``The divestment of government stake in Hindustan Paper was decided by the last Government and quotations were asked from merchant bankers. Thereafter, the government lost the confidence vote and the matter was put on the back burner. It will be taken up once the Government and inter-ministerial groups are formed,'' sources said.

Hindustan Newsprint Ltd, a mini-ratna and a wholly-owned subsidiary of Hindustan Paper Corp, has also been referred to the Disinvestment Commission. The commission has asked for details about the company, which received its ISO 9002 certificate last year.

Sources said: ``The commission has asked for every possible detail of the company's activities in the last five years and what it aims to become in the next five years. It is a voluminous task and almost impossible for the company officials to reply to all the queries of the commission. So a consultant will be appointed for this purpose.''

Chairman and managing director of Hindustan Paper ARK Rao confirmed this development but prefered not to name the merchant bankers. ``Yes, four merchant bankers are in the fray but I would not like to name them as nothing has been finalised yet. A consultant will also be appointed for Hindustan Newsprint,'' Rao told The Financial Express.

In 1998-99, Hindustan Paper increased its turnover to Rs 409.10 crore from Rs 360.5 crore. Quantity-wise our sales increased from 1,43,944 tonnes to 1,57,248 tonnes. However, net profit dropped from Rs 11.51 crore to Rs 9.32 crore.

Hindustan Newsprint performed better in 1998-99 compared to the previous year. Turnover increased from Rs 189.72 crore to Rs 221.09 crore. Profit before tax increased from Rs 5.25 crore to Rs 24.62 crore and net profit also surged from Rs 2.91 crore to Rs 20.63 crore.

Sources said a number of factors have be considered before finding a suitable partner for Hindustan Paper. The company, with its two paper mills at Nogaon and Cachar in Assam, is profitable and attractive.

However, two of its three subsidiaries - The Mandya National Paper Mills Ltd and Nagaland Pulp & Paper Co Ltd - are perpetually making losses. The Government made several futile attempts to sell Mandya National Paper Mills.

``A new partner would certainly not like to take the burden of these sick units and similarly the Government will not just sell the stake of Hindustan Paper as a single entity. The merchant banker will have to work out a feasible plan to make it a win-win deal for both the parties,'' sources said.

Sources also said it will take some time for the whole process to be over. ``Even if the political will is there, the disinvestment of Hindustan Paper and Hindustan Newsprint will take at least two more years,'' sources said.