Paper industry to create an additional capacity of about 1 million MT per year for the next decade, says Mr. Sanjiv Puri of ITC

Paper industry to create an additional capacity of about 1 million MT per year for the next decade, says Mr. Sanjiv Puri of ITC
-Spearheading the Plantations to Paper and Packaging Value-Chain
-Excerpts from the Address by Mr. Sanjiv Puri, Chairman & Managing Director - ITC Limited during 114th Annual General Meeting

The Pulp and Paper Times

In recent times, Paper sector has been facing significant headwinds from the dumping of low-priced imports as well as supply-side constraints leading to a surge in wood prices. Therefore, industry is scaling up plantations in active collaboration with stakeholders to avoid imports and resultant export of jobs. However, this sector possesses enormous potential given that India's per capita consumption is only one-fourth of the global average. Moreover, the country is the fastest-growing market in the world for paper and paperboards with demand growing at 6-7%, requiring industry to create an additional capacity of about 1 million MT per year for the next decade. This will spur economic multipliers with afforestation creating large-scale employment generation and carbon sequestration. New growth drivers are also emerging as customers increasingly seek solutions that are bio-degradable, substitute single-use plastic and meet stakeholder & regulatory expectations.

ITC is a market leader in Value-added Paperboards and derives formidable competitive advantage from its integrated business model. Recognising the enormous economic, environmental and social impact of this sector, substantial investments have been made over time to expand capacity 3-fold and strengthen structural competitiveness. The fibre value-chain pioneered by your Company has promoted an afforestation programme that has cumulatively greened over 13 lakh acres, supporting 240 million-person-days of livelihoods, while sequestering 6.4 million tonnes of CO2 annually contributing to the nation's endeavour to combat climate change.

In a strategic move aligned to ITC's growth aspirations, ITC has signed an Agreement for the acquisition of the Century Pulp and Paper undertaking to scale up its Paperboards business. The proposed acquisition will substantially enhance capacity in a more cost-efficient manner, relative to a higher investment and 4-year gestation period required for a greenfield project of similar scale. In addition, the acquired plant's locational advantage will provide proximity to key raw materials and better servicing of customers in the northern region. ITC's proprietary knowledge and knowhow will contribute to significant cost optimisation and superior customised solutions. Consequently, the acquisition is expected to be EPS-accretive in the first year of operations, whilst driving overall profitability improvement with a targeted increase of 30% to 40% in EBITDA per ton over normalised levels after 2 full years of operation.

In addition to scaling up your Company's core portfolio, Horizon 2 envisages new vectors of growth through the development of sustainable solutions to substitute single-use plastics. LSTC's Centre of Excellence in Material Sciences has developed a wide range of recyclable or compostable materials as also offerings with proprietary patented barrier coatings, which are today commercially available under the ‘Filo' and ‘Bioseal' series. Since its launch, this new vector has grown at 2.4x of FY22 levels.

The Horizon 3 initiative focuses on complex, engineered high-quality Moulded Fibre Products made from renewable natural raw materials such as wood, bamboo, bagasse and wastepaper. ITC's state-of-the-art facility in Madhya Pradesh has recently commenced operations to manufacture and export these innovative products under the ‘Fyba' brand. ITC's core portfolio, together with the new vectors, holds immense promise given the headroom, growing consumer awareness and regulatory requirements.
 

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