The Hindu Business Line

Emami Pa­per de­fers work on ₹2,000-crore Gu­jarat unit

Eco­nomic slow­down, un­cer­tainty in lend­ing by banks force re­think

- AB­HISHEK LAW DEBASISH BHADURI Business · Calcutta · National Stock Exchange of India · West Bengal · Belgium · Asia · Thailand · Vietnam · Sri Lanka · Emami · Balasore

An eco­nomic slow­down and a tight­en­ing in lend­ing by banks have forced Emami Pa­per Mills Ltd to de­fer the set­ting up its ₹2,000-crore green-field plant at Gu­jarat. The com­pany instead is look­ing to shore up mar­gins by fo­cussing on pre­mium of­fer­ings and through ex­port mar­kets.

The first phase of Gu­jarat plant, was sup­posed to come up at an es­ti­mated cost of ₹1,000 crore. A sim­i­lar amount would go in for phase-II. Ini­tial plans en­vis­aged a 225,000 tonne per an­num (TPA) multi-layer coated pack­ag­ing board man­u­fac­tur­ing unit and an 18-MW cap­tive power plant.

“In view of the cur­rent eco­nomic slow­down and un­cer­tainty in lend­ing by banks, we have de­cided to de­fer (work on) Gu­jarat project. We would re­view the sit­u­a­tion and then take a call on renewing con­struc­tion,” PS Pat­wari, Ex­ec­u­tive Direc­tor and CEO, Emami Pa­per, told Bui­nessLine on the side­lines of the com­pany’s an­nual gen­eral meet­ing. (from left) Man­ish Goenka, Direc­tor; PS Pat­wari, ED & CEO, and AV Agarwal, Ex­ec­u­tive Chair­man, Emami Pa­per Mills

Emami Pa­per, the pa­per and pack­ag­ing board unit of the Kolkata-based Emami Group, is listed on both the NSE and the BSE. Cur­rently, it has two man­u­fac­tur­ing fa­cil­i­ties – one in Kolkata (West Bengal) and an­other at Bala­sore (Odisha) – with a com­bined ca­pac­ity of 360,000 TPA. The com­pany re­ported a turnover of ₹1,542

crore in FY19 with a net profit of ₹44 crore.

Ac­cord­ing to Pat­wari, plans are afoot to fo­cus on pre­mium of­fer­ings that in­clude mak­ing of writ­ing and print­ing pa­pers and other high value-added of­fer­ings (like pa­per for lam­i­nate bases). This would be done by shoring up ex­ist­ing ca­pac­i­ties and by cut­ting back on newsprint pro­duc­tion, at its Bala­sore unit.

The com­pany has al­ready cut-back, by nearly 50 per cent, its newsprint ca­pac­ity. From 150,000 TPA newsprint ca­pac­ity, Emami Pa­per’s cur­rent newsprint mak­ing ca­pac­ity stands at 80,000 TPA. The com­pany is amongst the largest newsprint mak­ers in the coun­try.

The fo­cus on high-value added prod­ucts is ex­pected to shore up mar­gins, ac­cord­ing to the CEO. The EBITDA mar­gins are ex­pected to im­prove to 18-19 per cent for FY20, up from around the 17 per cent level last fis­cal.

An­other fo­cus would be to push ex­ports and see that it grows by 44 per cent this fis­cal. This would be done by go­ing deep into ex­ist­ing mar­kets such as South East Asia, Thai­land, Viet­nam, West Asia and Sri Lanka.

“Ex­ports grew by 44 per cent in FY19 and we plan to have sim­i­lar growth num­bers this year. More­over, the fo­cus on high value and pre­mium of­fer­ings should shore up mar­gins,” he said.

Mean­while, sources say, the pro­mot­ers have roped in in­vest­ment banker, No­mura, as it plans to bring in a strate­gic part­ner or buyer and pare pro­moter stake in the com­pany. Pro­moter stake in Emami Pa­per stands at around 74.97 per cent as on June 30, 2019.

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