Jk Paper, Gidc Strike Alliance For Rs 700cr Project

J K Paper Mills, a J K Corp company, and the Gujarat Industrial Development Corporation (GIDC) have signed a memorandum of understanding to set up a Rs 700-crore paper plant in the state using "baggasse" or agricultural residue as the raw material.

The green field venture forms a vital part of J K Corp's overall plan to consolidate itself in the paper business as the company is aiming at an expansion of its existing capacity in a major way. It has already invested close to Rs 250 crore to raise capacity and has earmarked an additional Rs 600 crore for investments to create fresh capacities in the next two years.

 

The proposed plant will have an installed capacity of 1,20,000 tonnes per annum. The J K group and GIDC will hold 40 per cent and 11 per cent of the equity respectively in the venture while the remaining will be offered to the public. It will have a debt equity ratio of 1:2.1.

A J K Corp official said the two promoters will make a feasibility study of the project and identify the kind of technology to be used in the venture. "We have used wood pulp until now as the basic raw material to produce paper in our plants. We are now considering the viability of using agricultural residue as the raw material in this new venture," he said.

The promoters also plan to seek the necessary environmental clearance from the government for the project. Further, the cost of funds to finance the venture is yet another factor being considered by the two parties. "This is a big project involving a huge investment. We would like to be cautious about its feasibility before starting investments in the project, the official said.

The company said it is in the process of increasing its existing capacity from 75,000 tpa to 90,000 tpa by the end of the current quarter. In the second phase early next year, the company plans to raise the capacity further to 1,60,000 tpa with an investment of approximately Rs 600 crore. J K Paper is also setting up a state-of-the-art pulp mill of 1,27,000 tpa, which would reduce the company's dependence on costly imported pulp. The company said the mill would provide economies of scale of global standards by reducing the cost of production and enhancing the quality of pulp.