Defunct Central PSU becomes centrepiece of alternative industrial development model by Kerala

Finance Minister KN Balagopal flagged off the first batch of paper produced by Kerala Paper Products Limited in Kottayam on November 1, 2022.

Finance Minister KN Balagopal released the first batch of paper manufactured by Kerala Paper Products Limited in Kottayam on November 1, 2022. Photo: Special Arrangement

Beset by mismanagement, Hindustan Newsprints Limited – the centrally owned public sector unit that had long dominated Kerala’s industrial scene – ceased operations nearly four years ago. But this iconic industrial infrastructure, located on the banks of the Muvattupuzha River, is now the focus of an alternative development model proposed by the state’s Left Democratic Front (LDF) government.

On Tuesday, when the State celebrated its 66th birth anniversary, the erstwhile industrial colossus resumed commercial production of paper. The first paper load, with the units deployed, was announced by Finance Minister KN Balagopal at a function presided over by Industries Minister P. Rajeeve.

“Kerala is writing a new history by taking over a defunct Central PSU through auction and restoring it to industrial-scale operations,” Industries Minister P. Rajeeve said. The company, according to him, is expected to make a profit from March and along with this, it will start hiring employees permanently.

“The company aims to achieve a turnover of ₹ 3,000 crore with a production target of five lakh metric tonnes. In the process, it will also create 3,000 jobs, which is equivalent to all the jobs that the public sector can create in the State in four to five years,” he added.

Company sources said the commercial operations started producing high quality 45gsm newsprint. “As the plants achieve stability in production, the unit will also focus on producing 42 gsm newsprint and 52-70 gsm writing and printing paper,” they said.

HNL faced liquidation when the Kerala government took over the National Company Law Tribunal’s offer of ₹ 146 crore. The fund, mobilized through the Kerala Infrastructure Investment Fund Board (KIIFB), was disbursed through the Board of Creditors, a consortium of banks.

Subsequently, the State has implemented the revival of the unit in four phases, and it started functioning as Kerala Paper Products Limited (KPPL) from January 2022.

The expenditure on the revival plan comprising the first two phases was ₹ 154.39 crore and the third phase envisages increasing capacity and diversifying the product portfolio, entailing an investment of ₹ 650 crore over 27 months.

The fourth phase of operations would focus on restructuring the existing machinery to produce craft paper grades. It requires an investment of ₹ 350 crore and a time frame of 17 months for implementation. The development activities of the third and fourth phases aim to move to diversification after increasing productivity.

In order to deal with the shortage of raw materials, a decision has also been taken to start the commercial cultivation of bamboo.

Along with the revival of the paper production unit, a land use plan for the 700-hectare property has also been initiated, which envisages the opening of a natural rubber-based industrial park by Kerala Rubber Limited.

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