ITC Buys BIPCO

Tobacco-to-paper giant ITC Ltd is buying into India's biggest paper company Ballarpur Industries Ltd (BILT) belonging to the Avantha group controlled by Gautam Thapar. Market sources said ITC has already bought over 23 lakh shares of BILT for Rs 5.60 crore in the last couple of months. The move has created a stir in corporate circles as ITC has major interests in paper through ITC Bhadrachalam Paperboard. BILT is the largest producer of writing and printing paper. The company holds 85% share of the bond paper market and nearly 45% share of the hi-bright maplitho market in India.

The promoters hold 39.44% in BILT. Its stock is now hovering at around Rs 30 and touched a 52-week high of Rs 193 in January. "The number of shares bought by ITC is not significant going by the large capital base of BILT. It is around 0.5% of the BILT equity but the development is of immense interest going by the past history. There are past instances when ITC has bought into companies complementary to its business interests," a market expert said. Incidentally, BILT has 55 crore shares following the share split last year. ITC officials were not available for comment.

ITC now has 14.92% in hospitality major EIH Ltd and 14.26% in tobacco firm VST Industries. ITC holds stakes in both companies through Russell Credit, the umbrella investment arm of the company. ITC had also come out with an open offer through Russell Credit for controlling stake in VST Industries in 2001 which was later on countered by Bright Star Investment of Damanis. The acquisition of EIH shares by ITC also led to a corporate battle between ITC and Oberoi group in 2001-02. The tobacco major had earlier bought Bilt Industrial Paper Company in 2003. Bipco had been valued at Rs 265 crore. The Coimbatore-based Bipco, which makes paperboard, was owned by Bilt Paper Holding Ltd, the holding company for the Avantha group of Gautam Thapar.

BILT Paper Holdings also hold 33.44% in the BILT, the group flagship. Sources in ITC said that the paperboard, speciality paper and packaging division of ITC is performing extremely well. "The segment revenues grew by 13% over the previous year to touch Rs 2364 crore in 2007-08. It has registered a profit of Rs 453 crore which is also 9% higher and best ever so far," said sources.

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