Ballarpur Industries Ltd

Ballarpur Industries Ltd— BUY—21—INR
Sector — Paper
Regd.Off.— Dist. Chandrapur, Ballarpur, Maharashtra - 442701
Listed — NSE, BSE.
Company overiew—
Ballarpur Industries (BILT), Thapar Group Company is India’s largest manufacturer and exporter of paper and paper products. The company was incorporated in 1945 as Ballarpur Paper and Straw Board Mills and changed its name to Ballarpur Industries Limited in 1975. Gautam Thapar is the chairman and R.R. Vederah is the managing director of the company. It is the largest manufacturer of writing and printing paper with a leading 45% market share in the coated paper segment. BILT enjoys a 25% market share for maplitho, 50% for common bonds. Company has technical agreements with a South Korean and Japanese company for the manufacture of coated and lightweight-coated paper. BILT has decided to exit all non-core businesses and focus on core areas of paper and chemicals. Consequently, BILT is divided into two companies BILT Paper and BILT Chemicals. BILT Chemicals comprises of three units Karwar, Khavda and Singach and five mills with a total capacity of over 242780 tpa.
Products & services—
The company operates in the business segments of coated wood free paper, uncoated hi-bright paper (maplitho), business stationery, copy paper and specialty and fine paper. Its products include writing and printing paper, industrial paper, specialty paper, coated and uncoated wood free paper, uncoated hi-bright paper, business stationery, tissue paper, packaging paper, and copy paper. Complementing this is a diversified production infrastructure with six manufacturing units spread across the country. Manufacturing units are located at Shreegopal (Yamunanagar), Ballarshah (Maharashtra), Sewa (Orissa), Bhigwan (Pune) and Kamalapuram (Andhra Pradesh). With the acquisition of Sinar Mas’ Indian operations, BILT has acquired world class coated paper capacities that find widespread application in the high end of the Indian usage market as well as developed overseas markets. The company is backward integrated with its caustic soda/chlorine manufacturing facility, which is a vital raw material in the production process of paper. Strategically implemented enterprise resource planning (ERP) system, real-time logistics and just-in-time (JIT) inventory solutions enable highly effective and efficient distribution of localized BILT products across urban, semi-urban and rural consumption centers nationwide with a network of 126 dealers.
BILT has 10 year contract with the government of Maharashtra for the supply of Bamboo that ensures cheap and regular supply of raw material. The company has also initiated farm forestry for cheaper raw materials and has cornered Indonesia and Malaysia for this activity due to its strategic geographic location. Company has an agreement with its calcium carbonate supplier, Emirys (France) to manufacture the chemical requirement for its coating paper.
Recent development—
Ballarpur Industries planning to invest USD 1 billion in overseas acquisitions and enhancing plant capacity in five years. India’s biggest paper maker will double its production capacity to 2 million tons by the year 2013. The expansion will be financed by loans and share sales.
Valuation—
At the current market price stock is trading at 5.67 P/E multiple of its FY2010 Estimated EPS. We recommend investors to “buy” “Ballarpur Industries Limited” with a medium to long-term investment prospective.