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TNPL to expand production to step up paper exports

Fakir Chand in Bangalore

Tamil Nadu Newsprint and Papers Ltd, the world's largest bagasse-based paper manufacturing plant, located in the neighbouring state, is expanding its production by 45,000 tonnes per annum to consolidate its dominant position in the country as well as step up its export market share in the Asia-Pacific and African regions.

The only World Bank assisted paper plant in India, the 15-year-old state public sector undertaking will be investing Rs 1.45 billion to increase its installed capacity to 2,25,000 tonnes from the present 1,80,000 tonnes,

"The investment for expansion and upgradation of the existing facilities will be raised from its cash-rich reserves of Rs 3.60 billion. The paper machines will be imported from reputed global manufacturers like Beloit of the UK and Voith of Germany," TNPL chairman and managing director N Narayanan said.

After going through a prolonged recession era due to the slowdown in the economy during the 1996-99 period, the public listed company has bounced back with vengeance to post a record turnover of Rs 4.93-billion during the preceding financial year and a net profit of Rs 800 million, ending March 31, 2000.

With a turn around in the company's fortunes, thanks to a buoyant economy of late, TNPL has decided to also augment its pulp mill capacity for meeting the additional requirement in the post-expansion period.

Situated within 100 km of huge sugar mills in the state at Kagithapuram in Karur district of Tamil Nadu, the company sources all its raw materials, including bagasse indigenously.

"Besides increasing our dominant market share across the sub-continent, we are tapping the markets of the Asia-Pacific and the African regions for boosting exports to 25 per cent during the ensuing financial year (2002-03) from the estimated export target of 19 per cent (2000-01).

When the Indian and the South-East Asian markets were in a roller-coaster due to recession and currency crisis for over three years recently, the company went Down Under to tap the booming Australian market, where TNPL products, especially copier and computer stationery are positioned in the premium segment even at the retail level."

Asked what would be the impact of the WTO regime on the company's prospects, Narayanan said TNPL would not be affected as the duty on import of printing and writing paper was 35 per cent, even below the WTO bound rate of 45 per cent.

"Even in the case of newsprint, though there are no quantitative restrictions on importing any kind of paper, the landed cost will work out more than our price. The import tariff on newsprint is 5.5 per cent against the bound rate of 25 per cent," Narayanan affirmed.

With the launch of the company's latest product: OS 2000 (office stationery) multipurpose high quality paper for modern offices and the emerging SOHO (small-office-home-office) market in the country this month, TNPL will also be branding it for exporting it to the countries in South-East Asia, SAARC region, Africa, and the Gulf region.

"Our printing and writing paper are already being exported to as many as 17 countries, including Australia, Egypt, Indonesia, Jordan, Kenya, Malaysia, Myanmar, Nepal, Nigeria, Philippines, Singapore, Sri Lanka, Sudan, South Africa, UAE, and Yemen" Narayanan stated.

Ideally suited for documentation, presentations, and business stationery, OS 2000 extra bright, opaque, and versatile office paper is eco-friendly and is based on non-wood based renewable raw material. The 80 GSM paper comes in A3 and A4 sizes. It can also be customised to any size.

In a highly competitive market, dominated by the likes of Ballarpur, Century, JK, and others in the private sector, TNPL has crossed its market share over the years to enter into double digits of 12 per cent.

Based on its marketing strategies which have been reworked in tune with the export potential, the company is projecting a sales turnover of Rs 7.50 billion during 2002-03, over and above the estimated turnover of Rs 5.80 billion for the current financial year, ending March 31, 2001.

Narayanan hinted that the state government may dilute its stake further by 8 per cent to reduce its holding to 26 per cent from the existing 34 per cent. With the leading financial institution (IDBI) holding another 34 per cent, the balance of 32 per cent of the Rs 690-million paid-up equity is being held by the public.

The company went public in December, 1995 with a premium of Rs 100 on Rs 10 per share to raise Rs 2.20 billion from the primary market. In view of its sound financial position, TNPL retired its debt of Rs 2.5 billion, it had raised from the World Bank as a soft loan.

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