India likely to be one of the few bright spots in world economy: Bharat Hari Singhania

NEW DELHI: Amidst coronavirus-related disruptions, advanced countries are set to experience prolonged pains, while India is expected to be one of the few bright spots in the world economy, according to JK Paper Chairman Bharat Hari Singhania.

The pandemic has arrived at a time when the Indian economy was already experiencing a growth slowdown, as reflected in lower discretionary spending over the last 12 months, Singhania said in his address to shareholders in the company's annual report for 2019-20.

He said in almost 170 countries, people are likely to face a decline in average income over the previous year as well.

"The complete lockdown in India is one of the most stringent, for (around) 70 days, where almost two-thirds of all economic activity came to a grinding halt. While the advanced countries are set to experience prolonged pains, India is expected to be one of the few bright spots in the world economy, sustaining positive growth at 4.2 per cent for 2019-20," Singhania said.

For the country, he said, "unfortunately, the COVID-19 pandemic arrived at a time when the Indian economy was already experiencing a growth slowdown, as reflected in lower discretionary spending over the last 12 months, particularly in automobiles, consumer durables and high-end FMCG products."

At a time when uncertainty prevails over the containment of COVID-19 and thereby the global economic recovery. "To ensure that the economic engine starts moving, governments across the world are providing fiscal stimulus of varying magnitude," he said.

This, Singhania said, "is important as the end consumers should be provided an adequate safety net to revive demand. That would determine whether the projected V-shaped recovery, where India's GDP growth is expected to recover, will happen or not."

Referring to the company's performance in FY20, he said at a time when the manufacturing sector in India is faced with significant spare capacity, with overall capacity utilisation falling to around 68 per cent in the December quarter, both JKPM (JK Paper Mills) and CPM (Central Pulp Mills) have been running at full capacity.

"This augur well for our planned expansion, where we are targeting to reach 8 lakh tonnes per annum (TPA) by March 2021," Singhania added.

He further said, "the impetus will mainly be in the packaging board segment, while maintaining the focus on other segments too, particularly where we enjoy a leadership position in the market."

JK Paper Vice-Chairman and Managing Director Harsh Pati Singhania said despite the setback from the COVID-19 triggered lockdown, the company's planned capacity expansions are progressing as per schedule, "although support from banks and financial institutions would be critical for us to adhere to timelines".

"To take advantage of the growth momentum witnessed in the country's paper sector, JK Paper is working towards increasing its production capacity from 4.5 lakh TPA to 8 lakh TPA (including capacity of The Sirpur Paper Mills Limited) by next year," he added.

This capacity augmentation is aimed at significantly expanding the company's packaging board capacity to take up growth opportunities on offer, with the proliferation of e-commerce, digital initiatives and growth upsurge in the pharmaceuticals sector, Harsh Pati Singhania said.