Orient Paper Photo Credit: Thinkstock

Orient Paper to demerge consumer electric business

18 October, 2016

Orient Paper & Industries Ltd said on Monday it has decided to demerge its consumer electric business to accelerate growth and tap into varied sources of funds for expansion.

The consumer electric business is distinct from its paper business and this necessitates different management approaches and focus, Orient Paper said in a stock market disclosure. 

The demerged entity will be called Orient Electric Ltd and its shares will be listed on the BSE and the National Stock Exchange.

The consumer electric business makes appliances such as fans, lighting products, home appliances and switch gears. This business has annual revenue of Rs 1,301.83 crore, which is 71.51% of the company’s total sales, according to fiscal 2015-16.

Its paper business includes manufacturing of products such as writing paper, printing paper and tissue paper.

Orient Paper is part of the CK Birla Group, which has presence across technology, automotive, home and building, healthcare and education sectors. The company had, in 2011, demerged its cement business and listed it on the stock exchanges.

Earlier this month, Orient Cement Ltd struck twin deals with Jaiprakash Associates Ltd to buy its majority stake in a joint venture with Steel Authority of India Ltd (SAIL) and a grinding unit from another group firm to expand to other regions.

In a similar demerger, engineering firm Crompton Greaves Ltd, part of Gautam Thapar-led Avantha Group, had decided to demerge its consumer products business into a separate listed firm in 2014.

In 2015, Avantha Group inked a deal to sell its entire 34.3% stake in Crompton Greaves to a special purpose vehicle created by PE firm Advent and Singapore state investment arm Temasek for Rs 2,000 crore ($316 million).

Last month, Advent and Temasek failed to buy any significant number of shares in the open offer for Crompton Greaves Consumer Electrical Ltd (CGCEL). The two firms had launched the open offer in May to acquire an additional 26% stake in CGCEL for up to Rs 1,695 crore ($251 million then).

Shares of Orient Paper gained 5.84% to Rs 89.65 on the BSE in a weak Mumbai market on Monday.

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Orient Paper to demerge consumer electric business

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