The Lalit Mohan Thapar (LMT) group has drawn up a proposal to merge Bilt Graphic Papers Ltd (formerly Sinar Mas Pulp & Paper (India) Ltd) into group flagship Ballarpur Industries Ltd (Bilt). According to sources, the proposal has been mooted to the shareholders of both the companies.
If the proposal gets to see the light of the day, the group's shareholding in Bilt, the country's largest paper producer, will go up sharply from the current 32 per cent as Bilt Graphic Papers Ltd is held 83 per cent by Bilt Paper Holdings, an LMT company. ICICI holds the remaining 17 per cent stake in Bilt Graphic Papers Ltd. According to sources, the group is currently discussing the merger with the financial institutions which hold a 36 per cent stake in Bilt.
Apart from this, Bilt is expected to gain from the merger in another way: Bilt Graphic Papers Ltd has losses in its books which can be used by Bilt for tax advantage. Bilt Graphic Papers Ltd is known to have notched a turnover in excess of Rs 450 crore during 2001. The company's financial year has been extended by six months to bring it in line with Bilt's financial year of July 2001-June 2002.
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It is worth noting that last year Bilt had come up with a proposal to buy out the Bilt Graphic Papers Ltd shares from Bilt Paper Holdings Ltd in a bid to share the gains of the acquisition (Sinar Mas was acquired by the group last year) with the Bilt shareholders and impart transparency to the company's functioning. Subsequently, the company had planned a rights issue to bankroll the buyout of shares. But the depressed stock markets has made the company put the rights issue plan on the backburner.
As per the original plan, Bilt had proposed to transfer its subsidiary Janpath Investments to Bilt Paper Holdings as a part of the consideration for Bilt Graphic Papers Ltd. However, the transfer has been delinked from this and Bilt is selling the company anyways to Bilt Paper Holdings. This is being seen as an attempt on the part of the group to clean up the Bilt balance sheet.