India's pulp-paper industry


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India's pulp-paper industry

  1. 1. A Review of Indian paper industry
  2. 2.  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 2
  3. 3.  The US is the largest market for paper product and commands high per capita consumption. Asia’s 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). India’s per capita consumption is estimated to be 7.0 kg in 2006. 3
  4. 4. Category-wise paper mills in India (figures in number) Category Capacity Range Number of units Capacity (TPA) Consumption per capita, 2005 vs. 2006 Small Up to 10000 299 12,90,382 (figures in Kgs) <2000 69 75,522 324.0312.0 2000–5000 107 2,96,980 247.0 5000–10000 123 9,17,880 228.0 Medium 10000–20000 116 16,69,460 106.0 Large >20000 70 38,93,048 51.0 42.0 22.0 16.0 14.0 6.57.0 USA Japan Singapore Malaysia Thailand China Indonesia Philippines Viet nam India 4
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  6. 6.  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. 6
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  9. 9. India is the 15th largest paper producer in theworld. It provides employment to nearly 1.5million people and contributes INR25.0 billionto the governments exchequer. In last 55years, the number of paper mills has increasedfrom just 17 mills in 1951 to more than 666units engaged in the manufacture of paper andpaperboard, out of which nearly 568 are inoperation by 2006.- 194 mills under purview of Board ofIndustrial and Financial Reconstruction (BIFR);nearly 60 mills with a capacity of 1.3 million tonnes is closed. 9
  10. 10. Indian paper mills are categorisedbased on the raw materials - Recycledwood/forest based mills, agro-residue Paper 38%based mills and wastepaper-basedmills.- Due to the increasing regulation and raw material prices, the companies are increasingly using more non- wood based raw material over the years. In 2006, around 70 % of the total production is based on non-- wood raw material. 10
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  12. 12. Due to high growth rate, Indian paper industry is very attractive for the foreign playersPaper and Paperboard - Production in India, 2002-06(figures in million tonnes) • India is self-sufficient in manufacture 8.1 Installed Capacity of most varieties of paper and Production 7.7 7.4 6.5 paperboards. 6.2 6.4 5.9 5.9 5.2 5.6 - 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,2002-03 2003-04 2004-05 2005-06 2006-07 the companies also need to rely onPaper and Paperboard - Import-Export, 2002-06 imported wood pulp and waste(figures in million tonnes) Import 0.4 paper. Export 0.3 0.3 0.3 0.3 0.3 • In last 5 years, capacity was 0.2 0.2 increased mainly through expansion 0.2 0.2 and modernisation of the existing facilities rather than setting up greenfield projects.2002-03 2003-04 2004-05 2005-06 2006-07 * 12
  13. 13. • 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. 13
  14. 14. Various macro-economic factors like• national economic growth,• industrial production,• promotional expenditure,• population growth and the government’s allocations for the educational sector influence the demand for paper- The growth in paper consumption is directly relatedto GDP growth in the country. In the past, it has shownthe 1:1 relationship with the GDP growth rate.- With expected GDP growth of 9-9.5%, the demandfor Newsprint and Writing & Printing Paper is expectedto grow at the same rate.Continued availability of raw materials would be a bigchallenge for the industry in the next 5-10 years. 14
  15. 15. According to the Indian Pulp and PaperTechnical Association (IPPTA), the paperindustry is expected to fall short of demand by1.1 million tonnes by 2010-11 due to rawmaterial constraints.According to ITC’s estimates, the total demandfor paper is around 8.0 million tonnes and isexpected to grow to 10.0 million tonnes by2012 and 21.0 million tonnes by 2020.According to Indian Paper ManufacturersAssociation (IPMA), consumption of paper inIndia is set to double from the current 7.0million tonnes per annum by 2015. 15
  16. 16. Demand driven P&P industry will bestressed by pressures of• quality,• availability &• environmental considerations.Society, CREP & sustainability issueswill demand a change in the mannerin which industry conducts itselftoday 16
  17. 17.  Chip size control Dust & sound management Raw material cleaning Raw material Storage Segregation of waste paper 17
  18. 18.  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 18
  19. 19.  Elimination of elemental chlorine & hypochlorite from bleaching sequence Introduction of ECF bleaching Introduction of oxygen extraction stage in bleaching (several mills don’t have this) Adoption of enzyme pre-bleaching Look at closing bleach filtrate cycles. 19
  20. 20.  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 20
  21. 21.  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. 21
  22. 22. On an average, recovered energy inIndian mills meets only 45 per cent ofenergy meets of pulp and recoverysection (in good global mills there isenergy excess) 22
  23. 23. • 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. 23
  24. 24.  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. 24
  25. 25.  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. 25
  26. 26.  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 26
  27. 27.  Sustained fibre supply-Virgin & Secondary Sustained water supply Sustained energy supply & quantum reduction in specific energy use Colour & chloro - organics in wastewater Odour & VOC’s in emissions Solid wastes management 27
  28. 28. Strong economic growth Low consumption per capita Indian Paper IndustryIncreased government focus on Printing Industry education 28
  29. 29. Low consumption per capita• India accounts for 15% of the world Paper Per Capita Consumption in India, 2003-07 population, it consumes only 1% of the (figures in Kgs) world paper consumption. 7.0 6.0 - The paper consumption in India is just 7 4.8 Kgs per capital, as compared to global 4.4 4.6 average of 50 Kgs per capita.• With the increasing literacy rate and strong economic growth, the per capita consumption of papers is expected to 2002-03 2003-04 2004-05 2005-06 2006-07 increase in the future Paper – Demand vs. Supply, 2007-11* - According to Economic Survey, per (figures in million tonnes) capita spending on education, as a 11.0 10.5 percentage of GDP, has increased from 9.2 9.6 9.3 9.0 9.8 8.6 8.8 8.7 8.2 1.2% in 1983 to 4.4% in 2003, at a 7.3 7.7 7.8 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. 2007 2008E 2009E 2010E 2011E Capacity Demand Demand (7Kgs per capita) (8Kgs per capita) 29
  30. 30. West Coast Paper Mills (WCPM) has recorded a88 per cent rise in its net profit at Rs. 28.52crores in 2000-01 (Rs. 15.20 crores). Salesand income from operations rose 7 per centto Rs. 351.33 crores (Rs. 328.68 crores).Profits jumped on better realisations coupledwith an increase in demand for paper andpaper board. 30
  31. 31. • 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. 31
  32. 32. Ballarpur Industries Limited (BILT) is Indiaslargest paper company and the only Indiancompany to rank amongst the top 100 papercompanies in the world.BILT, part of the $3 billion Avantha Group, isIndias largest manufacturer and exporter ofpaper, with a strong presence in all segmentsof the usage spectrum, including writing andprinting paper, industrial paper and specialtypaper.The company has a diversified productioninfrastructure with six manufacturing unitsspread across the country. 32
  33. 33. 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 capital- intensive and would focus on the speciality and consumer-focused products business. 33
  34. 34. Installed Capacity, 2002-06(Figures in ‘000 tonnes) 480.0 480.0 457.5 406.6386.0 386.6 383.4 407.3 358.9 369.9 2002-03 2003-04 2004-05 2005-06 2006-07Installed Capacity – Paper unit, 2005-06(Figures in ‘000 tonnes) 34
  35. 35.  To choose eco-friendly paper: Know 1. The paper’s fiber source 2. Chemicals processing 3. Ability to be recycled or break down in a landfill. 35