Home arrow Archives arrow Economic Highlights arrow Economic Highlights 2008 arrow Indian Paper Industry:INNOVATION IS NEW MANTRA,Radhakrishna Rao, 1 July 2008
 
Home
News and Features
INFA Digest
Parliament Spotlight
Dossiers
Publications
Journalism Awards
Archives
RSS
 
 
 
 
 
 
Indian Paper Industry:INNOVATION IS NEW MANTRA,Radhakrishna Rao, 1 July 2008 Print E-mail

Economic Highlights

New Delhi, 1 July 2008

Indian Paper Industry

INNOVATION IS NEW MANTRA

By Radhakrishna Rao

One of the oldest enterprises in the country, the Indian paper and newsprint industry, which currently employs around 1.3-million people, is up against a variety of problems. These include a massive and regular increase in the price of wood pulp in the international market, escalating cost of petroleum products, which in turns has pushed up the energy and transportation costs as well as dependence on obsolete technologies and outdated machineries and an all-round increase in labour wages. Though there are over 500 paper and newsprint production units in India, not even 10 per cent of theses are big or dynamic enough to turn out quality paper products at a competitive price.

Though the highly segmented Indian paper industry uses a wide variety of technologies and feedstock’s, the bulk of the production is concentrated in the hands of few large players. For instance, over 60 per cent of the newsprint production in India is concentrated with a few state-owned units like Hindustan Newsprint Ltd (HNL) and Tamil Nadu Newsprint and Papers Ltd (TNPL). As pointed out by the Development Council for Pulp Paper and Allied Industries, “Inadequate supply and high cost of raw materials, sub-optimal and obsolete technologies and accelerating energy costs are the main issues facing the industry”.

The biggest stumbling block for production units keen on attaining self sufficiency in wood pulp is the prevailing environmental laws, which prevent the industrial plantations of private sector on degraded land stretches. Against this backdrop, the Indian paper and newsprint industry has already urged the Government to amend the laws with a view to permit them to make use of the degraded land for raising plantations of fast-growing trees. But, the Government is yet to respond. As such many of the leading paper mills in the country have taken to social forestry schemes under which small and marginal farmers are provided saplings and know-how for raising plantations of fast growing trees with an assurance of a buy back at a remunerative price.

Not long back, bamboo was the most-favoured raw material of the paper mills. But with its prices shooting up as a result of rapid depletion of bamboo forests, the mills do not find bamboo as a cost-effective feedstock. Not surprisingly then, many of the paper production units are now using bagasse, rice and wheat straw instead. Though an estimated 55-million tonnes of bagasse is available, only eight per cent is currently put to use for paper production.

Given the above, many paper and newsprint production units are working towards becoming self-sufficient in wood pulp and other feedstock’s, used in paper manufacturing. For instance, Ballarpur Industries Ltd (BILT) has now drawn up a 20-million Euro plan for the modernization and augmentation of the facilities at Sabha Forest Industries (SFI) of Malaysia, acquired earlier. The SFI facilities are expected to start operations by 2009-end and renovations would include putting in place a new wood handling line, rebuilding the cooking plant and fibre line and upgradation of white liquor plant.

South India-based Seshasayee Paper and Board Ltd, is now close to commissioning its new pulp production mill designed for boosting the pulp production. Once the expanded pulp mill capacity is in place, the company will initiate work on boosting its paper manufacturing capacity with an additional investment of Rs 3,000-million. The modernization programme will see its in-house pulp production going up to 440-tonnes a day from 240-tonnes a day.

As of now, both the companies operate a 150-tonne day wood pulp mill and 90-tonne a day bagasse pulp mill. The new pulp production facility of the company will make for elemental chlorine-free production process. Clearly, the modernized pulp production unit will strengthen the position of the company by making available the required quantity of high-quality pulp in-house. On another plane, this would free the company from its dependence on imported wood pulp, the prices of which have been on an upward swing for over a year now.

To stay competitive both in the domestic and global markets, the Tamil Nadu government-owned enterprise TNPL has unveiled an ambitious action plan to invest Rs.10,000-million for  expanding its production capacity to 4,00,000-tonnes a year from the present 2,45,000-tonnes. TNPL known for its range of products including printing and writing paper and copiers and newsprint, is also mulling to put up a cement production unit that would make use of waste lime sludge generated from its paper-making operations and fly ash generated in its power boilers.

Of course, realization of the two plans is subject to the State Government approval and TNPL is yet to work out the strategy for raising funds for capacity expansion at its paper mill. But then the proposed cement plant would help TNPL boost its bottom-line by a substantial extent. For  increasing prices and occasional scarcity of cement, in the backdrop of booming construction in the country, will help TNPL make a “fat profit” from the cement production unit. Perhaps it is the first Indian paper and newsprint production unit to have hit upon this idea. It has also completed its Rs.6,000-million pulp mill expansion programme with the setting up of a state-of- the-art pulp production facility designed for elemental chlorine-free production process.

On the other hand, Paper Boards and Specialty Papers Division (PSPD) of the FMCG (Fast Moving Consumer Goods) giant ITC has gone in for an innovative range of products with an eye on emerging as the largest outfit in the paper production sector. “Our specialization in producing value-added  paper boards has made us realise  the huge potential for creating  gifts and toys for 200 million children, from the new borns to 15 years of age,” is ITC’s aim. Its Bhadrachalam facility is now producing 4,00,00 tonnes of paper boards and fine paper a year.

The disposable paper cups by ITC are now fast catching up in the market. Currently, ITC is active in supplying disposable paper cups to hotels, restaurants, soft drinks outlets and beverage companies such as Coca Cola India Inc, PepsiCo India Holdings Pvt Ltd and Nestle India Ltd.  As pointed out by the firm, “given the rapid  changes in lifestyle, we feel that the time is right to enter the consumer segment to popularize at home consumption.”

ITC’s market analysis shows that the market for disposable paper cups is worth about Rs.10,000-million a year. The company is trying to create a new category of space with Spectra brand of paper cups. According to an analyst, paper cups may not generate huge revenues but it is a logical progression  for ITC’s paper business. As it is, ITC has already made public its plan to invest Rs 25,000-million by 2009 to make more innovative paper products and also to boost its production capacity to 2,00,000 tonnes .

The PSPD  has a unique business and revenue generation model. It started operations in 1979 in Bhadrachalam primarily because it was a forest area and provided access to raw materials. However, by early 80s strict regulation on the use of forest resources was introduced and this forced PSPD to look for alternative sources of raw materials. Thus it forayed into the farm forestry programme by tying up with small and marginal farmers to raise plantations of fast growing trees.

Farmers who earlier used to earn Rs.10,000 per hectare from paddy now earn Rs.25,000 per  hectare by planting trees. Around 77,000 hectares of land is now covered by ITC’s social forestry scheme.  In addition to sustaining the supply of raw material for its paper and paper boards production facility, the farm forestry scheme had helped address the critical environmental issues relating to biomass depletion, soil erosion and water scarcity, while enabling the company to sequester twice the amount of carbon emitted from its operations and contribute to the national goal of climate change mitigation. –INFA

(Copyright, India News and Feature Alliance)

 

< Previous   Next >
 
   
     
 
 
  Mambo powered by Best-IT