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Ballarpur Industries plans price hike to safeguard margins

Ballarpur Industries plans price hike to safeguard margins
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First Published: Mon, Apr 25 2011. 06 32 PM IST
Updated: Mon, Apr 25 2011. 06 32 PM IST
New Delhi: India’s top paper maker Ballarpur Industries said on Monday it planned to raise prices in May to protect margins, under pressure from higher input costs.
Earlier in the day, it posted 11% rise in quarterly net profit, aided by higher production and better prices. Consolidated profit for Jan-March rose to Rs 49.2 crore on a 13% rise in revenue to Rs 1160 crore.
Ballarpur’s quarterly margins shrank 200 basis points to 20% from a year ago on higher pulp and coal prices, group finance director B. Hariharan told Reuters over the telephone, adding it would raise prices next month to offset rising input costs.
The paper maker plans to raise paper prices by Rs1,000-1,500 a tonne to “partly offset rising coal prices,” he said. It had raised prices in mid-March by Rs1,500.
Coal India, India’s top coal miner that sets the benchmark for the commodity in the country, last raised prices at Feb-end by about 30%.
Higher paper prices and stable pulp, a raw material for paper, would help Ballarpur expand its margin in April-June by about 50 basis points, Hariharan said, adding the margins for FY12 would go up by at least 150-200 bps after the pulp facility in Malaysia comes onstream at July-end.
The 120,000-tonne Malaysia unit would cut Ballarpur’s pulp import by about 40%, boosting its margins. The company currently produces about 350,000 tonnes of pulp and sources another 300,000 tonnes from outside.
Ballarpur would decide on the valuation and the timing of an IPO for its UK unit BILT Paper in 2-3 months, Hariharan said.
The company pulled BILT Paper’s $330 million London float earlier this month after the acquisition of a local smaller rival by a US firm convinced it to seek a higher valuation than achievable in the current rocky European market.
US paper and packaging company International Paper Co agreed last month to buy a majority stake in Andhra Pradesh Paper Mills (APPM), India’s third-largest paper company by market value, for about $257 million.
Ahead of the earnings announcement, shares in Ballarpur Industries, valued at about $540 million, closed 0.82% up at Rs 36.85 in a flat Mumbai market.
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First Published: Mon, Apr 25 2011. 06 32 PM IST