JK Paper saved Rs.250 crore via digital transformation and diversified into monocartons and labels business, realigning its product mix

JK Paper saved Rs. 250 crore via digital transformation and diversified into monocartons and labels business, realigning its product mix

- JK Paper experienced a decline in realisations – 17% in the case of writing & printing paper and 18% in the case of packaging board from April 1, 2023 to March 31, 2024
- Availability of wood has been a major challenge and this situation is expected to continue
The Pulp and Paper Times

JK Paper Limited is among the foremost paper and packaging companies in India. In the last six decades, JK Paper has emerged as a leading paper brand in the industry.

The Company established numerous flagship brands such as JK Copier, JK Easy Copier, JK Copier Plus, JK Excel Bond, JK SS Maplitho (SHB), JK Cote, JK Tuff Cote, JK Carta-Lumia, JK Ultima, JK Endura, and others. The JK Paper brand is renowned for quality products and services, generating a strong brand recall associated with trust and quality.

J K Paper has been able to perform incredibly achieving highest ever total sales of 7.94 Lac MT during the year, with consolidated turnover crossing Rs. 7,000 crore.

2023-24 was a challenging year for the J K Paper and industry, with margins declining due to lower realisations and higher input costs. However, the Balance Sheet continued to remain healthy and the credit rating was retained. J K Paper had reported a record performance in 2022-23 so the decline in 2023-24 performance was anticipated and must be viewed in context of the prevailing market environment. The Company embarked on various initiatives to protect realisations, evolve the product mix, and create a larger base for sustainable growth, the full benefits of which are likely to be visible across the foreseeable future.

During FY 23-24, the Company embarked on various initiatives to enhance product mix and create a larger base for sustainable growth, the full benefits of which are likely to be visible in the foreseeable future. By offering a diversified product portfolio, it continued to remain in the top tier in the paper and paperboard industry and remained well placed to capitalise on the evolving trends to enrich the lives of people for a better future.

“We also faced a few challenges including higher raw material cost and lower sales realisation which have adversely impacted performance during the year. Availability of wood has been a major challenge and this situation is expected to continue, at least for another year. The selling prices continued to remain under pressure due to increase in imports by almost a third on top of a 25% increase in the previous year,” Mr. Harsh Pati Singhania, Chairman and Managing Director of JK Paper Limited stated in the annual report for FY 2023-24

J K Paper experienced a decline in realisations – 17% in the case of writing & printing paper and 18% in the case of packaging board from April 1, 2023 to March 31, 2024 even as there was a 2% increase in tonnage sales. The increased volume sales helped offset partially the impact of a decline in realisations per unit across each product segment, a validation of its longstanding contention that enhanced volume would help recoup what could be lost by per unit value – and vice versa.

In addition to market expansion and service provided by the existing trade partners, the Company’s initiative to increase market touch points further widened and deepened the geographic footprint. The market reach of JK has expanded to Tier II and Tier III towns further enhancing the distribution network during the year.

For the sustainability of paper business, a robust environmental management system, is indispensable. JK Paper is focused on optimizing process parameters through automation, embracing the latest environmental friendly technologies like installation of modern emission control and adopting waste reduction measures to minimise fiber loss and freshwater consumption. These initiatives have enabled JK Paper to account for one of the lowest per-unit consumption of water, coal, steam, and energy within India’s integrated pulp and paper sector.

The Company continued to embrace Total Quality Management (TQM) across all its units which enabled strong focus on quality, cost, delivery, safety and morale. The Digital Transformation journey embarked by the Company for the past two years has been gaining further traction during the year creating a digital mindset across every aspect of the business, resulting in cost savings of over Rs. 250 crore till date since its inception. By the close of 2023-24, the Company had several additional digital projects in progress which will continue to improve profitability.

Amidst growing digitisation, the Company is realigning its product mix and diversified into packaging boards and corrugated packaging. The packaging industry is experiencing rapid expansion propelled by increasing disposable income, growing lifestyle changes, and a rise in the consumption of processed food. Through substantial investments in research and development, coupled with the integration of advanced technologies, the Company has developed a range of products including high bulk SBS Board, Aqueous Coated Board, and Antifungal Board during the year. These offerings cater to diverse customer segments while aligning with the Company’s commitment to providing sustainable paper solutions.

In response to the growing concern over plastic-based food packaging, the Company is well positioned to leverage the transition from plastic packaging towards recyclable and compostable alternatives, by introducing new products featuring oil and water resistance, moisture and oxygen barrier, and heat sealable capabilities. The Company also offers sustainable packaging solutions tailored for the food service, pharmaceutical and FMCG sectors, collaborating closely with customers to meet their specific needs.

JK continued to maintain its leadership in corrugated boxes during the year and made an entry into Monocarton and Labels business through acquisition of Manipal Utility Packaging Solutions Private Limited. This acquisition is in line with long term Strategic objective of the Company in packaging business and gives an opportunity to offer total solutions to the customers with respect to secondary and tertiary packaging.

Adhering to top-tier sustainable forestry practices, JK Paper has covered over one third of its plantations under the FSC® FM certification in the fiscal year gone by. The Company’s cumulative plantation efforts span about 6.92 Lac acres across diverse Indian states, with over 81,000 acres planted this year alone. Our farm forestry programs have bolstered sustainable livelihoods in rural regions, ensuring a stable income for farmers, along with establishing a renewable raw material source for the Company.

JK Paper Ltd. continues to implement a strategic plan to tackle the challenges of wood procurement. The Company has zeroed in on a core area within a 200 km radius of its manufacturing units to attempt a steady wood supply from local farmers by doing plantation more than the annual requirement to cope up with the impact of new mushrooming wood-based industries in recent past.

New beginning:

During the year under review, J K sowed the seeds of a new beginning. 

This indicates that the Company, along with its existing business will seek wider ways to enrich the lives of people for a better future. While it would be premature to indicate the precise nature of the new businesses the Company would like to enter, it would seek to build on the following competencies deepened across the decades in its core business.

One, the Company will leverage decades of institutionalised manufacturing competence, comprising the management of large volumes at one end and the delivery of standardised products at the other.

Two, the Company will leverage the rich value created through plantation resource management that could empower the Company to extend and appraise new opportunities.

Three, the Company will leverage deep insights in growing the business around the highest standards of environment protection and compliance.

Four, the Company will leverage an extensive value chain where the raw material cum resources are generated from within with the objective to manufacture a competitive end product.

Five, the Company will leverage the capability to manage a number of variables with the singular objective to establish sustainable cost leadership across market cycles.

Six, the Company will leverage the Company’s established competence in graduating commodity products into branded alternatives, strengthening capital efficiency.

Seven, the Company will leverage its established credibility with bankers and credit rating agencies to mobilise growth capital at the lowest long-term cost.

Eight, the Company will capitalise on its validated working capital management discipline with the objective to remain liquid and profitable across market cycles.

Nine, the Company will leverage customer insights drawn from its pan-India presence through committed channel partners that makes it possible to serve every demand upturn across the country.

Forward integration:

During FY 23-24, J K extended to the manufacture of monocartons and labels through acquisition of Manipal Utilities and Packaging Solutions Pvt Ltd, since renamed as JK Utility Packaging Solutions Pvt. Ltd. (JKUPSPL). This acquisition represented a reverse synergy, whereby the boards manufactured by the Company will be consumed in the manufacture of monocartons.

Packaging revolution:

JK commissioned a greenfield corrugated packaging plant and acquired two corrugated companies (one being India’s biggest) with pan-India operations (seven locations).

The Company has graduated from scratch to 320,000 TPA (25% market share) in just two years in demand-intensive hubs. This puts the Company at an advantage to deliver low logistic costs and build enduring customer relationships. This is also expected to enhance the Company’s recall as environment friendly.

Bleach Chemical Thermo-Mechanical Pulp (BCTMP) 

To become self-sufficient in hardwood BCTMP for producing Packaging Board and address the issue of price volatility and availability, the Company is setting up a BCTMP Mill at Unit CPM, Songadh, Gujarat, having capacity of 125,000 ADMT per annum. Project is expected to be commissioned in next financial year 2025-26.
 

Web Title: JK Paper saved Rs. 250 crore via digital transformation and diversified into monocartons and labels business, realigning its product mix