The Hindu Business Line : BILT set to buy Malaysian firm

MR GAUTAM THAPAR, Chairman, Ballarpur Industries Ltd, with Mr R.R. Vederah, Joint Managing Director, addressing a press conference in the Capital on Monday. — Ramesh Sharma

New Delhi , June 5

Ballarpur Industries Ltd (BILT) on Monday said that it was looking to acquire a majority stake in a Malaysian-based paper and pulp company, Sabah Forest Industries SDN BHD (SFI), jointly with JP Morgan for $ 261 million.

For the acquisition, BILT has entered into a conditional share purchase agreement with JP Morgan, which will hold a 20 per cent stake in SFI.

SFI, which is a part of Malaysia's Lion Forest Industries, has a paper capacity of 1,44,000 million tonne per annum (mtpa) and pulp capacity of 120,000 mtpa. The company would provide BILT access to around 2,89,000 hectares of forest land, which would be utilised for plantation purposes. SFI also operates a timber and plywood mill, a jetty and power and steam generation plant facility.

"We will begin the due diligence exercise for SFI, which would be completed in the next 120 days," said Mr Gautam Thapar, BILT Vice-Chairman and Managing Director.

He said that with this acquisition, BILT would be able to produce one million tonne of paper and pulp by 2010. "While the 3,50,000 mtpa domestic expansion at the Bhigwan unit is on, the acquisition in Malaysia gives us an additional 1,40,000 mtpa of paper, all of which would raise our capacity to one million tonne per annum by June 2010," Mr Thapar said.

Ballarpur, apart from benefiting from SFI's mill and forest lands, may consider setting up a 5,00,000-tonne capacity pulp mill in Malaysia at an estimated cost of $500 million, which may become operational by 2012, Mr Thapar said.

"Besides providing access to integrated pulp and paper capacity of SFI, the acquisition will help secure future availability of fibre for the company," Mr Thapar said.

The acquisition in Malaysia would help cut costs for BILT. According to Mr R.R. Vederah, Joint Managing Director of BILT, "Costs in Malaysia are nearly half of that in India, which is a big advantage for us."

Meanwhile, BILT's profit and revenue are likely to grow by "double-digit" each year over the next 10 years due to a continued surge in demand for paper in the country. "Paper demand grew 10 per cent last year. We should be able to maintain the growth this year as well," Mr Thapar said.

Further, BILT said the company may go in for an across-the-board two per cent increase in paper prices from July this year due to higher input prices and increased demand.

BILT witnessed a 0.97 per cent increase in its share price at the Bombay Stock Exchange to close at Rs 120 on Monday.

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