Ballarpur Industries (Bilt) may sell its wholly owned subsidiary, Janpath Investments and Holdings, to the shareholders of Bilt Paper Holdings, a closely-held company of the Lalit Mohan Thapar group. The Bilt board today asked the company to consider the option.
The proposed sale is a part of the buyout of Bilt Graphic Paper (formerly Sinar Mas Pulp & Paper India) by Bilt from Bilt Paper Holdings at a cost of Rs 293 crore. In order to fund the buyout, the Bilt board today approved an issue of fully convertible debentures totaling up to Rs 250 crore to the shareholders of the company on a rights basis.
"The gap will be made up by transferring Janpath to Bilt Paper Holdings," Bilt vice-chairman and managing director Gautam Thapar said.
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Janpath has a share capital of Rs 78.98 crore as on March 31, 2000, the last date for which information is available, comprising 38.98 million equity shares of Rs 10 each and 40 million five per cent redeemable cumulative preference shares of Rs 10 each. It reported a profit of Rs 2 crore for 1999-2000.
An investment company, Janpath holds shares in other Thapar companies such as Greaves Ltd, Crompton Greaves, JCT and Bharat Starch which is currently under liquidation. It also holds shares in overseas companies such as JG Containers (Malaysia) Sdn Bhd. Janpath also held the shares in Thailand-based Poenix Pulp and Paper which were sold off last financial year for almost Rs 150 crore.
The book value of Janpath Investments comprising quoted companies, unquoted companies and government securities stood at Rs 321.36 crore as on March, 2000. However, the market value of its quoted investments is known to be much below their book value. A proper valuation of the company would be carried out before it is transferred to Bilt Paper Holdings.
The transfer of Janpath will lead to a cleaning up of the Bilt balance sheet. As it is a fully owned subsidiary of Bilt, its balance sheet is appended to the company's annual report.
The rights issue, according to Thapar, will take place not before next year. "There are a lot of procedures that need to be gone through," he said. While the promoters hold a 34 per cent stake in Bilt, the Al Murjan family of West Asia holds a 14 per cent stake, the financial institutions another 31 per cent and the remaining is scattered amongst the smaller shareholders.