India’s Ballarpur takes over SFI

KOTA KINABALU: Malaysia’s largest integrated pulp and paper mill Sabah Forest Industries Sdn Bhd (SFI) has been taken over by India’s leading paper manufacturer, Ballarpur Industries Ltd (BILT). 

The acquisition, valued at US$261mil (RM991mil), was completed yesterday with the signing of an agreement between BILT and Lion Group, which is selling its 97.98% stake in SFI. The state government is retaining its 2.22% equity interest. 

BILT will acquire about 77% of SFI via its subsidiary Ballarpur Paper Holdings while JP Morgan will hold 20% equity ownership in SFI, whose operations cover a forest reserve of 288,623ha in Sabah, including 12,000ha of alienated land. 

Managing director R.R. Vederah, JP Morgan Special Situations Asia Corporation managing director Sanjai Vohra, Lion group chief executive officer Ngan Yow Chong and Sabah State Secretary Datuk K.Y. Mustafa signed the ownership transfer documents. 

The event was witnessed by Chief Minister Datuk Musa Aman, BILT chairman Gautam Thapar and Lion executive director Datuk Albert Cheng.  

SFI, incorporated in 1982, was fully owned by the state government until it sold 97.78% of its shares to Lion Group in 1994, giving the company a 99-year (from 1996) forest concession. 

Cheng said Lion Group decided to sell its stake in SFI to re-focus on its core steel businesses, retailing and property development. 

From left: Ngan Yow Chong, Albert Cheng, Musa Aman and R.R. Vederah after the signing ceremony

Gautam, who assured that all 1,700 of SFI's workers would not be affected, said the acquisition was in line with the company's global strategy to expand the paper and pulp operations.  

“In the first phase we will invest US$100mil (RM380mil) to increase capacity to 200,000 tonnes per year and pulp capacity to 250,000 tonnes,” he said, adding that BILT would help SFI to achieve operational benchmarks and introduce valued-added products like coated paper. 

Gautam also said the company would invest close to US$1bil to encourage ancillary industries that would boost the local economy. 

Musa, who had visited BILT's facilities in June, south of Mumbai last year, said he was impressed with the company’s corporate social responsibility initiatives.