Equity Research Private & Confidential

August 2, 2016
Ballarpur Industries Ltd.
Paper Industry Overview
The leading global paper manufacturers are growing nearly 5% on average and it stands at 8% approximately
among Asia. Indian market is growing around 12% or above which present a good for Indian paper industry.
The paper industry in India is growing in a rapid speed with demand increment and opportunity creation and
attraction to the international players.
The Indian paper industry is estimated to be Rs 50000 crore ($8 billion) and accounts for 3% of the world's
production of paper.
According to the Indian Agro and Recycled Paper Mills Association, the Indian paper industry is amongst the
world's fastest growing markets and accounts for about 2.6% of the world's production of paper, with an
estimated turnover of Rs 50,000 crore and a contribution of around Rs 4,500 crore to the exchequer.
Though India's per capita consumption of paper and paperboard has increased rapidly to 11kg in 2014, it still
remains far below compared to Europe is 129 kg, Australia 116 kg, Asia 45 kg and China at 75 kg. The Indian
Paper Industry accounts for about 2.6% of the world's production of paper, providing employment to more
than 0.5 million people directly and 1.5 million people indirectly.
The industry provides employment to more than 0.5 million people directly and 1.5 million people indirectly.
There are 800 paper mills in the India, however the 12 large-size, paper companies account for about 30% of
total production.
From FY12-15 domestic demand registered a CAGR of 8% as compared to a 6% increase in production.
During 2015-16, domestic production is estimated to be 14-15 MT. Demand of paper has been growing
around 8% per annum for the last couple of years and so far, the growth in paper industry has mirrored the
growth in GDP.
The India paper industry is preparing for the future ahead. In the last five years alone, the Indian paper
sector has invested about Rs 20,000 crore on capacity enhancement, technology upgrade and acquisitions.
The Indian Paper Manufacturer's Association (IPMA) estimates that the industry will require further
investments of about Rs 90,000 crore in the next decade to meet the projected demands for paper and
packaging industry in the country.
Revenues are expected to reach USD 11.8 billion by 2017. However, most of the equipment in most of the
Indian paper mills is old and they need to be overhauled. This is a serious concern if the industry wants to
increase its production numbers. If the country wants to produce 25 million tonnes as opposed to 12-13
million tonnes currently, to increase the per capita consumption to 19-20 kg, the industry will need an
additional investment of USD 15 billion by 2025-26.
As per a report by Food and Agriculture Organization of the United Nations (FAO) & RISI Research (global
research house on forest products industry), Indian paper industry will increase at a CAGR of 6.8% from 14.7
MT in FY15 to 19.1 MT in FY19.
In the long run growth in paper consumption is estimated to be in multiples of GDP and hence an increase in
consumption by 1kg per capita would lead to an increase in demand of 1 MT.

Budget impact: Budget removes basic customs duty on primary raw material wood chips
Basic customs duty (BCD) on wood chips or particles for manufacture of paper, paperboard and news print being
removed from 5%. This is positive news for paper manufactures like Ballarpur Industries, West Coast Paper Mills,
Tamil Nadu Newsprint & Papers and JK Paper. Since, wood chips are primary raw material for paper industry;
reduction in BCD will help them to reduced their raw material cost and lift their operating margin.

Ballarpur Industries Company details

Ballarpur Industries Limited (BILT) is one of Indias leading pulp and paper companies with a presence across
most elements of its value chain. It also operates Malaysias leading uncoated paper manufacturer Sabah
Forest Industries (SFI). This kind of business warrants a certain scale of operation with a fine balance
between integrated functioning and individual market segment specialisation.
BILT has developed a business model which involves reorienting the business organisation, corporate
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structures and processes. The paper and pulp industry is also highly capital intensive and the Company has
had to take recourse to innovative financing mechanisms to raise sufficient capital at the right kind of costs.
In the process, BILT has created two separate business blocks: one under BILT and one under its step down
subsidiary Bilt Paper. Under the standalone entity, BILT, the direct assets include: (a) Specialty paper
business operating from the Shree Gopal facility in Haryana (b) Rayon Grade Pulp business operating from

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 Equity Research Private & Confidential

August 2, 2016

Kamalapuram in Andhra Pradesh and (c) Tissue paper business operated through its subsidiary Premier
Tissues Limited. These businesses target the industrial and FMCG markets.
The other block of businesses comes under Bilt Paper BV, which focuses on the wood-free printing and
writing paper, coated and uncoated. This is the Companys primary business portfolio. The focus is on the
reel or sheet commercial printing business and the desktop printing business through copier paper. There is
also focus on high value bio-degradable high-end packaging.

(Rs cr) FY12 FY13 FY14 FY15 FY16

Net Sales 4747.81 4854.81 5220.32 3625.92 4103.98
EBITDA 535.26 528.87 525.19 275.7 4.09
EBITDA Margin 11.3% 10.9% 10.1% 7.6% 0.1%
PAT 123.09 93.55 49.77 -21.35 -160.14
PAT Margin 2.6% 1.9% 1.0% -0.6% -3.9%
NetWorth 2807.25 3679.06 3592.37 3201.97 2766.35
Total debt 3542.98 4824.84 5233.69 5215.55 6309.61
D/E 1.26 1.31 1.46 1.63 2.28
Operating Cashflow 453.06 938.83 971.71 685.27 NA
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 Equity Research Private & Confidential

August 2, 2016

Name Designation Email ID Contact No.

Paras Bothra VP Equity Research paras@ashikagroup.com +91 22 6611 1704
Krishna Kumar Agarwal Equity Research Analyst krishna.a@ashikagroup.com +91 33 4036 0646
Partha Mazumder Equity Research Analyst partha.m@ashikagroup.com +91 33 4036 0647
Arijit Malakar Equity Research Analyst amalakar@ashikagroup.com +91 33 4036 0644
Chanchal Bachhawat Equity Research Analyst chanchal.bachhawat @ashikagroup.com +91 22 6611 1712
Tirthankar Das Technical & Derivative Analyst tirthankar.d@ashikagroup.com +91 33 4036 0645

SEBI Registration No. INH000000206

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