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INDIA
BUSINESS WORLD -
NOVEMBER 2005
THE MONTH THAT WAS
ADITYA BIRLA BUYS OUT CANADIAN PULP MILL FOR $100 MILLION
The Aditya Birla group, one of India's largest business groups,
along with an overseas joint venture partner, on Thursday
bought out Canada's St. Anne Nackawic Pulp Mill, for $100
million, one of the biggest acquisitions in Canada by an Indian
company.
The New Brunswick-based pulp mill, one of the world's largest
producers of market pulp, was acquired by a joint venture
between the Birlas and Canada's Tembec, where the Indian conglomerate
holds the controlling 75% equity stake.
"The total
investment has been $100 million, of which $20 million is
by equity and the rest is through debt," Aditya Birla
group director Shailendra Jain told ET. The acquisition of
the mill, promoted by Parsons & Whittemore, will help
the Birlas increase captive supply of pulp, the main raw material
for making viscose staple fibre (VSF). The group currently
owns 45% of its raw material supply, while it buys the rest
from other companies.
"The acquisition
is in line with our strategy of reinforcing our competitive
edge in the VSF business, where we are currently global leaders,"
Aditya Birla group chairman Kumar Mangalam Birla said in a
statement.
The group currently
accounts for 24% of the global VSF market. The business also
contributes to over 27% of the revenues of its group flagship
company, Grasim Industries. Under the terms of the acquisition,
operations would be managed jointly by the Aditya Birla group
and Tembec, while the current workforce of 406 employees at
Nackawic will be reduced to 275, Mr Jain said.
The joint venture
also plans to convert the manufacturing process so that the
mill can make rayon grade pulp within a year, he added. Nackawic
currently has the capacity to make 2.8 lakh tonnes of paper
grade pulp annually.
Grasim already
has another pulp supplier overseas, the AV Cell unit in Canada,
which also supplies dissolving grade chemical pulp to the
group's VSF units in India, Thailand and Indonesia.
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