MP govt refuses Nepa tax waiver

With the MP government refusing to give the Rs 50 crore tax waiver to Nepanagar-based (district Burhanpur) public sector undertaking Nepa Ltd, the future of the undertaking is hanging in the balance.

The Board of Public Sector Enterprises (BRPSE) has recommended the firm convert itself into a joint venture company or sell its stake to a private firm.

The management of the unit, in which the state government holds a 1.67 per cent share, had asked for a waiver of Rs 50 crore on tax liabilities and various other dues from the state government.

"The Cabinet has refused to provide exemptions and the waiver of Rs 50 crore. A central inter-ministerial group said in March the joint venture was not a feasible option," an official source said.

The company has Rs 20.11 crore liabilities on state electricity board, Rs 11.68 crore captive power and electricity duty liabilities and central sales tax, state sales tax and entry tax liabilities of Rs 15.34 crore.

Established as a private entrepreneur in 1947, the Madhya Pradesh government took over the management control of Nepa Mills in 1949 and it became a Union Government entity in 1959.

According to 2003-2004 balance-sheet the cumulative losses of the company the total liabilities and borrowings of the mill had touched a figure of Rs 247.59 crore in 2003-04 against Rs 161.73 crore in 1993-94 as a result accumulated losses of the company have mounted from Rs 28.92 to 1993-94 to 205.49 crore in 2003-04 with 1482 employees on roll. Not only the company manufacturers newsprint, paper (recycled and fresh) but also caustic soda and feeds the Nepanagar town with a population of 31658.

Board of Industrial and Financial Reconstruction (BIFR) had declared the company since on 3 August 1998 under special provisions of Sick Company Act 1985. "Due to old technology and a particular problem in gears of its two units, only one is operational and is churning out recycled papers of 120 tonnes a day against the installed capacity of with a capacity of 88,000 Tonnes Per Annum (TPA)," a company source told Business Standard.

SBI Capital Markets Ltd. (SBICAP) had been nominated and retained as the sole advisor by Government of India for the disinvestment of 72.31 per cent of the stake in NEPA Limited.

However according to a company statement, quantity of sale of newsprint registered 39 per cent increase to touch 30,370 metric tonnes against the 21,818 metric tonnes in 2005-06.

Excluding heavy burden of interest on loans taken from Government of India, the operating loss of Rs 21.88 crore in 2004-05 is also brought down to Rs 13.23 crore in 2005-06. The working results for 2006-07 are expected to surpass all previous records of achievements, said the statement. Chairman SK Mutreja was not available for comment.

The company has been provided Rs 5.46 crore for taking up urgent repairs/replacements of old and worn out equipments, which are almost half century old. After completion of such jobs, the company aspires to further improve upon its performance and come out of red in coming years.