JK paper to invest Rs 700 cr in capacity hike

JK Paper Ltd today said it would invest about Rs 700 crore in the next 3-5 years to hike its production capacity to 5,00,000 tonnes per annum as the company sets eyes on a turnover of more than Rs 1,000 crore.

"The four major areas of thrust for the company in the future will be the writing and printing, photocopier, coated and packaging board paper segments. In the next 3-5 years we are looking at a total capacity of 5,00,000 tpa for which there could be an investment of around Rs 700 crore," JK Paper Ltd Managing Director Harsh Pati Singhania said.

He said the company was currently investing Rs 335 crore on a 60,000 tpa multilayer packaging board plant in Gujarat, over and above other modernisation plans.

To part fund the project, JK Paper today signed an agreement with Washington-Based International Finance Corporation (IFC) to allot about 10 per cent of equity shares worth Rs 50 crore. Moreover, IFC would provide JK Paper a loan of about Rs 70 crore for a 10-year term as part of the agreement.

The promoters of the company are injecting Rs 50 crore for the purpose and another Rs 50 crore through internal accruals, he said, adding the rest of the requirement would be met through other instruments, which may be "debt or convertible bonds".

"Once the packaging board project is completed by the first quarter of next year, the overall capacity of the company would be around 2,40,000 tpa," he said, adding with the further investments planned its capacity would be doubled.

When asked about the plans to fund future investements, Singhania said the company was looking for more investments from its new equity partner IFC.

"We look forward to more meaningful partnership with IFC as there are tremendous opportunities here in the paper industry," he said, adding the company would also explore other options but without disclosing the details.