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The Union Government has approved a Rs 500-crore financial package for Nagaland Pulp and Paper Co Ltd (NPPCL), a sick joint venture between Hindustan Paper Corporation and the Nagaland Government.
Earlier this month, the Cabinet Committee on Economic Affairs (CCEA) approved the revival of NPPCL through an “infusion of funds” and bank guarantees. Amitabh Banerjee, Finance Director of central PSU Hindustan Paper Corporation, told Business Line the package involved both debt and equity infusions.
The package is based on a reconfigured technology and product mix — only for pulp and paper — and not the earlier plan of producing writing and printing paper items.
The proposed financial input will be worth Rs 309.38 crore. The Government also committed regularisation of inter se diversion of funds (assistance) of Rs 54.60 crore. The package, which will have to be approved by IDBI, the operating agency, and BIFR, will increase the authorised capital of NPPCL from Rs 150 crore to Rs 250 crore. The CCEA also gave its approval for Government guarantee for a term loan of Rs 156.50 crore from commercial banks.
Term loan
“Two banks have in-principle agreed to provide the term loan,” Banerjee said. The majority partner, Hindustan Paper, and the Nagaland Government, as a minority owner, have to contribute to the proposed higher equity base of the joint venture.
The revival plan consists of rebuilding and re-furbishing pulping equipment and a new power plant at the company’s unit in Mokokchung district of Nagaland.
The company will produce both pulp and paper in the first phase.
“With the implementation of the revival plan, the net worth of the company will become positive and it will start posting profits from the first year after implementation,” said an official note of the Union Government.
The 100-tonne-per-day unit, commissioned in 1971, closed operations as it turned economically unviable in 1992. The Union Government has been providing financial assistance for wages and statutory dues to employees.
jayanta.mallick@thehindu.co.in
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