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The Harsh Pati Singhania-promoted JK Paper Ltd has taken over the ailing sick paper mill, The Sirpur Paper Mills Ltd, located at Kagazhnagar in Telangana district. The takeover comes after the National Company Law Tribunal, Hyderabad had on July 19 approved the Rs 782-crore resolution plan.
According to to the JK Paper management, “The acquisition provides a growth opportunity to JK Paper to expand its existing line of business of paper and paper board.”
The company has secured approval from the NCLT Hyderabad Bench and acquired 76.37 per cent stake comprising 13,90,00,000 shares of face value of Rs 10 each.
JK Paper does not require approval from the Competition Commission of India as the target business is within the prescribed exemption threshold as per the regulations.
Sirpur Paper unit was incorporated on November 17, 1938 and has developed into an integrated paper and pulp mill with a capacity of 1,38,000 tonnes per annum.
Last reported financial year turnover was Rs 430.59 crore due to shutdown of the plant since September 2014, there was no revenue generation in the past three years. Its net worth too was eroded.
As per the arrangement, Rs 371 crore has been settled by the company and its JK Enviro-tech Ltd, towards corporate insolvency resolution process cost, admitted operational creditors, workmen and employees dues among others, as per the terms of the Resolution Plan.
This consists of cash payment of Rs 165 crore and issue of securities consisting of equity shares of Rs 43 crore and preference shares of Rs 162 crore by Sirpur Paper Mills Ltd. The company has issued equity shares of SPML through primary subscription at the face value of Rs 10 each.
After the lenders lifted the seizure of the paper mills, Harsh Pati Singhania, Vice-Chairman and Managing Director of JK Paper, and others opened the paper mill, which will play a major role in the revival of the economy in the newly carved out Kumarm Bheem Asifabad district, where the mill is located.
Significantly, KT Rama Rao, Telangana IT and Industries Minister, and local MLA Koneru Konappa, played a role in facilitating the takeover of the mill by ensuring that the State extends certain concessions, which will make the mill viable.
JK Paper shares were trading at Rs 148.80, up 5.48 per cent on the BSE.
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