Orient Paper commits US$4.47M to new modernization projects despite widening losses

INDIA – Orient Paper and Industries has committed fresh capital to modernization and capacity-building projects even as it grapples with one of its toughest operating periods in recent years.

The company reported a deepening net loss after tax of INR 30.60 crore (US$3.42m) in Q2 FY26, a year-on-year decline of more than 55%.

The deterioration was driven primarily by the company’s core paper and tissue division, where loss before tax ballooned by over 88% to INR 43.84 crore (US$4.90m).

The company said its factories, including its principal unit in Bhubaneswar, continued to face mounting industry pressures, with material costs rising to INR 100.03 crore (US$11.18m) and power and fuel expenses increasing sharply during the quarter.

Yet even as profitability weakened, Orient Paper signalled confidence in its long-term prospects through significant capital expenditure.

The company’s capital work-in-progress (CWIP) expanded by nearly INR 40 crore (US$4.47m) over the half-year period, reaching INR 10,478.78 lakh (US$11.71m) as of 30 September 2025.

This sharp increase indicates active spending on machinery upgrades, plant improvements, and new product development, initiatives aimed at boosting operational efficiency and diversifying its grade mix to counter current market sluggishness.

While the paper and tissue division continued to strain performance, the company’s smaller chemicals segment delivered a positive result of INR 5.74 crore (US$0.64m).

This profitability underscores the stabilizing effect of Orient Paper’s multi-product structure, enabling the chemicals unit to offset the heavy losses incurred by the paper factories partially.

It also highlights the potential for higher-margin specialty products as a future growth lever.

The latest investment push follows a larger ₹125-crore (US$14.26 million) expansion and modernization programme underway at the company’s Amlai facility in Madhya Pradesh.

That project is designed to debottleneck critical production processes, enhance throughput, and strengthen cost competitiveness.

Once complete, the Amlai expansion will add 8,500 tonnes per annum (TPA) to the current capacity of 100,000 TPA, an increase of approximately 8.5%.

The company expects completion within 24 months, funded through a mix of internal accruals and debt.

“This is more than just a routine upgrade; it’s a strategic investment to ensure our operations remain competitive, efficient, and ready to meet future demand,” the company said in a statement.

Through these upgrades, Orient Paper aims to improve production consistency, reduce operating costs, and sharpen its competitive position in India’s highly cost-sensitive paper market.

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