Merger of Subburaj offers multiple advantages to Seshasayee Paper

Seshasayee Paper and Boards has cleared in principle the merger of Subburaj Papers with itself.

The boards of both the companies have independently approved the merger on Saturday said Mr N. Gopalaratnam, Chairman and Managing Director, Seshasayee Paper.

This will expand the annual paper production capacity of Seshasayee Paper to about 1.75 lakh tonnes early next financial year from the present 1.15 lakh tonnes.

The company announced the acquisition of the Tirunelveli-based Subburaj Papers last February. The plant, due to a financial crunch, had not been in operation for over six months at the time of acquisition. The factory with a production capacity of about 60,000 tonnes a year expandable to over 90,000 tonnes was established in 2009.

Location advantage

The unit will produce more than 60,000 tonnes next year and Seshasayee Paper plans to complete the expansion to full capacity during the course of the year.

The details of the merger are being finalised and will be completed in early next financial year after statutory clearances, he said.

At the time of acquisition, the company had said that apart from the advantage of larger production capacity, the acquisition gives it the benefit of a location close to the Tuticorin Port just 60 km away.

This will help in import of raw material, fuel and exports of finished product.

The unit is also within easy reach of major domestic markets like Kerala and Sivakasi. Also, Subburaj Papers comes with over 300 acres of land, which would be useful for further expansion.

The merger will also help bring down the cost of operations for the acquired unit, he said.

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