BILT to hive off chemical unit

NEW DELHI, JAN 30: Ballarpur Industries Ltd (Bilt) expects to complete its restructuring programme by hiving off its chemicals business into...

NEW DELHI, JAN 30: Ballarpur Industries Ltd (Bilt) expects to complete its restructuring programme by hiving off its chemicals business into a new company by March 31. Bilt joint managing director Gautam Thapar said on Friday that Bilt Paper, Bilt Chemicals and Bilt Investment – the three new entities being carved out of Bilt – will come into existence with retrospective effect from April 1, 1998.

The Thapar group is also keen to hike its stake in Bilt, which will come down from 28.9 per cent to 24.06 per cent after sale of 16.7 per cent stake to Al Murjan group of Saudi Arabia, at the earliest possible opportunity, Thapar said. He said the Rs 135 crore raised from placement of shares with Al Murjan will be used to retire high cost debts and redemption of foreign currency convertible bonds (FCCBs) issued in August 1994.

Thapar clarified that Al Murjan group will hold equity in Bilt Paper after the restructuring is complete. “They are in complete agreement with the decision of the board to hive off thechemicals business.” Thapar further stated that he would continue to play a major role in Bilt Paper. At present, Thapar takes all decision regarding the finances of Bilt.

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The Jeddah-based Al Murjan group owned by the Bin Mahfaouz family will have one nominee on the board of Bilt. Al Murjan is a joint venture partner of Bilt in Egypt. Bilt holds about 13% stake in this joint venture company – International Chemicals Company. The equity capital of Bilt Paper will be Rs 60 crore after allotment of one crore equity shares to the Saudi Arabian company against Bilt’s present equity of Rs 50 crore. The equity base of Bilt Chemicals and Bilt Investment will be worked out by March 31. The shareholders will get identical holding in Bilt Chemicals and Bilt Investment, Thapar said. Bilt Chemicals will be an unlisted company.

The restructuring is expected to be ratified at board meeting to be held before March 31. Bilt Paper’s turnover is expected to be over Rs 1,000 crore after becoming a separate company with anasset base of Rs 1,500 crore. Though Thapar refused to comment on the net profit, sources said the figure is expected to be around Rs 25 crore for the year ending March 1998 after excluding Rs 13 crore net profit of the chemicals division. Bilt’s net profit from all its operation during the first-half of the year was around Rs 8 crore.

The restructuring was necessitated by the need of the company to concentrate on its core business – paper. Thapar pointed out that the entire money generated by Bilt was just about enough for the paper business.

The chemical’s division, in contrast, is expected to have turnover of Rs 169 crore. This division will have an asset base of Rs 125 crore.

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Thapar added that the assets of the chemicals division would be bought by Andhra Pradesh Rayon, which is 50 per cent owned by Bilt. He clarified that the chemicals division will not be merged with Andhra Pradesh Rayon.

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