International Paper in talks to buy Century Textiles’ paper business: Sources

US based International Paper is in talks to buy Century Textiles’ paper business in India, sources said. People in the know also indicated that the deal could value the paper business of BK Birla’s pulp & paper business at over Rs 2000 crores.

International Paper had acquired controlling stake of 53.5% in Andhra Pradesh Paper Mills at Rs 1400 cr in 2011. It was at a huge premium to the then CMP of the company, International Paper is said to have given a huge premium for entry into the Indian market. The US based company had indicated that the company will look at inorganic route for growth in the Indian market.

Century Textile operates its paper and pulp plant in Nainital, Uttarakhand. It has a capacity of 2 lakh tonne per annum, manufacturing writing and printing paper and rayon grade pulp.

Century has recently invested in setting up specialised paper making capacity to improve margins, it has capabilities in tissue paper and packing paper products. Basanth Patil, Senior Research Analyst at Dalmia Securities said, “It will take the business 3-4 quarters to achieve economies of scale and improve profitability.”

Century Textiles has three business verticals cement, textiles and paper. Largest revenue contribution comes from the cement business at 60% while textiles and paper verticals account for 20% each. Both International Paper and Century Textiles have declined to comment on the development.