Khanna Paper plans Rs 250 cr IPO in '07

Amritsar-based paper manufacturer Khanna Paper Mills Private Ltd will hit the capital market with an initial public offer (IPO) early in the next financial year to raise up to Rs 250 crore, primarily for enhancing the paper production capacity to 1,100 tonnes per day and to set up a plant to convert rubber and plastic waste into oil, deploying Polish technology.

Started in 1965, with a 200-kg-per-day sun dry board unit, the company has expanded its capacity to 700 tonnes per day, with its captive power generation plant producing 25.5 Mw. The raw material for the unit is imported waste paper.

The company is planning to pump Rs 200-250 crore more over the next 18 months to raise its capacity to 850 tonnes per day in the near term to manufacture writing and printing paper including A-4 copier paper. The first products are expected for sale in April.

The company recently launched folding box board, and has the capacity to produce 250 tonnes per day. In the last financial year, the turnover of the company was Rs 297.7 crore. It is targeting Rs 470 crore in 2005-06. Talking to Business Standard, Chairman Brij Mohan Khanna said the firm had sought all clearances from the Punjab government.

"Once the new plant with Polish collaboration is operational, we will be in a position to sell oil to any company," Khanna said. Company's officials would visit Poland to get first-hand knowledge of the process, he said.

"If the Punjab government allots us 300 acres, we can have a sugar and a paper mill as a single unit, and the by product of the sugar mill, which is bagasse, will be used as raw material for the paper mill. The entire project will be between Rs 1,200 and 1,500 crore," he added.

"We are also planning to set up a paper-manufacturing unit in Gujarat, near a port, having a capacity of 1,000 tonnes, with an investment of around Rs 1,200-1,500 crore, using waste paper as raw material. The project will be implemented through internal accruals, equity and institutional loans. The area required for this project is about 250 acres," Khanna said.

The firm's products are exported mainly to Sri Lanka, Bangladesh, and African and South American countries.

Also, as part of corporate social responsibility, the company has started a project called the Green Belt project, which will include land filling and planting trees on both sides of roads, and will be completed in two years.

REAMS OF HOPE

The company plans to raise capacity to 850 tonnes per day over the next 18 months from 700 tonnes per day at present

It aims to manufacture writing, printing paper, including A-4 copier paper

It will set up a plant to convert rubber, plastic waste into oil, using Polish technology

At present, it uses imported waste paper as raw material