The Story Behind ITC's Acquisition of Century Pulp & Paper (CPP):
"ITC has pressed the pedal on acquisitions", was the headline in a recent Business Standard story. Indeed, the acquisition of CPP was one of ITC's largest. Here's the strategic background of this significant milestone. Before we dive in, a snapshot of our Paperboards & Specialty Papers Business Division aka ITC-PSPD.
ITC-PSPD: Leading From Many Fronts
It is often said - from morning to evening - you're likely to interact with an ITC-PSPD product in India - be it in consumer packaging, fast food, pharma, beverages, playing cards, or high-quality notebooks! ITC produces 1 million tons of paper & paperboard annually from 4 state-of-the-art factories, including India's largest integrated pulp & paper mill in Bhadrachalam. A hallmark of environmental stewardship, ITC-PSPD supports a large-scale afforestation programme that has greened 1 million+ acres, with 1.4 billion saplings planted - nearly equivalent to India's population! The initiative has created 240 million-person days of employment. Also, 50% of its energy comes from renewables, making it a sustainable, tech-driven business combating climate change, supporting livelihoods, & reducing import dependency.
India's Paper Market: Potential Unlimited
India ranks among the largest paper producers globally. Despite being a major consumption market, our per capita paper use is just 16 kg yearly-far below global avg. of 57 kg & the USA's 197 kg. With rapidly increasing demand for paper-based & sustainable packaging solutions across FMCG, QSR, Pharma, e-Comm, & Education sectors, there's immense potential for ITC-PSPD to unlock the next wave of growth. And that's exactly what the 'ITC Next strategy' articulated by Chairman Sanjiv Puri envisions. This strategy also focuses on value accretive acquisitions, which brings us to the CPP story.
ITC+CPP: Best Strategic Fit to Enhance Customer Delight
As Executive Director, Sumant B. says "The CPP acquisition will add significant scale & economies, provide locational advantage given that our existing facilities are saturated, derisk operations & will be faster to market than a greenfield option. It will strengthen market standing & engender new opportunities in India & global markets."
Aligned with ITC's capital allocation strategy, the acquisition is expected to be EPS accretive in the first full year of operations, thereby, improving earnings & boosting profitability.
Rajesh Ponnuru, Chief Executive, ITC-PSPD, adds, "We are an established market leader offering world-class products backed by most advanced technology & responsible sourcing. Our next orbit of growth will be fuelled by this acquisition. Our multi-location capacity expansion will enhance our ability to serve customers more effectively."
With added capacity, import substitution & smart investments, this business remains confident of powering new drivers of growth for ITC.
