Govt gives Rs 66 cr to ailing Nepa

Releasing a bundle of largesse, the Madhya Pradesh government on Tuesday chipped in Rs 66 crore in the form of share capital to ailing Nepa Mills, and said it would waive off interests on the principal amount that the public-sector undertaking owes to the state for long.

A state cabinet meeting decided to waive off Rs 33 crore interests and convert the principal Rs 32 crore into equity, health minister Narottam Mishra said. He evaded a reply on whether it was certain conditions that the state has released the bail-out package to the ailing mill. But well-placed sources in the government said the government has asked the country’s first newsprint manufacturing unit to diversify its product portfolio.

 

The union government has assured Nepa a Rs 975-crore bail-out package, provided the unit gets certified clearances from the state government on its dues. Company chairman S K Mutreja, who has been appointed for another term after a gap, had tried to pursue the matter with the state officials. Nepa wanted MP government to write off its dues of Rs 66.92 crore comprising power dues of Rs 9.81 core and Rs 22.32 crore interest on it besides entry tax and electricity duty. “State would not only pump in Rs 11 crore to help Nepa overcome its blues but also renew forest lease. The state cabinet on Tuesday cleared their demands and extending the required support in the interest of the local public,” the minister added.

Established in 1947, Nepa came to a grinding halt in 1990. It has since then been awaiting resuscitation. The Centre’s efforts that included marathon meetings failed when it came to selling the company.

That prompted it to floated the Rs 975-crore revival plan. Nepa produces 42- and 44-GSM grade newsprint by using recycled and waste paper.

Mutreja had recently told Business Standard that the government would enter into Nepa on buying writing and printing paper, once the revival package was through.

Nepa has an outstanding accumulated losses of Rs 574.03 crore. The union government had last year decided to convert these accumulated losses into equity, and waive of interests on it. The Centre has reportedly consented to covert the loan of Rs 203 crore into equity and waive off interest totalling Rs 304.16 crore.

The new revival plan will have a lumpsum breakup of Rs 400.40 crore cash. Of this, Rs 318 crore will go into overhauling of the machinery, while Rs 22.48 crore will be channelled into a rehabilitation scheme. Rs 60 crore will be used in granting a voluntary retirement scheme to 400 employees.

As of now, the two of its outdated units need urgent repair. Also the management has to de-linking plants of 175-tonne-per-day and 100-tonne-per-day capacity, and establish an 8-Mw power plant.

The state holds a minuscule share the Nepanagar town that houses the mill in Burhanpur district. If it is closed, the livelihood of hundreds of families will be in jeopardy. Nepa’s newsprint capacity reached 88,000 tonne per annum. Almost half of it is currently run at 47,425 tonne.