56Th Annual Report 2020
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Andhra Paper Limited DRAWING FUTURE BY MERGING STRENGTHS ANNUAL REPORT 2019-20 DRAWING FUTURE BY MERGING STRENGTHS With the acquisition of Andhra Paper Limited (APL) by West Coast Paper Mills Limited (WCPM), the company is on a transformational journey to further consolidate its leadership position in the Indian Paper Sector. APL in its over 5 decades of existence has been showing the much-needed business agility to stay ahead of the curve and emerge stronger. The company, over the years, under the leadership of experienced promoters and senior management has adopted many advanced processes and practices which are unique in the paper industry. Stepping into 2021 and beyond, the company is drawing its future by merging capabilities gained in the past and renewed strategic intents. TABLE OF CONTENTS MANAGEMENT NARRATIVES 1 Chairman’s Address 02 APL’s Sustainable Business Model 04 Inspired Performance 06 Corporate Information 07 Innovative Products 08 Investing in People 10 Improving Our Planet 12 Sustaining Fiber Source 13 Corporate Social Initiatives 14 Board of Directors 16 Leadership Team 17 2 GOVERNANCE Management Discussion & Analysis 18 Board’s Report 27 Report on Corporate Governance 62 3 FINANCIAL SECTION Independent Auditor’s Report 78 Balance Sheet 84 Statement of Profit and Loss 85 Statement of Changes in Equity 86 Cash Flow Statement 87 Notes forming part of the financial statements 89 Annual Report 2020 1 CHAIRMAN’S ADDRESS Dear Shareholders values etched in the APL’s business model. The company will continue to focus on the five I AM DELIGHTED. growth drivers: This is my first address after West Cost Paper • Sustaining fiber source Mills Limited (WCPM) acquired majority stake in IP APPM. After the stake change, IP APPM has • Investing in people become Andhra Paper Limited (APL). WCPM • Improving the planet and APL coming under the same corporate • Creating innovative products umbrella is a significant event in the history of • Delivering inspired performance Indian Paper Industry. WCPM comes with over five decades of experience in the paper industry. while maintaining high standards of integrity and With WCPM’s industry knowledge and the well- people safety in everything the company does. defined management processes imbibed from Driven by our focus on growth drivers and previous promotor, APL is poised to succeed in operating principles, we have delivered another its strategic pursuits. inspired financial performance for the FY 2020. APL’s key strategies and goals are already in We achieved this performance despite having place and we are committed to preserve the lost 25 days (YoY) of production for undertaking 2 Andhra Paper Limited Looking ahead, our long-term outlook for the sector continues to remain positive, with the The management has taken current phase seen only as an aberration. the opportunity of the last The management has taken the opportunity of the last few months to re-examine the business few months to re-examine and operating models. Upon assessment of the the business and operating short term and long-term prospects, a series models. Upon assessment of initiatives have been set in motion aimed of the short term and long- at sustainable growth while minimising the adverse impact of economic cycle. One of the term prospects, a series of key focus area would be cash cost reduction, initiatives have been set in both operation cost as well as fixed cost. The motion aimed at sustainable Company is confident about adapting to this growth while minimising the phase of the business and would respond suitably to fulfil the needs of its customers. adverse impact of economic In the efforts of the past and in the changes cycle. we are envisaging for the future, our source of strength is the tireless spirit of our employees and I would like to thank them for their commitment, patience and hard work. major boiler maintenance work, and lower I would also like to thank our extended family of sales off take in March 2020 due to COVID-19 dealers, suppliers, financial institutions, strategic lockdown. With strong cash reserves and partners, and customers for their continuing faith improved ROIC, the company is well posed to in us. meet the future challenges and explore new Warm Regards growth avenues. Social and environment sustainability is engraved in our business model. With our social sustainability initiatives focused around three Shree Kumar Bangur areas i.e Education, Community Engagement and Chairman & Managing Director Health & Wellness, we stepped up our efforts to support our society in and around our operating environment, benefitting the community, students and schools. Our commitment to the environment sustainability initiatives are not just aligning with the statutory requirements but a bigger corporate responsibility. We commit to embrace this responsibility through “ Vision 2030” sustainability goals built around 3 drivers – Sustaining fiber source, Investing in people and Improving planet. I am confident that, in our pursuit to grow our business, we would be able to achieve our sustainability goals realizing our vision of being most successful, sustainable and responsible paper company. Annual Report 2020 3 How We Create Value ANDHRA PAPER STRIVES TO DO THE RIGHT THINGS, IN THE RIGHT WAY, FOR THE RIGHT REASONS Our Vision To be among the most successful, sustainable and responsible companies in India Operating Business Our Values Principles Objectives Safety of Our Employees Commercial Excellence & Create Value for Customers and Contract Workers Customer Focus Create Value for Shareholders Manufacturing Excellence High Ethical Standards Create a Great Place to Work Productivity | Low Cost Commitment to Excellence Efficiency | Compliance Support our Communities A Performance-based Culture APL's Sustainable Business Model Sustaining Fiber Source 4 Andhra Paper Limited About Us ESTABLISHED IN 1964, ANDHRA PAPER LIMITED IS ONE OF THE LARGEST INTEGRATED PAPER AND PULP MANUFACTURERS IN INDIA. The company since its inception has evolved through times and gained unique industry skills in all areas of paper business from multiple promoters. In 2011, the company was acquired by International Paper (IP), US which is the world’s largest paper manufacturer. In October, 2019 the controlling stake in the Company was acquired from IP by West Coast Paper Mills Ltd. (WCPM). Consequently, the Company became a Subsidiary of WCPM. WCPM, is one of the oldest and the largest producers of paper for printing, writing, and packaging in India. Established in 1955, WCPM is located at Dandeli in Uttara Kannada District in Karnataka. The Company produces writing, printing and copier papers for domestic and international markets. Annual Report 2020 5 INSPIRED PERFORMANCE Financial Performance Operational Performance Revenue (` in lakhs) Production Volume (MT) FY 17-18 127,980 FY 17-18 228,900 FY 18-19 142,733 FY 18-19 238,700 FY 19-20 126,970 FY 19-20 227,600 Profit After Tax (` in lakhs) Sales Volume (MT) FY 17-18 8,306 FY 17-18 230,900 FY 18-19 20,008 FY 18-19 238,700 FY 19-20 21,292 FY 19-20 213,600 EBITDA (` in lakhs) Paper Production (Tonnes per day) FY 17-18 22,676 FY 17-18 643 FY 18-19 39,317 FY 18-19 684 FY 19-20 31,702 FY 19-20 692 Free Cash flow (` in lakhs) Pulp Production (Tonnes per day) FY 17-18 20,730 FY 17-18 503 FY 18-19 33,695 FY 18-19 527 FY 19-20 21,299 FY 19-20 534 ROIC (%) OTIF (%) FY 17-18 15 FY 17-18 90 FY 18-19 30 FY 18-19 92 FY 19-20 29 FY 19-20 92 6 Andhra Paper Limited CORPORATE INFORMATION Registered Office Works Rajahmundry – 533 105 Unit: RAJAHMUNDRY East Godavari District Rajahmundry – 533 105 Andhra Pradesh, India East Godavari District, Phone: +91 883 247 1831 to 1834 Andhra Pradesh, India Fax: + 91 883 246 1764 Phone: + 91 883 247 1831 to 1834 Fax: + 91 883 246 1764 Corporate Office Krishe Sapphire Building, Unit: KADIYAM 8th Floor, 1-89/3/B40 to 42/KS/801, Industrial Area, Hi-tech City Main Road, M R Palem – 533 126 Madhapur, Kadiyam Mandalam, Hyderabad – 500081 East Godavari District, Telangana, India Andhra Pradesh, India Phone: +91 40 6810 1200 Phone: +91 883 245 4651 Fax: +91 40 6810 1255 Fax: +91 883 245 3538 www.andhrapaper.com CIN: L21010AP1964PLC001008 Auditors Deloitte Haskins & Sells, Chartered Accountants Hyderabad Cost Auditors Narasimha Murthy & Co., Cost Accountants Hyderabad Secretarial Auditors D. Hanumanta Raju & Co., Company Secretaries Hyderabad Bankers State Bank of India Axis Bank Citi Bank N.A. Bank of America N.A. BNP Paribas Annual Report 2020 7 INNOVATIVE PRODUCTS Innovative Products We continue to focus on creating innovative, sustainable and recyclable products that help our customers achieve their needs and satisfy changing consumers. APL manufactures a wide variety of writing, printing, copier and specialty papers for foreign and domestic markets. Writing and Printing We offer a wide range of superior quality writing and printing papers suitable for printing journals, text books, reference books, calendars and a variety of other commercial printing applications as well as for notebooks and diaries. 8 Andhra Paper Limited Copier The papers are available in best-in-class brightness and produced with Elemental Chlorine Free (ECF) Pulp technology. Our range is perfect for high volume photocopying and high-quality color printing needs and engineered to run flawlessly on all types of Photocopiers, Laserjet and Inkjet printers and Multi-functional devices. Specialty APL offers a wide range of superior quality Specialty grade products that are custom engineered to suit specific and diverse range of applications. Annual Report 2020 9 INVESTING IN PEOPLE HUMAN CAPITAL POSH HR Vision: Your Company is committed to provide equal opportunity and a harassment free workplace To become the top performing and most respected notwithstanding race, caste, religion, colour, ancestry, paper company in India.