Ahmedabad-based Rainbow Papers is one of the fastest growing small paper companies. Commanding one of the best valuations on the bourses, the company is engaged in manufacturing different varieties of paper and after the current capacity expansion it will also produce valueadded products, such as glazed newsprint and speciality papers. It manufactures from waste paper, half of which is imported from overseas. Despite rise in waste paper prices, the company reported improvement in margins in the quarter ended March 2011.
In fiscal 2010-11, the promoters increased their stake in the company to 29.7% from 24.7%, reinforcing confidence in its business. In its phase I expansion, the company added 80,000 TPA capacity which led to enhanced performance in 2010-11. Phase II expansion is currently in progress, which includes building an integrated pulp and paper plant of 1.2 lakh TPA and a 20 MW captive power plant. Phase II expansion, which is likely to be complete by the end of this year, will boost earnings.
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