ITC-PSPD faces Q3 revenue decline due to low priced Chinese supplies and surge in wood cost ; sets sights on Moulded Fibre Products Mfg. by FY24 end

ITC-PSPD faces Q3 revenue decline due to low-priced Chinese supplies and surge in wood cost; sets sights on Moulded Fibre Products Mfg. by FY24 end

ITC's Paperboards and Specialty Papers Division (ITC-PSPD) Navigates Challenges, Reports Q3FY24 Revenue Dip of 9.7%
- Sharp drop in realisation + surge in wood cost weigh on margins
- Capacity utilisation of Nadiad packaging and printing unit in Gujarat progressively ramped up. 
- The state-of-the-art premium Moulded Fibre Products manufacturing facility2 is expected to be commissioned shortly.
- ITC-PSPD earned INR 296 Cr PAT, declined by 51% YoY

The Pulp and Paper Times | 31 January 2024:

In a Nutshell:

ITC's Paperboards and Specialty Papers Division (ITC-PSPD) has disclosed its financial results for the third quarter of FY24, revealing a 9.7% year-on-year decline in revenue, totaling INR 2081 Crore. The company attributes this downturn to competitive pressures from low-priced Chinese supplies in global markets, sluggish domestic demand, and an increase in wood costs.

Global and Domestic Challenges: In its submission to the Securities and Exchange Board of India (SEBI), the company highlighted the subdued global demand and a slowdown in domestic demand recovery following the festive season. Factors such as subdued consumer demand and a relatively muted festive season impacted customer off-take during the quarter.

Margin Pressures Mitigated:

The report indicates that ITC-PSPD faced challenges with subdued realizations and a surge in domestic wood prices, putting pressure on margins. However, the company employed its integrated business model, Industry 4.0 initiatives, strategic investments in High Pressure Recovery Boiler, and proactive capacity augmentation in Value Added Paperboards to partially mitigate the margin pressure. Record high in-house chemical pulp production was achieved, leveraging recent capacity expansion.

Despite the challenges, ITC-PSPD maintained its leadership position in the Value Added Paperboard (VAP) segment through innovation, focusing on custom solutions for end-use industries, and maintaining high customer service levels. The company is also recognized as an industry leader in eco-labeled products and premium recycled paperboards.

Strategic Interventions and Investments:

The company's integrated business model and strategic interventions in import pulp substitution, High Pressure Recovery Boiler, digital initiatives, and cost-competitive fiber chain played a role in mitigating the inflationary impact. Leveraging recent investments in pulp mill capacity expansion, ITC-PSPD achieved a record high in-house chemical pulp production during the quarter.

Future Growth Initiatives:

ITC-PSPD continues to witness strong growth in its sustainable paperboards/packaging solutions portfolio through cutting-edge innovation platforms. The wholly owned subsidiary, ITC Fibre Innovations Limited, is progressing with the establishment of a state-of-the-art premium Moulded Fibre Products manufacturing facility in Badiyakhedi, Madhya Pradesh. The project is expected to be commissioned by the end of the financial year.

Despite the challenges, ITC-PSPD remains committed to innovation, sustainability, and strategic investments, aiming for a robust and resilient future in the dynamic paper and specialty papers industry.
 

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