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Government to divest in MPM, raise Rs. 1,000 crore for modernisation

WAITING FOR IMPROVEMENT: A file picture of crushed wooden chips being processed at Mysore Paper Mills in Bhadravati.

WAITING FOR IMPROVEMENT: A file picture of crushed wooden chips being processed at Mysore Paper Mills in Bhadravati.  

S. Rajendran

Restructuring of the mills preferred to privatisation

MPM has stood up to the competition posed by Chinese mills Government will continue to have 50 per cent equity

BANGALORE: The State Government has decided to partially divest its shares in the Mysore Paper Mills (MPM) and raise around Rs. 1,000 crore to modernise the giant paper mill apart from the sugar factory and the power generation plant forming part of MPM.

The plan for modernisation of MPM is expected to be set in motion shortly and the long term target is to ensure that it will meet the challenges posed by the need for inducting green and modern technology that goes with the paper industry. According to reports available with the State Government, the Chinese newsprint sector has already captured the market once controlled by the Canadian, pan-Asian and the Russian newsprint industry.

Minister for Large and Medium Industries Katta Subramanya Naidu and Chairman and Managing Director of MPM Lukose Vallatharai told The Hindu here on Monday that MPM has so far stood up to the competition posed by the Chinese. The effort now was to modernise the machinery in a big way to ensure that MPM is able to respond to the demands of the market. The company's financial performance is also satisfactory, they said. According to an action plan that is under consideration, the Government will like to have a firm hold over MPM with an equity of nearly 50 per cent.

Early this year, the State Cabinet, which discussed in detail the state of affairs of the Mysore Paper Mills, constituted a Cabinet sub-committee to go into all facets of the problems pertaining to the MPM. The committee has suggested to the Government the ways and means of reviving the lost glory of the paper mills. One of the important recommendations made is the need to revive and restructure the unit rather than privatising it straightway.

Based on a decision of the Government arrived at after calling for tenders, Price Water Coopers has been assigned the task of identifying the best strategic partners for MPM. The report is expected in eight weeks and thereafter discussions will commence with the proposed partner before reaching an agreement.

Mr. Naidu said MPM had an accumulated loss of Rs. 54 crore besides loans from the State Government totalling Rs. 91 crore. The Government loan will be transferred to MPM to step up the equity.

The modernisation of the paper mills apart from the sugar and power generation units will also mean that it should meet the conditions of the Central Pollution Control Board and the Karnataka State Pollution Control Board. Towards this end, MPM is likely to opt for a Rotary Lime Kiln, Elementary Chlorine Free Technology for paper pulp manufacturing, energy augmentation and energy conservation systems and the systems that help in the reduction of vicious gases (non-condensible gases).

Mysore Paper Mills was founded by the late Krishnaraja Wadiyar, the then Maharaja of Mysore on May 20, 1936. It has been one of the most prestigious public sector undertakings run by the Karnataka Government and has prime property in several places including Bangalore, Mumbai and New Delhi. It also has a township for its workers numbering around 5,000 at Bhadravati. It is the only integrated paper and pulp manufacturing company in Asia, and the shares of the company are listed in the Bombay Stock Exchange.

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