Orient Paper posts net profit of Rs 59 cr; plans demerger

MUMBAI: Orient Paper and Industries Ltd ( OPIL) today reported 73 per cent jump in net profit at Rs 59.37 crore for the quarter ended June 30 and also approved a proposal to demerge its cement business into Orient Cement Limited (Orient Cement).

The OPIL, engaged in cement, paper and electrical sectors, had reported a net profit of Rs 34.24 crore in the quarter ended June 30, 2010.

The total income of the company for the quarter of this fiscal went up by 21 per cent at Rs 546.96 crore compared to Rs 449.22 crore in the year-ago period.

"We performed well in improving our revenues and profitability, inspite of the challenging economic climate and overhaul done in our paper business," OPIL Managing Director M L Pachisia told reporters here.

The board of directors of the company in its meeting held today also approved a proposal to demerge the cement business of OPIL into Orient Cement Limited (Orient Cement).

"Orient Paper and Industries, in its effort to enhance shareholder value, has undertaken this restructuring exercise. We have ambitious plans for the cement business and the demerger will provide an opportunity to shareholders to directly participate in the pure-play cement company. The restructuring is expected to unlock value for shareholders," OPIL Chairman C K Birla said.

OPIL shareholders will get one new equity share of Orient Cement for each equity share they hold in OPIL in addition to their existing shares.

Orient Cement is proposed to be listed on the Bombay Stock Exchange and National Stock Exchange, where OPIL is currently listed.

The demerger will be undertaken after the subject to approvals of the High Court of Orissa and from the shareholders and the lenders or creditors of OPIL.

OPIL, with a current manufacturing capacity of five million tonnes cement per annum, is planning to expand through a green field project in Karnataka.

"We are planning to set up a green field cement manufacturing plant in Karnataka with a capacity of three million tonnes, taking the total to eight million tonnes. The total investment for this plant will be Rs 1,750 crore, which will be raised through internal accruals and marginal debt," Pachisia said.

The plant will be operational by middle of 2014, he added.

Besides, OPIL is also looking at setting up cement plants at various other locations in the country which will help the company to take up the production to 15 million tonnes in future beyond 2014.

"We are still evaluating the sites and nothing has been decided yet," he said.

Talking about OPIL's electrical segment, Pachisia said, the company is planning to enter into the small electrical appliances market with a wide range of products.

"We are planning to launch a range of small electrical appliances soon. Some of them will launched next month, while the rest will mostly be introduced by the end of this year or early 2012," he said.

The company will invest Rs 10-20 crore for proposed expansion into the segment of electrical appliances that will mostly be manufactured in the country, the MD said.