The Directors have pleasure in presenting the Thirtysecond Annual
Report and the Audited Accounts of the Company for the financial year
1. FINANCIAL RESULTS
The Financial performance of the company for the year under review is
summarized in the table below :
(Rs. in crore)
Particulars 2011-12 2010-11
Revenue from operation 1522.92 1208.50
Other income 16.07 16.54
Operating Profit (PBIDT) 435.43 362.75
Finance cost 141.26 44.24
Gross Profit (PBDT) 294.16 318.51
Depreciation 169.05 123.37
Profit before tax 125.11 195.14
Provision for tax 16.17 46.14
Profit after tax 108.94 149.00
Balance brought forward 20.91 20.83
Profit Available for appropriation 129.85 169.83
Transfer to General Reserve 63.00 103.00
Debenture Redemption Reserve 5.70 5.70
Proposed Dividend 34.61 34.61
Tax on Dividend 5.61 5.61
Balance carried forward 20.93 20.91
The year 2011-12 was a challenging year for the Paper Industry in
India. The overall slowdown in the economy reduced demand for paper
substantially. At the same time, capacity increases by almost all paper
mills increased supplies enormously. As a consequence, prices declined
steeply in the market - while input costs, labour costs and interest
rates escalated. Profit margins of all paper mills - including TNPL -
were therefore dramatically eroded and were at the lowest in recent
history. Despite the adverse market environment, the operating profit
of TNPL was higher than in the previous year. This performance is
indeed a commendable achievement by the Management.
Your Directors recommend a dividend of 50% for the financial year ended
31.3.2012. The dividend, if approved by the shareholders, will be paid
to all the equity shareholders whose names appear in the Register of
Members as on 21.9.2012. The proposed dividend of 50%, will cost the
company Rs.40.22 crores, inclusive of taxes.
3. PERFORMANCE HIGHLIGHTS OF THE YEAR
1. Sales turnover crossed Rs.1500 crores for the first time in the
2. Export sales reached an all time high of 80459 tons - 24% over the
3. Paper production increased from 265044 Mts. to 343306 Mts., made
possible by the completion of the Mill Expansion Plan (MEP) during the
4. Hardwood Pulp production increased from 97492 Mts. to 107769 Mts.
5. Chemical bagasse pulp production increased by 24% from 133978 Mts.
to 165914 Mts.
6. The wind farm generated 500.64 lakh units of GREEN POWER and
earned a profit of Rs.2.86 cr.
7. The cumulative area under plantation was increased to 82025 acres.
15218 acres were added during the year benefiting 3006 farmers.
8. The Bio-meth nation Plant generated 87.35 lakh cubic metres of
methane gas enabling the company to reduce consumption of furnace oil
by 5207 KL valued at Rs.19.07 crores.
9. 27680 RENEWABLE ENERGY CERTIFICATES (REC) were received by the
company for generating power exclusively using steam produced in the
recovery boiler. TNPL is the FIRST in the paper industry to have been
awarded this benefit.
10. Substantial progress has been achieved in the implementation of
three important projects, i.e. setting up a 300 tpd De-inking Plant,
Revamping of power and steam system and Construction of a 600 tpd mini
cement plant to consume the highly polluting fly ash and lime sludge
generated as waste by the factory. All three projects will be completed
11. The company received the following awards and accolades:
(a) The ''Environmental Strategy of the Year award for 2011'' from PPI
(Pulp and Paper International) magazine. Many global players competed
for this prestigious award and TNPL emerged as the sole winner
(b) The National Award for Excellence in Water Management 2011 from
the Confederation of Indian Industry (CII) for the best water
management in India in the industrial sector
(c) The Emergent Ventures India Green Business Survey has ranked TNPL
No.5 among High
Energy Intensive Industries . TNPL was the only company in the Paper
Industry to receive this accolade. This is in recognition of the
adoption of new technologies by TNPL for value addition and all-round
12. Despite the adverse market conditions, the Directors have proposed
a Dividend of 50%. The proposed dividend is an indication of the
confidence that the Directors and Management have in the company''s
future Financial Performance .
b) Contribution to Environment
1. The company has now fully adopted Eco friendly ECF bleaching of
paper. The switch over from conventional chlorine bleaching involved a
capital outlay of Rs.316 Crores.
2. The Company is now using a ''OZONE TREATMENT SYSTEM'' as a tertiary
step in the effluent treatment plant substantially improving the
quality of effluent discharge. TNPL is the first and only company in
the paper industry to make use of this ''state of the art'' technology.
A Research project has been assigned to Tamilnadu Water Investment
Company to identify further areas of improving the quality of effluent
discharge. This will be an ongoing Research effort and the first phase
will cost Rs.2.80 crores.
3. Continuous effort to reduce water consumption at the factory has
paid handsome dividends. TNPL consumes the lowest amount of water in
its manufacturing process compared to any other paper producer in
4. The commissioning of a 600 tpd high grade mini cement plant at a
cost of Rs.67.46 crores has as its primary objective the consumption of
highly polluting lime sludge and fly ash generated by the paper mill as
5. To improve the ''Air quality'' in the mill area, a continuous air
quality monitoring system has been installed at the factory.
6. The windfarms at Devarkulam and Perungudi with an installed
capacity of 35.5 MW generated 500.64 lakh KWH Units of GREEN POWER
c) Corporate Social Responsibility (CSR)
1. The company is committed to being a socially responsible corporate
citizen and has spent Rs.3.71 crore on its Corporate Social
Responsibility Programmes in 2011-2012.
2. The objective of the company is to spend approximately 3% of the
profit of the previous year for CSR activities, in the subsequent year.
3. The CSR projects focus on promoting Economic, Social, Environmental
and Cultural growth in an equitable and sustainable manner, of the
community living in areas surrounding the factory .
d) Contribution to Innovation and New knowledge development
1. The company is focused on creativity and innovation in its Research
and Development activities. R & D activities are carried out largely
in-house. A few activities are outsourced when necessary and warranted.
2. The expenditure on R&D activities has increased to Rs.5.77 Cr. from
Rs.4.12 Cr. in the previous year. The long term objective is to
increase R & D investment from the current level of 0.39% to 1% of
3. The R&D activities focus on product development, process
improvement, raw material substitution, development of new products and
protection of the environment.
e) Other Highlights
1. The company is unique in India as it draws only 1.73% of its power
needs from the State Grid. The company generates 98.27% of its power
consumption and is also a nett exporter of power to the grid (98.98
lakh units in 2011-2012).
2. The installed production capacity has been increased during the
year from 245000 tons per annum to 400000 tons per annum by the
installation of a new Paper Machine (PM3). PM3 was commissioned in
January 2011 and because of initial teething troubles, overall capacity
utilization was only 85.83% in 2011-12.
For profitability reasons no Newsprint was produced during the year.
3. The company has repaid all the loans borrowed for implementation of
the Mill Development Plan (MDP).
4. During the year, the company has unwound the hedge instruments
relating to Long Term Foreign Currency loans availed of for the purpose
of acquisition of depreciable Fixed Assets and received upfront cash
flow of Rs.106.68 Crore from banks, being the exchange gains from the
date of hedge till unwind. As per AS11 (amended) vide Notification
No.GSR 913(E) and 914(E) dated 29.12.2011, the effects of changes in
the Foreign Exchange rates of Rs.85.92 Crores during the year on the
Foreign Currency Loans, has been capitalized. Against the cash flow
realized on unwinding of hedges, the exchange gain from 01.04.2011 till
unwind amounting to Rs.99.88 Crore has been recognized as income under
Exceptional Item in the Statement of P&L.
5. The Company has tied up term loans with Banks for financing the
ongoing projects viz.Deinking Plant, Revamping of Power and Steam
System and the mini cement plant. Of the funds availed, pending
crystallization of expenditure, the company has temporarily used the
loan of Rs.89.37 crore in general business operations. The unspent loan
funds will be used for the projects, when the expenditure crystallizes.
4. MARKET TRENDS
Estimated Global Production of paper in 2011-12 was 400 million tons
and in India 11 million tons. India accounts for 2.75% of world
production. The Per capita consumption of paper in India is
approximately 10 kgs, against the global average of 57 kg.
The rate of Excise duty was increased from four to five percent in
March 2011 and further increased to six percent in March 2012. Import
duty, however, has been retained at 10%.
b) Printing & Writing Paper (PWP)
Between 2008 and 2010, paper mills in India increased production
capacity PWP by 60% - an increase of 1.5 million tons. This was an
exceptionally high increase because growth in demand is only 8-9% per
annum. The Market accepted additional supplies upto June 2011.
Thereafter demand declined sharply and prices crashed. Finished stocks
piled up with all players in the industry. First signs of revival in
demand were seen only in January 2012.
Coincidentally , Export prices also declined during the period June to
The Newsprint prices continued to be volatile. Production in India has
become economically unviable. The country imports approximately 1
million tons every year.
Government spending on education will increase demand for PWP
exponentially . Increasing business activities will increase demand for
cut-size copy papers. The demand for PWP is expected to grow by 9% in
2012-2013. Newsprint will continue to be unviable for production in
In the global market, paper prices have increased by USD 80 per MT.
since March 2012 . Soft wood pulp prices have increased by USD 50 per
MT. and hard wood pulp prices by USD 100 .
e) TNPL response to Market Trends
In the first nine months of 2011-12 TNPL sales were level with the
previous year. Because of increased production, stocks were 37,000 tons
at the end of December. In terms of PBT, the company could only
breakeven in the first nine months.
A revival in domestic demand from existing customers, new domestic
customers and an accelerated demand growth in exports enabled the
company to increase sales by 65% in the final quarter. Profitability
also improved in the last quarter and was helped by a one time
contribution from unwinding of the hedging on long term loans.
Finished stocks were reduced to 5816 tons.
The company''s prices have been increased by Rs.2500/- per metric ton
effective April 2012 and Export prices by USD 70-80 per MT. The
increase in demand in both Domestic and Export markets and higher
margins through price increases should result in an improved
performance in 2012-13.
Pursuant to the orders of Government of Tamil Nadu, Thiru G Prakash IAS
was co-opted as an Additional Director w.e.f.9.1.2012 in place of Thiru
T K Ramachandran IAS, Managing Director.
Pursuant to the orders of Government of Tamil Nadu, Thiru Santosh K
Misra IAS was appointed as Managing Director of the company vice Thiru
G Praksh IAS who was holding additional charge as Managing Director.
Thiru G Prakash IAS relinquished his office w.e.f.25.1.2012.
Pursuant to the orders of Government of Tamil Nadu, Thiru S Krishnan
IAS was co-opted as an Additional Director w.e.f.15.9..2011 vice Thiru
R Thiagarajan IAS who has retired on 31.7.2011. Thiru S Krishnan IAS
will hold office upto the date of forthcoming Annual General Meeting
and is eligible for appointment as Director .
Pursuant to the orders of Government of Tamil Nadu, Thiru N Mathivanan
IAS was co-opted as an Additional Director w.e.f.11.11.2011 vice Thiru
Rajeev Ranjan IAS. Thiru N Mathivanan IAS will hold office upto the
date of forthcoming Annual General Meeting and is eligible for
appointment as Director.
Thiru M R Kumar, Executive Director(Personnel), LIC of India has been
co-opted as Additional Director w.e.f.15.9.2011 in place of Thiru D
Krishnan, who resigned w.e.f.15.8.2011. Thiru M R Kumar will hold
office upto the date of forthcoming Annual General Meeting and being
eligible offers himself for appointment as Director.
Thiru V Narayanan , Director retires by rotation and being eligible
offers himself for reappointment.
7. FIXED DEPOSITS
The company has stopped accepting fresh deposits from 1.6.2002 and
renewals from 1.8.2005. The outstanding deposits as on 31.3.2012 was
Rs.2.45 Lakhs against Rs.2.63 Lakhs in the previous year. The number of
depositors on 31.3.2012 was 14 against 15 in the previous year. The
outstanding deposits remain unpaid because the 14 depositors have not
made known their new addresses to the company.
8. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year, the company has transferred a sum of Rs.5,62,470/-
being the dividend amount which was due and payable and remained
unclaimed and unpaid for a period of seven years, to the Investor
Education and Protection Fund, as required under Section 205A(5) of the
Companies Act, 1956.
9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The particulars required under Sec. 217(1)(e) of the Companies Act.
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 are furnished in the Annexure to
this Report (Annexure I and II).
10. STATEMENT OF EMPLOYEES'' PARTICULARS
None of the employees drew remuneration of Rs.60,00,000/- or more per
annum / Rs.5,00,000/- or more per month during the year. This
information is furnished as required under section 217(2A) of the
Companies Act, 1956, read with Companies (Particulars of Employees)
Rules, 1975 .
11. INDUSTRIAL RELATIONS
Overall industrial relations during the year were cordial.
12. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
1. That the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
2. That the selected accounting policies were applied consistently and
judgments and estimates that are reasonable and prudent were made so as
to give a true and fair view of the state of affairs of the Company at
the end of the financial year and of the profit of the company for that
3. That the Directors have taken proper and sufficient care for the
Maintenance of adequate accounting records in accordance with the
provisions of the Companies Act , 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
4. That the Annual Accounts were prepared for the financial year ended
31st March 2012 on a going concern basis.
13. CORPORATE GOVERNANCE
The Report on Management Discussion and Analysis and the Report on
Corporate Governance forming part of Directors'' Report are enclosed as
As required by the Listing Agreement, an Auditor''s Certificate on
Corporate Governance and a Declaration by the Managing Director with
regard to Code of Conduct are attached to the Report on Corporate
14. CEO/CFO CERTIFICATION
As required by Clause 49 of the Listing Agreement, a Certificate on the
Financial Statements and Cash Flow statement of the company for the
year ended March 31, 2012 duly signed by the Managing Director and
Deputy Managing Director was submitted to the Board of Directors at the
meeting held on May 29, 2012.
The Board has pleasure in recording its appreciation of the assistance,
co-operation and support extended to the company by the Govt. of Tamil
Nadu, the Commercial banks, Financial Institutions, the Depositors,
Sugar Mills and the Indenters. The Board also places on record its
sincere appreciation towards the Company''s valued customers for their
continued support .
The company thanks all employees for their co- operation during the
year. The Directors place on record their appreciation of the excellent
effort made by every employee to enhance the company''s performance in
an extraordinarily adverse market. Their contribution has been
Finally, the Board of Directors are grateful for the confidence reposed
in them by the shareholders. The Board salutes the shareholding
community for their solid support.
For and on behalf of the Board
Date: 29th May 2012