JK Paper scouts for M&As, outsourcing to double capacity

Our Corporate Bureau

New Delhi, Nov 27: JK Paper Limited is looking at mergers and acquisitions and outsourcing to double its annual paper capacity to around 3 lakh tonnes over the next two to three years.

JK Paper has undertaken an aggressive multi-pronged strategy to become the ‘value leader’ by achieving the optimal product mix, attaining ‘solutions provider’ status and strategic volume expansion, aggressive marketing initiatives and setting customer relationship benchmarks.

As part of the consolidation of paper business, JK Corp had earlier transferred its paper division to Central Pulp Mills, which has now been renamed as JK Paper Limited.

In a bid to enhance its operating efficiency and profit margins, JK Paper will also look at Voluntary Retirement Scheme (VRS) of around 5 per cent of its current total staff strength of around 3,200 people. The company has already reduced its work force by almost 15 per cent over the last 2-3 years to the current level of 3,200 employees.
“JK Paper is also building up the retailing infrastructure and has already introduced customer relationship development programme (CRDP), which links all distributors across the country, enabling them to track their orders and ascertain the product availability status.

The company also plans to access capital markets for raising additional resources to meets the fund requirement for expansion over the next 2-3 years. However, most of the funding for expansion would mainly come through internal accruals and debt, JK Paper director, HP Singhania told The Financial Express.

JK Paper also plans to launch 3-5 new products a year, which will be part of the company’s aggressive marketing initiatives. Some of these products would be introduced in India for the first time.
“We intend to increase shareholders value through cost cutting, retirement of high-cost debt, reducing workforce and raw material costs resulting in higher profit margins, Mr Singhania said.

“JK Paper plans to increase its share of branded products in overall sales from 35 per cent to 50 per cent in the next two years. Besides expanding the market for the branded copier, we will induce shift from self-packed to the branded mill-packed copier,” Mr Singhania added.

JK Paper has a 40 per cent share in the branded paper segment despite selling its papers at 15 per cent premium, company’s vice-president (marketing) Rajiv Sheopuri said.