ITC: Enduring Value

Sab Saath Baadhein

Media Centre

ITC places big bets on its paper division 23 Apr 2003

The Economic Times

Vivek Sinha

ITC Ltd has placed big bets on its paper division. The diversified group has just completed the upgradation of its raw material production facility for its Paperboards & Specialty Papers division, formerly ITC Bhadrachalam. Coupled with the 33% capacity expansion for paperboards underway, the upgradation of the pulp facility amounts to a total investment of approximately Rs 550 crore over a period of two-three years. The paperboard industry, which has primary end use as packaging material for sectors like FMCG and pharmaceuticals is growing at a faster clip compared to the overall paper industry. The new pulp facility, which is the first chlorine free bleaching facility in the country, at the existing plant has a cost component of Rs 250 crore which has been financed through internal accruals.

This assumes importance as more and more western countries are imposing non tariff barriers on imports from developing countries in terms of packaging.

One of the criteria therein pertains to "elemental chlorine free pulp". The entire 1 lakh-tonne capacity of the pulp facility has been upgraded. The machinery of the old facility will be liquidated as scrap. Pradeep Dhobale, chief executive of the paper division at ITC, said: "We want to exploit the full potential at the high end packaging segment which is growing faster and where margins are better. In addition to the pulp upgradation, we will also push for increasing the export contribution of our sales to 25% from the current 15%."

According to the company, the new pulp facility will save foreign exchange of $15 million every year as currently, this particular grade of pulp is being imported to cater to some of the food packaging industry which requires paperboard using chlorine free pulp. The capacity expansion project of 75,000 tonne has commenced and along with the requisite power plant is expected to be completed by third quarter in the next financial year.

ITC’s paper unit is expected to cross Rs 870 crore in turnover for the year ending March, 2003.

© ITC Limited