Financial Daily from THE HINDU group of publications
Wednesday, Nov 24, 2004
Alliances & Joint Ventures
TNPL to buy hardwood from TAFCORN
Chennai , Nov. 23
TAMIL Nadu Newsprint and Papers Ltd has entered into a long-term agreement with the Tamil Nadu Forest Corporation (TAFCORN) to purchase over 70 per cent of TAFCORN's output of hardwood.
The agreement is a key step in launching its Mill Development Plan to upgrade and expand its pulp lines and production facility.
According to sources , with this agreement, TNPL will get 1.75-lakh tonnes eucalyptus hardwood a year for the next 15 years. This will meet about 60 per cent of its annual pulp wood requirement.
The company is in the process of augmenting its raw material requirement to ensure adequate, competitive supply. With sufficient raw material supply, the company is also planning to enter into marketing hardwood pulp in the domestic market. It hopes to market about 125 tonnes of hardwood pulp a day, they said.
The rest of its hardwood raw material is expected from captive plantations and farm forestry programmes for which it is roping in farmers. The company hopes to bring in over 30,000 acres under farm forestry. By December it will have about 3,500 acres of farm forest, they said.
The company sees this as a significant step in tying up its raw material requirement for its Rs 565 crore Mill Development Plan, which will see it expanding its pulp production facility and shifting over to an environment-friendly Elemental Chlorine Free process.
TNPL plans to generate Rs 150 crore internally and raise the balance as debt. This will see it replacing its existing 110 tonne a day hardwood pulp line with a 300 tonne capacity. It will also set up a modern chemical bagasse pulp line with a capacity of about 400 - 500 tonnes a day.
Bagasse is TNPL's primary raw material of which it needs about 10 lakh tonnes a year. It has tied up with nine sugar mills for bagasse supply.
The project will also add 10,000 - 15,000 tonnes of paper additionally to its present annual output of 2,30,000 tonnes. This is a part of the Rs 700 crore expansion programme, which the State Government announced last year to expand TNPL's capacity to 3,30,000 tonnes.
Last year the company roped in international consultants AMEC E&C Services Ltd, Canada, for carrying out the detailed market study and feasibility report for the expansion programme.
The studies in the first phase focussed on pre-feasibility for the expansion programme and the demand for the expanded production in India. This would be followed up with a techno economic feasibility report and detailed project report will also be compiled providing options and alternatives.
AMEC E&C is a market leader in construction with expertise in pulp and paper and has a strategic alliance with SPB Project Consultants, of the Chennai-based ESVIN group and AF-IPK, Stockholm.
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