Andhra Paper is upgrading its production facilities in phases, setting up an integrated Green Field Project and recycling wastepaper to manufacture high-quality printing and writing paper

Andhra Paper is upgrading its production facilities in phases, setting up an integrated Green Field Project and recycling wastepaper to manufacture high-quality WPP

- At Kadiyam unit, recycled paper is reused to manufacture high-quality printing and writing paper, minimising reliance on virgin material
- The investment in rebuilt and upgrade aligned with new technological advancements is expected to yield significant benefits on long term basis
The Pulp and Paper Times

As a leading manufacturer of paper and pulp in India, Andhra Paper Limited (APL) offer a comprehensive range of superior grade writing and printing paper as well as paper boards. APL extensive product portfolio offers essentials like writing and printing paper along with convenient cut-size options and specialty papers for different use cases such as photo printing or packaging solutions.

“The strong performance of the domestic economy provided a favourable environment for our continued growth. This has enabled us to maintain our growth momentum, ensuring that our financial performance for the year under review remains consistent and robust,” said Mr. Shree Kumar Bangur, Chairman & Managing Director of APL in the annual report for FY 23-24.

“Notwithstanding the long annual outage, During FY 23-24, our revenue from operations was Rs. 1,80,058 lakhs. Our EBITDA for the year was Rs. 52,593 lakhs and our Profit After Tax stood at Rs. 33,974 lakhs. On the operational front, we recorded a production volume of 2,35,749 MT and a sales volume of 2,33,480 MT during the last fiscal year. This performance reinforces our strong market presence and the growing demand for our offerings,

“Going forward, we will continue to focus on sustaining the strength of our balance sheet by judiciously managing our debt. Our persistent focus on client satisfaction, cost competitiveness, machine optimisation and enhanced operational efficiencies have helped us sustain our robust financial performance this year. Prioritising these areas helped us expand our production volumes and serve our clients better. “The Board had approved a capital expenditure of Rs. 520 crores for upgrading its production facilities in phases starting last year. Out of which Rs. 301 Crores has been expended by FY 2023-24 and the remaining work is expected to be completed by this financial year. The benefits of this upgradation will be realised in the long term and will enhance shareholders value in the years to come,” Mr. Bangur informed.

“Moreover, we are upgrading our facilities to minimise waste and emissions while improving energy efficiency. We utilise water recycling and reuse techniques to minimise our water footprint. Additionally, we recycle wastepaper in our manufacturing process as part of our ongoing environmental stewardship efforts.” He said.

APL take concerted efforts to ensure proper waste management across its production process. At Kadiyam unit, recycled paper is reused to manufacture high-quality printing and writing paper, minimising reliance on virgin material.

Installation of Tissue Paper Machine 

The Company received consent from the State Pollution Board for installation of a tissue paper machine with capital outlay of INR 270 crores. The Company has signed an agreement with a globally reputed vendor for the supply and commissioning of the tissue paper machine with 129 TPD capacity. This is expected to be operational in next year. This is anticipated to add to the existing capacity by 35,000 metric tones per annum and help diversify into the speciality paper segment where the growth is in double digits with opportunities in the domestic market.

Upgrading and rebuilding of pulp mill

The approved planned capex by the Board was utilised to rebuilt and upgrade the manufacturing facilities at Rajahmundry and Kadiam in phases starting from 2023 and most of the work was undertaken during the long annual outage. The rebuilt and upgrade is expected to get completed by 2024-25. The investment in rebuilt and upgrade aligned with new technological advancements is expected to yield significant benefits on long term basis by increase in operational efficiency, reduction in breakdowns and increase in machine reliability, productivity and competitiveness.

Installation of PCC Plant 

The Company undertook various sustainability initiatives, such as installation of PCC plant for efficient carbon capture and reuse. This reduces carbon emission for the Company’s existing lime kiln stacks by 54 metric tones per day i.e. 19,000 tones per annum (TPA ). This process also lowers production costs and improves paper capacity, bulk and brightness.

Financial Highlights

In FY 2023-24, revenue from operations stood at INR 1801 crore compared to Rs. 2098 crore in the previous year, reflecting a decline of 14% over FY 2023-24. EBITDA stood at Rs. 526 crore compared to Rs. 787 crore in FY 2023-24. Profit after tax dropped to Rs. 340 crore compared to Rs. 522 crore in the previous year.

Performance Review

During FY 2023-24, the Domestic Paper market encountered challenges from cheaper imported paper and unfavourable global supply demand imbalances situation resulting in significant price drop and lower sales realisations as against favourable market conditions and buoyant for most varieties / grades of Writing & Printing (W&P) during the entire FY 2022-23.

The decline in net profit during FY 2023-24 is mainly on account of (i) Significant increase in the cost of wood, a key input material for the Company. and wood procurement prices have become almost doubled during the year; (ii) Reduction in the average sales realisations in Domestic Market due to intense competition from Imported Paper, available at Cheaper prices and (iii) Lower production and sales volumes, owing to 41 days of planned maintenance shutdown in the last quarter. Impacts from the above were partially negated by reduction in prices of imported Coal, imported pulp, waste paper and chemicals.

Despite the challenges, APL’s strong distribution network and its proven capability of swinging between the domestic market and exports to balance supply and demand situations, the total sales made by the Company was 2,33,480 metric tones with an increment in domestic sales by 3% on a YoY basis. Andhra Paper made efforts to neutralise these effects by the support of the production vertical with improved performance of Pulp mill and recovery operations.

The management is confident that the capital investment in manufacturing facilities coupled with other initiatives taken during the year will yield positive results in the coming years. 

Green Field Expansion Project

In January, 2023 the Board had given in-principle approval to exploit opportunities in Paper Board Segment through expansion and capacity addition by setting up an integrated Green Field Project at Unit Kadiyam, East Godavari District, Andhra Pradesh. Proposed Mill Expansion Plan (MEP) with Installation of 1,75,000 TPA Paper Board Machine, 1,60,000 TPA Writing & Printing Paper machine, 1,92,500 TPA New Chemical Wood Pulp mill and 87,500 BD TPA BCTMP connected along with Recovery Plant (1500 TPD of BLS) and Expansion of Co-generation Power Plant from 5.74 MW to 94 MW with New Coal fired Boiler and New TGs and auxiliary facilities in the Existing Paper Mill at Unit: Kadiyam. In this regard, the Company has filed the requisite application with the Ministry of Environment & Forest for Climate Change (MOEF) for Environment Clearance.

Raw Material Security 

The Company has been continuing its focus on Forestry – Research & Development (R&D) to enhance farmer’s income from pulp wood plantation by way of increasing wood yield per unit area and reducing input cost. The Company has again entered into MOU with Institute of Forest Genetics and Tree Breeding (IFGTB), Coimbatore for next five years i.e. from 2024 to 2028 to enhance its research programme in scientific way with the objective to execute its phase-II collaborative Forestry R&D projects. The first phase of R&D projects executed during 2018 to 2023 have concluded and results are very encouraging.

APL’s focus is to transform its Farm Forestry Programme from low yielding seeds origin plantation to high yielding clonal plantation in phased manner for which capacity building and infrastructure development are being expanded to increase clonal plants production in collaboration with partner nurseries in catchment areas. During 2023, Company has tied up with 30 partner nurseries to meet out the requirement of clonal plants. Farm Forestry extension is one of the key areas where the Company carryout village level meeting with farmers, imparting training to nursery growers and farmers, imparting best practices for pulp wood plantation development and also acting as facilitator to address the farmer’s concern pertaining to wood resource development and procurement. The Company is supporting farmers by providing quality saplings at subsidised cost, technical know-how for raising plantation at their field, R&D support and ready market for purchase of wood produce. 

APL has facilitated distribution of 130 lakhs of Casuarina clones and 775 lakhs of Casuarina seedlings, covering 11,145 hectares of land and generated 55.7 lakh man-days of employment to the rural society under its farm-forestry program within the catchment area.
 

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