Higher demand for packaging boards from e-commerce, specialty papers to drive growth for JK Paper

Accelerated demand for packaging boards for online purchases and tissue papers on account of the Covid-19 pandemic, along with specialty papers, will drive growth going forward, said JK Paper Chairman Bharat Hari Singhania.

Besides, Singhania, who is also president of JK Organisation, said that though a gradual unlocking has commenced, disruptions are expected to sustain for some time.

JK Organisation has diversified interests, including tyres, cement, paper, industrial and automotive transmission products, and agri seeds. Recovery from the second wave of Covid-19 will depend on factors such as the government’s policy support and faster vaccination, he said in the latest annual report of JK Paper Ltd, a JK Organisation company.

“India was projected to grow in double-digit percentage growth rates this year but the second pandemic wave has raised downside risks. Whether the recovery materialises soon will depend upon the government’s policy support, faster vaccination and return to normalcy,” said Singhnia in his statement.

According to Sighania, “Uncertainty” prevails following the second pandemic wave that proved more devastating than the first.

“Even though a gradual unlocking has commenced, disruptions are expected to sustain for some time. One is unsure about the willingness of consumers to spend as they could be prone to precautionary savings. “Besides, Covid-19 brought untimely misery to many, especially those who lost their family members; and in some cases, their sole earning member,” he said.

To move the economy forward, end-consumers need more safety nets to revive demand, as successfully seen in developed countries.

“Estimates show that without swift fiscal support, last year’s severe collapse could have been three times worse,” Singhania added.

While talking about the paper industry in FY21, Singhania said the economy improved “appreciably” in the second half of the year, reflected in a pick-up in demand for packaging board as the pandemic accelerated online purchases due to social distancing restrictions.

“The emphasis on hygiene increased the demand for tissue papers. “Going forward, we expect that growth will be driven by this and the speciality paper segment, induced by plastic substitution, as the world replaces single-use plastic with eco-friendly paper-based alternatives,” he added.

The market for packaging board is likely to grow 9-10 per cent annually in India, compared with around four per cent globally.

“This growth is catalysed by personal consumption and the growing substitution of plastic products,” the annual report said.

While talking about the impact of the second wave of Covid-19 on the company’s business, the annual report said it appears less intense than the first.

“The outlook appears hazy, and disruptions in the coming months are not ruled out. However, a superior export performance and certain end-use segments in the packaging board business augur well for the company and its prospects for the expansion,” it said.

If education institutions restart, there could be a significant positive impact on the writing and printing segment, JK Paper added.

“The company will seek to enhance people productivity, morale and output from the packaging board expansion through prudent people re-deployment,” it added.

From a long-term outlook, the company is “optimistic” on India’s per-capita paper consumption potential, said JK Paper.

“From a long-term outlook, the company is optimistic of India’s per-capita paper consumption potential, presently much lower than the global average consumption average. “Even a moderate improvement in consumption could translate into a substantial increase in national appetite,” it said.

The intrinsic use of paper in education in India is expected to help the writing and printing papers segment grow around 4 per cent a year, higher than the global average.

For the last financial year 2020-21, JK Paper’s revenue stood at Rs 2,969.15 crore. It was Rs 3,254.20 crore during 2019-20.