JK Paper: New Brands, More Growth
JK Paper, the largest producer of branded copier paper in India, recently set up a new facility at Rayagada, Odisha, and then went on to launching two new copier brands – JK C MAX and JK MAX– aimed at providing its customers with ‘value for money’. With the installation of a new machine at Rayagada, the company is well on its way to delivering global quality standards of multipurpose office papers. The new plant is highly automated, and the paper manufactured is virtually untouched till the time it is loaded in trucks. The company’s total annual capacity now stands at 455,000 tons.
To know more about the company’s new facility at Rayagada, the recent launch of new products and the company’s unique selling proposition and future targets, Paper Mart recently interviewed Mr. Santosh Wakhloo, Vice President-Marketing & Sales, JK Paper Limited.
Paper Mart (PM): Was 2013 a good year for JK Paper Limited?
Santosh Wakhloo (SW): The company’s sales volume grew substantially compared to the previous year, although our capacity utilisation was not the fullest due to the initial teething troubles during stabilisation of new capacity at Unit JKPM, which was commissioned during the second half of the current year. The overall industry scenario was better with improvement in sales realisations; however, the increase could only partially offset the escalating input costs mainly wood and coal. As a result the profitability was impacted adversely. But things are now looking up. The new manufacturing facility is now working at full capacity. We are regarded as a leader in the industry and with the installation of this new machine, our position on the market would certainly be strengthened.
PM: Tell us about your new facility – the capabilities it has and the products it manufactures. When do you expect to start getting a good return on your recent investment?
SW: Our facility at Rayagada has the most modern technology. It uses minimum natural resources, and we are currently in a strong position to set a global benchmark for minimum water, energy and fibre consumption. This new facility will enable us to maintain the quality of our products – something that has helped us a lot in cornering the market.
There are two ways of monetising investment in technology: getting better efficiency in operation and better throughput. Getting premium from the customer is something that is bound to happen once the over capacity gets absorbed on the market. Absorption should not take more than a year to happen. Our machine would be producing quality product, and the customer would be quite willing to pay a little extra for better quality product.
PM: JK Paper has launched two new copier paper brands, namely JK C MAX and JK MAX. These brands are aimed at providing ‘value for money.’ How successful have been these brands on the market? Are you planning to further expand your range of products?
SW: It may be mentioned that JK Paper has always given a lot of importance to customers’ needs. For example, some time ago we introduced Colorlok technology to our copier paper customers in India. This technology helps to print more with lesser consumption of toner ink.
There are many people who want to use JK’s copier paper because of its superior quality, but they find this paper a bit expensive. So, we created new segments with relatively lighter GSM but having the same features – brightness, whiteness, printability and so on. The customer is now getting a pack of 500 sheets of paper of equally good quality but with reduced grammage at a lower price. We could reduce the price because the manufacturing cost of the paper ream fell because of lower grammage. Customers will get the same kind of paper at a lower price in these two segments. The grammage of JK C MAX is 72 GSM, and that of JK MAX is 67 GSM. Customers can now have quality product at a reasonable price. These two brands have therefore become very popular at the market. Before these brands were launched, we were manufacturing two premium brands – JK Copier (75 GSM) and JK Easy Copier (70 GSM). Our new capacity enabled us to get an entry into all segments of branded copier paper market in India. As we expected to achieve more growth in the mid segment and also the lower end economy segment, we decided to launch ‘JK C MAX ‘and ‘JK MAX’. While ‘JK C MAX’ is aimed to focus on the jobbers and SOHO’ in the A & B class cities, ‘JK MAX’ will help in reaching the upcountry markets. Because of these two new brands we achieved an incremental growth of 20 per cent in our overall copier paper sales. As far as future product launches in the office paper segment is concerned, we have more or less completed our product portfolio with our brand called JK Cedar (100 GSM) on the top end of this market, followed by 75, 72, 70 and 67 GSM copier papers. We would soon be launching pigmented Maplitho.
PM: What are your views on the current market scenario of copier paper? Where is it heading and how has JK Paper planned to increase its market share?
SW: We see good growth – 7-8 per cent per annum with a market size of 550,000 tons of paper. Earlier the growth was much higher, when the market size was relatively small. In the office paper segment, there are mainly two types of users: corporate users and jobbers. The corporate user is educated and less price-driven than the jobber. At the jobber-level, availability of paper and reach to the customer are of paramount importance. The office-paper users have become very quality conscious, as new printing machines print at higher speeds and jamming of paper is considered something devilish; for which you need consistency in the quality for smooth runnability of paper.
Another thing that we see is that the difference between the cost of mill pack copier paper and maplitho-converted copier paper has narrowed down; as a result, the chances of using maplitho as copier have lessened. So this business has become more organised with 99 per cent being in mill pack copier paper.
Overall, the market is strong, but there are some areas where demand has started falling. If demand in some segments declines, demand in some segments picks up. The use of copier paper in the education sector has gone up.
JK’s current market share in the office paper segment is 28 per cent, and we believe that it will be around 33 per cent by the end of this financial year.
PM: What is JK Paper’s X factor or USP?
SW: First and foremost, the quality of our products is conspicuous – and it’s something that doesn’t go unnoticed. Our customers know about it. We also stand out when it comes to distribution; our paper is available everywhere in the country. Also, we deal fairly with our customers and suppliers and our customers firmly believe that they are getting top quality paper.
PM: Do you think investment in appropriate technology is currently the only success mantra?
SW: People’s tolerance of low quality paper is declining. So, we need to ensure that the paper we produce is of high quality. And to achieve this goal, we need to invest in appropriate technology.
When we invest in long-term technology – like the new machine we have recently purchased – we need to ensure that the new technology continues to deliver contemporary products for a long period of time – let’s say, five to ten years after it has been acquired.
Appropriate technology is a mix of what your need is and how much you can afford. We gave a thought to the future use of the new technology as well before we went for it. We are using the best technology – technology that utilises minimum raw material and resources and is most environment friendly in terms of effluent discharges.
You see, chances of compromising on quality are rather high in manual intervention at the manufacturing facility. So we have focused a lot on automation. And our investment in technology will definitely help us in boosting growth and sustainability.
PM: What are your future targets?
SW: We would certainly like to retain our position as a leader on the copier paper market. Growth is our main target. We are therefore focusing on different segments of the industry, constantly trying to find the segment in which we can grow. Also, we are planning to invest in the field of packaging, and we would like to continue with our outsourcing module wherein we import paper and sell it under our own brand. We feel this business model will play a significant role in boosting our business in times to come as well. In addition, we are planning to export about 20 per cent of our copier paper production to markets such as the Middle East, Africa, Iran and small European countries.