ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Ballarpur Industries,Zuri Industries, Bongaigaon Refinery and Petrochemicals

BALLARPUR INDUSTRIES Leveraging Retail Brands Ballarpur Industries (BILT) is the largest paper company in India and the only one to have a position in the 100 topranking paper manufacturers in the world. BILT, a flagship company of the L M Thapar Group, was originally incorporated as Ballarpur Straw Board Mills in 1945 and renamed as BILT in 1975. The company has two subsidiaries, namely, Bilt Tree Tech and The Paperbase Company. The company

Companias

BALLARPUR INDUSTRIES

Leveraging RetailBrands

B
allarpur Industries (BILT) is the largest paper company in India and the only one to have a position in the 100 topranking paper manufacturers in the world. BILT, a flagship company of the L M Thapar Group, was originally incorporated as Ballarpur Straw Board Mills in 1945 and renamed as BILT in 1975. The company has two subsidiaries, namely, Bilt Tree Tech and The Paperbase Company. The company’s plants are located at Ballarpur, Bhigwan (both in Maharashtra), Shree Gopal (Haryana), Sewa (Orissa) and Kamalapuram (Andhra Pradesh).

During 2004-05, BILT reported a healthy financial performance. Though net sales showed a marginal rise of 0.7 per cent to Rs 1,790 crore over 2003-04, net profit grew by 25 per cent to Rs 168 crore over the same period of the previous year. The company’s paper division recorded a 7.2 per cent increase in net paper revenue to Rs 1,608 crore during the year under review.

BILT has recently ventured into the tissue paper business with the launch of its premier brand “Etiquette”. The company is also considering entry into other new segments, including personal hygiene products like diapers and paper products such as cream wove. Apart from the paper business, the company is also concentrating more on its non-paper businesses and has drawn expansion plans for its power, packaging and food divisions. BILT has also decided to venture into retailing by opening exclusive stationery stores. It will leverage its retail brands, Matrix and Royal Executive Bond, and retail other stationery products, including pens, pencils and folders, through these stores. BILT has already started test marketing by supplying to outlets such as Archies. In its business stationery segment the company launched BILT Matrix, which offers stationery goods such as premium notepads, five-subject notepads and writing pads.

The company has decided to invest Rs 1,200 crore to modernise each of its plants, increase papermaking capacity and substitute older machinery for more productive newer machines. In an attempt to consolidate and expand its business, BILT is also planning to make APR Packaging (Ashti) a 100 per cent subsidiary of the company. Currently, it has a 38 per cent stake in the Ashti unit and plans to merge the unit with the company. The Ashti unit, which previously manufactured extensible sack craft paper, has now moved to producing white copier paper.

BILT has posted good financial results for the first quarter ended September 2005. The company’s net sales have risen by 2.5 per cent to Rs 435 crore over the same period of the previous year and net profit has increased by 10 per cent to Rs 44 crore. The company’s APR pulp division’s revenue has been affected due to the turbine breakdown at its Kamalapuram unit.

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ZUARI INDUSTRIES

New Milestone

Z
uari Industries (ZIL) formerly known as Zuari Agro Chemicals was incorporated in 1967. ZIL is promoted by K K Birla and US Steel Corporation to manufacture urea and has a famous brand named “Jai Kisaan”. It manufactures nitrogenous and phosphatic fertilisers and has also diversified into the manufacture and sale of cement, seeds, bio-pesticides and pesticides. The company is one of the low cost fertiliser producers in India. ZIL has three subsidiary and three joint venture companies.

During 2004-05, ZIL performed well in terms of sales and profit. The company’s net sales increased by 46.4 per cent to Rs 1,755 crore, likewise net profit rose by 37 per cent to Rs 26.8 crore over the previous year. The sale of agro chemicals was augmented by 58 per cent to Rs 20.5 crore during the year under review. For the first time in the history of the company, the total production of all products crossed one million tonnes. The company is slowly but gradually proceeding towards the use of natural gas or LNG as feedstock, in response to the government’s insistence in various policy statements that all naphtha, fuel oil based and low sulphur heavy stock (LSHS) based fertiliser units convert to the use of natural gas.

During April-June 2005, ZIL reported a 13 per cent decline in net sales to Rs

252.6 crore over the same period of the previous year. However, it earned a net profit of Rs 1.3 crore during April-June 2005 as against a loss of Rs 4.8 crore over the same period of the previous year. For July-September 2005, the company’s net sales have surged by 56 per cent to Rs 644 crore over July-September 2004. Likewise, its net profit has galloped by 86 per cent to Rs 33.7 crore.

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BONGAIGAON REFINERY AND PETROCHEMICALS

Burdened by Taxes

B
ongaigaon Refinery and Petrochemicals (BRPL) was incorporated as a government of India undertaking under the administrative control of the ministry of petroleum and natural gas

Economic and Political Weekly January 21, 2006

The Week’s Companies in February 1974. The company became (Rs lakh) a subsidiary of Indian Oil Corporation

Ballarpur Zuari BRPL (IOC) in 2001, after disinvestment of its Industries Industries shares by the government of India.Financial Indicators 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

During 2004-05, BRPL recorded ex

Income/Appropriations
1 Net sales 179014 177653 175530 119921 454531 293567
2 Value of production 179489 174359 173703 126334 459444 303322
3 Other income 722 570 3482 3481 2103 1363
4 Total income 180211 174929 177186 129814 461547 304686
Raw materials/stores and spares/
power and fuel consumed 97114 87204 134979 97395 349471 228144
6 Other manufacturing expenses 12905 20857 12529 6794 94 0
7 Remuneration to employees 11893 12418 4167 4630 10442 9977
8 Other expenses 12546 11496 16175 12967 30726 18191
9 Depreciation 14308 13074 1610 1262 3192 3011
Gross profit 31444 29881 7726 6766 67622 45362
11 Interest 11040 12633 4930 4725 363 1516
12 Operating profit 20405 17248 2796 2041 67259 43846
13 Non-operating surplus/deficit 244 520 0 0 459 141
14 Profit before tax 20648 17767 2796 2041 67718 43987
Tax provisions 3839 4376 114 84 19888 13613
16 Profit after tax 16810 13391 2682 1957 47830 30375
17 Dividends (includes tax on dist profit) 2383 4815 530 442 23978 15386
18 Retained profits 14426 8575 2152 1516 23852 14989
Liabilities/assets
19 Paid-up capital 16745 16745 2944 2944 19982 19982
Reserves and surplus 132637 125057 34754 32676 55858 35312
21 Long-term loan 65041 76830 21959 28481 6246 4485
22 Short-term loan 53848 56191 36536 29099 6246 2597
(i) of which, bank borrowings 53848 56191 31935 25318 6246 2597
23 Gross fixed assets 342924 335086 36322 33269 96732 93629
24 Accumulated depreciation 118773 109260 18479 17267 55670 52590
Inventories 28024 24965 22512 24293 72437 47126
26 Total assets/liabilities 317206 319689 142782 120856 155199 116112
Miscellaneous items
27 Excise duty 20726 19293 151 28 44715 26827
28 Gross value added 58137 56003 10467 9769 79198 57034
29 Total foreign exchange earnings 19217 26572 - - 0 0
Total foreign exchange outgo 36925 41085 63590 82218 72188 53681
Key financial and performance ratios
31 Turnover ratio (sales to total assets) 0.6 0.6 1.3 1.0 3.7 2.6
32 Gross value added to gross
fixed assets (%) 17.1 17.2 30.1 29.5 83.2 61.0
33 Return on investment (gross profit
to total assets) (%) 9.9 9.7 5.9 5.7 49.8 37.1
34 Gross profit to sales
(gross margin) (%) 17.6 16.8 4.4 5.6 14.9 15.5
Operating profit to sales (%) 11.4 9.7 1.6 1.7 14.8 14.9
36 Profit before tax to sales (%) 11.5 10.0 1.6 1.7 14.9 15.0
37 Tax provisions to profit before tax (%) 18.6 24.6 4.1 4.1 29.4 30.9
38 Profit after tax to net worth
(return on equity) (%) 11.5 10.1 7.3 5.6 72.9 62.3
39 Dividend (%) 12.5 25.4 15.5 13.1 103.6 70.6
Earnings per share (Rs) 10.3 8.2 9.1 6.6 23.9 15.2
41 Book value per share (Rs) 91.9 87.3 128.0 121.0 38.0 27.7
42 P/E ratio (multiple) 10.2 9.4 8.0 5.5 3.8 3.8
43 Debt-equity ratio (adjusted for
revaluation) 0.80 0.94 1.55 1.62 0.16 0.13
44 Short-term bank borrowings
to inventories (%) 192.1 225.1 141.9 104.2 8.6 5.5
Sundry creditors to sundry
debtors (%) 115.5 100.8 91.4 96.2 13.2 24.0
46 Total remuneration to employees
to value added (%) 20.5 22.2 39.8 47.4 13.2 17.5
47 Total remunerations to employees
to value of production (%) 6.6 7.1 2.4 3.7 2.3 3.3
48 Gross fixed assets formation
(% growth) 2.3 6.4 9.2 0.7 3.3 0.2
49 Growth in inventories (%) 12.3 -11.7 -7.3 60.0 53.7 82.7

cellent financial performance. The company’s net sales galloped by 54.8 per cent to Rs 4,545 crore over 2003-04 and net profit surged by 57.5 per cent to Rs 478 crore. During the year under review, the company’s crude throughput has risen by 8 per cent to 2.3 million tonnes over the same period of the previous year; LPG production increased by 2 per cent to 49.1 MT. Though, the polyester staple fibre plant of the company remained temporarily shut down for five months to carry out maintenance work, its production has increased by 4 per cent to 23,251 MT. The government of Assam had introduced entry tax on crude oil of 4 per cent from October 2004, which has been reduced to 2 per cent in March 2005. This has resulted in the reduction of BRPL’s profit by Rs 46.9 crore up to March 2005. There have been no export earnings by the company during the year under review.

During 2004-05, BRPL successfully implemented project “SYNERGY” – the enterprise resource planning (ERP) system. The company’s various projects are aimed at infrastructure development, quality improvement and modernisation of its systems, plants, etc. The company in collaboration with IOC is carrying out research and development in its DCU and CCU plants for the production of needle coke.

BRPL witnessed mixed results for both the quarters of 2005-06. For April-June 2005, the company reported a 34.8 per cent rise in net sales over the previous year, at Rs 1,323 crore. However, it witnessed a 48 per cent fall in net profit at Rs 68.8 crore for the same quarter. Due to the introduction of entry tax by the Assam government, there was a reduction in profit to the tune of Rs 17.3 crore during April-June 2005. For the quarter ended September 2005, net sales of the company increased by 7 per cent over that of the previous year to reach Rs 1,248 crore. However, net profit declined by 69.4 per cent at Rs 49.2 crore. Entry tax again resulted in the reduction of profit by Rs 19.5 crore for

Notes: - Not available; P/E multiples are the latest with corresponding last year’s figures. July-September 2005.

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Economic and Political Weekly January 21, 2006

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