The company draws strategy to focus on value-added, high-margin offerings.
December 4, 2021
ITC Ltd. is looking to up its play in the value-added paperboards and speciality papers vertical as it ramps up on exports to existing countries like the Middle East, EU, UK, South East Asia, Australia and New Zealand; while focusing on the high margin value-added and sustainable packaging solutions for both the domestic and export markets.
Over the last few quarters, the company has invested in innovative products while upping R&D in the segment. Work is on towards solutions “that are more resilient and strengthen supply chain” thereby benefitting farmers, among others.
As reported in a leading daily — Mr. Sanjiv Puri, Chairman and Managing Director, ITC Ltd, said that investments were being made towards the “value-added segment” with “sustainable packaging” as a focus. The company has been actively substituting plastics with the help of sustainable packaging solutions developed at its Bhadrachalam unit in Telangana.
The recyclable barrier paperboards ‘Filo’ (used in QSR and exports) and biodegradable paperboards ‘Omega’ are “gaining customer franchise”; while other launches include ‘Bioseal’ (compostable packaging solution), ‘Oxyblock’ (recyclable packaging solution for foods, edible oils) and ‘Antimicrobial coating’ (solution for germ-free packaging surface).
The company’s paperboards, packaging and printing business performed well, driven primarily by the cartons segment.
ITC’s paperboard, paper and packaging division saw a 25 percent jump YoY in Q2FY22 to INR 1,830 crore; while segment profits (at a profit before tax level) rose 24 percent YoY to INR 409 crore.
Paperboard, paper and packaging divisions contribute around 14 percent to gross revenues and approximately 8 – 10 percent of the bottom line (before tax).
Talking about recovery, Mr. Vadiraj Kulkarni, Divisional Chief Executive, Paperboards and Specialty Papers Division, ITC Limited said that the segment witnessed a revival of demand across most end-user segments apart from publications, quick service restaurants and wedding card segments (which remain subdued). There was robust growth in value-added products; strong performance in exports on a high base, notwithstanding logistical challenges while realizations improved.
Also, investments made in pulp import substitution (at Bhadrachalam), cost-competitive fiber chain, a sharper focus on operational efficiency by leveraging data analytics, and Industry 4.0 enabled margin expansion despite the escalation in key input prices.
Speaking on the company’s ambitious growth targets — Mr. Kulkarni said that ITC’s strategy is to develop new and superior products, in collaboration with the value chain partners (customers, printers, converters etc.). And once we scale up, these offerings will contribute significantly to our top-line growth and will become margin accretive.