Bidyut Sir New

7/31/2019 Bidyut Sir New

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Indira School of Business Studies

Marketing Research

A

Project report on

Andhra Pradesh Paper Mills Ltd

Submitted By:

Adwait Dixit

C-21

Under the Guidance of

Prof. Bidyut Gogai


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INDEXSr.no. Topic Page no.

1 Executive Summary 3

2 Introduction 5

3 Company History 6

4 Vision/Mission of the Company 7

5 Organization Structure 8

6 Financial Performance 9

7 Market Capitalization 12

8 Company Size 13

9 Executive Profile 14

10 Business Operation 16

11 Business Status 17

12 PEST Analysis 18

13 Industry Overview :Competitors and Porters 5 forces Analysis

19

14 SWOT Analysis 24

15 CSR Activities 25


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Executive Summary

Andhra Pradesh Paper mills, currently a L N Bangur group company was originally set

up by a private entrepreneur and changed hands twice in the pre-independence period

because of losses. Later in the year 1953, the company was taken over by the Indian

Government. Pursuant to an agreement between the Government of Andhra Pradesh

and G D Somani, an Industrialist, the Andhra Pradesh Paper Mills, as we know it today,

came into being. It was incorporated as one of the first Joint-Sector Companies in India.

Somani later transferred his rights and obligations to the West Coast Paper Mills of the

current owner L N Bangur. Currently L.N.Bangur Group is holding around 68% of the

total investment. It's manufacturing units is situated at Rajahmundry and Kadiam in East

Godavari District of Andhra Pradesh. The Company is one of the top ten leading

integrated pulp and paper manufacturer's in India Production was increased to 100 tpd

in 1970 and to 250 tpd in 1977.The company went through a bad patch in the mid-'80s


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with capacity utilisation much below than installed and with accumulated losses

reaching Rs. 7 cr. The company launched vigorous HRD programme to stop labour

unrest, modernised mill processes and equipment, and commissioned a 10.5-MW

turbo-generator for its power requirements. This measures strengthened the bottom line

from 1988 onwards. Having commissioned its coating plant to manufacture value-added

coated papers and also having installed an on-line process computer control system on

its third machine, it further modernised by replacing the recovery boiler and bleach plant

in Sep.'94. During the year Chlorine Dioxide Generation Plant & Rebuild of Paper

Machine no.3 alongwith Rewinder of Paper Machine No.3 were commissioned. Besides

this, it is actively considering rebuilding one of the paper machines to improve quality

and production. During Mar.'97, APML commissioned the core making machinery and

lime sludge reburing system to control pollution, conserve mineral resources and

improve fuel utilisation. For the year 1997, the company received a Rolling Trophy for

Energy Conservation and Management from the Confederation of Indian Industry in

recognition of outstanding achievement in the field of Energy Conservation. During1999-2000, the Company allotted 561900 equity shares of Rs. 100/- each on rights

basis to the shareholders of the Company in the ratio of 1:1. The Company has

completed a substantial part of the Phase-I of Mill Development Plan and the balance

portion is expected to be completed by the Close of Financial Year 2000-01. In Dec

2000, the company acquired 71% Equity Shares of Coastal Papers Ltd, thus Coastal

papers become a subsidary of APPM. On January 31, 2001 the Board of Directors of

APPM decided to amalgamate the Coastal paper with APPM in the ratio of 1:3( one

shares of APPM for 3 shares of Coastal Papers). This scheme of amalgamation was

subsequently approved by the shareholders of both the companies on March 26, 2001

and Hon'ble High Court of AP has also sanctioned the amalgamation with effect from1st October,2000. Digvijay Investmetns Ltd, a promoter company has entered into an

agreemtn with Govt. of Andhra Pradesh to acquire its 25.36% stake in the company at

Rs. 130.95 per share on Dec 12, 2003. As on March 2004, installed capacity is grown

from 3000 to 1,53,500 TPA in over last 40 years. The Company has embarked 554

crore modernisation and expansion programme. The Company proposes to install a

new pulping line and to upgrade paper making machines. The Company received ISO

9001: 2000 (Certificate for Quality Management System) and 14001 (Certificate for

Environment Management) by DNV, Netherlands for its Rajahmundry Unit. The

Company is also received OHSAS 18001: 1991 (Certificate for Occupational Health and

Safety Assessment Series) from DNV, Netherlands


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INTRODUCTION

The company is engaged in the manufacture of surface and non-surface sized printing

and writing papers, coating based papers, etc.

Andhra Pradesh Paper Mills Limited One of the biggest integrated pulp and paper

manufacturing companies in India. In a constantly changing business scenario,maintaining a niche becomes even more challenging. In such a situation only with

innovation leadership, state-of-the-art technology and committed people can make a

company steal the lead over competition.

A company can lead by making quality a continuing reality, lead by being a profit-

making concern, lead by being a committed corporate citizen, lead by moving ahead

into the future-confidently.

And that is the story of Andhra Pradesh Paper Mills Limited.

Andhra Pradesh Paper Mills Limited is conscious of its responsibility towards the societyin minimizing the pollution load due to the proposed project and accordingly decided tocarry out the Environmental Impact Assessment to identify the negative and positiveimpacts and to delineate effective measures to control the pollution and to mitigate the

environmental pollution.


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COMPANY HISTORY

Andhra Pradesh Paper Mills Ltd., is one of the oldest paper manufacturing plant inIndia, established in the name of Carnatic Paper Mills Ltd., in 1921 on the banks ofGodavari river at Rajahmudry in Andhra Pradesh and started production with a capacityof 3000 TPA of paper.

The mill was renamed Andhra Paper Mills Ltd., after states reorganization in 1956. Theunit was renamed as The AndhraPradesh Paper Mills Limited, in 1964. The unit hasbeen expanding the capacities during the subsequent period.

The Company was incorporated on 29th June 1964 as "The Andhra Pradesh Paper MillsLtd." at Rajahmundry. The Certificate of Commencement of business was obtained on10th July 1964. The Andhra Pradesh Paper Mills Ltd. was formed with infusion of fundsand high caliber management of the well-known industrial house of Bangurs of Calcutta,who have interests in textile manufacturing, tea plantation, wind energy generation andtrading and investment business other than paper.

From a small entrepreneurial organization incorporated in June 1964 with infusion offunds and high caliber management of the wellknown industrial house of Bangurs ofKolkata, APPM has taken serious strides to be a significant player in the integrated pulpand paper industry. In 2001, Coastal Papers Limited was taken over by the Company,

which added to the range of offerings to the market.

In 2001, Coastal Papers Ltd was taken over by the company. The production capacityof both the units put together is 1,74,000 TPA. There are eight paper machines installedat the two locations which produce papers of different M.F & M.G varieties in the rangeof 21 to 250 GSM as well as newsprint. With the commissioning of largest continuousdigester in the country, the total bleached pulp production at APPM (Unit Rajahmundry)is 1,81,500 TPA.

During the year in1999, under review, the Company received May Day Award for theyear 1999 for best management for their outstanding contribution towards productivityand harmonious industrial relations and labour welfare.Andhra Pradesh Paper Mills Ltdhas signed a Loan Agreement on July 20, 2004 with International Finance Corporation,Washington, DC, USA (IFC) in connection with foreign currency loan of US $ 35 millionsanctioned by IFC.


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VISION / MISSION OF THE COMPANY

Andhra Pradesh Paper Mills Ltd. by providing competitive value must emerge asthe preferred choice for repeat purchases by an increasing number of satisfied

customers.

The company should continue to be environmentally friendly and conductthemselves as a good corporate citizen.

Andhra Pradesh Paper Mills Ltd. will follow a result oriented style of managementand encourage meritocracy and continuously improve on all parameters of

operations thereby producing a profit that improves the ratio of PBT to turnoveryear on year.


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ORGANISATION STRUCTURE

MANAGEMENT TEAM OF ANDHRA PRADESH PAPER MILLS LIMITED

Mr. Paul Brown Chairman & CEO

Mr. P. K. Suri Director (Operations)

Mr. C. Prabhakar Sr. Vice President (CA) & Company Secretary

Mr. E. Sairam Sr. Vice President (Finance) & CFO

Mr. Paul Brown President, IP IndiaChairman & CEO

Mr. Thomas

Kadien

Mr. Brett

Mosley

Mr. Shreeyash

Bangur

Mr. M.S.

Ramachandran Mrs. Ranjana

Kumar

Mr. M.K.

Sharma

Mr. C. Prabhakar

Sr. Vice President (Corporate Affairs) &

Company Secretary

Mr. E. Sairam

Sr.Vice President (Finance) & CFO


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FINANCIAL PERFORMANCEOver decades, Andhra Pradesh Paper Mills Limited continued to build on the foundationthat, the company had laid in recent years. They have benefited from the newly added

capacity, improved operating processes and have become a far stronger organizationwith a robust business model. The fundamentals that the company have put in place arepaying off in solid progress. It was a year when APPM sold 1.93 lakh MT, the highestever, approximately 9% over the previous year i.e.2009-10. The revenues were up by21.6% at `795.9 crore. The EBITDA improved to `163.9 crore from `153.0 crore in 2009-10, a rise of 7.1% over the previous year.

Profit after Tax

Sales

Crore

795.92010-11

654.5

2009-10

657.32008-09

18.9

54.244.9

0

10

20

30

40

50

60

2008-09 2009-10 2010-11

Profit after Tax

Crore


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APPM stayed customer and product oriented and stepped up companys marketingefforts. APPM saw their volume sales climb to 1.93 lakh MT and revenue grow healthilyto 795.93 crore, a new high for us in the Company. The company had PM6 commenceproduction which adds 67,000 TPA to their paper making capacity, although themachine stabilized only late in the financial year. They had therefore rise in revenue

without a corresponding increase in profits. The year therefore ended with a drop inprofit before tax to 57.09 crore, from 65.05 crore in the previous year.

19.0723.38 20.6

0

5

10

15

20

25

2008-09 2009-10 2010-11

EBITDA to TurnoverIn Percent

2.88

8.28

3.5

0

1

2

3

4

5

6

7

8

9

2008-09 2009-10 2010-11

PAT to TurnoverIn Percent


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Financial Performance of the company for the last five years

2010 - 11 2009 - 10 2008 - 09 2007 - 08 2006 - 0

Operating ProfitProduction MT 187233 176452 177748 180681 159574

Sales MT 193302 177351 170239 176758 155750

Turnover Lakhs 79593.83 66934.10 65733.39 62824.41 53303.0

Profit before Depreciation &Tax

Lakhs 12405.32 12087.25 7488.05 6497.07 6432.94

Depreciation Lakhs 6696.72 5581.71 5411.19 5236.22 4142.64

Exceptional Items Lakhs - - (111.87) (705.52) -

Provision for Tax Lakhs 18.38 176.49 42.14 89.17 (324.78

Provision for Deferred Tax Lakhs 1196.00 909.70 251.20 223.20 201.90

Profit After Tax Lakhs 4494.22 5419.34 1895.39 1654.00 2413.18

Dividend on Equity Shares Lakhs 397.70 327.52 128.77 257.34 257.34

Tax on Equity Dividend Lakhs 64.52 54.40 21.89 43.73 43.73

Retained Profit Lakhs 4032.00 5037.42 1744.73 1352.93 2112.11

Sources of FundsShare Capital- Equity Lakhs 3977.00 3275.18 2573.36 2573.36 2381.97

Reserves & Surplus Lakhs 53855.73 47019.35 39224.40 39069.58 36125.6

Shareholders Funds Lakhs 57832.73 50294.53 41797.76 41642.94 38507.6Borrowings Lakhs 43596.72 50684.45 56103.17 53193.05 51109.7

Deferred Tax Liability Lakhs 4271.25 3075.25 2165.55 2117.50 1922.10

Total Lakhs 105700.70 104054.23 100066.48 96953.49 91539.4

Applications of FundsNet Fixed Assets Lakhs 89505.68 90395.01 90333.10 86390.19 83922.2

Investments Lakhs 1664.34 1664.34 1664.34 1664.34 1664.36

Net Current Assets Lakhs 14530.68 11994.88 7926.33 8665.77 5602.12

Miscellaneous Expenditure Lakhs - - 142.71 233.19 350.66

Total Lakhs 105700.70 104054.23 100066.48 96953.49 91539.4

Book Value Per Equity Share 145.00 155.00 162.00 162.00 162.00

Earning Per Equity Share 12.82 21.03 7.37 6.44 10.13

Dividend (Equity) % 10 10 5 10 10

Note: Figures have been regrouped wherever necessary.
http://www.andhrapaper.com/images/pdf/five-years-glance.pdfhttp://www.andhrapaper.com/images/pdf/five-years-glance.pdf


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Market Capitalization

&

Basic Valuation of Company

Market capitalization is simply the worth of a company in terms of its shares. To put it ina simple way, if you were to buy all the shares of a particular company, what is theamount you would have to pay? That amount is called the Market Capitalization.

To calculate the market capitalization of a particular company, simply multiply thecurrent share price by the number of shares issued by the company.

Current Share Price of the Company is151.25(fluctuating)

Market Capitalization: 601.52in crore(Note: The above data is on 29

thJan 2012)

For a company, total assets minus total liabilities. Net worth is an important determinantof the value of a company. It is also called as owners equity or shareholders equity.

417.9502.9

578.3

0

100

200

300

400

500

600

700

2009 2010 2011

Net worth Crore


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Company SizeIn terms of no employees

APPM is working with 2,492 people. They communicate openly in the workplace tofoster fairness, respect and professionalism and recognize and reward results. Weactively encourage teamwork.

As competition becomes more intense, both within and outside the country, it isimportant that the company stay ahead of the curve. The APPM endeavor to be globallycompetitive is not just a matter of upgrading the plant and machinery or adding brickwalls. It has been an exercise in people engagement with a definitive role in impactingperformance

In terms of Turnover

Andhra Pradesh Paper Mills Ltd. has reported a sales turnover of194.01 crore and a

net loss of Rs.21.43 crore for the quarter ended Dec 11. For the quarter ended Dec 10

the sales turnover was 175.91 crore and net profit was 8.20 crore.

2546

2440

2492

2300

2400

2500

2600

2009 2010 2011

Employee Strength

69.572.3

75.1

2008-09 2009-10 2010-11

ProductivityPer MT of Product


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Executive Profiles

Mr. Paul BrownPresident, IP India, Chairman & CEO

Mr. L.N. Bangur Mr. M.K. TaraExecutive Chairman Managing Director & Chief Executive Officer

Ms. Sheetal Bangur Mr. Shreeyash Bangur

Director (Commercial) Director (Corporate)

Mr. P.K. Suri Mr. E. SairamDirector (Operations) Senior Vice President (Finance & Accounts) &

Chief Finance Officer

Mr. C. Prabhakar Mr. Jaspal SinghSr. Vice President (Corporate Affairs) Senior Vice President (Marketing)& Company Secretary

Mr. Hemant Kumar Singh Mr. Yogesh JainChief Information Officer Associate Vice President (Commercial)

Mr. Y. Uday Shankar Mr. Shalab AgarwalGeneral Manager General Manager (Marketing)

Mr. S. Vasudevan Mr. Raghu RegantiGeneral Manager (Marketing Support) Senior Vice President (Projects)

Mr. K.M. Kasetty Mr. T.S. SundaramGeneral Manager (Paper) General Manager (Works)


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Shri L. N. Bangur, an industrialist, has been the Chairman of the Company since 1992and a Director since 1985. He is the Chairman of the Committee of Directors(Commercial), Committee of Directors (Finance), Committee of Directors (MillDevelopment Plan) and the Investors Grievance Committee of the Board.

Dr. N. Tata Rao, a Masters in electrical engineering from Illinois Technology, USA, hasbeen a Director of the Company since 1989.

Smt. Alka Bangur, an industrialist and a post-graduate in English and Hindi, is an MBAand has been a Director of the company since 1996.

Shri N. Srinivasan, a Chartered Accountant has been a Director of the Company since1998. He is Vice Chairman of the Audit Committee and a member of the Committee of

Directors (Commercial), Committee of Directors (Finance), Committee of Directors (MillDevelopment Plan), Investors Grievance Committee and Remuneration Committee ofthe Board.

Shri R.K. Joshi, a graduate in Mechanical Engineering and an associate of theInsurance Institute of India, has been a Director of the Company since 2001. He is alsothe Chairman of the Audit Committee of the Board. Presently, he is working as GeneralManager in GIC.

Ms. Sheetal Bangur, a post graduate in Commerce and Business Administration, hasbeen a Director of the Company since 2002. She has taken over as Director(Commercial) with effect from 1st April, 2005. She is a member of the Committee ofDirectors (Commercial), Committee of Directors (Finance) and Committee of Directors(Mill Development Plan) of the Board.

Shri Surendra Singh, an MSC and an IAS (Retd.), has been a nominee director of theCompany since 2003. He is also a member of the Audit Committee and RemunerationCommittee of the Board.

Shri R. C. Mall, a graduate in Chemical Engineering, has been the Executive Directorof the Company since 1997. He is also a member of the Committee of Directors(Commercial), Committee of Directors (Finance), Committee of Directors (MillDevelopment Plan) and Investors Grievance Committee of the Board.


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Business OperationThe company owns and operates two manufacturing units located in Andhra Pradesh:one at Rajahmundry and another at Kadiam.

The Rajahmundry based Unit:APPM is an integrated wood based paper mill with a ratedproduction capacity of 1,74,000 MT per annum finished paper production and 1,82,500BDMT per annum of bleached pulp production. The unit manufactures industrial grades,posters, uncoated and office papers using casuarina and subabul hardwoods as rawmaterials.

At Kadiam, Unit:CP has a capacity to produce 67,000 MT per annum finished papervarieties such as creamwove, azurelaid, colour printing, kraft liner and newsprint. Theproduct profile is based on bleached pulp as well as recycled fiber. APPM's identityrests on four pillars: Technology, Excellence, People and Environment.

After focused inputs and investment, APPM has become a far more caring -sharing-growing-learning organization building capability to deliver long term growth.

Plant Location All Over India

Corp Office: Branches:

The Andhra Pradesh Paper Mills Ltd. The Andhra Pradesh Paper Mills Ltd.Secunderabad, Andhra Pradesh Gurgaon, Haryana

Division: The Andhra Pradesh Paper Mills Ltd.Mumbai, Maharashtra

The Andhra Pradesh Paper Mills Ltd. The Andhra Pradesh Paper Mills Ltd.Unit : APPM Kolkata, West BengalRajahmundhry, East Godavari Dist.

Andhra Pradesh The Andhra Pradesh Paper Mills Ltd.Bangalore, Karnataka

The Andhra Pradesh Paper Mills Ltd. The Andhra Pradesh Paper Mills Ltd.

Unit :CP Chennai, TamilnaduPalem, Kadiam, East Godavari Dist.Andhra Pradesh

Paper Cut to Size UnitSerinarasannapalem, Krishna Dist.

Andhra Pradesh


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Business Status

The Andhra Pradesh Paper Mills Ltd. stayed customer and product oriented and

stepped up their marketing efforts. Company saw their volume sales climb to 1.93 lakhMT and revenue grow healthily to 795.93 crore, a new high in the Company. Thecompany had PM6 commence production which adds 67,000 TPA to their paper makingcapacity, although the machine stabilized only late in the financial year 2010-11. Thecompany had therefore rise in revenue without a corresponding increase in profits. Theyear therefore ended with a drop in profit before tax to 57.09 crore, from 65.05 crorein the previous year.

The Andhra Pradesh Paper Mills Ltd. have done considerable development work in themarket, and based on the demand, they are switching to products that their customersneed and those that will enhance their margins also. The company is also investing in

improving product quality in DIP line. The company is hoping to see rise in volumeproduced and want to become the lowest cost producer in the country. The company isgoing to optimize their product mix, which will secure their market position by ongoingcost management and intensive marketing efforts. The Andhra Pradesh Paper Mills Ltd.will focus on high quality niche products by applying their core skills of business processto secure a better foothold in the markets. They will strive to get volumes and marginsclimb. Seen from todays perspective, APPM expects 2011-12 to be a good year.

Highlights of the Company

Established profit making Company.

Uninterrupted record of Dividend payment since the year 1971-72 except forthree years i.e. 1986-87 to 1988-89.

The Company has been awarded ISO 9001:2000 for Quality ManagementSystem by DNV of Netherlands for its manufacturing units at APPM and CP.

In May 2004, the Company has received OHSAS 18001:1999 for OccupationalHealth and Safety Management.

System from DNV Netherlands by DNV of Netherlands for its manufacturing units

at Rajahmundry

The Company has received ISO 14001:1996 for Environmental ManagementSystem.

Equity participation by International Financial Institutions viz., IFC, Washington,USA, DEG, Germany and Finnfund, Finland.


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PEST Analysis

PEST analysis stands for "Political, Economic, Social, and Technological analysis" anddescribes a framework of macro-environmental factors used in the environmentalscanning component and strategic management. It is also called as PESTLE. It is a partof the external analysis when conducting a strategic analysis or doing market research,and gives an overview of the different macro environmental factors that the companyhas to take into consideration. It is a useful strategic tool for understanding marketgrowth or decline, business position, potential and direction for operations.

Lets take an overview of PEST analysis of Andhra Pradesh Paper Mills Ltd.

Political:

There are no specific Regulations and Policies applicable to the Company. TheCompany has complied with SEBI guidelines in respect of corporate governance withrespect to the broad basing of the Board and constituting the committees on the Boardviz. Audit Committee, Remuneration Committee and Shareholders/Investors GrievancesCommittee.

Environmental:

APPM has shown a dedicated concern for Safety, Health & Environment and has takenadequate precautions for ensuring health and safety of its employees and responsibilityof controlling and preventing pollution.

For enhanced environmental care, APPM has taken various steps like:

Installing devices such as dust collector and Electrostatic Precipitators

Utilizing solid wastes like wood/bamboo dust as auxiliary fuel in its Coal Fired Boilers

Reclining lime sludge in its Rotary Lime Kiln to regenerate the required burnt lime forre-use in the, preparation of cooking liquor.
http://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Market_research


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Social:

APPM has met its raw material requirement through well managed farm forestryprograms over the last two decades by developing plantations over more than 100,000hectares. It has distributed more than 700 million quality saplings which have benefitted

more than 39,000 rural families since 1989. The company has emphasized the need forconservation of natural resources and a clean environment by promoting massiveplantations on marginal and degraded lands ensuring a sustainable raw materialresource while providing sustainable livelihood to the agrarian community acrossCoastal Andhra Pradesh. The farm forestry endeavors of APPM revolve aroundpromoting poverty alleviation and increasing the socio-economic well-being of the localcommunities.

With the granting of the FSC COC certificate, APPM has displayed the credibility of itsfarm forestry program by authenticating the origin of fiber resources within the socialand environmental perspective meant for raw material resourcing. Thus, abiding to the

policy of FSC by avoiding procurement of raw materials from illegal harvesting, violationof traditional and civil rights, harvesting from high conservation zones, conversion ofnatural forests and harvests from genetically modified trees.

Technological:

APPM has adopted the Sulphate (Kraft) Process for Pulping. Our major rawmaterials are Casuarina and Subabul. These raw materials are chipped in drum

type of chippers in a fixed proportion and the chips are screened to get therequired size (5mm - 35mm). The dust generated is fed to a Bio-Gas plant togenerate producer gas. This producer gas is used in Lime kilns to replaceFurnace oil.

The Cooking process of wood chips is carried out in the continuous digester.

The washed pulp is then sent to the Oxygen Delignification (ODL) stage. Blackliquor is sent to the Soda Recovery Plant for chemical recovery.

Bleached pulp from the HD storage tower is supplied to Five paper machines via

a centralized refining system.

APPM has installed a 34 MW Double Extraction Condensing type turbine to meetits power requirements. Initially, the turbine is supplied with steam generatedfrom the Recovery boiler to produce 18-20 MW of power. Once the power theBoiler comes into operation, the TG will generate power to its full capacity.


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Industry OverviewCompetitors Analysis:The Indian paper industry has an installed capacity of 6.7 million tons per annum while,

the actual production was approximately 5.26 million tons of paper in 2010-11, the localproduction is estimated to have reached 6 million tons in 2011. Newsprint capacity inIndia is estimated at 1.2 million tons per annum, however domestic production is onlyaround 0.6 million tons per annum while consumption of newsprint is 1.1 million tons perannum. The domestic pulp and paper industry is expected to increase its productionfrom the present six million tons to eight million tons by 2012 to meet the growingdemand. Recognizing this, several top players have initiated capacity expansion planthat is expected to be start commercial production. Further confronted with limited rawmaterial resources and technology options, the efficiency levels have to be improved.

Major Competitors:

Ballarpur Industries Ltd BILTBILT is Indias largest paper company and the only Indian company to rank amongst top100 paper companies in the world. BILT is Indias largest manufacturer and exporter ofpaper, with a strong presence in all segment of the usage spectrum that includesWriting & Printing Paper, Industrial Paper and Specialty Paper.

ITC Limited:ITC is one of the worlds most modern and contemporary manufacturer of packagingand graphic series of boards. ITCs Paperboards business has a manufacturingcapacity of over 360,000 tons per year and is Indias market leader across all carton -

consuming segments including cigarettes, foods, beverages, pharma, personal care &toiletries, durables and match shells.

JK Paper Ltd:JK Paper Ltd., Indias largest producer of branded paper is a leading player in thePrinting and Writing segment. The company operates two plants in India. One is inOrissa and other in Gujarat. The aggregate annual output is over 180,000 tons per yearof paper and pulp, using contemporary technology.

Pudumjee Pulp & Paper Mills Limited:A Pune-Maharashtra based company engaged in the manufacture and sale of specialty

Papers is a flagship company of the M. P. Jatia group of companies. Beginning withmanufacturer of Indias first indigenous Greaseproof and Glassine papers for packagingfor the first time in India, PUDUMJEE went on to extend range of papers to includeSecurity Papers such as MICR Paper, Sensitized Paper, Postal Stamp, ImpressedStamp, Silicon base Paper, Wax match Paper, Tissue Papers, catering to wide range ofindustrial applications specially manufactured to meet customers specific requirements.


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Andhra Pradesh Paper Mills Ltd.

The Andhra Pradesh Paper Mills Ltd was formed with infusion of funds and high calibermanagement of the well-known industrial house of Bangurus of Kolkata, who haveinterests in textile manufacturing, tea plantation, wind energy generation and trading

and investment business other than paper. In 2001, Coastal Papers Ltd was taken overby the company.The production capacity of both the units put together is 1, 74,000 TPA. There are eightpaper machines installed at the two locations which produce papers of different M.F. &M.G. varieties in the range of 21 to 250 GSM as well as newsprint.With the commissioning of largest continuous digester in the country, the total bleachedpulp production at AAPM (Unit Rajahmundry) is 1, 81,000 TPA. The paper productioncapacity will increase to 2, 41,000 TPA after commissioning of 67000 TPA papermachine which is undererection.

Analysis

The average growth of the industry has been 5.97% was Fairly good, were theindustry has grown by 7% during the year 2010-11.

The company has been growing well along with the industry growth. As the

industry has been ranking higher than the world average.

The total income of the industry has been continuously rising which depicts that

the company has been in a slowly and steadily increasing their earnings growth.

Though the total income has been contributed by various other factors such as

generation of electricity and generation of power paper board has the major

contributions.

As could be expected from how the worldwide pulp and paper industry has

shaken out over the past few years, the real movers were the Asians, which has

been clearly mentioned by the growth of the company.

One cannot replace paper for a new book publication or for fresh usage.

Statistics would reveal that more than 50 per cent of white paper produced

annually is used for record purposes, and if this were to be replaced by CD or

magnetic tapes, consumption would drastically fall.


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Porters Five Force Analysis:

Rivalry among Existing firms:There is large number of players in paper industry, which increases rivalry among them.

There is an intense rivalry as paper has high storage cost. There is higher level of

rivalry as there is a low level of product differentiation. As the market growth is slow,

firms fight for market intense. Rivalry is measured using concentration ratios. The CR

indicates the percent of market share held by the four firms.

Suppliers Power

Suppliers Concentration

Importance of Volume to Suppliers

Differenciation of Inputs

Switching costs of firm in the Industry

Threat of forward integration

Cost Relative to total purchases in Industry.

Threats of Substitute

Switching cost

Buyers Inclination to substitute

Price Performance trade-off osubstitutes

Degree of Rivalry

Exit Barriers

Industry Concentration

Fixed cost / Value Added

Intermittent overcapacity

Diversity of rivals

Corporate Stakes

Switching Cost

Buyers Power

Bargaining leverage

Buyer volume

Buyer Information

Brand Identity

Price Sensitivity

Threat of backward Integration

Product Differentiation

Barriers To Entry

Absolute cost advantage

Proprietary Learning Curve

Access to InputsGovenment policy

Economies of Scale

Brand Identity


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Bargaining Powers of Suppliers:

A producing industry requires raw materials labor, components, and other supplies.

This requirement leads to buyer-supplier relationships between the industry and the

firms that provide it the raw materials used to create products.

Bargaining Power of Buyers:

The power of buyers is the impact that customers have on a producing industry. In

paper industry, buyers are powerful as they purchase a significant proportion of output,

and they possess a credible backward integration threat, they are weak as they are

fragmented.

Entry Barriers:

Government Policy

Economies of scale

Capital requirement

Special access to distribution

Switching cost

Expected retaliation from present players

Large investments in technology, not capable of alternate uses.

Exit Barriers:

Easy to exit as exit cost is low and it is an independent business.

Threats from Substitutes:

In Porters model, substitute products refer to products in other industries. 8GB pendrive

can hold the same data where 8 tons of papers can hold. Substitutes for paper is pen

drives, PCs, etc. and in case of packaging, glasses, aluminum foil, plastics etc. threat

arises from the price changes of substitute product and also their availability which

gives more choice for the customers.


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CSR ActivitiesProviding health care

In December 2005, APPM introduced a Medical Mobile Van Service with an

objective of providing relatively quick medical aid to the people living in the

interior parts of East Godavari, Visakhapatnam and Srikakulam Districts.

Medicines worth Rs. 1.75 lakhs were distributed to around 200 villages between

December 2005 and March 2006. The Company has budgeted funds worth Rs.

12 lakhs for the FY 2006-07 to strengthen the MMVS initiative. APPM has also

shown its concern for animals by donating 40 GI Tubular Trevises worth Rs. 2

lakhs to various Veterinary hospitals. Motivating the community to participate in

various Aids Awareness Programmes APPM has been making constant efforts

to increase awareness among people about HIV and AIDS through rallies being

carried out by school children and its employees in various near by towns and is

helping remove various misconceptions relating to HIV and AIDS.

Caring for children through various initiatives in the education arena

APPM has established two English Medium High Schools for its employees

children as well as for the local kids under the guidance of the APPM

Educational and Cultural Society. Every year it contributes Rs. 8 lakhs to ensure

smooth functioning of these schools. Last year, a fund of Rs 2 lakhs was

created through which various books and uniforms were gifted to the childrenbelonging to the economically weaker sections of the society. Beside financial

support, APPMs employees have been providing guidance to more than 250

students from various graduate, post-graduate & professional colleges and

universities.

Supporting cultural, religious and sports events

Being located on the banks of the river Godavari and in the town of

Rajahmundry the ancient capital of culture and arts, APPM and its employees

never miss an opportunity to participate in the various cultural events held in thecity. Its employees actively participated in the Pushkaram event which is held in

a 12 year cycle. APPM on a yearly basis also gives finance to various local

sports persons and sports events.
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THANK YOU

Bidyut Sir New

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