JK Paper to take up ₹2,100-cr expansion plan

V Rishi Kumar Hyderabad | Updated on September 17, 2019 Published on September 17, 2019

AS Mehta, President and Director, JK Paper

Expanded capacity at Sirpur Paper Mills, which was acquired recently, expected to come into group’s fold starting October

JK Paper Limited is working towards increasing its paper production capacity from 4.5 lakh tonnes per annum (tpa) to 8 lakh tpa by next year with an outlay of about ₹2,100 crore.

This capacity augmentation is aimed at significantly expanding its reach and to take advantage of the growth momentum witnessed in the country’s paper sector.

AS Mehta, President and Director of JK Paper, said, “We are in the process of increasing the manufacturing capacity from 4.5 lakh tonnes per annum to 6.5 lakh TPA through internal expansion, and then to 8 lakh TPA, which will come through the addition of The Sirpur Paper Mills Limited capacity.”

“The expansion at the Gujarat plant — now under way with an outlay of ₹1,700-1,750 crore — will come up over next financial year and The Sirpur Paper Mills capacity will come progressively into the company’s fold right from October-November this year,” he told BusinessLine.

Expansion activities

“The Gujarat plant expansion will be ready by March 2021, The Sirpur Paper Mill will contribute about 1.4 lakh tonne capacity. The full benefit of The Sirpur Paper Mill — where we invested about ₹800 crore overall for acquisition, upgradation and improvements — will provide full benefits by next fiscal,” Mehta said.

The acquisition of the Sirpur Paper Mills is strategic as it not only adds fresh capacity but also provides access to new geographies.

The Odisha mill contributes about 7-8 per cent of the company’s export business, he said. Referring to the company’s business in the context of overall performance of the country’s paper sector, he said, “We are confident of achieving double-digit growth in the years to come and the fresh capacity would enable us to tap new area and markets.”

Double-digit growth

“JK Paper plants are functioning at full capacity and the capacity addition augurs well for the company,” he said.

Crisil, in its rating report, has mentioned that the company’s expansion plan in the packaging board segment at a capex of ₹1,750 crore over the next fiscal should help consolidate its market position while also driving margin improvement due to higher pulp integration for its plant in Gujarat.

The company has acquired The Sirpur Paper Mills Limited, which has a positive credit profile with its 1.38 lakh tonne capacity, at attractive valuations.

The company is entitled to benefits such as capital subsidies, lower coal linkage prices, and cheaper power from the grid, which have been approved by the Telangana government as part of the commitments made during the National Company Law Tribunal case in Hyderabad.

JK Paper has managed to garner a good presence in the domestic writing and printing market with product and geographical diversification, Crisil said.

Published on September 17, 2019

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