The vintage but ailing Nepa Nagar Mills may get back to life, as the Union government is learnt to have dumped its disinvestment plan of the 1947-founded company — instead, float a Rs 975-crore revival plan.
Top sources in both Nepa, which has an outstanding Rs 574.03-crore as accumulated losses, and state government, which first took over its management control in 1949, say the Centre has given its consent to convert Nepa’s loans (accumulated losses) into equity and waive of interests on it. The Mills, spread over 1500 acres in Nepa Nagar of Burhanpur district, became a Union government entity in 1959.
The department of heavy industries has simultaneously demanded the Nepa management to arrange a similar waiver from the Madhya Pradesh government so as to facilitate placing the issue before the Union cabinet. Nepa owes Rs 66 crore to the state government as power bills, entry tax, electricity duty, cess and other taxes.
“The management,” said a highly placed source in the company, “has discussed the matter with the state government to waive off the outstanding and assist the company in its revival.”
On the other hand, state government officials have demanded that Nepa produced a written consent of the Centre in this regard. “The state apex committee on investment,” a senior official in state industries department told Business Standard, “will discuss the matter shortly as they have applied and demanded from state to waive its dues.”
The new revival plan has four parts: renovation of two 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 and laying off of 400 employees under 50-60 age bracket.
Earlier, in March this year, the Union government, which has 97.7 per cent stake in Nepa, had decided to sell off the sinking newsprint mill. It even introduced a Bill in Parliament in this regard. Now, Nepa, to get over the blues, needs Rs 400.40 crore cash: Rs 318 crore in machinery, Rs 22.48 crore for a rehabilitation scheme and Rs 60 crore to lay off 400 employees through voluntary retirement scheme.
A highly placed source in the company said much of this would hinge upon the state’s decision as Nepa’s outstanding (mainly state electricity board dues) to the government since 1986 — it has reached Rs 66.82 crore. The Union government has consented to covert the loan (accumulated losses) of Rs 203 crore into equity and waive off interest totalling Rs 304.16 crore,” he told Business Standard.
The state has dues in the form of electricity duty which it levies on all captive power-generating units. Nepa has a 12-Mw captive power plant. Its dues on electricity to the government has reached Rs 9.81 crore and Rs 22.32 crore interest on it.
“Nepa,” the source added, “expects state government not only to waive off the principal but the interest as well. To meet the power demand of the mill, Nepa had to install a captive plant, since the state electricity supply was very poor.”
Nepa, which pioneered manufacturing of newsprint, commenced production in April 1956 with an installed capacity of 30,000 tonne per annum through sourcing raw materials from captive Salai wood and bamboo. The mill embarked upon major expansion programmes in 1967, 1978 and 1989 to increase its installed capacity to 88,000 TPA. The company switched over to waste paper as basic raw material when the quota regime ended in the 1990s. Last year it produced 47,425 tonne of 42 GSM and 44 GSM newsprint.
In 2008, the Madhya Pradesh government had turned down Nepa’s demand to waive off an amount of Rs 50 crore as entry tax, electricity duty, cess and other taxes.
