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Monday, Jan 21, 2002

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Corporate - Restructuring

Hindustan Paper to trim workforce, upgrade quality

Badal Sanyal

KOLKATA, Jan. 20

EXPECTING the domestic paper industry to continue to remain vulnerable to fluctuations in international prices and the inherent cyclicality of the industry, the State-owned Hindustan Paper Corporation (HPC) has initiated a process for sustaining the company's competitive edge in the market place.

The process covers reduction of manpower, improvement of operating efficiencies and upgradation of the quality of 13 varieties of paper it manufactures.

More importantly, close on the heels of the Centre's decision to disinvest about 74 per cent equity in HPC's wholly-owned subsidiary, Hindustan Newsprint Ltd (HNL), HPC now intends to focus its entire business attention in Assam where it has two paper mills, each with an annual production capacity of one lakh tonnes of writing and printing paper.

Incidentally, a global tender has been floated inviting price bids from private investors for the HNL shares to be sold. It is expected that the disinvestment process would be completed before the end of the current fiscal.

The Chairman and Managing Director of HPC, Mr Raji Philip, told Business Line that just as economic reforms were irreversible, competition was inevitable in the domestic paper industry under the WTO regime.

He, however, appeared concerned about the nature of competition in the event of drastic reduction in import duty on paper in the forthcoming Budget.

He said the company's two mills in Assam, one at Cachar and the other at Nagaon, had been performing satisfactorily in spite of logistics problems.

Both mills were expected to maintain over 100 per cent capacity utilisation for the remaining part of the current fiscal. He said inadequate availability of affordable raw materials and railway transportation snags would continue to affect the growth of paper mills in Assam as well as other North-Eastern States.

However, in keeping with the Centre's policy to help accelerate economic development of the North-Eastern States, Mr Philip said HPC has finalised an expansion programme for both the mills.

The installed capacity of each mill would be raised by at least by 25,000 tonnes each, entailing a total investment of around Rs 250 crore.

Along with the expansion programme, efforts are being made to upgrade quality of all varieties of paper so that the company could get better prices in the competitive market.

Though `cultural' varieties of paper constitute about 50 per cent of HPC's total annual production of about 2,00,000 tonnes of writing and printing paper, it has plans to add value to non-cultural varieties, thereby enabling it to earn more.

Mr Philip indicated that HPC might end the current fiscal with a turnover of about Rs 600 crore as against the Rs 523 crore achieved last year. He said that the net profit would be a little higher than last year's figure of Rs 32 crore.

The CMD said the company aimed to reduce about 10 per cent of its total workforce of 3,300 through VRS route before the end of the current fiscal. It would require to pay out some Rs 15 crore to implement the VRS.

NPCC, it may be recalled, was referred to the Board for Industrial and Financial Reconstruction (BIFR) in October 1999 and the production has since been suspended. NPCC, in the process, incurred a net loss of about Rs 189 crore till March 2001.

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