JK Paper to raise Rs 246 cr via rights

JK Paper today said it planned to raise Rs 246 crore through rights issue to part finance the expansion at its unit at Rayagada in Orissa.

The company has decided to issue 58.6 million shares of face value of Rs 10 each at a premium of Rs 32 each aggregating to Rs 246 crore.

The company plans to issue shares to the shareholders in the ratio of three equity shares for every four equity shares held on the record date, JK Paper's Managing Director, Harsh Pati Singhania told reporters here. The rights issue will open on August 8, 2011 and close on August 23, 2011.

The company plans to expand the manufacturing capacity at Orissa by installing a new fibre line with a capacity to produce about 2,15,000 tonnes of pulp per annum, installation of new paper machine with a capacity to produce of 1,65,000 tonnes of wood-free copy paper per annum for manufacturing copier paper and other multi-functional office paper grades and installation of captive power generation facility of 55 Mw.

The production capacity of the company will rise from the current annual capacity of 2.64 lakh tonne to 4.14 lakh tonne over the next two and half years and the capacity of JK Paper Mills at Rayagada will double from its present capacity of 1.25 lakh tonne to 2.4 lakh tonne.

The total project cost for expansion in Orissa is estimated at Rs 1,653 crore, which will be funded through Rs 150 crore of internal accruals, Rs 246 crore of rights issue, Rs 226 crore of FCCB issue and Rs 1,050 crore of debt.

JKPL manufactures a diverse range of writing & printing papers, watermarked bond paper, high value added copier paper and specialty grade paper. Its a market leader in the branded copier paper segment.

"Our aim is to further strengthen our position as one of India's leading paper manufacturing and selling companies, to enhance our manufacturing capacity and increase our products range and to increase our geographical reach in India and abroad to complement our brand," Singhania said.

The major source of raw material for the proposed project has been destined to be Andhra Pradesh and Orissa. The bamboo, which is used in very low quality is sourced from Orissa only, Singhania said.

JK Paper is focused on ensuring long-term continuous supply of pulp wood, primary raw material used in manufacturing of its products, by promoting farm forestry activities.

"We provide high quality seedlings/clones to private farmers located within the vicinity of our manufacturing units, and source wood back from such farmers. In the past 15 year, we have covered 80,000 hectares of land under this programme and this constitutes our 80-85% of the raw material requirements. We believe that this would reduce uncertainty in availability of raw materials," Singhania said.