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Orient Paper expects margins to further improve in FY20 and FY21, says MD Pachisia

Updated : May 06, 2019 05:00 PM IST

Orient Paper, the Madhya Pradesh-based paper manufacturer, is expecting a further improvement in its margins in FY20, said ML Pachisia, managing director of the company, adding "a major improvement would be seen in FY21 once the pulp mill expansion comes on stream."

He said year-on-year (YoY) gross margins have improved in the fourth quarter to 24 percent compared to 18 percent last year.

The company reported a mixed set of fourth-quarter numbers with the profit coming in higher on the back of lower tax expenses.

The company is currently debt free and therefore is planning to fund capital expenditure through internal accruals going forward, said Pachisia.

With regards to pulp usage, he said currently the company is utilising 87-88 percent capacity of pulp and importing only 10-12 percent. "Going forward that too will come down substantially. It will also enable us to increase tissue paper capacity," he said.

Post pulp expansion tissue paper contribution would go up from 50 percent to 65 percent to volumes in FY21. He said the growth of tissue paper has been in double-digits in FY19 and writing printing paper growth, which usually is in single-digits, has seen a double-digit. "Going forward, tissue paper will definitely grow in double-digits but one is not so sure of writing printing paper," he added.

Capacity utilisation is more than 90 percent and would continue to be so going forward as well, said Pachisia.
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