Erode-based Seshasayee Paper and Boards is planning to invest Rs 300 crore to double its printing writing paper (PWP) production capacity to 225,000 tonnes from the current 115,000 tonnes.
The expansion programme will be funded through debt and internal accruals V Pichai, director - finance and company secretary told Business Standard. He added, the company is planning to buy a second hand PWP machine from Europe, Canada or the US.
The cost of the second hand machine would be around Rs 50-60 crore compared to Rs 300-350 crore for the new machine. Currently the manufacturing unit has five machines at its manufacturing plant at Pallipalayam in Erode.
The rest of the money would be invested to buy allied equipments and towards modernisation of its Erode plant. The proposed expansion plan will be completed in two years, said Pichai.
Of the Rs 350 crore, term loans from banks would be Rs 250 crore and internal accruals would be Rs 100 crore.
The company reported a 45 per cent negative growth in profit after tax (PAT) during the three months ended June 30 at Rs 6.29 crore compared to Rs 11.54 crore. Total income rose by 2 per cent to Rs 111.18 crore from Rs 108.43 crore. Sales dropped to Rs 120.09 crore from Rs 121.22 crore.
Seshayee’s total export sales have come down to 10 per cent from 20 per cent. Pichai said as the demand is growing in the domestic market and due to the dollar fluctuations the company has decided to focus more on the domestic market. Demand for PWP is growing at CAGR of 6-7 per cent said Pichai.