In a move that significantly strengthens its position in India’s paper and packaging industry, ITC Ltd has announced the acquisition of Century Pulp and Paper from Aditya Birla Real Estate Ltd for ₹3,498 crore. The deal, disclosed on March 31, is set to expand ITC’s paper manufacturing capacity by 60%, adding 480,000 metric tonnes per annum (MTPA) to its existing 1 million MTPA capacity. More importantly, it marks ITC’s first major foray into North India’s paper market, diversifying its geographic footprint beyond its existing southern operations, where it is seeking to dominate entirely different industries.
A Strategic Expansion with Long-Term Gains
This acquisition aligns with ITC’s broader strategy of reinforcing its presence in the high-margin paperboards and specialty papers sector. While ITC’s existing facilities are already operating at full capacity, the addition of Century Pulp and Paper provides much-needed room for expansion. Located in Lalkuan, Uttarakhand, the newly acquired facility offers strategic locational advantages, including access to key raw materials and improved supply chain efficiencies for servicing customers across North India.
Furthermore, the acquisition enhances ITC’s resilience by mitigating operational risks through multi-site production capabilities, reducing the impact of regional disruptions. The move also strengthens its ability to cater to the growing demand for sustainable and high-quality paper solutions across industries such as FMCG, pharmaceuticals, e-commerce, and quick-service restaurants.
Financial and Market Implications
The paper and packaging segment has emerged as a vital contributor to ITC’s financial performance. In FY24, the segment generated ₹8,344 crore in revenue, accounting for 12.6% of ITC’s overall earnings. By integrating Century Pulp and Paper’s ₹3,375 crore revenue stream, ITC is poised for an immediate boost in scale and profitability. The company has confirmed that the acquisition is expected to be EPS accretive in its first full year of operations, reinforcing its potential for shareholder value creation.
From a broader market perspective, India’s paper and paperboards industry is expanding at a steady 6%-7% annually, with a total market size exceeding ₹80,000 crore. While traditional printing paper demand has been slowing, the growth in packaging and hygiene-grade paper products presents lucrative opportunities. ITC’s integrated pulp-to-packaging business model ensures that it is well-positioned to capitalize on these evolving market dynamics.
Aditya Birla’s Realignment Towards Core Business
For Aditya Birla Real Estate Ltd, this transaction represents a strategic portfolio optimization. By divesting its pulp and paper division, the company aims to sharpen its focus on its core real estate business, freeing up capital for further growth initiatives. As stated by Managing Director R.K. Dalmia, the sale is part of the company’s broader transformation strategy to drive sustained value creation within its primary sector of expertise.
Regulatory Approvals and Industry Outlook
The transaction is subject to necessary regulatory approvals and is expected to be finalized within the next six months. Once completed, it will mark a new chapter in India’s paper industry, consolidating ITC’s leadership while setting a precedent for future sectoral realignments.
With this acquisition, ITC has made a decisive move to fortify its industrial verticals, demonstrating that its strategic vision extends well beyond its traditional strongholds in FMCG and tobacco. As demand patterns shift and sustainability gains prominence, ITC’s reinforced presence in the paper segment places it in an advantageous position to shape the future of the industry.
