We are working on Gujarat pulp mill: AS Mehta

The fourth quarter numbers are better than the last three quarters because it was achieved despite a 9-day long plant shutdown, says AS Mehta, president, JK Paper. In a candid chat with Swati Khandelwal, Mehta said the capacity of the Sirpur Paper Mills is being expanded and production is expected to start by October this year.

Edited excerpts

How do you see the Q4 results in terms of revenue, Ebitda and margin?

I consider the fourth quarter revenue, Ebitda, PBDT, PBT and net profit to be better than the numbers we achieved in the last three quarters. This quarter is better for us because it was a quarter where we were able to produce beyond targets and improved on the profit as well as margin percentage despite a 9-9.5 day long shutdown. 

What is your expectation on the volume growth in the next two quarters? 

We always believe that the Indian paper market will grow at the rate of 6-7%, and that is why we have always said that our growth rate should be better than the rate at which industry will grow.  

Where do you see margins in the next few quarters, considering it increased in the last few quarters?  

Right now, I can just say that we will try to add at least a fraction of improvement on the margin percentage that was achieved this fiscal. But, I would like to say that every industry or sector has a pick margin level, a maintainable level and sustainable level. The previous fiscal (2018-19) has been good for the industry and it will be good for the industry if we are able to maintain or better on the number. 

Update us on the capacity expansion plans in the current fiscal 2019-20?

The capacity of the Sirpur Paper Mills, which was acquired last year, is being refurbished. In fact, it will start producing this year itself and trial production has already reached us, and machines are stabilising. I feel that two machines will start producing from the second quarter and the other two machines will be ready for production by September-October. So, the full capacity of the Sirpur mill will be used for production purposes by October. As far as our expansion plan is concerned, we are working on a new packaging board machine and pulp mill in Gujarat. It is going as per the schedule and we are waiting for environmental clearance and the construction activity will be started as soon as the clearance is provided to us.

What are the debt level and your plan to reduce it?

The additional cash that is generated through the profit levels at which we are standing at present is used only for reducing the debt. In fact, the debt level has been brought down significantly in fiscal 2018-19. If we look at our net debt positions, it has been brought down to Rs 700 crore. Net debt means the debt that lies in our books and the cash that is available with us in the banks and the treasury stands at Rs700 crore. Besides, the surplus cash that will be generated going ahead will be used to repay the debt.