Asia Pulp and Paper may withdraw its Investment on account of Jagan Reddy's decisions upsetting the business applecart

Asia Pulp and Paper may withdraw its Investment on account of Jagan Reddy's decisions  upsetting the business applecart

New Delhi | 19 August 2019 | The Pulp and Paper Times:

The biggest Foreign Direct Investment (FDI) in the pulp and Paper sector is on the edge of removal from Andhra Pradesh. Asia Pulp and Paper (APP), a subsidiary of Sinarmas, is one of the largest industrial houses in Indonesia, is considering to withdrawing its huge investment approx Rs. 24,000 Crore from the state. According to some media’s story, APP has sought to withdraw the investment due to newly elected government of Jagan Reddy’s animosity against his bete noire TDP chief  Chandrababu Naidu seems to have got the better of him in his penchant for reversing or scrapping the earlier government's initiatives, in the process upsetting the business applecart.     

The young Chief Minister of Andhra Pradesh YS Jagan Mohan Reddy, who took over in May last, has, through a series of controversial decisions, caused alarm in the business circles nationally and globally.

The Pulp and Paper Times talks to exclusive sources about the recent update on APP’s investment, “Our chief minister Mr. Reddy is on trip to United State, and he will come in a week, after that the meeting with APP will be held to decide further course of action. Right now, this is only a rumour circulating in the business circle that APP is likely to withdraw its FDI,” Sources said.

“In fact, APP is also seeking land in Maharashtra and Gujarat for paper making to capture the big market of western India. Definitely, they don’t want to restart the whole process again, APP’s concern is to pick it up what they left in the previous government,” Sources informed.

“Indonesia's Asia Pulp & Paper (APP), which entered into an MoU last January for one of the biggest Foreign Direct Investments in the country till date amounting to approximately Rs 24,000 crore for a greenfield pulp and paper plant in the state's Prakasam district is said to have withdrawn its plans in the new circumstances” FirstPost reported.   

Sources say that Asian Paper & Pulp has taken this decision mainly due to the new policies of the Jagan Reddy’s Government. This will come as a big blow to the new government as it is starting at empty coffers. Unless Jagan can generate revenues and mobilize resources, he will be under tremendous pressure to meet the increasing expenditure due to his election promises. Suspecting all the projects signed during Chandrababu Naidu, the new Chief Minister is harming the investor sentiment. His measures to date have unnerved foreign investors and damaged the business environment of the state. Unless he does not do something now, it will make things increasingly difficult.

 Brief about Andhra Pradesh's Project

The project with a capacity of 5 million metric tonnes per annum will be the largest unit of APP at a single location. The business operations of APP are spread over 120 countries across the world. Its total production capacity is 18 million tonnes per annum. The APP unit in Prakasam district will come up in 2,471 acres of land and generate 4,000 direct and 12,000 indirect jobs. It will be completed in two phases.

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