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Thursday, Jul 22, 2004

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AP Paper Mills signs loan agreement with IFC

Our Bureau

Hyderabad , July 21

ANDHRA Pradesh Paper Mills Ltd (APPML) has informed the bourses on Wednesday that it has signed a loan agreement on Tuesday with International Finance Corporation of USA (IFC) in connection with foreign currency loan of $ 35 million sanctioned by IFC to part finance its mill development plan.

APPML has embarked upon the developmet plan involving an outlay of Rs 554 crore to be implemented in two phases. While the first phase is scheduled to be completed by 2006, the second phase will be completed by March 2007.

The plan envisages increase in the company's installed capacity from 1,53,500 tonnes per annum to 1,97,700 tpa and modernisation of its two mills located at Rajahmundry and Kadiam in Andhra Pradesh.

The plan would be financed through the internal accruals of over Rs 240 crore and the remaining Rs 310 crore by way of term loans, debentures and equity.

Apart from IFC, the company had approached DEG of Germany for loan as well as equity component in the project and the State Bank of India, Canara Bank and IL&FS for domestic funding. The project is with an overall debt equity ratio of 1.25:1 including loans in foreign currency as well as rupee loan. The current equity of APPML is Rs 11.8 crore.

It is aimed at improvement of technology, achieving energy efficiency, marketability and long-term environmental compliance. It will also help the company replace recycled paper at its Coastal Papers Ltd in Kadiam with virgin fibre for making high-end value-added products.

The company stated that the implementation of the development plan would lead to substantial reduction in variable costs and improve sales realisations. After this, the company's revenues are projected to go up to Rs 600 crore per annum with profits in the range of Rs 90 crore.

In 2003-04, the company's turnover and net profit stood at Rs 450 crore and Rs 23.36 crore, respectively.

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