Directors Report of Mysore Paper Mills Ltd.
Mar 31, 2014
Dear Members,
1. The Directors wish to present the 79th Annual Report together with
Audited Accounts of the Company for the year ended 31st March, 2014.
2. OPERATIONAL RESULTS:
The operational results for the year under review are as follows:
FY 2013-14 FY 2012-13 % Change
I PRODUCTION (Qty. in MT)
Writing & Printing Paper 38052 40960 -7.10
Newsprint 38902 45450 -14.41
TOTAL 76954 86410 -10.94
Sugar 24675 17179 43.63
II SALES (Qty. in MT)
Writing & Printing Paper 35515 45927 -22.67
Newsprint 35316 47208 -25.19
TOTAL 70831 93135 -23.95
Sugar 24354 17797 36.84
III TURNOVER (Rs. in Lakhs)
Writing & Printing Paper 18581 20772 -10.55
Newsprint 12990 15468 -16.02
TOTAL 31571 36240 -12.88
Sugar 7306 5105 43.11
Molasses 828 353 134.56
TOTAL TURNOVER 39705 41698 -4.78
IV OPERATING PROFIT /(LOSS)
(Rs. in lakhs) (profit before
interest and depreciation) (3516) (3770)
V CASH PROFIT/LOSS
(Rs. in lakhs) (profit after interest
& before depreciation) (6768) (6635)
V NET PROFIT (Rs. in Lakhs) (7816) (7689)
Production Performance:
It may be noticed from the above that the production of WPP has
decreased by 7.10% from the level 40960 MT to 38052 MT i.e. down by
2908 MT. The quantity wise sale of WPP has also been decreased by 22.67
% from the level 45927 MT to 35515 MT i.e. down by 10412 MT. The
production of NP has been decreased by 14.41 % from the level 45450 MT
to 38902 MT i.e. up by 6548 MT. The quantity wise sale of NP has also
been decreased by 25.19% from the level 47208 MT to 35316 MT i.e. down
by 11892 MT. The production of paper was decreased by 10.94% from the
level of 86410 MT in FY 2013 to 76954 MT in FY 2014 i.e., down by 9456
MT. Reduction in sale of paper in quantity from the level of 93135 MT
to 70831 MT down by 23.95% i.e less by 22304 MT and the turnover from
Rs 36240 lacs to Rs 31571 lacs less by Rs.4669 lacs.
The production of sugar has gone up by 43.63% due to increase in cane
crushing activity from the level of 182414.67 MT (recovery of 9.28 %)
in FY 2013 to 253854.34 MT (recovery of 9.28 %) in FY 2014. There is an
increase in sale of sugar by 36.84 %. The increase in turnover by 49%
due to increase in quantity wise sales and there is a decrease in net
sales realisation of sugar from Rs 29214/MT to Rs.29034 /MT i.e. down
by Rs.180/MT. The turnover from Sugar Division was Rs. 81.34 Crore
compared to Rs. 54.58 Crore in the previous year i.e. up by 49%. The
total turnover of 2013- 14 has been decreased by Rs 19.93 Crores from
the level Rs 416.98 crores to Rs 397.05 crores i.e. down by 4.78%.
The Company has incurred operating loss, Cash loss and Net loss of Rs.
35.16 Crores, Rs.67.68 Crores and Rs. 78.16 Crores compared to previous
year losses of Rs. 37.70 Crores, Rs.66.35 Crores and Rs.76.89 Crores
respectively.
The accumulated losses at the end of 31.03.2014 stood at Rs.425.94
Crores with that entire net worth of Rs 287.09. crores (including GOK
loan of Rs 101.02 crores converted in to equity in 2011-12 and infusion
fresh equity of Rs 5.00 Crores in 2011-12, Rs.20 crores in 2012-13 &
Rs.40 crores in 2013-14 and Conversion of Guarantee Commission payable
upto 31.03.2013 amounting to Rs. 2.18 Crores in 2012-13) has been
eroded. The company has been registered as sick company as case no
601/2012 with BIFR, the revival scheme has been submitted by M/s
Deloitte and same with Board views sent to Government for its perusal
and advice.
STATUS OF BIFR:
The company has been registered as sick company as case No. 601/2012
with BIFR. The draft revival scheme prepared by M/s. Deloitte Touche
Tohmatsu India Pvt. Limited have been submitted to Government of
Karnataka being the promoter of the Company for their review and
comments. The same has also been submitted to the State Bank of Mysore,
Ambedkar Veedhi Branch, Bengaluru, the Operating Agency appointed by
BIFR for their review and comments.
3. MANAGEMENT DISCUSSION & ANALYSIS:
Segment wise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors'' Report.
4. CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement, the cash
flow statement for the year ended 31st March, 2014 is included in the
annual accounts.
5. CAPTIVE FORESTRY:
The Forest Wing has supplied 201195 M.T. of pulpwood by harvesting
about 2486 hectares of captive plantations during 2013-14.
The lease of forest land will be expiring in the year 2020-21 wherein
the plantation crop to be raised in 2014-15 would be the last rotation
of crop and till then the management plan has been approved by the
Ministry of Environment and Forests, Government of India. The
Management plan for a period from 2015-16 to 2020-21 need to be
submitted to Govt. of India for approval.
The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2009-10
are settled with the Government and from 2010-11 to 2013-14 the lease
rent is yet to be paid, which is calculated as Rs.786 lakhs.
Totally 3700.30 ha. of harvested plantation areas were regenerated by
replanting/coppicing with species like Acacia hybrid (1199.95 ha.),
Eucalyptus pellita (257.65 ha.) and Eucalyptus camaldulensis (2242.70
ha.)
The Farm Forestry programme is continued by selling about 7.00 lakhs
seedlings and by entering in to a buy-back agreement with farmers on a
plain paper wherever they have availed seedlings in the programme. The
Gate purchase of pulpwood is being continued and totally 2209.540 MT
was procured @ Rs. 3,683/- per MT.
The programme of raising large scale clonal plants of Eucalyptus
species in dry-zone nurseries has been continued which will double the
present yield from average 30 MT/ha. to over 60 MT/ ha. Where about 1/3
of the captive plantations are located in dry-zone. The achievement
with clonal plantations of Acacia hybrid in wet zone is already with an
average yield on 100 M.T./Ha.
The average weighted cost of Acacia and Eucalyptus pulpwood obtained
from captive plantations works out to Rs. 2,127/- per tonne as against
Rs. 5,288/- per tonne paid to M/s KFDC and M/s KSFIC. Thus Rs.6359.78
lakhs plus tax were saved by obtaining 201195 M.T. pulpwood from
captive plantations and also which has minimized the consumption of
chemicals and maximized the yield of pulp to fabricate the paper.
During 2013-14, 105472 M.T. of Acacia wood was supplied from captive
plantations which has helped in minimizing the consumption of chemicals
worth over Rs.62.55 lakhs. Hence captive forestry was responsible for
saving a total sum of Rs.6422.33 lakhs during 2013-14.
6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 134 of the Companies Act, 2013, read with
Rule 2 of the Companies (Disclosure of particulars in the report of
Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which
form part of this report.
7. INDUSTRIAL RELATIONS:
The overall industrial relations were cordial during the year under
review.
8. DIRECTORS:
Sri S Parameswarappa, IFS(Retd.), Director retires by rotation. The
said vacancy will be filled up soon as per the Companies Act 2013.
Sri. M Lakshminarayana, IAS, Director retires by rotation. The said
vacancy will be filled up soon as per the Companies Act 2013.
9. Apart from the above, the following changes amongst Directors have
also taken place during the year under review:
Smt. K Ratna Prabha, IAS: Pursuant to the powers conferred under the
Articles of Association of the Company, the Government of Karnataka
nominated Smt. K Ratna Prabha, IAS, Additional Chief Secretary to GOK,
Commerce & Industries Department, GoK as Director in place of Sri M. N
Vidyashankar, IAS & subsequently Chairperson in place of Sri. Umesh,
vide Govt. Notification No.CI 49 CMI 2014(8) dated 22.03.2014 &
CI-61-CMI-2014 dated 10.06.2014 respectively.
Sri. Naveen Raj Singh, IAS : Sri. Naveen Raj Singh, IAS was nominated
as Managing Director of the Company by the Government of Karnataka in
exercise of the powers conferred under Articles of Association of the
Company in place of Sri. M Maheshwar Rao, IAS vide Govt. Notification
No. DPAR 749 sas 2014 dated 3.9.2014. He assumed charge on 08th
September, 2014 as Managing Director.
10. DIRECTORS'' RESPONSIBILITY STATEMENT: Pursuant to the requirement
under Section-134 of the Companies Act, 2013, with respect to
Directors'' Responsibility Statement, it is hereby confirmed that:
The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;
a) The selected accounting policies were applied consistently, and
judgements and estimates that are reasonable and prudent were made, so
as to give a true and fair view of the state of financial affairs of
the Company at the end of the financial year;
b) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013, for safeguarding the assets of
the Company, and for preventing and detecting fraud and other
irregularities;
c) The annual accounts were prepared for the financial year ended 31st
March, 2014 on a going concern basis.
11. AUDITORS:
a) As per Section 140 of the Companies Act, 2013, the Government of
India, Ministry of Corporate Affairs, appointed M/s. M N S & Co.,
Chartered Accountants, Bengaluru, as Statutory Auditors of the Company
for the year ended 31.03.2014.
b) M/s. K.P.R. & Associates, Cost Accountants, Bengaluru, were
appointed as Cost Auditors of the Company for the year 2013-14 by the
Board, and the approval to this effect has also been received from the
Government of India.
12. PARTICULARS OF EMPLOYEES:
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees as required under Section 134
of the Companies Act, 2013, are not furnished.
13. CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange,
a report on Corporate Governance together with Management Discussion &
Analysis Report is enclosed herewith, which forms part of the
Directors'' Report. A Certificate from the Auditor regarding compliance
of Corporate Governance, as stipulated by clause 49 of the Listing
Agreement, is attached to this report.
14. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The comments by the Comptroller and Auditor General of India on the
Accounts for the year ended 31.03.2014 are attached to the report as
ANNEXURE - II.
15. ACKNOWLEDGEMENT:
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them during the year 2013- 2014. Your Directors
also thank the sugarcane growers for the supply of sugarcane. Your
Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and
by the Statutory Bodies and Financial Institutions, Karnataka State
Pollution Control board & IFCI and Banks. Your Directors also thank the
Government of India, Ministry of Corporate Affairs and its various
departments, Statutory Auditors, Comptroller of Accounts & Audit,
Registrar for Newspapers, Ministry of Railways, Department of Coal,
etc., for their continued support to the Company.
for and on behalf of the Board
BENGALURU (NAVEEN RAJ SINGH) (C. SHIVASHANKAR)
DATE: 18.11.2014 MANAGING DIRECTOR DIRECTOR
Mar 31, 2013
To the Members,
1. The Directors wish to present the 78th Annual Report together with
Audited Accounts of the Company for the year ended 31st March, 2013.
2. OPERATIONAL RESULTS :
The operational results for the year under review are as follows:
FY 2012-13 FY 2011-12 % Change
I PRODUCTION (Qty.in MT)
Writing & Printing Paper 40960 43983 -6.87
Newsprint 45450 40299 12.78
TOTAL - Paper 86410 84282 2.52
Sugar 17179 26198 -34.43
II SALES (Qty. in MT)
Writing & Printing Paper 45927 39573 16.06
Newsprint 47208 39102 20.73
TOTAL - Paper 93135 78675 18.38
Sugar 16926 21971 -22.96
III TURNOVER (Rs. in Lakhs)
Writing & Printing Paper 20772 18386 12.97
Newsprint 15468 12335 25.40
TOTAL - Paper 36240 30721 17.96
Sugar 5105 5887 -13.29
Molasses 353 732 -51.78
TOTAL TURNOVER 41698 37340 11.67
IV OPERATING PROFIT / (- LOSS)
(Rs. in lakhs)
(profit before interest and
depreciation) -3770 -3101
V CASH PROFIT / (- LOSS) (Rs.in lakhs)
(profit after interest
& before depreciation ) -6635 -6649
VI NET PROFIT / (- LOSS) (Rs. in Lakhs) -7689 -7686
Production Performance:
It may be noticed from the above that during the year under review the
production of WPP has decreased by 6.87 % from the level of 43983 MT to
40960 MT i.e, down by 3023 MT. The quantity wise sale of WPP has
increased by 16.06 % from the level of 39573 MT to 45927 MT i.e, up by
6354 MT. The production of NP has increased by 12.78 % from the level
of 40299 MT to 45450 MT i.e, up by 5151 MT. The quantity wise sale of
NP has also increased by 20.73% from the level of 39102 MT to 47208 MT
i.e, up by 8106 MT. The marginal improvement in production of paper is
2.52 % from the level of 84282 MT in FY 2012 to 86410 MT in FY 2013
i.e, up by 2128 MT. Improvement in sale of paper in quantity from the
level of 78675 MT to 93135 MT up by 18.38 % i.e, up by 14460 MT and the
turnover from Rs 30721 lacs to Rs 36240 lacs up by Rs.5519 lacs. The
production of sugar has gone down by 34.43% due to decrease in cane
crushing activity from the level of 269549 MT(recovery of 9.57 %) in FY
2012 to 182415 MT (recovery of 9.26 %) in FY 2013. There is a
substantial reduction in quantity wise sale of sugar by 22.96 %. The
decrease in turnover by 13.29% due to decrease in quantity wise sales
and some improvement due to improvement in average selling price of
sugar from Rs 26539/MT to Rs 29214/MT i.e, up by Rs 2675/MT. The
turnover from Sugar Division was Rs.54.58 Crores compared to Rs. 66.19
Crores in the previous year i.e, less by 17.54 %.
The total turnover of 2012-13 has been increased by Rs 43.58 Crores
from the level of Rs 373.40 crores to Rs 416.98 crores i.e, up by 11.67
%.
During the year, the Company has incurred operating loss, Cash loss and
Net loss of Rs. 37.70 Crores, Rs.66.35 Crores and Rs.76.89 Crores
compared to previous year losses of Rs.31.01 Crores, Rs. 66.49 Crores
and Rs. 76.86 Crores respectively.
The accumulated losses at the end of 31.03.2013 stood at Rs.347.78
Crores with that entire net worth of Rs 227.16 crores (including GOK
loan of Rs 101.02 crores converted in to equity in 2011-12 and infusion
fresh equity of Rs 5.00 Crores in 2011-12 and Conversion of Guarantee
Commission payable upto 31.03.2012 amounting to Rs.2.18 Crores in
2012-13) has been eroded.
STATUS OF BIFR
The company has been registered as sick company as case no 601/2012
with BIFR, the revival scheme is under preparation by M/s Deloitte
Touche Tohmatsu India Pvt. Limited.
1. PROJECTS:
The following projects and energy conservation measures are taken up
during FY 2012-13
A. Energy Conservation Measures :
The Management has adopted systematic Energy Management plan with focus
on reducing energy cost/consumption. Last year MESCOM has introduced
differential tariff system using the TIME OF THE DAY concept.
Accordingly, we are trying to reduce grid power usage during peak hours
(6pm-10pm) and avail more grid power during night time (10 pm  6 am).
Last year, the Bureau of Energy Efficiency (BEE), New Delhi has
introduced PAT.(Perform Achieve and Trade) scheme and we have to comply
with it. Since the company is referred to BIFR and unable to invest on
large energy savings schemes, we have appealed to BEE to exempt us from
above mentioned scheme till the mill is rehabilitated.
Last year, we engaged M/s MITCON - PUNE to conduct detailed Thermal
Energy Audit of the company. They have submitted draft final report.
Based on findings of the report schemes with minimum investment are
being taken up for implementation.
Schemes finalized for implementation are:
- In Sugar Mill vapor line juice heater is being introduced to reduce
the energy consumption.
- Modification in coal handling plant to separate fines and feed to
CFBC boiler.
B. Lime Sludge Re-burning Kiln :
The Company has taken up installation of Rotary Lime Kiln Project in
order to meet the stringent environmental norms costing Rs.35 crores.
The civil works for installation of Lime Sludge Re-burning Kiln is
under progress. Around 78% of the civil works have been completed.
Around 75% of the plant and machinery have been received at MPM site.
2. MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors'' Report.
3. CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement, the cash
flow statement for the year ended 31st March, 2013 is included in the
annual accounts.
4. CAPTIVE FORESTRY:
The Forest Wing has supplied 194596 M.T. of pulpwood by harvesting
about 2986 hectares of captive plantations during 2012-13.
The Public Interest Litigation in Hon''ble High Court in W.P.
No.14644/1998 was heard for final hearing and the writ petition was
dismissed in favour of MPM. However, the Hon''ble High Court has
directed MPM to adhere to the conditions stipulated in the Management
plan approved by the Ministry of Environment and Forests, Govt. of
India as per the Forest Conservation Act 1980. The lease of forest land
will be expiring in the year 2020-21 where in the plantation crop to be
raised in 2014-15 would be the last rotation of crop and till then the
management plan has been approved by the Ministry of Environment and
Forests, Govt. of India. The Management plan for a period from 2015-16
to 2020-21 need to be submitted to Govt. of India for approval.
The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2009-10
are settled with the Government and from 2010-11 to 2012-13 the lease
rent is yet to be paid, which works out to Rs.529 lakhs.
Totally 2994.65 ha. of harvested plantation areas were regenerated by
replanting/coppicing with species like Acacia hybrid (1231.45 ha.),
Eucalyptus pellita (255.95 ha.) and Eucalyptus camaldulensis (1507.25
ha.).
The Form Forestry programme is continued by selling about 5.52 lakhs
seedlings and by entering into a buy-back agreement with farmers on a
plain paper wherever they have availed seedlings in the programme. The
Gate purchase of pulpwood is being continued and totally 3159 MT was
procured @ Rs.3,250/- per MT. during 2012-13
The programme of raising large scale clonal plants of Eucalyptus
species in dry-zone nurseries has been continued which will double the
present yield from average 30 MT/ha. to over 60 MT/ha. Where about 1/3
of the captive plantations are located in dry-zone. The achievement
with clonal plantations of Acacia hybrid in wet zone is already with an
average yield of 100 MT./ha. The average weighted cost of Acacia and
Eucalyptus pulpwood obtained from captive plantations works out to
Rs.1,701/- per tonne as against Rs.4,025/- per tonne paid to M/s. KFDC
and M/s. KSFIC. Thus Rs.4522.50 lakhs plus tax were saved by obtaining
194596 MT. pulpwood from captive plantations and also which has
minimized the consumption of chemicals and maximized the yield of pulp
to fabricate the paper. During 2012-13, 96100 MT. of Acacia wood was
supplied from captive plantations which has helped in minimizing the
consumption of chemicals worth over Rs.57.00 lakhs. Hence captive
forestry was helped in saving a total sum of Rs.4579.50 lakhs during
2012-13.
5. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which
form part of this report.
6. INDUSTRIAL RELATIONS:
The overall industrial relations were cordial during the year under
review.
7. FIXED DEPOSITS :
The Company''s Fixed Deposits at the end of the year stood at NIL
(Rs.1313 lakhs in the previous year).
8. DIRECTORS :
Sri C Shivashankar, Director of the Company retire by rotation and is
eligible for reappointment at the Annual General Meeting.
Sri. C.B. Patil Okaly, Director of the Company, retire by rotation and
is eligible for reappointment at the Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review :
Sri. Kaushik Mukherjee, IAS: Pursuant to the powers conferred under the
Articles of Association of the Company, the Government of Karnataka
nominated Sri. Kaushik Mukherjee, IAS, ACS to GOK, as Director & also
the Chairman of the Company in place of Sri Araga Jnanendra, Ex-MLA,
vide Govt. Notification No.CI-45 CMI-2013 dated 06.06.2013 & he held
the office upto 6.11.2013.
Sri. L.V. Nagarajan, IAS: Pursuant to the powers conferred under the
Articles of Association of the Company, the Government of Karnataka
nominated Sri. L.V. Nagarajan, IAS, ACS & Chairman, KUIDFC, as Director
& also the Chairman of the Company in place of Sri. Kaushik Mukherjee,
IAS, vide Govt. Notification No.CI-86 CPM-2013 dated 06.11.2013 & he
held the office upto 5.12.2013.
Sri. V Umesh, IAS: Pursuant to the powers conferred under the Articles
of Association of the Company, the Government of Karnataka nominated
Sri. V. Umesh, IAS, ACS to GOK, as Director & also the Chairman of the
Company in place of Sri. L.V. Nagarajan, IAS, vide Govt. Notification
No.CI-86 CPM-2013 dated 05.12.2013.
Sri. M Maheshwar Rao, IAS: Sri. M Maheshwar Rao, IAS, was nominated as
Addnl. Director of the Company by the Government of Karnataka in
exercise of the powers conferred under Articles of Association of the
Company vide Govt. communication No.CI-45-CMI-2013 dated 06.06.2013.
Subsequently he was appointed as a nomine director of GOK vide DPAR 591
SAS 2013 Dated 13 Nov 2013. He is currently holding charge of Managing
Director of the Company.
Sri. Arvind Shrivastava, IAS: Sri. Arvind Shrivastava, IAS, was
nominated as a Director of the Company by the Government of Karnataka
in exercise of the powers conferred under Articles of Association of
the Company in place of Sri. Ajay Seth, IAS, vide Govt. communication
No.CI-50-CPM-2013 dated 25.06.2013.
Sri. Vinay C Sekar: Sri Vinay C Sekar has been nominated as a Director
of the Company by IFCI Ltd., in place of Sri. P.V. Srinivas, with
effect from 10.07.2013. He is the Non-executive Chairman of M/s.
Parijatha Business Solution Pvt. Ltd., Bangalore.
Sri. V. C. Rammohan: Sri V.C. Rammohan has been nominated as a Director
of the Company by IFCI Ltd., in place of Sri. Vinay C Sekar, with
effect from 17.09.2013. He is the Director of M/s. Madhuben Infra Units
& M/s. NSL Tideng Power Generation (P) Ltd.
DIRECTORS'' RESPONSIBILITY STATEMENT : Pursuant to the requirement under
Section-217(2AA) of the Companies Act, 1956, with respect to Directors''
Responsibility Statement, it is hereby confirmed that :
The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;
a) The selected accounting policies were applied consistently, and
judgements and estimates that are reasonable and prudent were made, so
as to give a true and fair view of the state of financial affairs of
the Company at the end of the financial year;
b) 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
irregularities;
c) The annual accounts were prepared for the financial year ended 31st
March, 2013 on a going concern basis.
1. AUDITORS :
a. As per Section 619(2) of the Companies Act, 1956, the Government of
India, Ministry of Corporate Affairs, appointed M/s. M N S & Co.,
Chartered Accountants, Bangalore, as Statutory Auditors of the Company
for the year ended 31.03.2013.
b. M/s. K.P.R. & Associates, Cost Accountants, Bangalore, were
appointed as Cost Auditors of the Company for the year 2012-13 by the
Board, and the approval to this effect has also been received from the
Government of India.
2. PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/ Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees as required under Section
217(2A) of the Companies Act, 1956, are not furnished.
3. CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange,
a report on Corporate Governance together with Management Discussion &
Analysis Report is enclosed herewith, which forms part of the
Directors'' Report. A Certificate from the Auditor regarding compliance
of Corporate Governance, as stipulated by clause 49 of the Listing
Agreement, is attached to this report.
4. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The comments by the Comptroller and Auditor General of India on the
Accounts for the year ended 31.03.2013 are attached to the report at
5. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them during the year 2012-2013. Your Directors
also thank the sugarcane growers for the supply of sugarcane. Your
Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and
by the Statutory Bodies and Financial Institutions, Karnataka State
Pollution Control board & IFCI and Banks. Your Directors also thank the
Government of India, Ministry of Corporate Affairs and its various
departments, Controller of Accounts & Audit, Registrar for Newspapers,
Ministry of Railways, Department of Coal, etc., for their continued
support to the Company.
for and on behalf of the Board
BANGALORE (M MAHESHWARA RAO) (C. SHIVASHANKAR)
DATE: 20.12.2013 MANAGING DIRECTOR DIRECTOR
Mar 31, 2012
To the Members,
1. The Directors wish to present the 77th Annual Report together with
Audited Accounts of the Company for the year ended 31st March, 2012.
2. OPERATIONAL RESULTS :
The operational results for the year under review are as follows:
(Rs. in Lakhs)
FY 2011-12 FY 2010-11 % Change
I PRODUCTION (Qty.in MT)
Writing & Printing Paper 43983 43050 2.17
Newsprint 40299 33608 19.90
TOTAL 84282 76658 9.95
Sugar 26198 27402 -4.39
II SALES (Qty. in MT)
Writing & Printing Paper 39573 47137 -16.04
Newsprint 39102 33642 16.23
TOTAL 78675 80779 -2.60
Sugar 21962 14470 51.78
III TURNOVER (Rs. in Lakhs)
Writing & Printing Paper 18386 19709 -6.71
Newsprint 12335 9806 25.79
TOTAL 30721 29515 4.09
Sugar 5887 3943 49.30
Molasses 732 268 173.13
TOTAL TURNOVER 37339 33726 10.71
IV OPERATING PROFIT
(Rs. in lakhs) (profit before
Interest and depreciation) - 3101 -5521
V Interest 3547 1918
VI CASH PROFIT / LOSS -6649 -7439
(Rs.in lakhs) (profit after
interest & before depreciation)
VII Depreciation 1038 1039
VIII NET PROFIT (Rs. in Lakhs) -7686 -8478
It may be noticed from the above that during the year under review the
production of WPP has increased by 2.17 % from the level 43050 MT to
43983 MT i.e. up by 933 MT. The quantity wise sale of WPP has decreased
by 16.04 % from the level 47137 MT to 39573 MT i.e. less by 7564 MT.
The production of NP has increased by 19.90 % from the level 33608 MT
to 40299 MT i.e. up by 6691 MT. The quantity wise sale of NP has also
increased by 16.23 % from the level 33642 MT to 39102 MT i.e. up by
5460 MT. The overall improvement in production of paper is 9.95 % from
the level of 76658 MT in FY 2011 to 84282 MT in FY 2012 ie less by 7624
MT. The overall improvement in the quantity of paper sold was decreased
marginally by 2.60 % i.e. from 80779 MT to 78675 MT. Improvement in
production of paper has helped in achieving higher turnover of by 4.09
% i.e. from Rs 29515 lacs to Rs 30721 lacs .
The production of sugar has gone down by 4.39% due to decrease in cane
crushing activity from the level of 291576 MT(recovery of 9.37 %) in FY
2010 to 269549 MT (recovery of 9.57 %) in FY 2012. There is a
substantial improvement in sale of sugar quantity by 51.78 %. The
increase in turnover by 49.30% due to higher quantity sales and coupled
with improvement in average selling price of sugar from Rs 26272/MT to
Rs 26539/MT ie up by Rs 267/MT. The turnover of Sugar Division was
Rs.66.19 Crore compared to Rs. 42.11 Crore in the previous year i.e. up
by 57.18%. The total turnover of 2012 has been increased by Rs 36.13
Crores from the level Rs 337.26 crores to Rs 373.39 Crores i.e. up by
10.71 %.
Production Performance:
During the year 2011-12, the overall production capacity utilization
again suffered due to :
- Adverse market condition. However, during the second half of the
year, the Newsprint market showed upward trend.
- Lack of infrastructure to produce adequate quantity of hard wood
chemical pulp to keep all the four machines running whenever WPP order
was taken on PM-4.
- Shortage of purchased pulp due to increase in price.
- Shortage of coal.
Production on PM-4 continued as a mix of WPP and Newsprint depending
upon the availability of captive chemical pulp and also market demand.
During the second half of the year, due to increased Newsprint market,
production of Newsprint on PM-4 increased. The company continues to
manufacture Note Books through an outsourced agency.
During the year, the company has incurred operating loss, Cash loss and
Net loss of Rs. 31.01 Crores, Rs.66.49 Crores and Rs.76.86 Crores
compared to previous year losses of Rs.55.21 Crores, Rs. 74.39 Crores
and Rs. 84.78 Crores respectively.
Following transactions were accounted / recognized while finalizing the
accounts for 2011-12.
- Conversion of GOK loan into equity of Rs 101.02 Crores as on
31.03.2012 as share application money pending allotment.
- Fresh infusion of equity capital to the extent of Rs 5.00 Crores
accounted as share application money pending allotment.
- Rs 5.00 Crores received towards working capital has been accounted as
rebates and incentives received from GOK and the same was utilized for
disbursement of cane arrears for the year 2009-10 and the same has been
accounted in the books as cane arrears for earlier year as the same was
not recognized as payable during 2009-10 with the pretext that the
enhancement of Rs 450/MT was announced by the GOK on receipt the same
will only be paid accordingly the transaction was regularized in the
books.
The company has defaulted in paying PF dues to the extent of Rs 18.30
lacs as at the end of 31.03.2012, due to poor liquidity, however the
same has been paid including interest on delayed payment, out of Rs 50
Crores fund raised during May 2012.
The accumulated losses at the end of 31.03.2012 stood at Rs.270.89
Crores with that entire net worth of Rs.224.92 Crores (including GOK
loan of Rs.101.02 Crores converted in to equity and infusion fresh
equity of Rs.5.00 Crores) has been eroded and the company has been
registered as sick company as case No.601/ 2012 with BIFR. To improve
networth and operations of the company, the company requested some
concessions and waivers with the Government of Karnataka.
STATUS OF BIFR
Based on the financials of 2010-11, the company was registered as a
sick company under section 15(1) of the Sick Industrial Companies
(Special Provisional) Act, 1985. The case has been registered as
No.601/ 2012 and two hearings were made. In the second hearing BIFR has
notified that MPM has become sick and appointed lead banker State Bank
of Mysore as operating agency for preparing revival package and submit
to Board in consultation with MPM.
3. PROJECTS:
The following projects and energy conservation measures taken up during
FY 2011-12
a. Lime Sludge Re-burning Kiln
Company has taken up Installation of Rotary Lime Kiln Project in order
to meet the stringent environmental norms costing Rs 35 crores.. The
civil works for installation of Lime Sludge Re-burning kiln is under
progress. Around 78% of the civil works have been completed. The
remaining civil works is expected to be completed by Oct 2012. Around
70% of the plant and machinery have been received at MPM site. The
plant is expected to be commissioned by March 2013.
b. Commissioning of Winder at Paper Machine -4 during Aug 2011
c. Energy Conservation Measures:
Recently the Government of India (Bureau of Energy Efficiency) has
notified Energy consumption norms. We are categorized as Large Wood
based Pulp and Paper Industry.
As per the Circular, we have to comply with norms of Energy
Consumption. BEE, New Delhi, also notified a Scheme to all Designated
Consumers which is called PAT Scheme. (Perform Achieve and Trade).
The Scheme has notified Energy Consumption norms for each Designated
Consumer. This norm is arrived through a Base Line Energy Audit. This
audit was carried out by M/s NPC- Bangalore. This norm is fixed based
on our own performance. The base line years chosen is 2007-08, 2008-09
and 2009-10. The scheme envisages reward for positive compliance and
penalty for negative compliance of the PAT norms. During Fy 2011-12,
following projects were implemented
- Flat bottom centrifugal machines in Sugar Mill during Sept 2011.;
- Single Entry Jet Condenser For Sugar Mill during Sept 2011
- Introduction of centrifugal pumps in place of ODS Pumps (Air lift
pumps);
- Variable Frequency Drive for S R Boiler I D Fan;
The company is engaging professional consultants to carry out
comprehensive Energy Audit. After getting the audit report, further
plan of action for energy conservation would be prepared
4. MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors'' Report.
5. CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement, the cash
flow statement for the year ended 31st March, 2012 is included in the
annual accounts.
6. CAPTIVE FORESTRY :
The Forest Wing has supplied 188647 M.T. of pulpwood by harvesting from
2872 ha. of captive plantations during 2011-12.
The Public Interest Litigation in Hon''ble High Court in W.P.
No.14644/1998 is due for final hearing and also for disposal of the
writ petition. However, the petitioners have availed time for
suggesting the court alternate raw-material for manufacturing paper or
alternate material in place of paper. The lease of forest land will be
expiring in the year 2020-21 wherein the plantation crop to be raised
in 2014-15 would be the last rotation of crop and till then the
management plan has been approved by the Ministry of Environment and
Forests, Govt. of India.
The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2011-12
are yet to be settled with the Karnataka Forest Department wherein most
of the dues have been paid by the Company upto 2000-2001 by
surrendering 12.5% of plantation crop and the lease rent is adjusted
towards the standing crop surrendered in Wildlife area in the later
period from 2001-02 to 2010-11.
Totally, 3023.95 ha. of harvested plantation areas were regenerated by
replanting/coppicing with species like Acacia hybrid (1082.70 ha.),
Eucalyptus pelita (165 ha.) and Eucalyptus camaldulensis (1776.25 ha.).
The Farm Forestry programme is continued by selling about 11.78 lakhs
seedlings and by entering in to a buy-back agreement with farmers on a
plain paper wherever they have availed seedlings @ 50% of the selling
rate. The Gate purchase of pulpwood is being continued and totally
1300.300 MT was procured @ Rs.3,000/- per MT.
The programme of raising large scale clonal plants of Eucalyptus
species in dry-zone nurseries has been continued which will double the
present average yield from 30 MT/ha.. to over 60 MT/ha. where about 1/
3 of the captive plantations are located in dry-zone. The achievement
with clonal plantations of Acacia hybrid in wet zone is already with an
average yield of 100 M.T./ha.
The average weighted cost of Acacia and Eucalyptus pulpwood obtained
from captive plantations works out to Rs.1,742/- per tonne as against
Rs.2,916/- per tonne paid to M/s KFDC and M/s. KSFIC. Thus Rs.2214.71
lakhs was saved by obtaining 185994 MT pulpwood from captive
plantations and also which has minimized the consumption of chemicals
and maximized the yield of pulp to fabricate the paper. During
2011-12, 92239 M.T. of Acacia wood was supplied from captive
plantations which has helped in minimizing the consumption of chemicals
worth over Rs.35.00 lakhs. Hence captive forestry was responsible for
saving a total sum of Rs.2249.71 lakhs during 2011-12.
7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which
form part of this report.
8. INDUSTRIAL RELATIONS:
The overall industrial relations were cordial during the year under
review.
9. FIXED DEPOSITS :
The Company''s Fixed Deposits at the end of the year stood at Rs.1313
lakhs (Rs.1313 lakhs in the previous year).
10. DIRECTORS :
Sri. M. Lakshminarayana, IAS, Director of the Company, retire by
rotation and is eligible for reappointment at the Annual General
Meeting.
Sri. S. Parameswarappa, IFS (Retd.), Director of the Company, retire by
rotation and is eligible for reappointment at the Annual General
Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review :
Sri. M.N. Vidyashankar, IAS: Sri. M.N. Vidyashankar, IAS is nominated
as a Director of the Company by the Government of Karnataka in exercise
of the powers conferred under Articles of Association of the Company in
place of Sri. K Jothiramalingam, IAS, vide Govt. communication
No.CI-78-CMI-2012(3) dated 12.06.2012. Presently, he is holding the
position of the Principal Secretary to Govt, C & I Dept., Govt. of
Karnataka. He is also a Chairman on the Boards of KIADB, GTTC, TECSOK
and Director of KSSIDC, MSIL and KSIIDC.
11. DIRECTORS'' RESPONSIBILITY STATEMENT :
Pursuant to the requirement under Section-217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that :
a) The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;
b) 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 financial affairs of
the Company at the end of the financial year;
c) 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
irregularities;
d) The annual accounts were prepared for the financial year ended 31st
March, 2012 on a going concern basis.
12. AUDITORS :
a. As per Section 619(2) of the Companies Act, 1956, the Government of
India, Ministry of Corporate Affairs, appointed M/s. M N S & Co.,
Chartered Accountants, Bangalore, as Statutory Auditors of the Company
for the year ended 31.03.2012.
b. M/s. KPR & Associates, Cost Accountants, Bangalore, were appointed
as Cost Auditors of the Company for the year 2011-12 by the Board, and
the approval to this effect has also been received from the Government
of India.
13. PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees as required under Section
217(2A) of the Companies Act, 1956, are not furnished.
14. CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange,
a report on Corporate Governance together with Management Discussion &
Analysis Report is enclosed herewith, which forms part of the
Directors'' Report. A Certificate from the Auditor regarding
compliance of Corporate Governance, as stipulated by clause 49 of the
Listing Agreement, is attached to this report.
15. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The comments by the Comptroller and Auditor General of India on the
Accounts for the year ended 31.03.2012 are attached to the report at
ANNEXURE - II.
16. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them during the year 2011-2012. Your Directors
also thank the sugarcane growers for the supply of sugarcane. Your
Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and
by the Statutory Bodies and Financial Institutions, Karnataka State
Pollution Control board & IFCI and Banks. Your Directors also thank the
Government of India, Ministry of Corporate Affairs and its various
departments, Controller of Accounts & Audit, Registrar for Newspapers,
Ministry of Railways, Department of Coal, etc., for their continued
support to the Company.
For and on behalf of the Board
BANGALORE Sd\- Sd\-
Date: 1st September 2012 (PADAM KUMAR GARG) (C. SHIVASHANKAR)
MANAGING DIRECTOR DIRECTOR
Mar 31, 2011
To the Members,
1. The Directors wish to present the 76th Annual Report together with
Audited Accounts of the Company for the year ended 31st March, 2011.
2. OPERATIONAL RESULTS :
The operational results for the year under review are as follows:
(Rs. in Lakhs)
FY2010-11 FY2G09-10 % Change
I PRODUCTION (Qty.in MT)
Writing & Printing Paper 43050 46833 -8.08
Newsprint 33608 34246 -1.86
TOTAL 76658 81079 -5.45
Sugar 27402 8020 241.67
II SALES (Qty. in MT)
Writing & Printing Paper 47137 41324 14.07
Newsprint 33642 44895 -25.07
TOTAL 80779 86219 -6.31
Sugar 14470 20382 -29.00
III TURNOVER (Rs. in Lakhs)
Writing & Printing Paper 19709 16886 16.72
Newsprint 9806 11375 -13.79
TOTAL 29515 28261 4.44
Sugar 3943 5173 -23.74
Molasses 268 309 -13.27
TOTAL TURNOVER 33726 33743
IV OPERATING LOSS -5521 -5004
V Interest 1918 1709
VI CASH LOSS -7439 -6713
VII Depreciation 1039 1010
VIII NET (- Loss) (Rs. In Lakhs) -8478 -7723
IX Balance of loss brought forward 10925 3202
X Total loss carried to
Balance Sheet 19403 10925
It may be seen from the above that during the year under review the
production of WPP and NP was less by 8.08 % and 1.86% respectively. The
overall decrease in production of paper was 5.45 % from 81079 MT in FY
2010 to 76658 MT in FY 2011 ie less by 4421 MT. In spite of decrease in
production of WPP the quantity sold has increased by 14.07% where as in
case of NP it was decreased by 25.07%, thereby overall decrease in the
quantity of paper sold was also less by 6.31% from 86219 MT to 80779 MT
ie less by 5440 MT.
While the quantity wise sale of WPP has gone up by 14.07% and the
turnover also up by 16.72%, which was mainly on account of increase in
quantity sold coupled with improvement in average net realization.
Quantity wise sale of NP and turnover was decreased by 25.07% & 13.79%
respectively. The overall increase in turnover of paper was 4.44% from
Rs.283 Crore during FY 2010 to Rs.295 Crore during FY 2011.
The production of sugar has gone up by 241.67% due to increase in cane
crushing activity and recovery in FY 2011. However, there was decrease
in sales in terms of quantity by 29 % due to lesser release from
government. The turnover of Sugar was Rs.42.11 Crore as against Rs.
54.82 Crore in the previous year (ie less by 23.18 %) which was due to
non sale of levy sugar. The total turnover of the Company was in the
region of Rs.33726 lakhs as against the previous year''s turnover of
Rs.33743 lakhs.
During the year, the company had incurred operating loss, Cash loss and
Net loss of Rs. 55.21 Crores, Rs.74.63 Crores and Rs.84.78 Crores
compared to previous year losses of Rs.50.04 Crores, Rs.67.13 Crores
and Rs.77.23 Crores respectively.
During the year 2010-11 overall capacity utilization suffered badly due
to:
- Adverse market for News Print.
- Lack of infrastructure to produce adequate quantity of Hardwood
Chemical Pulp to keep all the four Machines running to produce Writing
and Printing Paper.
- Shortage of Raw material (Bagasse).
- Shortage of purchased Pulp coupled with increase in pulp prices.
Production on PM-4 continued as combination of WPP and NP depending on
availability on Hardwood chemical Pulp and market requirement. CW -
Elegant made on PM-4 has good realization and its quality well accepted
in the market. MPM note books introduced last year has good market
potential. The Company has out sourced the note book manufacturing
activity to an external agency. Manufacturing facility is located
inside the Mill premises for better co-ordination and quality control.
GOK has placed order on MPM for supply of Note Books for its "Vidya
Vikas" scheme.
3. EROSION OF NETWORTH :
The total net loss including the accumulated losses as on 31.03.2011
was in the region of Rs. 19403 lakhs which has exceeded the entire net
worth of Rs.11889 lakhs thereby, the Company has become a Sick Company
under the provision of the Sick Industrial (Special Provisions) Act
1985. As required by the said Act, a reference will be made to the
Board for Industrial and Financial Re-construction (BIFR) for
determination of measures to be adopted by the Company.
4. PROJECTS:
As already informed the Company has taken up Rotary Lime Kiln Project
in order to meet the stringent environmental norms costing about Rs.35
crores. The civil contractor has been appointed and the civil work in
all respect is expected to be completed by February 2012. Further, the
Comnai iy i ias also taken up De- inking plant of 200 TPD costing
around Rs.125 crores which would help the Company in cost reduction.
M/s. SPB-PC have been appointed as Project Management Consultants. It
is expected that De-inking plant will be commissioned by March 2013.
5. MANAGEMENT DISCUSSIONS ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors'' Report.
6. CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement, the cash
flow statement for the year ended 31st March, 2011 is included in the
annual accounts.
7. CAPTIVE FORESTRY:
The Forest Wing has supplied 131206 M.T. of pulpwood by harvesting
about 3381 ha. of captive plantations during 2010-11.
The Hon''ble High Court in W.P. No.14644/1998 has ordered to surrender
2439.03 ha. of plantation area raised in revenue lands from 2010-11 to
2014-15 after harvesting the trees grown by MPM in a phased manner. An
expert committee was formed by the Hon''ble High Court by involving Sri.
A.N. Yellappa Reddy, IFS., (Retd.) Former Secretary, Department of
Environment and Forests, Government of Karnataka who volunteered on
behalf of the petitioners for discussion so that the purpose of MPM
remain as sustainable as it is today. Accordingly, the committee has
submitted the report to the court and on recommendation of the
committee the Hon''ble High Court has directed the State and Central
Governments to take appropriate steps to monitor the forestry works of
MPM on the Forest lands leased to the Company.
The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2010-11
are yet to be settled with the Karnataka Forest Department wherein most
of the dues have been paid by the Company upto 2000-2001 by
surrendering 12.5% of plantation crop and the lease rent is adjusted
towards the tree crop surrendered in Wildlife area in the later period
from 2001 -02 to 2010-11.
In all, 2441.85 ha. of harvested plantation areas were regenerated by
replanting/coppicing with species like Acacia hybrid (901.75 ha.),
eucalyptus pellita (435 ha.), Eucalyptus camaldulensis(1092.10 ha.) and
miscellaneous species (13 ha.). The Farm Forestry programme was
continued by selling about 12 lakhs seedlings and by entering in to a
buy-back agreement with farmers on a plain paper wherever they have
availed seedlings @ 50% of the selling rate.
The programme of raising large scale clonal plants of Eucalyptus
species in dry-zone nurseries has been started which will double the
present yield from average 30 MT/ha. to over 60 M.T./ha. in dry zone,
where about 1/3 of the captive plantations are located. The achievement
with clonal plantations of Acacia hybrid in wet zone is already with an
average yield of 100 M.T./ha.
The average weighted cost of Acacia and Euclyptus pulpwood obtained
from captive plantations works out to Rs.1,583/- per tonne as against
Rs.2,943/- per tonne paid to M/s. KFDC and M/s. KSFIC. Thus Rs.792.00
lakhs was saved by obtaining 131786 M.T pulpwood from captive
plantations which has minimized the consumption of chemicals and
maximized the yield of pulp to fabricate the paper. During 2010-11,
84390 M.T. of Acacia wood was supplied from captive plantations which
has helped in minimizing the consumption of chemicals worth Rs.34.00
lakhs. Hence captive forestry was responsible for saving a total sum of
Rs.826.00 lakhs during 2010-2011.
8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1 )(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE -1, which
form part of this report.
9. INDUSTRIAL RELATIONS:
The overall industrial relations were cordial during the year under
review.
10. FIXED DEPOSITS :
The Company''s Fixed Deposits at the end of the year stood at Rs.1313
lakhs (Rs.1313 lakhs in the previous year).
11. DIRECTORS:
Sri. C. Shivashankar Director of the Company, retire by rotation and is
eligible for reappointment at the Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review:
Sri. Padam Kumar Garg, IPS : Sri. Padam Kumar Garg, IPS (51) was
nominated as Managing Director of the Company by the Government of
Karnataka in exercise of the powers conferred under Articles of
Association of the Company in place of Dr. Sandeep Dave, IAS. He
assumed charge on 2nd February 2011 as Managing Director. He held
senior positions in different Departments of Government of Karnataka.
He is also the Director on the Board of M/s. Bangalore Electricity
Supply Company Limited (BESCOM), Hubli Electricity Supply Company
Limited (HESCOM), Mangalore Electricity Supply Company Limited
(MESCOM), Gulbarga Electricity Supply Company Limited (GESCOM) and
Chamundeshwari Electricity Supply Corporation (CESC), Mysore.
Sri. K Jothiramalingam, IAS: Sri. K Jothiramalingam, IAS (59) was
nominated as a Director of the Company by the Government of Karnataka
in exercise of the powers conferred under Articles of Association of
the Company in place of Sri. V.P. Baligar, IAS, vide Govt,
communication No.CI-53-CMI-2011(3) dated 20.05.2011. Presently, he is
holding the position of the Principal Secretary to Govt, C & I Dept.,
Govt, of Karnataka. He is also Director on the Board of Mysore Sales
International Ltd., Karnataka Power Transmission Corporation Ltd.,
Karnataka State Industrial and Infrastructure Development Corporation
Ltd., Karnataka Trustee Company Ltd., Karnataka Asset Management
Company Private Ltd., Hassan-Mangalore Rail Development Company Ltd.,
and Rail Infrastructure Development Company (Karnataka Ltd.)
Sri. Kaushik Mukherjee, IAS: Sri. Kaushik Mukherjee, IAS (56) was
appointed as a Director of the Company by the Government of Karnataka
in exercise of the powers conferred under Articles of Association of
the Company in place of Ms. Meera C Saksena, IAS, vide Govt,
communication No.CI-49-CPM-2011 dated 03.06.2011. Presently, he is
holding the position of the Principal Secretary to Govt, Forest,
Ecology & Environment Dept., Govt, of Karnataka. He is also a Director
on the Board of Karnataka Forest Development Corporation, Karnataka
State Forest Industries Corporation and Karnataka State Handicraft
Development Corporation. The board appreciated the valuable services
rendered by the outgoing Directors.
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
hereby confirmed that:
a) The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;
b) The selected accounting policies were applied consistently, and
judgements and estimates that are reasonable and prudent were made, so
as to give a true and fair view of the state of financial affairs of
the Company at the end of the financial year;
c) 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
irregularities;
d) The annual accounts were prepared for the financial year ended 31st
March, 2011 on agoing concern basis.
13. AUDITORS:
a) As per Section 619(2) of the Companies Act, 1956, the Government of
India, Ministry of Corporate Affairs, appointed M/s. Vishnu Rajendran &
Co., Chartered Accountants, Bangalore, as Statutory Auditors of the
Company for the year ended 31.03.2011.
b) M/s. K.P.R. & Associates, Cost Accountants, Bangalore, were
appointed as Cost Auditors of the Company for the year 2010-11 by the
Board, and the approval to this effect has also been received from the
Government of India.
14. PARTICULARS OF EMPLOYEES:
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees as required under Section
217(2A) of the Companies Act, 1956, are not furnished.
15. CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange,
a report on Corporate Governance together with Management Discussion &
Analysis Report is enclosed herewith, which forms part of the
Directors'' Report. A Certificate from the Auditor regarding compliance
of Corporate Governance, as stipulated by clause 49 of the Listing
Agreement, is attached to this report.
16. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The comments by the Comptroller and Auditor General of India on the
Accounts for the year ended 31.03.2011 are attached to the report at
ANNEXURE - II.
17. ACKNOWLEDGEMENT:
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them during the year 2010-2011. Your Directors
also thank the sugarcane growers for the supply of sugarcane. Your
Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and
by the Statutory Bodies and Financial Institutions, Karnataka State
Pollution Control board & IFCI and Banks. Your Directors also thank the
Government of India, Ministry of Corporate Affairs and its various
departments, Controller of Accounts & Audit, Registrar for Newspapers,
Ministry of Railways, Department of Coal, etc., for their continued
support to the Company.
For and on behalf of the Board
Sd\- Sd\-
(PADAM KUMAR GARG, IPS) (C. SHIVASHANKAR)
MANAGING DIRECTOR DIRECTOR
BANGALORE
Date: 11-08-2011
Mar 31, 2010
The Directors wish to present the 75lh Annual Report together with
Audited Accounts of the Company for the year ended 31st March, 2010.
FINANCIAL RESULTS :
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31 -03-2010 31-03-2009
Year ended Year ended
31.3.2010 31.3.2010
Sales 33743 42490
Profit/ Loss (-)
before interest, -5004 4504
Depreciation &
Taxation (PBIDC) 1709 1864
interest 1010 995
Depreciation 12
Taxation, Fringe
Benefit tax -7723 1633
Net Profit/Loss
(-) for the year -3202 -483
Balance of Profit/Loss
(-) brought forward
from previous year -10925 -3202
3.OPERATIONS & PROFITABILITY:
FY 2008-09 FY 2009-10 %
Change
I PRODUCTION (Qty.in MT)
Writing & Printing Paper 32604 46833 43.64
Newsprint 76667 34246 -55.33
TOTAL 109271 81079 -25.80
Sugar 21651 8020 -62.96
It may be seen from the above that the production of WPP was increased
by 43.64%, whereas newsprint was reduced by 55.33% which was due to
planned reduction in production, as the selling price was not
encouraging to produce and sell more newsprint. Similarly, the
production of sugar was reduced by 62.96% due to non availability of
sugarcane coupled with low recovery of 8.54% as against 8.97% in the
previous year which resulted in shortage of bagasse which in turn
reduced chemical bagasse pulp production. The overall turnover of the
Company during the year under review was in the region of Rs.337.43
crores as against Rs.424.91 crores i.e. reduction of 21%.
The production of Newsprint witnessed adverse market thereby forcing
Newsprint machine to stop so as to avoid build up of unsold stock of
inventory. Domestically, the trend in usage of Newsprint is towards 45
gsm whereas most of our Newsprint production is in 49 gsm. Though MPM
can produce 45 gsm Newsprint, we need more imported / chemical pulp.
The cost of pulp furnish make it uneconomical under prevailing
Newsprint market condition. However, to improve the sustainability of
operation and porofitability, the company successfully introduced value
added products viz., Cream Wove Elegant, MPM copier paper and MPM Note
Books. These products were produced on the Paper Machine - 4. The
Company have also tried new process called AKD sizing in the
manufacture of writing and printing paper which has improved the quaky
of paper.
During the year, the Company had incurred an operating loss, cash loss
and net loss of Rs.48.24 crores, Rs.65.33 crores and Rs.77.23 crores
respectively as against the profit of Rs.45.04 crores, Rs.26.40 crores
and Rs.16.33 crores in the previous year. The cash loss of Rs.65.33
crores was mainly an account of increase in the variable cost of
production of both WPP and newsprint by Rs.5784/- MT and Rs.429/- per
MT respectively, which was due to increase in the input cost viz.,
imported pulp, chemicals, power and fuel and usage of more indigeneous
pulp purchased at higher price.
The net loss of Rs.77.23 crores with carried forward loss of Rs. 32.02
crores (accumulated to Rs.109.25 crores) has exceeded the threshold
limit of 50% of networth, thereby, the company has become a potentially
Sick Industrial Company and as per the statutory provisions, the
company is required to make reference to the Board for Industrial &
Financial Reconstruction (BIFR).
In its relentless effort to bring down the cost of production and
improve the quality, certain small investment projects were8completed
viz., New Blow Heat Recovery & Screening System in C P M - 2, Air
Preheaters in AFBC Boilers and Cooling Tower in Evaporator. In order to
improve the customer satisfaction and environmental image, the company
is implementing Integrated Management System (I M S) consisting of ISO
9001 and 14001 series of standards.
While finalizing the provisional accounts for the quarter ended
31.03.2010 the company had recognized the estimated value of standing
crop to the extent of Rs.48.00crores on 16,000hectors of captive
plantation, at net realizable value as per clause 1 (d) of Accounting
Standard 2 Valuation of Inventories. Hither to the standing crop was
valued at cost based total expenditure incurred/ allocated to the year
of plantation and the total quantity of yield obtained/expected from
respective year of crop matured but not cut. The value of standing crop
upto seven years was not recognized in the books as inventory (work in
progress), the change in method of valuation was also in anticipation
of implementation of IFRS (International Financial Reporting Standards)
which was subsequently deferred till 2013. Hence the Books of Accounts
and Financial Statements as on 31.03.2010 were finalized as per
Accounting Policy 1.02, while doing so the opinion of experts on
the subject were obtained and the same were examined by the Company in
consultation with Statutory Auditors and it was decided to defer the
method valuation of Standing Crop adopted while finalizing the
quarterly results March, 2010.
LAND FOR REGD. OFFICE/CORPORATE OFFICE IN BANGALORE:
On the direction of the Honble Chief Minister of Kamataka, the BDA has
aiiotteo a CA site No.08 (P1) measuring about 1336 sq. mtrs. at HBR I
Stage, Bangalore, on lease basis for a period of 30 years on a lumpsum
lease amount of Rs.33.82 lakhs for construction of Regd./Corporate
office in Bangalore. The Company has paid the said amount and completed
the registration formalities. The Company has initiated a necessary
action for construction of office Building.
PROJECTS:
In order to meet the stringent environmental norms, which is mandatory,
the company had taken up installation of 75 TPD Rotary Lime Kiln
immediately.The Government of Kamataka has issued a guarantee to the
Company to borrow funds from the Banks/market for Rs.35 crores and
accordingly, the company has raised the same by issue of private
placement of taxable bonds. The work is under progress.
Further, the GOK has issued guarantee to the Company to raise Rs.100
crores funds from Banks/market in a phased manner for restructuring and
revival of the Company. The Company has identified De-inking plant of
200 TPD costing around Rs.100 crores and co-generation plant at the
cost of Rs.50 crores, which would improve the profitability. The
company has raised Rs.50 crores by issue of private placement of bonds,
for the above Projects and the balance Rs.50 crores bonds will be
issued by the Company as and when required.
MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors Report.
CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement, the cash
flow statement for the year ended 31st March, 2010 is included in the
annual accounts.
CAPTIVE FORESTRY:
The Forest Wing has harvested captive plantations over an extent of
1956 ha. and 1,27,673 M.T. of puipwood was supplied to the Mills. The
yield of pulpwood from captive plantations have increased considerably
since most of the areas are under clonal plantations. The Government
has reimbursed lease rentals (Rs.14.34 crores) in lieu of surrendering
of captive plantations raised in Wildlife areas pending a study report
by the committee comprising officers of Karnataka Forest Department and
MPM. The reassigning of Non-forest lands (after surrendering to the
Government consequent to the interim orders of Honble High Court of
Karnataka in W.P. No. 14644/ 98) is under the consideration by the
Government. The lease of degraded forest lands to MPM in iieu of
Wildlife areas surrendered (4665.30 ha.) was also requested with the
Government and the matter is being persued. About 2445 ha. of harvested
areas were regenerated by replanting/ coppicing with species like
Acacia hybrid (1041 ha.), Eucalyptus pelita (644 ha.) Eucalyptus
comaldulensis (758 ha.) and Miscellaneous species (2 ha.).
The Farm Forestry programme is being continued in the Forest Wing for
the benefit of farmers and institutions and about 7.00 lakhs polythene
bagged seedlings of improved varieties of Acacia, Eucalyptus.. Casurina
and other species were sold and Rs.8,97,169/- revenue is realized. The
Gate purchase of pulpwood was made @ Rs.2250/- per M.T. and a small
quantity f 346.57 M.T. of pulpwood was procured.
The programme of raising large scale clonal plantations of Eucalyptus
cornaldulensis in Dry-zone and Eucalyptus urophylla in Wet-zone is
under progress to ensure annual supply of 2.60 lakh tonnes of pulpwood
per annum which will be self-sufficient to the Company. The average
weighted cost of Acacia and Eucalyptus pulpwood obtained from captive
plantations works out to Rs.1,470/- per tonne as against Rs.2,170/- per
tonne paid to M/s KFDC & KSFIC. Thus Rs.894.00 lakhs was saved by
obtaining pulpwood from captive plantations. During this period 96,770
MT of Acacia wood was supplied from captive plantations which has
helped in minimizing the consumption of chemicals worth about Rs.39.00
lakhs. Hence, captive forestry was responsible for saving a total sum
of Rs.933.00 lakhs during 2009-2010.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1 )(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE -!, which
form part of this report.
INDUSTRIAL RELATIONS:
The company takes pride in its record for maintaining cordial
Industrial Relations. On attaining 75 years of the Company, a "Platinum
Jubilee Celebration" has been planned in the mills to commemorate the
peaceful co-existence of this organization.
FIXED DEPOSITS :
The Companys Fixed Deposits at the end of the yearstood at Rs.1313
lakhs (Rs.1313 lakhs in the previous year).
DIRECTORS :
Sri. C.B. Patil Okaly and Sri. S Parameswarappa, IFS (Retd), Directors
of the Company, retire by rotation and are eligible for reappointment
at the Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review :
Sri V. P. Baligar was nominated as a Director of the Company by the
Government of Karnataka in place of Sri. Subir Hari Singh, IAS, vide
Govt, communication No.CI-138-CMI- 2009(4) dated 20.11.2009.
Sri. Joseph Gonsalves and Sri. H.S. Srikantaiah ceased to be the
Directors of the Company effective from 25th September, 2009 as they
had withdrawn their candidature for the directorship of the Company at
the lastAGM held on 25.09.2009 due to their personal reasons.
Sri. T.K. Ray was nominated as a Director of the Company by IFCI Ltd.,
in place of Sri. M. V. Muthu, with effect from 08.09.2009. He held the
office upto 11.06.2010. Sri. P.V. Srinivas was nominated as a Director
of the Company by IFCI Ltd., in place of Sri. T.K. Ray, with effect
from 11.06.2010.
The board appreciated the valuable services rendered by the outgoing
Directors.
DIRECTORS RESPONSIBILITY STATEMENT :
Pursuant to the requirement under Section-217(200) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed that:
a) The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;
b) 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 financial affairs of
the Company at the end of the financial year;
c) 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
irregularities;
d) The annual accounts were prepared for the financial year ended 31st
March, 2010 on a going concern basis.
AUDITORS :
a) As per Section 619(2) of the Companies Act, 1956, the Government of
India, Ministry of Corporate Affairs, appointed M/s. MNS & Co.,
Chartered Accountants, Bangalore, as Statutory Auditors of the Company
for the year ended 31.03.2010.
b) M/s. G.S.R & Associates, Cost Accountants, Mysore, were appointed as
Cost Auditors of the Company for the year 2009-10 by the Board, and the
approval to this effect has also been received from the Government of
India.
15. PARTICULARS OF EMPLOYEES :
16. CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith, which forms part of
the Directors Report. A Certificate from the Auditor regarding
compliance of Corporate Governance, as stipulated by clause 49 of the
Listing Agreement, is attached to this report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
The comments by the Comptroller and Auditor General of India on the
Accounts for the year ended 31.3.2010 will be forworded to shareholders
seperately.
18. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them during the year 2009- 2010. Your Directors
also thank the sugarcane growers for the supply of sugarcane. Your
Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Kamataka through the Departments of Commerce and Industries, Finance,
Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and
by the Statutory Bodies and Financial Institutions, Kamataka State
Pollution Control board & IFCI and Banks.
Your Directors also thank the Government of India, Ministry of
Corporate Affairs and its various departments, Controller of Accounts &
Audit, Registrar for Newspapers, Ministry of Railways, Department of
Coal, etc., for their continued support to the Company.
For and on behalf of the Board
sd/- sd/-
(Dr.SANDEEP DAVE, IAS) (C. SHIVASHANKAR)
MANAGING DIRECTOR DIRECTOR
Place : Bangalore
Dated : 19-11-2010
Mar 31, 2009
The Directors have pleasure in presenting the 74th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 2009.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
Year ended Year ended
31.03.2009 31.03.2008
Sales 42490 39405
Profit before interest, Depreciation &
Taxation (PBIDC) 4504 3682
Interest 1864 2164
Profit before Depreciation 2460 1518
Depreciation 195 993
Taxation, Fringe Benefit tax 12 20
Net Profit / Loss for the year 1633 505
Balance of Profit/Loss brought forward
from previous year 4835 (-) 5341
Balance of Profit / Loss carried to
Balance Sheet 3202 (-)4835
3. SALES/TURNOVER:
The analysis of Sales is as under:
2008-09 2007-08
Quantity Value Quantity Value
in MT Rs. in lacs in MT Rs. in lacs
News Print 66623 21580 83887 20882
WPP 31513 13247 35306 14127
Sugar 42539 7015 31746 4123
Molasses 14539 648 20193 273
Total 42490 39405
4. OPERATIONS & PROFITABILIT`
During the year under review, the production of Writing & Printing
Paper (WPP) and Newsprint (NP) was reduced by 2.02% and 9.89%
respectively. The overall decrease in production of paper is 7.68 %
from the level of 1,18,364 MT in FY 2008 to 109271 MT in FY 2009.
Consequent to decrease in produc- tion, the quantity of WPP and NP sold
were also less by 10.74% and 20.58% respectively. The overall quantity
of paper sold was also less by 17.67%, i.e. down from the level of
1,19,193MT in FY 2008 to 98136MT in FY 2009. While the quantity wise
sale of WPP was less by 10.74%, the turnover of WPP was less by only
6.24%, mainly on account of increase in the average net sales
realization In case of NP while the production decreased by 9.89% and
the sales in quantity decreased by 20.58%, the turnover in Newsprint
increased by 3.34%, on account of improvement in the average net sales
realization. The overall marginal decrease in turnover of paper
division was 0.52% from the level of Rs.350 Cr. during FY 2008 to
Rs.348 Cr. during FY 2009. The sugarcane crushed during sugar season
2008-09 was 1,24,021 MT with a recovery of 9.48%, as against 4,88,195
MT with 9.47% recovery during sugar season 2007-08. There is a increase
in sales quantity of sugar by 34% due to higher release from
Government.
While the sales quantity of sugar was up by only 34%, the increase in
turnover was up by 70.17%. This was mainly due to increase in sales
quantity by 34% and also improvement in net sales realization. The
turnover of Sugar Division was Rs.76.64 Cr. compared to Rs. 43.96 Cr.
in the previous year. There was an increase of 7.83% in the turnover of
the Company, i.e., from the level of Rs. 394.05 Cr. to Rs.424.91 Cr.
There was increase of 22.32 % in operating profit i.e., by Rs.822
lakhs, as compared to previous year. There was increase of 76.12% in
cash profit, i.e., by Rs.1141 lakhs compared to previous year. The net
profit during the year was Rs. 16.34 Cr compared to Rs.5.06 Cr in the
previous year.
5. MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors Report.
7. CAPTIVE FORESTRY :
The Forest Wing harvested captive plantations over an extent of 3686
ha. and a quantity of 2,39,884 M.T. of pulpwood was supplied to the
Mills, which is the highest quantity supplied so far in a year since
1991-92 when mill started receiving pulpwood from the captive source.
The yield of pulpwood from captive plantations has increased
considerably since most of the areas are clonal plantations mainly due
to the efforts put forth by Forest Research division.
The adjustment of lease rentals due to be paid to the Government by the
Company in lieu of surrendering captive plantations raised in Wildlife
areas is being pursued with the Government, and the final decision of
the Government is awaited. The reassigning of Non-forest lands after
surrendering them to the Government, consequent to the interim orders
of Honble High Court of Karnataka in W.P. No.14644/98, is also being
pursued with the Govt. The lease of degraded forest lands to MPM in
lieu of Wildlife areas surrendered (4665.30 ha.) was requested with the
Government and the matter is being pursued. In all, 2925 ha. of
harvested areas were regenerated by replanting/coppicing with species
like Acacia hybrid (957 ha.), Eucalyptus pellita (419 ha.) Eucalyptus
comaldulensis (1468 ha.), Pines (45 ha.) and Miscellaneous species (36
ha.). The Farm Forestry programme is also being continued in the Forest
Wing for the benefit of farmers and institutions, and about 12.40 lakhs
polythene bagged seedlings of improved varieties of Acacia, Eucalyptus,
Casurina and other species were sold @ Re.1.20 per seedling.
Further, it is programmed to raise large scale clonal plantations of
Eucalyptus comaldulensis in Dry- zone and Eucalyptus urophylla in
Wet-zone is under progress to ensure annual supply of 2.60 lakh tones
of pulpwood per annum which will be self-sufficient for the Company.
The average weighted cost of Acacia, Eucalyptus and Pine pulpwood
obtained from captive plantations works out cheaper than the pulpwood
purchased from other sources, thereby Rs.2,516 lakhs was saved by
obtaining pulpwood from captive plantations. During this period 162678
MT of Acacia wood was supplied from captive plantations which has
helped in minimizing the consumption of chemicals worth about Rs.65.00
lakhs. Hence captive forestry was responsible for saving a total sum
of Rs.2,581 lakhs during 2008-09.
8 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE -1, which
form part of this report.
9. INDUSTRIAL RELATIONS
Overall industrial relations during the year were cordial. The
Directors place on record their apprecia- tion of the valuable
contribution made by the employees of your company towards the
performance and growth of your company.
10. FIXED DEPOSITS :
The Companys Fixed Deposits at the end of the year stood at Rs. 1313
lakhs, compared to Rs.1313 lakhs in the previous year.
11. RESTRUCTURING & REVIVAL
As already informed to the members in the past, the Government had
appointed M/s. Price Waterhouse Coopers (PwC) as Transaction Consultant
for working out the restructuring and revival proposal. The PwC made a
detailed analysis and submitted its report to the Government,
inter-alia recommending further investments in MPM through induction of
a strategic partner, which recommendation is still under the
consideration of the Government of Karnataka.
12. DIRECTORS :
Sri. Joseph Gonsalves and Sri.H.S. Srikantaiah, Directors of the
Company, retire by rotation and are eligible for reappointment at the
Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review :
Sri. Araga Jnanendra, Ex-MLA (58), Thirthahalli, Shimoga Dist.,:
Pursuant to the powers conferred under the Articles of Association of
the Company, the Government of Karnataka nominated Sri Araga Jnanendra
as Chairman of the Company vide Govt. Notification No.CI-21
-CPM-2009(1) dated 20.02.2009. Sri Araga Jnanendra assumed charge as
Chairman on 26.02.2009.
Sri. Sudhir Kumar, IAS: Sri. Sudhir Kumar, IAS (57), was nominated as
Chairman & Managing Director of the Company by the Government of
Karnataka, in exercise of the powers conferred under Articles of
Association of the Company, in place of Sri EVenkataiah, IAS. He
assumed charge on 12.11.2008 (AN) as Chairman & Mg. Director, & was
later appointed as Managing Director on 26.02.2009.
Sri. Subir Hari Singh, IAS: Sri Subir Hari Singh, IAS (56), was
nominated as a Director of the Company by the Government of Karnataka,
in exercise of the powers conferred under Articles of Association of
the Company, in place of Sri V Umesh, IAS, vide Govt, communication
No.CI-16-CMI-2009(5) dated 20.02.2009.
Sri Ajay Seth, IAS : Sri Ajay Seth, IAS (44), was nominated as a
Director of the Company by the Government of Karnataka, in exercise of
the powers conferred under Articles of Association of the Company, in
place of Sri M. R Sreenivasa Murthy, IAS, vide Govt. Communication
No.CI-11-CMI-2009(1) dated 02.02.2009.
Ms. Meera C Saksena, IAS- Ms. Meera C Saksena, IAS (58), was appointed
as a Director by the Board in its meeting held on 03.01.2009, in
pursuant to the Section 262 of the Companies Act, 1956, read with
Article 107 of the Articles of Association of the Company, against the
casual vacancy caused b the resignation of Sri. Abhijit Dasgupta, IAS.
Sri M Lakshmi Narayana, IAS: Sri.M Lakshmi Narayana, IAS (52), was
appointed as an Additional Director of the Company, pursuant to Section
260 of the Companies Act, 1956, read with Article 108-A of the Articles
of Association of the Company, at the Board Meeting held on 17.4.2009,
in the existing vacancy.
Sri M. V. Muthu: Sri M.V. Muthu (63) was nominated as a Director of the
Company by Industrial Finance Corporation of India (IFCI) Ltd., in
place of Sri. N. D. Auddy, with effect from 03.01.2009
Sri. M.C. Shetty : Sri. M.C. Shetty ceased to be a Director of the
Company effective from 15th July, 2009 consequent on his resignation to
the Directorship of the Company on health grounds.
Your Board placed on record the valuable services rendered by out going
Directors during their tenure as a Directors of the Company.
13. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed that:
a) The applicable accounting standards have been followed scrupulously,
along with proper explanation relating to material departures, if any;-
b) 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 financial affairs of
the Company at the end of the financial year;
c) 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
irregularities;
The Annual Accounts were prepared for the financial year ended 31st
March, 2009 on a going concern basis.
14. AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Ministry of Corporate Affairs, appointed M/s. MNS & Co.,
Chartered Accountants, Bangalore, as Statutory Auditors of the Company
for the year ended 31.03.2009.
M/s. G.S.R & Associates, Cost Accountants, Mysore, were appointed as
Cost Auditors of the Company for the year 2008-09 by the Board, and the
approval to this effect has also been received from the Government of
India.
15. None of the employees of the Company have drawn salary of Rs.24
lakhs or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees as required under Section
217(2A) of the Companies Act, 1956, are not being furnished.
16. CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith, which forms part of
the Directors Report. A Certificate from the Auditor regarding
compliance of Corporate Gover- nance, as stipulated by clause 49 of the
Listing Agreement, is attached to this report.
17. The comments by the Comptroller and Auditor General of India on
the Accounts for the year ended 31.03.2009 are attached to the report
at ANNEXURE - II.
18. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made by them in achieving uninterrupted production during
the year 2008-2009. Your Directors also thank the sugarcane growers for
the supply of sugarcane. Your Directors place on record their
appreciation for the assistance, support and guidance extended to the
Company by the Government of Karnataka through the Departments of
Commerce and Industries, Finance, Forest and Environment, KPTCL,
MESCOM, Directorate of Sugar, and by the Statutory Bodies and Financial
Institutions like the Karnataka State Pollution Control board, & IFCI
and Banks.
Your Directors also thank the Government of India, Ministry of
Corporate Affairs and its various departments, Controller of Accounts &
Audit, Registrar for Newspapers, Ministry of Railways, Department of
Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/- Sd/-
Place : BANGALORE (SUDHIR KUMAR) (C.SHIVASHANKAR)
DATE : 15.07.2009 MANAGING DIRECTOR DIRECTOR
Mar 31, 2008
The Directors have pleasure in presenting the 73rd Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 2008.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31.03.2008 31.03.2007
Year ended Year ended
39405 41519
Sales
3682 3859
Profit before interest, Depreciation & Taxation (PBIDC)
2164 2773
Interest
1518 1086
Profit before Depreciation
993 985
Depreciation
20 38
Taxation, Fringe Benefit tax
505 63
Net Profit / Loss for the year
(-)5341 (-) 5404
Balance of accumulated Profit/Loss brought forward
from previous year (-)4835 (-) 5341
Balance of accumulated Loss(-) carried to Balance Sheet
3. SALES/TURNOVER:
The analysis of Sales is as under:
2007-08
Quantity Value
in MT Rs. in lacs
83887 20882
News Print
35306 14128
WPP
31746 4123
Sugar
20193 273
Molasses
- 39406
Total
2006-07
Quantity Value
in MT Rs. in lacs
86137 24013
29920 11513
35922 5581
21798 413
41520
4. OPERATIONS & PROFITABILITY :
During the year, the production of Writing & Printing Paper (WPP) was
increased by 9.1% and of Newsprint (NP) was decreased by 0.8%. The
overall increase in production of paper was 1.8 % from 1,16,230 MT in
FY 2007 to 1,18,364 MT in FY 2008. Consequent to increase in
production, the quantity of WPP sold was increased by 18%.
But in case of NP quantity of sales has come down by 2.6%. The overall
increase in the quantity of paper sold was increased by 2.7% i.e. from
1,16,057 MT to 1,19,193MT While the turnover of WPP was increased by
22.7%, mainly on account of increase in net sales realization whereas
the NP was reduced 13% on account of reduction in quantity of sale
coupled with reduction in net sales realization. The overall decrease
in turnover of paper division was 1.5% from Rs.355 Cr.during FY 2007 to
Rs.350 Cr. during FY 2008.
The area registered by the Mill decreased from 16008 acres during last
year to 13295 acres during 2007-08, thus there was decrease of 2713
acres due to repair works / modernization of channels taken up by
Irrigation department in the MPM command area. The production of sugar
was down by 23.5% in view of decrease in quantity of sugar cane
crushing from 555597 MT with recovery of 9.32 % in FY 2007 with that of
393071 MT with recovery of 10.09 % in
FY 2008. For the season 2007-08 the cane crushed was in the region of
488195 MT with the production of Sugar 48296 MT with recovery of 9.47
%. Further there was a reduction in sales quantity of sugar by 11.6 %
mainly due to creation of buffer stock of 10417 MT. While the sales
quantity of sugar was less by 11.6 %, the decrease in turnover was also
less by 26.1% which is mainly due to reduction in sales quantity and
reduction in net realization during the current year. The turnover of
Sugar Division was Rs.43.96 Cr. compared to Rs.59.94 Cr. in the
previous year.
The aforesaid operations has resulted in an operating profit of Rs.
3682 lakhs; cash profit of Rs. 1499 lakhs and a net profit of Rs. 506
lakhs as against Rs. 3859 lakhs; Rs. 1048 lakhs and Rs. 63 lakhs
respectively in the previous financial year. The total turnover of the
company during the year ended 31st March 2008 was Rs. 39405 lakhs as
against Rs. 41519 lakhs as compared to the previous Financial Year.
5. MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors Report.
6. CASH FLOW ANALYSIS:
In conformity with the provisions of Clause 32 of the listing
Agreement, the cash flow statement for the year ended 31starch, 2008 is
included in the annual accounts.
7. CAPTIVE FORESTRY :
The Forest Wing of the company has harvested captive plantations raised
over an extent of 3165 ha. & 228667 M.T. of pulpwood was supplied to
the mills which is the highest quantity supplied so far in a year since
1991-92 when Mill started receiving pulpwood from the captive source.
As per the interim order of Honble High Court of Karnataka, about 78
of harvested non-forest lands were surrendered during the year. With
this 1199 ha of Non-forest Government lands were surrendered back to
the Govt, so far.
The Management plan for captive plantations of the company has been
approved by the Chief Conservator of Forests, Ministry of environment
and Forests, Govt, of India for a period from 2008-09 to 2014-15. 2598
ha. of harvested areas were regenerated by replanting/coppicing with
species like Acacia hybrid (894 ha.), Eucalyptus pellita (441 ha.),
Eucalyptus camaldulensis (1054 ha.),Pines (122 ha.) and Miscellaneous
species (87 ha.).
The Farm Forestry programme is being continued in the Forest Wing for
the benefit of farmers and institutions and about 9.89 lakhs polythene
bagged seedlings of improved varieties of Eucalyptus, Acacia and other
species were sold at a nominal price of Re.1/- per seedling.
Further, it is programmed to raise large scale clonal plantations of
Eucalyptus camaldulensis in dry-zone and Eucalyptus urophylla in
wet-zone to ensure annual supply of 2.60 lakh tones of pulpwood from
2013 to 2020 so that company would be self sufficient in wood raw
material requirement.
The cost of Acacia, Eucalyptus and Pine pulpwood supplied from Captive
Plantations had worked out cheaper than other sources thereby Rs.1196
lakhs was saved to the company. During this period 1,42,280 M.T. of
Acacia pulpwood was supplied from Captive Plantations, which has helped
in minimising the consumption of chemicals worth about Rs.57 lakhs.
Hence captive Forestry has been responsible for saving a total sum of
Rs.1253 lakhs during 2007-08.
8 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule of the Companies (Disclosure of particulars in the report of
Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which
form part of this report.
9. INDUSTRIAL RELATIONS
Overall industrial relations during the year were cordial. The
Directors place on record their appreciation of the valuable
contribution made by the employees of your company towards the
performance and growth of your company.
10. FIXED DEPOSITS :
The Companys Fixed Deposits at the end of the year stood at Rs. 1313
lakhs (Rs. 1313 lakhs in the previous year).
11. RESTRUCTURING & REVIVAL :
As already informed to the members, the GoK has appointed M/s. Price
waterhouse Coopers (PwC) as Transaction Consultant for working out the
restructuring and revival proposal.The PwC has made a detailed analyss
and submitted its report to the Government, inter-alia recommending
investments through induction of strategic partner which is still under
the consideration of GOK.
12. DIRECTORS :
Sri S. Parameswarappa and Sri C. Shivashankar, Directors of the
Company, retire by rotation and are eligible for reappointment at the
Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review :
Sri K. M. Shivakumar, ias : (56 ) has been nominated as a Director by
GoK vide its communication No. CI 62 CMI 2006 (5) dated 2.5.2006 in
place of Ms. Lakshmi Venkatachalam, IAS. He ceased to be Director of
the Company w.e.f. 15.3.2008, consequent on withdrawal of his
nomination by the Government of Karnataka.
Sri.V. P. Baligar, ias: (54) has been nominated vide Govt,
communication No. CI 20 CMI 2008 (5) dated 28.2.2008 as a Director of
the Company by the Government of Karnataka in exercise of the powers
conferred under Articles of Association of Company in place of Sri.
K.M. Shivakumar, IAS and ceased to be Director of the Company effective
from 16.07.k008 consequent on withdrawal of his nomination by
Government of Karnataka.
Sri.V Umesh, IAS, (52) Principal Secretary to Govt, C & I Dept., Govt,
of Karnataka has been nominated vide Govt, communication No.CI-56-CMI-
2008(5) dated 17.6.2008 as a Director of the Company in exercise of the
powers conferred under Articles of Association of the Company in place
of Sri V.R Baligar, IAS.
Sri M. R. Sreenivasa Murthy, IAS, (58) Principal Secretary to Govt.,
Finance Dept., Govt, of Karnataka has been nominated vide Govt.
Communication No.CI-48-CPM-2007 dated 3.8.2007as a Director of the
Company in exercise of the powers conferred under Articles of
Association of the Company in place of Sri N Gokulram, IAS
Sri Dipak Sarmah, IFS : (54) Addnl. Principal Chief Conservator of
Forests, (Head Quarters & Co- ordination), Govt of Karnataka was
appointed as a Director at the 513thoard Meeting held on 24.01.2008
against the casual vacancy of Sri. R.M. Ray, IFS who holds office upto
the date of ensuing AGM and he is eligible for appointment as a
Director in the AGM.
Sri N. D. Auddy : (55) General Manager has been nominated as a Director
of the Company by Industrial Finance Corporation of India (IFCI) Ltd.,
in exercise of the powers conferred under Articles of Association of
the Company in place of Sri K Kalyana Sundaram with effect from
29.04.2008.
Sri Suresh Gowda : (43) Sri Suresh Gowda was appointed as a Chairman of
the Company by the Government of Karnataka. He has assumed the charge
on 25.7.2007 and ceased to be Chairman of the Company with effective
from 25.10.2007, consequent on withdrawal of his nomination by GOK.
13. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed :
a) That the applicable accounting standards had been followed along
with proper explanation relating to material departures, if any;
b) 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;
c) 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
irregularities;
d) That the annual accounts were prepared for the financial year ended
31starch, 2008 on a going concern basis.
14. AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s.MNS & Co., Chartered
Accountants, Bangalore, as Statutory Auditors of the company for the
year ended 31.03.2008.
M/s. G.S.R & Associates, Cost Accountants, Mysore have been appointed
as Cost Auditors of the Company for the year 2007-08 by the Board. The
company had requested the Department of Company Affairs for its
approval on the appointment of the Cost Auditors and the approval to
this effect has been received from the Central Government.
15. PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/ Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
16. CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
the Directors Report. A Certificate from the auditor regarding
compliance of Corporate Governance as stipulated by clause 49 of the
Listing agreement is attached to this report.
17. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The comments on the Accounts for the year ended 31.3.2008 by the
Comptroller and Auditor General of India is attached to the report at
ANNEXURE - II.
18. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made in achieving uninterrupted production during the year
2007-2008. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane. Your Directors place on record
their appreciation for the assistance, support and guidance extended to
the Company by the Government of Karnataka through the Departments of
Commerce and Industries, Finance, Forest, Karnataka State Pollution
Control Board, Directorate of Sugar, KSBPE, IFCI and Banks .
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Accounts &
Audit, Registrar for Newspapers, Ministry of Railways, Department of
Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/-
(E. VENKATAIAH)
Place : BANGALORE
DATE : 31.10.2008 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2007
The Directors have pleasure in presenting the 72nd Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2007.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31.03.2007 31.03.2006
Year ended Year ended
31.3.2007 31.3.2006
Sales 41519 34927
Profit Before interest, 3859 3758
Depreciation & Taxation
Interest 2773 2480
Profit before Depreciation 1086 1278
Depreciation 985 980
Taxation, Fringe Benefit tax 37 39
Net Profit/Loss for the year 63 259
Balance of Profit/Los brought
forward from previous year (-) 5404 (-)5663
Balance of Profit/Loss carried
to Balance Sheet (-) 5341 (-)5404
SALES / TURNOVER:
The analysis of Sales is as under:
2006-07
Quantity Value Av. Rate
in MT Rs. in lacs Rs./Tonne
News Print 86137 24013 27878
WPP 29920 11513 38479
Sugar 35922 5581 15535
Molasses 21798 413 1893
Total 41520
2005-06
Quantity Value Av. Rate
In MT Rs. in lacs Rs. /Tonne
81554 21400 26240
22258 7891 35454
27874 4810 17257
17395 826 4748
34927
OPERATIONS & PROFITABILITY:
The Company has earned an Operating profit of Rs. 3858 lakhs during the
year compared to Rs.3758 lakhs in the previous year. During the year,
the Company earned cash profit of Rs.1086 lakhs as against Rs.1278
lakhs of the previous financial year. The net profit after providing
interest and depreciation was Rs.63 lakhs compared to Rs. 259 lakhs
profit in the previous year.
MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors Report.
CASH FLOW ANALYSIS:
In conformity with the provisions of Clause 32 of the listing
Agreement, the cash flow statement for the year ended 31st March, 2007
is included in the annual accounts.
PROJECT WORKS :
As you are all aware the Company has not modernized its Paper and Sugar
Mill. In line with investments being made in the Paper Industries in
India, there is an urgent need for investments in the order of Rs.350
Cr. for modernization of Paper Mill. These investments have been
proposed to be taken up phase-wise in two stages. The investments under
Phase-1 are in the order of Rs.100 Cr. and that of Phase-ll in the
order of Rs. 250 Cr. aggregating to RS.350 Cr. The investments under
Phase-l amounting to Rs.100 Cr. mainly comprise of - Augmentation of
Power Plant, Modernization of Evaporator and Recovery Boilers, Setting
up of Rotary Lime Kiln and various investments covered under Energy
Audit by Central Pulp & Paper Research Institute (CPPRI). The total
savings per annum from these investments will be in the order of Rs.48
Crs. The pay back period of these investments is just two years.
Under Phase-ll, it is proposed to set up a 300 TPD Chemical Pulp Mill
so as to produce either Writing & Printing Paper or Newsprint depending
upon the demand supply position in the country. The annual savings from
these projects are estimated to be in the order of RS.20 Cr. per annum
and the pay back period is 8 Y2 years. This project is very important
because it is not feasible to depend on Newsprint alone, in future,
mainly because of stiff and cut-throat competition from domestic and
overseas suppliers in this Industry.
In the case of Sugar Mill, investments in the order of Rs.120 Cr. are
required to expand the sugar mill capacity from 2500 TCD to 5000 TCD
along with Co-generation and Distillery/Ethanol Plant. The annual
savings on modernization of Sugar Mill will be in the order of RS.17
Crs. with a pay back period of 7 years. As you all may be aware, Sugar
Industry per se without Co-generation and Distillery are not viable, as
every other Sugar Industry is going in for increase in capacity coupled
with Co-generation and a similar investment is needed for the Company
in the absence of which it is no longer viable to continue the Sugar
division in the Company.
It was not possible to take up any of the projects due to paucity of
funds and our request to the Government for financial support is under
consideration by the Government.
RESTRUCTURING AND REVIVAL:
Government has appointed M/s.Price Waterhouse Coopers Pvt. Ltd., (PWC)
as the Transaction Consultant for working out a Restructuring & Revival
proposal for the Government. The report submitted by PWC is under the
consideration of the Government. PWC have also, inter-alia, proposed
investments in the order of Rs. 470 Cr. so as to revive the company
either from the Government or through induction of a strategic partner.
CAPTIVE FORESTRY :
The Forest Wing has harvested Captive Plantations raised in Forest
lands, Non-forest lands and K.P.C areas over an extent of 3071 ha. and
a quantity of 178126 M.T. of pulpwood was supplied to the mills which
is the highest quantity supplied so far in a year since 1991-92 when
Mill started receiving pulpwood from the Captive source. As per the
interim order of Honble High Court of Karnataka in W.P.No.14644/1998,
about 35 ha. of harvested Non-forest lands were surrendered during the
year, with this totally 1121 ha. of Non-forest Government lands are
surrendered back to the Government.
Totally 1935 ha. of harvested areas were regenerated by
replanting/coppicing with species like Acacia hybrid (901 ha),
Eucalyptus pellita (162 ha.) Eucalyptus camaldulensis (833 ha.) and
Miscellaneous species (39 ha.).
The Farm Forestry programme is being continued in the Forest Wing for
the benefit of farmers and institutions and about 9.65 lakhs polythene
bagged seedlings of improved varieties of Eucalyptus, Acacia and other
species were sold @ Re.1/- per seedling. The Gate Purchase of pulpwood
from farmers & suppliers is made @ Rs.19857-and Rs.1950/-, totally 8968
M.T. of pulpwood was procured during the year.
The average weighted cost of Acacia, Eucalyptus and Pine pulpwood
obtained from Captive Plantations works out to Rs.1598/- per tonne as
against Rs.1992/- tonne paid to M/s KFDC/KSFIC. Thus Rs.702 lakhs was
saved by obtaining pulpwood from Captive Plantations. During this
period 116858 M.T. of Acacia pulpwood was supplied from Captive
Plantations, which has helped in minimizing the consumption of
chemicals worth about Rs.47 lakhs. Hence captive Forestry has been
responsible for saving a total sum of RS.749 lakhs during 2006-07.
SUGAR MILL OPERATIONS DURING THE YEAR :
The area registered by the Mill increased from 10204 acres during
Financial Year 2005-06 to 16008 acres during 2006-07; thus there was an
increase of 5804 acres during the year under review. Further, the
quantity of sugarcane crushed was also increased from 348485 tonnes
during FY 2005-06 to 558483 tonnes during FY 2006-07 with recovery of
9.33% as against 9.30% in the previous year. The increase in cane
crushing was mainly due to high cultivation of cane due to good monsoon
during FY 2006-07.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which
form part of this report.
INDUSTRIAL RELATIONS & HUMAN RESOURCE DEVELOPMENT :
Employer and Employee relationship in the Company was cordial during
the year under review. Creating a congenial working atmosphere,
welfare measures, safety measures have been given importance for the
overall development of the workforce.
The Management has continued to give emphasis to develop human resource
for its optimum utilization. It has given importance to training to
develop the human resource for the improvement of production and
productivity. The Production Linked Incentive (PLI) Scheme entered into
between the Labour Association and the Management has expired on
31.8.2005. The fresh Scheme has been negotiated and submitted to the
Government for its approval.
As planned, the Management has formulated its Vision, Mission and Value
Statement as under:
Our Vision:
To be a world class enterprise offering paper, sugar and allied
products and services, enhancing stakeholders value.
Our Mission :
To make MPM a self reliant Company by:
Creating a vibrant work culture
Enhancing productivity
Offering globally competitive products and services through continuous
technology upgradation and innovation.
To adopt eco-friendly processes and technologies and uphold corporate
social responsibility.
Our Values:
1. Commitment, 2. Concern for people. 3. Customer focus, 4.
Innovation, 5. Recognition, 6. Team work, 7. Transparency.
The Government have employed 150 un-employed candidates to the Company
under "Suvarna Kayaka Udyoga Shikshana yojane" and are being trained as
per the guidelines of Government in different departments of the
Company.
FIXED DEPOSITS :
The Companys Fixed Deposits at the end of the year stood at Rs.1313
lakhs compared to Rs. 705.20 lakhs in the previous year.
DIRECTORS :
Sri. H.S. Srikantaiah, Sri. C. B. Patil Okaly and Sri M.C. Shetty
Directors of the Company, retire by rotation and are eligible for
reappointment at the Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review:
a. Sri E Venkataiah, IAS: Pursuant to the powers conferred under the
Articles of Association of the Company, the GOK has appointed Sri E
Venkataiah, IAS as Mg. Director of the Company in place of Dr. Rajkumar
Khatri, IAS. Sri E Venkataiah, IAS, has taken charge as Managing
Director of the Company effective from 29.03.2007.
b. Sri Dr Rajkumar Khatri, IAS: Pursuant to the powers conferred under
the Articles of Association of the Company, the GOK has appointed Sri
Dr Rajkumar Khatri, IAS, Commissioner for Industrial Development and
Director of Industries & Commerce and placed in additional charge of
Mg. Director of the Company in place of Sri Lukose Vallatharai, IAS.
Sri Rajkumar Khatri, IAS, had taken charge as Managing Director of the
Company effective from 15.02.2007.
The Board placed on record its appreciation of the valuable services
rendered by the Directors whose nominations were withdrawn by the
GOK/lending institutions.
c. Sri B. Suresh Gowda : Pursuant to the powers conferred under the
Articles of Association of the Company, the Government of Karnataka has
appointed Sri B. Suresh Gowda as Chairman of the Company. Sri B. Suresh
Gowda had assumed charge as chairman from 25-07-2007
d. Sri K.K. Sen : State Bank of India has withdrawn the nomination of
Sri K.K. Sen on nominee from the Board of Director of the Company with
effect from 13.04.2007.
DIRECTORS RESPONSIBILITY STATEMENT :
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed
That the applicable accounting standards had been followed along with
proper explanation relating to material departures, if any;
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;
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
irregularities;
That the annual accounts were prepared for the financial year ended
31st March, 2007 on a going concern basis.
AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s. MNS & Co., Chartered
Accountants, Bangalore, as Statutory Auditors of the Company for the
year ended 31.03.2007.
M/s. G.S.R & Associates, Cost Accountants, Mysore have been appointed
as Cost Auditors of the Company for the year 2006-07 by the Board. The
company had requested the Department of Company Affairs for its
approval on the appointment of the Cost Auditors and the approval to
this effect has been received from the Central Government.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum /Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
the Directors Report. A Certificate from the auditor regarding
compliance of Corporate Governance as stipulated by clause 49 of the
Listing agreement is attached to this report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31.3.2007 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE -
II.
ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made in achieving uninterrupted production during the year
2006-2007. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane.
Your Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, MESCOM, Karnataka State Pollution Control
Board, Directorate of Sugar, DPE, Commissioner for Industrial
Development and Director of Indusatries and IFCI and Banks.
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/-
(B. SURESH GOWDA)
CHAIRMAN
PLACE: BANGALORE
DATE : 31.07.2007
Mar 31, 2006
Your Directors have pleasure in presenting the 71st Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 2006.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31.03.2006 31.03.2005
Year ended Year ended
31.3.2006 31.3.2005
Sales 34927 32128
Operating Profit (PBIDT) 3758 2688
Interest 2480 2516
Profit before Depreciation 1278 172
Depreciation 980 989
Profit before Tax 298 (-)817
Taxation, Fringe Benefit Tax 39 -
Net Profit / Loss for the year 259 (-)817
Balance of profit brought forward from
previous year (-) 5663 (-) 4846
Balance of Profit carried to Balance Sheet (-)5404 (-)5663
OPERATIONS & PROFITABILITY :
The Company had mixed market related experience during the year, while
the first half of the year was not encouraging, the second half of the
year with a substantial boost in market prices helped the Company to
reduce its losses. It was also possible to earn marginal cash profit in
Q-3 i.e. October to December 2005.
The Company has earned an Operating profit of Rs.3758 lakhs during the
year compared to Rs. 2688 lakhs in the previous year i.e. an increase
of Rs.1070 lakhs. During the year, the Company earned cash profit of
Rs.1278 lakhs as against Rs.172 lakhs of the previous financial year
i.e. an increase of Rs.1106 lakhs. The net profit after providing
interest and depreciation was Rs.259 lakhs compared to Rs. 817 lakhs
loss in the previous year. The State Government granted concessions of
Rs. 26.75 crores (Rs. 12.35 crores cash and Rs. 14.40 crores as non
cash concessions) to sustain the Companys operations outside the
purview of BIFR.
MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the
business segments have been comprehensively covered in the Management
Discussion & Analysis which forms part of this Directors Report.
CASH FLOW ANALYSIS:
In conformity with the provisions of Clause 32 of the listing
Agreement, the cash flow statement for the year ended 31sT March, 2006
is included in the annual accounts.
PROJECT WORKS :
Short Term Investment Proposals :
The company has started (March 2001) implementing certain short term
investments comprising Nineteen (19) items aggregating an estimated Rs.
21.14 crores. While some of the investments will help rehabilitation of
old structures, which are in critical stages, the majority of them are
aimed at reduction of cost of production. We are happy to inform that
these investments have been completed and the expected savings in the
cost of production of newsprint and writing & printing papers will be
Rs. 470/- per MT.
Medium to Long term investment proposals :
There have been no major investments in the Company for modernization.
The Company has identified investment of Rs. 448 crores to modernize
both Paper Mill and Sugar Mill. Investment of Rs. 250 crores is
required for modernization of Paper Mill and Rs. 120 crores for Sugar
Mill. In case of modernization of Paper Mill, a 300 MT New Chemical
Mill is being proposed as this will be able to produce either Writing &
Printing Paper or Newsprint based on the demand and supply position.
This facility is not available on our Newsprint Machine (P.M/c.4). In
case of Sugar Mill, the proposal is to enhance the capacity of Sugar
Mill from 2500 TCD to 5000 TCD along with a 10 MW Co-generation Plant.
A detailed proposal has been submitted to the Government for its
consideration and approval.
The Company is required to immediately install a lime mud reburning
kiln (Rs.24.25 crores) in order to reuse the lime mud and prevent its
disposal as solid waste. Lime kiln installation is a statutory
requirement and should be commissioned by May 2007. The Company has
submitted a detailed proposal to the Government for its approval to
execute the project.
CAPTIVE FORESTRY :
The Forest Wing has harvested Captive Plantations raised in forest
lands and non-forest lands over an extent of 2956 ha. and a quantity of
154326 M.T. of pulpwood was supplied to the Mills. During the year,
170.34 ha. of harvested non-forest lands were handed over to the
Government as per the orders of Honble High Court of Karnataka in W.R
No.14644/98 and PIL filed against MPM. With this a total extent of 1086
ha. lands has so far been surrendered to the Government.
About 2250 ha. of harvested areas are regenerated by replanting /
coppicing with species like Acacia hybrid (929.75 ha.), Acacia
auriculiformis (2.00 ha.), Eucalyptus pellita (347.55 ha.), Eucalyptus
camaldulensis coppice (600.00 ha.) and miscellaneous species (2.00
ha.).
The Government of India has released a grant of Rs.27.50 lakhs (50% of
total project cost) towards Forest Research Project "Extension of
Forestry research in the Mysore Paper Mills Limited". This project has
been successfully implemented and an amount of Rs.21.70 lakhs has been
utilised during the year for raising 5,65 lakhs nursery plants and
64.60 ha. of experimental plantations in the Research Division.
The Forest Wing has continued the Farm Forestry activities for the
benefit of local farmers and institutions and about 9.42 lakhs of
polythene bagged seedlings of improved varieties of Eucalyptus, Acacia
and other species were sold @ Re.1/- per seedling. The Gate purchase of
pulpwood from local farmers and suppliers is made @ Rs. 1,850/- per MT,
and 5838 MT of pulpwood was bought during the year.
The average weighted cost of Acacia, Eucalyptus and Pine pulpwood
obtained from Captive Plantations works out to Rs.1,272/- per tonne as
against Rs.1,875/- per tonne paid to M/s. KFDC/KSFIC.Thus Rs.930 lakhs
was saved by obtaining pulpwood from captive plantations. During this
period, 100798 tonnes of Acacia pulpwood was supplied from captive
plantations which has helped in minimizing the consumption of chemicals
worth about Rs.41 lakhs. Hence captive forestry has been responsible
for saving a total sum of Rs.971 lakhs during 2005-06.
SUGAR MILL OPERATIONS DURING THE YEAR :
The area registered by the Mill increased from 9352 acres during FY
2004-05 to 10204 acres during 2005-06, thus there was an increase of
852 acres during the year under review. Further, the quantity of
sugarcane crushed was also increased from 255563 tonnes during FY
2004-05 to 348485 tonnes during
FY 2005-06. The increase in cane crushing was mainly due to the
decrease in diversion of registered cane to power crushers and good
monsoon during FY 2005-06 with a recovery of 9.30% as against 9.11 % in
the previous year.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE -1, which
forms part of this report.
INDUSTRIAL RELATIONS & HUMAN RESOURCE DEVELOPMENT:
The salary revision for the employees which was due from 1.3.2002 was
successfully negotiated and the Government of Karnataka gave its
approval for implementation of the same. All throughout the year the
industrial relations in the company was cordial. Great emphasis was
laid on developing the human resource in the Company. Training was
given more importance, to build this company into one with world class
manufacturing systems. Management is planning to release a Vision,
Mission and Values statement and set goals for this Company to motivate
its employees to deliver high quality performance. The Company has
introduced many motivational, technical performance training programs.
The working atmosphere, welfare measures and safety measures have been
given due importance. These are comparable to similar industries in the
country.
A self-performance appraisal system, overarching training programmes,
identification of "Facilitators" for Culture Building are on the
cards.The improvement teams at departmental levels have been
contributing towards the overall improvement of the Company.
FIXED DEPOSITS :
The Companys Fixed Deposits at the end of the year stood at Rs. 705.20
lakhs compared to Rs.747.68 lakhs in the previous year.
DIRECTORS :
Sri S. Parameswarappa, IFS, (Retd.) and Sri Joseph Gonsalves, Directors
of the Company, retire by rotation and are eligible for reappointment
at the Annual General Meeting.
Apart from the above, the following changes amongst Directors have also
taken place during the year under review:
Sri Lukose Vallatharai, IAS : Pursuant to the powers conferred under
the Articles of Association of the Company, the GOK has appointed Sri
Lukose Vallatharai, IAS, as Chairman & Mg. Director of the Company in
place of Smt Meera Saksena C, IAS. Sri Lukose Vallatharai, IAS, has
taken charge as CMD of the Company effective from 24.10.2005.
Sri G.V. Krishna Rau, IAS, ceased to be Chairman & Mg. Director of the
Company w.e.f 18.5.2005, consequent on withdrawal of his nomination by
the Govt of Karnataka.
Smt Meera Saksena C, IAS was appointed as a Chairperson & Mg Director
of the Company by GOK in place of Sri G.V. Krishna Rau, IAS. She has
assumed the charge on 18.5.2005 and ceased to be CMD of the Company
with effective from 29.6.2005, consequent to withdrawal of her
nomination by GOK.
Smt. Lakshmi Venkatachalam, IAS: was appointed as a Chairperson & Mg
Director of the Company by GOK in place of Smt. Meera Saksena C, IAS.
She assumed charge on 29.6.2005 and ceased to be CMD of the Company
with effect from 01.09.2005 consequent to withdrawal of her nomination
by GOK. Further, GOK appointed Smt. Lakshmi Venkatachalam, IAS as
Director of the Company from 17.11.2005 to 24.06.2006.
Sri V. Madhu, ias was appointed as Chairman & Mg. Director of the
Company by GOK in place of Smt Meera Saksena C, IAS, and assumed charge
on 1.9.2005 and ceased to be CMD of the Company effective from
7.10.2005 consequent to withdrawal of his nomination by GOK.
Sri H.V. Eswaraiah : M/s. Indian Renewable Energy Development Agency
Limited (IREDA) has withdrawn the nomination of Sri H.V. Eswaraiah, as
a Director on the Board of the Company with effect from 1.12.2005.
Sri. T.K. Anil Kumar, IAS Deputy Commissioner, Shimoga Dist., was
appointed by the GOK as a Director of the Company in place of Sri.
Tushar Girinath, IAS, vide its Order dated 23.3.2006.
Sri. N Gokulram, IAS : Principal Secretary to Govt., Finance Dept., was
appointed by the GOK as a Director of the Company in place of Sri.
Ritvik Pandey, IAS, vide its Order dated 26.5.2006.
Sri K.M. Shivakumar, IAS : Principal Secretary to Govt., Commerce &
Industries Dept., was appointed by the GOK as a Director of the Company
in place of Ms. Lakshmi Venkatachalam, IAS, vide its Order dated
25.5.2006.
Apart from the above, Sri Abhijit Dasgupta, IAS, Principal Secretary to
Govt., Forest, Ecology & Environment and Sri R.M. Ray, IFS, Principal
Chief Conservator of Forests, GOK, were appointed as Directors in the
casual vacancy caused by the resignations of Sri A.K. Varma, IFS, and
Sri Dipak Sarmah, IFS, respectively by the Board at its meeting held on
24.06.2006 pursuant to the provisions of Sec. 262 of the Companies Act
1956 read with Article 107 of the Articles of Association of the
Company. Sri Abhijit Dasgupta, IAS, and Sri R.M. Ray, IFS, would hold
office upto the date of the ensuing Annual General Meeting and are
eligible for appointment by the shareholders. The Board placed on
record its appreciation of the valuable services rendered by the
Directors whose nominations were withdrawn by the GOK/lending
institutions.
DIRECTORS RESPONSIBILITY STATEMENT :
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed :
That the applicable accounting standards had been followed along with
proper explanation relating to material departures, if any;
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;
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
irregularities;
That the annual accounts were prepared for the financial year ended
31st March, 2006 on a going concern basis.
AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s. Manian & Rao, Bangalore,
as Statutory Auditors of the Company for the year ended 31.03.2006.
M/s. G.S.R & Associates, Cost Accountants, Mysore have been appointed
as Cost Auditors of the Company for the year 2005-06 by the Board. The
company had requested the Department of Company Affairs for its
approval on the appointment of the Cost Auditors and the approval to
this effect has been received from the Central Government.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
Directors Report. A Certificate from the auditor regarding compliance
of Corporate Governance as stipulated by clause 49 of the Listing
agreement is attached to this report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31.3.2006 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE -
II.
ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation of the valuable
contribution made in achieving uninterrupted production during the year
2005-2006. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane.
Your Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, KSIIDC, etc., and IFCI and Banks.
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit, Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/-
(LUKOSE VALLATHARAI)
Place : BANGALORE
DATE : 25.07.2006 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2005
The Directors have pleasure in presenting the 70th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2005.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31.03.2005 31.03.2004
Year ended Year ended
31.3.2005 31.3.2004
Sales 30785 28139
Operating Profit (PBIDT) 2688 2179
Interest 2516 2183
Profit before Depreciation 172 (-)4
Depreciation 989 974
Profit before Tax (-)817 (-)978
Net Profit/Loss for the year (-)817 (-)978
Balance of profit brought forward
from previous year (-)4846 (-)2795
Adjustment of Deferred Tax Credit of earlier years - (-)1073
Balance of Profit carried to Balance Sheet (-)5663 (-)4846
SALES/TURNOVER :
The analyses of Sales is as under:
2004-05
Quantity Value Av. Rate
in MT Rs. in lacs Rs./Tonne
News Print 76159 17627 23145
W P P 27915 8937 32015
Sugar 30975 4808 15522
Molasses 11668 490 4200
Bagasse - - -
Total 31862
2003-04
Quantity Value Av. Rate
in MT Rs. in lacs Rs./Tonne
News Print 77773 16341 21011
W P P 27874 8862 31793
Sugar 29927 3818 12758
Molasses 21663 306 1413
Bagasse 7048 55 780
Total 29382
OPERATIONS & PROFITABILITY:
The operations of the Company were adversely affected due to adverse
market conditions during the year. The Company has earned an Operating
Profit of Rs.2688 lakhs during the year compared to Rs. 2179 lakhs in
the previous year. The Net Loss after providing for interest and
depreciation is in the order of Rs. 817 lakhs compared to Rs. 978 lakhs
in the previous year.
The per capita consumption of paper in our country is the lowest (5Kgs)
against the world average of 60 Kgs. Hence there is a vast scope for
increasing the consumption of paper in the country. During 2004-05
against an installed domestic capacity of 76 Lac MTs, the production of
paper was approx. 62 Lac MTs in India. There was an import of 8 Lac MTs
(mainly Newsprint) and export of 4 lac MTs (mainly WPP). The capacity
utilisation in the country in the case of Newsprint was approx. 60%
(40% Imports), whereas in the case of WPP it was about 86%, The imports
of WPP were mainly the specialty papers. As far as MPM is concerned,
the production was 1,02,317 MTs against installed capacity of 1,05,000
MTs (97% capacity utilisation).
NEWSPRINT:
From the time Newsprint was placed under OGL in 1995, the domestic
paper mills have been at disadvantage owing to increasing imports
(approx. 7 lakh MTs in 2004-05) by Newspapers at a import duty of 5%
(present) as against 25% (Bound rate) as per WTO guidelines. This
coupled with the inflexibility of producing Writing & Printing Paper
(which offers better realisation) in our Newsprint machine and lack of
modernisation and expansion of our manufacturing facilities have
adversely affected operations of the Company.
The international prices for Imported Newsprint have been improving
since last few years. In the last year due to increased international
prices we could get a better realisation (increase of approx. Rs.2000/-
per MT over the last year) for Newsprint from our customers.
The international prices have further gone up in the first half of FY
2005-06 due to which we have been able to get further additional
realisation of Rs.1765/- per MT from customers from April 2005. It is
expected that there could be one more price increase in the imported
Newsprint in the FY 2005-06 and thereafter the-prices may stabilize.
However there is sufficient availability of Newsprint in the country
and the customers are carrying inventory of approximately 6-7 months
consumption of newsprint in their warehouses and supplies against their
orders are in the pipeline. Overall during the FY 2005-06, realisation
for Newsprint is expected to be better than FY 2004-05. MPM presently
has a market share of 11% in the Newsprint market.
WRITING & PRINTING PAPER (WPP) :
With increased production by mills (21.14 lac MTs in 2004-05 as
compared to 19.78 Lac MTs in 2003-04) the domestic competition has
become intense. Due to surplus production, the mills have been forced
to export their WPP (2.35 Lac MTs in 2004-05 as compared to 1.76 Lac
MTs in 2003-04).
In the case of MPM, we have been able to sell all the produced quantity
domestically. The proportion of our WPP sale to Government and Trade
was 60:40 in 2004-05. Also we have effected price increases of
Rs.500/MT in August 2004, Rs.1000/MT in Mar. 2005 on our WPP. Due to
good demand for our Kraft paper, we effected a price increase of
Rs.2000/MT in March 2005. In view of the continuing good demand and
introduction of VAT in Karnataka, we have effected price increase of
Rs.1550 MT between April to September 2005. We expect to increase the
price again by RS.500/MT from Jan 2006. Hence our realisation on WPP
during FY 2005-06 would be better than FY 2004-05.
With the introduction of Transparency Act, MPM (earlier to which orders
were obtained from Government Departments directly) has now been
compelled to participate in tenders along with other Private paper
mills thus making competition intense. MPM, like all other major paper
mills has also faced threat from `B' grade mills, which have improved
their quality and still able to offer their products at substantially
lower prices than large paper Mills.
SUGAR:
The Sugar production in the country for the 2004-05 season is estimated
to be 130 lakh MTs as compared to the production of 140 lakh MTs in the
2003-04 season. As far as the sugar production in south is concerned,
it is estimated to be 9.12 Lakh MTs in the 2004-05 season as compared
to 10.42 Lakh MTs in 2003-04 season. In the case of MPM, the sugar
production in the 2004-05 season Rs 23,420 MTs as compared to the
production of 40,407 MTs in the 2003-04 season. The lower production in
2004-05 was mainly due to lower cane availability and the sugar crop
infected with sugarcane wooly aphids.
In the past two years sugar industry which suffered on account of
excess production and lower open market prices turned around in 2004-05
and the Sugar Mills were able to get better sale realisation. The
shortage in cane availability in the country in 2004-05 leading to low
production prompted the Government to resort to Import of raw sugar to
check the spiralling prices of sugar. Several sugar mills in private
sector imported raw sugar and sold the refined sugar in the market by
which the availability of sugar in the country improved bringing
stability to the sugar prices. Further, due to lower production of
sugar, Molasses prices improved and we could get high realisation for
our Molasses. During 2005-06 sugar industry in the country is
expecting.better cane availability, better sugar production and
improved realisation. In the case of Molasses also it is expected that
the availability and realisation to improve in 2005-06 as compared to
2004-05.
PROJECT WORKS :
i. Short Term Investment Proposals:
The company is implementing short term investments comprising of
Nineteen (19) items aggregating to an estimated Rs.21.14 crores since
March 2001. While some of the investments will help rehabilitation of
old structures, which are in critical stages, majority of them are
aimed at reduction of cost of production. Thirteen (13) items of short
term investment proposals have been completed. So far an investment
amounting to Rs.16.31 crores has been made on short term investment
proposals. Investment amounting to Rs.2.56 Crores is deferred due to
financial constraints. Upon completion of the short term investments
the expected savings in the cost of production of newsprint and writing
& printing paper are in the order of Rs.470/- per MT
ii. Medium to Long term investment proposals :
There have been no major investments in the Company for modernization.
The Company has identified investments in the order of Rs. 438 cr. to
modernize both Paper Mill and Sugar Mill. Investments in the order of
Rs. 318 cr. are required for modernization of Paper Mill and Rs. 120
cr. for Sugar Mill. In the case of modernization of Paper Mill, a 300
MT New Chemical Pulp Mill is being proposed as this will help to
produce either Writing &Printing Paper or Newsprint based on demand and
supply position, the facility of which is not available on our
Newsprint Machine (P.M/c.4). In the case of Sugar Mill, the proposal is
to enhance the capacity of Sugar Mill from 2,500 TCD to 5,000 TCD along
with a 10 MW CQ- generation Plant and 45 KLD Distillery. A detailed
proposal has been submitted to the Government for its consideration and
approval.
CAPTIVE FORESTRY :
Forest Wing harvested captive plantations raised on forest land and
non-forest land over an extent of 3618 ha. and a quantity of 1,20,885
MT of pulpwood was supplied to the Mills and 917 ha. of harvested
non-forest lands were handed over back to the Government as per the
orders of Hon'ble High Court of Karnataka in W.P. No.14644/1998 and PIL
filed against MPM.
Totally 2587.75 ha. of captive plantations are raised during this year
with species like Acacia hybrid (662.70 ha.), Acacia auriculiformis
(255.55 ha.), Eucalyptus camaldulensis (98.50 ha.), Eucalyptus pellita
(156.60 ha.), Eucalyptus Coppice (1380 ha.) and Miscellaneous species
(35.00 ha.).
The Management plan for captive pulpwood plantations raised on KPC
lands (1200.08 ha.) was approved by Govt. of India on 7.2.2005 and the
matured plantations would be harvested as approved in the plan.
An extension project on Forest Research was prepared and sent to
Government of India for approval. The duration of project i$ 2 years
and total cost of project is Rs.55.00 lakhs of which 50% is a grant
given by the Govt. of India under Cess fund.
The Farm Forestry activities are continued for the benefit of local
farmers and institutions and about 7.61 lakhs polythene bagged
seedlings of improved varieties of Eucalyptus, Acacra and other species
were sold at a price of Rs.1/- per seedling, the gate purchase of
pulpwood from local farmers and suppliers was continued for the benefit
of the beneficiaries who availed seedlings under Farm Forestry
activities of MPM.
SUGAR MILL OPERATION DURING THE YEAR :
34 Villages of the command area of M/s. Deve Sugars Factory, Shimoga,
have been permanently allocated to our Sugar Mill from September 2004.
The area under cane decreased from 14401 acres during 2003-04 to 9352
acres during 2004-05. Hence, the quantity of cane crushed decreased
from 4,26,340 tonnes at a recovery of 9.45% during 2003-04 to 2,55,563
tonnes at a recovery of 9.11% during 2004-05. The considerable fall in
cane crushing and recovery were due to the large-scale diversion of
cane to power crushers, incidence of Sugarcane Wooly Aphids,
insufficient water availability at the Bhadra Dam, and low rainfall
during 2003-04.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE-I, which
form part of this report.
INDUSTRIAL RELATIONS :
The Industrial Relations has been cordial throughout the year.
Continuous training to different categories of employees has helped
them in upgrading their skills. Welfare measures provided by the
company are perhaps the best in the Industry".
FIXED DEPOSITS :
The Company's Fixed Deposits for the end of the year stood at Rs.747.68
lakhs compared to Rs.797.09 lakhs in the previous year.
DIRECTORS :
Sri. C Shivashankar and Sri. M C Shetty, Directors of the Company,
retire by rotation and are eligible for reappointment at the Annual
General Meeting.
Sri. G.V. Krishna Rau, IAS : Sri G.V. Krishna Rau (51) ceased to be a
Director & Chairman & Mg. Director of the Company effective from
18.5.2005 consequent on withdrawal of his services by Govt. of
Karnataka. Your Board placed on record the valuable services rendered
by him during his tenure as the Chairman & Mg. Director on the Board of
the Company.
Sri A.K. Varma, IPS : Sri A. K. Varma, IFS (52) has been appointed by
the Board of Directors at its meeting held on 29.4.2005 as an
additional Director of the Company pursuant to Section 260 of the
Companies Act, 1956 read with Article 108A of the Articles of
Association of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT :
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
That the applicable accounting standards had been followed along with
proper explanation relating to material departures, if any;
That the selected accounting policies were applied consistently and
made 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.
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
irregularities;
That the annual accounts were prepared for the financial year ended
31st March 2005 on a going concern basis.
AUDITORS :
Sri A.K. Varma, IPS : Sri A. K. Varma, IFS (52) has been appointed by
the Board of Directors at its meeting held on 29.4.2005 as an
additional Director of the Company pursuant to Section 260 of the
Companies Act, 1956 read with Article 108A of the Articles of
Association of the Company.
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s. Manian & Rao, Bangalore,
as Statutory Auditors of the Company for the year ended 31.03.2005.
M/s. G.S.R & Associates, Cost Accountants, Mysore have been appointed
as Cost Auditors of the Company for the year 2004-05 by the Board. The
company had requested the Department of Company Affairs for its
approval on the appointment of the Cost Auditors and the approval to
this effect has been received from the Central Government.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
Directors Report. A Certificate from the auditor regarding compliance
of Corporate Governance as stipulated by clause 49 of the Listing
agreement is attached to this report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31.3.2005 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE-II.
ACKNOWLEDGEMENT :
The Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation to the valuable
contribution made in achieving uninterrupted production during the year
2004-2005. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane.
The Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, KSHDC, etc., and IFCI and Banks.
The Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/-
(LAKSHMI VENKATACHALAM)
CHAIRMAN & MANAGING DIRECTOR
PLACE : BANGALORE
DATE : 23.07.2005
ANNEXURE - I TO DIRECTORS' REPORT
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
TECHNICAL ABSORPTION:
RESEARCH AND DEVELOPMENT DURING THE YEAR 2004-05 :
1. A Digester Additive specific for agricultural residues was
identified for cooking of bagasse, Lab trials & plant trials indicated
that about 8% white liquor can be saved. Further trials are planned.
2. Analysis of acacia raw material indicated the presence of heavy
metal ions which could be detrimental for peroxide bleaching. Hence
plant trials with DTPA (Diethylene Triamine Penta Acetic Acid) in CSRMP
Plant were conducted. Further trials are required.
3. `Refine Rich' (an enzyme) was used in lab trials for the refining of
CSRMP pulp. The study revealed that about 8% power could be saved.
Plant trials are-planned.
4. Use of drainage aids in lab trials for washing of bagasse pulp has
indicated that these chemicals help in better drainage of liquor
thereby helping in the reduction of alkali losses. Plant trials are
planned.
FUTURE PLAN OF ACTION :
a. Performance of the sugarcane varieties :
CO-94005, CO-85019, CO-88025 and COVC-89222 which were planted in the
fields of 3 selected farmers in the month of November 2003 in our
reserve area have given encouraging yields and quality. Hence, the
field trial of these varieties is continued this year also to include
fifty farmers in our reserve area.
We shall consolidate our views on the performance of the 12 varieties
of sugarcane from VC Farm, Mandya, on yield and quality parameters, at
the end of current year's trials.
b. We had set a target of developing 6 acres of Foundation Seed in our
R&D Farm, Kharehalli. However, due to frequent power outages in our
R&D Farm, we could develop only 5 acres of foundation seed last year.
We have set a target of 5 acres of Foundation Seed during the current
next year.
4. For the second year in succession the tie up with IFFCO and Canara
Bank has been successful in meeting the requirements of fertilizers,
essential micronutrients, pesticides etc., of 1000 farmers in our area
during 2004-05 against 760 farmers during 2003-04.
EXPENDITURE ON R&D DURING 2004-2005 : Rs. 73.09 lacs
EXPENDITURE AS A % OF TOTAL TURNOVER : 0.23%
Mar 31, 2004
The Directors have pleasure in presenting the 69th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2004.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
Year ended Year ended
31.3.2004 31.3.2003
Sales 29382 35052
Operating Profit (PBIDT) 2179 876
Interest 2183 2025
Profit before Depreciation (-)4 (-)1149
Depreciation 974 1480
Profit before Tax (-)978 (-)2629
Deferred Tax-Income - 543
Net Profit/Loss for the year (-)978 (-)2086
Balance of profit brought forward
from previous year (-)2795 347
Transfers from General Reserve - 206
Deferred Tax credit of earlier years - -
Adjustment of Deferred Tax Credit of
earlier years (-)1073 (-)1262
Balance of Profit carried to Balance Sheet (-)4846 (-)2795
SALES/TURNOVER:
The analyses of Sales is as under:
2003-2004 2002-2003
Quantity Value Av.Rate Quantity Value Av.Rate
in MT Rs. in lacs Rs./Tonne in MT Rs. in lacs Rs./Tonne
Newsprint 77773 16341 21011 83069 15896 19136
WPP 27874 8862 31793 34424 10664 30978
Sugar 29927 3818 12759 75493 8011 10612
Molasses 21663 306 1413 22035 481 2183
Bagasse 7048 55 780 - - -
Total 29382 35052
PROFITABILITY:
The Company has earned an Operating Profit of Rs. 21.79 cr. during the
year compared to Rs. 8.76 cr. in the previous year. The Operating
Profit has arisen mainly due to sanction of concessions by the
Government in the order of Rs.28.00 cr. The Net Loss after providing
for interest and depreciation is in the order of Rs. 9.78 cr. compared
to Rs. 20.86 cr. in the previous year. On segment-wise review of the
operations of the Company, the Company has incurred loss from both
Newsprint and Sugar Divisions in the order of Rs. 24.71 cr. and Rs.
16.48 cr. respectively. There is marginal profit of Rs. 21 lacs in the
case of Writing & Printing Paper Division. The average realization in
the case of Newsprint was Rs. 21,011/- per tonne compared to total cost
of production of Rs. 24,117/- per tonne comprising of Rs. 17,213/- as
variable cost and Rs. 6,904/ - as fixed cost. The loss per tonne of
Newsprint is in the order of Rs. 3,106/-. The average realization in
the case of Sugar was Rs. 11,910/- per tonne compared to cost of
production of Rs. 16,005/- per tonne comprising of Rs.11,360/- per
tonne as variable cost and Rs. 4,645/- per tonne as fixed cost. The
loss per tonne of Sugar was in the order of Rs. 4,095/-. In the case of
Writing and Printing Paper, the average realization was Rs. 28,632/-
per tonne compared to cost of production of Rs.28,563/- per tonne
comprising of Rs.18,492/- as variable cost and Rs.10,071/- as fixed
cost. The profit per tonne of Writing & Printing Paper was thus Rs.
69/-. While the above figures were based on the actual costing, net
loss for the year was reduced to Rs.9.78 cr. after considering the
Government concessions in the order of Rs. 28,00 cr. as indicated
above.
PROJECT WORKS:
The company is implementing short term Investments comprising of 19
items aggregating to Rs. 21.14 crores since March 2001. While some of
the investments will help rehabilitation of old structures, which are
in critical stages, majority of them are aimed at reduction of cost of
production. Twelve items of short term investment proposals have been
completed. So far an investment amounting to Rs.14.92 crores including
investments in the order of Rs. 10.82 Crores during the year 2003-04
have been done on short term investment proposals. Out of the balance
amount of Rs. 7.52 cr. investment amounting to Rs. 2.20 Cr. !G expected
to be completed by end of March 2005 and the balance amount of Rs. 5.32
Cr. was deferred due to financial constraints. Upon completion of the
short term investments the expected savings in the cost of production
of Newsprint & Writing & Printing Paper are in the order of Rs.470/-
per MT.
CAPTIVE FORESTRY:
The Forest Wing has harvested Captive plantations raised in Forest
lands and Non-Forest lands over an extent of 4042 Ha. 4665.30 Ha. (4265
Ha. with crop and 400.30 Ha. of harvested area) of Captive Plantations
raised in Wild-life areas and 414.05 Ha. of harvested plantations in
Non-Forest lands have been surrendered back to the Government
consequent upon the interim orders of Hon'ble High Court of Karnataka
and the PIL filed against the Company is yet to be disposed. During the
year, 2215.61 Ha. of Captive Plantations were raised with species like
Acacia hybrid (773.16 Ha.), Acacia auriculiformis (96.70 Ha.)
Eucalyptus species (1341.75 Ha.), and miscellaneous species (4.00 Ha).
The extraction of Captive plantations raised during the years prior to
and upto 1996 and some Captive plantation of 1997 also was taken up
during the year and about 1,64,248 MT of pulpwood was supplied to the
Mills from 4042 Ha. including 1162 Ha. of plantations raised in 1997
the felling of which advanced by one year to meet the requirements of
the Mills and to this extent the yield from Captive plantations during
the 2004-05 would be affected. About 121 Ha. of plantations raised in
BEML & MPM Joint Afforestation Project area were harvested during this
year also and 1969 MT of Eucalyptus pulpwood was supplied to the Mills.
Hence, nearly 90% of pulpwood requirement was met from Captive sources
and the rest from private sources during 2003-04. The supply of
pulpwood from Captive sources was highest during the period compared to
the last 13 years. The extension Farm Forestry activities are continued
for the benefit of local farmers and Institutions and about 15.08 lakhs
polythene bagged seedlings of improved varieties of Eucalyptus, Acacia
and other species were sold to the beneficiaries at a subsidized price
of 50 paise per seedling. The company has arranged for Gate purchase of
pulpwood from local suppliers and 80% of the value of pulpwood is being
paid to suppliers on the day of supply to the Mills. Though the Gate
purchase has not shown good response from the local suppliers the
response to Farm forestry is found to be encouraging.
It is pertinent to mention that the average cost of producing Acacia
and Euca pulpwood in the captive forestry works of Rs. 1,4507- per
tonne as against Rs. 1800/- per tonne paid to external agencies which
has resulted a saving of Rs. 574 lakhs. Similarly during the year, the
forestry wing has supplied 39,611 MT of Euca and 1,26,656 MT of
Acacia/pine pulpwood. The higher proportion of Acacia pulpwood supplied
from Captive plantations has helped in reducing the chemical
consumption cost by Rs. 50 lakhs and thus the Captive forestry has been
responsible for saving a total amount of Rs. 624 lakhs during the year.
SUGAR MILL OPERATION DURING THE YEAR:
The command area of M/s. Deve Sugars, Shimoga continues to be
temporarily allocated to our Sugar Mill. The area under cane registered
increase from 12456 acres in 2002-03 to 144401 acres during 2003-04. A
quantity of 426340 tonnes of sugarcane was crushed during 2003-04 at a
recovery of 9.45% against a crushing of 526676 tonnes during 2002-03 at
10.31% recovery. The considerable fall in cane crushing and recovery
was because of the large scale diversion to power crushers and
incidence of White Wholly Aphids respectively. A quantity of about
1,06,000 tonnes of sugarcane was diverted to power crushers for making
of joggery in 2003-04.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE-1, which
form part of this report.
INDUSTRIAL RELATIONS:
The Industrial Relations has been cordial throughout the year.
Continuous training to different categories of employees has helped
them in upgrading their skills. Welfare measures provided by the
company are perhaps the best in the Industry".
FIXED DEPOSITS :
The Company's Fixed Deposits for the end of the year stood at Rs. 797
lakhs compared to Rs. 166 lakhs in the previous year.
DIRECTORS:
a. Sri Narendra M. Kheny and Sri G.V. Venkanna, Directors of the
Company, retire by rotation and are eligible for reappointment at the
Annual General Meeting.
b. Sri N.A. Haris was appointed as Director & Chairman of the Company
by the Govt. of Karnataka pursuant to the powers conferred under
Articles of Association of the Company. Sri N.A. Haris assumed the
charge on 9th December 2003. He ceased to be Director and Chairman of
the Company effective from 29th March 2004 consequent on acceptance of
his resignation by the Govt. of Karnataka. Your Board placed on record
its deep appreciation of the valuable services rendered by him during
his tenure as Chairman of the Company.
c. Pursuant to the powers conferred under Articles of Association of the
Company, the Govt. of Karnataka has appointed Sri G.V. Krishna Rau, IAS
as Director and Managing Director of the Company in place of Sri B.A.
Coutinho, IAS. Sri G.V. Krishna Rau, (AS has taken charge effective
from 12th February 2004. Your Board placed on record its deep
appreciation of the valuable services rendered by Sri B.A. Coutinho
during his tenure as Chairman and Managing Director and subsequently as
Managing Director of the Company.
d. Sri B.U. Chengappa, IFS (Retd.) and Sri V.D. Hegade ceased to be
Directors of the company effective from 29th December 2003 and 29th May
2004 respectively consequent on their resignation to the Directorship
of the Company. Your Board placed on record the valuable services
rendered by them during their tenure as Director on the Board of the
Company.
e. Sri S. M. Fathaulla, Director (Marketing) of the Company was
appointed as a Director on the Board of the Company effective from 30th
August 2004 in the casual vacancy caused by the resignation of Sri V.D.
Hegade, Director of the Company. By virtue of Section 262 of the
Companies Act, 1956 read with Article 107 of the Articles of
Association of the Company, he shall hold office only upto the date of
this Annual General Meeting of the Company and is eligible for
appointment.
f. Sri. D.H. Chebbi, Director passed away on 5th November 2003. Your
Board expressed profound grief at the passing away of Sri. D.H. Chebbi
and prayed Almighty to give his family members the strength to bear the
loss. Your Board also placed on record the valuable guidance and
services rendered by Sri. Chebbi during his tenure as Director on the
Board.
g. The Government of Karnataka has nominated Sri Ritvik Pandey, IAS, in
place of Sri B.K. Das, IAS and Sri Tushar Girinath, IAS, Dy.
Commissioner, Shimoga District, Shimoga, in the existing vacancy of Sri
N.A. Haris, Former Chairman of the Company as a Directors of the
Company effective from 30.08.2004.
The Board placed on record its deep appreciation of the valuable
services rendered by Sri B.K. Das and Sri N.A. Haris during their
tenure.
h. The Government of Karnataka nominated Sri N. Gokulram, IAS as
Government nominee on the Board of the Company effective from 2.8.2001.
However, he ceased to be Government nominee consequent on appointing
him in the casual vacancy caused by the resignation of Sri B. U.
Chengappa, IFS (Retd.) with effect from 29.12.2003. The Government of
Karnataka again nominated Sri N. Gokulram, IAS as Govt. Nominee with
effect from 30th August 2004 in place of Sri Subir Hari Singh, IAS. The
Board placed on record its deep appreciation of the valuable services
rendered by Sri Subir Hari Singh during his tenure as a Director of the
Company. Accordingly, Sri N. Gokulram, IAS ceased to be Director under
the elected category. Sri Dipak Sarmah, IFS was appointed as an
additional Director effective from 30.8.2004. By virtue of section 260
of the Companies Act, 1956 he would hold office upto the date of the
ensuing Annual General Meeting and eligible for appointment by the
shareholders.
i. Ms. Vipula Sharma has been nominated by the IFCI Ltd., as a Director
of the Board of the Company effective from 30.08.2004 in place of Sri
G. J. Prasad. The Board placed on record its deep appreciation of the
valuable services rendered by Sri G.J. Prasad during his tenure as a
Director of the Company.
DIRECTORS'RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
a) That the applicable accounting standards had been followed along
with proper explanation relating to material departures, if any;
b) That the selected accounting policies were applied consistently and
made 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;
c) 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
irregularities;
d) That the annual accounts were prepared for the financial year ended
31st March 2004 on a going concern basis.
AUDITORS:
a. As per Section 619(2) of the Companies Act. 1956, the Government of
India, Dept of Company Affairs, appointed M/s. Manian & Rao, Bangalore,
as Statutory Auditors of the Company, for the year ended 31.03.2004.
b. M/s. G.S.R. & Associates, Cost Accountants, Mysore have been
appointed as Cost Auditors of the Company for the year 2003-04 by the
Board. The company has requested the Department of Company Affairs for
its approval on the appointment of the Cost Auditors, and the approval
to this effect has been received from the Central Government.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs. 24 lakhs
or more per annum/Rs. 2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
Directors Report. A certificate from the auditor regarding compliance
of Corporate Governance as stipulated by Clause 49 of the listing
agreement is attached to this report.
DELISTING OF SHARES :
The Equity Shares of the Company are at present listed on the Stock
Exchanges at Mumbai and Bangalore. The shares of the company are
compulsorily traded in dematerialized form. The attention of members is
drawn to item No. 6 of the Notice of the Annual General Meeting and to
the explanatory statement attached thereto whereby the company proposes
to delist its equity shares from the Bangalore Stock Exchange. With the
wide and extensive networking of the centers of the Stock Exchange,
Mumbai the investors have access to online dealings in the company's
shares across the country. There were no trading at all of the
company's shares on the Bangalore Stock Exchange for more than five
years.
The Board of Directors has therefore decided to apply for the Voluntary
Delisting under SEBI (Delisting of Securities) Guidelines, 2003, of the
Companies equity shares from Bangalore Stock Exchange. Since, the
equity shares are continued to be listed on the Stock Exchange, Mumbai,
no exit option is required to be offered to the shareholders of the
region where the Bangalore Stock Exchange is situated. The delisting of
the company's equity shares from Bangalore Stock Exchange will not
adversely affect the interest of the investors including that of the
members of the company located in the region of Bangalore.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31.30.2004 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE-II.
ACKNOWLEDGEMENT :
The Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation to the valuable
contribution made in achieving uninterrupted production during the year
2003-2004. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane.
The Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, KSIIDC, IFCI and Banks etc.
The Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their continued support to the Company.
For and on behalf of the Board
Sd/-
BANGALORE (G.V. KRISHNA RAU)
DATE: 30.08.2004 CHAIRMAN & MANAGING DIRECTOR
ANNEXURE-I TO DIRECTORS' REPORT
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. TECHNICAL ABSORPTION:
RESEARCH AND DEVELOPMENT:
1. Alternate Raw Material for Cold Soda Pulping:
For Cold Soda Pulping other raw materials were investigated for their
suitability.
a) Bamboo and Casurina wood were investigated for their suitability.
Bamboo was found to be unfit due to its higher chemicals consumption,
lower brightness of pulp and except for the tear factor, other strength
properties were also not impressive, when compared with Acacia.
b) Casurina pulping in lab revealed that the impregnation of chips
would be a problem as it happens to be a denser wood compared to
Acacia. The strength properties and yield were comparable to that of
Eucalyptus. The consumption of chemicals is also comparable to Euca. It
is desirable to use it in CSRMP production provided it is fresh with
higher moisture. This will be investigated with larger material.
2. Plant scale trials with Acacia Hybrid wood were conducted for a
period of twenty days. The trial results indicated that Acacia Hybrid,
whose yield per hectare is double to that of Acacia Auriculiformis, is
better than the latter in terms of strength properties (about 20%
higher), slightly lower power and bleach chemical consumption. Also the
colour of effluent was lower by about 18%. During the periods of trial,
the ratio of CSRMP in Newsprint furnish could be increased by 3% with
corresponding reduction in the imported CTMP.
3. Longer plant scale trials with the digester additive were found to
be economical in terms of reduction in white liquor consumption. Its
use will be regularised.
4. Two stage peroxide bleaching, being practised in the Cold Soda
Refined Mechanical Pulp Mill was causing problems of higher Peroxide
consumption, higher steam consumption and higher residual peroxide in
pulp. The bleaching conditions were optimised in lab and were
successfully implemented in the plant. Better results are now obtained
with single stage bleaching.
5. As CTMP of required specifications is becoming scarce, plant trials
using slightly inferior quality of CTMP from M/s. Winstone, Newzealand
were conducted. The trials revealed that for the current level of use,
this pulp could replace the currently used CTMP having higher strength
properties
6. Lab trials on the production of Newsprint using only captive pulps
revealed that acceptable quality Newsprint can be produced making use
of CSRMP & HW Chemical pulp in the ratio of 60:40.
7. Use of liquid optical whitening agent was found to be advantageous
and economical also. Its use is regularised in the plant.
C. FUTURE PLAN OF ACTION :
a) As proposed earlier, the sugarcane varieties, CO 94005, CO 88025, CO
93009, CO 85019 and CO 94009 have been planted in the fields of three
farmers in our reserve area to ascertain the performance of the
varieties.
b) All the twelve cane clones supplied by VC Farm, Mandya are being
multiplied in our R & D Farm for the second year in succession in order
to assess their performance.
c) An area of 2 acres has been developed as foundation seed plot. We
propose to develop about 6 acres of land as foundation seed plot in the
year 2004-05.
d) IFFCO and Canara Bank have introduced a special package of loan in
kind for the benefit of our registered sugarcane farmers. The package
consists of balanced quantities of fertilisers, bio-fertilizers,
essential micronutrients, presticides etc to meet the entire
requirement of sugarcane crop. About 760 farmers have been covered
under this programme in the year 2003-04. MPM's contribution is by way
of identification of prospective beneficiaries for the scheme and
making necessary deductions from the cane proceeds due to the
beneficiaries for repayment of loan to the banker, Canara Bank.
D. EXPENDITURE ON R&D DURING 2003-2004 - Rs. 66.54 lacs
E. EXPENDITURE AS A % OF TOTAL TURNOVER : 0.22%
Mar 31, 2003
The Directors have pleasure in presenting the 68th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2003.
FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
Year ended Year ended
31.3.2003 31.3.2002
Sales 35052 28431
Operating Profit (PBIDT) 876 (-) 451
Interest 2025 2760
Profit before Depreciation (-) 1149 (-) 3211
Depreciation 1480 1534
Profit before Tax (-) 2629 (-) 4745
Deferred Tax-Income 543 1259
Net Profit/Loss for the year (-) 2086 (-) 3486
Balance of profit brought forward from previous year 347 3301
Transfers from General Reserve 206 -
Deferred Tax credit of earlier years - 532
Adjustment of Deferred Tax Credit of
earlier years (-) 1262 -
Balance of Profit carried to Balance Sheet (-) 2795 347
The significant features of the accounts for the year under
consideration are as under:
SALES/TURNOVER:
The analysis of Sales is as under:
2002-2003
Quantity Value Av.Rate
in MT Rs. in lacs Rs./Tonne
News Print 83069 15896 19136
WPP 34424 10664 30978
Sugar 75493 8011 10612
Molasses 22035 481 2183
Total 35052
2001-2002
Quantity Value Av.Rate
in MT Rs. in lacs Rs./Tonne
News Print 51853 11846 22845
WPP 30733 9478 30840
Sugar 53946 6862 12720
Molasses 18770 245 1305
Total 28431
It may be noticed from the above that the Sales during the year have
been increased from Rs.284.31 Crores in FY 2002 to Rs.350.52 Crores in
FY 2003 - up by 23%. On segment-wise review, it may be noticed that the
sale of newsprint in FY 2003 was Rs. 158.96 crores compared to Rs.
118.46 crores in FY 2002 - up by 34 %. Similarly, the sale of writing
and printing paper was Rs. 106.64 crores compared to Rs. 94.78 crores -
up by 13%. The sale of sugar has been increased from Rs. 68.62 crores
in FY 2002 to Rs. 80.11 crores in FY 2003 - up by 17% mainly on account
of export of 45,124.80 MTs. of sugar during the year. It was possible
to increase the turnover despite reduction in the average realization
of all the finished products mainly on account of 100 % capacity
utilization and continued efforts on reducing the cost of production.
PROFITABILITY:
The Company has earned an Operating Profit of Rs.8.76 crores during the
year compared to an Operating Loss of Rs.4.51 crores in the previous
year. The Net Loss, after providing for interest and depreciation, is
in the order of Rs.20.86 crores for FY 2003 compared to Net Loss of
Rs.34.86 crores in the previous year. On segment-wise review of the
operations of the Company, the Company has incurred loss from both
Newsprint and Sugar Divisions and profit from Writing & Printing Paper
Division. In the case of newsprint, the market was very sluggish
throughout the year. With continued decline in the prices, it was
possible to have an average realization of Rs.19,1367- per MT compared
to Rs.22,845/- per MT in the previous year. As against to this, the
cost of production of newsprint was Rs.22,600/- per MT comprising of
Rs.16,105/- towards variable cost and Rs.6,495/- towards fixed cost. In
short, the loss per tonne of newsprint was in the order of Rs.3,464/-
per MT and the total loss on production of 77,445 MT was in the order
of Rs.26.80 crores. In the case of writing & printing paper, there was
a marginal increase in average sales realization by Rs.138/- per MT
which was increased from Rs.30,840/- per MT in FY 2002 to Rs.30,978/-
per MT in FY 2003. As against to an average realization, the cost of
production of writing and printing paper was Rs.27,609/ - per MT
comprising of Rs.17,683/- per MT as variable cost and Rs.9,926/- per MT
as fixed cost. The Company has with a profit of Rs.3,370/- per MT
earned Rs.9.85 crores profit on a production of 29,265 MT of writing
and printing paper. In the case of sugar, the market was also very
sluggish as in the case of newsprint. The average realization was
Rs.10,612/- per MT in FY 2003 compared to Rs.12,720/- per MT in the
previous year. Against to this, the cost of production of sugar was
Rs.12,788/- per MT comprising of Rs.9,791/- per MT as variable cost and
Rs.2,997/- per MT as fixed cost. The Company has, therefore, sustained
a net loss of Rs.12.15 crores on production of 55,838 MT of sugar
during the year. While the above figures are based on actual costing,
the net loss for the year amounting to Rs.20.86 crores has been worked
out after considering the impact of inventory changes and other income.
PROJECT WORKS :
i) Energy Conservation Project:
The Energy Conservation Project comprising of -
(a) Chemical Recovery Boiler and associated plants,
(b) Evaporator &
(c) Cooling Water Pumps for Steam Turbine Generator with an estimated
Project cost of Rs.2160 lacs is being implemented by the Company. IREDA
has sanctioned Term loan of Rs.1164 lacs. Development Consultants,
Calcutta, has been appointed as Project Consultants. All the
clearances for implementing this Project have been obtained. The
implementation period of this Project is 18 months. The expected annual
savings on this Project are in the order of Rs.656 lacs, with a pay
back period of 30 months. This project will help to reduce the cost of
production substantially.
(ii) Short Term Investment Proposals:
The Company is implementing Short term investments comprising of 22
items aggregating to Rs.32 crores. While some of the investments will
help rehabilitation of old structures which are in critical stages,
majority of them are aimed at reduction of cost of production. The
implementation period of these investments vary between 6 months to 18
months. Ten items of investments amounting to Rs.969 lacs have been
already completed. These investments are being partly financed by way
of term loans from KSIIDC, private placement of bonds, lease finance
and other means of finance. On completion of these investments, the
annual savings will be in the order of Rs.520 lacs. In the absence of
no major investments being made by the Company, these investments will
help the Company to sustain its operations as an on going concern.
(iii) Infrastructure Augmentation for Self Sufficiency in Power Generation:
The company proposes to take up the replacement of existing turbines
with new turbines with auxiliaries at an estimated cost of Rs1975 lacs.
On implementation of this project, the company would be able to
generate adequate power to cater to all its needs without any drawal of
power from M/s KPTCL grid. Further, it would be able to bring down the
cost of power generation to a great extent bringing down the
manufacturing cost of paper to a large extent. Additionally at time we
would be able to supply power to the grid after meeting our
requirements.
CAPTIVE FORESTRY:
The Forest Wing has commenced harvesting of captive plantations raised
on forest lands as per the management plan approved by the Government
of India. The Hon'ble High Court of Karnataka has permitted MPM to
harvest all the captive plantations raised on non-forest lands in its
interim order dated 19.11.2002 and insisted on not to replant the
harvested areas until further orders. Accordingly action has been taken
to harvest the matured plantations in non- forest lands also. The PIL
filed against MPM is in the final stage now for disposal. Totally
1942.77 Ha. of captive plantations are raised during the year with
species like Acacia hybrid. Acacia auriculiformis and Eucalyptus
species. The extraction of captive plantations raised during the years
prior to and upto 1995 was taken up during the year and about 85422 MT
of pulpwood was supplied to the mills from 2741 Ha. MPM had entered
into an agreement with M/s BEML for a joint afforestation scheme with
land given by BEML and initial expenditure for raising plantations
shared equally between MPM & BEML. These plantations are now ready for
harvesting during 2002-03, 4365 MT of Eucalyptus pulpwood was
harvested, from 153 Ha. of plantations. To augment the short-fall of
raw materials supplied from the captive sources, action was also taken
to procure pulpwood from Governmental sources like KFD, KFDC, KSFIC and
from the local farmers and other suppliers to the extent possible. The
extension of Farm Forestry Project has been continued for the benefit
of local farmers and institutions. About 6.35 lakhs polythene bagged
seedlings of improved varieties of Eucalyptus Acacia and other species
were sold to the beneficiaries at a subsidised price of 50 paise per
seedling. The demonstration plots over 39.64 Ha. were laid out in the
lands of 34 beneficiaries to educate the local farmers, students and
others about the method of raising high yielding exotic pulpwood
species. The company has also arranged to buy back the pulpwood from
local suppliers who have raised trees under Farm Forestry. The
activity of Farm Forestry apart from meeting a portion of raw materials
requirement of the mill has also generated a lot of goodwill towards
the company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE-I, which
form part of this report.
INDUSTRIAL RELATIONS:
The industrial relations have been cordial throughout the year. The
Company realizes the importance of the enhancement of the capabilities
of our human resources. Accordingly, a number of training programs were
conducted for different levels of workmen and officers.
FIXED DEPOSITS :
The Company's Fixed Deposits for the end of the year stood at Rs 165.83
lakhs compared to Rs 460.35 lakhs in the previous year.
DIRECTORS :
Sri. S. Parameshwarappa, Rtd., I.F.S., Sri. C. Shivashankar, and Sri.
M.C. Shetty, Directors of the Company, retire by rotation and are
eligible for reappointment at the Annual General Meeting.
DIRECTORS-RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed:
a) That the applicable accounting standards had been followed along
with proper explanation relating to material departures, if any;
b) That the selected accounting policies were applied consistently and
judgements 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;
c) 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
irregularities;
d) That the annual accounts were prepared for the financial year ended
31st March 2003 on a going concern basis.
AUDITORS:
a. As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s. Manian & Rao, Bangalore,
as Statutory Auditors of the Company, for the year ended 31.03.2003.
b. M/s. G.S.R & Associates, Cost Accountants, Mysore have been
appointed as Cost Auditors of the Company for the year 2002-03 by the
Board. The company has requested the Department of Company Affairs for
its approval on the appointment of the Cost Auditors.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs
or more per annum/Rs.2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report is enclosed herewith which forms part of
Directors Report. A Certificate from the auditor regarding compliance
of Corporate Governance as stipulated by clause 49 of the Listing
agreement is attached to this report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The Review of Accounts for the year ended 31.3.2003 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE-II.
16. ACKNOWLEDGEMENT :
The Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation to the valuable
contribution made in achieving uninterrupted production during the year
2002- 2003. Your Directors also thank the sugarcane growers for the
uninterrupted supply of sugarcane.
The Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, KSIIDC, etc., and IPCI and Banks.
The Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their confined support to the Company.
For and on behalf of the Board
Sd/-
BANGALORE (B.A.COUTINHO)
DATE: 29th July, 2003 CHAIRMAN & MANAGING DIRECTOR
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. ENERGY CONSERVATION :
1. Energy conservation measures taken:
a) Mills in-house energy conservation measures are listed below:
i. The company has engaged the services of TERI for studying the
Boilers, suitable fuels to achieve optimum thermal efficiency and least
fuel cost per tonne of steam. Study completed and detailed report
received & implemented.
ii. The company has engaged services of CII, Chennai to carryout the
compressed air and water audit in the mill and to suggest the savings
methods. Audit is in progress.
iii. Mill process water pumping station between Cultural Paper Mill and
Newsprint Mill inter-connected. This has resulted in stopping of 120 KW
rating pump reducing energy consumption.
iv. Paper Machines treated effluent recycling implemented reducing
water and energy consumption.
v. Various water recycling systems implemented. Water consumption per
tonne of paper brought down from 202 KL to 125 KL as compared to
previous year.
vi. Energy consumption for water pumping brought down from 10.21
million units to 9.24 million units as compared to previous year.
vii. Energy consumption per tonne of paper brought down from 2084 Unit
per tonne to 2048 Unit per tonne of paper during the current financial
year.
viii. Boiler Feed pumps modified, by changing the internals to increase
the capacity and to avoid additional pump running saving energy.
b) Additional investment and proposals, if any, being implemented for
conserving energy:
i) Colony drinking water pipeline re-routing with higher size is taken
up to save energy.
ii) Cooling Tower installation at Evaporator proposed to save energy
avoiding warm water recycling through waterworks.
iii) Pressure control valve for warm water return line installation
taken up to save energy.
iv) Replacement of Pith and Bagasse Blowers with belt conveyors taken
up conducting detailed study to save energy.
v) VFD for riverwater pump proposed to save energy and water.
vi) Carbon Trading initiated under Clean Development Mechanism and
energy saving projects.
vii) Bagasse drying system development initiated to improve Boiler
efficiency and save energy.
viii) Inter connection of Warm Water line to warm water pumps suction
initiated to save energy.
ix) Replacement of 12.5 MW old turbines initiated to improve in-house
power generation and energy efficiency.
x) Pumping of treated effluent to our nearby captive forest initiated
to use effluent and increase the forest raw material yield per hectare.
B. TECHNOLOGY ABSORPTION :
RESEARCH AND DEVELOPMENT:
a) Plant trials with Improved Acacia in CSRMP Pulping:
This raw material procured from the captive forests was found to be
advantageous in terms of lower specific power consumption while the
specific chemical consumptions were on par with those of regular Acacia
Auriculiformis. The strength properties of the pulp were better where
as yield was slightly lower by 1.7% when compared to regular. Acacia.
b) Plant scale trials with Pinus Careabea :
Pinus Careabea, grown in captive forests is used in the hard wood
chemical Pulp Street. This long fibred species has given pulp with
better strength properties (tearing strength in particular), compared
to Eucalyptus.
c) Plant Scale Trials with Digester Additive :
A suitable digester additive is identified for the hard wood street and
plant scale trials were conducted. The trials revealed that multiple
benefits like white liquor reduction and lower screen rejects could be
achieved. Longer trials are planned.
d) Plant scale trials with Direct Dyes :
A few direct dyes were tried and the results were to the expected
level. The use of these dyes is regularized/being regularized.
e) Hydrogen Peroxide Stabilizer :
A suitable Hydrogen Peroxide stabilizer is identified which is expected
to reduce the consumption of Hydrogen Peroxide to a tune of 10 to 15%
in the bleaching of captive mechanical pulp. Plant scale trials are
planned.
f) Digester Additive for bagasse Chemical Pulp Mill :
A suitable digester additive is identified for the bagasse Chemical
Pulp Mill. A few problems were faced during the short duration plant
scale trials. These problems are being sorted out and further trials
are planned.
C. FUTURE PLAN OF ACTION :
1. Seed Multiplication Programme :
The two year zonal trial under the Institute to Industry Programme of
the Sugar Cane Breeding Institute, Coimbatore has come to an end. Four
sugarcane varieties, Co 94005, Co 88025, Co 93009, Co 85019 have been
found to be promising in our farm. However, to establish the
suitability or otherwise of these varieties in various agro-climatic
conditions prevailing in our reserve area, we propose to take up trials
in the fields of farmers who come forward. V.C. Farm, Mandya has
supplied clones of twelve new varieties of sugarcane. All these cane
clones are under trial in our R & D Farm. We need to continue the
trials for one more year for drawing conclusions.
2. The aerated steam therapy unit is in operation in our R & D Farm.
Development of Foundation seed is proposed to be extended to wider area
of 10 acres of land in our R & D Farm.
3. In order to disseminate the latest technology a one-day sugarcane
seminar was conducted on the 18th November 2002 at MPM Kalyana Mantapa,
Paper Town and IFFCO, Bangalore had sponsored the seminar. Several
topics like sugarcane agronomic practices, fertilizer and Water
management, Pests and diseases of sugarcane etc., were discussed. A
group of 48 sugarcane growers and our mill Officers were sent on a
two-day technical tour to Bannari Amman Sugars, Nanjangud on 24th &
25"' April 2003 in order to study the various agronomic practices,
improved cane varieties grown in that area etc.
Sugar Mill Operations during 2002-03 :
A Area under sugarcane in our reserved area has registered an increase
from 12908 to 14910 acres. Due to scanty rainfall during 2001-02, the
area under paddy has registered a decrease while the area under freshly
planted cane has increased.
The cane area registered has shown a similar increase from 11075 acres
in the year 2001-02 to 12456 acres during 2002-03.
B. The command area of M/s Deve Sugars, Shimoga continues to be
temporarily allocated to our Sugar Mill.
C. The diversion of sugarcane to Jaggery was 11065 tonnes against 31595
tonnes during the year 2001-02.
D. This is the third time since inception that the sugar mill has
crushed more than five lakh tonnes of sugarcane, with 5,26,676 tonnes
at a recovery of 10.31 percent (crushing during 2001 -02 was 3,96,706
tonnes at a recovery of 10.37 percent).Sugar bagging has been the
highest ever in crushing season at 558380 quintals.
D. EXPENDITURE ON R&D DURING 2002-2003 : Rs.71.17 lakhs
E. Expenditure as a % of total turnover : 0.20%
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION : Nil
Mar 31, 2002
1. Your Directors have pleasure in presenting the 67th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2002.
2. FINANCIAL RESULTS:
The financial results for the year under review are as follows:
(Rs. in Lakhs)
Year Year
ended ended
31.3.2002 31.3.2001
Sales 27988 35748
Operating Profit(PBIDT) (-)451 3347
Interest 2760 1296
Profit before Depreciation (-)3211 2051
Depreciation 1534 1179
Profit before Tax (-) 4745 872
Deffered Tax-Income 1791 -
Provision for Tax - 76
Net Profit for the year (-) 2954 797
Balance brought forward from previous year 3301 2828
Profit available for appropriation 347 3625
Apportionment of profit for dividend - 324
Balance of Profit carried to Balance Sheet 347 3301
It may be noticed from the above that the Sales during the year have
been reduced from Rs. 357.48 Crores in the previous year to Rs. 279.88
Crores i. e., reduction of 22%. It may be noted that the reduction is
mainly on account of reduction in sale of newsprint which has been
reduced almost by 47% compared to previous year. In case of both
Writing & Printing Paper (WPP) and Sugar there is an increase in sales
compared to previous year. The sale of WPP has been increased to Rs. 95
crores compared to Rs. 82 crores, an increase of 16%. Similarly, the
sugar sales has been increased from Rs. 53 crores in the previous year
to Rs. 64 crores in the current year, an increase of 21%. The increase
in sale of Sugar is mainly on account of export of 20,637 MTs of sugar
during the year.
However, the company has incurred an operating loss of Rs. 4.51 crores
and a net loss of Rs. 29.54 crores during the year compared to
operating profit of Rs. 33.47 crores and net profit of Rs. 7.97 crores
during the last year. This is mainly on account of adverse market
conditions for sale of all the finished products by the Company, viz.,
Writing & Printing Paper, Newsprint and Sugar. On segment wise review
of the operations of the Company, it is noticed that the Company has
incurred losses from both newsprint and sugar divisions, with nominal
profit from writing & printing division. The loss in the case of
newsprint division was in the order of Rs. 32.80 crores and that of
sugar division Rs. 9.90 crores. The nominal profit from writing &
printing paper division was in the order of Rs. 70 lakhs.
3. REVIEW OF OPERATIONS
The market for Writing, Printing & Packing paper during the period
2001-2002 was sluggish. The situation was further aggravated with
manufacturers of Newsprint shifting over to Writing, Printing & Packing
paper due to adverse market conditions for Newsprint. This, in turn,
did not provide any scope for price increase but on the contrary,
prices had to be brought down indirectly by introduction of Special
Discounts and Quantity Discounts in line with competitors. In view of
supply position in the country being in excess of demand, the price
realization were on the lower side with intense competition between the
manufacturers of both in `A Grade and `B Grade sectors as a result of
which customers enjoyed low pricing and attractive credit facilities.
An All India Dealers Meet of MPM for Writing, Printing and Packing
paper, Dealers was organized on 04-6-2001 at Bangalore so as to
impress upon the dealers for sale of MPM paper in the depressed market
conditions. Despite this situation, it was possible for the company to
produce 34,453 MT of writing & printing paper and sold 30,733 MT during
the year, compared to production of 29,188 MT and sale of 26,260 MT in
the previous year and made a nominal profit of Rs. 70 lakhs as
indicated above.
Similarly, the market for indigenous Newsprint was sluggish throughout
the year and started gradually sliding down from the beginning of the
year itself as the availability of imported Newsprint increased with
liberal pricing and credit facilities. The Overseas suppliers slashed
the prices of imported Newsprint. In line with the price trend of
imported Newsprint, the Company also brought down the prices of its
Newsprint by a total of Rs. 7850/- per MT between the period July 2001
and March 2002, with an average realization of Rs. 22,845/- per MT for
the year compared to Rs. 25,706/- per MT in the previous year. Despite
this, the company had to cut down on production of Newsprint due to low
sales volume on account of huge stocks of imported Newsprint in the
Godowns of our major newsprint customers. The production of newsprint
during the year was in the order of 56,067 MT with sale of 51,853 MT
compared to production of 87,578 MT and sale of 86,015 MT in the
previous year. It was not possible to utilize the entire capacity
during the year in view of adverse market conditions as indicated
above.
As in the case of writing & printing paper and newsprint, the market
for sugar was also not encouraging during the year. The Government of
India reduced the sale quota from 85:15 to 90:10 for free sale to levy
sale in line with its proposed decontrol in sugar market. In addition
to this, the Government of India permitted export of sugar to help to
realize funds through export for payment of farmers dues on time. With
the depressed market for both writing & printing paper and newsprint,
the financial position of the company was worsened and it had become
extremely difficult for payment to farmers as well. The company,
therefore, had to take advantage of the export permissions given by the
Government of India and exported sugar in the order of 20,637 MT during
the year. The company had crushed a quantity of 3,96,706 MT of
sugarcane during the year with a recovery of 10.37% compared to
sugarcane crushing of 4,23,782 MT with a recovery of 10.65% during the
previous year. The reduction in the crushing of sugarcane was mainly on
account of sharp decline in the area under sugarcane from 17,497 acres
in the previous year to 13,763 acres during the year. The reserved area
of Devi Sugars continued to be allocated to MPM during the year as
well. The average realization on sale of sugar was Rs. 11,899/- per
MT during the year compared to Rs. 12,328 per MT in the previous year.
In spite of depressed market for all the finished products of the
company, the company had generated 1838 lakh units of power during the
year compared to 2020 lakh units in the previous year. The power
generated is more than its requirement and 155.88 lakh units were
exported to KPTCL during the year. The average cost of captive
generation of power was Rs. 3.40 per unit compared to average cost of
Rs. 4.36 per unit supplied by KPTCL.
4. PACKAGE OF RELIEFS & CONCESSIONS:
Another important factor the Directors desire to bring to the notice of
the members is that the company has successfully implemented the
rehabilitation package approved by IDBI for a period of 10 years from
1993 to 2002. The state government, banks and financial institutions
have fully allowed the sacrifices as per the rehabilitation package as
applicable to them. The Board after a detailed review of the working of
the company and the market for its finished products, has decided to
request the government to extend the package of reliefs for a period of
3 years from 2002 to 2005. The government has since considered the same
and has only extended the benefit of 50% royalty on purchase of pulp
wood through governmental sources for a period of one year, i. e., 2002
to 2003.
5. PROJECT WORKS:
(i) Cleaner Production of Pulp and Paper:
This project had been taken up under the financial assistance from
Royal Government of Netherlands at a cost of Rs. 16.65 crores. The
project interalia covered up-gradation of effluent treatment plant,
implementation of energy conservation projects, water conservation
projects, reduction in consumption of bleaching chemicals and
installation of equipment for better monitoring of process and
environment. With the delay in disbursement of pre-finance and claims
by Royal Government of Netherlands, the project could not be completed
on time. Also, the Royal Government of Netherlands did not allow MPM to
reduce the grant earmarked for bench marking/dissemination activities
which was in the order of Rs. 3.17 crores as the company was unable to
spend this amount which is almost equivalent to 30% of the financial
assistance given by Royal Netherlands Government on dissemination
activities due to its non-profitable operations during the year. The
Company has detailed meeting at the level of Government of India and
Royal Government of Netherlands and after detailed discussions the
project has been foreclosed with activities completed as at the end of
March 2001. Balance activities covered under this Dutch Scheme are
taken up on need basis under short term investment proposals of the
Company.
(ii) Energy Conservation Project:
The Energy Conservation Project in the key areas comprising of (a)
Chemical Recovery Boiler and associated plants, (b) Evaporator, & (c)
Cooling Tower of steam turbine generator amounting to Rs. 16.79 crores
has been taken up with the financial assistance of IREDA of Rs. 11.40
crores. The project is being implemented with the technical assistance
of Development Consultants Limited, Calcutta, who have been appointed
as turnkey consultants for the Company on this project.
(iii) Short Term Investment Proposals:
The Company could not take up the entire Short Term Investments of Rs.
44.63 crores as envisaged earlier keeping in view of the current
financials of the Company. The sub-committee of the Board on a regular
review of these investments has now finally decided to take up short
term investments comprising of 21 items aggregating to Rs. 26.53
crores. These investments are categorized into two categories. Under
the first category investments for critical maintenance of piant &
machinery and under the second category investments aimed for
profitability with reduced pay back period are taken up. The
investments for critical maintenance of some spares and rehabilitation
of distressed civil structures has become an absolute necessity for the
company to continue the company as an on going concern. The investments
aimed at profitability will add to the profitability of the company in
the coming years. The projects are under various stages of
implementation.
6. CAPTIVE FORESTRY:
It is heartening to note and bring to the notice of the members that
Government of India has finally approved the Management Plan of the
company on 10.8.2001 for a period of 8 years from 2001 to 2008. It was
possible to get the Management Plant approved by the Government of
India after pre-payment of CDC loan of Rs. 36.94 crores which was
settled by way of One Time Settlement of Rs. 25.19 crores. With the
approval of Management Plan, it is now expected that the Public
Interest Litigation pending in Karnataka High Court could be disposed
off favourably in favour of the Company at the earliest. Approval of
Management Plan will help the company to maximize its yield from its
own captive forestry which otherwise was purchased from the
governmental and other sources in the last four years.
The company has raised captive forestry in harvested areas to the
extent of 1554.30 ha. during the year with species of Eucalyptus,
Acacia and Pines. The hybrid clonal plantations of Acacia was also
raised to the extent of 975.75 ha. which are very high yielding species
introduced by the Forest Research Division of the Company.
The extraction of captive plantations raised during the year 1993-94
was taken up during the year and about 80,733 MT of pulp wood out of
2405 ha. of land was supplied from the captive forestry to the mills.
To augment the short fall of raw-material supplied from the captive
sources, action was taken to procure the same from governmental sources
like, KFD, KFDC and KSFIC and from the local farmers to the extent
possible.
The extension of Farm Forestry Project has been continued for the
benefit of local farmers and institutions. About 12.5 lakh polythene
bagged seedlings of improved varieties of Eucalyptus, Acacia and other
species were sold to the beneficiaries at a subsidized price of 40
paise per seedling. The Demonstration plots over 52.20 ha. were laid
out in the lands of 43 beneficiaries to educate
the local farmers, students and others about the method of raising high
yielding exotic pulpwood species. The company has also arranged to buy
back the pulp wood from local farmers and institutions who have raised
trees under Farm Forestry Scheme.
7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are furnished at ANNEXURE-1, which
form part of this report.
8. INDUSTRIAL RELATIONS:
The industrial relations have been cordial throughout the year. The
Company realizes the importance of the enhancement of the capabilities
of our human resources. Accordingly, a number of training programs
were conducted for different levels of workmen and officers.
9. FIXED DEPOSITS:
The Companys Fixed Deposits for the end of the year stood at Rs.
460.35 lakhs compared to Rs. 664.06 lakhs in the previous year..
Deposits matured and not claimed amounted to Rs. 6.40 lakhs as at
31.3.2002.
10. DIRECTORS:
Sri Narendra M Kheny, Sri B. U. Chengappa and Sri G. V. Venkanna
Directors of the Company, retire by rotation and are eligible for
reappointment at the Annual General Meeting.
11. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed:
a) That the applicable accounting standards had been followed along
with proper explanation relating to material departures, if any;
b) That the selected accounting policies were applied consistently and
judgements 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;
c) 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
irregularities;
d) That the annual accounts were prepared for the financial year ended
31st March 2002 on a going concern basis.
12. AUDITORS:
a) As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept of Company Affairs, appointed M/s. Patel Mohan Ramesh &
Co., Bangalore, as Statutory Auditors of the Company, for the year
ended 31.03.2002.
b) M/s G. S. R & Associates, Cost Accountants Mysore, have been
appointed as Cost Auditors of the Company for the year 2001-02 by the
Board. The company has requested the Department of Company Affairs for
its approval on the appointment of the Cost Auditors.
13. PARTICULARS OF EMPLOYEES:
None of the employees of the Company have drawn salary of Rs. 24 lakhs
or more per annum/Rs. 2 lakhs or more per month during the year.
Therefore, the particulars of employees required under Section 217(2A)
of the Companies Act, 1956 are not furnished.
14. CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the stock
exchanges, a report on Corporate Governance together with Management
Discussion & Analysis Report and certificate of Auditors are given
separately which forms part of the Annual report.
15. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The Review of Accounts for the year ended 31.3.2002 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE -
II.
16. ACKNOWLEDGEMENT:
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees and place on record their appreciation to the valuable
contribution made in achieving uninterrupted production during year
2001-2002.
Your Directors thank the sugarcane growers for the uninterrupted supply
of sugarcane.
Your Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution
Control Board, Directorate of Sugar, KSBPE, KSSIDC, KSIIDC, etc., and
IFCI and Banks.
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments, Controller of Aid
Accounts & Audit, Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their continued support to the Company.
Your Directors are also thankful to Japan Bank for International
Co-operation, (JBIC) Japan, Royal Government of Netherlands and the
Commonwealth Development Corporation, London, for their financial
assistance and support to the Company.
ANNEXURE TO DIRECTORS REPORT
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. ENERGY CONSERVATION:
1. Energy Conservation measures taken:
(a) Mills in-house energy conservation measures are listed below:
i) The Company had engaged the services of TERI for studying the
boilers and fuels and recommend the optimum fuel mix to achieve the
highest thermal efficiency with least cost. The study is in progress.
ii) The complete system required for the utilisation of bagasse as fuel
to boilers is procured and installed. By this, the excess bagasse could
be used in Boilers regularly.
iii) Blow down heat recovery system for all the boilers is implemented.
iv) Vapour extraction hood for the unbleached decker in hard wood
chemical pulp mill is installed. This facilitated the use of water at
higher temperature to improve the washing of pulp and reduce the Alkali
losses as well as the bleaching chemical consumption.
v) Several variable frequency drives have been installed for various
equipment in the mill like bleach washer and decker in CSRMP etc., to
reduce the energy consumption.
vi) A separate booster pump had been installed for supplying cooling
water to the surface condenser in evaporators. Due to this the running
of a high capacity pump could be avoided in Water Works which resulted
in savings in energy as well as water.
vii) Uhle Box was installed for the 2nd press in PM-1 and due to this
one vacuum pump could be stopped with resultant savings in energy.
viii) Water separator was installed in the vacuum Line in PM - 3 which
resulted in reduction in the electrical load on vacuum pump and thus
savings in energy.
ix) A 11 K W pump had been installed in PM - 4 for the press pit which
will be in operation during the regular machine run times. The original
big pump runs only when sheet break occurs. This helped in conserving
energy.
(b) Additional investment and proposals, if any, being implemented for
conserving energy ;
i) Up-gradation of Evaporator Plant is planned under the IREDA Scheme.
This is likely to result in savings in thermal energy due to improved
steam economy.
ii) A scheme is prepared and is under implementation to recycle the
clarified effluent of non coloured stream from ETP to water works. This
helps to conserve water and energy.
iii) Replacement of pneumatic bagasse blowing system with conventional
belt conveying system is planned to reduce energy consumption.
iv) Evaporator surface condenser water reuse schemes are made and are
under implementation.
B. TECHNOLOGY ABSORPTION:
RESEARCH AND DEVELOPMENT:
a. Under the Dutch Assisted Scheme for cleaner production technology in
the area of bleaching alternatives, unbleached chemical pulps of
bagasse and hard woods are sent to CPPRI, Saharanpur, to take up the
study.
The oxygen treated pulps have the following advantages over the
unbleached pulps:
Reduced Kappa Nos. and hence bleach chemicals reduction (a reduction in
total chlorine by 2.9% & 1.2% and alkali by 0.5% for Bamboo/Hardwood
Pulp and Bagasse Pulp respectively).
b. Various Acacia Hybrid species of raw materials received from the
captive Forest plantations are being tested for their characteristics
in laboratory pulping studies. The species like Acacia K-45, Acacia
K040, Acacia B-12 are tried and the results indicate that the above
species are better compared to regular Acacia Auriculiformis in terms
of yield, chemical consumption and strength properties.
c. For the bleaching of Cold Soda Pulp a relation had been developed
for the peroxide addition and the total alkalinity which is helpful in
maximising the brightness response and reduce the residual peroxide in
the pulp ;
d. Direct dyes have been identified which could replace the in use dyes
in the production of coloured papers. The advantage of the direct dyes
is that generation of coloured effluent is avoided due to which paper
machine back water can be recycled thus reducing the hydraulic as well
as pollution load to Effluent Treatment Plant (ETP). Plant scale trials
are planned ;
e. A suitable Digester Additive had been identified which helps in not
only reducing the white liquor consumption but also increases the yield
and quality of pulp. Plant scale trials are planned ;
f. Poly Aluminium Chloride was tried in laboratory for newsprint and
cultural paper furnish and was found to be an ideal substitute for alum
with an added advantage of higher brightness. Plant scale trials
conducted confirmed the same.
C. FUTURE PLAN OF ACTION:
Cane Development:
1. Seed Multiplication Programme:
New sugarcane varieties like Co-7704, Co-7804 and Co-8371 released for
cultivation in the Reserve area. Zonal trials of other new varieties
like Co-93004, Co-93005, Co-93009 and Co-85019 undertaken in the R&D
farm under the guidance of the Sugarcane Breeding Institute,
Coimbatore. These new varieites are expected to be released in our
Reserve area for commercial propagation next year.
2. Aerated Steam Therapy unit has since been installed at the R&D Farm.
Development of foundation seed in R&D farm, Kharehalli with the help of
this unit, our farm has been commenced this year.
3. Conducting Sugarcane Seminars and filed days for dissemination of
technology among cane growers will be continued.
Energy Conservation measures proposed:
A. Single Entry multi jet condenser for Evaporator:
A single entry multi jet condenser was installed in the off season of
2001 in place of the rain and shower condenser. As a result of this, a
pump driven by a 110 KW motor could be stopped. The energy saving
achieved is to the extent of 0.95 KWH per tonne of cane crushed.
B. Reduction of raw water consumption:
In order to reduce the consumption of raw water used in sugar mill, the
following measures were taken:
i) Use of cooled water from the cold water channel of the cooling
towers in place of raw water for the Oliver filter condensers.
ii) Use of pure condensate at 70 degree to 75 degree C directly for
maceration at the mill house instead of mixing with raw water and
reducing the temperature of maceration water to 60 degree C.
iii) Leading the crystalliser cooling water to the cooling tower
circuit instead of draining the same.
All the above have reduced raw water consumption by about 300 m3/day.
D. EXPENDITURE ON R&D DURING 2001-2002 - Rs. 68.48 lakhs
E. EXPENDITURE AS A % OF TOTAL TURNOVER: 0.24%
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
1. Usage of white liquor as a partial substitute to Caustic Soda in the
Cold Soda Pulp Plant for the soaking of chips without causing quality
problems is possible as observed during plant scale trials provided the
sulphidity levels are monitored and kept at a lower level.
2. ORP Controls had been installed in the chlorination of Hardwood and
Bagasse Chemical Pulp Mills to achieve uniform chlorination of pulps.
These are found to be working satisfactorily. The quality of pulps
subsequent to this are found to be more uniform.
3. Bagasse yard effluent which is one of the major sources of Pollution
is being recycled to the wet bulk storage yard after neutralization and
clarification. This has helped in reducing the water consumption in
Bagasse Chemical Pulp Mill and the hydraulic load on Effluent Treatment
Plant.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
1999-00 2000-01 2001-02
1. FOREIGN EXCHANGE EARNINGS - - -
2. FOREIGN EXCHANGE OUTGO DURING THE FINANCIAL YEAR ENDING 31-03-2002
(a) Imports (C. I. F. basis)
(i) Raw Materials 2593.80 4162.76 2985.95
(ii) Components, Spare Parts, Chemicals 241.38 444.49 359.76
(iii) Capital Goods - - -
(b) Other than Imports
(i) Travel - 3.11 -
(ii) Interest on CDC Loan 143.86 123.30 -
(iii) Repayment CDC Loan 364.86 - 2519.40
iv) Services 10.48 12.35 -
For and on behalf of the Board
Sd/- (B. A. COUTINHO)
CHAIRMAN & MANAGING DIRECTOR
BANGALORE, DATE: 8th October 2002
Mar 31, 2001
1. Your Directors have pleasure in presenting the 66th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 2001.
2. FINANCIAL RESULTS :
The financial results for the year under review are as follows:
(Rs. in Lakhs)
31.3.2001 31.3.2000
Sales 35748 27047
Operating Profit 3402 1662
Interest 1350 559
Profit before Depreciation 2052 1103
Depreciation 1179 936
Profit before Tax 873 167
Provision for Tax 76 -
Profit for the year 797 167
Balance brought forward from previous year 2828 2661
Profit available for appropriation 3625 2828
Proposed Dividend including Dividend Tax 324 -
Balance Carried to Balance Sheet 3301 -
It may be noticed from the above that there is an overall increase in
the sales from Rs. 270.47 crores in 1999-2000 to Rs. 357.48 crores in
2000-01, an increase by about 32%. The increase in sales is mainly on
account of increase in turnover in Newsprint and WPP.
The sale of newsprint has been increased from Rs. 149.46 crores to Rs.
221.11 crores, an increase by about 48%. Also, the sale ofWPP has been
increased from Rs. 69.04 crores to Rs. 81.55 crores, an increase of
about 18%. There is a marginal increase in sale of Sugar from Rs.
50.72 crores to Rs. 52.72 crores, an increase of about 4%.
The market for indigenous Newsprint was favourable during the year
2000-2001 and the Company was able to increase the prices of newsprint
by a total of Rs. 7,500/- per MT between April 2000 and January 2001.
This was mainly due to reduced availability of imported Newsprint as
also due to its higher International prices. However, from February
2001, the market for Newsprint started gradually declining and the
availability of imported Newsprint has considerably improved. The
international prices have also come down and inturn has affected the
Indigenous Newsprint. The Company envisages drop in prices of newsprint
in the coming months as well.
The beginning of the financiai year witnessed better market prospects
for Writing, Printing and Packing Paper in view of which, the Company
was able to effect a price increase of Rs. 3,750/- per MT between April
2000 and September 2000. However, the sluggishness in the market
conditions for WPP aggravated after September, 2000. Hence, there was
no scope for any further price increase.
Competitors were offering attractive incentives and discounts to
increase the sales. However, MPM did not offer any discount nor was any
price reduction effected. In view of supply exceeding demand, price
reduction by offering discounts becomes inevitable in the coming
months.
During the year, the Sugar industry is understood to have come up with
bumper production with a carry forward stock of around 10 million
tonnes from the previous Season. MPM produced around 45,340 MTs of
Sugar and sold around 26,073 MTs of Free-sale quantity and 16,693 MTs
of Levy quantity during the year.
Sugar is available in plenty in the country and the Government is
moving in the direction of de-controlling the Sugar Industry. The
Mahajan Committee appointed by the Govt. has recommended Govt. of
India to exempt Sugar Industry for giving levy component and also to
de-control Sugar in phased manner. As a result, with effect from 1st
February 2001, the Government has changed the Free-sale/Levy Sale
ratio from 70:30 to 85:15. As the Country is carrying huge stocks,
Govt. has removed export restrictions and Mills are free to export
Sugar. Accordingly, MPM is also exploring the possibility of exporting
Sugar in the coming days.
3. DIVIDEND :
Your Directors are pleased to recommend a dividend of 2.5% on the
Equity Shares for the Financial Year ended 31st March, 2001.
4. OPERATIONS :
The production of both Newsprint (NP) and Cultural Papers (CP) for the
year 2000-01 was very good. NP production was 87,578 MT as against
69,428 MT in 1999-2000. CP Production was 29,188 MT as against 27,482
MT in 1999-2000. Thus, there was 100% capacity utilisation.
The captive power generation was an all time high at 2020 lakh units in
2000-2001 as against 1555 lakh units in 1999-2000. This accounts for an
increase of 30% over the previous year. The captive power generation as
a percentage to total power consumption was 79.56% in 2000-2001 as
against 68.82% in 1999-2000. An increase in power generation was
possible on account of better operations of Boilers and also due to the
installation of 16 MW T G set under OECF Project. The average cost of
captive generation of power was Rs. 2.66 per unit in 2000-01 and the
cost per unit compared very favourably with the purchased power cost of
Rs. 4.01 per unit from KPTCL in 2000-01.
Various steps were taken towards cost reduction which yielded
significant returns.
5. PROJECT WORKS :
(A) Externally Aided Projects :
(i) Cleaner production of pulp and paper :
This project has been taken up under the financial assistance from the
Royal Government of Netherlands at a cost of Rs. 16.65 crores and is
under progress. It was contemplated under this project to upgrade our
Effluent Treatment Plant, implementation of Energy Conservation
Projects, help-in conservation of water, reduction in consumption of
bleaching chemicals and better monitoring of process and environment.
This project is expected to be completed by the end of December, 2001.
(ii) Bagasse burning in boilers :
This project was contemplated under two phases. The first phase
comprised to reduce the consumption of coal in our CF boilers, a
separate bagasse handling and blowing system has been installed. This
is primarily to fire bagasse into the new CFBC boiler. It is also
contemplated to burn bagasse and pith in CFBC boilers in the second
phase by modifying the existing screw conveyor system into "return
bagasse conveying system'.
(B) OTHER PROJECTS :
In order to utilise captive pine wood eftictively, two digesters and a
blow tank, which were available in the Mill, have been installed in the
hardwood chemical pulp mill area at a cost of Rs. 1.66 crores and the
project has been completed.
(C) PROJECTS UNDER CONSIDERATION :
it is proposed for Short Term investment in the order of Rs. 45 crores
which are in the nature of critical maintenance spares, rehabilitation
of distressed civil structures
and certain proposals are for improving runnability of the present
equipements, quality and towards conservation of energy and chemicals.
6. SUGAR MILL :
The area under cane in our Reserve Area has declined during the year
from 13,799 acres to 11,344 acres mainly due to high prevailing price
of paddy. The command area of Devi Sugars Ltd., continues to be
temporarily allocated to our mill and diversion of cane to jaggery is
24,000 MT agianst 39,000 MT last year.
An all time high Recovery of 10.65% has been achieved this year as
against 10.04% during last year. The major reasons for the high
recovery are increased proportion of high sugar, early maturing cane
varieties like CO 7704, CO 7804 and midlate varieties like CO 8371 etc.
The Aerated Steam Therapy unit necessary for growing disease-free seed
has been installed at our R & D Farm, Karehalli.The unit has been on
trial run and is in working order. We propose to treat more seed this
year before planting.
Under the Institute to Industry Programme of the Sugarcane Breeding
Institute, Coimbatore, nine varieties of sugarcane have been planted
for conducting varietal trials with a view to select promising
sugarcane varieties for our zone.
In order to improve the returns to the cane grower, a spacing trial is
under way in the R&D Farm. Sugarcane has been planted with inter row
spacing varying from 2 to 6 Ft. The 5 Ft. inter row spacing which is
recommended for machanization of harvesting and some other operation
like, weeding etc., is quite promising.
7. CAPTIVE FORESTRY :
The Forest Wing has successfully raised Captive Plantations in
replanting areas after harvesting the standing crops in piantations
raised in degrated forest land and C & D class of lands leased by the
Govt. of Karnataka.
During the year 2000-2001, the working of the Forest Division was
smoothened after the grant of interim order from the Hon'ble High Court
of Karnataka, Bangaiore dated 15.12.1999 to extract the plantations
raised in 1991 & 1992. Further, on 24.01.2001 the Hon'ble High Court of
Karnataka has again granted permission to cut and transport plantations
raised in 1993 but the time limit was restricted upto 31st March, 2001
with a condition to pay back loan availed from C.D.C. and to get the
Management Plan approved by the Chief Conservator of Forests (Central),
Govt. of India, New Delhi after obtaining the forest land free from
encumbrances.
The Forest Wing has raised Captive Plantations in harvested areas over
an extent of 1184.70 Ha. during 2000 rains with species of Eucalyptus,
Acacia and Pines with due permission from the Hon'ble High Court.
Clonal Plantations of Acacia hybrid was raised over an extent of 536.70
Ha. which is very high yielding species introduced by the Forest
Research Division of the Company.
The extraction of Captive Plantations raised in 1991, 1992 & 1993 was
taken up during 2000-2001 and about 1,04,683 MT of debarked pulpwood
was supplied to the Mill from 3286.95 Ha. of plantation areas. An
extent of 603.50 Ha. of plantations raised in 1991 & 1992 are handed
over to the Karnataka Forest Department towards the lease rent as per
lease agreement. A quantity of more than 15,000 MT of firewood in the
form of lops and tops were allowed to be collected by local villagers
from Captive Plantations after harvesting the pulp wood by the Company.
To augment the shorfall of raw material supply from the captive source,
action has been taken to procure the pulpwood from Govt. organisations
like M/s. Karnataka Forest Development Corporation Ltd., and M/s.
Karnataka State Forest Industries Corporation Ltd., for which the
Government has extended subsidy as a rehabilitation package to MPM.
The Extension Farm Forestry Project is being continued by the Forest
Wing for the benefit of local farmers and in turn to the benefit of the
Company. About 13 lakhs seedlings of high yielding pulpwood species
were sold to the beneficiaries at a subsidised price of 40 paise per
seedling and demonstration plots over an extent of 50.40 Ha. were laid
out in the lands of 42 beneficiaries to educate the local farmers and
others about the method of raising high yielding exotic species. The
Company has arranged to buy back the pulpwood from the local farmers
and others who have raised trees under Farm Forestry Scheme.
8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO :
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are given in Annexure-I, which forms
part of this report.
9. INDUSTRIAL RELATIONS :
The industrial relations have been cordial throughout the year.
10. FIXED DEPOSITS :
The Company's Fixed Deposits for the year stood at Rs. 664.06 lakhs.
Deposits matured and not claimed amounted to Rs. 6.40 lakhs as on
31.03.2001.
11. DIRECTORS :
Sri V.D. Hegde, Sri D.H. Chebbi and Sri M. Chandrashekar Shetty
Directors of the Company, retire by rotation and are eligible for
reappointment at this meeting.
12. DIRECTORS' RESPONSIBILITY STATEMENT :
Your Directors' would like to inform members that the Audited Accounts
contaning the financial statements for the year 2000-2001 are in full
conformity with the requirement of the Act and they believe that the
financial statements reflect fairly the form and substance of
transactions carried out during the year and reasonably present the
Company's financial condition and results of operations. These
financial statements are audited by the Statutory Auditors M/s. Patel
Mohan Ramesh & Co.
Your Directors further confirm that:
i. In the preparation of annual accounts, applicable accounting
standards have been followed.
ii. The accounting policies are consistently applied and reasonable,
prudent judgement and estimates are 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.
iii. That Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. That the Directors had prepared the annual accounts on a going
concern basis;
The Company's Internal Auditors have conducted periodic audit to
provide reasonable assurance that the Company's established policies
and procedures have been followed. The Audit Committee constituted by
the Board meets once in a quarter to review internal control and
financial reporting issues.
13. AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept. of Company Affairs, appointed M/s. Patel Mohan Ramesh &
Co., Bangalore, Auditors of the Company for the year ended 31.03.2001.
14. PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary more than Rs. 12
lakhs per annum during the year. Therefore, the particulars of
employees required under Section 217(2A) of the Companies Act, 1956,
are not furnished.
15. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Account for the year ended 31.03.2001 by the Comptroller
and Auditor General of India is attached to the report at ANNEXTURE-III
16. ACKNOWLEDGEMENTS :
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees in achieving production during year 2000- 2001. Your
Directors thank the sugarcane growers for the uninterrupted supply of
sugarcane.
Your Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, etc., and Financial Institutions
and Banks.
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments including Bureau of
Industrial Costs and Prices, Controller of Aid Accounts & Audit,
Registrar for Newspapers, Ministry of Railways, Department of Coal,
etc., for their continued support to the Company.
Your Directors are also thankful to Japan Bank for International
Co-operation, (JBIC) Japan, Royal Government of Netherlands and the
Commonwealth Development Corporation, London, for their financial
assistance and support to the Company.
For and on behalf of the Board
BRAHM DUTT
CHAIRMAN & MANAGING DIRECTOR
BANGALORE
DATE: 28.07.2001
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES,1988
A. ENERGY CONSERVATION :
1. Energy Conservation measures taken :
a) Mills' in-house energy conservation measures are listed below :
(i) Continued usage of high calorific value and low ash coal helped in
reducing the steam cost.
(ii) Bagasse as a fuel to boilers : The system had partially been
procured and installed. By this, the excess bagasse available can be
blown to the boilers.
(iii) Variable frequency drive systems were installed for several
equipments in various departments like ID Fans in boilers, due to which
considerable energy could be saved
(iv) Insulation of tankages, piping etc., : Thermal insulation of tanks
and piping etc., was carried out under the Dutch assisted scheme due to
whcih steam consumption in several modules could be reduced.
(v) The feed chutes and the feeding systems of secondary refiners in
the CSRMP Plant were modified to improve the through-put of the
refiners, which resulted in saving considerable electrical energy.
(vi) Save all for PM-1&2 are installed. As expected these units are
found to be not only useful in recovering valuable fibre but also
conserving the water as the clarity of the back water generated was
satisfactory for recycling.Thus, not only the load on Effluent
Treatment Plant is reduced but also energy is saved in pumping of
water.
(vii) A process modification was carried out in CSRMP Plant by way of
introducing a peroxide bleaching stage in between primary and secondary
refining of the stock, as it is expected to reduce the power
consumption. Though, some savings in energy could be noticed, the whole
system is being monitored to evaluate the overall economics of the
implementation of the scheme.
(viii) Several water re-cycling schemes are implemented in all the
modules of the mill in order to conserve water and at the same time
reduce the hydraulic load on the Effluent Treatment Plant.
(ix) Additional Digesters and blow tank availble in the mill are
installed in hard wood chemical pulp mill to fecilitate the separate
cooking of pines and blend that pulp with eucalyptus pulp in required
proportion in order to overcome the problems of quality variations.
(x) With the better performance of the turbo generators and boilers,
the captive power generation was 79.56% of the total requirement of the
mill compared to 68.82% for the year 1999-2000. A record captive
generation of 20,20,56,360 KWH was achieved for the year compared to
the previous best of 15,56,00,000 KWH achieved during the year
1999-2000.
(xi) 52" refiner plates are being used in CSRMP in place of 48" plates
as they are found to be more energy efficient.
b) Additional investment and proposals, if any, being implemented for
conserving energy :
(i) Blow down heat recovery system for all the boilers is under
implementation.
(ii) Vapour extraction hood for the unbleached decker in hard wood
chemical pulp mill has been installed. This is expected to improve the
washing efficiency as water at higher temperature can be used and thus
help in reducing the chemical losses and also the bleaching chemical
consumption,
(iii) Additional water conservation schemes are under implementation,
which are expected to not only reduce the water consumption and thus
the energy consumption but also reduce the load on effluent treatment
plant.
B. TECHNOLOGY ABSORPTION :
RESEARCH AND DEVELOPMENT :
(a) Enzyme bleaching trials were conducted in the laboratory under the
Dutch assisted scheme for cleaner technology in the area of alternate
chemicals for bleaching. The laboratory trials were found to be
encouraging in terms of reduction in elemental chlorine and Hypo
consumption. Based on the results a plant scale trials was conducted
using the enzyme supplied by M/s Esvin Bio Systems, Chennai, at both
prechlorination stage and immediately after chlorination. It was found
that about 20% of elemental chlorine consumption can be reduced by the
use of enzyme with the corresponding improvements in the quality of the
effluent. However, reduction in Hypo could not be achieved. Further,
iab trials with the enzymes of other suppliers are under way
(b) Oxygen bleaching trial at CPPRI : Under the Dutch assisted scheme
for cleaner production technology in the area of bleaching
alternatives, unbleached chemical pulps of bagasse and hard woods are
sent to CPPRI to take up the study The results of the study are
awaited.
(c) Acacia Hybrid raw material received from the captive forest
plantations was tested for its characteristics by conducting laboratory
pulping studies. It was found that, though the yield of Acacia Hybrid
is less than regular Acacia Auriculiformis by about 5%, it is
comparable with Acacia Auriculiformis in terms of chemicals consumption
and strength properties of the mechanical pulp. As the output of Acacia
Hybrid is much higher than Acacia Auriculiformis per hectare, Acacia
Hybrid could be a potential raw material for the future. A two day
plant scale trial with this raw material in CSRMP confirmed the above
findings.
(d) Colour removal studies of Brown stock washer filtrate of Cold Soda
Refined Mechanical Pulp Mill.
i) Samples of BSW filtrate along with other effluents from the mill
were sent to National Chemical Laboratory, Pune for carrying out colour
removal studies. The results indicate that the colour removal costs are
quite expensive.
ii) Several studies were taken up for removal of colour from the BSW
filtrate of CSRMP Plant. It was found that the cost of colour removal
is quite high by using conventional chemicals and additives like Alum,
Hydrogen Peroxide etc., Further trials are under way.
(e) Usage of white liquor in Cold Soda Refined Mechanical Pulp Plant:
White liquor was used as a substitute for caustic soda lye in the
Mechanical Pulping of Acacia chips in the laboratory. The results
indicated that the unbleached pulp brightness was lower by 3 points and
bleached puip brightness was lower by 1.5 points when compared to the
usage of caustic soda lye. Plant scale trials with whiteliquor as
partial substitute to CS Lye, taken up on a couple of occasions,
remained inconclusive due to inconsistent results. Further trails are
planned.
C. FUTURE PLAN OF ACTION :
Cane Development :
1. Tissue Culture :
It is proposed to grow tissue culture seeds in our Farm in order to
have an option for rapid multiplication of such of those varieties as
may prove promising in our Command Area.
2. Single Budded Setts :
In order to reduce the time required for germination in the field, it
is proposed to adopt the technique of raising Single Budded setts in
our R & D Farm, Karehalli in poly bags.
3. In order to disseminate technical information to farmers, it is
proposed to conduct seminars and field days.
4. Raising of suitable inter crops/companion crops with a view to
reduce the cost of cultivation is also proposed.
Energy Conservation Measures Taken in the Sugar Mill :
The Rain & Shower condenser of the evaporator set is being replaced
with a Single Entry Multi Jet condenser. This is expected to reduce the
energy conservation by 0.52 KWH/Ton of cane.
ENERGY CONSERVATION MEASURES PROPOSED :
(a) Replacement of 10 Nos. Low Speed conical bottom centrifugal
machines with three No.s high speed flat bottom centrifugal machines.
This will reduce the power consumption by 1.68 KWH per ton of cane;
(b) It is proposed to replace all the 5 condensers of pans with Single
Multi Jet condensers with addition of two more cooling towers during
the off season. This will reduce the power consumption by 1.05
KWH/tonne of cane;
(c) Revamping of evaporator set by addition of one more body of Semi
Kestner type or Felling Film Evaporator of suitable heating surface.
This is expected to reduce the steam consumption by 2% on cane.
D. EXPENDITURE ON R & D DURING 2000-2001 - Rs. 111.97 lakhs
E. EXPENDITURE as a % of total turnover : 0.31%
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :
(i) It was found that by using higher percentage of hydrogen peroxide
in the Alkali extraction stage in hard wood Chemical Pulp Mill, the
pulp can be bleached to higher brightness levels, required to produce
WPP.
(ii) Usage of polyelectrolytes : Several polyelectrolytes were tested
and suitable ones are identified for handling problematic materials in
specific areas like handling of bagasse yard water at
drainer screen, Krofta save alls in Paper Machines 1 & 2, handling of
mixed liquor suspended solids at the vaccum drum filter at ETP and in
the processing of primary solids in press filters.
(iii) Installation of Two Nos. Digesters and One Blow Tank available in
the Mill are installed in Hardwood Chemical Pulping Street.This enables
the cooking of long fibered Pine and Bamboo separately so that the Pulp
in the required proportion can be blended with the HW Chemical Pulp to
maintain uniformity in the Pulp supplied to Paper Machines.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
1998-99 1999-00 2000-01
1. FOREIGN EXCHANGE EARNINGS - - -
2. FOREIGN EXCHANGE OUTGO DURING THE
FINANCIAL YEAR ENDING 31-03-2001
(a) Imports (C.I.F. basis)
(i) Raw Materials 3176.81 2593.80 4162.76
(ii) Components, Spare Parts,
Chemicals 453.30 241.38 444.49
(iii) Capital Goods 199.73 - -
(b) Other than Imports
(i) Travel 2.67 - 3.11
(ii) Interest on CDC Loan 314.99 143.86 123.30
(iii) Repayment CDC Loan 724.34 364.86 -
(iv) Services - 10.48 12.35
Mar 31, 2000
The Directors have pleasure in presenting the 65th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 2000.
2. FINANCIAL RESULTS:
The financial results for the year under review
are as follows:
(Rs. in Lakhs)
Year Year
ended ended
31.3.2000 31.3.1999
Sales 27047 24924
Operating Profit 1661 1463
Interest 559 454
Profit before Depreciation 1102 1009
Depreciation 936 892
Profit before Tax 166 117
Provision for Tax - -
Profit for the year 166 117
Balance brought forward from previous year 2661 2544
Profit available for appropriation and
carried to Balance Sheet 2827 2661
It may be notices from the above that there in an overall increase in
the sales from 249.24 crores in 1998-99 to Rs. 270.47 crores in
1999-2000, an increase of 9%. The increase in sales is mainly on
account of increase in turnover in Newsprint and Sugar. The sale of
newsprint has been increased from Rs. 132.36 crores to Rs. 149.46
crores, an increase by about 13%. Also, the scale of sugar has been
increased from Rs. 41.65 crores to Rs. 50.72 crores, an increase of
about 22%. There is a decrease in sale of WPP from 73.61 crores to Rs.
69.04 crores a decrease of about 6%.
The market for Newsprint started improving from January 2000. Effective
1st February 2000, the price of Newsprint was increased by Rs. 1000/-
per MT. The imports of News print have began declining and the prices
are further firming up. The Newsprint industry, as a whole, has just
began to look up.
The market for Writing, Printing and Packing Paper continued to be
sluggish and intense competition was witnessed in view of supply
exceeding the demand during the 1st quarter. However, from July 1999
onwards market conditions started improving and the Company was in a
position to increase the prices by Rs. 8000/- per MT between July 1999
to March 2000, although Excise Duty has been enhanced from 8% to 16%.
Market is expected to improve in the coming months.
The sale of sugar is controlled by Government of India. During the
year, the average monthly releases were of the order of 21,500 qntls.
of free sale and 13,700 qntls. under levy quota. Also, the average
realisation for free sale quota was around Rs. 1287.00 per qntl. while
levy sugar price was fixed at Rs. 1102.70 per qntl. From January 2000
onwards, the Free Sale quota has been revised to 70% from earlier 60%,
thus reducing Levy Quota from 40% to 30%. Also, Import Duty has been
enhanced to 60% from 40% giving some relief to Sugar Mills. These
positive Government measures are expected to give some relief to Sugar
Industry in the coming months.
3. OPERATIONS:
The market continued to be depressed particularly in the area of
Newsprint. Further, the margin available from the sales realisation
continued to be depressing. Though there was higher level of production
compared to 1998- 99 in the case of newsprint, it was only 69,428 TPA
which was still below our installed capacity of 75,000 TPA. Further,
our News- print and Cultural paper production was affected, about 15
days in the case of Newsprint and 20 days in the case of PM-3 of
Cultural Paper due to non-availability of wood because of Court ban on
extraction of wood from our captive forestry and transporters strike.
Apart from this, there was curtailment of production due to market
conditions in the case of Newsprint at the beginning of the financial
year.
We are pleased to inform the shareholders that with the successful
completion of new 16 MW Turbo-generator with the financial assistance
from OECF, there has been an all time high record of captive power
generation. The captive power generation was 1556 lakh units in
1999-2000 which surpassed the earlier record of 1361.38 lakh units. The
captive power generation was to extent of 68.8% against previous years
figure of 63%. The average cost of captive generation of power was Rs.
2.47 per unit compared to average purchased power rate of Rs. 3.99 per
unit.
The comparative figures of production are as under:
Product 1999-2000 1998-1999 % age
MT MT increase
WPP 27,482 27,373 0.34
Newsprint 69,428 66,134 6.60
Sugar 51,441 46,254 11.20
4. PROJECT WORKS:
(A) Externally Aided Projects:
(i) A 90 tph capacity CFBC Boiler and 16 MW steam Turbo-generator with
the financial assistance of OECF has been successfully implemented
during the year.
(ii) Cleaner Production of Pulp and Paper:
This project, which has been taken up under the financial assistance
from Royal Government of Netherlands at a cost of Rs. 16.65 crores, is
under progress. This project envisages Cleaner Production in both Pulp
and Paper. This would bring in upgradation of our Effluent Treatment
Plant, Conservation of energy, Conser- vation of water, Extension of
Forest Research, Reducing bleaching chemicals and environment. This
project is expected to be completed by end of March, 2001.
(B) OTHER PROJECTS:
(i) ETP upgradation project is almost completed and trial runs are
under way. With thus, it is envisaged to meet the requirements of the
Karnataka State Pollution Control Board.
(ii) In order to utilise captive pine wood effectively and also to
increase our Digester capacity, a project has been taken up a cost of
Rs. 1.66 crores. It is expected that this project would be completed by
end of October, 2000. With the completion of this project, we will be
making use of pine wood pulp along with our eucalyptus/bamboo wood
chemical pulp with proper blend.
(iii) To reduce consumption of coal in our Boilers, Bagasse debaling,
Blowing and Handling System at a cost of Rs. 250 lakhs has been
envisaged. This project has been contemplated in two Phases. The first
one at a cost of Rs. 150 lakhs which is primarily for firing bagasse in
the new CFBC Boiler. In the second Phase, it is contemplated to burn
bagasse and pith in the AFBC Boilers also. The expected cost of this
would be around Rs. 100 laks.
(C) PROJECTS UNDER CONSIDERATION:
In order to bring down the cost of production through reduced Chemicals
Steam, Power consumption and also through increased production, certain
proposals towards upgradation of Machine-1 and 2. Retrofitting of
Evaporators, Retrofitting of CSRMP into APMP are being contemplated at
a projected cost of Rs. 130 crores.
5. SUGAR MILL:
Area under cane cultivation continued to be as high in reserve as in
the last year. Devi Sugars cane area continues to be allocated to our
Mill. However, the division to jaggery has been lower this year.
An all time record of Sugarcane crushing has been achieved, viz.,
5,03,705 MT upto March 2000 against 4,60,356 MT upto March 1999 and
recovery was higher compared to 1998-99 from 10.05% to 10.21%.
6. CAPTIVE FORESTRY:
The forest Wing of the Company has successfully continued raising
Captive Plantations on degraded land and C & D Class of land leased by
the Government of Karnataka.
However, during the year 1999-2000, the working of the Forest Division
was affected because of a `Public Interest Litigation' filed against
MPM in the Hon'ble High Court of Karnataka. Initially, the Hon'ble High
Court had stopped all forestry operations of MPM during June 1999 and
subsequently modified this order by appointing two Court Commissioners
for inspecting the areas and allowed MPM to take up only those works
certified by the Court Commissioner. This had delayed planting in 1999
rains.
The Forest Wing raised Captive Plantations over an extent of 1663.75
Ha., of replanting area during 1999 rains with species of Acacia,
Eucalyptus and Pine after obtaining necessary certification from the
Court Commissioner appointed by the Hon'ble High Court of Karnataka.
Clonal Plantations of Acacia hybrid was raised over an extent of 720.25
Hs., which is known for high yield of pulpwood.
During 1999-2000, after obtaining an order of the High Court during
December 1999 extraction of plantations raised in 1991 and 1992 was
taken up and about 71302 MT of debarked pulp wood was supplied from the
Captive Plantations to the Mills. An extent of 263 Hs., of plantation
raised by MPM was handed over to Karnataka Forest Department towards
the Lease Rent payable to the Forest Department. A quantity of more
than 10000 MT of firewood in the form of lops and tops after extraction
of pulpwood were allowed to be collected by the local villagers free of
cost by the Mills.
The extension -- Farm Forestry work is being continued by the forest
Wing for the benefit of local farmer communities and institutions as
per the Project Report. About 26 lakhs seedlings of high yielding
pulpwood species were distributed to the beneficiaries at a subsidised
price of Rs. 0.25 per seeding and demonstration plots over an extent of
51.75 Ha., were laid out in the lands of 42 beneficiaries to educate
the local farmers and other people about the methods of rising
successful free plantations.
7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217 (1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988 are given in ANNEXURE - I, which
forms part of this report.
8. INDUSTRIAL RELATIONS:
The industrial relations have been cordial throughout the year.
9. FIXED DEPOSITS:
The Company's Fixed Deposits for the year stood at Rs. 636.61 lakhs.
Deposits matured and not claimed amounted to Rs. 3.65 laks as on
31.3.2000.
10. DIRECTORS
Sri Parameshwarappa, Sri G. V. Venkanna and Sri C. Shivashanka,
Directors of the Company, retire by rotation and are eligible for
reappointment at this meeting.
11. AUDITORS:
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept. of Company Affairs, appointed M/s. Patel Mohan Ramesh &
Co., Bangalore, Auditors of the Company, for the year ended 31.03.2000.
12. PARTICULARS OF EMPLOYEES:
None of the employees of the Company have drawn salary more than Rs.
6.00 lakhs per annum during the year. Therefore, the particulars of
employees required under Section 217 (2A) of the Companies Act, 1956
are not furnished.
13. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The review of Accounts for the year ended 31.3.2000 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE III.
14. ACKNOWLEDGEMENTS:
The Directors are pleased to acknowledge the dedicated efforts of all
the employees in achieving production during the year 1999-2000.
The Directors thank the sugarcane growers for the uninterrupted supply
of sugarcane.
The Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, KPTCL, Karnataka State Pollution Control Board,
Directorate of Sugar, KSBPE, KSSIDC, etc., and Financial Institutions
and Banks.
The Directors also thank the Government of India, Department of
Economic Affairs, and its various departments including Bureau of
Industrial Costs and Prices, Controller of Aid Accounts and Audit
Registrar for Newspapers, Ministry of Railways, Department of Coal,
etc., for their continued support to the Company.
The Directors are also thankful to OECF, Japan, Royal Government of
Netherlands and the Commonwealth Development Corporation, London, for
their financial assistance and support to the Company.
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. ENERGY CONSERVATION:
1. Energy Conservation measures taken:
(a) Mills' In-house energy conservation measures are listed below:
(i) Continued usage of lignite which is cheaper and increased usage of
coal of high calorific value and low ash content, has been continued
which has resulted in substantial savings in fuel cost.
(ii) The work related to 90 tph multi-fuel (CFBC) circulating fluidized
bed combustion boiler and 16 MW steam TG set under OECF project had
been completed and both unit are in operation.
(iii) With better performance of Turbo Generators (TGs) and
uninterrupted supply of steam, the captive power generation was 68.82%
of the total requirement of the Mill compared to 63.53% of the
requirement for the year 1998-99. A record captive generation of
15,56,00,000 KWH was achieved in 1999-2000, which has surpassed the
previous highest of 13,61,37,950 KWH generated in 1998-99.
(iv) Begasse as a fuel to boilers: A system is being installed to blow
the excess bagasse available as a fuel to the boiler at an investment
of Rs. 150 crores. This is expected to save coal to a tune of Rs. 2.75
crores per year.
(v) With the improvements brought about in the refining and the fibre
recovery system Control refiners in PM-4 could be bypassed. The energy
savings on this account is about Rs. 70 lakhs per year.
(vi) A booster pump was installed in Evaporators to meet the cooling
water requirement of surface condensors of the Evaporators. Several
water recycling schemes have been implemented in various modules of the
Mill to conserve fresh water. Due to this energy savings to a tune of
Rs. 48 lakhs per annum is expected.
(vii) Variable frequency system for motors are installed for the
washers and refiner feeders in pulp mills which helped in reducing the
energy consumption. Further installation of these systems are being
taken up in a phased manner.
(viii) Stationary doctors had been installed for all the washers in new
pulp mill and this helped in stopping the blowers for the air doctors
and thus reduce energy consumption.
(ix) Save-alls for PM-1 & 2 have been ordered. Once these are
installed, not only valuable fibre can be recovered but also water
recycling can be improved, thereby conserving fresh water and reducing
the load on the effluent treatment plant.
(b) Additional investments and proposals, if any, being implemented for
conserving energy:
(i) High Tension (HT) capacitors for improving the power factor are
being ordered under the Dutch Assistance scheme.
(ii) It is being tried to tie up with IREDA loan under the "Energy
Efficient Projects" for improving the energy efficiency of the multiple
effect Evaporators, etc.
(iii) Additional water conservation measures are under way to reduce
water consumption and to reduce the Hydraulic loan on ETP.
B. TECHNOLOGY ABSORPTION:
RESEARCH AND DEVELOPMENT:
(a) A pulp washing aid chemical was tried in the washing of cooked pulp
in chemical pulp mill No. 2.: The trials were found to be encouraging.
Longer plant scale trails are planned.
(b) Laboratory trials on Anthraquinone (AQ) usage in Bagasse pulping:
The study revealed that AQ can be used in the Bagasse Chemical pulping
with benefits like reduced Kappa No. and increased yield.
(c) Sulphamic Acid usage in the Bleach Plant of Hardwood Chemical Pulp
Mill: Usage of Sulphamic Acid in the Bleach Plant in Hardwood Chemical
Pulp Mills is found to be useful to obtain pulp of better strength
properties and viscosity and same had been implemented in the Plant.
(d) Polyester Staple Fibre (PSF) usage as a reinforcement agent in the
production of Newsprint: Laboratory trials using polyester staple fibre
in the production of newsprint revealed that significant improvements
in the strength properties of newsprint could be obtained by using PSF
in small properties.
(e) development of special shade of newsprint: As per the requirement
of the Market, special shades of newsprint (pink and yellow) were
developed in the Laboratory matching the samples provided by the
customers.
(f) Alkaline Peroxide Mechanical Pulping: Acacia chips were sent to
M/s. Andritz, Springfield, Ohio, USA to carry out the pulping studies
using APMP process. The pulp samples received after the pilot plant
studies were tested for their properties. It was found that the APMP
pulp produces out of Acacia is superior in strength properties compared
to CSRMP produced with Acacia. Also, the pulp was of higher brightness
about 80% making is possible to produce WPP on NP machine.
(g) Usage of pine wood in the Chemical Pulping Street: Pine wood
available in the captive forest is pulped in the Hardwood Chemical Pulp
Mill on a regular basis. Two Digesters and one Blow Tank, available in
the Mill are being shifted to HW Chemical Pulp Mill to process the pine
wood pulp separately. This enables to blend the pine pulp with hard
wood pulp in required to have uniformity in the quality of pulp. The
pine wood pulp was found to improve the strength properties of papers.
C. FUTURE PLAN OF ACTION:
Cane Development:
1. Seed multiplication programme:
Co-7704, Co-7804 and Co-8371 new varieties released for cultivation and
other new varieties like Co-VC, Co-86032, Co-87-25 are proposed to be
taken under farm trials.
2. Aerated steam therapy building has been completed and shortly unit
will be installed to develop foundation seed at R&D farm, Karehalli.
3. Raising single eye budded sets in polythene bags for the
multiplication of new varieties is proposed.
4. Conducting sugarcane seminars and field days to educate farmers on
modern cultivation methods of system.
D. EXPENDITURE ON R&D DURING 1999-2000 Rs. 103.61 lakhs.
E. Expenditure as a % of total turnover: 0.38%.
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
(a) Erection Work of equipments related to upgradation of Effluent
Treatment Plant (ETP) and Sewerage Treatment Plant (STP) have been
completed and trial runs are to start.
(b) New Quality Control System (QCS) for Newsprint machine ordered at a
cost of Rs. 7 crores has been successfully commissioned. This is the
latest version of the earlier system with additional features like CD
basis weight profiler and CD hot air calipher profiler. This has
improved the quality of newsprint successfully.
Mar 31, 1999
The Directors have pleasure in presenting the 64th Annual Report
together with Audited Accounts of the Company for the year ended 31st
March 1999.
FINANCIAL RESULTS :
The financial results for the year under review are as follows :
(Rs. in Lakhs)
Year Year
ended ended
31.3.99 31.3.98
Sales 24924 27831
Operating Profit 1394 1241
Interest 385 279
Profit before
Depreciation 1009 962
Depreciation 892 931
Profit before Tax 117 31
Provision for Tax - -
Profit for the year 117 31
Balance brought
forward from
previous year 2544 2512
Profit available for
appropriation and
carried to Balance
Sheet 2661 2544
It may be noticed from the above that the Company has earned an operating profit of Rs.13.94 crores compared to Rs. 12.41 crores in the
previous year despite reduction of 10% in sales from Rs. 278.31 crores
to Rs. 249.24 crores. There is an increase in net profit for the year
from Rs. 31 lakhs in the previous year to Rs.117 lakhs. There is decline in sales mainly in the areas of newsprint and sugar. The sale of newsprint was reduced from Rs.144.83 crores in previous year to Rs.132.36 crores - by 9% and sale of sugar reduced from Rs.60.46 crores
to Rs. 41.65 crores-by 31%. However, there is increase in sale of
Cultural Paper from Rs. 69.53 crores during previous year to Rs.73.61
crores.
The market for newsprint continued to be sluggish with heavy inflow of
imported newsprint from countries like Canada, Norway, USA, Germany,
and other South East Asian Countries at less than the domestic prices.
Further, some of the 'B' Grade Mills in the country have started
manufacturing good quality newsprint with large volumes with relatively
lower price and they were able to capture part of the domestic market.
Added to this, there was no change in the Central Government Policy to
protect the domestic newsprint industry. Much awaited and expected
decision of the Government of India on increase in Customs Duty and
introduction of anti-dumping duty did not come through Union Budget 1999-2000. The Government of India has recently taken a decision not to
impose anti-dumping duty despite recommendations by the Designated Authority. Further, due to the overall industrial recession, the transport sector was also badly affected. This in turn affected availability of sufficient trucks for movement of newsprint to various
destinations in the country. It was an uphill task to arrange for
transportation besides extending additional rebates for this purpose to
the buyers of newsprint as the buyers on their own failed to arrange
for transportation of newsprint.
The market for Cultural Paper was also very competitive during the year. There were large scale incentives and discounts from various mills in the country besides very competitive prices. The Company also introduced quantity discounts and offered attractive prices and was able to achieve higher sales compared to the previous year.
The sale of sugar is controlled by Government of India. There were hardly any releases by the Government during the months from July to November 1998. The average releases which were of the order of 26,000
Qntls. in Free sale and 17,000 Qntls. under Levy quota were reduced to
all time low of 2,200 Qntls. in Free quota and 300 Qntls. in Levy quota during this period. It was possible to get some enhanced allocation for sale of sugar with continued follow up action by the Company with Government of India only after December 1998. Due to inadequate releases of sugar by Government, not only the sale of sugar was reduced, but the Company had to face serious financial constraints to arrange funds for payment to sugarcane growers. The situation was eased only at the end of the Financial Year.
OPERATIONS :
Despite unfavourable market conditions the Company has achieved higher
production in the areas of Cultural Paper and Sugar.
The production of Cultural Paper was 27,373 MTs as against 27,183 MTs
in the previous year.
There was turn-around in the production of sugar, which has increased
from 36,558 MTs in the previous year to 46,254 MTs with an increase in
recovery percentage from 9.67% to 10.04%. The area under cane has increased during the year. The State Government also notified reserved
area meant for Devi Sugars in favour of the Company. Therefore, sufficient sugarcane was available and the Company was able to crush
the entire Sugarcane.
The production of newsprint was curtailed to 65,134 MTs as against
70,407 MTs in the previous year. This was mainly due to continued
accumulation of stocks due to unfavourable market conditions.
The comparative figures of production are as under :
1998-99 1997-98 Percentage of
Product increase/
MT MT decrease
Writing, Printing
and Packing
Paper 27,373 27,183 +0.69%
Newsprint 65,134 70,407 -7.48%
Sugar 46,254 36,558 +26.51%
Further, as the members are aware, both the cost of pulp wood and power
forms major part of the cost of production. The cost of these two items
are on the increase. The Directors have the pleasure to inform in this
regard that there is an increase in yield from captive forestry and higher generation of captive power. The yield from Captive Forestry increased to 97,918 MTs compared to 91,987 MTs in the previous year. Also, the captive generation of power was all time high to 1361.38 lakh
units. We were therefore able to conserve cost and meet 81% of pulp wood requirements and 63% of power requirement in the production.
The cost of captive yield on forestry is about Rs. 780 per MT which is
almost half of the cost of market rates. The average cost of captive
generation of power was Rs. 2.92 per unit compared to KEB overall rate
of Rs. 4.28 per unit.
PROJECT WORKS :
a) Externally Aided Projects :
MPM Modernisation Project -
Phase - II :
The Directors are happy to inform that the Modernisation Project-Phase
II consisting of 90 TPH capacity CFBC Boiler and 16 MW Steam Turbo
Generator with the financial assistance from OECF was completed (excepting some auxiliaries) during the year. Both the plants were successfully put to pre-trial run tests. The completion of this project
will help the Company in increased captive generation of power with
lesser dependency on KEB power which is costlier.
Cleaner Production of Pulp and Paper :
As a pollution control measure, the Company is implementing a pilot
project with the financial assistance from Royal Government of Netherlands. The total cost of the project is in the order of Rs.16.65
crores, of which Rs.10.65 crores will be funded by Royal Government of
Netherlands and balance being met by the Company out of its internal
accruals. The Royal Government of Netherlands have released pre-finance
of Rs. 224.86 lakhs as per the Grant Agreement which has been fully
utilised in the project. Further claims have been made for reimbursement from Royal Government of Netherlands. Upon completion of this project, it would be possible to meet the stringent pollution control norms besides achieving some amount of energy conservation and good house keeping in the Mills.
(b) OTHER PROJECTS :
New Winder and Save all :
During the year New Winder and Save all have been successfully completed
and commissioned. Upon commissioning of these two plants, the Company
has witnessed considerable reduction in production loss.
ETP Upgradation :
The civil works in respect of ETP upgradation are almost completed. The
machineries have since arrived at site and commissioning is expected to
be completed shortly.
10 MW Bagasse based Co-generation Project :
In order to develop the non-conventional energy and also to reduce the
cost of captive generation of power, the Company has decided to set up
a 10 MW bagasse based Co-generation Plant. The project is funded by
IREDA. The project cost is about Rs. 29.90 crores and will be funded
by IREDA to the extent of Rs. 22.40 crores. The balance amount of Rs.
7.50 crores will be out of the internal accruals. The Company has
tendered the project and approval of IREDA obtained as per ADB guidelines for issue of Work Orders on turnkey basis. The project will
be taken up for erection in the year 1999-2000.
Expansion of Sugar Mill Capacity :
The Company keeping in view the higher requirement of bagasse for
generation of power and also to crush the increased sugarcane available
in the area has also proposed to expand the sugar mill crushing capacity from 2,500 TCD to 5,000 TCD. The project cost is in the order of Rs. 48 crores. The tendering and evaluation of the project has been completed, but the work has not been taken up pending financial closure. Since the Sugar Industry is under negative list for financing by both the Financial Institutions and Banks, there is a delay in the financial closure. Therefore, it would be possible to take up the expansion only after the necessary financial tie up from Banks, Financial Institutions and Sugar Development Fund.
CAPTIVE FORESTRY :
The Forest Wing of the Company has successfully raised captive plantations on degraded forest lands and C & D class lands leased by the Government of Karnataka.
During 1998-99, 2,730 Ha. of captive plantations are raised in both New
areas and Replanting areas (RPA) with the species of Acacia, Eucalyptus
and Pines of which the dons plantation of Acacia hybrid is raised to an
extent of 371 Ha. During 1998-99, 97,918 M.T of debarked pulp-wood was
extracted from captive plantations and supplied to the Mills. Also, 10,770 M.T. of fire wood was given to the Karnataka Forest Department towards 12.5% lease rent, besides about 11,000 M.T of lops & tops are collected by local villagers free of cost for fire wood.
The Extension-Farm Forestry is being continued as per the project report (1996-2003) for the benefit of local farmers, institutions and other communities. 25,74,710 seedlings are distributed to the beneficiaries at a higher subsidised price of Re. 0.25 per seedling and 50.56 Ha. of demonstration plots are established in the lands of 40 beneficiaries to popularise the scheme effectively.
A public interest litigation (Writ Petition No. 14644/98) has been
filed in the Hon'ble High Court of Karnataka questioning the action of
the Government in leasing lands to the Company. In this connection, the
Hon'ble High Court have appointed two Court Commissioners for verifying
the contentions of the writ petitioners by conducting field inspection
and the matter is still pending.
FUTURE OUTLOOK :
It is expected that the era of recession for the paper industry having
reached the bottom line will come to an end. The Paper Industry as a
whole has just began to look up. The pulp price across the world are on
increase. There is shortage of production of pulp across the world and
prices are on the rise. The imports of paper are under decline. The
positive impact of the rise is seen at the first instance on writing
and printing paper. The newsprint may also witness similar positive
impact from the second half of the next financial year. In the case of
sugar also, with the increase in the customs duty on imports, the supply and demand position will help the domestic sugar industry. The Company has survived the bottom line of the industrial recession and has now geared up to meet the future challenges of the industry.
Y2K COMPLIANCE :
The Company has formed a Committee which works as a task force for
compliance on Y2K problems in respect of both hardware and software. It
is possible, to take all appropriate and effective steps for ensuring
Y2K compliance by November 1999. The expenditure to attain the compliance is not significant, and it will be possible to comply with
the Y2K problems within the overall expenditure of Rs. 15 lakhs.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988, are given in ANNEXURE-I, which
forms part of this report.
INDUSTRIAL RELATIONS :
The year 1998-99 was an eventful year on the industrial relations
front. The salary revision for all the categories of employees, which
fell due in 1998; was successfully negotiated and settled without loss
of production or mandays. The industrial relations have been cordial
throughout the year.
FIXED DEPOSITS :
The Company requested Sugarcane Growers' Association to raise Fixed
Deposits to augment funds for meeting part of the promoters contribution required to fund the proposed expansion of Sugar Mill along with the Co-generation Plant. There was overwhelming response from the farmers who volunteered and allowed deduction at the rate of Rs. 50/- per tonne of sugarcane supplied by them and to treat the same as unsecured and unregulated deposit for a period of three years with interest rate of 15% per annum. The amount collected from the farmers by way of deposits in this regard is in the order of Rs.185.08 lakhs. Consequently, the deposits stood at Rs. 218.95 lakhs as at the end of the year compared to Rs.18.73 lakhs in the previous year. In the case of regulated deposits the amount outstanding as at the end of March 1999 was Rs. 33.87 lakhs. Out of this, the deposits matured but not claimed amounted to Rs. 3.93 lakhs.
DIRECTORS :
Sri D.H. Chebbi, Sri M. Chandrashekar Shetty and Sri Narendra M. Kheny,
Directors of the Company, retire by rotation and are eligible for
reappointment at this meeting.
AUDITORS :
As per Section 619(2) of the Companies Act, 1956, the Government of
India, Dept. of Company Affairs, appointed M/s K.R Rao & Co., Auditors
of the Company, for the year ended 31.03.1999.
PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary more than Rs.
6.00 lakhs per annum during the year. Therefore, the particulars, of
employees required under Section 217(2A) of the Companies Act, 1956,
are not furnished.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31.3.1999 by the Comptroller
and Auditor General of India is attached to the report at ANNEXURE II.
A. ENERGY CONSERVATION :
1. Energy Conservation measures taken :
Energy Audit Report of Mill furnished by M/s. Confederation of Indian
Industries, after making extensive studies in the plant, has been
scrutinised. Out of 71 proposals on Energy Savings with envisaged savings of Rs. 943.51 lakhs and investment of Rs. 492.20 lakhs, 8 proposals have been implemented with achieved savings of Rs. 44.85 lakhs and 43 proposals found feasible after a detailed study with envisaged savings of Rs. 617.81 lakhs and is being considered for implementation. The mill is trying to tie up IREDA loan under the "Energy Efficient Projects" for these projects as well as some other Schemes.
(a) Mills' in-house energy conservation measures are listed below :
(i) Continued usage of lignite which is cheaper than coal and usage of
coal of high calorific value and low ash content, has resulted in
substantial savings in fuel cost.
(ii) With better performance of Turbo Generators (TGs) and uninterrupted supply of steam, the captive power generation was 63.53% of the total power requirement of the mill compared to 62.2% of the requirement for the year 1997-98. A record captive power generation of 13,61,37,950 KWh was achieved in 1998-99, which has surpassed the previous highest of 13,22,15,000 KWh generated in 1997-98.
(b) Additional investment and proposals, if any, being implemented for
conserving energy :
(i) Work related to new 90 TPH multi-fuel circulating fluidized boiler
and 16 MW steam TG under OECF Project are complete and both units are
under pre-trial runs.
(ii) High Tension (HT) capacitors for improving the power factor are
being ordered shortly after observing tender formalities under the
Dutch Assisted Scheme.
(iii) Disc Save-all supplied by M/s. Kaverner, Norway, at a cost of Rs.
5 crores has been commissioned for Newsprint machine. This has resulted
in reduced fibre loss, better water re-cycling and consequent reduction
in load on Effluent Treatment Plant.
B. TECHNOLOGICAL ABSORPTION :
RESEARCH AND DEVELOPMENT :
(a) LABORATORY TRIALS ON PULPING OF ACACIA HYBRID :
Laboratory studies carried out on Kraft and Cold Soda pulping of captive Acacia Hybrid (8 years old) revealed that acceptable quality pulps could be obtained from this species.
(b) PERFORMANCE OF 50" REFINER SEGMENTS IN CSRMP :
Performance of 50" refiner segments in CSRMP mill refiners was studied
in relation to degree of refining and power consumption. It is observed
that 50" refiner segments are helpful in reducing the specific energy
consumption against 'the usage of existing 48" refiner segments.
(c) YELLOWNESS AND SHADE OF NEWSPRINT :
Laboratory studies were carried out on dyeing of newsprint and established that yellowness and shade are relative to the addition of
methyl violet dye, which helps to minimise shade variation in newsprint.
(d) PLANT SCALE TRIALS ON USAGE OF BUBREAK WASHING AID :
Bubreak pulp washing aid was tried in washing of cooked pulp in chemical pulp mill No. 2 to improve washing efficiency. The effectiveness of this chemical as washing aid was found to be marginal and needs to be studied further for which plant trials are planned. If found successful, this results in reduction in chlorine consumption, improves chemical recovery and also reduces load on effluent treatment plant.
(e) BLEACHING DURING REFINING IN CSRMP MILL :
Plant trials were carried out by adding hydrogen peroxide during secondary stage refining in CSRMP to improve initial brightness of pulp
before bleaching. This helps in bypassing of hypo tower which needs repairs without sacrificing the brightness of final bleached pulp. Further trials on alkaline peroxide mechanical pulping are planned to
simplify the process attaining pulp with better properties and at a
reduced cost.
C. FUTURE PLAN OF ACTION :
Cane Development :
1. Seed multiplication programme :
Co-7704, Co-7804 and Co-8371 new varieties released for cultivation and
other new varieties like Co-VC, Co-86032, Co-87025 and Co-C-92061 are
under farm trials.
Co-VC, Co-86032, Co-87025 Co-C-92061
2. Aerated steam therapy building has been completed and shortly unit
will be installed to develop foundation seed at R&D farm, Karehalli.
3. Raising single eye budded sets in polythene bags for the multiplication of new vaneties.
4. Issuing of press mud to farmers on free-of-cost from sugar mill.
5. Conducting sugarcane seminars and field-days to educate farmers on
modern cultivation methods of system.
6. Establishing parasite laboratory at R&D farm, Karehalli.
D. EXPENDITURE ON R&D DURING 1998-99 : Rs. 68.76 lakhs
E. R&D Expenditure as a % of total turnover : 0.28%
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :
a) Upgradation of Effluent Treatment Plant (ETP) and Sewerage Treatment
Plant (STP) Project works are nearing completion. After the completion
of the Project, quality of treated effluent discharged will improve.
(b) New Quality Control System (QCS) for Newsprint machine at a cost of
Rs. 7 crores has been ordered. This is the latest version of earlier
system with additional features like CD basis weight profiler and CD
hot air caliper profiler.
(c) New QCS supplied by M/s. CEERI for Paper Machine No. 3 has been
commissioned and performance trials are under way.
(d) Installation of syrup clarification system for Sugar mill is being
contemplated to improve the brightness of sugar for better marketability.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. FOREIGN EXCHANGE EARNINGS - - -
2. FOREIGN EXCHANGE OUTGO DURING THE
FINANCIAL YEAR ENDING 31-3-99
(a) Imports (C.I.F basis)
(i) Raw Materials 1544.90 2658.21 3176.81
(i) Components, Spare parts, Chemicals 278.72 236.00 453.30
1996-97 1997-98 1998-99
(iii) Capital Goods - 1138.96 199.73
(b) Other than Imports
(i) Travel - 8.26 2.67
(ii) Interest on CDC Loan 283.83 310.62 314.99
(iii) Loan Repayment CDC Loan - 323.72 724.34
Mar 31, 1998
Your Directors have pleasure in presenting the 63rd Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 1998.
FINANCIAL RESULTS:
The year 1997-98 also as in the past saw continuous import of newsprint
from overseas causing severe problems to indigenous industry. Further,
continuation of free imports has made the indigenous manufacturers of
newsprint to curtail their production and hence offtake of publications
was not upto desired levels since large publications had contracted
with overseas suppliers at attractive prices and facilities. As in the
previous year, the Company has made a very nominal profit for the year
1997-98. The environment in the indigenous newsprint industry continues
to be not very encouraging though the designated authority has
recommended imposition of anti dumping duty, the Union Government is
yet to implement this decision.
The market for Writing, Printing & Packing paper was sluggish during
1997-98 with recessionary trends resulting in all large mills resorting
to indirect price reductions such as quantity discounts and attractive
credit terms. Similarly, the Company had also introduced quantity
discount schemes during the year which has helped to mobilise orders
and bring about reduction of stock. Inspite of difficult market
conditions, the Company was able to sell most of the quantity produced
during the year by offering competitive price. In any case, the entire
market condition in respect of paper industry continues to be quite
fluid.
Inspite of competitive market conditions, the sale of newsprint was
70,576 MTs and Writing, Printing and Packing Paper was 27,257 MTs as
against previous year's sale 53,741 MTs and 27,924 MTs respectively.
In the recent budget of 1998, the Union Government has reduced import
duty on Newsprint from 10% to 5% which may have adverse effect on the
indigenous manufacturers. However, for the Writing & Printing Paper the
Government has enhanced customs duty from 20% to 30% with additional
customs duty of 4% which may deter imports to some extent and provide
impetus to indigeneous manufacturers.
The financial results for the year under review are as follows:
Year Year
ended ended
31.3.1998 31.3.1997
(Rs. in lakhs)
Sales 27831 24771
Operating Profit 1241 1761
Interest 279 527
Profit before
Depreciation 962 1234
Depreciation 931 1003
Profit before Tax 31 231
Provision for Tax - 32
Profit for the year 31 199
Balance brought
forward from
previous year 2512 2313
Profit available for
appropriation and
carried to
balance sheet 2544 2512
In order to conserve the funds for the ongoing capital works/projects
and due to insufficient profits made during the year, your Directors
have not recommended any dividend for the year under review.
OPERATIONS :
The performance of the Company during the year was also affected as in
the past due to adverse market conditions. Even under such
unfavourable conditions, the Company had produced cultural paper of
27,183 MTs as against 29,960 MTs in the previous year. The shortfall
was due to transporters strike, grinding of MG Cylinder of Paper
Machine No.1 and production of higher quantities of water mark paper
and also low gsm papers to cater to the market conditions. However, the
production of newsprint was higher during the year at 70407 MT as
against last year's production of 50,840 MT. If there were no
transporters' strike and modification of winder, the production of
newsprint would have been higher by about 10000-12000 tonnes.
In respect of sugar, there was reduction of 22.40% production compared
to the previous year of 1996-97. This is due to non-availability of
sufficient cane.
Your directors are happy to inform that the in-house power generation
was geared upto the maximum level which has led to lower consumption of
expensive KEB grid power and in turn brought down the cost of
production.
During the year, inspite of transporters' strike and stoppage of
Newsprint Mill for 5 weeks for winder modification, the Company had
generated an all time high record of 13,22,15,000 units against the
earlier achievement of 12,55,00,000 units in 1995-96.
ACTUAL PRODUCTION :
Percentage
1997-98 1996-97 of increase/
Product decrease
MT MT
writing Printing
and Packing
Paper 27,183 29,960 -10.20%
Newsprint 70,407 50,840 +27.79%
Sugar 36,558 44,748 -22.40%
PROJECT WORKS:
EXTERNALLY AIDED PROJECTS:
A. MPM MODERNISATION PROJECT-PHASE II:
The modernisation project Phase II for erection of 90 TPH capacity
multifuel CFBC boiler and 16 MW Steam Turbo Generator with the
financial assistance of 2381 million Japanese Yen from OECF, Japan is
progressing in full swing and is expected to be completed by October
1998 as scheduled. On commissioning of these equipments the
profitability of the Company will increase as there will be less
dependence on KEB power which is costlier.
B. PROJECT FOR CLEANER PRODUCTION OF PULP AND PAPER:
As a pollution control measure the Company is implementing a project at
a cost of Rs. 16.65 crores with the financial assistance of the order
of Rs. 10.65 crores from the Royal Netherland Government and the
balance amount will be met by the Company from its internal resources.
The Company has requested Government of India for release of 20% of the
total assistance for payment of advances to the contractors. The
request is under the consideration of the Government. This will help in
meeting the stringent pollution control norms and helps energy
conservation measures and good house keeping of the Mills.
II OTHER PROJECT WORKS:
As indicated in the Annual Report of 1996-97, the Company had prepared
a Corporate Plan for the next ten years upto 2007 A.D. As part of the
Corporate Plan, the Company is taking up the implementation of the
following projects in phased manner:
A. EXPANSION OF SUGAR MILL CAPACITY:
The Company has obtained necessary licences from Government of India
for expansion of the cane crushing capacity of the existing sugar mill
from 2500 TCD to 5000 TCD. Approval of Government of Karnataka is
awaited for taking up the project. The cost of the project is
estimated at Rs. 47.91 crores. Applications are being made to the
financial institutions viz. IFCI and Sugar Development Fund for
financial assistance.
B. 10 MW BAGASSE BASED CO-GENERATION PROJECT :
In order to give thrust to the policy of the Government in developing
Non-conventional energy, the Company is setting up a 10 MW bagasse
based co-generation plant by utilizing the Bagasse generated from the
expanded capacity of the Sugar Mill. The project cost is estimated at
Rs.29.90 Crores. The IREDA has already sanctioned a rupee loan of Rs.
22.40 Crores. The balance is to be borne by the Company out of its
internal accruals. The plant is considered as a demonstration project
and is eligible for MNES [Ministry of Non-Conventional Energy Sources]
SUBSIDY of Rs. 25 lakhs per MW of surplus power.
CAPTIVE FOREST PLANTATION:
As the shareholders are aware, the Government of Karnataka has leased
30,000 ha, of degraded forest lands and C&D Class of lands to the
Company for raising captive plantations and to use them for meeting
pulpwood requirement. During 1997-98, a total quantity of 91,987 MT of
debarked pulpwood was extracted out of 1749 ha. and supplied to the
mills. During this period 8675 MT of Fire Wood was given to the
Karnataka Forest Department towards 12.5% lease rent. In addition, lops
and tops are freely allowed to be taken by nearby villagers.
During 1997-98, a total extent of 2,455 ha. of plantations viz. Acacia,
Pines and Eucalyptus, were raised including 1,311.50 ha of new areas
and 1,143.60 ha of replanting areas. For raising these plantations, a
total 89 lakhs seedlings were raised in the nurseries managed by the
Company.
Another important activity of the Forestry Division is Farm Forestry
and Extension Forestry in which seedlings are distributed to the
beneficiaries at the subsidised rate of 25 paise per seedling. To
popularise the Farm Forestry Project, demonstration plots in 55.55 ha
were raised during the year and during this period a total number of 20
lakhs seedlings were distributed to the beneficiaries at subsidised
price.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 217 (1) (e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988, are given in Annexure-I, which
forms part of this report.
INDUSTRIAL RELATIONS:
The Company could achieve good production and sales during the year
with the continued and good industrial relations.
FIXED DEPOSITS:
The Company's Fixed Deposits for the year stood at Rs. 18.73 lakhs.
Deposits matured and not claimed amounted to Rs. 5.42 lakhs as on
31-3-1998.
DIRECTORS:
Sri C. Shivashankar, Sri G. V. Venkanna and Sri V. D. Hegade,
directors of the Company, retire by rotation and are eligible for
reappointment at this meeting.
AUDITORS:
As per Section 619 (2) of the Companies Act, 1956, the Government of
India, Dept. of Company Affairs, appointed M/s K. P. Rao & Co.,
Auditors of the Company, for the year ended 31-3-1998.
PARTICULARS OF EMPLOYEES:
Particulars of employees required under Section 217 (2A) of the
Companies Act, 1956, is given in Annexure II to this Report.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA:
The Review of Accounts for the year ended 31-3-1998 by the Comptroller
and Auditor General of India is attached to this report at Annexure
III.
ACKNOWLEDGEMENTS:
Your Directors are pleased to acknowledge the dedicated efforts of all
the employees in achieving production during the year 1997-98.
Your Directors place on record their appreciation for the assistance,
support and guidance extended to the Company by the Government of
Karnataka through the Departments of Commerce and Industries, Finance,
Forest and Planning, Karnataka Electricity Board, Karnataka State
Pollution Control Board, Directorate of Sugar, KSBPE, BEML, etc. and
Financial Institutions and Banks.
Your Directors also thank the Government of India, Department of
Economic Affairs, and its various departments including Bureau of
Industrial Costs and Prices, Registrar for Newspapers, Ministry of
Railways, Department of Coal, etc., for their support.
Your Directors thank the sugarcane growers for the uninterrupted supply
of sugarcane. Your Directors are also thankful to OECF, Japan, Overseas
Development Administration and the Commonwealth Development
Corporation, UK, for their assistance and support.
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
(A) ENERGY CONSERVATION :
1. Energy Conservation measures taken:
(a) The Mill has engaged M/s. Confederation of Indian Industry,
Chennai, to carryout energy audit of the Mill. The audit is completed
in three phases. Total No. of energy saving Proposals (ESPs) are 71.
They have envisaged an energy savings potential of Rs. 943.51 lakhs
based on present energy cost and further investment required is Rs.
429.20 lakhs. The report is under scrutiny for the implementation of
energy savings proposals.
(b) The Mill has gone along with its own energy conservation scheme as
listed below:
(i) The use of lignite which is cheaper than coal and use of coal of
high calorific value and low ash content are streamlined. High
calorific value of coal (22%) and lignite (13%) are being blended with
low grade coal for achieving better thermal efficiency of the boilers.
(ii) The performance of the Turbo Generators are better and
uninterrupted supply of steam, the captive power generation was 62.2%
of the power requirement of the Mill compared to 37.8% of the
requirement for the year 1996-97, with an all time record captive power
generation of 13,22,15,000 KWH in 1997-98.
(2) Additional Investment and proposals, if any, being implemented for
conserving energy.
(i) Work of 90 TPH multi fuel circulating fluidised boiler and 16 MW
steam TG are in full swing. About 80% of civil work is completed and
the major electro-mechanical units have arrived. The project is
expected to go on stream by October 1998.
(ii) A Corporate plan covering 10 years from 1997 is prepared' by MPM
in which the major development works that are needed to be taken up to
make the Mill globally competitive are covered. Some of these relate to
energy conservation.
(iii) Scheme for installation of HT capacitors for improving the power
factor is ready.
(B) TECHNOLOGICAL ABSORPTION :
Research and Development :
(1) Specified area in which R&D carried out and the benefits derived as
a result of the R&D are:
(a) Laboratory pulping studies on various Eucalyptus species grown in
captive research plantations :
A comparative pulping study on seven species of Eucalyptus, grown in
MPM Captive Research Plantations, was carried out. Among the species,
the pulp from Eucalyptus Grandis is found possessing best properties
for the production of Kraft Pulp as well as Cold Soda pulps. Eucalyptus
Agrophloea and Eucalyptus Cioezina possess very poor cold soda pulp
characteristics compared to other Eucalyptus species. This study helps
in taking up large scale plantations of suitable species.
(b) Use of Eco-friendly hydrogen peroxide in bleaching of bagasse pulp:
In view of maintaining higher strength properties of bagasse bleached
pulp at higher brightness levels, hydrogen peroxide addition at alkali
extraction stage (reducing addition of hypochlorite at subsequent
stage) was introduced. This has helped in obtaining pulp and paper with
improved strength properties.
(c) Gum Rosin from Captive Pinus Caribaea:
Preliminary trials on extraction of oleoresin from Captive Pinus
Caribaea plantations and processing of oleoresin to Gum Rosin, have
been carried out. Trials revealed that acceptable quality Gum Rosin
could be obtained from Captive Pinus Caribaea plantations. Viability of
Gum Rosin extraction from captive plantations is yet to be established.
(d) Acrocarpus Froxinifollous (Balanji) wood pulping :
Acrocarpus Froxinifollous is fast growing indigenous hardwood specie
grown in MPM Forest Research Plots at Thirthhalli. Laboratory
investigations indicated that both Kraft and Cold Soda Pulps (with
lower chemical requirements) obtained from this wood are better than
Acacia and Eucalyptus wood pulps.
(e) Plant scale trials on addition of Hydrogen peroxide during refining
in CSRMP Mill :
Single stage peroxide bleaching, replacing two-stage hypochlorite
bleaching, is well established in bleaching of Cold Soda Pulp. Further
trial, to improve upon the brightness of unbleached pulp, was carried
out by adding hydrogen peroxide at secondary refining stage at CSRMP
Mill. This trial did not give encouraging results, and hence, another
trial with addition of hydrogen peroxide at secondary refining with
changes in parameters is under consideration.
(c) FUTURE PLAN OF ACTION
(a) Cane Development:
1. Seed Multiplication Programme :
Co-7704, Co-7804 and Co-8371 new varieties released for cultivation and
five new varieties are under trials.
2. Shortly installing Aerated Steam Therophy at R&D Farm Karehalli to
improve yield and quality of Sugarcane.
3. Raising of Single Eye budded seeds in Polythene Bagasse to increase
ratoon yield and multiplication of new varieties.
4. Issuing of press-mud to Farmers at free of cost from Sugarmill.
5. Conducting Field Day at Farmers Field to educate modern cultivation
methods and efficient use of water and fertilizers.
6. Establishing parasite laboratory at R&D Farm, Karehalli to obtain
better quality cane.
(b) Raw-material from Captive Plantation :
The clonal propagation of acacia hybrid has been undertaken on a field
scale during 1998 rains. The Company is planning to raise 400 acres of
acacia hybrid plantations and in the coming years, it would be
increased further. Ultimately, the objective is to plant only sapplings
of clonal origin.
D. Expenditure on R&D during 1997-98 : Rs. 64.93 lakhs
E. R&D Expenditure as a % of total turnover : 0.23%
F. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :
The Effluent Treatment Plant and sewage treatment plant upgradation
project work is under progress. After the implementation of the project
the quality of the treated effluent discharged will improve.
The erection of Boiler and TG is in progress and this augments the
generation of steam and power.
The usage of hydrogen peroxide in extraction stage of bleaching of
Kraft pulp is in service which is giving good results.
Two stage hydrogen peroxide bleaching will be tried at CSRMP for
improving the quality of pulp.
Efforts are on for modifying the cold soda mechanical pulping process
to produce pulp of higher brightness, better quality with reduced
energy cost.
Centri cleaners are installed in place of out dated vortraps in PM-2 is
working satisfactorily. The same system will be implemented for PM-1.
(Rupees in Lakhs)
1995-96 1996-97 1997-98
FOREIGN EXCHANGE EARNINGS AND OUTGO
1. FOREIGN EXCHANGE EARNINGS - - -
2. FOREIGN EXCHANGE OUTGO DURING THE
FINANCIAL YEAR ENDING 31ST MARCH, 1998
(a) Imports (on C.I.F. basis)
(i) Raw Materials 5029.47 1544.90 2656.46
(ii) Components, Spare parts, Chemicals 308.36 278.72 236.00
(iii) Capital Goods - - 1138.96
(b) Other than Imports
(i) Technical Services/Professional charges 85.53 - -
(ii) Travel 7.86 - 8.26
(iii) Interest and Commitment Charges- 229.55 283.83 310.62
CDC Loan
(iv) Loan Repayment CDC Loan - - 323.72
(v) Others - - 1.75
REVIEW OF ACCOUNTS OF THE MYSORE PAPER MILLS LIMITED, BANGALORE FOR THE
YEAR ENDED 31ST MARCH 1998, BY THE COMPTROLLER AND AUDITOR GENERAL OF
INDIA
1. FINANCIAL POSITION :
The table below gives the financial position of the Company under broad
headings for three years upto 1997-98 :
(Rupees in Lakhs)
1995-96 1996-97 1997-98
LIABILITIES
(a) Paid-up Capital 9853.01 9853.01 9853.01
(b) Reserves and Surplus 3612.61 3774.77 3769.64
(c) Borrowings from
(i) Government of Karnataka 3725.77 4992.39 8542.39
(ii) Financial Institutions 4455.52 4606.14 5832.41
(iii) Banks (including Cash Credits) 4103.94 3181.27 1951.38
(iv) Others 76.85 30.93 23.47
(d) Current Liabilities and Provisions 8769.28 6443.15 7735.38
(including interest accrued and
due on loans)
Total 34596.98 32881.68 37707.68
ASSETS
(e) Gross Block 37263.27 37542.05 37727.25
(f) Less : Depreciation 27623.76 28680.72 29648.03
(g) Net Fixed Assets 9639.51 8861.33 8079.22
(h) Capital Work-in-Progress 140.67 177.49 6906.06
(i) Captive Forest Plantations 3214.24 4205.58 5706.15
(j) Investments 0.13 0.13 0.13
(k) Current Assets, Loans and Advances 21602.43 19637.13 17016.12
Total 34596.98 32881.66 37707.68
Capital Employed 22805.25 22328.76 24343.69
Net Worth 13465.62 13627.78 13622.65
NOTE : (1) Capital employed-represents net Fixed Assets (including
capital working progress) Plus Working Capital.
(2) Net Worth represents paid-up capital Plus Reserves and Surplus Less
Intangible Assets.
2. CAPITAL STRUCTURE :
The Debt equity ratio of the Company was 0.9:1 in 1995-96 and 1996-97
and 1.3 : 1 in 1997-98.
3. RESERVES AND SURPLUS :
The table below indicates the Reserves and Surplus accumulated,
percentage of Reserves and Surplus to total Liabilities and to Equity
Capital for the three years upto 1997-98:
As on 31st March Reserves & Surplus Percentage of Reserves and
Surplus to
(Rs. in Lakhs) Total Liabilities Equity
1996 3612.61 10.4 36.7
1997 3774.77 11.5 38.3
1998 3769.64 10.0 38.3
The Reserves and Surplus as at the end of 1997-98 consisted of Capital
Reserve (Rs. 5.50 lakhs) and Revaluation Reserve (Rs. 1014.68 lakhs),
Investment Allowance Reserve (Rs. 205.77 lakhs) and Free Reserve (Rs.
2543.69 lakhs).
4. LIQUIDITY AND SOLVENCY :
(a) The percentage of Current Assets to total net assets decreased from
62.4 in 1995-96 to 59.7 in 1996-97 and to 45.1 in 1997-98.
(b) The percentage of Current Assets to Current Liabilities (including
provisions) varied from 246.3 in 1995-96 to 304.8 in 1996-97 and to
220.0 in 1997-98.
(c) The percentage of quick assets (Sundry Debtors, Advances and Cash
Balances) to current liabilities (excluding provisions) decreased from
157.3 in 1995-96 to 130.7 in 1996-97 and to 83.0 in 1997-98.
5. WORKING CAPITAL :
The Working Capital of the Company for the years 1995-96, 1996-97 and
1997-98, amounted to Rs. 13025.07 lakhs, Rs. 13289.94 lakhs and Rs.
9358.41 lakhs and represented 4.77 months' value of production at cost
(excluding depreciation and profit for the year) in 1995-96, 6.68
months' in 1996-97 and 4.38 months' in 1997-98. The Working Capital was
equivalent to 4.15 months' turnover in 1995-96, 6.44 months' in 1996-97
and 4.03 months' in 1997-98.
6. SOURCES AND USES OF FUNDS
Funds amounting to Rs. 3608.03 lakhs from internal sources
(Depreciation, Provisions and Reduction in Current Assets and Reserves)
and Rs. 4806.31 lakhs from external sources (Current Liabilities and
Borrowings) were utilised during 1997-98 as shown below:
(Rs. in Lakhs)
Fixed Asset-Gross Block (including Capital 6913.77
work-in-Progress)
Captive Forest Plantations 1500.57
Total 8414.34
7. WORKING RESULTS :
The Working Results of the Company for the three years upto 1997-98 are
tabulated below:
-----------------------------------------------------------------------
(Rs. in Lakhs)
-----------------------------------------------------------------------
1995-96 1996-97 1997-98
(i) Profit/Loss for the year 5920.62 230.96 31.19
(ii) Add/Deduct prior period
adjustments and arrears of
depreciation (-) 2651.31 - -
(iii) Profit(+)/Loss (-) before tax (+) 3269.31 (+) 230.96 (+) 31.19
(iv) Tax Provision 750.00 32.00 -
(v) Profit after Tax 2519.31 198.96 31.19
Percentage of Profit before tax to
(a) Sales 8.7 0.9 0.1
(b) Gross fixed assets 8.8 0.6 0.1
(c) Capital employed 14.8 1.0 0.1
Percentage of profit after tax to
(a) Net Worth 18.7 1.5 0.2
(b) Equity Capital 25.6 2.0 0.3
(c) Capital Employed 11.0 0.9 0.1
-----------------------------------------------------------------------
8. COST TRENDS :
The table below indicates the percentage of cost of sales to net sales
for the three years upto 1997-98:
(Rs. in Lakhs)
-----------------------------------------------------------------------
1995-96 1996-97 1997-98
-----------------------------------------------------------------------
Sales (including central Excise duty) 37636.79 24770.58 27830.61
Less Profit/Add Loss for the year (-) 5920.62 (-) 230.96 (-) 31.19
Cost of Sales 31716.17 24539.62 27799.42
Percentage of cost of Sales to Sales 84.3 99.1 99.9
-----------------------------------------------------------------------
9. PRODUCTION PERFORMANCE :
The value of production for the three years upto 1997-98 is worked out
below:
-----------------------------------------------------------------------
(Rs. in Lakhs)
-----------------------------------------------------------------------
1995-96 1996-97 1997-98
(a) Sales (including Central Excise Duty) 37636.79 24770.58 27830.61
(b) Closing Stock of Finished Goods and
Process Stock 4642.04 4979.13 3702.66
(c) Opening Stock of Finished Goods and
Process Stock 3160.56 4642.04 4979.13
(d) Value of Production (a+b-c) 39118.27 25107.67 26554.14
(e) No. of Employees 3193 3173 3197
(f) Value of Production per employee
(Rs. in lakhs) 12.25 7.91 8.30
-----------------------------------------------------------------------
The percentage of value of production to net worth varied from 290.5 in
199596 to 184.2 in 1996-97 and to 194.9 in 1997-98.
The percentage of value of production to total net assets decreased
from 113.1 in 1995-96 to 76.4 in 1996-97 and to 70.4 in 1997-98.
10. INVENTORY AND PRODUCTION :
The following table indicates the comparative position of the inventory
and its distribution at the close of the three years upto 1997-98:
(Rs. in Lakhs)
1995-96 1996-97 1997-98
1. Raw Materials 1561.79 3389.46 3342.81
2. Stores and Spares 2048.23 2853.48 3500.36
3. Finished Goods 4465.58 4863.33 3551.50
4. Process Stock 176.46 115.80 151.16
Total 8252.06 11222.07 10545.83
(a) The stock of raw materials, stores and spares was equivalent to
6.96 months' consumption in 1997-98 compared with 7.01 months' in
1996-97 and 3.02 months' in 1995-96.
(b) Finished goods represented 1.53 months' of sales (including Central
Excise Duty) in 1997-98, compared with 2.36 months' in 1996-97 and 1.43
months' in 1995-96.
(c) Process Stock represents 0.07 months' value of production at cost
in 1997-98 compared to 0.06 months' in 1996-97 and 1995-96.
11. SUNDRY DEBTORS AND TURNOVER
The following table indicates the value of book debts and sales for the
three years upto 1997-98 :
(Rs. in Lakhs)
As on Debts Considered Total Percentage Sundry Debtors
31st Book Sales of Debtors in terms of months'
March Good Doubtful Debts to Sales Turnover
1996 5404.42 20.81 5425.23 37636.79 14.4 1.7
1997 3285.60 20.81 3306.41 24770.58 13.4 1.6
1998 3034.62 20.81 3055.43 27830.61 11.0 1.3
The particulars of debts outstanding for more than one year as on 31st
March 1998 are given below :
(Rs. in Lakhs)
Particulars of Debts Govt. Depts. and Private Total
Govt. Companies Parties
Debts over one year but - 314.37 314.37
less than two years
Debts over two years but - 26.66 26.66
less than three years
Debts over three years 12.99 20.81 33.80
Total 12.99 361.84 374.83
Mar 31, 1997
1. Your Directors have pleasure in presenting the 62nd Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 1997.
2. FINANCIAL RESULTS
The year 1996-97 saw a change in the newsprint operations because of
two factors:
i. Continuation of Free imports;
ii. Imposition of only 10% duty that too with some qualification with
regard to ash content.
This has made the indigenous manufacturers of newsprint to curtail
their production as free imports, resulted in the publishers not
lifting sufficient quantity from the indigenous newsprint mills.
MPM, thus lost about 45% of production and sales thereof and this has
resulted in Company showing a very nominal profit for the year 1996-97.
Even now, the environment in the indigenous newsprint industry is not
very encouraging even though the designated authority has recommended
for imposition of anti dumping duty, the Government is yet to implement
this decision.
All the above facts put together have made the indigenous newsprint
industry to adopt a cautious approach with regard to production, sales
and profitability. However MPM is taking measures to improve the
quality and compete with the international competitors. With this it
may be possible that there may be an improvement during 1997-98. In
any case the entire market situation in respect of paper industry is
quite fluid at present.
To conserve funds for the capital works that are to be carried out
immediately and due to insufficient profits made during the year, your
Directors have not recommended any dividend for the year under review.
3. OPERATIONS:
The performance of the Company during the year was affected due to
adverse market conditions for newsprint. Under such unfavourable
conditions the Company had to curtail newsprint production. The
production of newsprint for the year was 50,840 MTs which is 44% less
than the production achieved in 1995-96. The production of cultural
paper mill was 29,960 MTs which is almost on par with the rated
production.
In respect of sugar, there was a reduction of 4.44% but the recovery
percentage has gone up from 9.64% in 1995-96 to 9.87% in 1996-97. Sugar
production was lower for the year due to non-availability of sufficient
cane.
ACTUAL PRODUCTION
Product 1996- 1995- Percentage
97 96 of
decrease
MT MT
Writing Printing
and Packing
Paper 29,960 30,407 1.47%
Newsprint 50,840 91,483 44.42%
Sugar 44,748 46,830 4.44%
The sale of indigenous newsprint continued to be lower in the year
1996-97 due to continuous fail in international prices and dumping of
imported newsprint in large quantities by foreign newsprint
manufacturers. Representations have been made to the Hon'ble Prime
Minister of India, Commerce Ministry and Finance Ministry (Government
of India) to take suitable steps like imposition of anti-dumping duty,
increase in customs duty etc., as a measure to safeguard the indigenous
industry.
In spite of sluggish market for Writing, Printing & Packing paper, we
have been able to sell 27,922 MTs (including 998 tonnes of trading
activity). Likewise, sale in respect of newsprint was 53,741 MTs.
PROJECT WORKS
The project works for the erection of 90 TPH CF Boiler and the 16 MW
Steam Turbo Generator were started and going on in full swing and they
are expected to go on stream by October/November, 1998.
The company has prepared a Corporate Plan covering 10 years period till
2007 in which plans of developmental works that need to be taken up on
priority to make the mill face global competition are chalked out.
4. CAPTIVE FOREST PLANTATION:
Raw Material from MPM Plantations: Government of Karnataka has leased
30,000 hect. of land to the company for raising captive plantations and
to use them for meeting wood raw material requirement. During 1996-97,
95,299 MTs. of Debarked Pulpwood was extracted and supplied to the
Mills and 9620 Cu.M. of Fire Wood was issued to the Karnataka Forest
Department towards 12 1/2% lease rent in the form of plantation.
As emphasised by the Senior Adviser of CDC, London, the II Phase of
Farm Forestry Project is being continued from 1996-97. During 1996-97,
18,34,500 seedlings were distributed to the beneficiaries at a
subsidised price of 25 paise per seedling. To popularise the Farm
Forestry Project, the demonstration plots are laid out in the lands of
37 beneficiaries to a total extent of 45.76 ha. Importance is being
given to popularise the scheme in lands belonging to Schools, Colleges
and other public organisations by laying out Demonstration plots,
conducting Vanamahotsava etc. The response from the public is highly
encouraging towards Farm Forestry. Based on the demand survey and the
public interaction 25 lakhs polythene bag (p.b.) seedlings are raised
for distribution during 1997 rains.
Raising of Plantations
The Forest Wing has planted 3692.5 ha of area during 1996-97, out of
which 1794.60 ha of new areas and 1897.90 ha of replanting areas are
planted with Accacia (2577 ha), Pinus (554.25 ha) and Eucalyptus
(561.25 ha).
The MPM/BEML Joint Afforestation Project was encouraging. During 3rd
year, the project has been completed resulting in a total of 330 ha. of
Barren land planted with seedlings both at KGF & Mysore.
5. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE
OUTGO
Information under Section 217 (1) (e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988, are given in Annexure-I, which
forms part of this report.
6. INDUSTRIAL RELATIONS
The Company could achieve good production and sales during' the year
with the continued and good industrial relations.
7. FIXED DEPOSITS
The Company's Fixed Deposits for the year stood at Rs. 26.19 lakhs.
Deposits matured and not claimed amounted to Rs. 5.31 lakhs as on
31-3-1997.
8. DIRECTORS :
During the year, consequent upon the retirement of Sri B. K.
Jagdeeshchandra and Sri A. S. Sadashivaiah and transfer of Dr. A.
Ravindra, they ceased to be the Directors of the Company on 19-11-1996,
30-6-1997 and 30-6-1997 respectively. Upon the Company repaying the
term loan sanctioned by GIC, its nominee Sri T. Lakshmanan has resigned
from the directorship of the company on 24-6-1997.
Your Directors place on record their appreciation for the significant
contribution and able guidance while they were in office as Directors.
IFCI has nominated Sri R. K. Pandey as director on the Board
effective from 10-9-96.
Sri S. Parameswarappa and Sri S. Swatantra Rao have been appointed as
Directors on our Board with effect from 19-11-1996 and 5-8-1997
respectively. The co-opted Directors hold office only upto the date of
ensuing Annual General Meeting. Notice under Section 257(1) of the
Companies Act has been received proposing the appointment of Sri S.
Parameswarappa and Sri S. Swatantra Rao, as directors.
9. AUDITORS :
As per Section 619 (2) of the Companies Act, 1956, the Government of
India, Dept. of Company Affairs, appointed M/s K. P. Rao & Co.,
Chartered Accountants, as Auditors of the Company, for the year ended
31-3-1997.
10. PARTICULARS OF EMPLOYEES :
No employee was in receipt, either during the year or part thereof, of
remuneration above the limits specified in Section 217 (2A) of the
Companies Act, 1956, as amended.
11. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The Review of Accounts for the year ended 31-3-1997 by the Comptroller
and Auditor General of India is attached to this report at Annexure II.
12. Energy conservation measures taken:
(a) The mill has engaged M/s Confederation of Indian Industry, Chennai,
to carry out the energy audit of the Mill. The audit is to be carried
out in three phases. The first phase of the audit is completed. The
second phase is due to be started in July and the third phase in August
1997. After the completion of the audit CII will submit the
recommendations and suggest schemes for effecting energy conservation.
CII are also to conduct inplant training programmes for the Mill
personnel during the 2nd phase of the audit. As per the preliminary
survey and estimate of CII there is a scope to save Rs. one crore in
energy in the Mill, annually.
(b) The Mill has gone along with its own energy conservation schemes -
as listed below
(i) Use of lignite which is cheaper than coal and use of coal of high
calorific value and low ash content are streamlined. Lignite and High
Calorific coal are being blended with low grade coal for achieving
better thermal efficiency of the boilers. A remarkable increase in the
steam generation was noticed per tonne of coal consumed after
(ii) As per the recommendations of the supplier of over hang and better
pattern discs are being installed in the refiners of CSRMP Plant. This
is expected to not only conserve energy, but also improve the quality
of pulp.
(iii) Similar action is initiated for the refiners of stock preparation
section in Newsprint machine. After getting the recommendations of the
Suppliers, the discs will be procured and installed. These are also
expected to give similar results as in case of CSRMP refiner discs.
(iv) This year with the better utilisation of Turbo generators due to
continuous and uninterrupted supply of steam, the captive power
generation was 56.8% of the power requirement of the Mill compared to
43.2% of the power requirement for the year 1995-96.
Additional investment and proposals, if any, being implemented for
reduction of energy:
(i) Civil works for the 90 TPH multi fuel circulating fluidized boiler
and 15 MW condensing turbine are in full swing. They are expected to
come on range by October/November 1998.
(ii) Two bodies of falling film evaporators are being proposed in the
evaporator section of Soda Recovery.
(iii) A corporate plan covering 10 years from 1997 is prepared by MPM
in which the major developmental works that need to be taken up to make
the Mill globally competitive are covered. Some of these schemes
relate to energy conservation.
(iv) HT capacitors are planned to be installed for improving the power
factor.
13. TECHNOLOGY ABSORPTION:
Research and Development
i). Specified areas in which R & D carried out and the benefits derived
as a result of the R & D:
(a) Quality improvement in CSRMP & Newsprint
Quality of cold soda pulp was improved by making changes in process
parameters which in turn has helped to reduce power consumption in
pulping and improvement in newsprint quality with reduction in fluff
content.
(b) Bleaching of kraft pulp using Hydrogen Peroxide in Alkali
extraction stage :-
Introducing addition of hydrogen peroxide in alkali extraction stage
(anti pollution system) has helped in obtaining higher brightness pulp
with better strength properties. This has helped in achieving writing
printing papers of higher brightness.
(c) Polyester staple fibres (PSF) for improvement in strength
properties of paper:
Laboratory trials made by using PSF as partial substitute to regular
paper making furnish showed considerable improvements in strength
properties of paper. It is established that PSF can be used whenever
strength properties of paper are low.
(d) Study on use of extender pigments to improve optical and surface
properties of Paper
In the laboratory study, the Aluminium hydrate-1512, and Gloss
white-1516, are found to be ineffective as extender pigments to improve
optical and surface properties.
(e) Use of sodium sulphite in combination with caustic soda in cold
soda pulping
Both lab and plant trials have been carried out on Cold soda pulping,
using sodium sulphite along with caustic soda to study brightness
improvement and strength properties of cold soda pulp. The results are
still to be established.
(f) Deinking of waste paper
Laboratory trials were carried-out using a deinking chemical developed
by a local source. The deinking chemical was found to he ineffective.
(g) Two stage cooking technique
Two stage cooking technique in CPM-II has been followed to improve
strength properties of pulp.
(h) Study on chemical losses
A team of officers was constituted to study and control the chemical
losses in pulp mill/chemical recovery plant. The study helped to
improve upon the performance of the plants.
14. FUTURE PLAN OF ACTION :
(a) Cane Development.
(i) Seed multiplication programme : In this scheme, 5 varieties are
already developed and 5 more are in the process.
(ii) Conversion of filter cake into compost : This is being pursued for
the mutual benefit of the Mill and farmers.
(iii) Installation of aerated steam therapy : This is being pursued
with an aim to improve the yield and quality of sugarcane.
(iv) Developing of parasite laboratory : Development of parasite
laboratory is under active consideration for obtaining better quality
cane.
(v) Raising of single eye budded seeds : This is being pursued to
increase the yield of the ratoon cane and for the multiplication of new
varieties.
(vi) Campaigns at field level to educate farmers of modern cultivation
methods, economic usage of fertilisers and manure, etc. These
campaigns are being planned.
(b) Raw-material from Captive Plantation
The clonal propagation of natural hybrids of Accacia Mangium will be
identified further during next year. The clonal seedlings will be
planted in regular captive plantation areas also. It is expected to
get the annual increase of yield more than 100% compared to Accacia
auriculiforms.
D. Expenditure on R & D during 1995-96 : Rs. 53.95 Lakhs.
E. R & D Expenditure as a % of total turnover : 0.22%
F. Technology Absorption, Adaptation and Innovation :
The Effluent Treatment Plant upgradation is on hand. This improves the
quality of treated effluent discharged to Bhadra river.
Erection of a boiler and TG are in progress and these augments the
generation of steam and power.
Trials of the usage of hydrogen peroxide in the extraction stage of
bleaching of kraft pulp were successful and the system is in service
since October, 1996.
Centri cleaners are installed in place of outdated vortraps in PM 2 by
which the cleanliness of paper has improved substantially.
Sodium sulphate pre-treatment of chips was carried out on trial basis
to further improve the brightness of CSRMP.
Efforts are on for modifying the cold soda mechanical pulping process
to produce pulp of higher brightness and better quality with reduced
energy cost.
(Rupees in Lakhs)
1994-95 1995-96 1996-97
C. FOREIGN EXCHANGE
EARNINGS AND OUTGO
1. FOREIGN EXCHANGE EARNINGS - - -
2. FOREIGN EXCHANGE OUTGO
DURING THE FINANCIAL YEAR
ENDING 31ST MARCH, 1997
(a) Imports (on C.I.F. basis)
(i) Raw Materials 2324.10 5029.47 1544.90
(ii) Components, Spare
parts, Chemicals 257.61 308.36 278.72
(iii) Capital Goods -- -- --
(b) Other than Imports
(i) Technical Services/
Professional charges - 85.53 -
(ii) Travel - 7.86 -
(iii)Interest and Commitment
Charges CDC Loan 143.96 229.55 283.83
Mar 31, 1996
1. Your Directors have pleasure in presenting the 61st Annual Report
together with Audited Accounts of the Company for the year ended 31st
March, 1996.
2. FINANCIAL RESULTS:
The financial results for the year under review are as follows:
Year Year
Ended Ended
31-3-96 31-3-95
(Rs. in lakhs)
Sales 37637 27756
Operating Profit 6770 4805
Interest & Finance Charges 406 1874
Profit before Depreciation 6364 2931
Depreciation 444 490
Profit before Tax 5920 2441
Provision for Tax 750 --
Profit for the Year 5170 2441
Less : Arrears of Depreciation 2651 2441
Available for Appropriation 2519 --
Appropriation :
Investment Allowance Reserve 206 --
Balance of Profit carried to 2313 --
Balance Sheet
With a view to conserve funds for future expansion like acquisition of
90 T boiler, 15 MW turbo generator, sugar mill expansion and other
immediate capital expenditure, it has been decided not to declare
dividend for the financial year under review.
3. OPERATIONS :
The performance of the Company during the year was good. The
production of writing paper and newsprint was 121890 MT which was the
highest ever achieved so far by the Company. Sales has gone up from
Rs. 27756 lakhs to Rs. 37637 lakhs in 1995-96, an increase of Rs. 9881
lakhs, i.e., 36% over 1994-95. Net profit has gone up from Rs. 2441
lakhs to Rs. 5170 lakhs during 1995-96, an increase of Rs. 2729 lakhs
or 112% over previous year 1994-95. Net profit as a percentage of
sales has gone up from 9% in 1994-95 to 14% in 1995-96. The Company
was able to achieve ZERO stock level for the second consecutive year
in Writing, Printing and Packing paper. On account of better financial
management, substantial reduction in interest charges could be
achieved.
During the year, liabilities of Rs. 3143.86 lakhs towards term loan
instalments including one-time settlement of Rs. 1852 lakhs and Rs.
316.43 lakhs towards interest have been met.
In respect of sugar, though there was an increase in production by 9%
in 1995-96 over 1994-95, there has been a reduction in average sales
realisation. The recovery rate was lower at 9.64% as compared to
10.30%, which is consistent with the trends in the sugar industry in
the State. The Government by notification extended crushing season
upto 31-5-1996.
ACTUAL PRODUCTION
% age
1995-96 1994-95 in-
crease
(QUANTITY IN TONNES)
(a) Writing 30407 24080 26
printing
speciality
paper
(b) Newsprint 91483 88379 4
(c) Sugar 46830 42963 9
The sale of indigenous newsprint over the last four months has been
lower due to continuous fall in international newsprint prices. The
situation has led to a steady build up of newsprint stock.
Representations have been made to the Joint Secretary, Ministry of
Industrial Policy & Promotion, Government of India, to initiate steps
by extending protection to the indigenous newsprint manufacturers.
The international bid for 90 tonnes of steam per hour Multi-fuel
circulatory Fluidised Bed Combustion Boiler with accessories (optional
package) and 16 MW steam turbo generator has been finalised with M/s.
Marubeni Corporation Consortium under the loan assistance of Overseas
Economic Co-operation Fund, Japan through Government of India/
Government of Karnataka.
The Company intended to take up long term proposals like doubling of
capacity in newsprint and sugar, installation of de-inking plant, etc.
However, the Company has deferred these proposals for the present due
to uncertainties envisaged in the paper market.
4. CAPTIVE FOREST PLANTATION:
A quantity of 117895 tonnes of Acacia and eucalyptus was extracted
from captive forest for the financial year 1995-96. 14737 tonnes of
firewood were issued towards lease rent to the Karnataka Forest
Department, Government of Karnataka.
The Senior Forestry Advisor to CDC, London, has emphasized the need to
continue the scheme of Farm Forestry Project in a wider scope. The
Project is being taken up for a period of 8 years from 1996 to 2003 at
a total estimated cost of about Rs. 138 lakhs. This will involve the
farmers and institutions to grow pulp wood species, in turn
encouraging the concept of growing forests in the minds of people and
the students which will help in conserving soil and environment. This
will also help the public in getting fuel wood, small timber, Fodder,
etc. apart from getting a good financial return after selling pulp
wood to the industry.
The Company has also agreed to render financial assistance to
Karnataka Forest Department to take up Bamboo Project for the mutual
benefit of the Company and the State Forest Department. The total
outlay of the project is Rs. 58 lakhs and the project is for a period
of 5 years from 1995-96 to 2000-2001. The project is a very innovative
one which not only intends to supply 20000 tonnes of dried and dead
bamboos to the Company during the project period but also involves the
local members in the Management of Bamboo Forests and to meet their
green bamboo requirement.
The Joint Afforestation Programme of MPM and BEML is in good progress
during the 2nd year of completion. Plantations over an extent of 274
ha. in KGF & Mysore has been raised.
The natural hybrids of Acacia mangium identified in the Company's
Research Plots are showing high potential of maximising the yield in
Wet Zone. The clonal propagation of this hybrid is undertaken to
standardise the technique and to propagate on a commercial scale. The
expected annual increase in the yield from these species is around
75%.
5. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
OUTGO:
Information under Section 217 (1) (e) of the Companies Act, 1956, read
with Rule 2 of the Companies (Disclosure of particulars in the report
of Board of Directors) Rules, 1988, are given in Annexure I, which
forms part of this report.
6. INDUSTRIAL RELATIONS:
The Company could achieve good production and sales during the year
with continued good industrial relations.
7. FIXED DEPOSITS:
The Company's Fixed Deposits for the year stood at Rs. 71.58 lakhs.
Deposits matured and not claimed amounted to Rs. 5.74 lakhs as on
31-3-1996.
A. CONSERVATION OF ENERGY:
(a) Energy Conservation measures taken :
(i) All the three Coal Fired Boilers have been converted into
Fluidized Bed Combustion System successfully.
(ii) Renovation/Upgradation of Soda Recovery Boiler has been
completed. Higher Steam Generation has been achieved.
(iii) Double Felt arrangement has been provided for Paper Machines 1
and 2.
(iv) Utilising process back water in place of fresh water at Bagasse
Pulp Mill, Bagasse Yard and Paper Machine-3.
(b) Additional investment and proposals, if any, being implemented for
reduction of energy :
(i) Installation of 90 TPH Multifuel Circulating Fluidized Boiler and
16 MW Extraction Back Pressure Steam Turbo Generator. This will enable
higher steam and power generation at lower cost. Total investment
involved is Rs. 8,500 lacs approx. The Contract finalised with
Consortium of M/s Marubeni Corporation, Japan, M/s Foster Wheeler Pyro
Power Inc., U.S.A. & M/s. B.H.E.L., India.
(ii) Insulation of old steam pipes and fittings (Approx. Rs. 10 Lacs).
(iii) Retrofit Automation of Paper Machine-3 (Approx. Rs. 50 Lacs).
(iv) Installation of Modern Polydisc Filter Saveall for Paper
Machine-4 with an investment of Rs. 400 lacs, approx.
(v) We are going in for a modern falling film evaporator to improve
steam economy and remove the bottle necks in evaporation capacity to
take care of increased pulp production and consequent black liquor
solids production which is burnt in waste heat recovery boiler
resulting in increased steam production. The estimated Cost is Rs. 500
lakhs.
(vi) HT Capacitor : The power factor of our electrical system is low
resulting in energy loss, higher demand requirement and lesser
capacity utilisation of electrical equipments. It is proposed to
install 5000 KVAR of HT capacitors along with connected reactor and
switch gear, during this year. This will cost about Rs. 100 lakhs.
(c) Impact of Measures at (a) and (b) above :
Expected results in savings have been achieved by the completed
schemes, by achieving higher capacity utilisation of boilers,
better/improved Steam-Coal ratio, improved thermal efficiency, and in
respect of Recovery Boiler, higher Steam output, increased firing rate
of black liquor solids.
(d) Total Energy Consumption and Energy Consumption per unit of
production (as prescribed in Form "A") enclosed.
B. TECHNOLOGY ABSORPTION:
Research and Development:
1. Specified areas in which R & D carried out and the benefits derived
as a result of the R & D.
(a) Kraft Pulping of Bamboos of different States:
A comparative study on bamboos of Karnataka, Kerala and Assam was
carried out to study the characteristic differences and establish
optimum pulping parameters. The study also enables for comparative
cost evaluations in relation to procurement action.
(b) Substitute chemical to Rosin Size :
As a cost reduction measure, laboratory trials were carried out to use
fortified rosin as a substitute to conventional rosin size.
(c) Cold Soda Pulping of Acacia Mangium and Casurina :
Cold Soda pulping trials were conducted on Acacia Mangium, which is a
special species grown in the Varakodu Research Plantations of MPM. The
results obtained are encouraging. The species is comparable to Acacia
Auriculiformis in the production of cold soda pulps. Comparative study
of other hard woods, i.e., Casurina and Eucalyptus were also carried
out to facilitate better usage of hard woods.
(d) Shade Matching of Various Coloured Papers:
As per the market requirements of various coloured papers, shade
matching was carried-out to establish the furnish combinations and dye
requirements before taking up particular coloured paper manufacture on
paper machines. This enables control of wastages during order change
and customer satisfaction.
(e) Quality Norms:
A review of the existing quality norms on input intermediates and
final product was made. Based on previous performance and present
needs, new quality norms were established which helps the materials
department and process department to maintain the quality of inputs
and final products.
(f) Resin Extraction from Captive Pinus Caribaea Variety Hondurensis:
Pinus Caribaea variety Hondurensis grown in our experimental
plantations is a suitable species for tapping resin to produce gum
naval stores, i.e., rosin and turpentine. Efforts are being made
through forest research wing for establishing suitable extraction
process for tapping resin and further obtain rosin for internal use in
paper making.
(g) Kraft Pulping of Grass:
As an alternative/substitute fibrous raw material for pulp
manufacture, laboratory trials on kraft pulping of grass grown in
forest areas was carried-out. It is found that, its pulp yield and
properties were poor and unsuitable for usage in our pulping system.
h) Usage of Liquid Dye-Methyl Violet :
Conventional powder/Crystalline dyes are used in the manufacture of
tinted/coloured papers. Recently, some liquid dyes are available
replacing powder/crystalline dyes, which enable easy handling and
application. Plant trial of newsprint tinting with liquid methyl
violet dye was successfully made after finding the laboratory trial
encouraging.
A. Future Plan of Action:
(a) Cane Development:
(i) Seed Multiplication Programme;
(ii) Adaptive of Trials;
(iii) Raising of 'single eye-budded setts' at R & D farm at Karehally.
(iv) Installation of 'aerated Steam Therapy';
(v) Issue of Press Mud to Farmers from Karehally Farm.
(b) Raw Material from Captive Plantation :
(i) Establishment of clonal seedling and seed orchards of hybrid
acacia and other promising seed sources to further enhance the
plantation productivity on degraded forest lands;
(ii) Production of hybrid acacia propagulis on large scale.
B. Expenditure on R & D During 1995-96: Rs. 23.65 lakhs
C. R & D Expenditure as a % of total turnover: 0.06%.
D. Technology Absorption, Adaptation & Innovation:
Steps are taken up for technological upgradation of Effluent Treatment
Plant to improve the quality of treated effluent discharged to Bhadra
river.
To augment the steam and power requirements, steps are taken to
install one more Boiler and a TG, which helps uninterrupted supply of
steam and power to the Cultural & Newsprint mill, during Sugar season.
On finding the laboratory trials encouraging to use hydrogen peroxide
in extraction stage of bleaching kraft pulps, it is planned to
implement in Plant level (Anti-pollution System), to reduce chlorine
usage.
As per the technical review mission report (CDC London), efforts are
being made to explore the possibility of establishing a system for
resin tapping from captive Pinus Caribaea plantations.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. FOREIGN EXCHANGE EARNINGS -- -- --
2. FOREIGN EXCHANGE OUTGO DURING THE
FINANCIAL YEAR ENDING 31ST MARCH, 1996
(a) Imports (On C.I.F. basis)-Rs. Lakhs
(i) Raw Materials 1884.11 2324.10 5029.47
(ii) Components, Spare parts, Chemicals 201.11 257.61 308.36
(iii) Capital Goods -- -- --
(b) Other than Imports
(i) Technical Services/Professional charges 43.63 -- 85.53
(ii) Travel 5.51 -- 7.86
(iii) Interest and Commitment Charges- -- 143.96 229.55
CDC Loan
1. FINANCIAL POSITION:
The table below gives the financial position of the Company under
broad headings for three years upto 1995-96:
(Rupees in Lakhs)
1993-94 1994-95 1995-96
LIABILITIES
(a) Paid-up Capital 9853.01 9853.01 9853.01
(b) Reserves and Surplus 1987.06 1130.66 3612.61
(c) Borrowings from :
(i) Government of Karnataka 1219.93 1290.93 3725.77
(ii) Financial Institutions 9349.84 9705.83 7546.30
(iii) Banks 190.03 323.11 1013.16
(iv) Others 84.75 556.04 76.85
(d) Current Liabilities and 5490.94 6537.95 8769.28
Provisions (including interest
accrued and due on loans)
Total 28175.56 29397.53 34596.98
ASSETS
(e) Gross Block 33924.94 32897.84 37263.27
(f) Less: Depreciation 22010.59 24478.78 27623.76
(g) Net Fixed Assets 11914.35 8419.06 9639.51
(h) Capital Work-in-Progress 241.47 79.84 140.67
(i) Unallocated Capital
Expenditure 115.91 118.83 --
(j) Advance to Contractors 235.83 24.08 16.04
(k) Investments 0.34 0.19 0.13
(l) Current Assets, Loans
and Advances 12715.91 17895.51 21586.39
(m) Captive Forest Plantations 2951.75 2860.02 3214.24
Total 28175.56 29397.53 34596.98
Capital Employed 19701.64 20541.00 22648.54
Net Worth 11840.07 10983.67 13465.62
NOTE : (1) Capital employed represents net Fixed Assets Plus Working
Capital.
(2) Net Worth represents paid-up capital Plus Reserves and Surplus
Less Intangible Assets.
2. CAPITAL STRUCTURE:
The Debt equity ratio of the Company was 1.1:1 in 1993-94, 1.2 : 1 in
1994-95 and 0.93 : 1 in 1995-96.
3. RESERVES AND SURPLUS:
The table below indicates the Reserves and Surplus accumulated,
percentage of Reserves and Surplus to total Liabilities and to Equity
Capital for the three years upto 1995-96:
As on 31st March Reserves & Surplus Percentage of Reserves
and Surplus to
(Rs. in Lakhs) Total Liabilities Equity
1994 1987.06 7.1 20.2
1995 1130.66 3.9 11.5
1996 3612.61 10.4 36.7
The Reserves and Surplus as at the end of 1995-96 consisted of Capital
Reserve (Rs. 5.50 lakhs) and Revaluation Reserve (Rs. 1087.80 lakhs),
Investment Allowance Reserve (Rs. 205.77 lakhs) and Free Reserve (Rs.
2313.54 lakhs).
4. LIQUIDITY AND SOLVENCY:
(a) The percentage of Current Assets to total net assets increased
from 45.1 in 1993-94, to 60.9 in 1994-95 and to 62.4 in 1995-96.
(b) The percentage of Current Assets to Current Liabilities (including
provisions) varied from 231.6 in 1993-94, to 273.7 in 1994-95 and to
246.2 in 1995-96.
(c) The percentage of quick assets (Sundry Debtors, Advances and Cash
Balances) to Current Liabilities (excluding provisions) varied from
140.4 in 1993-94, to 198.7 in 1994-95 and to 157.1 in 1995-96.
5. WORKING CAPITAL:
The Working Capital of the Company for the years 1993-94, 1994-95 and
1995-96, amounted to Rs. 7787.29 lakhs, Rs. 12121.94 lakhs and Rs.
13009.03 lakhs and represented 4.05 months' value of production at
cost (excluding depreciation) in 1993-94, 5.67 months' in 1994-95 and
4.82 months' in 1995-96. The Working Capital was equivalent to 3.65
months' turnover in 1993-94, 5.24 months' in 1994-95 and 4.15 months'
in 1995-96.
6. SOURCES AND USES OF FUNDS:
Funds amounting to Rs. 5257.90 lakhs from internal sources
(Depreciation, Provisions and Reserves and Surplus) Rs. 3086.59 lakhs
from external sources (Current Liabilities and Borrowings) were
utilised during 1995-96 as shown below :
(Rs. in Lakhs)
Gross Block (Including Capital Work-in-Progress) 4299.39
Current Assets and Loans & Advances 3690.88
Capital Plantations 354.22
8344.49
7. WORKING RESULTS :
The Working Results of the Company for the three years upto 1995-96
are tabulated below:
(Rs. in Lakhs)
1993-94 1994-95 1995-96
(i) Profit/Loss for the year 840.54 2310.83 5920.62
(ii) Add/Deduct prior period
adjustments and arrears of
depreciation (-)840.54 (-)2310.83 (-)2651.31
(iii) Profit (+)/Loss (-)
before tax Nil Nil (+)3269.31
(iv) Tax Provision - - 750.00
(v) Profit after Tax - - 2519.31
Percentage of Profit
before tax to
(a) Sales - - 8.6
(b) Gross fixed assets - - 8.8
(c) Capital employed - - 14.4
Percentage of profit
after tax to
(d) Net Worth - - 18.7
(e) Equity Capital - - 25.6
(f) Capital Employed - - 11.1
8. COST TRENDS:
The table below indicates the percentage of cost of sales to net sales
for the three years upto 1995-96:
(Rs. in Lakhs)
1993-94 1994-95 1995-96
Sales 25579.08 27755.89 37636.79
Less : Central Excise Duty 287.20 531.63 763.44
Net Sales 25291.88 27224.26 36873.35
Less : Profit/Add Loss for the year - 840.54 - 2310.83 - 5920.62
Cost of Sales 24451.34 24913.43 30952.73
Percentage of cost of Sales
to Net Sales 96.70 91.5 83.9
9. PRODUCTION PERFORMANCE:
The value of production (including excise duty) for the three years
upto 1995-96 is worked out below:
(Rs. in Lakhs)
1993-94 1994-95 1995-96
(a) Sales (Excluding
Trading activity) 25579.08 27755.89 37205.13
(b) Closing Stock Finished
and Process Stock 2443.53 3160.57 4642.04
(c) Opening Stock Finished and
Process Stock 3456.63 2443.53 3160.56
(d) Value of Production (a+b-c) 24565.98 28472.93 38686.61
(e) Total No. of Employees 3701 3313 3193
(f) Value of Production
per employee 6.64 8.59 12.12
The percentage of value of production to net worth increased from
207.5 in 1993-94, to 259.2 in 1994-95 and to 287.3 in 1995-96.
The percentage of value of production to total net assets increased
from 87.2 in 1993-94, to 96.9 in 1994-95 and to 111.8 in 1995-96.
10. INVENTORY AND PRODUCTION:
The following table indicates the comparative position of the
inventory and its distribution at the close of the three years upto
1995-96:
(Rs. in Lakhs)
1993-94 1994-95 1995-96
1. Raw Materials 760.21 1297.88 693.07
2. Stores and Spares 2366.64 2075.02 2048.23
3. Pulp 215.14 219.98 868.72
4. Finished Goods 2350.55 3093.05 4465.58
5. Process Stock 92.98 67.52 176.46
Total 5785.52 6753.45 8252.06
(a) The stock of raw materials, stores and spares was equivalent to
3.02 months' consumption in 1995-96 compared with 4.03 months' in
1994-95 and 4.81 months' in 1993-94.
(b) Finished goods represented 1.45 months' net sales in 1995-96,
compared with 1.36 months' in 1994-95 and 1.12 months' in 1993-94.
(c) Process Stock represents 0.06 months' value of production at cost
in 1995-96 compared to 0.03 months' in 1994-95 and 0.05 months' in
1993-94.
11. SUNDRY DEBTORS AND TURNOVER
The following table indicates the value of book debts and sales for
the three years upto 1995-96:
(Rs. in Lakhs)
As on Debts Considered Total Percentage Sundry Debtors
31st Book Sales of Debtors in terms of
March Good Doubtful Debts to Sales months'
Turnover
1994 3173.92 4.14 3178.06 25579.08 12.4 1.5
1995 753.58 35.29 788.87 27775.89 2.8 0.3
1996 5404.42 20.81 5425.23 37636.79 14.4 1.7
The particulars of debts outstanding for more than one year as on 31st
March 1996 are given below :
(Rs. in Lakhs)
Particulars of Debts Govt. Depts. and Private Total
Govt. Companies Parties
Debts over one year but
less than two years -- -- --
Debts over two years but
less than three years -- -- --
Debts over three years 11.80 31.41 43.21
Total 11.80 31.41 43.21
As against the debts of Rs. 43.21 lakhs outstanding for over three
years as at the end of March 1996, the Company had made a provision of
Rs. 20.81 lakhs towards doubtful debts.
Mar 31, 1995
1. Your Directors have pleasure in presenting the 60th
Annual Report together with Audited Accounts of the Company
for the year ended 31st March, 1995.
3. OPERATIONS:
3.1 Production:
Finished production of Newsprint for the year was 88379
tonnes, as compared to 88538 tonnes for the previous year.
Due to retrofitting of Soda recovery boiler, the production
of cultural paper had to be suspended for 53 days. The
production for the year was 24080 tonnes as compared to
27628 tonnes for the previous year.
3.2 Other Highlights:
The conversion of three coal fired boilers into fluidized
bed combustion boilers (FBC) has been successfully
completed and commissioned.
Representatives from M/s. Honshu Paper Co., Japan, visited
in the month of June 1995. They have cleared the
international tender documents for 90 tonnes of steam per
hour Multi Fuel Circulating Fluidized Bed Combustion Boiler
and Accessories with 15 MW Steam Turbo Generator.
3.3 Your Company had entrusted Technical Audit and Mill
development study to M/s. SPB Project Consultants. They
have submitted a Mill development plan which envisages
short-term modification to improve the present level of
operations. The long-term proposals include doubling of
capacity in newsprint and sugar, installation of deinking
plant, installation of boiler and accessories, steam turbo
generator, lime sludge re-burning plant, water and effluent
treatment plant.
4. SUGAR:
The total sugar production during the year was 42963 tonnes
as against 25598 tonnes during previous year. The recovery
rate was 10.30% as against 10.11% during 1993-94 which was
the highest for any season since inception of the Sugar
Mill.
5. MARKETING:
Newsprint & Cultural Paper:
During 1994-95 sale of Newsprint was 92966 MT as against
86948 MT during the previous year. Writing, Printing &
Packing Paper was 26486 MT including 662 tonnes from the
trading activity as against 25972 MT. The total sales of
these products during the year was highest ever in any
financial year. For the first time in the history of the
Company, a zero level stock as on 31-3-1995 was achieved.
Decontrol of Newsprint was brought about on 26-4-1995 by
the Government of India. Newsprint has been included under
the permitted list of imports in Export-Import Policy
1992-97. The effect of such change in policy may have an
adverse bearing on the profitability of indigenous mills.
Sale of Sugar:
The total sale during the year was low at 26571 MT as
against 45820 MT during the previous year as a result of
the policy of the Government.
6. FINANCIAL PERFORMANCE:
During the year, Liabilities of Rs.18.62 Crores towards
term loan instalments and Rs.8.89 Crores towards interest
have been met.
The Company was able to earn a substantial interest of
Rs.3.8 Crores by prudent deployment of funds.
The Company obtained Rs.29.72 Crores loan from Commonwealth
Development Corporation, U.K., as on 31-3-1995 for forestry
project.
The Company obtained a lease finance of Rs.8.35 Crores for
Fluidized Bed Combustion Boiler & Soda Recovery Boiler.
The Company extended voluntary retirement scheme during the
year. The total liability so far on this account is
Rs.9.19 Crores for 564 employees, including contract
labour. The amount was met out of internal generation of
funds. However Company has approached GOK/GOI for specific
assistance to meet Voluntary Retirement Scheme expenses.
The Investment Information and Credit Rating Agency of
India (ICRA) have rated the Company's credit for Commercial
Paper as high safety & adequate safety for fixed deposits,
viz., "A2+" and "MA".
7. CAPTIVE FOREST PLANTATION:
30933 MT of Eucalyptus and 102732 MT of Acacia was
extracted from captive forest for the financial year
1994-95. 15760 tonnes of firewood was issued towards lease
rent to the Karnataka Forest Department, GOK.
Plantations were raised on 4063 hectares during 1994.
Forestry Adviser, Commonwealth Development Corporation, UK,
visited the Company's Forestry and expressed deep
appreciation on the progress of forestry project.
Apart from imparting technical guidance to the farmers for
establishing and maintaining farm forestry, seedlings of
various species were continued to be distributed at
subsidised rates.
The Company has successfully completed 2nd year
afforestation project on BEML land at Mysore and KGF. This
will ensure better utilisation of land and a pollution
controlled environment for BEML and availability of raw
materials for the Company at the end of eighth year at
economical rates. The contract is for 25 years.
8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE OUTGO:
Information under Section 217(1) (e) of the Companies Act,
1956, read with Rule 2 of the Companies (Disclosure of
particulars in the report of Directors) Rule 1988, is given
in Annexure-1.
9. INDUSTRIAL RELATIONS:
The Company could achieve good production and sales during
the year with continued good industrial relations.
10. FIXED DEPOSITS:
The Company's Fixed Deposits for the year stood at
Rs.100.24 lakhs. Deposits matured and not claimed amounted
to Rs.5.09 lakhs as on that date.
11. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF
INDIA:
The Review of Accounts for the year ended 31-3-1995 by the
Comptroller and Auditor General of India is attached to
this Report at Annexure-II.
12. ACKNOWLEDGEMENTS:
Your Directors are pleased to acknowledge the dedicated
efforts of all the employees in achieving high production
for the year.
Your Directors place on record their appreciation for the
assistance, support and guidance extended to the Company by
the Government of Karnataka through the Departments of
Commerce and Industries, Finance, Forest, Planning,
Karnataka Electricity Board, Karnataka State Pollution
Control Board, Directorate of Sugar, KSBPE, Financial
Institutions and Banks.
Your Directors also thank the Government of India and its
various Departments, including Bureau of Industrial Costs
and Prices, Registrar for Newspapers, Ministry of Railways,
Department of Coal, etc., for their support.
Your Directors thank the sugarcane growers for the
uninterrupted supply of sugarcane and OECF, Japan, and
Honshu Paper Company, Japan, SPB Project Consultants for
extending necessary assistance for the Modernisation and
Upgradation of the Mill. Your Directors are also thankful
to Overseas Development Administration and the Commonwealth
Development Corporation, UK, for their assistance and
support.
Mar 31, 1994
Your Directors have pleasure in presenting the 59th Annual Report together with Audited Accounts of the Company for the year ended 31st March, 1994.
2. FINANCIAL RESULTS
The Financial results for the year under review are as
follows:
---------------------------------------------------------
Year Year
ended ended
31-03-94 31-03-93
----------------------------------------------------------
(Rs. in lacs)
Sales 25579 19554
Gross Profit 3119 2878
Less Financial Charges 1633 2104
Less Depreciation 669 774
Net Profit for the Year 617 --
---------------------------------------------------------
Arrears of depreciation to be provided as on 31-03-94 is Rs. 5092.37 lakhs (Previous year Rs. 5709.82 lakhs).
3. PRODUCTION HIGHLIGHTS
3.1 Newsprint:
Production of Newsprint was the highest as compared to any other year since inception. The finished production was 88538 tonnes. This was 9% higher than the previous best during 1986-87. This is more commendable since we are producing 49 gsm variety now compared to 52 gsm produced
earlier. The capacity utilisation was 118%.
3.2 Writing and Printing Paper:
There was a phenomenal increase in the production of writing and printing paper as compared to last year. The finished production was 27,628 tonnes which is 79% higher than that of last year's production of 15,441 tonnes.
3.3 Other Highlights:
3.3.1 Two coal fired boilers out of the three have been converted to fluidized bed combustion (FBC) and commissioned. The construction of 105 metres high chimney has been completed and commissioned. The third
boiler has been taken up for conversion and is expected to be completed by end of August, 1994.
3.3.2 The Company had requested OECF, Japan, to enhance financial assistance to implement the recommendation of Japanese Consultants, M/s. Honshu Paper Company for installation of 90 TPH, FBC boiler with 15 MW steam turbo generator and their final decision is awaited.
3.3.3 The Company has switched over to peroxide bleaching completely to manufacture mechanical pulp for newsprint manufacture. This replaces Hypo bleaching. The brightness of the pulp has increased. Though there is a marginal enhancement in strength properties of paper, the
improvement in the newsprint machine runnability has been considerable.
3.3.4 The Soda Recovery Boiler is being made more efficient by taking up retrofitting works on the boiler. By this, the boiler will be in a position to handle 300 tonnes black liquor solids per day from both the pulp mills. The thermal efficiency will also get enhanced. The work is
expected to be completed by July 15th, 1994.
3.3.5 It may not be possible to maintain the present production level with the existing facility at the Mill. In the present competition in the paper industry and with the restrictions in the Government policy, it is necessary to carry out a Technical Audit to ensure large-scale
expansion in cultural paper mill for achieving higher out-put with better margins. With this in view, consultancy services for Technical Audit and Mill Development study is entrusted to SPB Project Consultants, Madras, at Rs.7.25 lakhs. The expected date of completion of the assignment is mid November, 1994.
4. SUGAR:
The total sugar production for the year was 25598 MT as against 37499 MT and the recovery rate was 10.11% as against 10.03% in the previous year.
MARKETING
a. Newsprint--Though the demand for newsprint continues to be affected by liberal import policy of the Government, the Company could do well to record a sale of 86948 MT as compared to 75318 MT in the previous year, 1992 -93. In terms of value, it was Rs. 16,594 lakhs as against
Rs. 13,794 lakhs in the previous year.
b. Writing and Printing Paper--The sale of Writing and Printing Paper for the year was 25972 MT as against 15828 MT in the previous year representing an increase of over 50% in quantity. The sales value for the above years were Rs. 5015 lakhs and Rs. 2987 lakhs, respectively.
c. Sugar--45820 MT of Sugar was sold during the year as compared to 37830 MT in the previous year. The sales in value represented Rs. 3840 lakhs as against Rs. 2705 lakhs in the previous year.
6. FINANCIAL PERFORMANCE:
The Company has entered into an agreement with Commonwealth Development Corporation on 29.9.1993 for implementing Captive Plantation Project over an extent of 14,742 Ha. at Rs. 554 million.
The Company drew 3.5 million pound sterling out of 7.389 million pound sterling foreign currency loan from Commonwealth Development Corporation, UK, towards Forestry Project Phase-II. The Second installment of 0.839 million pound sterling is being drawn for the proposed expenditure upto September, 1994.
During the year 1993-94, liabilities of Rs. 2906 lakhs towards term loan instalments including funded interest and Rs. 1203 lakhs towards interest have been met.
The Company was able to mobilise Rs. 1130 lakhs through leasing for financing the conversion of boilers at attractive internal rate of return.
The Company also introduced Voluntary Retirement Scheme. 59 Officers and 390 non-officers, including contract labourers, opted for the scheme. The total financial implication is about Rs. 6.4 crores including VRS
Benefit, Gratuity, Leave Encashment, etc., which is met out of Company's own funds.
The Company has given necessary effect to increase the Equity Capital arising out of 3rd package of reliefs by IDBI.
7. CAPTIVE FOREST PLANTATION:
7.1 104342 MTs of Eucalyptus and Acacia were extracted during the year. As lease rent for the lease lands, 11470 MT of wood was handed over to the State Government. As a welfare measure 48445 head loads, 3349 cycle loads and 3933 cart loads of lops and tops including bark were given to the local villagers without cost for meeting their fuel needs.
7.2 During the year, under the Farm Forestry Project, the Company has distributed 10 lakhs seedlings of Acacia, Eucalyptus and other miscellaneous species at subsidised rates. The captive plantation programme has played an important role in the ecological balance especially in degraded lands by way of restoring soil moisture,
conserving soil, meeting the needs of local villagers and generating employment in rural areas.
7.3 Due to the research carried out, the Company was able to derive the following benefits:
(i) Identification of better adaptable & high yielding pine species;
(ii) Nursery period and size of polythene bags have been reduced which has resulted in significant reduction in nursery cost;
(iii) Nutrient studies indicated that there is no depletion of soil fertility under Eucalyptus/Acacia/Pine stand.
8. POLLUTION CONTROL:
All efforts are made to minimise pollution at source. The water consumption in process departments will be controlled by recycling wherever possible. The effluent treatment plant is used continuously to maintain pollution standards. The electrostatic precipitators installed for coal fired boilers and the 105 metres height chimney have helped to
maintain clear air around the factory.
9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of particulars in the report of Directors) Rule 1988, is given in Annexure-I.
10. INDUSTRIAL RELATIONS:
Employees in the Company rose to the occasion during this year to achieve record production. Organisation considers motivating employees to give their best which will pay dividends in future years. In this line, continuous efforts are being made to have excellent industrial
relations in the Company.
10.1. Training & Development:
Priority was given for training of technical, supervisory personnel and managerial personnel under Process Improvement programmes. In addition, managerial personnel, division-wise, actively participated in Strategic Planning and Goal Setting Workshops for the respective divisions.
11. FIXED DEPOSITS:
The Company's Fixed Deposits stood at Rs. 78.46 lakhs as on 31.3.1994. The deposits matured and not claimed amounted to Rs. 4.10 lakhs as on that date.
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988
A. CONSERVATION OF ENERGY:
a. Energy conservation measures taken:
Out of 3 Coal Fired Boilers 2 boilers have been converted into fluidised bed combustion system during the year and third boiler will be completed during 1994-95.
b. Additional investments and proposals, if any, being implemented for reduction of energy:
Retrofitting of Soda Recovery Boiler is taken up during 1994-95. This will enable higher generation of steam. Total investment involved is Rs. 317.77 lacs.
Insulation of Steam pipes and fittings and replacing Steam ejector by vacuum pumps.
c. Impact of measures at (a) and (b) for reduction of energy consumption and consequent impact on the cost of production of goods.
The schemes contemplated above are expected to result in substantial savings.
d. Total energy consumption and energy consumption per unit of production as prescribed in Form 'A' enclosed.
B. TECHNOLOGY ABSORPTION:
Research & Development:
1. Specified areas in which R & D carried out:
Screening of species and provenances in Pine to enhance pulp wood productivity. Evolution of suitable nursery practices for development of healthy seedlings in Pine and Acacia. Continuation of growth, water use and nutrient uptake studies in Eucalyptus Acacia, Pine and natural forest establishment of clonal multiplication plots and screening
plots.
Standardisation of nursery techniques for mass production of vegetative propagules. Optimisation of bleaching conditions for Cold Soda Refined Mechanical Pulp using Hydrogen Peroxide.
Bio-technology in Pulping: As a step towards elemental Chlorine-free bleaching trials carried out using 'Bleachzyme-F'.
2. Benefits derived as a result of above R & D:
Better adaptable high-yielding Pine species have been identified and used for plantation development. Nursery period reduced by 2 months and size of polythene bags reduced resulting in significant cost reduction. Improved product quality and machine runnability.
Studies have confirmed:
No excessive water use.
No water absorption from ground water table.
No depletion of soil fertility.
No allopathic effect on field conditions.
3. Future plan of action:
Development of hybrids in Acacia, Eucalyptus and Pine for increased productivity.
Establishment of seed/clonal orchards to avoid import of seeds.
4. Expenditure on R & D during 1993-94: Rs. 25.45 Lakhs.
5. R & D expenditure as a % of total turnover: 0.10%
Technology Absorption, Adaptation and Innovation:
Steps being taken for modernisation and technological upgradation of production facilities in the old 3 mills producing cultural and kraft varieties of paper. Coloured newsprint such as pink, blue and green are being manufactured and supplied to the market on a continuous basis.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. FOREIGN EXCHANGE EARNINGS Nil Nil Nil
2. FOREIGN EXCHANGE OUTGO DURING
THE FINANCIAL YEAR ENDING
31ST MARCH, 1994
(a) Imports (On C.I.F. basis)-Rs.Lakhs
i) Raw Materials 1197.55 1670.07 1884.11
ii) Components, Spare parts,
Chemicals 240.68 316.68 201.11
(iii) Capital Goods Nil Nil Nil
(b) Other than Imports
(i) Technical Services Nil Nil 43.83
(ii) Travel Nil Nil 5.51
Mar 31, 1992
Your directors are pleased to present the 57th annual report together with the audited accounts of your company for the year ended 31.3.92.
Production performance highlights :
Newsprint :
Production of Newsprint was 82440 MT in 49 gsm compared to 74988 MT in 1990-91. The equivalent production in 52 gsm, being the standard reckoned for installed capacity, is 87702 MT compared to 79487 MT in the previous year, and represents a higher capacity utilisation of 117%. The company switched over to production of lower gsm newsprint responding to the market demand.
A significant improvement in the current year's performance is the higher usage of indigenous pulp. The availability of raw material from captive plantations has enabled us to contain the usage of imported pulp at 17% only. Production of indigenous pulp has gone up by 10.4% i.e., 78325 MT compared to previous year's production of 70955 MT.
Installation of new centricleaners, streamlining the bleaching process and pulp cleaning system during the year helped improve the quality of paper.
Writing and printing paper :
16933 MT of writing and printing paper was produced during the year as against 16368 MT during 1990-91. The inferior quality and inadequate supply of coal were the major constraints for increasing production further. Steam and power constraints have affected the production to some extent.
Sugar :
The total sugarcane crushed during the season from 15.9.91 to 15.4.92 was 487829 MT which is the highest in our company and the sugar produced was 500799 quintals with an average recovery of 10.24%. We have paid a cane price of Rs. 491 per tonne to the farmers. This highest crushing was possible because of good co-operation from the farmers and the higher cane price paid by the company.
Other highlights :
Installation of the pith fired boiler has been completed. This has helped improve the availability of medium pressure steam. The bagasse generated during the year was 141350 tonnes. Out of this 14189 tonnes of bagasse pulp was produced which was used in the manufacture of writing and printing paper as also newsprint. Further 31600 tonnes of pith was generated which was used in the boilers for generating steam. Raw material from captive plantations and bagasse from the sugar mill has brought about the much needed relief and reduced dependence of the company one external sources for raw materials and also coal to some extent.
Marketing :
The demand for the newsprint has been good. We have sold 82570 MT of newsprint during the year compared to 75040 MT in the previous year. Due to tough competition in writing, printing and packing paper, we could only sell 15610 MT as against 16135 MT in the previous year. The sugar sold during this year is 35562 MT against 26042 MT during the last year. Although the company achieved a record production of 48230 MT of sugar during the year, it could sell only 35562 MT due to lower releases by the sugar directorate, resulting in carrying an unsold stock of 33894 MT, including previous years' production, valued at Rs. 25.34 crores. The higher inventory carrying cost of sugar has adversely affected the profitability besides affecting liquidity of the company. The company is making efforts to get higher releases from the sugar directorate besides exploring export market to dispose of the stock.
Profitability :
The company earned an operating profit of Rs. 3364.02 lakhs before providing depreciation. After providing full depreciation of Rs. 1555.80 lakhs for the current year, there is a surplus of Rs. 1808.22 lakhs. An amount of Rs. 490.36 lakhs is charged to profit and loss account as prior period adjustments, leaving a net profit of Rs. 1317.86 lakhs. The net profit for the current year has been adjusted against accumulated and unabsorbed depreciation of previous years. After setting off the current year's net profit of Rs. 1317.86 lakhs, the balance of depreciation of earlier years yet to be charged to account gets reduced to Rs. 5187.70 lakhs as on 31.3.92. Despite increase in production as also higher turnover, the profit earned is lower during the year as compared to the previous year.
The reduced profits is due to higher input costs particularly the prices of major items like coal, power, fuel and chemicals and the cascading effect of the budgetary levies, tariff increases and general inflation on which the company has no control. Whereas the prices of inputs increased unchecked, the same could not be matched with suitable adjustments by increasing the selling prices of finished products due to consumer resistance particularly in the case of newsprint. The marginal increase effected in the newsprint price during the year could only partially neutralise the increased cost of production, still leaving a wide gap. This situation cannot continue for long to the detriment of your company and suitable price adjustments will have to be made to sustain the company. However, through careful management of costs, optimum utilisation of available resources and high production levels, your company could achieve a profit of Rs. 3364.02 lakhs before depreciation.
Captive forest plantation :
Your directors are happy to inform that the company has started getting yield from its captive plantations. During the year we received a net quantity of 91387 MT of Eucalyptus and Acacia, after giving 13050 MT of forest products to the State Government as lease rent for the land leased by the State Government to the company. In addition to this, 140000 head loads and 40000 cycle loads of lops and tops were given to the nearby villagers free of cost to meet their fuel wood needs, thus meeting the social objective. The company has evolved a standard rate of costing the raw material price for captive plantations. The successful implementation of the afforestation programme with ODA assistance is now being cited as an example to other paper mills. So far we have planted 20060 Ha. upto 1991 rains. The average yield from the plantations is 41 tonnes per hectare. The plantation programme in the remaining newly acquired areas of 9940 hectares is being taken up for implementation along with replantation of extracted areas of over 4000 Ha. during the II Phase. The II Phase of forestry project will be implemented with soft loan from Commonwealth Development Corporation (CDC), London under counterpart rupee loan to be sanctioned by State Bank of India led consortium of banks under NABARD refinance. The negotiation with the CDC has reached the final stage and execution of loan documents is expected to be completed during 1992-93. This loan is structured in such a way that the company is not exposed to the foreign exchange risk by the counter financing by the Indian Banks in terms of rupee. The emphasis in this programme is on planting more of pine trees in addition to Acacia and Eucalyptus. The pine will meet the long fibre requirement of the company as a substitute for Bamboo. This pioneering effort will ensure the much needed raw material on a long term basis and reduce the company's dependence on external source and will also help improve the environment and ecology, besides providing substantial rural employment.
Research and Development Activities :
The Research wing of the forest division has carried out research in respect of screening of species/provenances, with the object of evolving higher yielding species/provenances, standardisation of suitable nursery techniquest resulting in reduction of nursery cost, evolution of sivicultural and managerial practices to increase the productivity and vegetative propagation of pine trees. The trials regarding the environmental effects of Eucalyptus and other fast growing tree species on site and associated agricultural crops are also under progress.
Cane Development :
Introduction of high quality seeds in the seed multiplication programme is being continued. Our own farm operations have commenced to enable cane development activities like research, adoptive trials, seed multiplication programme and demonstration of proven technology for the farmers.
Modernisation & Rehabilitation projects :
Pith Fired Boiler :
As mentioned earlier, trial runs of the new pith fired boiler have commenced from Jan, 1992. Full commissioning will be done after overcoming initial teething problems particularly in the pith feeding system. The operation of pith fired boiler is being stabilised.
Coversion of existing 3 Nos. stoker fire boilers to fluidised bed combustion (FBC) system :
Your directors are glad to report the starting of the work on the conversion of the coal boilers to FBC system. The first boiler which is under conversion is expected to be completed by Dec.92/Jan.93. It is hoped that the remaining two boilers will be completed during 1993-94. On completion of conversion, the efficiency of the boilers will improve from the present 60-65% to over 80% even with low grade coal with 45-50% ash content. Further, it will be possible to use Pith, Bagasse, Bamboo, Wood dust, leco, effluent sludge etc. as secondary fuel.
Modernisation programme under OECF Assistance :
Action on the implementation of the project has begun during the year. A contract has been concluded with M/s. Honshu Paper Company Ltd., Japan and the approval of Government of India and OECF has been received. The draft feasibility study prepared by the Indian consultants for upgradation of paper machines for manufacture of writing and printing paper is being examined. On completion of feasibility study and basic engineering by the overseas consultants, procurement action will be initiated.
Environment related schemes under Netherlands assistance :
The technical assistance under Phase I and II programmes of the Dutch Government assistance relating mainly to environment management in pulp and paper, water conservation, solid waste disposal etc. has been completed. The Netherlands Government has offered to continue their assistance with technical and financial support in the III phase.
Pollution control :
Your company is conscious of its obligation to maintain a healthy and clean environment. A new division of environmental pollution control has been created in the company during this year to monitor and take effective steps to reduce pollution due to the mills operations, conversion of coal fired boilers into a fluidised bed combustion systems, installation of electro-static precipitators and construction of chimneys of 103 metres height will reduce air pollution considerably and will meet the pollution considerably and will meet the pollution control standards. As far as the effluent treatment is concerned the company has already ahered to the effluent treatment standards.
Adequate attention is also being given to conservation of water by recycling waste water within the plant by implementing the recommendation of the Netherlands Govt. assisted consultants. Reduction in colour in the effluent jwater is noticeable during the year. Extensive work has been carried out to ensure and maintain the standards.
Conservation of energy, technology absorption and foreign exchange earnings and outgo :
Information pursuant to section 217(1)(c) of the companies act, 1956 read with rule 2 of the companies (disclosure of particulars in the report of board of directors) rule 1988, as amended, is given in Annexure I.
Fixed Deposits :
The company's fixed deposit stood at Rs. 39 lakhs as an 31.3.1992. Fixed deposits matured but not claimed amounted to Rs. 6.85 lakhs as on 31.3.1992. However claims to the extent of Rs. 1.14 lakhs have been settled subsequently.
Conservation of Energy :
Energy Conservation measures taken :
Energy conservation measures suggested by energy audit study have been taken up for implementation in a phased manner. Installation of pith fired boiler has been completed and is on trial run. Modification of certain equipments like pumps, agitators and material conveying system has been effected to reduce energy consumption. Provision of transparent FRP sheets in buildings has resulted in saving of electric energy.
Additional investments and proposals, if any, being implemented for reduction of energy :
Conversion activity of the existing coal fired boilers to fludised bed combustion system involving an expenditure of Rs. 1630 lacs so as to make use of low grade coal with high ash content, is under progress.
Renovation of black liquor evaporation plant for conservation of steam is being completed.
Impact of measures at (a) and (b) for reduction of energy consumptiion and consequent impact on the cost of production of goods :
The company expects to reduce energy consumption by removing obsolescence that has set in some of the old equipments. Cost of production will come down due to efficient energy management.
Technology Absorption :
Research and Development :
Specified areas in which R&D carried out by the company :
Studies to investigate water use and growth of fast growing tree plantations vis-a-vis forest and agriculture crops. Development of high yielding pulp wood tree species and provenances.
Evolution of suitable silvicultural and Managerial package of practices for higher pulp wood productivity. Colour reduction of effluent by use of polyelectrolyte and hydochlorite. Peroxide bleaching of mechanical pulp.
Specific Research and Adoptive Tips in the farmer's field for sugar cane. Well planned seed multiplication programme.
Benefits derived as a result of above R&D :
Acacia auriculiformis have been promising higher yield. Irrespective of the age of seedlings planted, performance in the field is more or less the same. Nursery cost could be reduced based on this finding.
Labortory trials on bleaching cold sodaaaa pulp using single staage Hydrogen Peroxide.
New variety of sugar cane co. 7804 introduced in the area of operation.
Future plan of action :
Research is high rain fall areas (for improvment of genetic resources) site classification, selection and yield prediction.
Trials for colour reduction of effluent.
Two new varieties of sugar cane coc 671 and co 7704 are proposed for introduction during 1992-93 planting season.
Expenditure on R&D during 1991-92 : Rs. 19.34 lakhs.
R&D expenditure as a % of total turnover : 0.10%.
Technology absorption and innovation :
Upgradation of production facilities of old 3 mills planned to be taken up. Colour newsprint production has been standardised.
Foreign Exchange Earnings & outgo :
Details of foreign exchange outgo during the financial year ending 31.03.1992 :
Imports (on CIF basis) :
Raw materials : 1054.64
Components, spare parts, chemicals : 236.39
Capital goods : Nil
Other than imports :
Technical services :
Travel :
Foreign exchange earnings : Nil.
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