The State government is making a last ditch effort to stave off the insolvency proceedings initiated against Hindustan Newsprint Limited and retain the company in the public sector by acquiring its stakes.
Hopes of resuscitating the unit that is facing the threat of extinction have been revived with the State government stepping in to acquire the stakes from the Centre and also infuse funds to weather the current crisis.
Industries Department Principal Secretary K. Elangovan had written to Resolution Professional for Hindustan Paper Corporation Limited, the holding company, on April 30 seeking a month’s time to complete the procedures to buy the shares.
The move is in line with the State government policy to support public sector and also following the intervention of INTUC president R. Chandrasekharan and CITU general secretary Elamaram Karim who collectively flagged the gravity of the crisis to Chief Minister Pinarayi Vijayan.
In a joint letter to Mr. Vijayan, they pointed out that the company had been posting profit till 2011-12, but turned sick due to competition from imported newsprint, increasing cost of production, and plant and machinery becoming obsolete.
They demanded urgent action to delink HNL from the holding company and make it an independent enterprise. The unit, which has 1,200 employees on its rolls, offers employment to about 5,000 persons indirectly. Moreover, the factory is located on the 700 acres provided by the State government. The Central government move was to sell its stakes to private investors for a paltry price.
“The unit could be operated profitably by manufacturing paper for government presses, public sector undertakings and educational institutions in the State. Since the unit needs only 300 acres, the remaining 400 acres could be utilised for various development projects,’’ Mr. Chandrasekharan said.
Now the company is striving hard to meet its commitments and lending agencies have developed cold feet following the announcement of strategic investment.
“The State government should form a consortium of financial institutions under its purview and provide a revenue grant of ₹100 crore or soft loan to clear the pending liabilities and ₹450 crore for modernisation. This could be done by mortgaging its land resources, Mr. Chandrasekharan said.
When contacted Public Sector Undertakings Restructuring and Internal Audit Board chairman N. Sasidharan Nair told The Hindu that the government was exploring all options to bail the company out of the red.
