ITC’s ₹3498 Crore Mega Acquisition: Game-Changer or Risky Move?
ITC Ltd is set to acquire Century Pulp and Paper from Aditya Birla Real Estate Ltd for ₹3,498 crore, boosting its paper production capacity by nearly 50% and strengthening its presence in North India. Currently, ITC’s paper facilities are concentrated in the South, while Century’s Uttarakhand-based unit adds 480,000 metric tonnes per year. The acquisition enhances ITC’s supply chain, reduces operational risks, and provides strategic access to key raw materials.
ITC’s paper segment, which contributed ₹8,344 crore in FY24, will gain a significant revenue boost, while Aditya Birla Group plans to focus more on its core real estate business. Analysts see the deal as a smart move, given ITC’s strong cash reserves and the long-term growth potential of India’s ₹80,000 crore paper industry. Despite challenges like cheap Chinese imports affecting margins, ITC expects this acquisition to be earnings-accretive by FY27.
The deal is currently awaiting regulatory approvals and is expected to be completed within six months. With increasing demand for paper across industries, this acquisition positions ITC for sustained expansion and market leadership.
ITC’s ₹3498 Crore Mega Acquisition: Game-Changer or Risky Move?
In a strategic move to strengthen its position in the paper industry, ITC Ltd has announced plans to acquire Century Pulp and Paper, a division of the Aditya Birla Group, for ₹3,498 crore. This deal will boost ITC’s paper production capacity by nearly 50%, marking a significant step in its growth strategy.
Key Details of the Acquisition
ITC currently operates four paper manufacturing units in South India, producing over 1 million metric tonnes of paper annually. With the addition of Century Pulp and Paper’s facility in Lalkuan, Uttarakhand—which has an annual capacity of 480,000 metric tonnes—ITC’s total production capacity will rise substantially. This expansion not only enhances ITC’s presence in northern India but also improves supply chain efficiency and product diversity.
Strategic Advantages for ITC
The acquisition offers multiple benefits, including:
- Economies of Scale – Larger production volumes will reduce costs and improve profitability.
- Geographic Diversification – Operating units in multiple regions will lower risks related to regional disruptions.
- Access to Raw Materials – Proximity to raw material sources in northern India will streamline operations.
- Market Expansion – Strengthening its foothold in North India enables ITC to cater to growing demand in the region.
In a statement, ITC emphasized that the deal aligns with its long-term goals, especially as its existing facilities are already operating at full capacity. B. Sumant, ITC’s Executive Director, highlighted that the acquisition supports the company’s ambition to lead in the paper and packaging sector.
Why Aditya Birla Group Sold the Division
For the Aditya Birla Group, selling Century Pulp and Paper reflects a strategic shift to focus on its core real estate business. R.K. Dalmia, Managing Director of Aditya Birla Real Estate, stated that the decision reinforces their commitment to creating long-term value for stakeholders by concentrating on areas of expertise.
Industry Growth and ITC’s Position
The Indian paper and paperboard industry, valued at over ₹80,000 crore, ranks fifth globally, producing around 23 million metric tonnes annually. Demand is growing steadily at 6–7% per year, driven by sectors like education, e-commerce, pharmaceuticals, and fast-moving consumer goods (FMCG). ITC’s paper and packaging division generated ₹8,344 crore in revenue in FY24, while Century Pulp contributed ₹3,375 crore to Aditya Birla’s earnings.
Analysts view the acquisition as a smart move for ITC. Abneesh Roy of Nuvama Institutional Equities noted that the deal will likely boost ITC’s earnings per share (EPS) starting in FY27. With strong cash reserves of ₹30,000 crore, ITC is well-positioned to invest in growth opportunities despite challenges like competition from cheaper Chinese imports, which have pressured margins in recent years.
Overcoming Challenges and Future Plans
While the paper industry faces hurdles such as fluctuating raw material costs and environmental regulations, ITC remains optimistic. The company plans to leverage its expanded capacity to meet rising domestic demand and explore international markets. Diversifying production across regions will also help ITC maintain stability during market fluctuations.
Regulatory Process and Timeline
The transaction is pending regulatory approvals and is expected to be finalized within six months. Once completed, ITC will integrate Century’s operations into its existing framework, focusing on operational synergy and cost optimization.
Broader Business Strategy
This acquisition is part of ITC’s broader strategy to expand across sectors. Recently, the company demerged its hotel business, allowing ITC Hotels to operate independently while ITC retained a 40% stake. Such moves highlight ITC’s focus on unlocking value and driving growth in core areas like agriculture, consumer goods, and paper products.
Why This Matters
Paper products remain essential in everyday life, from packaging for e-commerce deliveries to educational materials. By scaling up production, ITC aims to meet the needs of a growing economy while reducing dependency on imports. The company’s investment in northern India will also create jobs and support local economies.
Looking Ahead
ITC’s acquisition of Century Pulp and Paper underscores its commitment to innovation and sustainability in the paper industry. With a stronger production base and wider geographic reach, the company is poised to capitalize on India’s economic growth and evolving consumer demands. As the deal progresses, stakeholders will closely watch its impact on ITC’s market leadership and long-term profitability.
In summary, this strategic purchase not only strengthens ITC’s position in the paper sector but also aligns with India’s vision of self-reliance in manufacturing. By balancing expansion with efficiency, ITC aims to deliver sustained value to shareholders while contributing to the nation’s industrial growth.