BILT to invest $1 billion in Malaysian acquisition

Our Corporate Bureau
16 March 2007

Sabah (Malaysia): India`s largest paper manufacturer, Ballarpur Industries Ltd (BILT), plans to invest close to $1 billion over the next seven or eight years to expand the operations of Malaysia's largest integrated pulp and paper mill, Sabah Forests Industries Sdn Bhd (SFI), which it recently acquired.

After signing the agreement for transfer of SFI`s ownership to BILT and its joint venture partner JP Morgan, Gautam Thapar, chairman, BILT, told reporters that in the first phase the company would invest about $100 million in the next two and a half years. "Overall, we would be investing about a billion dollars in SFI over the next few years."

The company will fund the investment through a mix of internal accruals and debt. In the first phase, the paper capacity would be expanded to about 2.10 lakh tonnes and pulp capacity to 2.5 lakh tonnes by 2009-10 at a total investment of $80 million. BILT would also undertake forestation over 5,000 hectares in the first year, 10,000 hectares in the second year and 20,000 hectares in the third year at $35 million.

Thapar said that it took around six years for trees to mature and by 2012, the company planned to set up a 650,000-700,000 tonnes per annum pulp facility for $700 million. He added the company may also put up a paper manufacturing facility later.

The investments would be funded through a mix of internal accruals and debt he said and added the company may also put up a paper manufacturing facility later.

The 80:20 joint venture of BILT and JP Morgan, Ballarpur Paper Holdings Bv, acquired a 97.78 per cent stake in SFI from Malaysia`s Lion Group for $261 million dollars (Rs 1,175 crore), making it the largest ever overseas acquisition by an Indian paper and pulp company.