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Orient Paper, a CK Birla Group company, has decided to spin-off its cement business as Orient Cement. It will issue one equity share of Orient Cement for each share of Orient Paper held.
The date for the scheme is April 1. The company expects Orient Cement to get listed by April-May.
The demerger will be undertaken through a Court-approved Scheme of Arrangement and will be subject to approval of the High Court of Orissa.
The company has plans to increase cement production capacity of five million tonnes per annum to eight mtpa by putting up a plant in Karnataka. The project is expected to be completed by 2014.
After the demerger, the company will have presence in paper and electrical consumer durables (fans and lighting) businesses. Cement business has contributed revenue of Rs 317 crore (Rs 284 crore) in the June quarter, while electrical business chipped in Rs 165 crore (Rs 135 crore). Paper and board division recorded revenue of Rs 51 crore (Rs 21 crore).
Mr C.K. Birla, Chairman, Orient Paper, said the cement division is being separated for enhancing shareholder value and providing an opportunity for them to directly participate in the pure-play cement company.
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"A pure-play cement company will provide better focus and achieve faster growth. At the same time OPIL management will be able to provide greater focus on growing paper and electrical businesses,” he added.
The company's net profit for quarter ended June 30 was up 73 per cent at Rs 59 crore (Rs 34 crore), while income rose 21 per cent to Rs 547 crore (Rs 449 crore) on the back of improved earning from the cement and electrical divisions.
Cement division has achieved 12 per cent increase in turnover at Rs 317 crore and EBIT rose 40 per cent to Rs 109 crore.
The company has included an income of Rs 8.55 crore from sale of carbon credit.
Paper production was shut down for 36 days during the quarter for an overhaul and the cost incurred for this has been accounted for during the quarter, the company said. “We have also completed expansion of our CFL production capacity to 13.2 million units and the fan production capacity is also being expanded. The new 55 MW thermal power project is expected to be commissioned by the first quarter of the next financial year,” the company said.
The company's shares on BSE were down 3 per cent at Rs 62 on Wednesday.
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