Overcoming an initial hitch, the Madhya Pradesh government is now readying to give a fresh lease of life to the ailing Nepa Mills — on the condition that the country’s first newsprint manufacturing unit would diversify its product portfolio.
Earlier, the state’s finance department had turned down a request from Nepa to waive of its dues, mainly power bills, on grounds that the Union government’s effort to revive it does not carry weight.
Established in 1947, Nepa conked out in 1990 and has since then been awaiting resuscitation. In the recent past, the Central government has floated a Rs 975-crore revival plan after it failed to sell it off to the private sector. The Nepa produces 42- and 44-GSM grade newsprint by using recycled and waste paper.
State chief secretary Avani Vaish said on Wednesday that the government has considered a package for the mills in a bid to bring it out of the red. “It is a question of hundreds of people who live in and around Nepa. Moreover we don’t have an immediate plan to use the assets, including forest land, if the company shuts shop,” he told Business Standard.
A well-placed source in the company said the government had accepted their proposal, but asked the management to diversify. “Once the revival package is through, we will enter into writing and printing paper,” he said.
Nepa has an outstanding accumulated loss of Rs 574.03-crore. The central government has decided to convert these accumulated losses into equity, and also waive of interests on it. The Union department of heavy industries had a few months ago asked the Nepa management to arrange a waiver from the Madhya Pradesh government.
Nepa wanted MP government to write off a thick debt of Rs 66 crore comprising power bills, entry tax, electricity duty. A well-placed finance department source said the state would inject approximately Rs 11 crore to help Nepa overcome its blues. “The state apex committee on investment has agreed upon extending the required support,” he added.
Since 1986, Nepa’s dues to MP government mounted to Rs 66.82 crore. This includes power dues of Rs 9.81 core and Rs 22.32 crore interest on it. The Union government has reportedly consented to covert the loan of Rs 203 crore into equity and waive off interest totalling Rs 304.16 crore.
The new revival plan of the mill requires Rs 400.40 crore cash: Rs 318 crore for sprucing up machinery and other junks, Rs 22.48 crore for a rehabilitation scheme and Rs 60 crore for golden handshake with 400 employees through voluntary retirement scheme.
As of now, the ailing entity urgently requires to overhaul two of its outdated units, setting up of two de-inking plant of 175 tonne per day and 100 tonne per day capacity, establishment of an 8-Mw power plant.
The state government, though, holds only a minuscule share the Nepanagar town that houses the mill in Burhanpur district has a population of nearly one lakh. A closure will pose a question on livelihood of hundreds of families. Nepa’s newsprint capacity reached 88,000 tonnes per annum. Almost half of it is currently run at 47,425 tonne (of 42-GSM and 44-GSM newsprint).
