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State-owned Mysore Paper Mills Limited (MPM), which has been making losses for the last few years, is planning to lease out the management of its paper and sugar mills to the private sector.
According to top official sources, the company, which has accumulated losses to the tune of Rs 475 crore, is unable to manage on its own and has prepared a roadmap for leasing out the company to private sector on management contract.
“We have taken several measures to reduce losses and revive the sick company. The government has asked us to work out a plan for its revival. We are in the process of preparing a cabinet note on the same. Once the cabinet approves, we will work out the modalities for offering it to the private sector on a lease basis,” K Ratna Prabha, additional chief secretary, government of Karnataka and director of MPM, told Business Standard.
As per the proposal worked out by the company’s management, the land and property of the sick company would remain with the state government and only the day-to-day management of the paper and sugar mills would be handed over to the private sector, she said.
Mysore Paper Mills Limited was founded by Krishnaraja Wodeyar Bahadur in 1937, the Maharaja of erstwhile Mysore State, on May 20, 1936, under the then Mysore Companies Regulation, VIII of 1917. Later, it became a government company in 1977 under Section 617 of the Companies Act, 1956. The company has its plant located at Bhadravati in Shivamogga district. It also has a sugar unit with co-generation facility.
The company has an authorised capital of Rs 150 crore and a paid up capital of about Rs 120 crore. The shares of the company are listed on the Bombay Stock Exchange.
While the Karnataka Government holds 65 per cent of the shareholding of the company, IDBI and other financial institutions hold 18 per cent of the shares, whereas the public shareholding is 17 per cent.
Recently, the company’s paper manufacturing unit was shut down following the Central Pollution Control Board order. Challenging the order, the company board had moved the National Green Tribunal, which has given time to the company to take remedial measures.
“We are implementing some corrective measures and spending over Rs 10 crore to upgrade the machinery. Once that is done, we will go back to the Green Tribunal to give us permission to restart the factory,” Ratna Prabha said.
The company had planned to temporarily lay-off around 80 per cent of its contract staff and 20 per cent of permanent workers for about 25 days. The workers’ union has opposed the government move. The company has 3,380 employees, including 1,150 contract workers.
MPM reported a net loss of Rs 23.55 crore for the second quarter ended September 2014, when compared with a net loss of Rs 23.68 crore in the same period a year ago. Its total income for the period was also down at Rs 81.53 crore as against Rs 89.95 crore a year ago.
