Seshasayee Paper to raise capacity from 2.55 to 4 lakh tonnes, backed by a Rs 750–800 crore investment plan over the next two years

Seshasayee Paper to raise capacity from 2.55 to 4 lakh tonnes, backed by a Rs 750–800 crore investment plan over the next two years

The Pulp and Paper Times

Seshasayee Paper and Boards Limited (SPB), an Integrated Pulp, Paper and Paper board Mill, and the flagship company belonging to Writing and Printing paper manufacturing in India, has registered a fall in net profit during FY 2024-25 compared to corresponding period of previous year.

Revenue from Operations of the Company for FY25 was Rs. 1754.11 crores, as against Rs. 1801.56 crores, in the previous year.

The Company’s Profit after tax stood at Rs 105 crores in the FY 2024-25 as against Rs 259 crores in the previous year. The lower profits are mainly due to Lower average realisations per ton of paper in the Domestic Market and Significant increase in the cost of wood, key input material for the company.

On the reply of a question about decreasing margin, Mr. N GOPALARATNAM says, “Our PAT is 6 %. I can say that our PAT is quite comparable or better than few other leading paper mills. Therefore, you can appreciate that the being smaller in size has not really put us in any disadvantageous position.

On comparability to TNPL, he added, I think we are quite comparable to TNPL in quality and cost and we are much better than them in the bottom line, as you may see for many years and this position will continue. We hold on our own.

SPB presently has an annual paper capacity of about 2.55 lakhs tonnes, with Erode unit accounting for 1.65 lakhs tonnes and Tirunelveli unit accounting for 0.9 lakh tonnes.

Under project MDP-IV in Unit: Erode, the Company is currently taking steps to augment the pulp, chemical recovery and paper production in Unit : Erode by 40% in 2 phases. The Company is awaiting Environment Clearances for the 1st phase of 20% increase.

SPB had also acquired the assets of Servalakshmi Paper Limited as a going concern, situate close to our existing Tirunelveli unit, in an e-auction sale approved by Hon’ble NCLT. The Company has taken over possession of the assets and is currently contesting the appeals in Hon’ble NCLAT challenging the Honourable NCLT’s order. This 3rd unit of the company can manufacture about 75000 tonnes per annum of Fine Papers.

“Over next 2 years, on commissioning of Unit-III and completion of both phases of MDP-IV, the company’s paper capacity is expected to grow from current levels of 2.55 lakhs tonnes to 4.0 lakhs tonnes. Also, during this time, the company’s in-house wood and bagasse pulp capacities are expected to grow from 1.8 lakh tonnes to over 2.5 lakh tonnes,” Mr. N GOPALARATNAM, CHAIRMAN of Seshasayee Paper and Boards Limited said during AGM.

The Company plans to invest nearly Rs.750-800 crores in these growth projects over next 2 years.

Seshasayee Paper has also recently collaborated with a Spanish company for setting up and commissioning of about 62 MW of Hybrid Solar and Wind Power facilities, for exclusive use by SPB. This facility, to be housed as a separate SPV, will have Equity Participation from our Company under Group Captive Model and this facility will have 9 MW of Wind Power Facilities and 52.8 MW of Solar PV facilities.

This strategic tie-up to foster Energy from Renewable sources, along with the company’s proposed investment in Erode in project MDP-IV and in bio-fuel based boilers in Tirunelveli unit, can ensure that more than 65% of energy needs of all the 3 units of the company be addressed by Green Sources.

Mr. N GOPALARATNAM informed the shareholders that we have a large Investment being made in both solar and wind energy and the expect, over the next three years, our renewable green energy will be at least about 65 to 70 % of our overall energy, which I think will be a record of sorts for the Paper industry.

OUTLOOK
 Domestic market conditions are expected to remain challenging at-least until the first 2 quarters of the FY26 for W&P grades, as per the present market trends.

The demand for paper and more particularly, the market operating prices will depend on the Global macro-economic trends and swift closure of trade agreements between India and US in resolving the tariff situation.

As sweeping tariffs have been imposed on India's competitors including China, Thailand, Vietnam and Malaysia, their goods become expensive in the US market and this would lead to diversion of goods into countries like India after some months. The clear signals for these rises in imports are likely to manifest from June to July.
 

Web Title: Seshasayee Paper to raise capacity from 2.55 to 4 lakh tonnes, backed by a Rs 750–800 crore investment plan over the next two years