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Ruchira Papers to foray into W

Written by: Staff

New Delhi, Nov 21: Kraft paper manufacturer Ruchira Papers Ltd will foray into writing and printing (W&P) paper sector and will set up a 33,000-tonne-per annum capacity plant in Kala-Amb in Himachal Pradesh at a total investment of 135.50 crore.

The company will raise Rs 28.50 crore through an initial public offering to part-finance the project and the remaining funds will be accumulated through bank term loans and internal accruals, company's Whole-time Director Jatinder Singh told reporters here today.

''The public issue will contribute only 21 per cent of the total cost of the project, including five-crore-rupee contribution by the promoter through participation in the public issue.

''The bulk of the funding would be done through term loans of Rs 93.50 crore that have already been sanctioned by a consortium of banks including Punjab National Bank, State Bank of Indore, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur,'' he said.

The company will offer equity shares of Rs 10 each at a price-band of Rs 21-23 per share. The issue will open on November 23 and close on November 29.

The new plant, scheduled to complete by June 2007, will contain a chemical recovery plant, in which the company will invest Rs 25 crore, and a six-megawatt captive power co-generation plant, in which Rs 10 crore will be invested.

Ruchira Papers has a Kraft paper manufacturing plant in Kala-Amb with a total capacity of 52,800 tonnes per annum.

Kala-Amb is a no-excise zone up to the year 2013. It also offers income tax exemption to the extent of 100 per cent for the first five year and thereafter exemption of 30 per cent for the next five years.

''In addition to these sops, the company is eligible for concessional rate of sales tax at one per cent instead of the regular rate of four per cent. It also gets capital subsidy,'' Mr Singh said.

The public issue will dilute the promoter's share in the company by 42-43 per cent from 100 per cent at present. The debt-equity ratio after the completion of the project will be 1:1.66.

The compay had earned Rs 37.76 crore during the first half of the current year, registering a net profit of Rs 3.02 crore.


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