The Hindu Business Line : AP Paper bullish on post-expansion growth

Future plans
"On completion of the expansion programmes, we are expecting a benefit of 6-7 per cent through cost reduction and 12-13 per cent in the form of improved sales realisation. We expect the sales volume to improve to Rs 670 crore in 2007-08 from the existing level of Rs 500 crore."

Hyderabad , March 22

Andhra Pradesh Paper Mills Ltd (APPML), part of the LN Bangur Group of Kolkata, is upbeat on the growth prospects in the post-expansion era.

It expects the topline to grow at an average of 18 per cent per annum and profits at significantly high levels.

The company, which has taken up Rs 635-crore project for expansion, modernisation and upgradation of its pulp and paper making facilities, is set to complete the phase-I of project involving over Rs 500 crore by June this year, the APPML Executive Director, Mr R.C. Mall, said.

In a bid to compensate the delay of around three months in executing the phase-I of project, it is planning to expedite the second phase to complete it by January next year as against the earlier envisaged schedule of March 2007.

On completion of second phase expansion, the company's installed capacity of paper would go up to 1.94-lakh tonnes per annum from the existing 1.6-lakh tpa.

Since a majority portion of Rs 635-crore was going towards meeting quality and environmental requirements and an insignificant portion towards paper capacity expansion, the company is considering a proposal to add a paper machine to increase the total capacity to around 2.5-lakh tpa involving an investment of Rs 234-crore, Mr Mall told Business Line.

Decision soon

However, he said a decision on this would be finalised soon and the project would be completed in 24 months from then.

"On completion of the expansion programmes, we are expecting a benefit of 6-7 per cent through cost reduction and 12-13 per cent in the form of improved sales realisation. We expect the sales volume to improve to Rs 670 crore in 2007-08 from the existing level of Rs 500 crore. Following the completion of proposed paper expansion, the turnover is projected to go to around Rs 840 crore by 2009-10," Mr Mall said.

The company, which raised over Rs 450 crore of debt for the ongoing expansion-cum-modernisation, is confident of repaying the debt to institutions well before the stipulated seven years.

The company expects its cash profit (PBDT) position to improve from the current level of around Rs 65-crore to around Rs 210 crore in 2008-09 and further to around Rs 275-crore during 2009-10, he said.

Further, Mr Mall said the company is also bullish the emerging opportunities in the area of carbon credits. APPML is currently evaluating applying for the carbon credits with the designated authority.

The company currently has around 10,000 CERs (certified emission reductions) with host country approvals and expects them to cross the 100,000-CERs mark following the ongoing expansion.