Jk Corp Net Profit May Slide As Core Businesses Suffer

J K Corp's net profit for fiscal 1996-97 is likely to decline as sale prices in all its core businesses -- paper, cement and polyester fibres -- fell sharply during the year. The company had maintained a net profit of around Rs 51 crore during the previous two financial years.

But falling cement and paper prices in the last fiscl will squeeze margins and pull down the company's profitability for the year, company officials feared. "It would be difficult for us to maintain the kind of profits we made in the past two years," an official said.

The operating profit, however, is expected to be up this year on the strength of a higher sales volume. JK had lifted its operating profit to Rs 136 crore in March 1996 from Rs 95 crore the year before.

 

The official added the company raised its sales and production volumes and that it did not lose its market share in cement and paper segments during the period. J K Corp, at the moment, is consolidating its operations by expanding capacities in its core competencies.

The company raised its paper output by 3,000 tonnes to 76,000 tonnes and the production of cement from 8.4 mt to 11.5 mt during the last fiscal.

The year, however, witnessed depressed prices in cement and paper. Cement prices on an average dropped to Rs 130 per bag from Rs 160 while paper prices fell by Rs 3,000 per tonne and hovered around Rs 25,000 per tonne. Price of paper has been particularly depressed since the last quarter of 1995-96.

Even the polyester fibre prices have been ruling low for the past few years owing to saturation in the market. The company, however, said that its expansion programme is not untimely. "Though the prices were depressed last year, the expansion will provide economies of scale and the price situation will improve soon with the international price of cement and paper firming up," a company official said.

The company earns over 85 per cent of its revenue from paper, cement and polyester businesses.