Hike in paper prices, cost cuttings help paper mills improve margins

Market leader JK Paper posted a 72% jump in December quarter profit to Rs 120.26-crore this year, compared to Rs 69.81-crore in the corresponding quarter last year. JK Paper has also announced that it expects the Sirpur Paper Mills facility in Telangana to add capacity by 1.4-lakh tonne from 1 April 2019. The company acquired the mill last year.

11 Mar 2019 | By Dibyajyoti Sarma

International Paper and West Coast Paper reported 179.16% and 57.28% growth in December quarter profit. TNPL reported 17.4% and 83.36% jump in its December quarter sales and net profit respectively.

During the quarter, the paper mills raised their prices and cut their cost concurrently, which helped improve profit margins. The positive sentiment is likely to continue in the coming quarters, as paper mills see room for a price increase of certain grades.

TNPL reported a 6% increase in its paper production at 113,526-tonnes during October–December 2018 quarter compared to 106,558-tonnes in the corresponding quarter last year. The company’s packaging board output also surged to 47,489-tonnes for October-December quarter 2018 versus 43588-tonne for the same quarter last year.

AS Mehta, president and director, JK Paper said, lower raw material cost plus price hike helped the company improve margins. “On top line growth, the volume is the same compared to the same period last year. It is the price improvement on a product category that helped.”

The company’s export turnover is around 7-8% of the total turnover. Since there is a robust demand in the domestic market, Mehta said the export volume will not increase further.