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Tuesday, January 26, 2021

Satia Industries Ltd. Plans Major Expansion cum Acquisition; Seeks Permission to Bid on Ballarpur Industries Ltd. Acquisition

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Satia Industries Limited (SIL) (BSE: 539201 | NSE: SATIA), is one of the biggest and completely integrated Wood and Agro based printing & writing paper manufacturers. SIL’s products are extensively used in the printing of books, directories, envelopes, diaries, calendars, computer stationery, copy manufacture annual reports, etc.

Dr. Ajay Satia, CMD

The company has notified BSE and NSE that it is seeking to apprise and seek permission to bid for acquisition of Ballarpur Industries Ltd. (BILT) and to seek permission for appointment of PricewaterhouseCoopers Pvt. Ltd. (PWC) as advisors to assist it for acquiring Ballarpur Industries Ltd.

The company is on expansion mode and has invested Rs. 500 Cr capex in order to purchase additional land and ordered New European Paper Manufacturing Machinery. The company has also received final Environmental Clearance from the Ministry of Environment & Forests, Delhi.

Company has its ultra-modern, completely integrated manufacturing unit in Punjab with capacity to manufacture over 1,05,000 MT per annum with 3 paper machines and 100% in house power generation, along with state of the art effluent treatment plant, paper machines, pulping machinery and also a chemical recovery plant.

The company has plans to make best in class facility by focusing on modernization of its existing plant and machinery; quality up gradation by increasing wood pulp in its raw material mix and making surface sized paper for high speed multi-color printing and plans to double its production capacity by setting up a new paper machine in its existing premises, whereby the profitability may increase substantially.

Paper industry in India is the fastest growing major paper market in the world. Free trade Agreements with ASEAN and South Korea led to an increase in exports at 10 YR CAGR of 15% and 8%, respectively. With the booming conditions in the paper industry and increasing growth due to ban on plastics, the consumption in the Indian market is expected to rise and the company will benefit substantially with increased profitability.

Company is planning to exploit opportunities currently going on in Indian market causing shift towards more use of paper & wood based food plates and cutlery. For this segment company is planning for an initial capital outlay of INR 15-18 crores and has partnered with an MNC which is into food brands.

Backward Integration: Power Capacity and Eucalyptus Plantation.

Company has a 33 MW of power capacity as industry is power intensive. Out of 33 MW, 19-22 MW is utilized for its internal capacity and the rest is transferred to grids in the form of Renewable Energy Certificates. As energy generated by Satia is in the form of Biomass energy. This in-house energy generation provides an edge over one of its peer. Power consumption rate for company’s own production is at INR 2-2.5/unit; it stands at INR 5-7/unit. Company also has a Eucalyptus plantation in 540 acres which consumes waste treated water from paper plants. With above new developments, and Major Acquisition plans, this share may present an excellent investment opportunity.

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