Financial Daily from THE HINDU group of publications
Friday, Nov 19, 2004
Financial Daily from THE HINDU group of publications Friday, Nov 19, 2004 |
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Corporate
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Mergers & Acquisitions Yash Papers scouting for overseas investors Latha Venkatraman
Mumbai , Nov. 18 YASH Papers Ltd is looking at the possibility of taking on an overseas investor aboard. The company is in talks with a European paper manufacturer for a possible stake offer in Yash Papers. "A strategic investor is one of the options we are examining. We may go for either a preferential allotment or a rights issue or a public issue," said Mr Ved Krishna, Managing Director, Yash Papers. He is a member of the promoter family and they hold 40 per cent equity in the company. Yash Papers plans to expand its paper manufacturing capacity from 50 tonnes per day to 120 tonnes per day at an investment of Rs 85 crore. It has already raised Rs 56 crore from State Bank of India and Bank of Baroda; contributed Rs 5 crore from its internal accruals. "For the remaining amount we are looking at various possibilities from a strategic investor to an issue," Mr Krishna said. According to him, the capital base is small, thereby allowing for further addition. Yash Papers has been focussing on speciality papers catering to a niche segment of the paper market. Its products include wrapping paper, custom made for specific industries. "We have been able to post good growth number primarily because we are into value-added products. Besides, our plant is situated in the raw material abundant region in Uttar Pradesh," Mr Krishna said. The company uses bagasse and wheat straw as raw material for making paper. However, the downside is the fact that the company is subjected to vagaries of monsoons. The capacity expansion will help the company to push up its topline by three-fold. Much of the expanded capacity will drive the value addition. The company is expected to end the year 2004 (it follows a calendar year) with a net profit of Rs 2.5 crore on a turnover of around Rs 30 crore. This compares well with the previous year's net profit of Rs 0.87 crore on a turnover of Rs 27.25 crore. During 2003, the company's net profit suffered declines mainly because of poor crop caused by inadequate rains.
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