ITC keen on paper biz expansion, but dumping a concern

Diversified conglomerate ITC is keen to expand production capacity of its paperboards, value-added paper and packaging segments. However, for the domestic industry, influx of cheap import from China and Indonesia is a key concern and the industry needs to be protected by the government through anti-dumping measures, said B Sumant, Executive Director, ITC Ltd.

The conglomerate is also looking to increase global shipments of its value-added paper and paperboards by around 20 per cent year-on-year next fiscal. Its key overseas markets include the Middle East and Europe.

“As far as ITC is concerned, paper is a core sector, as we see good and steady growth in demand in years to come. So, it is a good industry to be in, and we foresee good progress for the sector. We have been continuously adding capacity and will continue to expand, given the long-term fundamentals of the industry,” Sumant told businessline.

At present, the company’s four plants for the segment— situated in Bhadrachalam, Coimbatore, Tribeni and Bollaram — have a total production capacity of around 10.7 lakh tonnes per annum. The Bhadrachalam plant, spread over approximately 500 acres in Telangana, has been upgraded across all its seven production lines and is running at full capacity.

The company is looking for a suitable location with proximity to inputs for its much-needed capacity expansion. The proposed facility is expected to be of large capacity, similar in size to its Bhadrachalam operation.

“Now, we have run out of space (at Bhadrachalam). We are looking for new locations for expansion. We are assessing possible options. The probable location needs access to plantations and other necessary inputs,” Sumant said.

Growth drivers

ITC feels the sector has a large headroom to grow with the per capita consumption of paper in India, at 16 kg, being far below the global average of 58 kg, and 200 kg in developed economies. Moreover, there are strong fundamental growth drivers, including higher consumption economy, formalisation and shift towards packaged products and trends of replacing plastic with sustainable packaging. The company has invested significantly in R&D to create a diverse range of sustainable packaging solutions for different industries.

However, the domestic industry is currently facing challenges from dumping of low-priced products from China and Indonesia, as well as from high wood prices.

“What we need is safeguards against the dumping from China and Indonesia. I am sure the government will take necessary measures to protect the domestic paper industry from aggressive dumping. India’s paperboards and paper industry is a force multiplier for the economy and supports large-scale livelihoods across value chains and industries,” Sumant observed.

The total industry size of paperboards and paper is estimated at around 23 million tonnes in India, which is expected to grow over 6 per cent this fiscal.

Strengthening exports

ITC, a market leader in value-added paperboards, has been exporting to multiple countries. “We are continuously growing our exports. Our products are extremely competitive globally. We produce a range of specialty grades by catering to specific needs of global customers. One of the key focus areas for us is also plastic substitution grades. So, we are focusing on these niche products in the overseas markets,” Sumant said.

At present, the company exports approximately 10,000 tonnes of paperboards per month. Its largest export markets are the Middle East and Europe. The company has also started exporting to the US. It is looking to expand exports to around 12,000 tonnes per month next fiscal.

“Today, 100 per cent of our wood is FSC (Forest Stewardship Council) controlled and around 20 per cent is FSC certified. We export that at a premium to customers who want it,” Sumant added.

The Middle East and Europe presently contribute around 44 per cent and 18 per cent, respectively, to the company’s overall shipments.

ITC is also continuing to invest in cutting edge Industry 4.0 technology in paperboards leading to higher efficiencies.