India-based JK Paper signs agreement with Myanmar government to revive state-owned Thar Paung Paper and Pulp Mill; JK Paper to assume undetermined stake in mill, ship 55,000-60,000 tonnes/year of pulp to India

LOS ANGELES , July 24, 2012 () – JK Singhania Group’s JK Paper Ltd. has signed a memorandum of understanding with the government of Myanmar concerning state-owned Thar Paung Paper and Pulp Mill, The Hindu Business Line reported July 24.

JK Paper, which is based in India, will assume an undetermined stake in the mill and help revive it. Thar Paung Paper’s rate of production has been inconsistent due to unstable operating costs.

Thar Paung Paper has an annual capacity of 70,000 tonnes of pulp and 15,000-17,000 tonnes of paper, JK Paper President A.S. Mehta told The Hindu Business Line.

JK Paper expects to prepare a business plan for Thar Paung Paper in the next two to three months and is currently reviewing its business process. At this point, the plan is to use 10,000-15,000 tonnes of pulp in Myanmar and ship the rest to India, Mehta said.

Details regarding the company’s valuation and the level of investment in Thar Paung Paper will be decided shortly, Mehta added, The Hindu Business Line reported.

In its June quarter, JK Paper reported a 42% quarter-over-quarter drop in net profit to 140 million Indian rupees (US$2.5 million), down from 240 million rupees. During this period, sales rose 6% to 3.45 billion rupees, up from 3.24 billion rupees, while expenses were up 13% to 3.2 billion rupees, from 2.84 billion rupees, driven by higher chemical and raw material costs.

The depreciation of the rupee has driven up import prices, even though pulp prices have been flat, stabilizing at US$600/tonne in the June quarter, up from $550-$650/tonne the previous quarter. To cover higher operating cost, JK Paper increased its prices by 4%, reported The Hindu Business Line.

The primary source of this article is The Hindu Business Line, Chennai, India, on July 24, 2012.

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