Seshasayee Paper and Boards Ltd is revising its investment plan for expanding pulp and paper capacity under the Mill Development Plan IV programme, following feedback from the Expert Appraisal Committee of the Union Ministry of Environment, Forest & Climate Change on its environment clearance application for the expansion project.

The company had originally planned to increase paper and pulp capacity by 40 per cent at its Pallipalayam manufacturing unit in Erode (Tamil Nadu) and applied for environmental clearances for the expansion.

Multiple phases

After reviewing the feedback from the Environment Ministry, the Company’s Board has now approved the execution of the expansion in multiple phases under the Mill Development Plan – IV programme.

The first phase will involve a 20 per cent expansion, with a fresh application for environmental clearances to be submitted. The subsequent expansion of up to 40 per cent will be done upon successful completion of Phase-I, as the company had sought exemption from fresh public consultations, according to information in its FY24 annual report.

The Board is expected to grant final approval for the revised scope, timelines and costs for various phases of the project after a detailed review of the techno-economic feasibility report, subject to obtaining requisite approvals from concerned authorities for the revised Phase-I expansion by 20 per cent.

The ₹1,802 crore company currently operates an integrated pulp, paper and paper board mill at Pallipalayam and a paper manufacturing mill at Tirunelveli. Its total installed capacity stands at 2,55,000 tonnes per annum (tpa), with the Erode facility at 1,65,000 tpa and the Tirunelveli unit at 90,000 tpa. The Erode facility is already running at full capacity, with a capacity utilisation of 100 per cent in FY24, while the Tirunelveli facility’s utilisation was about 84 per cent.

Overall production

However, the company’s overall production in FY24 was lower at 240,383 tonnes when compared with 241,145 tonnes in FY23, mainly due to planned maintenance activities in H1 of FY24, outages in recovery and power boilers in H1 of FY24 that affected pulp and paper production, and adverse product mix/basis weight mix due to poor market conditions.

Looking ahead to FY25, the company expects challenging domestic market conditions for writing and printing grade papers, at least till the first half of the fiscal, as per current trends. It continues to face pricing pressure from the increased availability of imported paper at cheaper prices, especially from China, Indonesia and other Asian countries. 

Additionally, high wood and increasing coal prices are affecting profitability margins.