Stock Insight: Top of the Pack

Bilt, the largest paper company in India, has embarked on an aggressive growth plan to double its size by 2008.

The company, which is among the top 100 paper manufacturers in the world, was incorporated in 1945 as Ballarpur Straw Board Mills, which was later changed to Ballarpur Industries in 1975.

Bilt has split into two companies-- Bilt Paper and Bilt Chemicals. The company has five plants located at Ballarpur and Bhigwan in Maharashtra, Yamunanagar in Haryana, Jeypore in Orissa and Kamalapuram in Andhra Pradesh. It is in the process of adding a sixth plant by merging APR Packaging, which it acquired in 2003, with itself.

The company makes coated wood free paper, uncoated hi-bright paper (maplitho), business stationery, copy paper, industrial paper, speciality and fine paper.

As the country is poised to show a robust 8 per cent GDP growth, the consumption of paper is also going up steadily. India's consumption is growing at 6 per cent, much ahead of the global average of 2.2 per cent and Asian average of 4.5 per cent. Or in other words domestic per capita consumption of paper in India is low at 5 kg per annum compared to the global average of 54 kg. To meet the surging demand, Bilt has devised a four-pronged strategy to growth. First, it is building up capacities. Second, it has taken steps to ensure supply of raw material apart from reducing costs. Third, it has focused on high-value products to increase margins, and finally is taking to inorganic growth strategy.

Raw material supply remains a big challenge for the paper industry in India. The company has developed a strong farm forestry programme covering over 8,000 hectares to secure the feedstock. It plans to increase the coverage to 13,000 hectares by 2008. The company has also signed a 10-year contract with Maharashtra and Orissa to source 3,00,000 tonnes of bamboo at Rs 650 per tonne. The deal would help the company save between Rs 400 and Rs 500 per tonne and would also reduce its exposure to the spot market.

It has acquired 97.8 per cent equity in Malaysia's largest integrated pulp mill Sabah Forest Industries (SI). SFI is the largest integrated pulp mill in Malaysia. It has a paper capacity of 1,44,000 tpa and a pulp capacity of 1,20,000 tpa, together with various forest concessions for 2,89,000 hectares, valid till 2094. The buy will help the company cater to the growing Asian region and ensure easy availability of fibre. The company has chalked out plans to introduce high-value speciality products. It has premium products like Bilt Matrix and Royal executive bond paper. In the superior bond paper the company enjoys a market share of 80 per cent.

The company has drawn up plans to introduce stationery for students and premium-branded tissue paper. The company has planned to expand into pencils, pens and photo papers also.

Additionally, it intends to increase its market share in uncoated wood-free paper. The company has created a war chest for uncoated freesheet machine having an annual capacity of 2,50,000-3,00,000 metric tonnes.

All this may auger well for the company and improve its profitability over the years.

Source: Idirect

This article was originally published on September 01, 2006.