ABC Paper plans a greenfield paper unit

Chandigarh-based ABC Paper Ltd (previously part of Amrit Banaspati Co Ltd, now a separate entity) is planning to set up a greenfield paper unit with a 100,000-tonnes per annum capacity to produce speciality paper with an investment of Rs 600 crore.

The location for the new unit would be either Madhya Pradesh or Maharashtra. Besides, the company has plans for increasing the production capacity of its existing plant at Hoshiarpur at an outlay of Rs 160 crore.

"We are looking for a location for the new unit in Maharastra and Madhya Pradesh. Although nothing has been finalised, the new unit will come up in either of these two states. We hope that everything would be finalised by March next year," Pavan Khaitan, managing director, ABC Paper Ltd, told Business Standard.

"Apart from this, we are also expanding the production capacity at our Hoshiarpur plant from 48,000 tonnes per annum to 100,000 tonnes per annum with an investment of Rs 160 crore, which would be completed by March next year. Also, we will add a 10 megawatt co-generation power plant to the plant," Khaitan said.

After setting up the greenfield project, the company will roll out 200,000 tonnes of paper.

Fuelled by growing domestic consumption, the company is looking at high growth and handsome profits from its paper business. "While global paper market is growing at around 1 per cent, the Indian market is growing at an impressive 8-10 per cent. Currently per head consumption of paper in India is measly 7kg compared to China's 45kg and US 300kg. Every kilogram increase in per head consumption will result in an increased demand of 1 million tonne of paper," he said.

He further added that increased spend on education by the government, growing literacy rate, increase in printing and publishing outsourcing to India and fast growth in packaging industry fuelled by retail boom are all going to result in increased consumption of paper in India.

The new division has come out from Amrit Banaspati. Earlier, Amrit Banaspati Co Ltd had implemented the restructuring scheme on June 23, 2007, and the paper business was demerged into a separate company, ABC Paper Ltd, while edible oils and FMCG commodities business was transferred and consolidated with Amrit Enterprises Ltd.

The holding company in its new dispensation, Amrit Corporation Ltd, will comprise of real estate, dairy and services businesses besides retaining the flagship brand "Gagan". It is the majority shareholder in both paper and edible oil companies.

All the three companies emanating from the restructuring scheme are in the process of allotting shares to the shareholders in the swap ratio provided in the scheme. The shares will be separately listed by the three companies in the stock exchange.