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  • Writer's pictureShekhar Yadav

N R Agarwal Industries- Analysis

Updated: Aug 4, 2021

With the ban on the import of waste paper in China, N R Agarwal Industries was thought to be one of the largest beneficiaries. 

The ban on waste paper by China, which consumed world’s 50% Waste paper led to significant drop in prices of waste paper. Since, N R Agarwal industries manufactures its entire product range from waste paper, it was to benefit from the drop in waste paper prices i.e. raw material cost for the company. 


Let’s analyze the company. I also have wrote about the industry in an earlier blog. You can read it here -> Paper Industry

N R Agarwal Industries- Brief profile

Set up in 1993, N R Agarwal Industries is a pioneer in the manufacturing of paper products by recycling waste paper.

The company took an ambitious decision in 2010 to expand the capacity by 90,000 Tonnes per annum(TPA) with a capex of ₹330 cr which was to be primarily funded through debt. But the project went into rough waters with the change in government policy where the company had to get the approval from central govt rather than state govt, thus delaying the project by years & hence interest started piling up with no sight of the new plant approval. The management was quite proactive to get into CDR cell quite early thus avoiding the situation to worsen.

{Post being admitted to CDR cell, the company gets haircut on interest payment, increased moratorium period & some other benefit but during that period for every major decision they will have to take approval & also have restriction on raising further debt.}

I have explained the N R Agarwal industries CDR story in the image below. 

NR Agarwal Industries

NR Agarwal Industries CDR story.jpg


N R Agarwal industries- Products

Now, lets try to understand more about the company & in particular its products.

Currently the company has 5 plants manufacturing 3 products which are:

a> Duplex Coated Paper Boards: Used mainly as packaging material for Garments,  Pharma, FMCG, Cosmetics etc

b> Writing & Printing paper: Used for writing or printing 

c> Newsprint: Used as the printing material for newspaper


1. Unit I(Vapi): Duplex Coated Paper Boards

2. Unit II(Vapi): Newsprint {Buoyed with the higher margins provided by Unit V which was launched in July ’14, the company has decided to completely convert this Newsprint plant with a capacity of  36,000 TPA to W&P unit with a capacity of 54,000 TPA in 2017.

But lately, the surge in prices of Newsprint prices by about 50% has led the management to rethink & only partially convert the plant to W&P capability}

3. Unit III(Vapi): Duplex Coated Paper Boards

4. Unit IV(Vapi): Duplex Coated Paper Boards

5. Unit V(Sarigam):Writing & Printing paper (W&P)

In terms of profitability, Writing & Printing Paper > Duplex Boards > Newsprint

The profitability of W&P paper is around 3 times that of Duplex board.

Although, the margins are much higher in W&P Paper but the growth driver is the Packaging industry where Duplex paper boards finds usage. Therefore, one needs to maintain a right balance among the products.

The company in its latest annual report have indicated its plan to further expand by setting up a 600 TPD kraft paper unit in Sarigam with a CAPEX of ₹400 cr which would be funded by debt & internal accruals.

The management seems to be focused on growth & not too inclined to bring down debt beyond a certain manageable ratio.

NR Agarwal Industries

N R Agarwal Industries- Duplex borad end usage


N R Agarwal industries- Financial performance

Since, the industry is capital intensive, operational efficiency and the sophistication of end product enables the differentiation.

Post coming out of the CDR cell, the company has been continuously trying to bring efficiency into its operation such as changing product mix, bringing in specialized company to minimize machinery breakdown, hiring external consultancy (E&Y) , upgrading machinery to improve its performance The efforts of the company was rewarded and was further enhanced by the Chinese tailwinds from July’17 helping it to improve its profitability.

The company also got all the pledged shares released in the latest quarter. 

NR Agarwal Industries

N R Agarwal industries- Financial performance​

Almost all the paper companies are running at 90+% capacity utilization. The profitability margins have improved for other players as better price realization of W&P paper where N R Agarwal industries lags in terms of profitability as almost equivalent percentage of revenue coming from low margin duplex packaging board. 

Now, if the waste paper prices fall further along with the Unit II restarting the operation with W&P paper & Newsprint, it will definitely push up the margins.

Need to wait & watch for sometime.


Further reading:


Shekhar Yadav

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