The Hindu Business Line : Hind Paper finalises Rs 1,000-cr capacity expansion plan

ANTICIPATING that the domestic paper and newsprint market will remain bullish in the foreseeable future, the State-owned Hindustan Paper Corporation (HPC) has finalised a fresh investment proposal to expand capacity of its two paper mills in Assam and a newsprint making unit in Kerala which is under the administrative control of its wholly owned subsidiary — Hindustan Newsprint Ltd (HNL).

The proposal, involving investments between Rs 800 crore and Rs 1,000 crore, is ready and will now be submitted to the Union Ministry of Heavy Industry for approval.

Confirming this, informed sources at HPC said that a considerable portion of the earmarked funds would be arranged from internal sources and the balance through borrowings. A fresh investment plan has been drafted in the aftermath of the UPA Government deciding not to disinvest Government stake in profit-making PSUs.

The Disinvestment Ministry of the erstwhile NDA Government had floated global tenders seeking prospective bidders for 74 per cent of the total equity of HPC and HNL. Accordingly, the Ministry received bids.

At one point, the process of disinvesting equity shares in both the companies was almost finalised. But things have since changed with the new thinking of the UPA Government towards disinvestmentof equity in profit-making PSUs. This has given impetus to HPC to consider a capacity expansion plan.

The HPC source indicated that HNL's annual capacity will be raised from 1,00,000 tonnes to the level of 2,00,000 tonnes. The new capacity will be created with "swing" facility so as to enable this mill to produce both newsprint and writing and printing paper.

Under the expansion plan, the combined annual capacity of its Assam mills, one at Naogaon and the other at Cachar, will be raised to the level of 3,00,000 tonnes from 2,00,000 tonnes. The capacity expansion at the Assam mills is planned considering the export possibilities in South East Asia and South Asia, particularly in Bangladesh.

Meanwhile, the company is considering to revise the prices of its writing and printing paper from early next month. The source said that it had last revised prices in April 2004, while other large paper mills revised the prices twice during this period.

Though he declined to divulge the quantum of rise, he indicated that the average increase would not be above Rs 1,000 a tonne. He was confident that the revised prices would be absorbed by the market in view of a tight demand-supply situation of cultural varieties of paper.

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