Newsprint barons in race for HNL sell-off
By Praveen Chandran | 03 May 2002
Mumbai: Leading news print manufactures like ITC Bhadrachalam Paper Ltd, the Gujarat Samachar group of publications, Ballarpur Industries Ltd, Tamil Nadu Newsprint Ltd, Mysore Paper Mills Ltd and West Coast Paper Mills Ltd are among the major bidders for the controlling stake in the Kerala-based Hindustan Newsprint Ltd (HNL).
The central governments plan to sell either 74 per cent or its entire holding in HNL entirely depends on the priority of the final bidder. HNL is a wholly owned subsidiary of the state-owned Hindustan Paper Corporation (HPC). In January 2002, the government had announced its intention to divest HPCs stake in HNL and appointed SBI Caps as the merchant banker for the selection of bidders.
An SBI SBI Caps official says nine domestic as well as international newsprint manufactures have submitted the expression of interest (EoI) and at present the due diligence exercise is on. It is expected that within three months from now, the HNL divestment will be completed.
SBI Caps has also received an EoI from a Singapore-based consortium of some of the worlds leading newsprint manufacturers. The consortium is led by a Canadian company, which has a combined annual newsprint production capacity of about 8 million tonnes.
HNL has an annual installed capacity of 100,000 tonnes of newsprint and the net profit of the company is continuously registering a positive growth. HNL reported a net profit of Rs 161.99 million in the fiscal 2000-01 on sales of Rs 2.67 billion. Its net worth was Rs 2.17 billion as on 31 March 2001.
A net worth in excess of Rs 1.5 billion was the main eligibility criterion to bid for HNL. The bidders are also required to have an experience of five years in any manufacturing activity or a three-year experience in the manufacture of paper or related businesses. The EoI is a preliminary process to help shortlist potential bidders, who will be provided further details for the due diligence exercise, and then invited to make the financial bids.
Industry analysts say it is surprising to note that many investors have shown interest in the HNL stake, particularly at a time when the domestic newsprint manufacturers are struggling to compete with the low-cost imported newsprint. The government can now expect better offers in view of the number of bidders in the fray.
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