Emami Paper to Borrow, Sell Shares to Raise $443 Million to Add Capacity

Emami Paper Mills Ltd., an Indian supplier to the world’s largest selling English newspaper, plans to raise 20 billion rupees ($443 million) from borrowings and a share sale in the next four years to add capacity.

The Kolkata-based company may raise 6 billion rupees through internal accrual and the sale of shares, and the balance 14 billion rupees through debt, Chief Executive Officer P.S. Patwari said in an interview at his office. Emami Paper plans to raise capacity of its newsprint manufacturing units and set up a new facility to make wood-based writing and printing paper.

Economic acceleration is increasing literacy in India, the world’s most populated nation after China, and boosting newspaper readership luring investors including Blackstone Group LP into the industry. Demand for paper is expected to grow 57 percent to 14 million tons in the seven years to 2015, according to the Indian Paper Manufacturers Association.

“Now that newspaper companies are expanding, it is a favorable time for us to look at expansion and also increase newsprint prices,” Patwari said. The company plans to raise prices of newsprint by 14 percent to as much as $800 a ton in April, he said.

Emami Paper’s shares, which have declined 15 percent this month, gained 3.7 percent to 52.3 at 9:46 a.m. in Mumbai after surging as much as 13 percent.

Blackstone Group, the world’s largest private equity firm, in April said it plans to invest 2.25 billion rupees in Jagran Media Network Pvt. A unit of Jagran Media prints Dainik Jagran, which claims to be the world’s most widely read newspaper with a readership of 54.6 million.

Emami Paper supplies newsprint to the Times of India, the world’s largest selling English-language broadsheet.

The paper maker will spend 6 billion rupees to raise the production capacity of its two existing newsprint units to 250,000 tons a year from 150,000 tons, Patwari said.

India’s $1.3 trillion economy may expand 8.5 percent in the year ending March 31, according to the Indian central bank.