The Hindu Business Line : Equity being raised for three projects: Orient Paper

The Orient Paper board has approved raising up to Rs 175 crore via a rights issue. The company's Managing Director, Mr ML Pachisia, says that the equity is being raised for three projects, which include expansion of their cement capacity, setting up a thermal power plant, and additional tissue paper capacity at their paper plant.

Excerpts from CNBC-TV18's exclusive interview with Mr Pachisia:

I am assuming that a lot of Rs 175 crore would be used to raise your capacity to one million tonne, could you tell us what more this will be used for and by when you hope to come out with the pricing issue?

The equity that we are raising basically is for three projects, one is to expand our cement capacity by a million tonne, the other is to set up a thermal power plant at our cement plant of 30 MW, and the third project is 20,000 tonnes of additional tissue paper capacity at our paper plant.

So these three projects together and a number of other ongoing capital projects is what the equity funding will be used for, apart from our own internal generations as well as we also wish to repay some of the debts or prepay some of the high cost debts and improve our credentials generally.

How much is the debt on the books right now?

It is about Rs 320 crore right now.

How much do you intend to retire?

Let's see how it works out, but we want to basically become a debt-free company in due course.

By when will you actually look to start adding all these capacities and by when will all of this basically come on board?

The cement capacity will happen in two phases, about 3 lakh tonnes will get added in the next four months.

By January 2007, we are hoping to complete about 3 lakh tonnes and then the remaining will happen by March 2008.

On the paper side, it will happen by September 2008 and for the power plant, it will be by March 2008.

How much savings would you generate on account of this power plant?

It will be about Rs 40 crore a year.

When is this pricing actually likely to come through and what could be a likely ratio that you are looking at for this rights issue?

I would not like to guess it, it will probably take three-four months to complete all the formalities and then apply for SEBI approval.

The pricing will depend upon the market prices ruling at that time and the ratios will obviously get decided. We have just decided on the total amount of money that we want to raise and the pricing and the ratios will be decided closer to the actual opening of the issue.

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