Officials, investors lose hope in headless TNPL
By Venkatachari Jagannathan | 17 Jul 2002
More importantly, the Rs 595-crore-turnover company is in the process of modernising and debottlenecking its paper mill. The Rs 140-crore programme, supposed to be completed by this yearend, is expected to increase the capacity by 50,000 tonnes per annum.
Despite reshuffling its Indian Administrative Service (IAS) cadre a couple of times in the recent past, the Tamil Nadu government is yet to find a chief for TNPL. It was during one of its reshuffling exercise that the government had recalled the company’s CMD N Narayanan, a senior IAS officer, and posted him as the state’s finance secretary. Now industries secretary Arun Ramanathan doubles up as the company’s CMD.
TNPL’s Rs 69-crore equity is shared by the Tamil Nadu government (35 per cent), Industrial Development Bank of India (IDBI) (35 per cent), and the public and others (30 per cent). As per convention the state government nominates an IAS officer as TNPL’s CMD or chief executive officer.
During his four-year tenure at TNPL, Narayanan, an electrical engineer, really toiled to turnaround the company. When he took over the reigns, TNPL was tottering with a loss of Rs 3.57 crore and was overwhelmed with lots of human relations problems with employees’ morale at the lowest ebb.
Focussing on cost-cutting (production and finance), improving efficiencies and launching new products Narayanan took TNPL to dizzying heights. Today the company is self-sufficient in power and its average variable energy cost is Rs 1.69 per kwh. Last fiscal TNPL exported 541.71 lakh kwh to the Tamil Nadu Electricity Board.
TNPL closed last year with a net profit of Rs 35.31 crore. The profits got halved compared to 2000-01 due to price pressures and statutory provisioning under the Accounting Standard 22. With the paper prices picking up again (TNPL has revised the prices of its printing and writing paper thrice in 2002) the company is all set to reap the benefits of efficiencies.
But if that is to happen without any hitch the company should have a fulltime head. Industry analysts says the 35-per cent stake held by the Tamil Nadu government is the dampener for investors putting in their monies in the TNPL stock.
With rumours about the government divesting its stake in the company agog at regular intervals, it is time for the major shareholders — the Tamil Nadu government and IDBI — to think about appointing an industry professional to head the premier paper company.
This will surely perk up the scrip’s prices on the bourses and add wealth to its shareholders. On the bourses TNPL’s scrip is changing hands for Rs 50, which is far less than the company’s premium public issue price. Curiously, low market prices are one of the reasons for the state government for not diluting its stake to 26 per cent as per its undertaking to the World Bank.
Though Narayanan, now a paper industry expert, is there in the company’s board, the day-to-day running of the company can only be carried out by a fulltime managing director, say industry watchers.
It is a known fact that it will take time for an IAS officer to learn the ropes and reams of the industry — and by that time his tenure would come to an end. While Narayanan is an exception, it is widely believed that IAS officers come to public sector units just to warm their seats because their eyes are always set on procuring a secretariat posting.