PaperBoard

Paperboard
OVERVIEW SELECT APPLICATIONS MARKET MAKET CHARACTERISTICS FUTURE

Segments in Paper Sector

News on Paperboard
NORTHERN KRAFT PAPER... SINAR MAS TO PUMP RS... BILT EYES 51% IN PAP... THAPARS BUY PAPER BO... ECOBOARD EXPANDS CAP... ITC BHADRA PENS STRA... ITC BHADRACHALAM EXP... ITC LOOKS FOR SYNERG... PAPER: STILL WAITING...

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OVERVIEW

Paper & paperboard decontrolled in 1988 Paperboard specified in grams per square metre(gsm) Any paper above 140 gsm is referred to as a 'board' Paper boards mainly used for packaging Major switch towards coated duplex for packaging, in recent years (FMCGs, pharmaceuticals and branded consumer goods)

http://www.indiamarkets.com/imo/industry/paper/paperboard.asp? display_content_link=0&search_link=0

SELECT APPLICATIONS Board Kraft Pulp Board Duplex BoardsUncoated Applications Major Manufacturers

Corrugated Packaging Cartons/ Boxes SSI Units Cigarette Packets, Filters, Covers, Brochures, Visiting Cards, Danglers Primary Packaging Consumer goods and durables, Pharma products, Processed foods, Cigarettes Primary Packaging Up-market Consumer goods and Pharma products, Alchoholic Beverages, Premium Cigarette packets. Tetrapacks and Topaks ITC Bhadrachalam SSI predominant, ITC Bhadrachalam Rohit, Orient Paper

Duplex Boards Coated

Balakrishna Paper (largest) ITC Bhadrachalam Rohit Paper, BR Agarwal ITC Bhadrachalam

Multilayered

MARKET Market Size Technology

Paperboards demand for 1998-99 estimated at 702,000 Technology - assessed in

MT per annum Market has been growing at 4 % per year. terms of process machinery performances Technology parameters steam consumption per MT, electrical energy consumption per MT, chemical recovery % Two layer single knifecoating technology for duplex boards Major raw materials for duplex boards - bleached hardwood pulp, soft wood pulp (imported),mixed waste box board cutting, other paper wastes

 Many paper mills process both paper as well as

paperboard Mills classified as small (< 100 MT per day), use agro based raw materials (bagasse) most are shut down or operate with low efficiencies Larger mills (> 33,000 MT per year) are more efficient with better chemical recovery systems and have pollution control equipment There are over 380 mills in the industry Of these, only around 60 would be large mills Large mills - ITC Bhadrachalam, Star Paper Mills, West Coast Paper Mills, Orient Paper Mills, Seshsayee Paperboards, Rohit Paper Mills, Ballarpur Paper Mills, AP Paper Mills

Structure

MARKET CHARATERISTICS Tariffs

Import Duty : Basic (35%), Special

Additional Duty (4%), Surcharge (10%) Excise duty : 16 % (8 % if agro based raw material is used) Prices per MT :Uncoated Rs. 23,000 Coated Rs. 27,000

Characteristics

Segments

Shift in demand pattern to

coated duplex boards for better printability, finish and appeal

West and south zones - major consumers of

paperboards

Many FMCG companies (Hindustan Lever, Cadbury

India, Proctor & Gamble), cigarette manufacturers (ITC, VST Industries), liquor companies (McDowells), pharmaceutical concerns (Glaxo Laboratories, Wockhardt, Dr. Reddy Labs) and branded consumer goods companies (Voltas, Videocon, Whirlpool, Philips) are located in these zones

Historically, uncoated duplex

boards have been used for packaging

200 - 400 gsm duplex

boards most commonly used

Cigarette, FMCG
(toothpaste, toiletries), liquor and pharmaceutical industries are major paperboard users

Distribution mainly through

jobbers who customise end users requirements and procure paperboard from the mills. Imports Paperboards imports 1997-98 : US 220 million (Rs 50 crores) - 16,000 MT A few varieties like Art boards, Chrome pulp board and coated duplex boards are imported Softwood pulp imported - international prices had moved up to US $ 540 / MT (June 1999)

FUTURE Demand Drivers Future

Growth linked to prospects in the following user

industries - Cigarette, Liquor, FMCG(toothpaste, toiletries, malted foods, beverages), pharmaceuticals and Match box/cracker industries

Growing by 7% CARG for the

industry, we estimate the future to be 1.05 million MT (2003 - 04)

Additions to capacities

 Export packaging is another growth area for (coated anticipated:

duplex) paperboards

Century Textiles (1,15,000 MT) Servall Engineering (90,000 MT) NEPC Paper (82,000 MT) BK Duplex Boards (33,000 MT) Key Success Factors

Business Concerns

Capacity additions by 2000 AD to lead to glut in

market

Access to good coating technology Sourcing of quality raw materials

(wood pulp)

Globally, costs of wood pulp have been moving up Cost of electrical power increasing and power
availability is a problem in several states

Product development and

application engineering skills

Cost reduction programmes

TO SUM UP
An over supply scenario where margins are under pressure. With anticipated capacity additions, the future may lie with those units who go in for value added products (coated boards) for the branded goods markets