Three M Paper Boards IPO: Risky or ?

Three M Paper Boards Introduction

Three M Paper Boards Limited is a notable player in the paper industry.

• Founding Date: Established in July 1989, Three M Paper Boards Limited specializes in manufacturing high-quality recycled paper-based Duplex Board products.
• Product Focus: Their Duplex Board is suitable for printing and packaging applications across various industries, including food and beverage, pharmaceuticals, cosmetics, and consumer goods.

Brief about Three M Paper Boards

Summary of the business of Three M Paper Boards

company is engaged in the business of manufacturing recycled paper-based Duplex Board products used in various packaging applications across industries such as food and beverage, pharmaceuticals, cosmetics, and consumer goods and supplies its high-quality duplex board paper products in both the domestic and international markets. Our products are made out of 100 percent recycled waste-paper and are completely biodegradable. The company sets out to undertake various innovations in both the product-development side as well as in manufacturing processes on a consistent basis. The company is headquartered in Mumbai, with its manufacturing facility located in Chiplun, Dist. Ratnagiri – 415604, Maharashtra, India. Equipped with state-of-the-art machines and ultra-modern technologies in its manufacturing facility, the company had a total manufacturing capacity of 72,000 TPA paper at the close of FY 2022–23.

History of Three M Paper Boards

Company was incorporated as “Three-M-Paper Manufacturing Company Private Limited” at Mumbai as a private limited company under the Companies Act, 1956, pursuant to a certificate of incorporation dated July 26, 1989,

Promoters & Board of Directors of Three M Paper Boards

• Mr. Hitendra Dhanji Shah, Mrs. Prafulla Hitendra Shah and Mr. Rushabh Hitendra Shah are the promoters of our Company.

Board of directors of Three M Paper Boards

Share Holding pattern of Three M Paper Boards

Qualitative Factors of Three M Paper Boards

• 34-year-old strong brand in Duplex Paper
• Experienced promoters and a proven track record
• Diversified product portfolio focused on various consumer segments and markets
• Plan to utilize waste for power generation for captive use
• Extensive network connecting diverse customers and dealers alongside collaborations with raw material suppliers.
• Effective procurement and supply chain management through bulk purchasing, leveraging economies of scale, and strategic importation, enhancing cost efficiency and competitiveness.
• Consistent track record of profitable growth and strong financial performance

Strategy of Three M Paper Boards

• Product Diversification
• Innovation
• Plan to use waste generated
• Sustainability Initiatives
• Customer Focus
• Strategic Partnerships
• Marketing
• Market Expansion:

Strength of Three M Paper Boards

• Diversified product portfolio.
• Consistence financial performance.
• Import of Raw material & Export of finished goods.

Industry Outlook

Duplex Board

Duplex board, a distinguished type of paperboard, is characterized by its unique composition—a glossy coated surface on one side complemented by a matte surface on the other. This distinctive dual-sided feature enhances its versatility, making it a preferred choice for a diverse range of packaging applications. Positioned as one of the sturdiest forms of paperboard or cardboard, the duplex board combines practical durability with aesthetic appeal.

Commonly referred to as Grey back or White back duplex boards, this form of paperboard showcases a dual-sided grey or white coloration, attributed to its two-layered or ply structure. The application of a glossy coat on one side further amplifies its printability, making it a favoured choice for high-quality printing outcomes.

This resilient material is crafted to withstand daily use, offering robustness even in its non-coated state, as evident in applications like disposable cups. In contrast to traditional corrugated cardboard, duplex board sets itself apart by its remarkable balance of toughness, lightweight attributes, and the ability to present a bright white aesthetic.

Meeting diverse industry demands, duplex board is available in specialized variations, including High Weight Coated for robust applications and Light Weight Coated for more delicate uses. The intricate formulation of these papers involves processed pulp, recycled materials, and organic pulp, resulting in a multi-layered structure that ensures durability even under rigorous conditions.

Market Segmentation
The coated duplex board market exhibits a comprehensive segmentation, offering insights into various aspects of the industry.

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Thickness Types:
Up to 200 GSM: This category includes coated duplex boards with a thickness of up to 200 grams per square meter, catering to applications where a lighter board is suitable.
201-400 GSM: Boards falling within this thickness range, from 201 to 400 grams per square meter, are positioned for applications that require a moderate level of thickness and sturdiness.
401-600 GSM: This segment encompasses coated duplex boards with a thickness ranging from 401 to 600 grams per square meter, suitable for applications demanding a higher level of thickness and strength.
Above 600 GSM: Boards with a thickness exceeding 600 grams per square meter, targeting applications that demand heavyweight and robust packaging solutions.

End-User Segment:

• Food and Beverages: Coated duplex boards are widely employed in the packaging of food and beverage products, ensuring both visual appeal and protection for items in this industry.
• Pharmaceuticals: This segment involves the use of coated duplex boards for packaging pharmaceutical products, emphasizing qualities like durability and compliance with regulatory standards.
• Personal Care and Cosmetics: Coated duplex boards play a role in the packaging of personal care and cosmetic products, contributing to the visual presentation and protection of these items.
• Home Care Chemicals: Applications in the packaging of home care chemicals involve coated duplex boards, ensuring safe containment and transportation.
• Other Industries: This segment encompasses various industries beyond the specified categories, reflecting the versatility of coated duplex boards in meeting packaging needs across diverse sectors.

Market Scenario
In the span from FY 2018 to FY 2023, the apparent consumption of duplex boards witnessed a substantial increase, growing from 3.03 million tonnes to 5.65 million tonnes. This expansion reflects a robust CAGR of 13.29% during this period. The surge in apparent consumption signifies a heightened demand for duplex, emphasizing its versatile applications across various industries.

The significant surge in the adoption of duplex boards can be attributed to its widespread utilization across key industries such as FMCG, pharmaceuticals, and e-commerce. In the FMCG sector, where visual appeal and durability are crucial for packaging, duplex boards have emerged as a preferred choice. Similarly, in the pharmaceutical industry, the need for secure and efficient packaging solutions has driven the demand for duplex boards. The thriving e-commerce sector, with its emphasis on sustainable and reliable packaging, has also contributed substantially to the increased adoption of duplex.

Key Applications & End Use Customer Segments

• Packaging for Beverage Industry: Duplex boards are the material of choice for creating eye-catching and resilient packaging for various beverages. Whether it’s the vibrancy of soft drinks or the sophistication of premium beverages, duplex boards ensure a blend of visual appeal and structural integrity.
• Match Boxes: In the realm of matchboxes, duplex boards shine. Their sturdy composition and coated surface not only provide durability but also serve as a canvas for intricate designs and branding, making each matchbox unique.
• Packaging for Garments: Duplex boards play a vital role in presenting garments with elegance and protection. Their use in garment packaging guarantees a durable and visually pleasing solution, enhancing the overall presentation of clothing items.
• Packaging of FMCG Goods: Duplex boards find practical application in the packaging of several FMCG goods such as soap bars, toothpastes, cereals, snacks, cigarettes etc. As duplex boards present a sturdy and printable surface, it allows companies to utilise it as a protective outer covering for their goods, with the added capability of creating visually appealing packaging.
• Toys and Game Boxes: Crafted in various sizes, duplex boards are the go-to choice for creating packaging for toys and games. The boards’ versatility ensures that each box is tailored to the unique requirements of different toys and games, providing both protection and appeal.
• Cartons for Pharmaceuticals: Pharmaceutical packaging demands reliability, and duplex boards deliver just that. With secure cartons crafted from these boards, pharmaceutical products are not only safeguarded but also presented with clarity and precision.
• Greeting Cards: The smooth and uniform finish of duplex boards transforms them into ideal canvases for crafting greeting cards. These boards provide the perfect backdrop for detailed designs, ensuring that each card becomes a work of art.
• Food Packaging: Ensuring the safety and hygiene of food products, duplex boards play a pivotal role in food packaging. Manufactured from food-grade materials, they comply with stringent standards, making them a trustworthy choice for packaging edibles.
• Medication Packaging: Accredited for use in medication packaging, duplex boards offer a secure and compliant solution for the pharmaceutical sector. These boards contribute to maintaining the quality and efficacy of medications, adhering to regulatory requirements.

Demand Drivers
Demand for duplex coated boards is closely linked to consumer demand pattern as its usage is primarily for packaging consumer products ranging from food products, garments, foot wear, pharmaceuticals, and other consumer durable and non-durable products. Higher sales of consumer products that trigger consumer product packaging translate into demand for duplex coated boards.

• Expanding E-Commerce Market
  • India’s e-commerce sector is experiencing a robust surge, driven by the escalating number of internet users, widespread smartphone adoption, and an upswing in disposable incomes. This expansive trend encompasses diverse commerce segments, including business-to-business (B2B), direct-to-consumer (D2C), consumer-to- consumer (C2C), and consumer-to-business (C2B). Particularly noteworthy are the significant strides in growth observed in the D2C and B2B segments in recent years.
  • As of 2021, India’s e-commerce market boasts a formidable Gross Merchandise Value, surpassing USD 55 billion, and projections indicate a remarkable trajectory with an anticipated annual Gross Merchandise Value of USD 350 billion by 2030. These numbers underscore the industry’s dynamic evolution, further emphasized by the participation of over 348 million users in online transactions and nearly 140 million engaging in online shopping.
  • The integration of various packaging papers, such as duplex boards and kraft paper, within the e-commerce landscape is playing a pivotal role in driving market growth. These packaging solutions are gaining traction due to their associated benefits, including folding resistance, toughness, and high-strength compression performance. Additionally, governmental initiatives aimed at curbing the single-use of plastic bags are poised to further amplify the demand for duplex boards, aligning with broader sustainability goals.
• Growth in Pharma Sector
  • Between FY 2015-21, the Indian pharmaceutical industry witnessed a healthy annual revenue turnover growth, registering an 8% CAGR driven by robust domestic and export demands. However, the advent of the Covid-19 pandemic cast a shadow on revenue growth in FY 2022, especially affecting export revenue. Despite the challenges, pharmaceutical exports in FY 2022 remained steady at USD 24.62 billion, aligning closely with the preceding year’s figures.
  • The disruptions in freight movement caused by the pandemic in the first half of FY 2022 severely impacted pharmaceutical exports, with a modest recovery observed in the latter part of the fiscal year, despite a weakened currency. Moving into FY 2023, India saw a noteworthy increase in pharmaceutical exports, reaching nearly USD 25.39 billion. Over the period from FY18 to FY23, the Indian pharmaceutical industry demonstrated resilience with a CAGR ranging from 6-8%, propelled by an 8% surge in exports and a 6% uptick in the domestic market.
  • Anticipating this growth momentum and considering expected developments, the pharmaceutical industry’s annual revenue turnover is projected to reach USD 130 billion by 2030. This growth in the pharmaceutical industry is driving a substantial demand for duplex boards. As companies expand, the need for reliable packaging solutions is on the rise. Duplex boards, valued for their quality and versatility, are becoming essential for secure and efficient pharmaceutical packaging.
• Growing FMCG Sector
  • The FMCG sector in India expanded primarily due to consumer-driven growth and increased product prices, particularly for essential goods. In the April-June 2023 quarter, India’s FMCG sector witnessed a notable growth of 7.5% by volumes, marking the highest in the past eight quarters. This growth was propelled by a resurgence in rural India and increased expansion in modern trade. As India’s fourth-largest sector, the FMCG industry has sustained a robust growth trajectory over the years, driven by factors such as rising disposable income, a growing youth population, and increased consumer brand awareness. Accounting for 50% of FMCG sales in India, household and personal care contribute significantly to the country’s GDP. As of December 2022, the FMCG market reached USD 56.8 billion, while the Indian food processing market size reached USD 307.2 trillion in 2022, projected to reach USD 547.3 trillion by 2028 with a CAGR of 9.5% during 2023-2028. The advent of online retail and e-commerce has enabled FMCG businesses to market and sell their products nationwide with minimal investment in marketing activities. This robust growth in the FMCG sector in India is set to generate a heightened demand for duplex boards. As the sector expands, there is a growing need for reliable and efficient packaging solutions.
  • The demand for duplex boards is further accentuated as they provide effective packaging solutions for a wide range of products marketed and sold across the country. This trend aligns with the FMCG industry’s focus on efficient and sustainable packaging solutions to meet the evolving demands of consumers and the market.
• Growing demand for F&B products
  • According to industry reports, the food and beverage sector in India is increasingly growing. Constituting approximately 3% of India’s GDP and accounting for nearly two-thirds of the entire retail market in the country, this industry is experiencing significant profitability. The expansion of the food and beverage sector can be attributed to various factors, including the ongoing urbanization, evolving dietary and lifestyle choices among millennials, and a surge in household spending rates.
  • In the food and beverage industry, there is a heightened demand for paper packaging owing to its recyclability, potential for reducing air pollution, and its capacity to contribute to environmental cleanliness. Consequently, the upward trajectory of the food and beverage industry is expected to positively impact the growth of the packaging paper sector.
• Rising Consumption of Alcohol
  • A recent analysis published in the medical journal Lancet indicates a noticeable uptick in alcohol consumption in India spanning the last three decades. Various factors contribute to this rise, including the increasing levels of disposable income and the expanding urban population. The alcohol market in India, valued at USD 20 billion, is projected to experience a 7% annual growth from 2021 to 2025. This surge in consumption is influenced by shifting social norms, urbanization, female empowerment, higher incomes, and product innovations. Post a two- year pandemic-induced isolation, a growing number of young individuals, especially in urban areas, are engaging in social activities at restaurants, clubs, pubs, and bars. Notably, the evolving landscape during Hindu festive seasons prompts alcohol companies to boost production and distribution, aiming to enhance sales and maximize profits. The transformation from a lack of fine dining culture in the 1990s to a vibrant scene in metros and smaller towns underscores the dynamic shifts in India’s alcohol consumption patterns.
  • This growing alcohol consumption in India is set to increase demand for duplex board liquor cartons. Duplex board liquor cartons, offering strength and printability, become essential for presenting diverse alcohol products. This demand peaks during Hindu festive seasons, driving liquor companies to boost production and heightening the requirement for duplex board-based liquor cartons to meet market dynamics and consumer preferences. This emphasizes the importance of packaging solutions that balance functionality with India’s changing alcohol culture.

Close to a decade of high economic growth changed India’s consumer demand landscape.
Indian economy enjoyed more than a decade of uninterrupted growth beginning the initial years of 1990-2000 periods as country dismantled its license regime. Higher operational freedom and increased integration with global economy propelled Gross Domestic Product to grow by an average rate of 7% per annum. This growth phase which created thousands of jobs primarily in urban centres created a new affluent middle-class segment with higher disposable income.

Lifestyle and consumption pattern of this middle class was entirely different from earlier consumer groups. Demand for consumer durable and non-durable products from this consumer class was higher. Along with higher disposable income the pick-up in consumer demand is credited to improved exposure to consumer centric western markets. Consequently the sales of consumer durable products including home appliances, electronic products, furniture and non-durable products like food, personal and household hygiene products saw an increase.

Past few months has seen developments in government policy measures, credit growth, and steps to simplify regulatory framework. These developments have played a huge part in reviving growth in industrial sector after the covid-19 pandemic by improving credit flow and inducing growth in service sector, which is finally resulting in higher economic growth. Even as an erratic monsoon led to a spike in inflation in Q2 2024, consumer demand which contributes about 60% of GDP growth – remained strong in a country of over 1.4 billion people, largely driven by urban dwellers.

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Duplex board manufacturers who have strong relationship with their customers, innovative and diverse product offering, and capability to service customers across sectors and geography stand to benefit.

Exports
The export of duplex board has displayed a remarkable trajectory over the given years. In FY 2019, the export value stood at INR 4.6 billion, and by FY 2023, they reached INR 10.8 billion. The CAGR over this period stands at an impressive 24%, indicative of sustained and substantial growth.

Notably, the most notable growth occurred in FY 2022, with a staggering YoY increase of 81.13%, following a robust 28.47% growth in FY 2021. This exceptional growth can be attributed to the global surge in e-commerce, driving increased demand for packaging solutions. The duplex board, being a versatile and reliable material for packaging, has evidently thrived amidst these evolving market dynamics. Despite a marginal decline in FY 2023, the overall trend showcases the resilience and adaptability of the duplex board industry to global packaging needs.

UAE holds the largest share, accounting for 18% of the total exports of duplex board. This is followed by the United Kingdom, with 13% of the share. Following closely behind are Italy, USA, and Turkey, with 8%, 6%, and 6% of the export share, respectively. Rest of the world accounted for 49.67% of the export market.

Imports
Annual imports reached INR 2.6 billion in FY 2023, up by a phenomenal 136%, from INR 1.1 billion in FY 2022. This was driven by a swift embrace of online shopping by consumers and a renewed focus from prominent consumer goods and retail entities in the nation. The gross merchandise value (GMV) of India’s e-tailers reached USD 60 billion in the FY 2023, up by 22% from USD 49 billion in FY 2022. This caused the huge demand boost for packaging materials, especially duplex boards, in the Indian market.

Majority of these imports were from Japan, accounting for 66.57% of the total imports for duplex boards. This was followed by China with 15.93% of the share. Nepal, Spain, and Malaysia accounted for 8.25%, 3.48% and 0.97% respectively. Rest of the world accounted for a total of 4.80% of the total imports.

Key Challenges
Indian Paper Industry confronts many challenges in terms of high production cost caused by inadequate availability and high cost of raw materials, non-availability of good-quality fibre, power cost and concentration of mills in one particular area, uneconomical plant size, technological obsolescence and environmental challenges.

• Raw Material Shortage
  • The Indian paper industry heavily relies on raw materials like wood, bamboo, and bagasse, and any scarcity or price fluctuations in these resources can negatively impact the industry’s operations and profitability. The Indian paper market currently faces an unsustainable condition due to severe shortages and elevated input costs.
  • Rising production costs, along with increased expenses in logistics, chemicals, and raw materials, have forced paper mills to establish new price benchmarks. The global awareness of supply chain challenges for 2023 heightened within the paper business community, given the uncertainties stemming from the pandemic and the Ukraine war, making predictions about future world cargo trends challenging. The decision by Indonesia to limit coal exports has also affected coal prices.
  • The significant shortage and high cost of basic raw materials have intensified the pressure on profit margins, leading to the closure of mills in some cases. The severity of the situation is underscored by the current cost of procuring wood in India, exceeding USD 100 per tonne, compared to other competitive countries with advanced paper manufacturing, where the cost is USD 60 per tonne.
• Environmental Challenges
  • The paper industry, being a major contributor to environmental pollution, faces stringent regulations due to various environmental concerns. Issues such as climate change, human toxicity, ecotoxicity, photochemical oxidation, acidification, nutrification, deforestation, and solid refuse production are exacerbated by the resource- and capital- intensive nature of this business. In India, the paper industry is categorized as an agro-based industry, encompassing enterprises involved in producing pulp, paper, paperboard, and other cellulose-based products using wood as a raw material. This industry falls under both the Manufacturing and Agricultural sectors, which collectively contribute significantly to greenhouse gas emissions.
  • On a global scale, the paper and pulp industry accounted for around 190 million metric tonnes (MMT) of CO2 emissions in 2021, marking a record high for the sector and representing about 2% of all industrial emissions. As per the Global Carbon Budget Report of 2022, India demonstrated the highest growth rate in carbon emissions among major contributors to global warming. With an annual increase of 3.8%, India became the fourth-largest emitter globally. Despite this growth, India’s per capita carbon emissions remain significantly lower, being one- eighth of those in the United States and one-third of the global average. The report estimates India’s total emissions in 2021 at 2.7 billion tonnes, slightly less than the EU’s 2.8 billion tonnes. India’s contribution to global emissions in 2021 was 7.5%, slightly below the EU’s 7.7%.
  • While regulations play a crucial role in mitigating the adverse environmental effects of ongoing business operations, overly complex procedures and inflexible standards pose a threat to the predictability of future business opportunities. Moreover, they can hinder the motivation to explore more foundational and environmentally responsible technological advancements. Non-compliance with these regulations carries the risk of fines, penalties, or even the shutdown of operations, impacting the industry’s growth. These regulations manifest in various forms, including performance standards such as emission limit values, technology requirements, and incentive-based instruments like taxes/charges, voluntary/self-regulations, and tradable emission allowances.
• Technological Challenges
  • The paper industry is in a continuous state of evolution, incorporating modern technologies and processes to enhance productivity, efficiency, and quality. Falling behind in adopting these technological advancements could place industry players at a competitive disadvantage. In comparison to global counterparts, including Scandinavian countries, the USA, Russia, China, Japan, Indonesia, etc., the Indian paper industry significantly lags in technology adoption, with only a few mills employing state-of-the-art technologies.
  • A notable challenge faced by the industry is the absence of domestic manufacturing capabilities for plant and machinery. Approximately 18% of paper production relies on forest-based raw materials like wood and bamboo, while the remaining comes from non-conventional sources like agro residues. Currently, 75% of production is attributed to the Recovered Paper (RCF) and wastepaper sector.
  • Confronting pollution challenges, numerous small and medium-sized agro-based mills, unable to bear the costs of chemical recovery, transitioned to utilizing Recovered Paper (RCF) for paper production. The predominant scenario in India’s paper mills is the utilization of outdated technology, particularly in the face of the industry’s intricate structure. The technology and equipment employed by mills vary based on their scale of operation and raw materials. This variance not only adversely affects the quality and pricing of the products but also poses environmental concerns, as obsolete technologies tend to be less efficient and more polluting.
  • To effectively compete with larger firms’ smaller paper mills have to invest in improving their manufacturing technology, build economies of scale, ensure quality compliance, and create a robust distribution network. However, smaller firms, especially manufacturing firms in the SME space finds it difficult to raise capital at a cheaper rate when compared to larger firms. Higher risk profile of these smaller firms results in funding agencies (banks, NBFCs) charge a premium. This lack of access to capital at a lower cost is preventing smaller paper mills to effectively compete with larger mills, thus contributing to the fragmented nature of the industry.
  • These challenges provide tremendous scope for improvement in terms of technological improvement. Therefore, many capital investments in recent years were aimed at deploying latest technologies and best practices to ensure environment compliances rather than increasing capacity.
• Recently developed market challenges
  • The present market conditions for coated duplex board suggest a slowdown, with challenges arising from surplus capacity in various clusters and a decrease in demand. Mills in Gujarat encounter significant obstacles in both recycled duplex board and kraft paper segments, primarily due to sluggish order bookings from overseas markets, a crucial factor in selecting the mill’s location near a port. Additionally, the region’s overcapacity contributes to price pressure among manufacturers.
  • The Indian market is further affected by the availability of more affordable paper products from mills in Indonesia, Taiwan, and Malaysia, making domestic products relatively expensive. Mills are experiencing closures due to burdensome loans, EMIs, and accumulating fixed expenses like electricity bills, staff salaries, administrative costs, and maintenance expenses.
  • Despite a notable decrease in waste paper prices, the order influx from both domestic and overseas markets remains insufficient to fully capitalize on the available capacity. This resulted in a notable increase in inventory levels during Q1 as compared to Q2 in the current year. Consequently, mills found themselves compelled to implement combined shutdowns as a strategic move to stimulate demand within the market.
  • The challenges outlined, such as a slowdown in market conditions, surplus capacity, declining demand, and increased competition from overseas markets, present an opportunity for strategic innovation and adaptation in the industry. Despite the hurdles, there is a chance for mills to leverage these challenges as a catalyst for efficiency improvements, cost optimization, and diversification into emerging markets or product segments. By addressing issues like overcapacity and exploring new avenues for growth, mills can position themselves to not only weather the current market challenges but also emerge stronger and more resilient, tapping into unexplored opportunities within the evolving landscape of the coated duplex board and paper products industry.

Key Players
Several major players operate in the coated duplex board market in India. These include

• ITC
• Century Pulp and Paper Limited
• JK
• Tamil Nadu Newsprint & Paper Limited (TNPL)
• Emami
• N.R. Agrawal Industries
• Camerich Paper
• Divya Shakti Paper
• Siddartha Paper
• KD Pulp & Paper
• Mehali Paper

Financial Analysis

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For detail industry analysis refer drhp page numbers of 98-128

Business Data of Three M Paper Boards

Verticals of Three M Paper Boards

• Royal Grey Back
  • GSM Range: 200 – 400
  • Royal grey back is a coated duplex board which is designed to meet high stiffness with superior bulk and brightness. Its exceptional stiffness and bulk makes it an excellent choice for packaging that needs extremely good strength with unbeatable print quality.
  • Applications
    • Food Packaging
    • FMCG
    • Garments & Apparels
    • Liquor Cartons
• Prima Grey Back
  • GSM Range: 200 – 400
  • Prima Grey Back is a coated duplex board of high density made predominantly from recycled pulp. Owing to its heavy coating it is very glossy in nature with smoothness. It’s high strength properties on printing & packaging machines makes it ideal for packaging needs.
  • Applications
    • FMCG
    • Footwear Cartons
    • Notebook Covers
    • Garments & Apparels
    • Liquor cartons
• Royal White Back
  • GSM Range: 200 – 400
  • Produced from recycled pulp, Royal White Back has excellent top surface coating and offers high bulk with superior strength-weight ratio. The top surface of White Back gives better whiteness and a dust free surface for unmatched efficiencies on high speed printing and conversion machine.
  • Applications
    • Playing Cards
    • Pharmaceuticals
    • FMCG
    • Garments & Apparels
    • Liquor carton

Product wise break-up of Three M Paper Boards

(Rupees in Lakhs)

Revenue contribution from Geography presence of Three M Paper Boards

(Rupees in Lakhs)

Domestic Sales

Three M Paper Boards

International Sales

Three M Paper Boards

Customer dependency of Three M Paper Boards

Amount (₹ lakhs)

Supplier dependency of Three M Paper Boards

Amount (₹ lakhs)

Machinery/Plants/Factory

The company’s manufacturing facility is located at F1, MIDC Area, Kherdi, Chiplun, Ratnagiri – 415 604, Maharashtra, India. Situated on 20 acres of leasehold land. The unit is connected through a broad-gauge railway line on the Mumbai-Trivandrum section.

Capacity Utilisation

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Competition

In our industry, competition is prevalent, much like in any other sector. We face competition from companies such as N R Agarwal Industries Ltd., Kuantum Papers Ltd., Shree Ajit Pulp and Paper Ltd., and Astron Paper & Board Mill Limited, which either operate in the same line of business as us or offer similar products. Our competitors are primarily centered around the availability of product range, production capacity, and product quality.

Peer companies comparison

Business risk factors

• Three M Paper Boards historical revenues have been significantly dependent on few customers. The loss of one or more of significant customers or significant reduction in production and sales or demand for Three M Paper Boards product from significant customers may adversely affect Three M Paper Boards business, financial condition, result of operations and cash flows.
• Three M Paper Boards generate our major portion of sales from our operations in certain geographical regions especially Maharashtra, Karnataka, Goa and Delhi and internationally also. For the year ended March 31, 2023 and period ended September 30, 2023 our Company generated 82.04% and 89.96% from Domestic Sales and 17.96% and 10.04% from International Sales respectively of Three M Paper Boards revenue from operation cumulatively. Any adverse developments affecting our operations in these regions could have an adverse impact on Three M Paper Boards revenue and results of operations.
• Any significant decline in the demand for our products i.e., coated duplex paper boards or introduction of alternative technology or consumer habits may adversely affect Three M Paper Boards profitability and business prospects.
• Three M Paper Boards is mainly dependent on imports for supply of our major raw material; i.e., waste paper.
• Volatility in the supply and pricing of Three M Paper Boards raw materials may have an adverse effect on our business, financial condition and results of operations.
• Three M Paper Boards business is dependent on our single manufacturing facility, and we are subject to certain risks in manufacturing process. Any slowdown or shutdown in our manufacturing operations could have an adverse effect on our business, financial condition and results of operations.
• Three M Paper Boards have experienced negative cash flows from operating, investing and financing activities in the past.

Financials

Key Performance Indicators

(₹ in lakhs unless otherwise stated)

Profit & Loss

(Rupees in Lakhs)

Cash Flow

(₹ in lakhs)

Capital structure

SWOT ANALYSIS

• Strengths:
  • In-house core competency in pulp & paper.
  • Low power cost due to in-house coal-based power generation capability.
  • Plan to utilize waste for power generation for captive use.
  • Utilization of imported coal with stable supply instead of local coal with fluctuating supply.
  • Established network of dealers and customers.
  • 30-year-old brand in Duplex Paper.
  • Established network of raw material suppliers.
• Weaknesses:
  • High initial capital investment.
  • High pollution control equipment cost to meet stringent environmental norms.
  • Dependency on high-cost imported raw material.
  • Lack of own collection centers for recovered paper.
• Opportunities:
  • Plastic ban leading to increased use of packing paper.
  • High demand for the product in the western region.
  • Growing export demand for the product due to restrictions in China.
  • Increased demand due to growth in FMCG.
  • High cost of jute/cloth-based packaging bags.
  • Increasing awareness among people to reduce the usage of plastic-based bags and packaging material.
• Threats:
  • Stringent environmental norms.
  • Large number of organized and unorganized players.
  • Thin margins.
  • Fluctuation in raw material prices.
  • Fluctuation in foreign currency exchange.
  • Limited availability of imported coal and other raw materials.

IPO Details

Three M Paper Boards Limited IPO Details

Object of the issue

Litigation involved

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