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BILT forays into tissue paper, eyes acquisitions

Our Bureau

New Delhi , April 26

BALLARPUR Industries Ltd (BILT) today announced a number of initiatives to generate growth.

While it has been talking about acquiring pulp and paper capacities in South-East Asia for some months, the company has also begun diversification in the domestic market. Its board today approved a foray into tissue paper, with an investment of Rs 25 crore over the next five years.

Initially, BILT will outsource this product, but eventually the company plans to set up a manufacturing line for it, the Chief Financial Officer, Mr B. Hariharan, said here. Besides tissue paper, BILT is also keen to enter non-paper based products to expand its fledgling retail foray. It has already launched Matrix notepads, Matrix multi-purpose paper and the Royal Executive Bond through smaller stock keeping units as part of the retail initiative and expects the retail business to generate Rs 100 crore over next four years.

Asked about acquisition plans, the Joint Managing Director, Mr R.R. Vederah, said that BILT was negotiating with a couple of integrated manufacturers of pulp and paper in Indonesia and Malaysia. While he did not specify the amount BILT has earmarked for such an acquisition, Mr Vederah said that the target companies have at least 100,000 tonnes of capacity and would help BILT achieve economies of scale. This acquisition would be in line with BILT's plan to double total capacity to 8.5 lakh tonnes over next five years, involving Rs 1,200 crore investment. The investment will be funded through an equal mixture of debt and equity.

At its meeting today, BILT's board of directors also accepted the resignation of Dr Cherif Sedky as Director. Further, an in-principle approval for pre-payment of existing Foreign Currency Convertible Bonds (FCCBs) amounting to $45 million, in part or full, was given. And to finance the pre-payment, the board approved, in principle, a fresh issue of FCCBs aggregating to $60-100 million. The issue will be subject to pre-payment of the existing FCCBs and will not result in any incremental equity dilution beyond the potential conversion of the existing FCCBs.

On whether prices were being revised, Mr Vederah said that the company has already increased prices of uncoated paper by about Rs 1,600 per tonne over the last few months due to higher prices of pulp globally, and BILT was contemplating an increase in the prices of coated paper as well.

"Over the last nine months, uncoated paper has become dearer by about 5.4 per cent. We are contemplating a hike in the prices of coated paper as well and this should take effect in the current quarter," Mr Vederah said.

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