A Review of Indian paper industry

The global pulp and paper industry consists of about 5000 industrial pulp and paper mills, and an equal number of very small companies. Broadly, the industry can be classified into two segments: - Paper and paperboard (writing, printing, packaging and tissue). The writing and printing paper market can be further divided into coated and uncoated segments. - Newsprint mainly uses for newspapers, flyers, and other printed material intended for mass distribution
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The US is the largest market for paper product and commands high per capita consumption. Asias main markets are China, Japan, India, Malaysia, Singapore and Thailand. In 2005, Japan had the highest per capita consumption (247 kg), followed by Singapore (228 kg), Malaysia (106 kg), Taiwan (51 kg) China (42 kg), Indonesia (22 kg) and Philippines (16 kg).

Indias per capita consumption is estimated to be 7.0 kg in 2006.

Category-wise paper mills in India (figures in number)

Consumption per capita, 2005 vs. 2006 (figures in Kgs)

Category Small

Capacity Range Up to 10000 <2000

Number of units 299 69 107 123 116 70

Capacity (TPA) 12,90,382 75,522 2,96,980 9,17,880 16,69,460 38,93,048

324.0 312.0 247.0

20005000 500010000 Medium Large 1000020000 >20000

228.0

106.0 51.0 42.0

22.0

16.0
Philippines

14.0
Viet nam

6.57.0
India

USA

Japan

Singapore

Malaysia

Thailand

China

Indonesia

Indian Pulp and Paper has shown significant improvements.

There are still many

challenges & a long way to go. Capacity utilization of the industry is just 79%, due to old technology.

India is the 15th largest paper producer in the world. It provides employment to nearly 1.5 million people and contributes INR25.0 billion to the government's exchequer. In last 55 years, the number of paper mills has increased from just 17 mills in 1951 to more than 666 units engaged in the manufacture of paper and paperboard, out of which nearly 568 are in operation by 2006. - 194 mills under purview of Board of Industrial and Financial Reconstruction (BIFR); nearly 60 mills with a capacity of 1.3 million tonnes is closed.
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Indian paper mills are categorised based on the raw materials wood/forest based mills, agro-residue based mills and wastepaper-based mills.
-

Recycled Paper 38%

Due to the increasing regulation and

raw material prices, the companies are increasingly using more nonwood based raw material over the years. In 2006, around 70 % of the total production is based on non-

wood raw

material.
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Due to high growth rate, Indian paper industry is very attractive for the foreign players
Paper and Paperboard - Production in India, 2002-06 (figures in million tonnes)
Installed Capacity

7.4 6.2 5.2 6.4 5.6 5.9

7.7 5.9

8.1 6.5

Production

2002-03

2003-04

2004-05

2005-06

2006-07

Paper and Paperboard - Import-Export, 2002-06 (figures in million tonnes)

0.4 0.3 0.3 0.2 0.2 0.2 0.2 0.3 0.3

Import Export

0.3

India is self-sufficient in manufacture of most varieties of paper and paperboards. - Import is mainly related to certain speciality papers such as light weight coated variety of paper, cheque paper, etc. - Due to the scarcity of raw material, the companies also need to rely on imported wood pulp and waste paper. In last 5 years, capacity was increased mainly through expansion and modernisation of the existing facilities rather than setting up greenfield projects.

2002-03

2003-04

2004-05

2005-06

2006-07 *

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The per capita consumption of paper in India is very low i.e. 7 Kgs in 2006, as compared to an average consumption of 28 Kgs and 58 Kgs in Asia and world respectively. The per capita consumption is expected to increase to 12 Kgs by 2020. The domestic paper market is dominated by large players owing to their size, brand value and financial strength. In 2006-07, the top 10 players control around 60% of the market in term of capacity.
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Various macro-economic factors like national economic growth, industrial production, promotional expenditure, population growth and the governments allocations for the educational sector influence the demand for paper - The growth in paper consumption is directly related to GDP growth in the country. In the past, it has shown the 1:1 relationship with the GDP growth rate. - With expected GDP growth of 9-9.5%, the demand for Newsprint and Writing & Printing Paper is expected to grow at the same rate. Continued availability of raw materials would be a big challenge for the industry in the next 5-10 years.
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According to the Indian Pulp and Paper Technical Association (IPPTA), the paper industry is expected to fall short of demand by 1.1 million tonnes by 2010-11 due to raw material constraints. According to ITCs estimates, the total demand for paper is around 8.0 million tonnes and is expected to grow to 10.0 million tonnes by 2012 and 21.0 million tonnes by 2020. According to Indian Paper Manufacturers Association (IPMA), consumption of paper in India is set to double from the current 7.0 million tonnes per annum by 2015.
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Demand driven P&P industry will be stressed by pressures of quality, availability & environmental considerations. Society, CREP & sustainability issues will demand a change in the manner in which industry conducts itself today
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Chip size control Dust & sound management Raw material cleaning Raw material Storage Segregation of waste paper

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Pulp quality variation: H- Factor Control Adoption of modern pulping digesters Adoption of Single/two stage oxygen de-

lignification

Control of odour in conventional batch

digester
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Elimination of elemental chlorine &

hypochlorite from bleaching sequence Introduction of ECF bleaching Introduction of oxygen extraction stage in bleaching (several mills dont have

this)

Adoption of enzyme pre-bleaching Look at closing bleach filtrate cycles.

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Eliminate DCE for Kraft liquor evaporation (63 per cent Indian mills have DCEs). Introduce concentrators for black liquor concentration above 72 per cent Look at BL viscosity reduction opportunity Put efforts on NPE, silica and scales management Introduce lime reburning systems

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Indian mills are weak in instrumentation & process control. This results in wide variations in quality of sectional outputs.

Variation in quality of inputs,

poor/inefficient/outdated multiple equipments multiplies the challenges.

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On an average, recovered energy in Indian mills meets only 45 per cent of energy meets of pulp and recovery section (in good global mills there is energy excess)

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 During the previous year, pulp prices went up but

companies were unable to pass on the full increase to buyers. However, most companies raised prices thrice this year, to pass on raw material push. They are reporting better performance, quarter-on-quarter.

he fact that companies are able to pass on the price T

increase from time to time shows the demand-supply gap is narrowing. Companies are also looking at

another round of price increase.

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The domestic paper industry is estimated at around 10 million tonnes yearly. Of this, the writing and paper segment accounts for 3.8 mt, the packaging grade paper segment is around 4.5 mt and the newsprint industry about 1.7 m t. The domestic yearly per capita consumption of paper is only 9.2 kg, much lower than many other developing economies. The figure in China and Indonesia is estimated at 42 kg and 23 kg, respectively. However, all segments of the industry are growing at eight to nine per cent or above.

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The industry is likely to see supply pressure by the end of the year. The supply overhang in the paper industry, caused by the bunching of new capacities by leading companies such as BILT, TNPL and West Coast in 2010, seems to be getting over. After having faced overcapacity last year, the industry is likely to see supply pressure by the year end.

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There were many capacity additions last year, but nobody is carrying stocks or operating at a lower capacity. The market is absorbing whatever is being produced. Demand is expected to exceed supply in 2012 and 2013,said A Velliangiri, deputy managing director, TNPL, which has writing and printing paper capacity of 400,000 tonnes yearly. Others in the industry echo Velliangiri view. s

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Sustained fibre supply-Virgin & Secondary

Sustained water supply

Sustained energy supply & quantum

reduction in specific energy use

Colour & chloro - organics in wastewater Odour & VOCs in emissions Solid wastes management
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Strong economic growth

Low consumption per capita

Indian Paper Industry

Increased government focus on education

Printing Industry

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Low consumption per capita

India accounts for 15% of the world population, it consumes only 1% of the world paper consumption. - The paper consumption in India is just 7 Kgs per capital, as compared to global average of 50 Kgs per capita. With the increasing literacy rate and strong economic growth, the per capita consumption of papers is expected to increase in the future - According to Economic Survey, per capita spending on education, as a percentage of GDP, has increased from 1.2% in 1983 to 4.4% in 2003, at a CAGR of 7.1%. The impact of just 1 kg increase in per capita consumption would lead to increase in demand by 1.1 million tonnes of paper.
Paper Per Capita Consumption in India, 2003-07 (figures in Kgs)
7.0 6.0 4.4 4.8 4.6

2002-03

2003-04

2004-05

2005-06

2006-07

Paper Demand vs. Supply, 2007-11* (figures in million tonnes)

10.5 9.2 7.3 7.7 8.2 7.8 9.6 8.6 8.8 9.3 8.7 9.0 11.0 9.8

2007
Capacity

2008E

2009E

2010E

2011E

Demand (7Kgs per capita)

Demand (8Kgs per capita)

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West Coast Paper Mills (WCPM) has recorded a 88 per cent rise in its net profit at Rs. 28.52 crores in 2000-01 (Rs. 15.20 crores). Sales and income from operations rose 7 per cent to Rs. 351.33 crores (Rs. 328.68 crores). Profits jumped on better realisations coupled with an increase in demand for paper and paper board.

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 ITC Bhadrachalam Paperboards had expanded capacity from 62,500 tpa to 1.82 lakh tpa. Following the infusion of around Rs. 150 crores from ITC, the company has carved a niche for itself in the export market for coated paperboards and specialty paper. Tamil Nadu Newsprint (TNPL) boasts of being among the most efficient players in the newsprint industry. In 2000-01, the company reported sales of Rs. 596.40 crores and a net profit of Rs. 76.40 crores. Promoted jointly by the Tamil Nadu Government and IDBI, TNPL manufactures newsprint and printing/writing paper with a capacity of 1.8 lakh tonnes annually. TNPL uses bagasse as the main input. It is now going in for de-bottlenecking to enable capacity increase by around 25 per cent.
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Ballarpur Industries Limited (BILT) is India's largest paper company and the only Indian company to rank amongst the top 100 paper companies in the world. BILT, part of the $3 billion Avantha Group, is India's largest manufacturer and exporter of paper, with a strong presence in all segments of the usage spectrum, including writing and printing paper, industrial paper and specialty paper. The company has a diversified production infrastructure with six manufacturing units spread across the country.
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Ballarpur Industries Limited (BILT)

The company has 6 units, together with a capacity of 480,000 tonnes and a pulp mill of capacity 100,000 tonnes manufacturing rayon grade pulp, in the state of Andhra Pradesh (Kamlapuram Unit). BILT is expanding its production capacity in both coated and non-coated paper, to take it to around 1.0 million tonnes by 2009-10. With the increase in overall capacity, the company expects to double its turnover by 2009-10. In October 2007, the company announced to increase the capacity of its coated wood free paper unit at Bhigwan in Pune by adding 190,000 tonnes. After the expansion, the total unit capacity would increase to 315,000 tonnes. The main plant and machinery and its installation would be supplied by Voith, Germany, while some equipment will be sourced locally from suppliers like L&T, etc. In July 2007, the company also initiated a restructuring plan, under which it would transfer 3 manufacturing units at Bhigwan, Ballarpur and Kamalapuram, to a separate company called BILT Graphic Paper Products, which would be transferred to Ballarpur Paper Holdings BV (BPH) after court approval. By this exercise, the company would transfer its commodity business, which is capitalintensive and would focus on the speciality and consumer-focused products business.

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Installed Capacity, 2002-06 (Figures in 000 tonnes)

480.0 386.0 358.9 386.6 406.6 369.9 383.4 407.3 480.0 457.5

2002-03

2003-04

2004-05

2005-06

2006-07

Installed Capacity Paper unit, 2005-06 (Figures in 000 tonnes)

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To choose eco-friendly paper: Know

1. The papers fiber source

2. Chemicals processing
3. Ability to be recycled or break down in a

landfill.

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