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Debdatta Das

To hive off edible oil, paper units

New Delhi , Dec. 19

Amrit Banaspati Company Ltd will no longer produce vanaspati. The over Rs 600-crore company has decided to hive off its edible oil and paper businesses to other group concerns, while retaining for itself the dairy and real estate operations. The company hopes to complete the entire restructuring process by February 2007.

Under a restructuring plan, the paper business is to be demerged into a separate company, ABC Paper Ltd, while edible oils would be transferred to Amrit Enterprises Ltd. The holding company, Amrit Banaspati, in the new dispensation will comprise the real estate and the dairy business and also retain the flagship Gagan brand.

It will also be a majority shareholder in both paper and edible oil businesses with 26 per cent and 22 per cent stake respectively.

"We are doing major restructuring, since our diverse business activities have different dynamics, growth drivers and management focus. This move is aimed at unlocking the value of the company," said Mr Naresh Kumar Bajaj, Chairman and Managing Director, Amrit Banaspati.

Both Amrit Banaspati and Amrit Enterprises are listed companies, having recorded profit after tax (PAT) of Rs 14.6 crore and Rs 1.01 crore on net sales of Rs 467.14 crore and Rs 206.9 crore respectively for the year ended March 31, 2006. The group is open to the idea of listing its proposed paper company sometime in the future.

Focus on paper

The company plans to have major focus on its paper business, where, after the restructuring, it will undergo a massive capacity expansion hike. "We expect the real growth story of the group to come from our paper entity. While we currently produce 48,000 tonnes per annum (tpa), we plan to invest about Rs 125 crore to hike the production capacity to 75,000 tpa after the restructuring process. Besides a 9.6 MW co-generation plant, a chemical recovery plant will also be set up during the same period, thereby hiking our turnover from paper production to Rs 260 crore," said Mr Bajaj.

The company also has plans of setting up a 1-lakh tpa greenfield manufacturing facility, with an investment of around Rs 550 crore, which will be operational by 2012. The company that has two paper brands, ABC Gold and Aqua Sapphire, plans to clock a turnover of Rs 650 crore after the new paper plant starts production.

Edible oil

"The future prospects of Amrit Enterprise are extremely promising as the demerger and consolidation of the edible oil business will enable it to achieve business synergy due to economies of scale, rationalisation of the operational cost and optimal utilisation of the various resources," he said.

Besides, the FMCG commodities business of rice, salt and pure mustard oil will be strengthened and the `Gagan' umbrella brand and distribution network will be leveraged to offer many other FMCG commodity products, Mr Bajaj added. Gagan is currently a Rs 550-crore brand and the company hopes to make it an over Rs 1,000-crore brand by 2012.

As regards the dairy business, "We see huge potential in modern retail and will definitely use the medium to our benefit," Mr Bajaj said.

More Stories on : Restructuring | Oilseeds & Edible Oil | Paper | rd & Newsprint

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