HPC eyes funding options for Jagdishpur mill

Hindustan Paper Corporation's (HPC) greenfield venture at Jagdishpur in Uttar Pradesh over 500 acre with an investment of Rs 2,742 crore through its subsidiary Jagdishpur Paper Mills (JPML) might be financed through a mix of debt and equity and HPC is looking at securing some premium for the equity component.

Funds could be raised through a mix of debt and equity in the ratio 1:2, said Raji Philip, chairman and managing director, HPC.

"For the equity component we are looking at some amount of premium and can hit the capital markets when conditions are conducive," he added.

He did not rule out debt financing as an option, without divulging further details.

 

This has deferred the deadline for completion from November 2007 to June 2010 by which the first phase may be completed. This 300,000 tonne per annum (tpa) facility will be the largest state-of-the-art facility in South Asia in terms of installed machinery, Philip claimed.

The project will be set up by JPML in which HPC has a 51 per cent stake.

Uttar Pradesh government has already allotted around 250 acres of land for the project, said Philip. Discussions are on for the rest of the land required for the project. While 600 people will be directly employed by JPML, nearly 25,000 people are expected to get livelihood in the spin-off and ancillary activities, Philip said.

HPC Group achieved highest ever combined production output of 3,27,857 tonnes and sales volume of 3,29,174 tonnes exceeding 100 per cent capacity utilisation during 2007-08.

Net sales stood at Rs 1137 crore up from Rs 786 crore in 2006-07. HPC units registered an 11 per cent rise in profit before tax at Rs 133 crore for 2007-08 fiscal. Profit after tax was estimated to come to around Rs 100 crore, up from Rs 81 crore in 2006-07 fiscal, said M V Narasimha Rao, director, finance, HPC.

The group has set a production target of 3,40,000 tonnes for the current fiscal and aims to take it up to 800,000 tonnes by 2012-13. Sales is expected to touch Rs1313 crore this fiscal and Rs 3030 crore by 2012-13.

The net worth of the group that is Rs1084 crore now is poised to zoom to Rs 2800 crore by 2012-13, Rao told the media.