Ballarpur Industries Halves Choudwar Expansion Outlay

The company had chalked out a Rs 1,000 crore plan to improve the financial status of the unit last year.

The plan envisaged increasing the paper making capacity of the unit from 22,000 tonnes per annum to 90,000 tonnes besides installing new machineries for manufacture of 60,000 tonnes of paper board per annum.

Again, the delay in finalising the technology and financial partner for the expansion project has also played a role in the downsizing, sources said.

In fact, the company was in talks with Stora of Sweden, a top-ranking name in the world paper industry, for both technological and financial collaboration. To facilitate the process, the BILT had proposed to spin off the Choudwar unit into a separate company so that Stora can take up a stake in it.

 

However, the talks are yet to be fruitful, said a senior BILT official.

He further explained that the unit being a loss making one, the company was apprehensive about the response of the financial institutions to lend such huge fund requirement for expansion, particularly in the context of the present weak market conditions.

As per the revised proposal the company has decided to go for only increasing the paper making capacity to 90,000 tonnes at an estimated cost of Rs. 500 crore. However, the details of the revised plan and its financing are still being worked out, sources said.

The Choudwar unit, originally set up by the Titagarh Paper Mills (TPM).

BILT acquired it in May 1991, when it was marred by prolonged losses and a BIFR case. The BILT had also taken over another sick unit, Sewa Paper Mill at Jeypore in Koraput district.

However, both units are losing heavily under the new management notwithstanding efforts to revive them through infusion of fresh investments.

The accumulated losses of Choudwar paper mill and Sewa paper mill in last five years stand at Rs 39.91 crore and Rs 34.45 crore respectively.

In addition to this, the company has invested Rs 52 crore in the Choudwar unit and Rs 96.65 crore in the Sewa paper mill during the same period.

The cause for huge losses are different for both the units, pointed out P C Tugnait, the general manager of the Choudwar plant.

Jeypore, the location of the Sewa mill is not at all suitable for a paper mill because of water scarcity. Lack of raw material - bamboo - is the other factor which has crippled the mill.