ITC-Paper division’s Q3 FY25 profit drops by 30% amid subdued realizations and a surge in wood prices

ITC-Paper division’s Q3 FY25 profit drops by 30% amid subdued realizations and a surge in wood prices

-Subdued realisation and surge in domestic wood prices continue to weigh on margins
-Low priced Chinese & Indonesian supplies, soft domestic demand, lower realisations continue to impact Industry performance
-Q3 FY24 profit stood at INR 205 crore, marking a 30.6% year-on-year drop
-Near term challenges continue to be mitigated through sharp focus on portfolio augmentation, export customer/market development & structural cost management interventions.
The Pulp and Paper Times

ITC's Paperboards and Specialty Papers Division (ITC-PSPD) has disclosed its financial results for the third quarter of FY24-25, revealing a 3.1% year-on-year increase in revenue, totaling INR 2,144 crore. Competitive pressures from low-priced Chinese supplies in global markets, sluggish domestic demand, and rising wood costs are creating a challenging environment for the paper sector, ITC said in its media release.

ITC-PSPD continues to navigate a challenging operating environment, impacted by low-priced Chinese and Indonesian supplies in global markets, including India. Additionally, weak domestic demand, an unprecedented surge in domestic wood costs, and subdued realizations have added to the sector’s woes.

Despite these hurdles, the company exhibited resilience, with segment revenue increasing by 3.1% year-on-year, driven by strong export growth. ITC-PSPD has focused on portfolio augmentation, export market expansion, and structural cost management to mitigate near-term challenges. The Value-Added Paperboards (VAP) segment maintained its leadership position, witnessing double-digit growth in anchor grades, led by liquid packaging board and other competitive offerings.

Sustainable paperboard and packaging solutions have seen strong growth, leveraging advanced innovation platforms, expanding approximately 2.5 times over the past three years. A major milestone during the quarter was the launch of ‘FiloBev Mini,’ a sustainable plastic substitute for small cups (less than 90ml), aimed at replacing traditional plastic cups. The newly commissioned premium Moulded Fibre Products manufacturing facility in Badiyakhedi, Madhya Pradesh, is also undergoing progressive ramp-up.

Domestic wood costs surged further in the quarter due to heavy cyclonic rainfall in core plantation areas and increased demand from other wood-based industries. ITC-PSPD is responding by accelerating plantations in key regions, developing new areas, collaborating with other wood-based sectors, and implementing satellite-based plantation monitoring systems.

The company remains actively engaged with policymakers to address critical industry concerns, including boosting wood availability through collaborative public-private plantation models and curbing the rise of low-priced imports of paper and paperboard into the country.

The packaging and printing business faced sluggish demand from end-user industries such as quick-service restaurants (QSRs), food, and consumer wearables, which impacted realizations. However, efforts to accelerate new business development in domestic and export markets through innovative and customized solutions are underway.

Structural advantages of an integrated business model, Industry 4.0 initiatives, strategic investments in High Pressure Recovery Boiler technology, and proactive capacity expansion in Value-Added Paperboards have helped mitigate severe pressure on margins. ITC-PSPD remains committed to navigating these challenges while maintaining its focus on innovation and sustainability.

The Education and Stationery Products Business of ITC continued to witness heightened competitive intensity especially from regional/local players on the back of sharp reduction in paper prices. Amidst such conditions, ‘Classmate’ Notebooks fortified its leadership position through relentless focus on portfolio premiumisation, innovation and leveraging institutional strengths. Further, Business launched a new digital feature, Classmate eduGAMES Infinity, an innovative feature designed in alignment with 5 the principles of the National Education Policy 2020, providing children with an engaging learning experience that enhances their cognitive, logical, mathematical and verbal skills.

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