Magnum Ventures will focus on manufacturing high-BF furniture kraft paper and crockery paper, advancing its paper business through a decisive investment

Magnum Ventures will focus on manufacturing high-BF furniture kraft paper and crockery paper, advancing its paper business through a decisive investment

- MVL's paper division saw a decrease in sales from INR 375.64 Cr in FY 2022-23 to INR 355.46 Cr in FY 2023- 24.
- This investment will strengthen the Company’s capacity to be at the right place at the right time with the right product in the right country
- The Company has developed cup stock paper, which is projected to see significant growth as an eco-friendly alternative to plastic cups
The Pulp and Paper Times

Magnum Ventures Limited (MVL) enjoys a respectable presence in the manufacturing of eco-friendly paper and India's hospitality sector. MVL has been present for nearly 30 years in the manufacture and trading of paper products; these products are sold within India and abroad. The Company is dedicated to producing value-added and high-demand paper varieties imported into India. By providing a domestic source, MVL ensures prompt delivery, allowing customers to maintain lower paper inventory and improve its working capital efficiency.

MVL is a trusted supplier for major multinational electronics manufacturers in India, especially for smartphone packaging. In addition, the Company produces quality newsprint, which has been consistently utilised by top-tier media brands in India. Over the years, it exported to the Middle East, Sri Lanka, and Europe.

MVL's paper division saw a decrease in sales from INR 375.64 Cr in FY 2022-23 to INR 355.46 Cr in FY 2023- 24. The Company embraced the "Say No to Plastic" movement, creating new opportunities in the paper industry as the market shifts towards eco-friendly packaging solutions.

During the last financial year (23-24), MVL took its paper business ahead through a decisive investment. The Company allocated 75% of its rights issue proceeds for the paper business. The outlay will address import substitute products following the ban on single-use plastic and a consumer movement away from plastic packaging.

“At Magnum Ventures, we made a contrarian decision during the last financial year in accelerating the repayment of our net liability of INR 136.47 Cr (following a repayment discount as part of a one-time settlement) during the last financial year. The dues to be paid to Alchemist by September 2025, which the Company repaid in March 2024. This repayment was funded through the issue of 18% non-convertible debentures aggregating INR 150 Cr. The Company began the year with a repayment liability of INR 136.47 Cr, which was settled early using funds from 18% non-convertible debentures totaling INR 150 Cr, resulting in a year-end liability of INR 141.5 Cr,” Mr. Parveen Jain, Chairman, Magnum Ventures Limited said in the Annual report for FY 23-24.

“We are confident that by living the ‘time cost of money’ ethic – we have taken a bold decision that should play out attractively across the foreseeable future. The higher cost incurred to mobilise growth capital will be more than covered by timely asset investments that graduate our company into the next orbit,

“With the ARC-imposed restrictions over, your management moved with speed to infuse additional capital to strengthen its business model. The Company made a INR 48.92 Cr rights issue during the year under review, principally to strengthen its paper business. The business underperformed in FY 2023-24: revenues declined 0.68%. This decline was not limited to our company; this was in line with the general weakness in the paper sector the world over” he stated.

Mr. Jain informed in the report, the result is that approximately 75% of our rights issue proceeds will be invested in our paper business. The outlay will address import substitute products that we expect will grow following the ban on single-use plastic and a consumer movement away from plastic packaging. The Company will focus on the manufacture of furniture kraft paper of a high burst factor and crockery paper. The manufacturer will strengthen our brand as a niche boutique player with a growing insulation against commodity market cycles. Besides, the Company expects an improvement in the paper market following the 2024 General Elections. Had the Company not invested at this juncture, there is a possibility that it would have lost its capacity to be at the right place at the right time, affectively competitiveness and market share.

This investment will strengthen the Company’s capacity to be at the right place at the right time with the right product in the right country. This investment will strengthen paper business towards a superior product mix that could potentially increase average realisations and margins, shrinking payback. MVL intends to upgrade its duplex paper quality to ensure it remains suitable for packaging purposes. Additionally, the Company has developed cup stock paper, which is projected to see significant growth as an eco-friendly alternative to plastic cups.

“On the other hand, this investmentdriven quality enhancement will graduate our paper business towards a superior product mix, corresponding to an increase in average realisations from INR 44 per kg to INR 58 per kg; the enhanced value is also likely to strengthen our EBITDA margin by 600 bps to 9%; this investment is expected to be recovered in just 30 months, creating a sustainable growth platform,” he said.

“In view of this, it would be reasonable to conclude that the Company created a new growth platform during the last financial year. This platform should begin to deliver superior outcomes starting FY 26, extending sustainability into the long-term,” Mr. Jain said.

MVL is well-positioned to use its expertise in sustainable paper for growth and environmental benefits. As the need for eco-friendly paper grows, the Company is dedicated to creating solutions that meet both eco-friendly and market demands, solidifying its role in promoting a greener future.
 

Web Title: Magnum Ventures will focus on manufacturing high-BF furniture kraft paper and crockery paper, advancing its paper business through a decisive investment