JK Paper's Q2 profit falls 41% amid continuing cheap imports

In the second quarter of fiscal year 2026 (Q2 FY26), JK Paper faced significant pressure, with its consolidated net profit after tax (PAT) attributable to owners of the parent company declining by 41.8% year-over-year to INR 74.75-crore. The import headwinds impacted the company’s half-year performance, with the consolidated PAT declining nearly 42% compared to the same period last year. Sequentially, the Q2 FY26 profit of INR 74.75-crore was also lower than the INR 81.23-crore reported in the preceding quarter (Q1 FY26).

Harsh Pati Singhania, chairman and managing director, JK Paper, provided further context on the operational pressures. He reiterated the challenge of "higher wood costs continue to impact profitability" and noted "lower sales realisation due to cheap imports" has affected performance across product segments.

A major point of concern highlighted was the Goods and Services Tax (GST) anomalies or inverted duty structure. Singhania stated, "Recent changes in GST rates have also had an adverse impact on the paper and board Industry. While GST on paper and boards has gone up from 12% to 18%, it has been reduced to 5% on converted products..., resulting in inverted duty structure." He explained this leads to more expensive input costs, blockage of working capital, and an open market for further cheap imports that do not bear the embedded taxes, confirming that representations have been made to the government and GST Council to address this.

Despite the challenges in its core paper segments, JK Paper continues its strategic push into packaging solutions. Singhania commented positively on the acquisitions, stating, "The performance of the company's packaging conversion subsidiaries improved during the quarter.”

The company increased its stake in subsidiary Radhesham Wellpack to 80% in September 2025 and completed the initial acquisition of a 65.7% stake in Borkar Packaging in October 2025. These investments underscore the company's commitment to consolidating its position in the domestic packaging market. As it was reported in PrintWeek, JK Paper has made a total of six acquisitions from 2022 to 2025. The company is bringing the packaging business under a single consolidated entity, which is expected to optimise the use of capital assets, supply chain operations, and customer relationships, and create a stronger base for future growth.

In a move reflecting management’s long-term plan, shareholders at the 64 AGM (September 2025) approved raising the company's borrowing authority under Section 180(1)(c) of the Companies Act, 2013, from the previous limit of INR 3,500-crore to INR 5,000-crore. The rationale for this enhancement was to accommodate financing for ongoing projects, notably the BCTMP pulp mill project, annual maintenance capex, and long-term working capital requirements.

JK Paper operates across multiple segments including office paper, writing and printing paper, packaging boards, coated paper, and speciality paper. This diversified product portfolio provides some insulation from segment-specific downturns, but also exposes the company to varied demand dynamics. The packaging board segment has shown resilience driven by e-commerce growth, whilst the writing and printing paper segment has faced structural challenges from digitalisation.