The Hindu : Business : Orient Paper to diversify into CFL products

Online edition of India's National Newspaper
Tuesday, Oct 23, 2007
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Orient Paper to diversify into CFL products

Special Correspondent

New project will involve Rs. 40 cr. investment

CFL unit to be located at Faridabad
Board declares 50 p.c. interim

KOLKATA: The board of Orient Paper & Industries on Monday gave its nod for diversifying into the manufacture of compact fluorescent lighting (CFL) products and accessories, for which a new unit will be set up with an investment of Rs. 40 crore.

The company, which has presence in cement, paper and fans, planned to set up the CFL unit at Faridabad, where its fan factory is located, by early next year, a senior official told The Hindu, adding that the products would be in the market by May. The GP-CK Birla group company had already informed the stock exchanges of its decision.

The growing market for CFL lamps, along with the synergies that the existing distribution network would provide, made the company decide in favour of this new project. “We plan to capture five per cent of the market,” company sources said.

Orient Paper, which has its cement and captive power plant at Devapur in Andhra Pradesh and its paper plant in Madhya Pradesh and Maharashtra, is now implementing a Rs. 650 crore capacity expansion plan. To be completed in three phases by 2008-09, the cement capacity would be expanded from 2.4 million tonnes annually to five million tonnes annually while the 50 MW captive power plant would be completed in tandem, improving the cement division’s profitability.

The tissue paper expansion project would also be completed by the next financial year. Cement is the major contributor (over 50 per cent) to the company’s turnover followed by paper and fans.

The investment in these projects would be funded mostly through internal accruals and through the proceeds of a Rs. 160 crore rights issue made during the second quarter.

The board also decided to call for the subscription of the balance 50 per cent of the rights issue (50 per cent was received in August). An interim dividend of 50 per cent was declared for 2007-08 based on the improved results for the second quarter, when sales grew by 31 per cent over the same quarter last year, with a 190 per cent jump in net profit during the quarter. According to the Managing Director, M. L. Pachisia, the results were a reflection of improved efficiencies through optimum utilisation of its resources.

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