ITC papers unit awaits land allotment for Rs 3,000-cr expansion project at Bhadrachalam

ITC Ltd's Paperboards and Speciality Papers Division (ITC PSPD) is awaiting land allotment from the Andhra Pradesh Government to go ahead with a planned Rs 3,000-crore expansion project adjacent to its existing pulp and paper mills complex in Bhadrachalam .

The company has embarked on a massive social forestry initiative to secure the raw material required for the expansion, which is expected to double manufacturing capacity to one million tonnes a year .

Mr Sanjay K. Singh, Division Chief Executive, ITC PSPD, told

Business Line (at Iravendi village near Bhadrachalam) that the company was awaiting allotment of 1,000 acres of land adjacent to the existing unit. Once this process is completed, ITC expects to secure necessary clearances for the expansion. This is part of the company's strategy to double the plant's capacity from the current 5 lakh tonnes a year, within the next four to five years.

In addition, the company is investing Rs 1,110-crore to upgrade the plant's capacity by 1 lakh tonnes a year . ITC is also keen on acquisitions, but nothing is on the table as yet, Mr Singh said.

RAW MATERIAL SECURITY

“We are in the business of pulp and paper and need good quality pulp. Since we cannot own land due to restrictions imposed by the Government, we have developed an ecosystem where local tribals are encouraged to cultivate through the social forestry initiative.

“Over the years, this has grown big. We have helped develop plantations in over 110,000 hectares of land in Andhra Pradesh, Maharashtra and Madhya Pradesh,” he said.

ITC is facilitating the addition of about 10,000 hectares a year. The company itself needs 10,000-12,000 hectares a year. This gets replenished with new plantations. In the next four years, ITC plans to take this up to 150,000 hectares, Mr Singh said.

The social forestry initiative engages the Forest Departments, Integrated Tribal Development Agency, NGOs and local tribals and farmers. ITC's research and development team has developed robust varieties of clones suitable for higher yields. Lately, intercropping is being encouraged, he said.

According to the ITC Annual Report 2011, the value-added paperboard segment is expected to grow at around 15 per cent (the paperboard industry overall is expected to grow by 8 per cent) over the next 5 years. Per capita consumption of paper is very low, at only 9 kg in India, compared to a global level of 55 kg.

The continued growth shown by the Indian economy, coupled with favourable demographics demand expansion in rural markets, rising demand for branded and packaged products — supported by growth in organised retail and differentiated packaging — are expected to augur well for the paperboard industry.