Andhra Paper expects wood prices to soften in the year’s second half; sluggish demand has prompted a re-evaluation of its Greenfield Expansion Project

Andhra Paper expects wood prices to soften in the year’s second half; sluggish demand has prompted a re-evaluation of its Greenfield Expansion Project

- APL is investing in a 100 TPD greenfield facility for tissue paper. Post regulatory approvals, we expect to commence operations in Q1 FY 26-27
- Proposed Mill Expansion Plan (MEP) includes the installation of a 1,75,000 TPA Paper Board Machine, a 1,60,000 TPA Writing & Printing Paper machine

The Pulp and Paper Times

Established in 1964, Andhra Paper Limited (APL) stands as one of India’s leading integrated paper and pulp manufacturers based in Andhra Pradesh with a production capacity of 2,20,500 TPA of virgin pulp and 2,59,400 TPA of paper, APL is the only paper mill in Andhra Pradesh using virgin pulp.

The company serves diverse segments, including writing, printing, industrial, and copier papers, with a healthy presence in the global market. Our extensive product portfolio includes superior-grade writing and printing papers, paperboards, cut-size options, and speciality papers for applications like photo printing and packaging.

In FY25, Andhra Paper operated in one of the most challenging market environments in recent memory. APL total income stood at INR 1,62,997 lakhs, a decline of 14% compared to the previous year mainly on account of depressed domestic market conditions, intense competition from cheaper imports, especially from China and ASEAN countries. Further, the dip in earnings was primarily lead by increase in raw material cost, driven by 34% surge in wood prices. Finance cost increased owing to investment in capital expenditure. Also there were some temporary disruptions in the production resulting from Strikes and annual outage. Despite these headwinds, Andhra Paper demonstrated resilience and posted moderate profitability by maintaining operational stability through process efficiencies, optimising our product mix towards high-margin value added segments, and exercising prudent financial and cost controls through efficient operational capabilities, prudential financial management and posted a moderate profitability.

“To overcome these challenges, we have significantly enhanced our operational framework and market positioning. When we took over in 2020, our manufacturing infrastructure was significantly outdated, relying heavily on traditional technologies. Recognising the need for continuous modernisation, your Company, invested around INR 520 crores in critical capital projects in a phased manner since 2023 at its Rajahmundry and Kadiyam manufacturing facilities. These initiatives focused on advanced technology to optimise resource and utility consumption, pulp mill capacity enhancement, achieve energy efficiency. Process upgrades have improved product quality, productivity, and recovery rates, while costefficiency measures have enhanced our competitiveness. New product variants introduced during the year received an encouraging market response,” Mr. Shree Kumar Bangur, Chairman of Andhra Paper said in the annual report for FY 24-25

Key Projects Included

 Upgrades to our pulp mill for enhanced efficiency, reliability, and capacity.  Improvements to the Fiberline, Chipper, and RJ5 Size Press at Rajahmundry, and the KA3 Size Press at Kadiyam, for capacity enhancement and process efficiency.  Upgrades to the Recovery Boiler, Coal-Fired Boiler, and Turbine for improved energy efficiency and utility.  Upgrades to the Waste Paper Recycling Plant for improved product quality and raw material utilisation.

These upgrades will boost production capacity, improve energy efficiency, ensure superior product quality, and reduce our environmental footprint, positioning us for a strong recovery.

WIDENING OPPORTUNITY LANDSCAPE

Mr. Shree Kumar Bangur informed that, in keeping with our strategic focus on diversifying our product portfolio towards value-added products, we are entering the high-growth and lucrative tissue paper segment. Buoyed by the increased hygiene awareness, rapid urbanisation, and the rise of the hospitality and food service sectors, this market segment provides visibility for healthy growth over the medium term. We are investing in a 100 TPD greenfield facility for tissue paper. Post regulatory approvals, we expect to commence operations in Q1 FY 26-27. We have shifted the Tissue Paper Machine project to Rajahmundry to take advantage of the upgraded infrastructure consequent to upgradation of critical capital projects through the capital expenditure program approved by the Board.

This INR 270 crore project will position Andhra Paper to serve the fastgrowing hygiene and tissue segments driven by changing consumer preferences, urbanisation, and environmental consciousness.

Strengthening Market Position and Customer Trust

Despite market turbulence, Andhra Paper made noteworthy strides in customer-centric growth. We recorded strong year-on-year sales growth in key value-added products like Truprint Ultra, Pharma Print, Cupstock Bottom, and Stiffener. Our efforts to deepen customer engagement, broaden the product portfolio, and improve service delivery enabled us to achieve an impressive OTIF (On-Time-In-Full) delivery rate of 96% — among the best in the Indian paper industry reflecting our commitment to customer satisfaction. Our ability to pivot between domestic and export markets, supported by product-mix and a robust dealer network, helped mitigate the impact of fluctuating market conditions and maximise realisation from these premium offerings. This performance, reflects our continued commitment to quality, reliability, and customer satisfaction, he added.

“In FY26, we anticipate a cautiously improving market environment with a softening of wood prices in the second half of the year, improving domestic paper demand in packaging, hygiene, and specialty segments. Through significant upgrades to its manufacturing facilities, the company is well-positioned to regain its momentum,” Mr. Bangur said.

Sustainable Resource Sourcing

APL’s Farm Forestry Programme exemplifies the organisation’s commitment to sustainable development. Spanning an approximate area of 7,54,956 acres, this initiative collaborates with farmers within a 150-kilometer radius of its mills, supplying them with complimentary saplings and technical guidance. By the end of FY24, 2.05 billion saplings had been successfully planted, ensuring a renewable wood fibre supply, fostering rural economic growth, and enhancing carbon sequestration.

Mill Development & upgrade 

APL has made significant strides in optimizing its operations and investing in technologies that drive both efficiency and sustainability. The Board sanctioned capital expenditure aggregating to INR 520.40 Crores being implemented in phased manner for the comprehensive rebuild and upgrade of critical plant and machinery at our Rajahmundry and Kadiyam manufacturing units. This initiative replaces obsolete equipment and technology with cutting-edge solutions, aiming to significantly enhance operational efficiency, productivity, and product quality while reducing our environmental footprint. 

The Pulp Mill development at the Rajahmundry unit, which began in 2023, focuses on these critical upgrades. To date, Rs. 508.40 Crores of the earmarked amount has been spent (including Rs. 84.81 Crores spent in May 2025, with the remaining capital projects scheduled for completion by July 2025.

Green Field Expansion Project

In January 2023, the Board had given in-principle approval to exploit opportunities in the Paper Board Segment through expansion and capacity addition by setting up an integrated Green Field Project at Unit Kadiyam, East Godavari District, Andhra Pradesh. This proposed Mill Expansion Plan (MEP) includes the installation of a 1,75,000 TPA Paper Board Machine, a 1,60,000 TPA Writing & Printing Paper machine, a 1,92,500 TPA New Chemical Wood Pulp mill, and an 87,500 BD TPA BCTMP connected along with a Recovery Plant (1500 TPD of BLS). The plan also involves the expansion of the Co-generation Power Plant from 5.74 MW to 94 MW with a New Coal-fired Boiler and New TGs and auxiliary facilities in the existing paper mill at Unit: Kadiyam.

In this regard, the Company has filed the requisite application with the Ministry of Environment, Forest & Climate Change (MoEF&CC) for Environmental Clearance. The environmental clearance process involves stages such as screening, scoping, public consultation including a public hearing if required and appraisal by expert committees (EAC/SEAC).

While the expansion program was aggressively pursued, current sluggish market demand has led us to re-evaluate its immediate advancement. Given the significant capital expenditure involved, our strategy now focuses on pursuing the expansion program and related approvals in a phased manner close to an anticipated revival in market demand aligning the expansion program with the profitability goals
 

Web Title: Andhra Paper expects wood prices to soften in the year’s second half; sluggish demand has prompted a re-evaluation of its Greenfield Expansion Project