N R Agarwal Industries Limited has informed the Exchange the Company has decided to permanently close down Unit IV (Duplex Board Plant) which is not in operation with effect from July 01, 2024 as intimated vide our letter dated July 01, 2024.
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On the reaction day the stock moved 1.9 pts more than Nifty Microcap 250 and 1.6 pts more than its Paper & Paper Products peers, over the same two closes: a difference in percentage points, not a measure of what the filing did.
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N R Agarwal Industries has announced plans to set up a new Multilayer Board plant (Unit VI) with an installed capacity of 1,000 tonnes per day, requiring an estimated investment of Rs. 1,200 crore over about 4 years. The company is purchasing a 2013-make 4.3-meter deckle board paper machine with 1,020 TPD capacity from China and is currently in the process of acquiring land for the project. Separately, the company is permanently closing Unit IV (Duplex Board Plant), which has been non-operational since July 1, 2024 and contributed only Rs. 47.95 crore (2.89%) of turnover in FY25, citing non-viable operations. Existing operational capacity stands at 4,44,000 MT per annum, with utilization of 3,84,880 MT in FY25 (around 87%). The mode of financing for the new project is yet to be decided.
The Rs. 1,200 crore capex signals a major expansion in the company's core paper board business and could significantly boost future capacity, but execution and financing risks remain as land is still being acquired and funding source undecided. The closure of the non-contributing Unit IV has minimal impact on overall business, removing a small loss-making unit (under 3% of revenue).