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JK Paper to reach 8 lac TPA capacity; Sirpur Paper Mills to get an investment in second phase

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Read the annual Operation & Financial summary of JK Paper Ltd for the year 2019-2020

JK Paper to reach 8 lac TPA capacity;  Sirpur Paper Mills to get an investment in Second phase

10 Nov 2020 | New Delhi | The Pulp and Paper Times

The complete lockdown in India is one of the most stringent, for 70 days, where almost two-thirds of all economic activity came to a grinding halt. While the advanced countries are set to experience prolonged pains, India is expected to be one of the few bright spots in the world economy, sustaining positive growth at 4.2% for 2019-20.

“Despite these bottlenecks, the paper industry has been growing at a healthy rate of around 6%. Overall sales at JK Paper have been growing at a CAGR of 5-6%. Growth has been quite robust in the coated paper segment, which showed an uptick of over 14% last year,” Said Mr. Bharat Hari Singhania, Chairman- Jk Paper Ltd. in the annual Report for FY 19-20.

JK Paper recorded a 6% growth in its EBIDTA and clocked the highest-ever Profit after Tax (PAT) of  INR 492.71 crores, a y-o-y growth of 12.7%. Aggregate sales increased by 8.9% to INR 3,254 crores in 2019-20 over 2016-17.

Mr. Singhanin further said that, at a time when the manufacturing sector in India is faced with significant spare capacity, with overall capacity utilization falling to 68% in the December quarter, both JKPM and CPM have been running at full capacity. This augurs well for our planned expansion, where we are targeting to reach 8 lac tonnes per annum (TPA) by March 2021. The impetus will mainly be in the packaging board segment, while maintaining the focus on other segments too, particularly where we enjoy a leadership position in the market.

JK Paper announced its 1.7 lac TPA paper board expansion project at Unit CPM for about INR 1,900 crores (net of GST); capital cost per tonne was around INR 15,000 lower than the prevailing benchmarks on account of the Company’s decision to repurpose an existing pulp mill and use existing infrastructure, strengthening business sustainability

PROJECT EXPANSION

The Company commenced Virgin Fibre Boards (VFB) production in the financial year 2007-08 with an initial capacity of 60,000 TPA at its Unit CPM which was enhanced to 90,000 TPA in the financial year 2013-14. The current production from this facility exceeds 100,000 TPA. This segment has grown at 12% CAGR during the last 5 years and is expected to maintain its growth at double-digit rates in the coming years due to changes in organized retail and the quest for more eco-friendly, aesthetic and customer-friendly packaging.

                     

Looking at this growing demand particularly in the high-end VFB and to build its market share, the Company had decided to set up a new Packaging Board facility along with an integrated chemical pulp mill at Unit CPM. Orders for critical equipments and some other areas have been placed and civil construction started in November 2019. The estimated capital cost is about INR 1935 crores (net of GST). Once completed the capacity for VFB will increase to 270,000 TPA along with a pulping capacity of 160,000 TPA. The new project is likely to take 24 months from zero date to commence production. Post completion of this project the JK Paper will be the second-largest producer of VFB in the country with a capacity of 270,000 TPA along with a pulping capacity of 160,000 TPA.

The Company also made several de-bottlenecking and cost optimizing investments in critical areas like headbox, steam and power systems, finishing equipment, refiners, chemical processing, effluent discharge etc. in its existing facilities during the year totaling over INR 79 crores.

PROGRESS AT THE SIRPUR PAPER MILLS LTD.

The acquisition of SPML was expected to provide synergies of a strategically located 3rd site near to sources of raw material with closer access to Coal and plenty of water. SPML commenced its commercial production on 24th May 2019 on Machine 7 alongwith Boilers and Turbines. After some challenges in stabilizing operations, all the machines (including Machines 3, 8, and 6 alongwith all allied equipment) commenced commercial production on 1st March 2020 after due refurbishment. There was an additional investment of INR 210 crores compared to earlier estimates which were met from funds lent by the Company.

Before the COVID-19 lockdown, SPML had ramped up its production and achieved the highest production of 286 tons from the Pulp Mill (against a rated capacity of 323 tpd) and 320 tons (rated capacity of 400 tpd) from the Paper Machines. In the month of March, 2020 (up to 21st March, before COVID-19 lockdown) the Company achieved about 70% of the capacity based on actual number of working days.

Progress is also being made on improving the quality parameters of the final products to meet customer requirements and expectations. In second phase, the project activities for setting up energy efficient 130 Ton per hour high-pressure Boiler and 20 MW high-pressure Turbine along with its utilities are in progress. This project with an investment of over INR 175 crores which will replace the existing low-pressure CF Boilers and Turbines will have significant savings on energy cost on production.

                     

The total project cost, as per current estimates including Phase II is INR 897 crores. This includes the amount settled with the erstwhile creditors of INR 371 crores. This is being funded by Term Loans from Banks, Capital Subsidy from the Government of Telangana, and issue of Equity/Preference Capital/loan from the Company.


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