Indian Wood Products Makes Fresh Investment in Jammu

Even as the debate over the actual socio-political situation on ground zero in Jammu & Kashmir continues, The Indian Wood Products (IWP) Co Ltd, the century-old largest manufacturer of branded Katha (catechu) in India, has decided to shell out Rs 20 crore, in the first phase, to come up with a state-of-the-art manufacturing facility in Jammu, purely on business reasons (on the availability of raw materials), much to the pleasure of the Modi 2.0 government. In fact, the company is already in the process of investing in the new plant and commercial production would commence very soon- certainly by the fourth quarter of the current fiscal, top company officials said.

Interestingly, the overall market of Katha, a vital ingredient for pan masala, is estimated to be nearly Rs 2000 crore, which is dominated by the unorganized sector. At present, IWP has a market share of 35 per cent in the organised segment. With the implementation of GST and e-Way Bill, the unorganized Katha sector is expected to shrink rapidly in the coming years and the organized sector is expected to eat into this large market, said Bharat Mohta, director, IWP.

Mohta said that the move to make fresh investments and come up with the new plant in Jammu, and thereby ramp up commercial production in the fourth quarter of 2019-20 is expected to increase the overall premium Katha production of the company by 50 per cent. The company has also lined up plans for new launches for the retail segment too. This would enable Indian Wood Products (IWP) to corner nearly 20 per cent market share of the overall market (organized and unorganized sector put together) in India in the next five years. He added that the biggest advantage for the Jammu unit is access to raw material (timber) at most competitive prices viz others in the industry.

Interestingly, according to different market research studies, the size of the retail market for paan or betel leaf is estimated to be nearly Rs 850 crore for UP only. The overall pan India retail market of paan or betel leaf can, therefore, be estimated to be nearly Rs 3000 crore. Mind you, in this case also, the informal or unorganized sector is very big.

The company’s profitability would also get a big boost since the margins in the premium category continue to be much higher than regular Katha.

Besides Katha, IWP is also set to increase its product basket of IWP branded spices by adding 18 new launches to its existing 75 varieties during the year, starting with few states in northern and eastern India with more specific focus on rural and semi-urban segment where the market is steadily growing into packed ready-to-use spices segment from raw spices which were being grinded at rural households or spices in loose packing, said Mohta.

Significantly, IWP Also exports spices to many countries through Agro & Spice Trading PTE ltd Singapore – a 50:50 joint venture of IWP and a Singapore-based group which, in turn, promotes PT Thea Universal a PMA (100 per cent Foreign-owned) in Indonesia. PT Thea,  which is Kosher certified and has a US FDA number export spices to the US, Brazil, Russia, Netherlands, Latvia, Turkey, Morocco, UAE, India and Nepal and others.

The company, which has been operating quietly out of its Kolkata headquarters, was originally promoted by H N Gladstone, H Bateson, E H Bray of London and others in 1919 with the sole objective to manufacture Katha and Cutch at Izatnagar, Bareilly (UP). The manufacturing activities were started in 1920. The new promoters (current management) took over in 1980.