Financial Daily from THE HINDU group of publications
Wednesday, May 15, 2002
Financial Daily from THE HINDU group of publications Wednesday, May 15, 2002 |
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Corporate
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Mergers & Acquisitions West Coast to take acquisition route Badal Sanyal
KOLKATA, May 14 WEST Coast Paper Mills Ltd (WCPM) of the S.K. Bangur group plans to grow fast through the acquisition route because the company has limitations in expanding capacity at its Dandeli mill in Karnataka due to a space problem. Talking to Business Line, a senior executive of the company said that though WCPM was among the nine bidders showing an interest in purchasing 74 per cent equity state of the State-owned Hindustan Newsprint Ltd (HNL), the company was on the lookout to acquire controlling equity stakes in some running, medium-sized writing and printing paper and newsprint manufacturing units, preferable located in the northern and western regions. Available information suggests that the WCPM management has already made some progress in this regard. Whatever be its strategy to grow fast, the company wants to complete its ongoing Rs 215-crore modernisation and expansion programme within the current fiscal ( 2002-03) so that its Dandeli mill can produce at least 1,00,000 tonnes of paper and 60,000 tonnes of duplex board at reduced costs per annum. The company recently commissioned a multilayer duplex board machine of 33,000 tonnes per annum (tpa) capacity, enabling it to produce speciality grade duplex board. The company has spent Rs140 crore till March 2002 towards modernisation, expansion and diversification, while the balance Rs.75 crore is scheduled to be spent during the current fiscal. Of the total investment being made, about Rs 121 crore are sourced from FIs, about Rs 37 crore from lease finance arrangement, and about Rs.56 crore from internal accruals. Though there was a provision to arrange about Rs 21 crore through a rights issue, the move has been deferred for the time being. WCPM expects to earn an additional profit of about Rs 18 crore during 2002-03 by effecting a reduction on fuel and energy costs. It has, in the meantime, completed various modernisation projects such as a 500-tonne-a-day chemical recovery boiler, installation of four additional bodies of falling film evaporators, centri-cleaners on paper machine I and III, a quality control system on paper machine II and digester-XI. Meanwhile, the company has raised its equity stake in Speciality Coatings & Laminations Ltd (SCL), from 23 per cent to 63 per cent, by subscribing a total of 20 lakh new equity shares of the company at Rs.10 each (at par) worth Rs 2 crore. SCL's unit at Gurgaon has capacity either to produce 1,500 tonnes of chrome paper or about 1,000 tonnes of art paper per annum. This subsidiary of WCPM expects to achieve a turnover of Rs 50 crore for the year 2002-03 as against previous year's turnover of Rs 40 crore. It may be mentioned that WCPM ended the financial year ended March, 2002 with a sales turnover of Rs 356.45 crore on a production and sales of 1,20,293 tonnes and 1,24,989 tonnes, respectively, while the company's annualised ESP (of face value of Rs10 each ) was at Rs 35.04 against Rs 31.86 in the previous year, the executive said.
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