The “Rights” Issue of JK Paper Ltd, the largest producer of branded papers in terms of production and a leading player in the fine papers‘ & virgin packaging board‘ segments, in terms of market share, in India and the market leader in the branded copier paper segment in India (Source: CRISIL Research Paper Annual Review, November 2010), is closing on Tuesday, August 23, 2011. The company had decided to offer further Equity Shares on a “Rights Basis” to the existing Equity Shareholders of the Company.
The Board of Directors of JK Paper had decided to issue 5,86,12,454 Equity Shares of face value of Rs 10 each (“Equity Shares”) for cash at a price of Rs 42 per share (including a premium of Rs 32 each) aggregating Rs 246.17 crores to the existing Equity Shareholders of the Company. The “Rights” Issue was being made to the Equity Shareholders of the Company in the ratio of three (3) Equity Shares for every four (4) Equity Shares held by them.
The Company had fixed July 27, 2011 as the Record Date to determine the entitlement of the existing Equity Shareholders of the Company, to the Shares to be offered to them on a “Rights” basis. The Promoters of the Company will also participate in the “Rights” Issue. The Issue, priced at Rs 42 per share was 4.2 times the face value of the Equity Shares of the Company.
The “Rights” Issue was being made to part finance the on-going Rs 1,653-crore expansion-cum-development programme of J K Paper Ltd. Upon successful completion of the “Rights” Issue, the Company would achieve complete financial closure of the project.
JK Paper is one of India’s largest paper companies and is the leader in the branded copier segment in the country with a market share of about 28.8% (Source: CRISIL Research Paper annual Review, November, 2010). The Company is focused on the production and marketing of high-end papers like office papers, coated papers and virgin packaging board.
The existing Equity Shares of the Company are listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company has received in-principle approvals from the BSE and the NSE for listing of the Equity Shares.
The Issue which opened on August 8, 2011 is closing on August 23, 2011. ICICI Securities is the Lead Manager to the Issue.
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The “JK Paper” brand has an established reputation in the Indian market. This is reflected in the Company’s market share of approximately 28.8%, in the branded copier paper segment in India. In virgin packaging board segment, out of the total production of 3,87,000 tonnes during Fiscal 2010 in India, JK Paper produced 66,135 tonnes. JK Paper is the largest producer of branded papers in India in terms of production, second largest producer of virgin board, and a leading player in the =fine papers‘ segment, in terms of market share. (Source CRISIL Research Paper Annual Review, November 2010) The Company believes that its brand commands respect and credibility and offers it competitive advantages, enabling JK Paper to maintain leadership position in the branded market along with strengthening the brand equity of its leading products such as - JK Copier‘, JK Excel Bond‘ and JK Easy Copier‘.
JK Paper operates two integrated manufacturing facilities, the JK Paper Mills Unit at Rayagada, Odisha (Unit JKPM) and the Central Pulp Mills Unit at Songadh, Gujarat (Unit CPM), for the production of paper and virgin packaging boards, with a combined manufacturing capacity of 2,64,000 TPA. The Unit JKPM presently has an installed capacity of 1,25,000 TPA for manufacturing paper and saleable pulp. In addition, the blade coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper, enabling JK Paper to move up the value chain and capitalize on the growing market of coating paper. The capacity of the coating plant at the Unit JKPM is 46,000 TPA. JK Paper is the second largest producer of coated paper in India. (Source: IPMA Report, March 2010) Further, the Company commissioned a pulp drying plant at its Unit JKPM, in 2001 to increase the output and realization of market pulp. The Unit CPM presently has an installed capacity of 55,000 TPA for manufacturing paper and saleable pulp. Additionally, JK Paper has set up a packaging board plant at its Unit CPM, which was commissioned in October 2007, with an installed capacity of 60,000 TPA, increased to 84,000 TPA with effect from April 1, 2011, which is equipped with contemporary technology sourced from global leaders in the paper board machinery sector.
Estimates indicate that the Indian paper industry will grow at a CAGR of 10.7% from its current levels of Rs.317 billion in 2009-10 to Rs. 526 billion in 2014-15, the demand being driven by strong industrial and economic growth. The Writing and Printing Paper (WPP) is likely to be the largest segment with a market share of around 42% followed by paperboard at 39%. The shares of speciality paper and newsprint are expected to be around 7% and 13% respectively.
Among the segments, demand for paperboard is expected to increase as 7.8% CAGR to reach 6.7 mn tonnes in 2014-15 driven by a healthy growth in industrial production and a sustained demand for consumer goods. The WPP segment is expected to increase in demand at a 7.6% CAGR till 2014-15 as compared to a 6.5% CAGR in the preceding 5 years.