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TNPL plans retiring debt

R. Balaji

CHENNAI, Aug. 10

CAPITALISING on increased revenues following the uptrend in prices of newsprint, and printing and writing paper, Tamil Nadu Newsprint and Papers Ltd (TNPL) plans to prepay or retire debts of about Rs. 60 crores during the current year, according to offic ial sources.

The company has approached the Industrial Development Bank of India (IDBI) to prepay a loan of Rs. 30 crores. In the case of International Bank for Reconstruction and Development (IBRD), TNPL has sought to prepay one instalment. As on March 31, 2000, TNP L's rupee loans stand at Rs. 50 crores and the foreign currency loan at Rs. 270 crores, said the officials.

According to sources, TNPL plans to pay off the rupee loan by making a prepayment of Rs. 30 crores in addition to the payment of Rs. 20 crores due to IDBI this year. Similarly, in addition to the two instalments due this year to IBRD, TNPL has made one p repayment of Rs. 16.32 crores on back-end basis, and will pre-pay one more instalment during the current financial year. This will effectively improve TNPL's debt-equity ratio from 0.88:1 to about 0.65:1.

According to officials, TNPL aims to retire its debts ahead of schedule in the coming years. The paper industry is on a strong wicket, and particularly with the lack of capacity additions, the existing players can make good. Prices of printing and writin g paper and newsprint have been increasing over the last year - up 25 per cent in the last six months alone.

Imported newsprint is quoted around $650 per tonne for the quarter commencing October, and taking into account the local handling charges, the price will effectively be about Rs. 30,000, according to sources. Domestic newsprint manufacturers are able to quote a competitive Rs. 27,000 per tonne while printing and writing paper commands about Rs. 32,000 per tonne. This is a significant increase over last year's net realisations of Rs. 21,500 and Rs. 25,900, respectively.

There is reason for optimism on the export front, according to officials. Exports have increased to 6,884 tonnes during the first quarter of the current year compared to 1,717 tonnes during the same period in the previous year. For the whole of last year , it exported 18,750 tonnes.

Under the circumstances, TNPL is looking at measures to better utilise existing capacities, said sources. The Rs. 25.50-crore mill development plan launched to improve performance of Paper Machine-I and produce value-added products is scheduled to be com pleted by October 2000.

Production will go up to 1,92,000 tonnes from 1,80,000 tonnes per year. A reel-to-sheet machine for online precision cutting and packing into A4, A3 and folio cut size reams has been installed at a cost of Rs. 10 crores.