Tamil Nadu Newsprint & Papers Ltd (TNPL) is expected to invest more than ₹600 crore in capital expenditure in the next two years in several projects, according to rating agencies that have reaffirmed the company’s ratings.

TNPL has postponed its capital expenditure (capex) plans for the phase 2 expansion of its print and writing paper (PWP)/board segment. However, the company is expected to spend approximately ₹600-650 crore over FY2025 and FY2026 on setting up a tissue plant, upgrading power plants, and performing regular maintenance. This will be partly funded through a debt of ₹240 crore, according to a note from rating agency Icra.

In response to the growing market potential for tissue paper, TNPL plans to install a state-of-the-art tissue paper machine with a capacity of 100 tpd and its auxiliaries at TNPL Unit-II, at an estimated project cost of ₹340 crore. The project is expected to be commissioned before March 2026. This will be funded through ₹270 crore in debt, with the remaining balance covered by internal accruals.

In phases

Additionally, TNPL is revamping the existing steam and power system at Unit-I in phases to replace the old low-pressure boilers, which have been in operation since the mill’s inception in 1985. The installation of two high-pressure boilers, each with a steam generation capacity of 125 tph, and a 42 MW turbo generator, is also being carried out in phases. As part of Phase I, procurement of one high-pressure boiler is underway and is expected to be completed by March 2026. The total cost for this phase is estimated at ₹150 crore, with ₹120 crore to be funded through debt, according to a recent note of CARE Ratings.

In line with its commitment to environmental sustainability and renewable energy, TNPL is also installing 1 MW rooftop solar power plants at both units. The project is expected to be completed by July 2026, with an estimated cost of ₹12 crore, funded entirely through internal accruals.

The stable outlook on the long-term rating reflects ICRA’s expectation that TNPL will sustain its credit profile, with gradual improvements in operating profits. This is supported by the company’s established position, competitive advantages in the PWP segment, and strong financial flexibility with lenders.

The outlook on TNPL’s long-term rating continues at ‘Positive’ in anticipation of a better performance in the forthcoming quarters with improvement in realisations due to price hikes aided by recovery in demand. CARE Ratings expects the cost savings from the imported pulp mill to enable the company to maintain a good margin in the near future.