Ballarpur Industries Limited (BILT), India's largest manufacturer of writing and printing paper acquired Premier Tissues India (PTIL) for Rs 76.5 crore. BITL has entered into a share purchase agreement with Premier Tissues India and all its shareholders, for acquisition of entire paid up capital of PTIL, either directly and / or indirectly.

Ballarpur Industries Limited, part of the $4-billion Avantha Group, holds 85% share of the bond paper market and nearly 45% share of the hi-bright Maplitho market in India. BILT retails its tissue products under the brand ’Etiquette’ primarily in North India.

o3 Capital was the sole advisor to the transaction.

Premier Tissues is the largest player in the tissue paper market in India, and retails its products under the brand name ‘Premier’. Over the last 12 years, Premier Tissues has an extensive distribution network across India, reaching 8800+ outlets through 150+ distributors. The company also exports its products to Europe. The aforesaid acquisition is subject to satisfaction of all condition precedents by PTIL and its promoters, a company statement said. In 2007, BILT had acquired 98% stake in Sabah Forest Industries SDN. BHD, the largest integrated pulp and paper mill in Malaysia, for $261 million.

Shares of the BILT went up Rs 1.15, or 3.09%, to close at Rs 38.40.

R.R. Vederah, MD of BILT said, “The acquisition is expected to be completed by the end of this month, when BILT will take over the operations and management of the company from its existing management. Yogesh Agarwal, COO, BILT, said, “Premier is very strong in South and West India, while we have a good presence in North India. The integration of Premier’s operations with BILT’s own brand ‘Etiquette’”, will help us capture a significant share of this rapidly growing category.”

The deal value has been calculated on an estimated EBITDA of Rs 9.6 crore for 2010-11 that gives an EV/EBITDA multiple of about eight. The actual revenue for 2009-10 is Rs 41.7 crore, which is estimated to increase to Rs 50 crore in 2010-11.

The size of the organised tissue paper market in India is estimated at around Rs 1,200 crore and the unorganised sector is almost the same size. India’s per capita tissue paper consumption is dismally low at 0.01 kg as compared to China at 4.5 kg and 23 kg in North America.

G.G. Shenoy, Chairman & MD, Premier Tissues, said, “BILT is part of one of India’s largest business conglomerates with significant financial strength and experience in the tissue business. I am sure they will be able to leverage on both and take the brand to a different level.”

“The Indian tissue paper market is at an inflexion point and is expected to grow at a CAGR of 20% in the next 3 – 5 years, with the organised segment growing even faster. This growth will be driven by increasing hygiene awareness, disposable income and deeper penetration of organised retail. Given that there is no national player in this segment, with this acquisition BILT will be suitably placed to capture that position. Also, with this acquisition, BILT has forayed into value added, consumer facing paper businesses in a big way,” said Deepesh Garg, Director, o3 Capital Global Advisory.

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