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ITC to pump Rs 15 billion in paperboard unit

Indian tobacco and hotels conglomerate ITC Ltd will invest up to Rs 15 billion in its paperboard and paper-making subsidiary over the next five-to-seven years, its chairman said on Friday.

Y C Deveshwar told shareholders that the cash would be used to upgrade the pulp mill of ITC Bhadrachalam and Paperboards and aggressively push growth of disease-resistant eucalyptus trees for its products.

"This investment programme, on successful completion, carries the potential to catapult this company into a position of leadership," Deveshwar said.

Calcutta-based ITC is India's largest tobacco firm but has diversified into hotels, paper and paperboards, information technology, apparel and edible oils. Two out of three cigarettes sold in the country are made by the company.

British American Tobacco Plc, the world's second largest tobacco group, owns 31.7 per cent of ITC Ltd.

Based in the southern state of Andhra Pradesh, ITC Bhadrachalam's net profit fell 36 per cent in the past quarter to Rs 46 million from Rs 71.6 million in the same period a year earlier.

Net sales was nearly flat at Rs 1.49 billion against Rs 1.43 billion in the same quarter last year.

Deveshwar said that ITC Ltd was also expanding its retailing operations by increasing the number of stores marketing its premium sportswear apparel to 100 in the next few years.

By September this year, it will have 25 Wills Lifestyle stores in the country, another official told Reuters.

ITC Ltd net profit rose 20.8 per cent to Rs 3.01 billion in first April-June quarter from Rs 2.49 billion a year earlier, reflecting price hikes for its wide-selling cigarette brands.

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