we were at full capacity at both the unit our margins were only 10% EBIDTA margin.” A shareholder asked during 42nd AGM.

As regarding the question about the shrink margins of TNPL during FY 21-22, Dr M. Sai Kumar, IAS, Chairman & Managing Director, said in a reply to shareholder that as to why the others have done well and we have done not so well, you know we base on bagasse and the deal is to take coal and give bagasse, so since the coal prices are roaring at an all-time high now and at least during the year in question, this answer is obvious that once the coal prices settle down then | think we will get back the margins.

Rise in input costs especially for coal and imported pulp grades put enormous stress on the financials of the Company. However, TNPL is putting its best efforts to mitigate this through various internal efficiency measures.

The year was reasonably good for the packaging segment. While order books and demand were strong, there were pressures due to very high raw material costs and logistics issues. Covid 19 led to a delay in the installation of our new pulp mill and consequently our proposed shift towards 100% virgin grades on the packaging board machine got affected. However, as a strategy, we gradually increased our focus towards the fast-growing high value-added cup stock segment which uses more of our indigenous pulp.

On the question of cost benfit accruing from the new pulp mill, Dr Sai Kumar informed that its about 10 crores every month is the cost benefit we are getting from the new pulp mill.

During the 42nd AGM of TNPL, Dr. Sai Kumar outlined the vision of the company, he added, “Your company has been operating with a Vision to be the market leader in Paper and Paperboards, by adopting Innovative Technologies. In line with the above Vision, the company’s Mission has been to be the manufacturer of World Class Paper and Paperboards, to the tune of 1.0 million Tons by 2030 and to be the most preferred Supplier. In this context, the company has prepared a Roadmap for the next 5 years, covering all the three manufacturing units.”

He said, “Since customer demands are specific made to order sizes makes it difficult for demand forecasting, a lot of inventory accumulation and price corrections happen during the lean periods. Considering this typical nature of the market, TNPL has started to increase its focus towards industrial uses of paper which will ensure that there is a more uniform off-take of paper during the entire year. We have developed certain grades of industrial papers like sublimation papers, Cup Stocks and papers for offline coating applications to ensure greater regularity of demand.”

Overall demand for Paper and Packaging boards is expected to grow. With greater focus on “Make in India” “we expect exports of paper and converted paper products to be robust in future. A strong and robust domestic demand coupled with strategic exports of both paper and converted paper products augers well for the Indian Paper industry. The company is well positioned to take full advantage of this bright future outlook.” He added.

During the year, TNPL has produced 3,88,881 Metric Tonnes of paper and achieved paper sales of 4,38,010 Metric Tonnes. With the commissioning of Multilayer Double Coated Board Plant, TNPL has made a foray into the Packaging Board segment. In the year under review, TNPL has produced 1,83,770 Metric Tonnes of packaging board and achieved packaging board sales of 1,84,546 Metric Tonnes. 3,06,591 tonnes of Hardwood Pulp, Chemical Bagasse Pulp and Deinked Pulp were produced during the year.
 
During the year, TNPL has exported 1,44,000 Metric Tonnes of paper and 21,766 Metric Tonnes of board, i.e. 33% of total paper sales and 12% of total board sales is by way of exports to around 30 countries.

TNPL has achieved a higher PBDT and PAT compared to the previous year despite adverse conditions in the domestic and export markets and increase in input costs. Profit before tax is Rs.22.03 crore and Profit after tax Rs.14.33 crore.

Printing and Writing Paper:

The Indian Printing and Writing Paper Industry was moderate during the first three quarters of 2021-22 due to the Covid-19 pandemic. By February 2022, the impact of Covid reduced resulting in better confidence levels and Education Sector being opened. This resulted in reduction of stocks on hand and the company achieved “Nil" Stock of Paper as on 31st March 2022. Imports of paper during the year was very low because of very low demand and uncertain market scenario. We exported 1,44,000 Metric Tonnes of paper during the FY 2021-22.

The growth in demand in packaging boards is expected to continue with an anticipated growth of 12%-15% per annum in Virgin Fiber based packaging boards. Recycled boards is expected to grow at 8-9% per annum Some pricing pressure is expected in the second half of the year as additional capacity is expected to be commissioned in the domestic market. Overall, with minimum imports expected in this segment, the market is expected to be stable in 2022-23.

Sustainability in Clonal Forestry:

TNPL has produced 428.00 lakh pulpwood saplings during this year, out of which 362.50 lakhs are Casuarina species and 65.50 lakhs are Eucalyptus, Melia, Gmelina & Subabul and Sissoo species. This is the first time our company has produced 428.00 lakh plants and supplied 464.00 lakh clonal plants along with 2020-21 carry over stock of 38.80 lakhs to the farmer’s field in a year. This is also the highest ever production & supply by any industry in the country during this year. So far, the company has produced 2930 lakh plants and supplied 2706 lakh plants to farmer’s field over the past 17 years.

Research and Development

Pulping and Bleaching: 

R & D in coordination with Pulp Mill process team conducted trial on Enhancement of Virgin Pulp Production by dosing Probiotic Oxygen bases delignification catalyst. The available Total Active Alkalo & Chlorine dioxide with addition of Probiotic catalyst resulted in enhancement of virgin pulp production by 50 MT per day and reduction in alkali usage per MT of pulp, which has positive impact on partial reduction in Pulp Mill effluent load. 

Paper Machine – Product Design: 

“Radiant Natural Lottery Printing (RNL)” a new product with natural shade developed by R & D team reduces the use of dye and Optical Whitening Agent. This would aid to improve the environment performance of the mill. The new product identified in the current financial year namely OPAL & Base Paper for cup stock will enhance the customer satisfaction requirements and customer base.

Replacements of BCTMP 80% ISO Brightness with BCTMP 70% ISO Brightness for bulk improvements reduces the cost in the consumption of BCTMP in Paper Machine by 25% and also reduces the usage of bleaching chemical during BCTMP manufacture else were.

-Revenue from Operations during the year 2021-22 is Rs. 4020.29 crore.
- During the year 2021-22, the Paper production was 388881 MT, equivalent to 97%.
- Achieved Paper sales of 438010 MT during the year 2021-22. Domestic Sales accounts for 67% and Exports at 33%.
-Profit before tax is INR 22.03 crore and Profit after tax INR 14.33 crore
 

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