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Friday, December 16, 2011

JK Paper may buy coal from open market -Mr Kumarswamy CFO

Friday, 16 Dec 2011

Mr V Kumarswamy CFO of JK Paper spoke to CNBC-TV18 about his outlook for the business and the way ahead for his company. He says that after the terrible past quarter, this quarter seems to be much better. Mr Kumaraswamy said that that JK Paper will go ahead and buy coal from the European markets if need be since the plants cannot be kept shut.

Q - Your profitability declined by about 78% last quarter and margins fell from 28% to 17%. Has Q3 been better for you all?

A - Well, the last quarter’s disturbance was created largely by coal supply disturbances which you are reading in the paper almost daily now, and also some kind of dumping of coated paper from China consequent to US and EU putting some very high dumping duties there. A lot of quantities were thus diverted here.

The coated paper scenario has been largely taken care of by the currency depreciation in India, almost going from INR 45 to INR 53 per dollar levels that has made imports of coated paper that much costlier. Coal supplies are improving but no where near normal. So that’s how the current quarter is panning out to be.

Q - This gap that you have between what was your supply of about 1.5 tonne of coal required for every tonne of paper and what you get now, are you looking at buying in the open market? How are you looking at resolving this issue?

A - We have to buy it from the European markets, there is no other alternative. I can't keep the plant shut for this reason. After all, there is a positive contribution and EBITDA margins even at the bought-out coal. We always buy coal from European markets because there is no way that we will not buy from the open market.

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