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KOLKATA, July 11

WEST Coast Paper Mills Ltd (WCPML) plans to grow through the acquisition route rather than by further expansion of the production capacity of its mill at Dandeli in Karnataka or setting up a greenfield unit, according to the Chairman, Mr S.K.Bangur.

Mr Bangur told Business Line here that his company had already done some exercise towards acquisition of paper mills. Though he declined to disclose the names of the mills, Mr Bangur confirmed that WCPML had made a bid to buy 74 per cent equity stake of Hindustan Newsprint Ltd, a subsidiary of Hindustan Paper Corporation, which is under the process of disinvestment. Eight more bidders are in the fray for the stake.

He said acquisitions were cost and time-effective compared to greenfield projects, while there was a limitation in expanding the capacity of existing mills. He thus preferred to grow by purchasing and merging mills. He, however, said he would be active on this front after the completion of the company's ongoing Rs 300-crore expansion programme within the current fiscal.

Mr Bangur said that the Dandeli mill's production capacity was being raised from 1,25,000 tonnes to about 2,00,000 tonnes per annum, and of the total expanded capacity, about 70,000 tonnes would be for manufacturing duplex boards and the balance for making writing and printing paper. The 100-tonne-per-day capacity multi-layer duplex board mill with pressure formers and 3-stage coating plant along with all the required accessories and equipment had already been commissioned in March, and commercial production would start next month.

Asked if the company had plans to enter the capital market to raise funds for the expansion programme, Mr Bangur said it had plans for a rights issue, but had abandoned the idea in view of requirement of funds for other business purposes.

The cost of expansion programme was being met through borrowings of Rs 200 crore and internal accruals of about Rs 100 crore. He said the company had plans to invest Rs 50 crore more towards the second phase of expansion programme.

Mr Bangur, however, did not rule out the possibility of WCPML entering the capital market with a rights issue during the next phase of the company's expansion programme, to be taken up after six months.

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