Indian paper and packaging board manufacturer JK Paper has recently announced a significant decline in profit for the eighth consecutive quarter, marking a challenging period for the company. The company’s consolidated net profit for the quarter ending 30 June experienced a nearly 42% year-on-year drop to Rs812.3m ($9.3m), while reporting gross revenues from operations of Rs14.71bn.
In response to the ongoing challenges faced by domestic paper manufacturers, JK Paper has disclosed its strategic decision to acquire a 72% stake in Borkar Packaging for Rs2.35bn. This acquisition comes at a crucial time when companies like JK Paper are struggling with rising wood costs and increased competition from lower-priced imports.
JK Paper stated, “Lower volume and sales realization due to cheap imports with continued high wood cost have adversely impacted performance. Sirpur Paper Mills also had an annual planned shut during the quarter.” The company’s net revenue from operations also experienced a slight decline of 2.3% to Rs16.74bn, while raw material costs surged by 9.2%.
In light of the challenges faced by the industry, India has initiated antidumping investigations into imports of paperboard from countries such as Indonesia, Chile, and China. These imports have been affecting the local market, where paperboard plays a vital role in packaging consumer goods, pharmaceuticals, and electronics.
With the acquisition of Borkar Packaging, JK Paper aims to strengthen its position in the packaging sector. Borkar Packaging, which serves major consumer conglomerates such as Unilever and Nestlé, operates factories in eight locations across India. By acquiring Borkar Packaging, JK Paper seeks to establish itself as one of the top three players in the folding cartons segment of the packaging industry.
The article “JK Paper to acquire Borkar Packaging amid profit decline” originally appeared on Packaging Gateway, a GlobalData owned brand.
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