ITC Ltd, India’s largest cigarette maker, said it plans to invest Rs2,500 crore by 2009 to make more writing and printing paper and up capacity by more than five times to 2,00,000 tonnes as it races to meet a shortfall of paper in India.
ITC, the makers of Wills cigarettes, also makes a quarter of all the packaging and speciality paper sold in India.
The company has been setting up plantations and employing farmers to grow trees such as Eucalyptus, that generate the pulp for the paper. While they pay the farmers for the crop cultivation, they also allow them to use the land to plant other food crops.
“We are dovetailing the project with our farm forestry initiatives,” Pradeep Dhobale, CEO, ITC Paperboards and Speciality Paper division, said in an interview with Mint.
“The project, to be set up either in Andhra Pradesh or Madhya Pradesh, will be put in place, once we decide on the location, depending on when we hear from the state governments,” Dhobale said.
The two states have been shortlisted on the basis of agro-climatic conditions like soil, availability of raw materials, crop profile and intercropping patterns. Funds for the project will be generated through internal accruals.
“Discussions are in progress with both the states for a comprehensive package of land, water and requisite environmental clearances,” said Dhobale.
The company would require around 2,000 acres of land for the project. This is expected to generate jobs for 5,00,000 people, inlcuding farmers. ITC currently makes 30,000 tonnes of paper per annum.
The Indian Paper Manufacturers’ Association estimates that a rapidly growing economy is using up more and more paper, which will cause a shortage of as much as 30 lakh tonnes of paper and paperboard by 2010, given existing manufacturing capacity.
On an average, paper prices have gone up by about Rs2,500 per tonne over the last one year. India imports paper from countries such as Finland to meet its shortages. The Indian economy is expected to grow by more than 9% this year, its highest in 18 years.