The Hindu Business Line : Ballarpur Industries second quarter net up 9.45 pc

Corporate Results - Paper, Board & Newsprint
Corporate - Restructuring

Ballarpur Industries second quarter net up 9.45 pc — Plans to withdraw from non-core business

Our Bureau

New Delhi , Jan. 24

PAPER major Ballarpur Industries Ltd (BILT) has reported a 9.45-per cent rise in its net profit at Rs 47.4 crore for the quarter ended December 31, 2005, compared to Rs 43.3 crore in the corresponding period last year.

BILT, which follows a July 1-June 30 fiscal year, said net profit in the first half was higher by 9.82 per cent at Rs 91.6 crore against Rs 83.4 crore in the previous corresponding period.

The company has declared a 12.5 per cent interim dividend.

According to company officials, the board in its meeting today had approved the merger of APR Packaging Ltd (Ashti) unit with BILT. The company also said it would hive off its power division and real estate assets to focus on its core business.

"The objective is to focus on paper and withdraw from all our non-core businesses. This will improve our return on capital employed," Mr B. Hariharan, the Group Finance Director of BILT, said.

BILT will sell assets pertaining to the real estate and power division to two separate companies.

While the real estate assets will be sold to another group company, Janpath Investment, for Rs 140 crore, the power division assets will be spun off into a separate company, which will fetch BILT Rs 217 crore.

BILT will hold 26 per cent stake in the separate power company to be called BILT Power Ltd.

The remaining 74 per cent stake will be held by another group company (Ballarpur Paper Holding Ltd) and a financial institution. "We have 95 megawatt capacity (captive power plants), which will be hived off into a separate company and sold. We will get Rs 217 crore in cash for this," Mr Hariharan said.

BILT will use the proceeds from the sale to fund the capacity expansion plans at its Bhigwan unit.

"The expansion will be completed by March 2008," said Mr Hariharan, at an estimated investment of Rs 1,200 crore.

With regard to the remaining amount required for the expansion, Mr Hariharan said, "We have $50 million from the foreign currency convertible bond issue which we raised in July last year and the balance would come through suppliers' credit."

BILT also announced the disinvestment of its entire shareholding in Paperbase Company Ltd, currently a 100-per cent subsidiary of the company.

"Paperbase Company has no assets. It's a defunct company," said Mr Rajeev R. Vederah, Joint Managing Director, BILT.

Additionally, BILT will also work out a voluntary retirement scheme "shortly" to trim workforce by about 10 per cent.

"This will be done to restructure fixed costs and improve productivity," Mr Vederah said.

Mr Hariharan said, "The downsizing will be in excess of 10 per cent of the total work strength," and the process is likely to be completed by the end of this fiscal.

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