ITC to invest Rs 1,000 cr for expansion of paper mill

To focus on writing and copier paper segments

Business conglomerate ITC Limited is setting up another unit at its existing paper mill in Bhadrachalam at a cost of Rs 1,000 crore. The 200,000-tonne per annum (tpa) paper plant is expected to be ready in two years, taking the combined capacity of ITC’s paperboards and specialty papers division (PSPD) from the existing 560,000 tpa to 750,000 tpa.

The expansion project is being funded through internal accruals. The construction work has already begun, said ITC’s divisional chief executive Pradeep Dhobale.

Last year, ITC has set up a 100,000-tpa unit in Bhadrachalam to make copier paper under the ‘Classmate’ brand. The company is hopeful of increasing revenue contributions from its writing and copier paper segments as these are expected to grow around 15 per cent.

“The government is spending huge amounts on education. There is a huge demand in the writing and copier segment, particularly from the younger generations,” he said, adding that education segment accounted for about 50 per cent of the total sales of writing and copier paper.

According to Dhobale, the demand for paper from the education segment is expected to grow at around 15 per cent a year. The company would pitch the two brands - Classmate and Papercraft - on an environmental platform as it replaced chlorine with ozone for bleaching and the raw material is sourced from sustainable forestry, he said.

“We will launch a paper variant made from recycled paper for these two brands,” he said. The company has plans to add further capacity apart from meeting paper demands in the publication segment, Dhobale added.

ITC is seeking about 1,500 acre from the state government for capacity expansion. “We are talking to a company for expanding our writing paper segment,” he said, while declining to divulge the company details or the deal size.

Its revenues are Rs 3,400 crore, of which about 10 per cent comes from exports mainly to Europe, West Asia, Southeast Asian countries and Australia. It is now increasing its supplies to these locations. The international price is around $1,000 a tonne.

There is also an increasing demand for newsprint, tissue paper, craft paper and corrugated boxes. The growth in the paper industry is driven by the growth in the FMCG segment. The younger population is the main consumer of paper. The supply of paper and allied products is comfortable even as the demand is growing around 8-10 per cent per year, he said.