JK Paper Ltd will raise Rs 1700m in two tranches to fund expansion, including part financing of its plans to diversify into multi-layer packaging board.
“We are yet to decide on the mode of raising the funds. We are exploring various options like rights issue, preferential allotment and foreign currency convertible bonds,” said Satish Mandhana, chief financial officer and head (business strategy), JK Paper to a leading newspaper.
Though JK Paper has got the permission to raise Rs 1700m, which includes the premium amount, the company will raise it in two tranches, Mandhana explained.
The company is setting up a 60,000-tonne capacity plant to manufacture multilayer duplex board at its Central Pulp Mill in Gujarat at a cost of Rs 235 crore. The plant will start production in late 2006. The project is being financed through a debt-equity ratio of 1.5:1.
“After a long period, we have decided to diversify and production of packaging boards is the first such move. This will give us a foothold in the high growth markets of branded copier paper and coated paper. These segments are growing at the rate of 15-20 per cent against 5-6 per cent growth rate for the entire paper industry,” Mandhana said.
In July, JK Papers had commissioned an offline blade coating plant with a capacity of 45,000 tonnes per annum at its existing facility in Jaykaypur in Orissa. “The product has been well received in the market and we expect it to grow further,” he added.
JK Paper has cornered more than 20 per cent share of the coated art paper market in the last few months. The company was present in this segment earlier by marketing coated papers imported from Europe.
Internationally, coated papers account for about 40 per cent of the market, while printing and writing paper form the remaining. In India, coated papers account for just 10 per cent, but this share is bound to increase to international levels. Of the 2.3 million tonnes of printing and writing paper, coated papers constitute just two lakh tonnes, he said
