Orient Paper & Industries Ltd

The transition to a more sustainable and equitable economic model will be a gradual process, but the initial indications are undoubtedly encouraging.

C. K. Birla

Chairman

At Orient Paper, we have built a legacy of leadership in producing high-quality paper sustainably since its inception in 1936. Our products have been integral to the everyday lives of millions of people.

In the face of a digital revolution that is redefining the paper industry, we have pivoted our focus to become a solutions-driven, customer-centric, and innovation-focused enterprise.

The transition to a more sustainable and equitable economic model will be a gradual process, but the initial indications are undoubtedly encouraging.

In FY24, we remained steadfast in our commitment to ESG goals, implementing strategies for responsible resource management, building resilient communities, and ensuring compliance with the rigorous ethical frameworks.

As part of our sustainability initiatives, our agroforestry efforts continue to empower marginalized communities in rural India. By engaging these communities in our initiatives, we are ensuring a stable income stream for them.

Additionally, during the year, we embarked on a mission to become a water-positive and carbon-neutral paper company by 2027 and 2029, respectively. Through these initiatives, we are creating enduring value for future generations.

As we redefine our approach to advance India's paper industry, we are guided by the values of stakeholder-centricity, quality and innovation, and ecological protection and development. With these principles, we will navigate the future with clarity and focus.

Embracing Transformation

A Review of

Financial Year 2023-24

At Orient Paper, we are committed to pioneering innovation that addresses both environmental responsibility and customer value.

Ashwin J. Laddha

Managing Director & CEO

Dear Investors,

For over 87 years, Orient Paper has proven that success and social responsibility go hand-in-hand. Our unwavering focus on sustainability has built a strong foundation for progress, making growth a natural outcome rather than the sole objective. We've recently embarked on a transformative journey, aiming to combine our legacy of excellence with modern agility. By prioritizing innovation, customer focus, and sustainable practices, we're aligning our mission with the needs of our planet, nation, and stakeholders.

Charting Growth: Orient Paper's Performance in Financial Year 2023-24

In the financial year 2023-24, the Indian paper industry faced macroeconomic challenges, including global price volatility, excessive imports, and tepid exports, which influenced the profitability of local manufacturers. Orient Paper responded with agility, shifting focus to the value-added domestic market. We have also initiated modernisation and debottlenecking operations to boost production. Additionally, our manufacturing plant is undergoing a complete revamp for more efficient production, with real-time inventory and demand forecasting.

But there were challenges as well. We faced a few unforeseen downtime and production stoppages during the plant modernisation process and experienced pricing pressure in the market. Both factors led to a reduction in profitability.

Sales amounted to 832 crore and PAT was 6 crore during the year.

However, we believe these are only temporary blips, and our courage to undertake plant modernisation, prioritising long-term gains over short-term profitability, will pay off in the long run.

India's Economic Momentum: Driving the Paper Industry's Growth

Amidst global economic challenges such as geopolitical conflicts, recessionary pressures, and inflation, India has emerged as a sweet spot. In 2023, the global pulp industry experienced a significant decline in prices due to oversupply and weak demand, with hardwood pulp prices decreasing by approximately 32% and softwood prices by approximately 24%. India's paper industry experienced a contraction of ~11%, from 1,020 billion in the FY2022-23 to 907 billion in the FY2023-24.

Even though 2024 was a challenging year, the Indian paper & pulp industry is poised to capitalise on these challenges, thereby making substantial contributions to India's economic growth. Over the last decade (2012-13 to 2022-2023), India's paper consumption grew at a CAGR of 6%, outpacing the global rate of 3%, solidifying our position as one of the fastest-growing paper markets globally. India's GDP is expected to reach $7 trillion by 2030, at a CAGR of 9.4%, while lifestyle spending is projected to grow by 1.7x. This indicates significant potential for sectors such as education, arts & crafts, health & hygiene, and plastic substitution within the paper industry.

Innovations that will Shape Tomorrow's Landscape

At Orient Paper, we are committed to pioneering innovation that addresses both environmental responsibility and customer value. In the financial year 2023-24, we introduced a diverse range of new products that reflect this ethos: Sustainable Solutions: We are combatting plastic waste by creating eco-friendly carry bags and cup stock, offering customers responsible alternatives that uphold both quality and functionality. Additionally, we are the first company in South Asia to introduce virgin bamboo tissues, promoting environmentally conscious choices for consumers and businesses alike.

Optimising Value: We have strategically realigned towards high-quality, high-grammage paper, such as cartridge paper, which is ideal for high-volume printing due to its superior strength and durability. Similarly, our cartridge, carry bag and ice cream cone paper are engineered for optimal performance in their respective applications. This translates into higher efficiency and cost savings for our customers.

Meeting Niche Demands: Our distinctive colour papers address the growing demand for aesthetically pleasing and functional paper options. This diversification enables us to serve a niche market, providing solutions with higher margins.

By prioritising innovation with tangible benefits for our customers, Orient Paper is ready to lead the charge towards a more sustainable future. This approach enables us to secure an first-mover advantage in niche, industry-specific categories with robust profit margins.

Strides in Technological Transformation

In the financial year 2023-24, our focus on technological advancement drove operational excellence, strengthening our competitive edge in the industry. Here's how: Digital 4.0 Foundation: Our Digital 4.0 strategy aims to enhance efficiency and predictability through AI and ML driven analytics. Over the next 18-24 months, our digital command centre will enable close-loop integrated operations for better efficiency. Eco-Efficiency Commitment: Transitioning to the ECF bleaching process underscores our dedication to environmental sustainability, aligning us with industry standards while improving pulp quality.

Production Capacity Boost: Strategic investments led to a 36% increase in pulp production capacity, reaching 300 TPD.

Infrastructure Reliability: The addition of a new rewinder for the main machine ensured consistent product quality, complemented by enhanced power plant operations, minimising disruptions.

Automation Integration: Commissioning a Quality Control System for Tissue Production Lines 1, 2, and 3 ensures uniform product quality. Implementing a Distributed Control System optimised pulp mill operations.

By embracing cutting-edge technologies and automation, we're not just staying ahead of the curve but actively shaping it. Our commitment to sustainability, enhanced production capacity, and reliability underscore our dedication to meeting evolving market demands while staying true to our Stakeholder environmental responsibilities. Empowerment for Collective

Growth

In the financial year 2023-24, we strengthened relationships across our stakeholder ecosystem: Customers: Customer-centric, industry-first initiatives such as ‘Mission Khushi', and a Net Promoter Score (NPS) driven sales approach led to improved service quality and a shift towards proactive solutions development, which is evident in our innovation of high-value premium products in the hygiene and health sector.

Dealers & Partners: We enhanced collaboration through initiatives such as ‘Sampark Hub Meets' and ‘Orient Stars', facilitating knowledge-sharing and community-building among dealers, brands, converters and institutions. Employees: Recognising the importance of digital skills and the need for upskilling, we conducted a cumulative 18,658 hours of training – translating into a 343% increase in the number of hours over the last year. By fostering trust and long-term value, we've laid a strong foundation for sustainable growth.

Sustainability and Community Impact

The financial year 2023-24, Orient Paper prioritised environmental and community well-being through conservation and welfare initiatives.

Water Stewardship: Partnering with local communities via Mission Khushi, we built over 1,440 water structures, capturing 15 billion litres of water and irrigating 13,551 acres. We are a leader in ‘water positivity', with an impressive 86% water conservation rate.

Environmental Upgradation: We achieved record-breaking results in agroforestry. This includes planting on 8,309 acres, irrigating 13,551 acres, and treating 5,784 acres to improve soil and moisture retention, setting new benchmarks for the Indian paper industry. Empowering Livelihoods: During the year, 38,154 families benefitted from Mission Khushi. Further, the Orient Paper Outreach Program, was launched during FY2023-24 to tackle

Pradesh. As a part of the initiative, we supported income improvement for 2,600 farmers by enabling them to adopt inter-cropping practices and 4,745 farmers to organic farming methods. Further, we promoted Good Agricultural Practices (GAP) across 22,500 acres to boost farmer incomes. Community Outreach: Our holistic CSR program impacted 186,000 people across villages. We revitalised 496 SHGs and supported the formation of 62 new ones. We also facilitated credit access for 1,687 families and 297 women-led businesses and provided healthcare to over 24,152 community members.

Our efforts reinforced our commitment to building a path towards a more sustainable future for everyone.

Proactive Risk-Management for Future Readiness

We live in a volatile, uncertain, complex and ambiguous (VUCA) world. At Orient Paper, we recognise that navigating this landscape demands a proactive approach to risk.

Our robust risk management positions us for future uncertainties and opportunities. We're building a foundation for sustainable growth through strong accountability, optimized processes, a risk-aware culture, and digital integration.

As I end this note, I express my deepest gratitude to our shareholders, employees, partners, and customers. Together, we made the financial year 2023-24 transformative, laying the groundwork for a thriving future built on the pillars of collaboration, innovation, technology, and foresight.

We face exciting opportunities and challenges ahead, and remain steadfast in our unwavering commitment to deliver paper with purpose.