JK Paper board okays 10% stake sale to IFC

The board of JK Paper Ltd has approved the allotment of 10 per cent stake to International Finance Corporation, Washington, for Rs 50 crore.

The promoters too have hiked their stake in the company by 1.5 per cent to 43.9 per cent, by bringing in Rs 50 crore.

The allotment of shares to both parties were done at Rs 65 a share on a preferential basis.

Managing director Harsh Pati Singhania said the fresh equity of Rs 100 crore along with internal accruals and borrowing to the extent of Rs 150 crore, will be used for funding its greenfield project of setting up a packaging board unit in Gujarat with an annual capacity of 60,000 tonne.

The plant that is expected to commence commercial production in the first quarter of the calendar 2007, will see JK Paper's foray into this new segment with competition only from ITC Ltd.

"Our plan is to focus only the high-end packaging boards which grew by 15 per cent in the last one year, while the paper industry itself grew only by 6-7 per cent," Singhania said.

The total size of the packaging board segment is estimated at around 1.2 million tonne annually, with the premium segment contributing close to 400,000 tonne.

The company reported 14 per cent growth in the second quarter gross sales at Rs 202.96 crore. However, net profit owing to a high level tax and provision for taxes, declined during the quarter.

Profit after tax during the quarter ended December 31, 2005 was Rs 9.48 crore, lower by 11 per cent than the Rs 10.67 crore profit reported for the same period last year.

Profit before tax for the quarter, however, increased by 30 per cent to Rs 14.59 crore, against Rs 11.25 crore reported for the same period last year.