ITC Share Price Gains: Acquires Century Pulp & Paper for ₹3,500 Crore

ITC Limited announced a significant strategic move by signing a Business Transfer Agreement (BTA) with Aditya Birla Real Estate Limited (ABREL) to acquire its pulp and paper business, popularly known as Century Pulp and Paper (CPP). The deal, valued at up to ₹3,500 crore on a cash-free, debt-free basis, is expected to be completed within 6 months, subject to regulatory approvals.

As of 10:06 AM on April 1, 2025, ITC’s share price was up by 0.90%, trading at ₹413.30 on the NSE.

Overview of Century Pulp and Paper (CPP)

Established in 1984 at Lalkuan, Uttarakhand, CPP is a prominent player in the Indian paper industry with an installed capacity of 4.8 lakh MT per annum. It has a robust in-house pulp manufacturing setup and strong fibre sourcing capabilities. Over the past 5 years (excluding the pandemic-hit FY21), it has averaged ₹2,958 crore in revenue and ₹506 crore in EBITDA.

Why This Acquisition Matters for ITC

ITC’s Paperboards and Specialty Papers Business is already a reputed name in the sector, with four world-class manufacturing units and a throughput exceeding 1 million MT annually. However, with capacity expansion at current locations constrained, this acquisition offers several advantages:

• Immediate Scale: The CPP facility will add significant capacity and operational scale without the lead time required for a greenfield project.

• Locational Advantage: With a strong presence in North India, CPP complements ITC’s existing Southern facilities, improving supply chain efficiencies and customer servicing.

• Operational Synergies: ITC aims to unlock value through initiatives like product mix optimisation, capacity debottlenecking, digitalisation, and Total Productive Maintenance (TPM).

• De-risking Operations: Multi-site operations improve business resilience and reduce operational risks.

A Move Aligned with Industry Growth

India, the 5th largest producer of paper globally, sees annual demand growth of 6-7%, with over 1 million MT of incremental demand each year. Per capita consumption stands at just 16 kg, much lower than the global average of 57 kg—signalling ample headroom for growth. This acquisition positions ITC well to cater to rising demand across FMCG, QSR, pharma, e-commerce, education, and sustainable packaging sectors.

Financial and Strategic Highlights

• Deal Value: Up to ₹3,500 crore

• Mode: Slump sale on a cash-free, debt-free basis

• Expected Completion: Within six months

• EPS Impact: Expected to be accretive in the first full year of operations

• Profitability Target: 30–40% increase in EBITDA/tonne over normalised levels within two years

The acquisition aligns with ITC’s capital allocation strategy and aims to sustain strong free cash flow generation, which exceeded ₹4,000 crore between FY20 and FY24 for the Paperboards, Paper & Packaging segment.

Conclusion 

With CPP’s integration, ITC is expected to enhance operational capabilities, pursue growth opportunities across key industries, and maintain its commitment to sustainability and value creation.

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