Orient Paper & Industries Ltd is a diversified company with focus on Paper, Cement and guess what??? Electrical Appliances...

The company has 3 major divisions:

Orient Paper Mills:

Orient Paper Mills is one of India's major players in Paper with a wide range of writing, printing, industrial and specialty papers.

Fully integrated with facilities for production of high strength pulp combined with reafforestation.

Orient Cement:

Orient Cement's state-of-the-art manufacturing facility at Devapur in Andhra Pradesh and at Jalgaon in Maharastra.

www.orientcement.com

Orient Fans:

Orient Fans introduced the cutting edge techno- logy, revolutionary invention and the most sought after benchmark in the fan industry.


www.orientfansindia.com

A CK Birla Group Company
The CMP of the stock is Rs.60..
Face Value: Rs.1..
Market cap: Rs.1156 crores...
FY2010-11 EPS: Rs.7.42...
Promoters Holding: 33.61%

So, what is it that is interesting in this company???

The company is going for demerger of Cement Unit into a wholly owned subsidiary, which will be listed as Orient Cement Limited in the stock exchanges...

The residual company will have the Fans / Electrical Appliances business and the Paper business... I think over time the Paper business might be sold out and focus only on Electrical / Consumer Appliances business...

The company can get rerated once the demerger is complete and the electrical appliances business will command higher PE...

Any thoughts from any one??

Note: I have no vested interest in this stock as of now... But, I am planning to buy this stock on dips...

Key Highlights of Electrical Appliances Business:

- One of the leading brands with MS Dhoni as our
brand ambassador for Fans
‰- Registered over 30% growth year‐on‐year during
last 2 years
‰- Increased our market share rapidly in CFLs,
launched only 3 years ago
‰- Continued to be the leader in exports, accounting
for 48% of all fans exported from India

If such happens , could turn out to be good . Management integrity ?

http://www.orientpaperindia.com/press_release/Press%20Release%20-%20Restructuring%20-%20Final.pdf

ORIENT PAPER AND INDUSTRIES TO DEMERGE ITS CEMENT BUSINESS TO
CREATE A PURE-PLAY CEMENT COMPANY BY WAY OF A CLASSICAL DEMERGER
WITH MIRROR SHAREHOLDING
ORIENT’S SHAREHOLDERS TO PARTICPIATE DIRECTLY IN THE CEMENT COMPANY
Mumbai, July 27, 2011: The Board of Directors of Orient Paper and Industries Limited (“OPIL”) in its
meeting held today, approved a proposal to demerge the cement business of OPIL into Orient
Cement Limited (‘Orient Cement’).
OPIL shareholders will get 1 (one) new equity share of Orient Cement for each equity share that they
hold in OPIL, in addition to their existing OPIL shares. On effectiveness of the demerger, Orient
Cement is proposed to be listed on BSE and NSE, being exchanges where OPIL is currently listed.
The Board of Directors of Orient Cement, in its meeting held today, also approved the demerger
proposal.
Mr. C K Birla, Chairman, OPIL said “Orient Paper and Industries, in its effort to enhance shareholder
value has undertaken this restructuring exercise. The Company has ambitious plans for its cement
business and the demerger will provide an opportunity to shareholders to directly participate in the
pure-play cement company. The restructuring is expected to unlock value for shareholders.”
Mr. M L Pachisia, Managing Director, OPIL, added “Creation of a pure-play cement company will
allow Orient Cement to focus on the cement business and achieve faster growth. At the same time
OPIL management will be able to provide greater focus on growing paper and electricals businesses.”
The Restructuring Proposal
The Board of OPIL approved the classical demerger of the cement business with mirror shareholding
as it believes that the restructuring will meet the following objectives, viz:
 Creation of a pure-play cement company and to provide existing shareholders an opportunity to
participate directly in the cement business
 Enable both entities to explore various options to augment their growth plans
 Sharpen management focus and assign greater accountability for each of the businesses
 Unlock shareholder value as the demerger allows both companies to find their true value
The demerger will be undertaken through a Court approved Scheme of Arrangement under Sections
391 to 394 of the Companies Act, 1956 (“Scheme”) and will be subject to approval of the Hon’ble High
Court of Orissa. The appointed date for the Scheme is April 1, 2012. The Scheme will further be
subject to various statutory approvals, including those from the shareholders and the lenders /
creditors of OPIL.
Under the Scheme, OPIL will transfer its cement business to Orient Cement. In consideration, Orient
Cement will issue one equity share of Rs.1/- each credited as fully paid up to the shareholders of
OPIL for each equity share they hold in OPIL as of the record date. The shareholders will continue to
hold shares of OPIL.
Post implementation of the Scheme, Orient Cement will be listed on the National Stock Exchange and
the Bombay Stock Exchange. The company will issue fresh shares of Orient Cement to shareholders
of OPIL and therefore Orient Cement will have a mirror shareholding as in OPIL. Advisors to the Restructuring
Kotak Investment Banking as transaction advisors
Khaitan & Co as Legal Advisors
Doshi, Chatterjee, Bagri & Co Chartered Accountants submitted a report on the share entitlement
ratio
Kotak Investment Banking provided the fairness opinion
About Orient Paper and Industries Limited
OPIL is a diversified company engaged in three distinct businesses viz. cement, electricals and paper.
The company has a cement manufacturing capacity of 5 mtpa with a 50MW captive power plant and
is one of India’s lowest cost cement producers. In 2010-11, the company registered a volume growth
of 15% as against 5% industry growth. Cement contributed ~53% to the revenue of the company in
FY 2011. The company has robust growth plans for its cement business and is currently expanding
through a green field project in Karnataka.
The company’s electrical business consists of fans and lighting products. OPIL achieved a volume of
65 lac fans and 81 lac CFLs in FY 2011. The company is the largest exporter of fans from India
accounting for 48% of total export of fans from India. The company plans to shortly enter the small
electrical appliances market with a wide range of products.
The Company has a large portfolio of products in the paper segment including tissue paper, branded
notebooks, writing, printing and photocopying paper and allied chemicals. OPIL has a fully integrated
paper and caustic / chlorine manufacturing facility in Madhya Pradesh and is now setting up a 55 MW
thermal power plant at the facility.