Diversified conglomerate ITC Limited on Sunday said it will invest up to Rs 3,000 crore to set up a paper manufacturing unit in Andhra Pradesh as part of plans to double capacity over the next five years.
“The total project cost for the new greenfield project will be about Rs 3,000 crore. It’s part of our plan to touch 1 million tonnes capacity in the next five years,” ITC Limited Executive Director Mr Pradeep Dhobale told reporters here.
The company’s paperboards and specialty papers division, which caters to a wide spectrum of packaging, writing and printing paper requirements, has four manufacturing units at present, with a total capacity of 5.5 lakh million tonnes per annum.
The new 2.5-3 lakh tonnes per annum unit will come up in Khammam district of Andhra Pradesh and the company plans to acquire 1,000 acres for this purpose.
“We have received requisite clearance from the Andhra government for the new plant and are now awaiting clearance from the Union Environment and Forest Ministry. We expect to get the final clearance in the next six months,” Mr Dhobale said, adding that the company is yet to finalise the products to be manufactured at the new facility. Asked about funding for the new project, Mr Dhobale said the company will finance it through internal accruals.
ITC’s paperboards and specialty papers division contributes nearly 12 per cent to its top-line. The Kolkata-headquartered firm reported net sales of Rs 18,153.19 crore for the year 2009-10.
As part of its capacity expansion plans, the company is already in the process of investing Rs 1,100 crore at its Bhadrachalam plant in Andhra Pradesh.
“We are in the process of investing Rs 1,100 crore in our Bhadrachalam plant. Apart from new lines, we are also upgrading our pulp and energy capacities. We expect to raise the present capacity by 1 lakh tonnes per annum,” Mr Dhobale said. The Bhadrachalam unit presently has a capacity of 4.5 lakh tonnes per annum.
According to industry estimates, demand for paperboard in the country in terms of volume stands at 1.8 million tonnes per annum and is growing at 8-10 per cent annually. ITC has a share of about 22 per cent in the domestic paper board market.
ITC has a market capitalisation of nearly $30 billion and a turnover of over $6 billion. It has interests in FMCG, hotels, paperboards and packaging, tobacco products and information technology.