Paper Mills Ltd.
Paper Mills Ltd.Corporate PresentationAugust 2017
Some of the statements made in this presentation may look forward looking information that involves number of risks anduncertainties. Such statements are based on certain assumptions, estimates, projections or plans that are inherently subject tosignificant risks, uncertainties and contingencies that are subject to change. Actual results can differ materially from those anticipatedin the Company s forward‐looking statements as a result of a variety of factors, including those set forth from time to time in theCompany s press releases and reports and those set forth from time to time in the Company s analyst calls and discussions. We do notassume any obligation to update the forward‐looking statements contained in this presentation.No part of this presentation shall form the basis of or may be relied upon in connection with any contract or commitment. Thispresentation is being presented solely for your information and is subject to change without notice.2
Emami Group Established in 1974 Leadershippositions in majorbusinessesFMCG & AyurvedicProductsRevenues of more thanINR 25,300 mnAgro-TechPaper-MillsFrank Ross PharmacyRevenues of nearlyINR 69,000 mnRevenues of nearlyINR 11,600 mnRevenues of more thanINR 4,300mn Pan-India presence Footprint across 60countries Workforce of over20,000 employees Market valuationof over USD 7 bnAMRI HospitalsRevenues of nearlyINR 3,600mnCRI (Ball pen tips)Revenues of nearlyINR 1,300mnEmami RealtyRevenues of nearlyINR 3,000mnCementOperationsCommenced Young & DynamicManagementA conglomerate with group revenues in excess of INR 122bn3Paper Mills Ltd.
Industry OverviewDomestic Paper Industry
Industry OverviewIndia’s paper consumption lower than world averageIndia’s paper demand continues to grow at a steady paceWorld per capita consumption (Paper Board) in kgs - 2014AfricaIndiaIndonesiaVietnamLatin AmericaThailandChinaEUSingaporeJapanN America6.3%(mn tonnes)27World 9-10India Paper : INR 554bn market in 2014-15(mn tonnes)Capacity15.0SpecialtyPaper, 242019-20PStable demand ensuring high capacity utilisation levels*Newsprint, 98Market hasgrown at 11%CAGR over thelast 5 years2014-1510.0W&P, 22812.812.011.59.79.1Production10.1Paper 4-15*excluding newsprintSource: CRISIL Research, PPI5Paper Mills Ltd.
Industry Overview : NewsprintNewsprint market size growing at fairly good pace(INR bn)CAGR – However, declining global prices affected domestic market pricing(INR per tonne)Landed cost (canada)Domestic 0-11Source: CRISIL Research2011-122012-132013-142014-152015-16 YTD6 Global newsprint demand is on adecline as increasing penetration ofdigital media has led to a shift in readinghabits from traditional physicalnewspaper to digital newspapers. India market continues to grow on backof rise in literacy rate which has led toincrease in newspaper dailies andreadershipPaper Mills Ltd.
Industry Overview : Paper boardPaper board market has grown at a steady pace(INR bn)CAGR – 4-15Expected to grow at a healthy pace in the long runVariety-wise DemandPaperboard2014-15(mn ton)Past 5 yearCAGR*2019-20P(mn ton)Next 5 yearCAGR#6.145.4%8.396.4%Tertiary packagingKraft paper3.544.7%4.695.8%Greyback / Whiteback1.955.6%2.656.3%FBB/SBB/ Others0.669.9%1.0610.1%Consumer packaging Kraft paper demand expected toincrease as industrial output improves Consumer packaging demand to beled by off-take in consumer durable,FMCG, pharmaceuticals and foodproduct industries* 2009-10 to 2014-15 ; # 2014-15 to 2019-20Source: CRISIL Research7Paper Mills Ltd.
Industry Overview : Writing & PrintingW&P volume growth expected to increase in next five years(Mn ton)CAGR – 4.1%CAGR – 3.6%5.044.123.452010-112015-162020-21W&P Variety-wise DemandVariety-wise Demand2015-16(mn ton)Last 5 yearCAGR*2020-21P(mn ton)Next 5 yearCAGR#Uncoated itho 0.91.5%1.022.8%Branded Copier0.82.4%1.309.7%Coated Paper/Art Board0.679.1%0.926.6%* 2009-10 to 2014-15 Demand in W&P segment grew on accountof increased government and corporatespending Future growth is primarily attributed to anincrease in the literacy rate and thegovernment's support Branded Copier is the fastest-growing subsegment in the uncoated category - including unbranded copier ; # 2014-15 to 2019-20Source: CRISIL Research8Paper Mills Ltd.
Company OverviewEmami Paper Mills Limited
Overview – Emami Paper Mills LtdOne of the largest papermanufacturers in India;2 manufacturing facilitiesBalasore (Odhisa)Kolkata (West Bengal)Paper board end usersinclude HUL, Colgate,Emami, Lux, Dollar, Rupa,Monginis, Kellogs, etc.US FDA certification forMaxofold (Folding BoxBoard), Glamkot (CoatedBleached Board) and EcoStrong Virgin Top CoatedGrey Back BoardOperates through 3divisionsNewsprint - 127,000 TPAPaperBoard - 180,000 TPAWriting & Printing (W&P)- 18,000 TPALeading printers like TCPL,Parksons, Kumar, Yorkand Borkar use EmamiPaper’s BoardAn ISO 9001, ISO 14001and OHSAS 18001certified companyNewsprint customersinclude leading dailies –The Economic TimesThe Times of IndiaHindustan TimesAnandabazar PatrikaThe Telegraph,The HinduDainik BhaskarInvested in a state of theart multi-layeredpackaging board unit inBalasore, Odisha;commenced operations inApr 2015Credit rating of A1 forshort term & A for longterm from CAREShareholding Pattern (Jun 2017)Others25.0%Promoters75.0%Key FinancialsRs. MnFY14FY15FY16Sales5,4665,2105,388 EBITDA(excl. other income)EBITDA (%)PAT10FY17Paper Mills Ltd.
Emami Paper Mills – Journey so farCapacity of Board Plantincreased to 180,000 TPACommissioning of Power Plant15MW, DIP-300TPD, Paper MachineIII-250TPDPaper Board Plant of132,000 TPA with10.5 MW power plantcommissionedOne of the LargestManufacturer ofNewsprint &Market Leader inthe CountryExpansion of capacities to 135 TPD2008Merged with Gulmohar Paper Mill20072017Equity listedon NSE and 2015BSE2010pursuant toan IPOReceivedfinalapproval forsetting upof an SFB PM-II Newsprint20052001200019981983Initial Commissioning with 15 TPDcapacity at Balasore facilityListed on BSECapacity increased to100TPD with successfulcommissioning of PM#2»5 MW Power Plantcommissionedmachine converted intowriting & printing gradeand commissioned inJuly-2017 15MW Power Plantupgraded to 18MW inJune-2017India’s largest manufacturer of Newsprint and one of the largest paper and Paper Board manufacturersNote: TPD – Tonnes Per Day11Paper Mills Ltd.
Board of DirectorsMr. A. V. Agarwal,Executive ChairmanMr. Manish GoenkaWhole Time DirectorMr. P.S. PatwariExecutive Director & CEOMr. MBS Nair,Director (Operations)Rich experience acrossbusiness functions;spearheading Emami PaperMills Ltd. since past 18 yearsExtensive Businessexperience of more than 18years across various businessfunctions;CA with 36 years ofexperience; associated withEmami Paper Mills for morethan 33 yearsRenowned paper technologistwith 43 years experience inPaper Industry. Working withEPML for last 18 yearsMr. J. N. GodboleIndependent DirectorFormer Chairman of IDBI.Extensive experience inFinance, Corporate Planningand Strategy formulationMrs. Richa AgarwalDirectorExtensive experience in Corp.Planning, Business Devp.,Marketing and OverallBusiness ManagementMr. S. BalasubramanianIndependent DirectorMr. U.G. BhatIndependent DirectorMr. J. K. KhetawatIndependent DirectorMr. H.M. MardaIndependent DirectorFormer Chairman of CompanyLaw Board and formermember of Indian PostalServiceWell known technocratand reputed projectconsultant in paperindustryIndustrialist with extensivebusiness experience in thearea of Corporate Planning &,Strategy FormulationIndustrialist withextensive managementexperience over 3decades12Paper Mills Ltd.
Senior Management TeamSenior ManagementRoleTotalExperienceAssociationwith EmamiProfileMr. S. K. JainSr. President37 yrs13 yrsRenowned Paper technologist and Project HeadMr. S. K. KhetanPresident (Finance) &CFO29 yrs17 yrsFCA and ACS, Experienced & Qualified commercialheadMr. G. SarafVice President(Finance) & Secretary40 yrs23 yrsQualified Company Secretary and commercial head ofGulmohar UnitMr. B. ChoudhuryVice President(Engineering)37 yrs10 yrsWorked with paper companies like Hindustan PaperCorporation, Rama Newsprint and Papers prior tojoining Emami.Mr. Anil SinghAsst. Vice President(Board Plant)25 yrs5 yrsBoard Plant head, previously worked for JK Papers,Khanna paper mills13Paper Mills Ltd.
Business OverviewEmami Paper MillsVarietyCustomers#1 Newsprint#2 Paper Board#3 Writing and Printing Delux Newsprint Standard Newsprint Eco Strong Maxofold Glamkot Cream Wove Maplitho Ledger Economic Times Times of India Hindustan Times Anandabazar The Hindu The Telegraph Dainik Bhaskar Dainik Jagran HUL Colgate Emami Lux Kellogs Dollar Rupa Monginis State Bank of India Saraswati PressCapacity1,27,000 TPA1,80,000 TPA18,000 TPARevenues(Rs. Mn)FY16 – 4,420FY17 – 4,330FY16 – 3,170FY17 – 6,250FY16 – 860FY17 – 780Market Share(FY17)7%15%---14Paper Mills Ltd.
Geographical ReachCombined strength of morethan 3,300 employees at bothlocationsNewsprint Capacity – 17,000 TPADelhiTotal capacity(950 tpd in Balasore and 50 tpd in Kolkata)1,000 tpdNewsprint capacity127,000 TPABoard paper capacity180,000 TPAWriting & printing capacity18,000 TPACaptive power generation unit sufficing 100%requirements33.5 MWNewsprintKolkataBalasoreSourcing CapabilitiesPaper antStrong waster paper sourcing capabilitieswith large supplier network and use of raillinked facilities of container rail operatorsTotal Land Area – 300 acresNewsprint Capacity – 1,10,000 TPAPaper Board Capacity – 1,80,000 TPAWriting & Printing Capacity – 18,000 TPAPower Plant – 33.5 MW15PrintersAssociation with 90 printers across East,West, South and North ZoneWarehousesDelhi Zone OnlyElsewhere directly shipped from BalasoreDealers & DistributorsDistribution network across India basedon tie-up with 45 dealersPaper Mills Ltd.
Paper Board BusinessOne of the fastest break-even in thesector. More than 100% capacityutilization with high end products inthe very first year of operation.New Generation technology formanufacturing high qualitypackaging board required by thefastest growing packaging market ofFMCG productsUSPExcellent Operating team andDynamic Sales & Marketing groupoffering consistent customer centricgoods and servicesHigh level of Automation forconsistent quality of the product16Paper Mills Ltd.
New Paper Board Plant at BalasoreRaw Materials WarehouseHead BoxSheet CuttersReam & Bundling System17Packing LineRack Storage SystemPaper Mills Ltd.
State-of-the-art Equipment BaseNew Board Paper Facility 4 Forming LayersShoe Press4 Combi Blade coaters with Infra-Red dryer to produce lowest cost paperboard4 Hydraulic Head boxes with top Former and Dilution Control SystemCaptive Power GenerationNew generation effluent treatment plantBest-in-class environment-friendly technology to provide optimum outputHigh quality coated board from waste paper and virgin pulpPaper MachineCapacity:155,000 TPASpeed:350 - 1105 MPMDeckle Width:2100 - 3550 mmRaw Material:100% Waste PaperLatest Installation: 2007Captive Power UnitsCapacity:Fuel:Boiler Type:Boiler Capacity:Steam Press:33.5 MW‘F’ Grade Coal & ETP SludgeABFC35-85 TPH63 Kg/cm218Paper Mills Ltd.
Advantage - Emami Paper Mills Ltd.Paper BoardAdvantageEPML Deep and long term relationships with customers Long term agreements with suppliers for sourcing pulp Easy access to key raw material Coal from nearby Talcher Coalfields located200kms from Balasore facility Cost effective import of pulp, waste paper, P&M and chemicals from Haldia Port New Board Machine to be configured will produce best quality value addedproducts FBB and CBB to capture the increased demand of virgin grade boardWriting & Printing Best quality writing & printing manufacturing machines Deep rooted distribution network Continuous adaptation to latest technologies for better qualityparameters and lowest costs One of the deepest networks in the country to source waste paperEfficiency Captive power plant provides self-sufficiency and keeps cost under control as power is a keycost item Fastest running paper machine in India with 1105 MPM speed Strong employee support and absence of unions have contributed to no strikes ever Engaged with best logistics solution providers to deliver finished goods anywhere in Indiawithin 3 days Input cost parameters and quality parameters are bench-marked with international norms19Paper Mills Ltd.
Capacity Expansion PlansPast CapacityTarget Capacity132,000TPAPaperBoardCapexRs. 6,500 Mn2016-17(Incurred)360,000TPA180,000TPACapexRs. 500 Mn2017-18(Ongoing)CapexRs. 7,500 Mn(Planned)Past CapacityWriting &PrintingTarget CapexRs. 500 Mn(Ongoing)2017-18CapexRs. 2,500 Mn2018-19(Planned)Planned capital expenditure of Rs. 11,000 mn over the next 4 years20Paper Mills Ltd.
Financial OverviewEmami Paper Mills Limited
Quarterly Financial Performance(INR mn)RevenuePaper BoardSales started3,0472,5292,7993,0092,7831,464 1,411 1,305 1,322 1,3091,275 1,270 1,358 1,329 1,4311,206 1,384Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q12014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 Commissioning of Multi-LayerCoated Board plant atBalasore in March 2016resulted in substantial pickup in revenues Strong ramp-up of PaperBoard segment leading toquarterly revenue run-ratecrossing Rs.2,500mn inQ1FY17(INR 216215185Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q12014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 201822 Increasing share of relativelybetter margin Paper Boardsegment has increased overallmargins Cost efficiency measures andall plants operating at 100%capacity utilisation furtheraids to margin uptickPaper Mills Ltd.
Summarized Profit & Loss Account(INR mn)ParticularsRevenueOther IncomeTotal ,452FY1711,38418511,568Cost of materials consumed3,0943,2103,180Changes in inventories of finished goods & WIP-16-117Employee benefits expenseFinance costs (net)287190Depreciation and amortisation expensesOther expensesTotal expensesProfit before TaxTax ExpenseProfit after taxQ1 FY 17Q1 FY 401426Reporting profits every year since inception across various industry cycles,showcasing financial robustness with Dividend track record since last 15 years.23Paper Mills Ltd.
Summarized Balance Sheet(INR mn)ParticularsEQUITY AND LIABILITIESShareholders’ funds*Non-current liabilitiesLong-term borrowingsDeferred tax liabilities (net)Other long-term liabilitiesLong-term provisionsCurrent liabilitiesShort-term borrowingsTrade payablesOther current liabilitiesShort-term provisionsTotalASSETSNon-current assetsFixed assetsNon-current investmentsLong-term loans and advancesOther non current assetsCurrent assetsCurrent investmentsInventoriesTrade receivablesCash and bank balancesShort-term loans and advancesTotal*Equity Shares of Face Vale Rs.2 Paper Mills Ltd.
Summarized Cash Flow Statement(INR mn)ParticularsCASH FLOW FROM OPERATING ACTIVITIESNet Profit before taxDepreciation and amortisation expensesProvision for employees benefitsFinance CostsChange in Working CapitalTaxes PaidOthersNet cash generated / (used) from operating activitiesCASH FLOW FROM INVESTING ACTIVITIESNet fixed assets and capital work in progress(Increase) / decrease in capital advancesDividend receivedInterest receivedProfit on sale of current investmentsNet cash generated / (used) from investing activitiesCASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of preference share capital (Net)BorrowingsInterest and other borrowing cost paidDividend & dividend tax paidNet cash generated / (used) from financing activitiesNet increase/(Decrease) in cash & cash equivalentsCash & cash equivalents (opening balance)Cash & cash equivalents (closing 103122-455754298Paper Mills Ltd.
Key RatiosRatiosPer Share Data (Rs.)Pre‐exceptional EPSDPSBVPSGrowth Ratios (%)RevenuesEBITDAProfit before TaxProfit after TaxProfitability Ratios (%)EBITDA MarginEBIT MarginTax RateNet Profit MarginWorking Capital (days)InventoriesReceivablesOther current assetsCurrent liabilities and provisionsReturn Ratios (%)RoERoCESolvency Ratios (x)Net Debt - EquityInterest CoverageNote: RoCE EBIT/Average Capital Employed; Interest Coverage EBIT / Interest Costnm – not .5%5.8%1.1x2.2x1.7x2.1x2.2x1.7x2.3x1.6xPaper Mills Ltd.
CSR, Awards & AccoladesEmami Paper Mills Limited
CSR - Improving the quality of lifeEradication of Hunger, Mal-Nutrition &Promotion of Health and SanitationTouching LivesProviding Mobile Health Care servicesat door steps in 4 locations cateringhealth needs of nearly 8,700 patients.Also identified children with low BMIto combat malnutritionPromoting Education andVocational SkillsContribution and continuous support toRemuna College. Free distribution ofnearly 70,000 exercise notebooks tostudentsEnsuring Environmental Sustainabilityand Animal welfareRural Infrastructure and CommunityDevelopmentPlanted 5,000 saplings, distributed1,730 horticultural plants and undertook16 kms of avenue plantation in Nilgiriand Balgopalpur. Also adopted cleantechnology to consume least possiblenatural resourcesCommunity centres erected in threelocal areas namely Fulkiari, Nuapadhiand Rasalpur. Construction of a bypassroad to Balgopalpur together withNOCCI28Paper Mills Ltd.
Awards & AccoladesGreentech CSRAward 2015Best Prize” at“Emami 3rdKaizenConvention”in April 2013Best CSR Activities inBalasore in BalasoreMahotsav, PallishreeMela & EXPOOdisha, 2016Silver Merit inEconomicTimes IndiaManufacturingExcellenceAward 2011Odisha StateEnergyConservationAwardNationalAward forExcellence inEnergyManagement2011Odisha StateSafetyConclave20141st Prize for “National EnergyConservation –2010” for Pulp &Paper Category byMinistry of Power29Greentech CSRAward, 2014(GOLDCATEGORY)ICAI Award2010GreentechEnvironmentalAward, 2014(GOLD CATEGORY)TPMExcellenceExcellence 2009inConsistentTPM - 2008Paper Mills Ltd.
Customer Feedback“Emami paper is a forward looking company with a progressiveattitude to grow their presence and market share in the paperboardpackaging space.“We are thankful to Emami Paper Mills asthey have provided fastest services to ourorders.We are happy to see their commitment to provide top quality boardand we appreciate their ability to quickly streamline the right qualityof product in a very short period of timeFurther to us your company’s most importantachievement is you have achieved theInternational parameters of quality.Providing recycled and virgin board under one roof give immenseconfidence to buyers like us who want to work with players who canservice large requirements across an array of products and thisparticularly appeals to us in the larger scheme of thingsWe are also happy with your quick response toour specific requirement of either material ortechnical.”We look forward for a deeper engagement with the Emami paperteam to build a long term relationship and also expect Emami to beable to be fleet footed and flexible in their servicing approach at apan India level “.Mr. Yogesh MahadeviaManaging DirectorYamir Packaging Pvt Ltd.Mr. Sidharth Kejriwal,Managing DirectorM/s Parksons Packaging Limited30Paper Mills Ltd.
Thank YouInvestor Relations : emamipaper@emamipaper.in, gsaraf@emamipaper.in31Paper Mills Ltd.
manufacturers in India; 2 manufacturing facilities Balasore (Odhisa) Kolkata (West Bengal) Operates through 3 divisions Newsprint - 127,000 TPA PaperBoard - 180,000 TPA Writing & Printing (W&P) - 18,000 TPA Newsprint customers include leading dailies – The Economic Times The Times of India Hindustan Tim
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