ITC Ltd is buying Bilt Industrial Paper Company of the Lalit Mohan Thapar group.

Bipco has been valued at Rs 265 crore (Rs 2.65 billion). The deal is likely to be announced in a month.

The Coimbatore-based Bipco, which makes paperboard, is owned by Bilt Paper Holding Ltd, the holding company for the Lalit Mohan Thapar group.

ITC is the country's largest producer of paperboard and speciality paper. Its paperboard business was under a separate company called ITC Bhadrachalam earlier.

This company has now been merged into ITC. The ITC paper division recorded sales of around Rs 875 crore (Rs 8.75 billion) in 2002-03.

According to sources close to the deal, ITC has drawn up an aggressive growth strategy for its paperboard business. The Bipco acquisition was the first step in this direction, the sources added.

Bipco, called Servall Engineering earlier, was taken over by the Lalit Mohan Thapar group in 2000. However, soon afterwards, Ballarpur Industries Ltd, Lalit Mohan Thapar's flagship and the country's largest paper company, took over Sinar Mas India, which gave it additional capacity to manufacture industrial paper. This made the Coimbatore capacity redundant. At the moment, the plant is shut.

After looking at various options like reconfiguring the plant and a total makeover, the group finally put Bipco on the block. A Bilt spokesperson, when contacted, refused to comment.

In the last few years since Gautam Thapar, Lalit Mohan Thapar's nephew, took over the reins, the group has undertaken a series of acquisitions and divestments in paper.

While it acquired Servall and Sinar Mas, it first sold almost its entire stake in Thailand-based pulp producer Phoenix Paper and Pulp Public Company Ltd for Rs 140 crore (Rs 1.4 billion), and is now divesting its stake in Bipco.

ITC recently invested Rs 227 crore (Rs 2.27 billion) in the upgradation and modernisation of its pulp mill at Bhadrachalam after which, all paper produced by the company is free of chlorine.