Decks cleared for Rayalaseema Paper reopening

Decks have been cleared for the Rayalaseema Paper Mills to end its seven-year long closure. The Board of Industrial Finance and Restructuring (BIFR) has in-principle cleared a revival scheme at its meeting in New Delhi on Wednesday.

Sources close to the development said that the company management has agreed to pay an additional amount of Rs 20 crore towards old outstandings to the lenders' consortium of 23 banks and financial institutions. This is in addition to Rs 33 crore that the company has already paid after taking over from the old management.

According to sources, paving way for the revival, the company has already deposited 10 per cent of the amount which it has agreed to pay to the banks. The total debt outstanding prior to the payment of Rs 33 crore is said to be over Rs 100 crore.

"The revival scheme was firmed up in yesterday's meeting. The same is expected to be released by the appellate authority in a couple of weeks," a senior management representative told Business Standard from New Delhi.

Considered as one of the best and most modern paper mills in the country, and also the biggest industrial unit with over 3,000 workforce in the entire Rayalaseema region, the paper mill has a production capacity of 1.3 lakh tonnes of paper products a year. It has a diverse range of products "� from newsprint to packaging paper.

This is the second time that the mill is coming out of closure. Started as a joint venture between the state-owned Andhra Pradesh Industrial Development Corporation (APIDC) and T G Vasant Gupta in 1974, the factory ran smoothly up to 1989.

It was declared closed in 1992-93 and referred to BIFR. When it bid for revival in 1994-95, present promoter Satya Sai Prasad took over the management of the company in a Rs 120-crore deal with the original promoters.

Though AP Paper Mills and Ballarpur Industries Limited too had bid for the project, Satya Sai Prasad emerged successful. After two years, the mill again faced closure on account of a series of disputes and court litigations between the original promoters and the new management combined with the working capital problems.

Ending the possibility of any further dispute with the TG family, Sai Prasad is understood to have agreed against invoking old guarantees signed by the original promoters of the company, sources close to Prasad said.