Seshasayee Paper looking at ₹200-cr capex for expansion.

Seshasayee Paper and Boards is in the process of adding ₹200 crore capital to enhance pulp output to achieve better scale and synergy between its two plants.

The listed company operates two paper plants in Tamil Nadu - at Erode and Tirunelveli - with a total production capacity of about two lakh tonnes a year.

The company is expanding its pulp production capacity at Erode which will give it better economy of scale and enable it to supply surplus raw material to its Tirunelveli unit to save on costs and increase output, according to N Gopalaratnam, Chairman, Seshasayee Paper.

The pulp output will go up to 400 tonnes a day from 330 tonnes and about 100 tonnes will be supplied to Tirunelveli where the annual production will go up to about 90,000 tonnes from 70,000-75,000 tonnes.

Also, equipment such as film press and top wire have been added to aid multicolour operations. The unit still needs to import about 20 per cent of its pulp requirement.

The company has earlier upgraded and retrofitted its power plant boiler and expects to complete the capital additions by March-April 2017.

The Erode unit is running to capacity and upgrades for quality parameters have also helped a 5 per cent increase in production capacity, Gopalaratnam said. The overall synergy between the two units will help and improvements will continue, he said.

The current year has been good with the company reporting growth in net profit in quarter ending September 30, 2016, over that of the comparable quarter in the previous year. It reported a net profit of ₹30.70 crore (₹7.19 crore) on a total income of ₹281.62 crore (₹242.87 crore).

The growth in net profit has been aided by vacation of capacities in the domestic market and favourable input prices, he said.

HBL