Global Boards may induct partner

Maharashtra based Global Boards Ltd, one of the few paper board and specialty paper outfits in the country, is likely to induct a strategic partner with a controlling stake as a part of its restructuring program.

A finance executive of GBL told Business Standard that some big companies in the paper sector are in the race for the outfit.

The company will issue equity shares in the preferential basis to a strategic investor.

"The investor might get a controlling stake in the company. But the board will take a final call on that," he said.

ITC Bhadrachlam, the paperboard and specialty paper division of ITC Ltd, is the biggest player in the paperboard sector in the country.

Bhadrachalam currently has a capacity of 3.5 lakh ton per year, which according to the company officials is likely to touch 4 lakh ton by mid 2005.

Another big player in paper Ballarpur Industries (BILT) currently does not have interest in the paperboard sector following the sale of its paperboard division to ITC in March 2004.

The chief executive of ITC Bhadrachlam division, Pradeep Dhobale, when contacted, told Business Standard that the company had earlier spoken to Global Boards management but currently it had nothing to say on the transaction. "The company is not big enough compared to our size. We will make Rs 2,500 crore investment in medium term and the majority of that will be on new capacity addition," Dhoble said.

The GBL official said the company has recently undertaken a debt restructuring program.

The Asset Reconstruction Company of India Ltd has purchased Rs 120 crore debt from Global Boards recently.

Incidentally, the company took shareholders approval on September 2004 to shift the debt to ARCIL.

"Now the big companies are showing interest," added the GBL source.

The promoter of a leading paper company endorsed the GBL view the unit after its debt restructuring programme was viable, more as it had large real estate.

The promoters of GBL hold around 35 per cent stake in the company through a finance company called Raj Investments.

The public holding is around 50 per cent.

GBL posted a loss of Rs 6.3 crore on sales of Rs 15.2 crore in 2003-04, after loss of Rs 2.8 crore in the quarter ended December 31, 2004.