JK Paper hosted a conference call on Nov 03, 2021. In the conference call the company was represented by Mr A S Mehta- President& Director and Mr V Kumaraswamy-CFO.

The company has crossed turnover of more than Rs 1000 cr in Q2FY2022. Revenues of the company stood at Rs 1001 cr in Q2FY2022 against Rs 702 cr in Q2FY2021.Lower base in Q2FY2021 due to covid coupled with additional volumes from Sirpur plant helped the revenues to grow in Q2FY2022.

EBITDA stood at Rs 237 cr in Q2FY2022 against Rs 157 cr in Q2FY2021 and PAT stood at Rs 118 cr in Q2FY2022 as against Rs 68 cr in Q2FY2021.

EBITDA margin stood at 25.1% in Q2FY2022 as against 24.6% in Q2FY2021.

Realizations: Packaging board realizations has increased by 3-4% in Q2FY2022. Since demand for the products are good in the market, realization are better than the input prices.

Coated paper realization has increased by 5% in Q2FY2022. Supply chain disruption from China and Indonesia has resulted in improved demand for coated paper.

There was a drop in prices of uncoated paper during second wave of covid due to depressed demand. However, once the recovery has begun, the company has been able to correct the prices and the there is continues increase in prices of unquoted paper. The current prices of unquoted paper is more or less similar to pre covid levels. (Pre-covid level prices were around Rs 62-63/per KG).

Manufacturing cost has increased by around 8-9% when compared to previous year due to higher coal and other raw materials.

Utilization in the current quarter stood at 110.5%(Standalone). Sirpur utilization in Q2FY2022 stood at 70% as against 60% in Q1FY2022. And expects to touch around 90% in Q3FY2022(Sirpur).

Promoter stake: Reduction of promoter holding by 2 % is based on their liquidity requirements. However, they are committed to the business.

Commodities and power constitute around 15% of the total cost of the company. Basic raw materials including wood and pup prices have not increased for the company in fact pulp prices have come down. However, other commodities prices and power prices has increased and there is an impact. The company has passed on the increase in prices to the customers till Oct. However, the Nov and December scenario is difficult to predict for the company.

The company expects to pass on the increase in energy prices to customers.

Chemical pulp prices had touched US$ 800 per ton due to some speculative activity and other mismatches. However, it is currently prevailing around US$640-650 per ton due to ocean freight shortage. Once things normalize the sustainable chemical pulp prices will be around US$ 500-550 per ton. (Mechanical pulp is used in packaging board whereas chemical pulp is used both in paper and board) On an average the company maintains inventory for 30-45 days.

Container availability has slightly improved. However, the company expects at least another 6 months for the things to normalize. Mix between coal and black liquor is in the ratio of 40:60 for power requirement.

BIS Certification: Unless BIS certification, no company can sell paper in India.

Capacity: The current capacity of the company is 5,91,000 MT and will be increased to 7,61,000 Mt once the expansion of packaging board is completed.The company expects peak utilization in next year.

Market share: The company has a market share of 25% in copier paper, 11% market share in coated paper and 11% in packaging board. The company's market share in packaging board will increase once the new facility in Surat, Gujarat is commissioned.

Debt: Peak debt at consolidated levels will around Rs 2600-2700 cr levels.

Outlook: The revenues at peak utilization at Sirpur plant will be around Rs 1250-1300 cr.