JK Paper: new packaging board plant should give revenue close to INR 1400 Cr on full capacity utilization

JK Paper: new packaging board plant should give revenue close to INR 1400 Cr on full capacity utilization

The plant will upscale the company’s annual capacity from 455,000t to 625,000t.

New Delhi | 18th January 2022 | The Pulp and Paper Times: 

India-based paper company JK Paper is on our radar after the company begins commercial production at its new packaging board plant in Gujarat.

Earlier on 14 May 2018, the company had announced that its board accorded its approval for setting up of packaging board plant at its unit CPM in the state of Gujarat. The new functional plant will increase company's annual capacity from 4.55 lakh tonnes per annum (TPA) to 6.25 lakh TPA and enhance its market share in packaging board segment.

Built with an Rs14.5bn ($195.3m) investment, the plant will provide 200,000t of additional production capacity a year. The expansion is also intended to increase JK Paper’s market share in the packaging board segment.

In a conversation to CNBC, JK Paper’s President and Director Mr. AS Mehta said, “This is a brand new state of the art machine with the number of features which will be the first time in the country and the capacity of this machine is 1,70,000 tonne, but yes, there is always a hidden capacity and the machine is capable for producing more than 1,70,000 tonne. JK Paper has been known in the circle that we always use the capacity over 100 percent most of the time.”

He added, “After ramping up for maybe six months, thereafter, we would try to achieve much more than 1,70,000 from this machine.”

Current prices are in the range of Rs.70 to 74 per kg for virgin packaging boards.

 Mr. Mehta said, “On full utilization of 2,00,000 lcs tonnes, this plant should give us a revenue of close to INR 1400 Crore on the basis of the net sales. but I would not immediately says that we will achieve INR 1400 Cr.”

“In fact, we are forecasting for FY 2022-23, if we achieve the capacity utilization somewhere around 1,50,000 to 1,60,000 tonnes and then at a price of Rs. 65 to 70, it should give us a turnover something around INR 1200  to 1300 Crore,”

Mr. Mehta informed that this new capacity of packaging board will certainly take more time, we hope to achieve somewhere around 60 percent target of capacity utilization in this quarter (Jan to March 21) and thereafter there would be a faster ramp up from the new capacity.

On the question of order booking for the new machine production, Mr. Mehta says, Packaging board demand is fairly healthy and robust in the country, and we have earmarked 15 to 20 percent capacity for the export market and rest for the domestic market.

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