“Keeping in view the possibilities in the segment, JK Paper is setting up a new 150,000 tonnes Packaging Board capacity at our Gujarat (Unit: CPM) facility. The work is well underway on the project, and the production is likely to commence in the next two and a half years,” said Mr. Harsh Pati Singhania, Vice Chairman & Managing Director, JK Paper Ltd.
Paper Mart: First, tell us about the business in the last FY and so far in the current FY!
Harsh Pati Singhania: The last year was good business wise as we were able to improve our sales as well as profit. In the current FY, the overall performance is quite satisfactory and quarterly results so far reflect better business than in the last FY.
PM: Industry is quite upbeat about the packaging segment’s growth and is investing big time in creating new capacities. Are such investments worthwhile given the demand in the market? What do you have to say about it?
HPS: There is growth in all segments of the paper industry in India, whether it is printing-writing paper, or tissue, or packaging paper. Even the newsprint, which has been steadily declining globally and in India till recently, is now growing appreciably. The reason for such positive growth in the Indian paper industry are several — rising circulation, improved literacy rate, increased paper consumption in business and commerce, changing lifestyle standards among other factors.
Now speaking on packaging segment, I would see no one could dispute its present high growth figures and its potential growth trends in times to come. The packaging has been growing at double digit while the overall growth of the paper industry in India is at an average of 7-7.5 percent. Packaging undoubtedly has immense possibilities. So, yes, the quantum of investments currently happening is worthwhile and of course much required. The segment is witnessing good growth because of growth in sectors such as FMCG, pharmaceuticals, organized Retail, e-commerce, etc. The preference for packaged goods has led to an overall demand growth for packaging paper and board.
JK Paper already has capacity in packaging for making products such as virgin fiber boards, folding boxboards (FBB), SBS and other products. We make high-end packaging products and are continuously involved in developing new products for the segment.
Keeping in view the possibilities in the segment, JK Paper is setting up a new 150,000 tonnes packaging capacity at our Gujarat facility. The work is well underway on the project, and the production is likely to commence in the next two and a half years.
PM: What is the status of the Sirpur Paper Mill?
HPS: Sirpur Paper Mills has been closed for the last four years. We acquired the mill through the government’s new Insolvency and Bankruptcy Code (IBC) and were adjudged as the successful resolution applicant. Since it was a closed mill, we have been working on renovating and repairing various sections and setting them right. Over the next few months, we would be in a position to finally start the production at the mill and subsequently increase the capacity gradually. I am sure we would be able to ramp up our production in the FY20, and achieve the full capacity of 140,000 tonnes over a period of time.
PM: How closely do you think the growth of the industry is linked to national economic growth and good policy environment by the Govt.?
HPS: First of all, we must be very clear that the growth of the Indian economy is something which is unstoppable. Now, if we do a good job in policy execution, our growth will be higher than what it is now, no matter how often the policies are amended or introduced. India’s economic growth is so inevitable that even if our policy framework and its execution are not up to the mark, an average annual growth of 7-8 percent is assured or inescapable given there is no crisis of global nature lurking on our head, e.g. the global meltdown in 2008.
For the Indian paper industry, I would reiterate that all its segments will continue to grow for the next few years due to reasons mentioned earlier. However, the main challenge for the industry now is to prepare a policy environment if we wish the current growth to last long commensurate with the national growth rate. A feasible policy environment would help us in achieving our business targets along with creating immense employment in the country. For example, pragmatic policies are needed to be drawn and implemented with respect to forestry and plantation, allowing creation of plenty of jobs in rural and tribal areas apart from ensuring the availability of raw material in the country. Such policies would also immensely cut down the import of wood and processed pulp saving good amount of forex spent.
Other areas to be taken seriously by the Govt. are working on infrastructure development, which will bring down the transportation cost; simplifying the procedures to obtain land on time; and addressing the environmental issues through practical policies. All these areas need immediate attention. Further, the cost of money is very high in this country, and the paper industry is quite capital intensive. If the Govt. works on the issue and is able to bring down the interest rates, easy capital would facilitate new investments in the industry, thereby assuring its growth in long-term. The growth of the Indian paper industry is not a question anymore, the issue is how much of this growth is going to happen on account of an enabling policy environment and our own hard work.