Tnpl

Consider this, within a period of seven months of the company's IPO devolving, the chairman and managing director of the company was changed.

In the second instance, the company was saddled with a huge inventory (it still is) when the half yearly results were announced.

Again in a span of four months, the chairman and managing director of the company was changed.

The latest chairman and managing director is R Gopalan, the third CMD that the company has in a period of less than a year.

Can a change in the managing director's post provide a solution to the ongoing problems facing the company, which are mainly related to the industry?

The industry has been suffering from falling paper and newsprint prices.

The company has been saddled with an inventory for the first time in eight years. For seven successive years (till FY1995-96), Tamilnadu Newsprint and Papers was a zero-inventory company.

As on September 30, 1996, the company had a newsprint inventory of 18,000 tonnes and a printing and writing paper (PWP) inventory of 16,000 tonnes.

Sales for the period was 13,703 tonne (10,555 in the first half of 1995-96) of newsprint and 37,525 tonne (34,558 tonne) of printing and writing paper.

This means that 40 per cent of the production is lying as inventory.

It may be noted that the company doubled its capacity from 90,000 tpa to 1,80,000 tonnes per annum, which went on stream on January 31,1996.

Certainly, a frequent reshuffle at the top is not in the company's interest.

And, since Tamilnadu Newsprint and Papers is a listed company, such a move can affect investor sentiment.

Ironically, the resignation of the chief of a company like Dunlop India raises a hue and cry, but the strange happenings at Tamilnadu Newsprint and Papers have gone unnoticed so far.

Further, the World Bank had granted a loan to the company, meeting about 45 per cent of the project cost for its capacity expansion. A stipulation of this loan was that the Tamil Nadu government's stake in the company will come down to less than 26 per cent from 34.92 per cent within a period of one year from the date of commissioning of the plant.

The due date was January 31, but the state government now proposes to approach the World Bank to waive this condition.

A condition laid down by Industrial Development Bank of India (the IDBI loan accounted for 17 per cent of the project cost) for sanctioning the loan was that the managing director will have a tenure of five years.

Both the conditions were violated and the largest shareholders of the company