A New Imprint

The Thapar Group flagship, Ballarpur Industries (Bilt) has scripted a impressive turnaround story in a span of 18 months. From a dismal bottomline of Rs 3.2 crore on a turnover of Rs 1825.19 crore for 18 months ended September 1998, the paper major has rebounded with a net profit of Rs 38.52 crore, on a turnover of Rs 924.9 crore, for nine months ended March 2000.

The restructuring scheme has been successful on both counts as Bilt has been focused exclusively on the paper business and also has been de-linked from other businesses of the group. The chemical division of the company has been hived of into a separate company. Recently, the company also hived off Ashti, the paper board unit into a separate company-Bilt Industrial Packaging. This new company would also take over Servall, a Tamil Nadu based folding boxes company, which the group had recently acquired.

 

At the same time Bilt has acquired AP Rayon's pulp business for which it will issue fully paid equity shares of Rs 10 each directly to shareholders of AP Rayon in ratio of 3:10_three shares of Bilt for 10 shares of AP Rayon. The acquisition of pulp business should ensure that the company would have access to necessary raw materials for manufacturing paper.

This final round of business restructuring would mean that there would be two paper companies in the Thapar Group -Bilt and Bilt Industrial Packaging Ltd. While Bilt would be focused on writing and printing paper, Bilt Industrial Packaging Ltd would be into industrial paper and boards.

With a clear cut mandate to manufacture only writing and printing paper Bilt is now looking to consolidate and expand. It is looking to expand its overall paper manufacturing capacity from the current levels of about 2.35 lakh tonnes. The company has approached the Industrial Finance Corporation (IFC) for a 12 year guarantee for a term loans of $30-35 million to part finance its expansion plans.

The Board has also given its nod for issue of secured redeemable non convertible preference shares upto Rs 50 crore on private placement basis. The proceeds would be used for pre payment of high cost debt. During the current year the company has already issued redeemable cumulative non-convertible preference shares for Rs 8 crore.

Meanwhile on the business side the company is on a high. The uptrend in the international prices, after a almost five years of slump, has cushioned the company against cheap imports. And improvement in domestic scenario following economic revival has given a boost to paper demand. This is reflected in production figures for the nine month period ended March 2000 wherein despite the cyclone effecting its plant in Choudwar, Orissa., the production of paper was 1,76,000 tonnes_118 per cent capacity utilisation.

The volume growth, coupled with improvement in prices, has impacted the financials significantly. For nine months ended March 2000 the company has notched up a turnover of Rs 924.9 crore, an increase of 5.6 per cent over nine months ended June 1999. But before taking the comparison further two points are to be remembered. The previous fiscal , ended June 1999, was only of nine months duration and also included the turnover of the chemical division which was hived off into a separate company in June 1999. Considering these facts, the 5.6 per cent growth is very significant. The net profit for the first nine months of the current fiscal

at Rs 38.52 crore is 139.4 per cent more than the net profit for the nine month year ended June 1999.

Bilt is now looking to move up the value chain by offering high quality paper. It has tied up with foreign players to sell imported high quality paper. Through this arrangement the company will be able to corner a significant portion of fast growing high

value and high margin premium paper market. With this arrangement Bilt would become the market leader in all segments of paper industry.

Clearly, the company has emerged much stronger and more focused post restructuring. The good fortune of rising prices in the restructuring period have ensured that there were no hiccups. The company looks poised for a decent run in the near future.