A Publication on World Pulp, Paper & Allied Industry

April-June'2001 - Vol. 5 Issue 3

COUNTRY PROFILE
   
Indian Paper Industry and its Challenges  by  Dr. B.L. Bihani*  
   

The Indian Paper Industry is more than a century old. The first paper mill was started in Serampore (West Bengal) in 1812. But this mill did not succeed because of lack of demand for paper. Later on Royal Paper Mills (1867), Upper India Couper Mills (1879), Titaghar Paper Mills (1882), and Deccan Paper Mills (1887) started with a total annual installed capacity of 5,000 tonnes. The industry has grown since then to an estimated paper and newsprint installed capacity of appr. 5.4 million and 1.7 million tonnes respectively in 2000-01.

Paper meets the basic needs of modern society by contributing to communication, education, packaging and hygiene. India's paper production accounts for 1% of the world production. The current per capita consumption of paper in India is about 5Kg. as compared with the world average of 50 Kg.

 

 

 



Brown Stock Screening & Washing System -  320 TPD at the
Andhra Paper Mills, India

The paper industry has been defined as a "Core Industry" by Government of India. The structure of the paper industry in India is a strange mix of very small to large plants using diverse raw materials and technologies producing various grades of paper, Indian Paper Industry can be broadly classified as :
  • Large, where the annual capacity is 33,000 tonnes or above
  • Small, where the annual capacity is below 33,000 tonnes

    The paper mills can be further classified on the basis of raw materials used for production of paper :
 

Table 1: Trend in Import Duty on Paper & Board
       
Year Import Duty % SAD* CVD*
       
1990-91 140 - 10% + Rs.1900
1991-92 110 - 10% + Rs.2425
1992-93 85 - 10 % + Rs.2425
1993-94 65 - 20%
1994-95(March) 40 - 20%
1995-96(May) 20 - 20%
1996-97(March) 20 2 18%
1997-98(Sept.) 20 5 18%
1997-98 25 5 18%
1998-99 30 5 18%
1999-00 30 5 16%

2000-01

35

5

16%

Note : Import duty on newsprint, pulp and waste paper in 2000-01 is 5%, 10% and 10% respectively full mod vat is available on CVD only
  • Wood based (39%)
  • Agricultural residue based (33%)
  • Waste paper based (28%)

As per a recent study, there are 515 paper mills in India, out of which about 85 mills are closed and a large number of mills are under BIFR indicating that the health of paper industry. The number of non-wood mills is high and most of them are small in capacity much below the global level capacities.


Dr. B.L. Bihani, Member
Editorial Advisory Board, 
Inpaper International

Earlier the Indian Paper Industry was protected from global competition through high level of import duties on paper as shown in Table 1.

As can be seen from Table 1, the import duty on paper has been reduced from extremely high level of 140% in 1990-91 to 20% in 1995-96, thereby exposing the industry to stiff global competition. This has resulted in high level of imports leading to suffering of Indian Paper Industry. Due to strong representation made by the Indian Paper Industry, the Government of India has enhanced the import duty to 35% in 2000-01, providing the much needed relief to Indian Paper Industry.


               

Table 2: Year wise Demand, Installed Capacity and Production
     

PAPER

    

in Lakh Tonne
Year Demand Installed Capacity Growth % Production Capacity Utilisation % Imports Export
1996-97 40.00 45.20 - 40.50 89.60 1.10 1.00
1997-98 41.00 45.20 2.44 41.50 91.80 3.00 0.60
1998-99 42.10 49.36 2.68 42.50 86.10 2.71 0.75
1999-00 46.00 52.00 9.70 46.50 89.40 2.77 1.05
2000-01
(Estimated)		 47.26 54.08 2.73 47.95 88.70 2.00 2.00
Average     3.8   89.10
Source : IPMA, IARPMA

 

             

Year wise Demand, Installed Capacity and Production
     

News Print

    
Year Demand Installed Capacity Growth % Production Capacity Utilisation % Imports
1996-97 7.00 7.60 - 3.00 39.50 5.40
1997-98 7.50 8.00 24.70 3.74 46.70 5.00
1998-99 8.00 8.50 32.10 4.94 58.10 3.95
1999-00 8.50 9.25 (-)6.10 4.64 50.00 3.79
2000-01
(Estimated)		 9.00 10.65 26.70 5.40 50.70 2.60
Average     20 (upto Jan 01) 49 (upto Oct. 01)
Source : INMA

 

Product Segment

Based on application, there are two broad product segments in paper :

  • Cultural Paper, which finds uses mainly in publishing and stationary. This variety consists surface-sized maplitho, creamwove, copier paper, speciality papers and coated papers.

  • Industrial paper, which finds application in packaging and consists of kraft paper, pulp board and duplex board.

Newsprint is special kind of paper used for printing of newspapers, magazines and periodicals. The main characteristics required for newsprint are good tensile strength, opacity, ink absorbency and printability. High proportion of thermo-mechanical pulp and chemi-mechanical pulps are used for newsprint manufacture.

Growth Trends


The estimated production of paper and newsprint for the year 2000-01 is given in Table 2.

From the above table, it can be observed that the capacity utilisation in the last five years has improved over the previous years, but the demand growth has been about 4% against the anticipated growth of 8%. The capacity utilisation of newsprint mills is poor, which may be due to the production variation in newsprint vis-a-vis white printing paper among 


New Fiber Line at JK Paper Mills

the small mills. Large newsprint mills continue to manufacture newsprint, but small paper mills keep on changing their product mix as per the market condition, especially the selling price.

In India, the growth rate should be targeted as 7-8% per annum due to rapid economic growth, increasing purchase power, increased literacy rate, rapid development of retail market, fast development of computerization and emerging export leading to increased use of packaging paper and board etc.

 

Challenges Ahead

Inadequate availability of capital

The paper industry is highly capital intensive and requires regular investments of further capital for continuous technology absorption and upgradation. Shortage as well as high cost of capital faced by the Indian paper industry has resulted in import of obsolete second hand machinery and lower quality of paper produced. Both these factors have contributed to the preference of imported paper over paper produced in India and has had adverse effect on revenues and profitability of Indian paper mills.

Due lack of technically feasible and economically viable technology the small scale paper manufactures incur heavy annual operating costs.

 

 

 

 


New Recovery Boiler at Star Paper Mill

Raw Material

The major raw materials used are hardwoods, bamboo, reed, bagasse, straws, grasses, and waste paper. 

Bagasse and straw have short fibres and pose various problems in pulp manufacturing. These raw materials are seasonal. A large number of collection centers are required for straws and bagasse. Moreover, both these raw materials are bulky , thus making it difficult to transport. Straw poses an additional problem of removal of silica which causes scaling. The other aspect is the need for an efficient effluent treatment plant in the absence of chemical recovery , which requires high capital cost.

While waste paper is a preferred raw material for quality consideration and is imported in large quantity, price fluctuations are experienced from time to time, thereby affecting the profitability of the Company. Collection of indigenous waste paper is not organized and poses a big problem , besides its poor quality.


At the beginning of development of paper industry, the various State Governments had been promising to supply bamboo and wood as per need at a reasonable price, but gradually the quantity has been reduced, and at the same time increase the price. Thus, most of the paper mills in the country have started experiencing shortage of bamboo and wood. Now substantial quantity of bamboo and wood is purchased from the other states as well as in open market. This indicates that availability of wood and bamboo will become difficult, even at the high cost in future. Usage of wood has increased in other products like plywood and other commercial items, thereby putting the paper industry at a great disadvantage from the point of view of both the quantity and cost. 


New bi-drum rewinder with torque, nip & tension control system at The West Coast Paper Mill


The only answer to this raw material problem is to go for industrial plantation ,which is not yet permitted by Government of India and is being delayed for the last many years. It is hoped that sooner or later, industrial plantation will start to keep the paper industry running. Till industrial plantation is not permitted, the paper industry must go ahead in full swing for farm forestry to meet partial requirement of raw material.

It may be added that cost of raw materials in India are much higher as compared to other countries as indicated in the Table 3.

The high cost of raw materials has put Indian Paper Industry at a great loss and it will make it difficult to compete in the global market. 


Lime Sludge Retrieving System with 
ESP at Star Paper Mill

Thus it is important that Government of India accords permission at the earliest to the industry to grow its own raw material.

Table 3

Comparison of cost of Raw Materials
Country Cost US$ / Tonnes
Indonesia 20
Brazil 26
Canada (E) 31
USA (S) 36
Australia 41
India 60-75
 

Source : High Powered Committee Technology

Technological upgradation and cost reduction are directly interrelated and therefore, technological upgradation as a means to achieve cost reduction cannot be ignored. This is all the more relevant to Indian situation where cost of production and quality of product is still not competitive in world market. Technological upgradation would lead to higher efficiency and increased production. It is a fact that technological upgradation of the existing mills is cheaper as compared to setting up of new mills. The following points may be considered:


State of the art energy efficient seven effect falling film evaporator plant at The West Coast Paper Mill
  • Technological upgradation in pulping to achieve better quality of pulp, besides giving costs reduction benefits in terms of energy, water, chemical and space saving
  • Technological upgradation in chemical recovery plant to achieve better steam economy and high chemical recovery in all mills irrespective of their size.
  • To carry out modification of paper machines for increased productivity by introducing efficient equipments in various sections of paper machines to produce world class quality.
  • To carry out extensive modification of the waste paper treatment plants for utilizing various grades of waste paper to obtain speck-free pulp. The use of waste paper is expected to go as high as 35 % or more in future.
  • To become self sufficient in power generation to the maximum possible extent by installing TG set on co-generation principle. Paper Industry is highly power intensive and hence captive power generation will make the power availability at cheaper rates, besides other benefits like quality of power, uninterrupted supply of power etc.
  • Introduction of effective pollution control measures has become essential in view of public awareness. Large paper mills should consider installation of lime reburning kiln, while the agro based mills should consider installation of chemical recovery plant . This is in addition to the normal effluent treatment plant in each mill. 
Quality Consciousness

Most of the Indian paper manufacturers are not quality conscious. There are large quality variations in paper produced by small (agro and waste paper based) and large (bamboo and wood based ) paper mills in India. The difference in paper quality also exists between the large paper mills . This is a difficult situation. Quality variations are mainly attributed to the following reasons

  • Wide variety of raw materials used in India. 
  • Adoption of improper technology with no or little will to improve it. 
  • Installation of obsolete equipments in the past. 
  • Poor house keeping in most of the paper mills indirectly effecting quality.

Now there is a distinct shift in consumers thinking to go for quality product. Quality should be defined as giving the customer satisfaction with regard to the type of paper he requires, delivering it where required and at a value for money price. The customer's view of paper quality can be broken down into brightness, smoothness, bulk and opacity, etc.
 
Human Resources

One of the essential requirements for successful operations is qualified and trained manpower. Even though we have one of the largest pool of scientific and technical personal in the world, skill to meet challenges of modern technologies is scarce and problem is compounded with the introduction of sophisticated electronic control systems in the plants. It is, therefore, necessary that suitable training programmes are designed from highest to the lowest level of employees. If we need to be successful as organizations we need to provide support to people to develop their competence and that is the only way they can put in the best efforts to ensure results in line with our objectives. People with obsolete thinking as  I have observed in my long career i.e. we are doing for last so many years, should be bid good-bye. We need forward looking people, who should be given autonomy with responsibility and accountability.


High efficiency, low pressure drop, four stage ... at The West Coast Paper Mill
 
Conclusion

What Mr. Suresh Krishna of Sundram Fastners said in a different context holds good for the Indian Paper Industry. According to him "Building Sustainable Competitive Edge" has got two components. The first component is that you have a competitive edge. Once you have a competitive edge, then comes sustainablity of that competitive edge. There is a false perception in many of the companies that "I am alright". Nothing is going to happen to me. If you are doing well today, there is no guarantee that you will do well tomorrow. Many companies which have been in 



Reel Wrapping Machine at APPM


View of Central Pulp Mill

 the book called "In Search of Excellence" which were claimed as the world's best companies are no longer existent now. They are all gone. The good companies which have become competitive and who know how they can sustain this competitiveness are those companies which change when no change is percieved as necessary. This is a very important thing.

Indian Paper Industry needs to learn from the experience of other industries and must try for sustainability with change.
 

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