ITC Ltd’s packaging and printing division is setting up a greenfield cartonboards and flexibles unit in Uttaranchal. The proposed venture will be in addition to the company’s plans to upgrade the existing Chennai unit to further strengthen its position in value added cartonboards and flexibles.

The proposed expansion-cum-upgrading plan will entail an investment of nearly Rs 200 crore in the financial year 2006-07. While the greenfield facility for cartonboards and flexibles in Uttaranchal will involve an outlay of about Rs 100 crore, the company has decided to invest a similar amount at its Tiruvottiyur unit in Chennai.

Though top company officials remained tightlipped on project details, including the percentage increase in capacity post expansion, sources said efforts were on to make the project operational by March 2007. The tobacco-to-hotels major has already placed order for machines to equipment suppliers like Bobst Group, the source said. The new unit will augment capacities in cartonboards and flexibles. Upgrading the Chennai unit will further strengthen the company’s capabilities to offer a range of value-added packaging solutions for the food & beverage, personal products, cigarette, liquor and IT packaging industries.

At present, ITC Ltd annually converts over 35,000 tonnes of paperboards into value added packaging. Elaborating, sources said the move will help ITC service surrounding geographies better as well as give its foods business a two-fold fillip:

• The packaging unit will be set up adjacent to ITC’s first foods factory. Since both units are expected to become operational around the same time, the new packaging unit will ensure just-in-time supply of packaging material.

• The proposed unit signifies the emphasis on flexibles in line with the requirements of ITC’s Foods as well as other businesses.

ITC Ltd also derives additional advantages from the synergy between its packaging and paperboards businesses.

The company’s elemental chlorine free (ECF) unit provides its packaging business a competitive advantage in servicing internal and external requirements in the foods segment.

Once the greenfield plant becomes operational, the two packaging units will be able to meet the entire packaging requirement of its FMCG business jointly. Besides adding value to its own FMCG business by using innovative packaging, upgrading and the greenfield unit will also enable the company to leverage these facilities for its overseas and domestic customers exports as well as earn additional revenue.

Apart from foods, ITC Ltd is one of the leaders in cigarette and liquor packaging in India. It supplies packaging to cover 70 billion cigarettes a year domestically and for 15 billion cigarette sticks a year, targeting the export market. It is also one of the largest supplier of liquor mono cartons in the country.