Early in 2011, we at Sirpur Paper anticipated a slow down in the
economy and its impact on the paper industry, and have been proactive
in controlling costs and improving our productivity.
Consequently, we closed the financial year 2011-12 with a rise in
production and sales volume, higher net sales realization and more
important, managed to improve our profit before finance costs,
depreciation and tax (PBIDT) over the previous year.
We overcame challenges of high inflation, high interest, tight
liquidity conditions, and ensured that we made a cash profit.
Despite the competitive pricing pressures that accompanied slowdown in
industry volumes during the year, we at Sirpur Paper experienced
satisfactory development in our key indicators. We saved on raw
material, improved efficiencies in coal usage and reduced consumption
of power and water. We lowered the costs per tonne of paper produced in
each of these metrics. Simultaneously, we improved the pulp yield,
chemical recoveries and overall machine efficiencies. We sweated our
assets and got better value per rupee invested.
I must hasten to add that these improvements were despite significant
cost increases in raw materials especially wood, coal, power, fuel,
chemicals and manpower. In a high inflationary regime, rising interest
costs put pressure on our financial results.
Unfortunately, we had an accident in our chemical recovery section and
the mill was shut down in April- May 2012 and we have started the
current financial year with a loss. The unrelenting inflationary trend,
spiraling wood prices, severe power cuts and subdued paper prices is
adding to our complexities. We are working hard to control the
situation and are keen
that we do not let events beyond our control and erode our
As a team, we are confident of overcoming challenges and a difficult
business environment, by positioning ourselves better with our
customers, with our quality assurance as well as by working on our
internals. We have several levers to further improve our efficiencies,
refine the cost structure and enhance productivity. We have a measure
of our challenges and shall strive hard to revert to profitability and
demonstrate sustainable growth and do whatever it takes to make it
happen. This is a work-in-progress.
These are turbulent times, both for the economy and the paper industry.
Our journey cannot be done alone and we believe we need temporary
assistance. We are in conversation with our bankers to seek their
support to ensure that we revert to profitable growth, as early as
possible. While we shall work to regain our financial health and be a
high energy business enterprise, we seek relief, more in terms of time.
A flexible arrangement will ensure that we stay viable, grow in a
calibrated manner and meet all obligations to our stakeholders. In
fact, our commitment to our bankers is that we shall stay accountable
and be a reliable partner with all those associated with us.
At Sirpur Paper, we have a dedicated leadership, a talented team,
strength of our competence and a determination to succeed. We are
focused on creating a high-quality, high value robust business that
works in the best interest of all our stakeholders. In the long term,
we shall prove that temporary setbacks and challenges become staircases
of growth and reciprocate the trust of each of our stakeholders.
With best regards
Vice-Chairman & Managing Director