"The stake of ITC and its investment subsidiaries in the equity capital of ITC Bhadrachalam Paperboards has been hiked to 51 per cent from 37 per cent," said a notice issued by ITC Bhadrachalam to the Bombay Stock Exchange. "This follows the allotment, by the board of ITC Bhadrachalam Paperboards, of 1,91,20,000 equity shares of Rs 10 each for cash, at an issue price of Rs 65 per share and 11 per cent redeemable cumulative-preference shares of the face value of Rs 100 each, for cash, at par to promoter company ITC," the notice said.

This is the second-recent capital recast of the company. In 1996, ITC Bhadrachalam came out with a rights issue of 1.59 crore shares at a premium of Rs 90 per share, aggregating Rs 159 crore on a 3:10 basis to part-finance its expansion plans. With the majority stakeacquisition, ITC has, thus, put behind it completely past doubts over whether it will continue to be in paper and paperboards, a currently low-yielding area where it has been speculated in the past that ITC may disinvest.

In fact, it is believed that the UK-based single-largest shareholder in ITC, BAT Plc, was not in favour of ITC continuing business in areas which were at variance with its key tobacco competence. But the unquestioned control of Indian professional managers over the corporate management has ensured that the group flowered in areas it had entered in an earlier era to gain the status of a giant Indian conglomerate, rather than a British multinational's subsidiary alone. Incorporated in July 1975, ITC Bhadrachalam Paperboards commenced business in October 1979.

The company manufactures a wide range of baseboards, papers and paperboards for packing cigarettes, safety matches, detergents. Its product also includes superior-quality cultural paper, coated and speciality papers and boards.