"Seshasayee Paper to Develop Revised Investment Strategy for Erode Unit Expansion"

Seshasayee Paper and Boards Ltd is reassessing its investment strategy for expanding pulp and paper capacity as part of the Mill Development Plan IV program, prompted by feedback from the Expert Appraisal Committee of the Union Ministry of Environment, Forest & Climate Change regarding its environmental clearance application for the expansion project.

Initially aiming for a 40% increase in paper and pulp capacity at its Pallipalayam manufacturing unit in Erode, Tamil Nadu, the company submitted applications for environmental clearances for the expansion. However, subsequent feedback from the Environment Ministry has led the company's Board to approve a phased approach under the Mill Development Plan – IV program.

The first phase will involve a 20% expansion, with a fresh application for environmental clearances to be submitted. Subsequent expansion up to 40% will follow the successful completion of Phase-I. The company had sought exemption from fresh public consultations for this subsequent expansion, as mentioned in its FY24 annual report.

Pending a detailed review of the techno-economic feasibility report, the Board is expected to grant final approval for the revised scope, timelines, and costs for various phases of the project. This approval is subject to obtaining requisite approvals from concerned authorities for the revised Phase-I expansion by 20%.

Currently, the company operates an integrated pulp, paper, and paperboard mill at Pallipalayam and a paper manufacturing mill at Tirunelveli. Its total installed capacity stands at 255,000 tonnes per annum (tpa), with the Erode facility at 165,000 tpa and the Tirunelveli unit at 90,000 tpa. The Erode facility is operating at full capacity, with 100% utilization in FY24, while the Tirunelveli facility's utilization was around 84%.

Despite challenges in FY24, including planned maintenance activities, outages in recovery and power boilers affecting pulp and paper production, and adverse market conditions affecting product mix, the company remains cautiously optimistic. Looking ahead to FY25, it anticipates challenging domestic market conditions for writing and printing grade papers, particularly in the first half of the fiscal year, amid pricing pressure from imported paper and rising input costs.

HBL