ITC announces strategic acquisition of Pulp & Paper Undertaking of Aditya Birla Real Estate Limited

ITC Limited has signed a Business Transfer Agreement today to acquire the Pulp and Paper Undertaking ('CPP') of Aditya Birla Real Estate Limited ('ABREL'). Established in 1984 at Lalkuan (Nainital, Uttarakhand), CPP is a well-established player in the Indian Paper industry with an installed capacity of 4.8 Lakh MT per annum.

India is the fifth-largest producer of paper and paperboards in the world, with an estimated production of around 23 million MT per annum and an annual industry turnover of over Rs. 80,000 cr. India's per capita consumption at appx. 16 Kg. per annum is low as compared to the global average of 57 Kg., reflecting immense headroom for growth. India is one of the fastest growing markets in the world with demand for paper and paperboards growing at 6%-7% p.a., translating to incremental demand of over 1 million MT annually. End-user industries such as FMCG, Food Service / Quick Service Restaurants, Pharmaceuticals, e-Commerce, Education & Stationery and increasing demand for sustainable packaging solutions are expected to be the key drivers of growth going forward.

ITC's Paperboards & Specialty Papers Business is a reputable player in the industry offering a wide range of products manufactured at its four world-class facilities with an annual throughput of over 1 million MT. The Business is an exemplar in sustainability with over 50% of its energy requirements met from renewable sources. The integrated nature of the business model is a key source of competitive advantage for the Business besides creating a significant economic multiplier. The key elements of the business model comprise access to sustainable and cost-competitive fibre chain, in-house pulp manufacturing capability, world-class product quality, state-of-the-art manufacturing facilities, strong sales and distribution network, increasing digitalisation across all nodes of operations along with robust forward linkages with the Company's Education & Stationery Products and Packaging & Printing Business.

CPP is a one-of-a-kind asset with a strong strategic fit with ITC's Paperboards & Specialty Papers Business. The acquisition will immediately add significant scale and economies to existing operations with potential for further capacity expansion, provide locational advantage for efficient customer servicing and proximity to key raw material sources, mitigate operational risks through multi-site operations and enhance resilience across industry cycles through portfolio diversification. The Business expects to drive structural improvement in profitability of CPP through several value unlock interventions such as capacity debottlenecking, product quality upgrade, efficiency improvement leveraging TPM/Digital initiatives, supply chain optimisation, overhead rationalisation, and procurement efficiencies.

Commenting on the acquisition, Mr. B Sumant, Executive Director, ITC Limited said, "The acquisition will strengthen the market standing of ITC's Paperboards and Specialty Papers Business and engender new opportunities in the domestic and international markets. The acquisition aligns with the Company's strategy of driving the next horizon of growth in the Paperboards and Specialty Papers Business by expanding capacity at a new location considering that the existing facilities are already saturated. The strong linkages to afforestation and livelihood creation pursued by both the entities contribute meaningfully to national priorities. We are delighted to welcome CPP into the ITC fold and I am confident that together we will continue to set new benchmarks in customer satisfaction, operational excellence and sustainability."

Shares of ITC Limited was last trading in BSE at Rs. 409.80 as compared to the previous close of Rs. 409.40. The total number of shares traded during the day was 852982 in over 9830 trades.

The stock hit an intraday high of Rs. 415.60 and intraday low of 408.20. The net turnover during the day was Rs. 351727821.00.

Source : Equity Bulls

Keywords

ITC INE154A01025 Acquisition BTA PulpandPaperUndertaking AdityaBirlaRealEstate