Orient Paper Mills in for Rs 110-cr expansion

CK Birla group firm Orient Paper Mills is planning to expand its capacity with an investment of Rs 110 crore at Amlai (Shahdol district) in Madhya Pradesh.

Established in 1965, Orient Paper Mills has a 50 per cent market share with an installed capacity of 85,000 metric tonnes of paper every year. It produces high-quality writing and printing paper, paper for photocopying, board and Kraft, and tissue and specialty paper.

"The firm has asked for concessions from Chief Minister Shivraj Singh Chauhan," a company executive told Business Standard, adding, "the capacity will be expanded by 35,000 tonnes".

The mill's tissue paper product line will be expanded by 20,000 tonnes a year, requiring an investment of Rs 55 crore. "The expansion programme for the remaining 15,000 metric tonnes can be quickened if the MP government gives the incentives sought," the firm has said in its proposal submitted to the chief minister.

The firm has asked for incentives from the MP government for at least five years, or a maximum of 10 years. "The total incentives demanded by the company are of the order of Rs 127.71 crore for a period of five years, or Rs 260. 21 crore for 10 years," the source said.

"These concessions include waiving central excise duty, state sales tax, entry tax, electricity duty on captive power generation, energy cess, and tax on coal," said the source.

Per capita paper consumption is very low in Madhya Pradesh (according to the 2004-05 economic survey, only newsprint production had gone up 10.9 per cent to touch 20,400 tonnes, from 20,200 metric tonnes). The data on other paper products are not available with the department of industries or the Madhya Pradesh State Industrial Development Corporation.

With a turnover of Rs 233 crore, the firm provides 3,500 direct jobs, and 30,000 indirect jobs in forest operations and plantation programmes every year.

It exports to Nepal, Bangladesh, Malaysia, and Sri Lanka. The firm has justified its demand for incentives on the grounds that the same are given to new industrial units and the existing units for capacity expansion in Uttaranchal and Himachal Pradesh.

The Madhya Pradesh government does not offer subsidies as high as offered by other states. "The firm may get an assistance Rs 25 lakh in the form of tax exemptions, but full exemption from electricity duty and cess on captive power generation will not be possible," said a government official.

The Madhya Pradesh government levies 31 paise per unit as electricity duty and 10 paise per unit on captive power generation.