Ballarpur Industries

LimitedSubmitted by :

AnjaliGagan ChandaHarshit KeshariSaurabh Kesari

Sunil Hansu

OVERVIEW OF PAPER INDUSTRY Indian paper industry accounts for about 3% of the world’s production of

paper Estimated turnover of the industry is INR 50,000 crore (USD 8 billion) The industry provides employment to more than 0.5 million people

directly and 1.5 million people indirectly Most of the paper mills are in existence for a long time and hence present

technologies fall in a wide spectrum ranging from oldest to the most modern

During 2015-16, domestic production is estimated to be 12.2 million tonnesIndustry Composition & structure as in 2015

Installed Capacity 13.0 Million TonProduction of paper products

12.2 Million Ton

Domestic Consumption 13.9 Million Ton

KEY DRIVERS FOR GROWTH Economic and income growth,

population growth (changing demographics- urbanization, young population), rapidly changing lifestyle

Greater emphasize on education and literacy by government

Growth in organized retail and demand for better quality paper are the major drivers for writing and printing paper

Demand for better quality packaging of FMCG product marketed through organised retail, rising healthcare spends, over the counter medicines and increasing preference for ready to-..eat foods are the key demand drivers for paperboard

Improved technology which can use various forms of raw materials for production of paper.

47%

22%

31%

Production in terms of Raw materials

Waste Paper/ Recycled paperAgro Residue(Bagasse/wheat Straw)Wood/Bamboo

PORTERS 5 FORCE ANALYSIS Threat of Substitution:

MediumFrom metals in area of

packaging Digitalization

But increasing education & recycling increases growth

Entry Barriers: HighCost intensive & complex

production processPaper industry is relationship

drivenAvailability of limited resource

Entry Barriers: HighCost intensive & complex

production processPaper industry is relationship

drivenAvailability of limited resource

Bargaining Power of Suppliers: High

Limited number of suppliers of raw materials & additives

Government regulations are very stringent

Competitive Rivalry: High

Among leading players for acquisition of raw

materialExport demand is highly

price elastic

COMPANY OVERVIEW BILT Paper is India’s largest producer(38% market share) of

printing and writing paper and Malaysia’s largest producer of wood-free paper products(24% market share).

Paper produced is mainly sold to Indian and Malaysian markets with only 10% exported.

Vertically integrated producer - captive fibre supply from Malaysian pulpwood plantation - in-house pulp, chemicals and energy supplies Distribution with multi tier reach and availability Widest distribution network with 440 distributors Combined captive power capacity of 226.3 MW

FORTE OF THE COMPANY•India's fastest growing printing and writing paper markets globally•Coated paper is the fastest growing segment in which BILT paper is leaderCustomer Demand

•Largest producer of coated and uncoated wood free paper•Production facilities are well spread in southern India & MalaysiaCapacity

•World class products•Diverse product range•Able to customize as per customers

Products

•Largest distribution network•Well spread through out the nation & various parts of globeDistribution

•Foregn competitors are exposed to exchange rate fluctuations•Foreign competitors lack distribution networkImports

•Control in entire supply chain•Vertical integration •Captive power plants

Operations

Differentiating BILT AND Bilt PaperBILT Bilt Paper

Focus on high growth wood-free Printing and Writing paper including Coated and Uncoated

Targeting the reel/sheet commercial printing business and desktop printing through consumer facing Copy Paper

Focus on high value biodegradable high-end packaging

BILT

Shreegopal

Kamalapuram Tissue

Bilt Paper

Ballarpur Bhigwan Sewa Ashti SFI

Focus on specialty paper, rayon grade pulp and tissue products

Targeting the industrial and FMCG markets

Remains listed on Bombay Stock Exchange and National State exchange of India

India

Malaysia

Resources Valuable

Rare Inimitable Non-substitutable

Conclusion

Distribution Network

Yes Yes Yes Yes Sustainable Competitive Advantage

Acquisitions

Yes No No No Temporary Competitive Advantage

Integrated Supply Chain

Yes Yes Yes Yes Sustainable Competitive Advantage

Extensive Product Portfolio

Yes No No No Temporary Competitive Advantage

Experienced Management

Yes No No Yes Competitive Parity

Reputable Shareholders

Yes No No Yes Competitive Parity

RESOURCES – VRIN FRAMEWORK

CAPABILITIESCapabilities Zero

OrderFirst Order

Second Order

Dynamic

Sustainability       Yes

Sourcing     Yes  

Straddling       Yes

Low Cost Manufacturing

  Yes    

SHAREHOLDING STRUCTURE

CAPACITY GROWTH & MANUFACTURING LOCATIONS

Source: http://www.mcilvainecompany.com/industryforecast/pulp%20mills/India/Bilt%20Paper%20Plc-Presentation.pdf

Operationally Strategy: Integrated value chainPlantati

on Pulp mill Paper mill Distribution

Chemical productio

nWater Supply

Chemical productio

n• SFI operations

comprise of 288138 ha of licensed forest and plantation

• Only paper producer in India with access to its own plantation outside India

• Procurement from farmers in India through social farm forestry programs

• 3 out of 5 mills, namely the Ballarpur, Sewa and SFI units produce pulp

• The remaining 2 units, Bhigwan and Ashti, obtain intergated pulp produced by Ballarpur and SFI

• Current capacity : 603ktpa

• Fully self sufficient on hardwood pulp

• Current capacity of paper 887ktpa

• Integrated production structure includes captive energy and part chemicals (on site) at certain facilities

• Combined captive power capacity of 2663MW

• Operates unique distribution network

• Multi-tier distribution network with over 440distributors in India, with majority volume sold by exclusive distributors

• In Malaysia, it operates through 40 widely spread distributors

• Strong market position in Middle East and Africa

OVERALL STRATEGY• Efficient capital allocation• Reduce cost of production through

Cost management to maximise profitability

• Return on capital expenditure at 15-20%• Reduce debt • Cash flow generated from operations

Maintaining a healthy balance sheet

• Maintain the current market leadership• Increase market share• Filling the gaps by introducing new products

Expand the business and grow market share

• Continuous research• Premium products

Producing high quality products

• Fully leverage the extensive distribution network• Use of auxiliary functions such as IT and after customer service

support

Improving and maintaining an

extensive distribution network

• Acquisitions• Capacity ExpansionGrowth