Star Paper Mills has postponed its proposed investment plans because of non-availability of finances. The Kolkata-based company has been suffering losses for the last three years.
Controlled-by the Duncan Goenka Group, the company had last year planned to use bagasse (from sugarcane as well as wheat and rice straw) as raw material for its paper mill. Around Rs 70 crore was supposed to be invested in making the plant’s machinery adaptable to bagasse. Bagassse and similar agri-by products supplement soft-wood in paper production.
“The investment plan is still on. But things are moving slow. We are yet to finalise agreements with banks for borrowings,” G.P. Goenka, Chairman, Star Paper Mills, told
The proposed investments would be partly funded through internal accruals and partly from bank loans. The mix is not clear.
“We are working on the details of how much to borrow and so on,” Goenka said.
Currently, Star Paper’s lone manufacturing facility at Saharanpur in Uttar Pradesh has a production capacity of 75,000 tonnes of paper and uses wood and wood pulp as primary raw materials. Bagasse is expected to make up 50 per cent of the 100,000 tonnes of raw material required.
The idea of using bagasse as an alternative came up following the pressure on margins because of the increase in raw material costs.
Though the turnover went up 15 per cent to over Rs 273 crore in 2012-13 (from Rs 239 crore in 2011-12); the company reported a net loss of Rs 30 crore in FY-13. It was, however, able to reduce losses from the Rs 43 crore it reported in 2011-12.
According to company officials, cash losses were curtailed by nearly 30 per cent while steps were taken to reduce energy consumption and optimise the product mix.
abhishek.l@thehindu.co.in