ITC Ltd signed an agreement today to acquire Bilt
Industrial Paper Company’s (BIPCO) paperboards business, located near Coimbatore, for
a consideration of Rs 233 crore. The money will be paid to BIPCO over five years.
The acquisition will provide ITC, the largest paperboard
company in India, an additional 65,000 MT per annum capacity to service markets in India
and overseas. It already has an installed capacity of 225,000 MT per annum, on which it
produced 235,000 MT of paper board last year.
In addition to the acquisition, sources said, ITC is
spending another Rs 275 crore to expand its existing capacity by 33 per cent to 300,000 MT
per annum. The acquisition as well as the expansion will take ITC’s total paperboard
manufacturing capacity to 3,65,000 MT. ITC’s paper business was earlier operated
through a separate company called ITC Bhadrachalam which eventually got merged into ITC
Ltd. The paper division recorded sales of around Rs 875 crore in 2002-03.
A statement issued by the company’s public relations
agency said that the transaction is expected to be completed over the next 45 days.
ITC’s existing paperboards facility is already operating at full capacity.
This acquisition will enable ITC to service the growing
demand for high quality paperboards in the domestic market, as well as to widen its
product footprints in the export markets, the statement added.
The market for paperboard in India has been growing at the
rate of 10 per cent, even as the total paper market is growing at around 4 per cent.
Y C Deveshwar, chairman, ITC Ltd said that "this
acquisition strategically positions ITC to leverage its world-class capability in
paperboards towards realising the vision of becoming a leader in the Afro-Asian
region."
