Pallipalayam, Cauvery, India 30 September 2014 -- Seshasayee Paper and Boards will invest about Rs 480 crore in its paper mills to expand raw material capacity and captive power generation.

In tandem with the increase in paper pulp, paper production capacity will go up to 2.75 lakh tonnes from the present 1.9 lakh tonnes spread across two mills in South Tamil Nadu.

The primary objective of the investment is to improve cost-competitiveness, according to N Gopalaratnam, Chairman, Seshasayee Paper.

The focus is on increasing in-house pulp production to bring down dependence on imports, and captive power generation.

The company will fund about a third of the investment from internal accruals and the balance from bank loans.

The project cost at the Erode unit will be about Rs 300 crore with paper production increasing to 1.65 lakh tonnes a year from the present 1.2 lakh tonnes.

Besides, hardwood pulp plant capacity will increase to 1.45 lakh tonnes from 1.15 lakh tonnes now and a 15-MW coal-based power plant will be added, taking the total captive capacity to 55 MW.

It will also set up a chemical recovery island with a capacity of 630 to 950 tonnes a day.

The company will modernise the bagasse pulp and waste water treatment plants, Gopalaratnam said.

Seshasayee Paper will invest Rs 180 crore at the Tirunelveli unit, where it has about 300 acres, to expand paper production to 1.10 lakh tonnes from about 70,000 tonnes now. It will add equipment to enable production of high-end printing papers.

An 18-MW coal-based power plant will be established with the present 6 MW biofuel plant treated as a standby.

The deinking plant will also be restarted at the Tirunelveli unit, which will enable it to recycle 1.32 lakh tonnes of used paper annually. This unit will also use surplus pulp from Erode, he said.