Construction activity at Gujarat plant will be started after Environmental Clearances are provided: AS Mehta, JK Paper

The fourth quarter numbers are better than what we achieved in last three quarters because it was achieved despite a 9-day long shutdown, says AS Mehta, President, JK Paper. During a candid chat with Swati Khandelwal, Zee Business, Mehta said the capacity of the Sirpur Paper Mills is being refurbished and we expect that it will be used for production purposes by October 2019. Edited Excerpts: 

Q: How do you see your Q4 results in terms of revenue, EBITDA and margin?
A: I consider the numbers of the fourth quarter, Revenue, EBITDA, PBDT, PBT and net profit, as better than the numbers that we achieved in the last three quarters. This quarter is better for us because it was a quarter we were able to produce beyond targets and improved on the profit as well as margin percentage despite a 9-9.5 day long shutdown. 

Q: What is your expectation for volume growth in the next 2 quarters? 
A:  We always believe that the Indian paper market will grow at the rate of 6-7 per cent and that is why we have always said that our growth rate should be better than the rate at which industry will grow.  

Q: How much margins do you intend to maintain for the next few coming quarters, considering it increased well in the previous few quarters?  
A: Right now, I can just say that we will try to bring at least a fraction of improvement on the margin percentage that was achieved this fiscal. But, I would like to say that every industry or sector has a pick margin level, a maintainable level and sustainable level. 2018-19 fiscal has been a good fiscal for the industry and it will be good for the industry if we are able to maintain or better on the number. 

Q: Update us on the capacity expansion plans of your company in fiscal 2019-20?
A: The capacity of the Sirpur Paper Mills, which was acquired last year, is being refurbished. In fact, it will start producing this year itself and trial production has already reached us, and machines are stabilizing. I feel that two machines will start producing from the second quarter and the other two machines will be ready for production by September-October 2019. So, the full capacity of the Sirpur mill will be used for production purposes by October. As far as our expansion plan is concerned then we are working on new packaging board machine and pulp mill in Gujarat. It is going as per the schedule and we are waiting for environmental clearance and the construction activity will be started as soon as the clearance is provided to us.
 
Q: Update us on your debt levels and your plan to reduce it?
A: The additional cash that is generated through the profit levels at which we are standing at present is used only in reducing the debt. In fact, the debt level has brought down significantly in fiscal 2018-19. If we have a look at our net debt positions than it has been brought down to Rs700 crore. Net debt means the debt that lies in our books and the cash that is available with us in the banks and the treasury and it stands at Rs700 crore and we have a strong balance sheet. Besides, the surplus cash that will be generated in years ahead will be used repaying the debts.