Presented by

Dr. T. K. RoyDirector, CPPRI

Central Pulp & Paper Research InstituteSaharanpur, U.P., INDIA

Overview of Indian Paper Industry

1

PAPER INDUSTRY AT A GLANCE

Total number of Pulp & Paper Mills 666Wood Based 34Agro Based 165Recycled Fiber Based Mills 467

Pulp & Paper Mills in Operation 568Pulp & Paper Mills Closed 98Installed Capacity of Mills 6.9 million tonnesPer-capita consumption 6.0 kg

(Paper & Paperboard)Production 5.6 million tonnes – P&B

0.7 million tonnes - NewsprintTurnover Rs. 16000 CroresExchequer Rs. 2500 CroresEmployment Direct-3 Lacs / Indirect-10 Lacs

The industry is fragmented with capacities ranging from 2 to 800 tonnes per day

2

GROWTH OF PAPER INDUSTRY

In the 1970s excise concessions were given to small agro based mills, which resulted in a rapid increase of small mills and capacity.

In the late 1980s the industry was in a severe oversupply situation, capacity utilisation rates being around 60 %.

In early 1990s the government reversed the policy, making large units more competitive (e.g. by removing excise concessions for agro based mills).

First mill in the country was commissioned in 1812 in Serampur (W. Bengal).

The initial development & growth of industry in the 19th century was affected by shortage of wood (soft wood) in the country.

In 1914 the development of pulp making processes based on bamboo lead to rapid growth of the industry and by the end of the 1950’s installed capacity increased to 137000 tonnes.

3

GROWTH OF PAPER INDUSTRY ….. Contd…

Paper capacity and production in India 1950-2005

0.00

2.00

4.00

6.00

8.00

1950 1960 1970 1980 1990 2000 2005

Capacity

ProductionMillion tonnes

Nearly 1.25 million tones of capacity is closed

Technological obsolescence

Environmental issues

Reasons for Closed Capacities

5

Other varities

5%

Industrial paper 55%

Writing & printing grades 40%

Writing & printing grades Industrial paper Other varities

Total Paper and Paperboard demand in India

CAGR of nearly 5.5% in the past 3 years.

6

Year Production Imports Exports Consumption1995-96 3.81 0.42 0.09 4.141996-97 4.11 0.59 0.07 4.631997-98 4.58 0.65 0.06 5.171998-99 4.81 0.56 0.06 5.301999-00 5.5 0.55 0.10 6.12000-01 5.5 0.56 0.13 6.02

2001-02 5.57 0.56 0.29 5.98

2002-03 5.87 0.69 0.23 6.332003-04 6.24 1.01 0.23 7.02004-05 6.52 0.87 0.26 7.15

All figures in Million Tonnes

Paper, Paperboard & Newsprint

7

STRUCTURE OF PAPER INDUSTRY

34

165

467

0

100

200

300

400

500

Wood BasedMills

Non WoodBased Mills

RCF Based Mills

Categorization of the Mills Based on Cellulosic Raw Materials

Num

ber o

f Mill

s

8

PER CAPITA CONSUMPTIONThe per capita paper consumption in India is 6 kg compared to 324 kg in USA, 25 kg in Indonesia, 250 kg in Japan and 37 kg in China

050

100

150200250300350

PAKI

STAN

INDI

A

LATI

N AM

ERIC

A

EAST

ERN

EURO

PEIN

DONE

SIA

CHIN

A

WOR

LD(A

vera

ge

WES

TERN

EUR

OPE

JAPA

N

NORT

H AM

ERIC

A

Per Capita Consumption

Kg

9

FIBRE RESOURCESIndia is a fibre deficient country. Due to lack of wood resources, the paper industry is utilizing a wide verities of raw material for paper making ranging from forest based raw material to annual plant and recovered paper.

Forest based Agro based Recycled fiber

7%9%

84%

39%

31%

30%

34%

28%

38%

1970

2000

2005

10

TECHNOLOGICAL STATUSObsolescence of technology in most cases.

Lack of eco friendly state of the art processing technologies.

Uneconomic scale of operation.

In an international comparison, even the largest machines are medium-size

− The average capacity of paper machines is about 14000 t/a

− Most of Indian paper machines have a trim width from 1.5 to 3.5 m

− There are only 9 paper machines with trim width of 5 m or more

− Only 14 machines have capacities 50000 t/a or more

It is not possible to have very high speed paper machine, i.e. >1500 mpm for type of raw material available in India

Similarly for adoption of new papermaking technology quality of raw material and mill size are the major limitations.

Except the wood based integrated mills and few agro/RCF mills the level of automation and process control is very low in most of the mills

11

ENVIRONMENTAL COMPLIANCE - ISSUES

(CREP) for Paper Industry was introduced in the year 2003 by MoEF

(CREP) to be complied by entire industry between 2005 to 2008.

The major environmental issues :Control of color and AOX discharge

Control of release of Non Condensable Gases (NCG’s).

Disposal of Solid waste viz. Lime Sludge/Fly ash

12

Environmental issues Implementation Schedule (from April 2003)

Discharge of AOX kg/ tpaper AOX 1.5 kg/ tpaper within 2 years

AOX 1.0 kg/ tpaper in 5 years

Installation of Lime Kiln Within 4 years

Waste water discharge m3/ tpaper < 140 m3/ tpaper within 2 years

< 120 m3/ tpaper within 4 years for units installed before 1992

< 100 m3/ tpaper for units installed after 1992

Odor Control by burning the reduced sulfur emissions in the boiler / lime kiln

Installation of odor control system within 4 years

Utilization of treated effluent for irrigation Wherever possible

Color Removal from the effluent IPMA to take up project with CPPRI

CREP – LARGE MILLS

13

Environmental Issues Implementation Schedule (from April 2003)

Compliance of standard of BOD, COD & AOX

Either achieve the discharge Standards of BOD, COD & AOX by installation of chemical recovery system or utilization of black liquor with no discharge from pulp mill within 3 years or

shift to waste paper

Up-gradation of ETPs so as to meet discharge standards

Upgrade the ETP within one year so as to achieve the discharge standards

Waste water discharge/ tonne of paper < 150 m3/ tpaper within 3 years

Utilization of treated effluent for irrigation

Wherever possible

Color Removal from the effluent IPMA to take up project with CPPRI

CREP – SMALL MILLS

14

ISSUES BEFORE INDIAN PAPER INDUSTRY

Low scale of operation Inferior pulp & paper quality

High cost of transportation and power

Low capacity utilisation

High capital costs

High costs of raw materials

Issues & Challenges

Only 20% of the total used paper is recycled in India compared to a global recycling

average of 40%

State of art equipment & machineries

Emerging Environmental issues

DEMAND & SUPPLY SCENARIO

16

Source - Financial Express,19 Feb 2006

6.24 5.75

0.49

8.33

6.79

1.54

11.1

8.01

3.09

14.85

9.46

5.39

0

2

4

6

8

10

12

14

16

Pape

r Mill

ion

Tonn

e

1

Year

Demand Supply Shortfall

2005 2010 2015 2020

Demand Growth @ 6%/annumSupply Growth @ 3.4%/annum

Pape

r Mill

ion

Tonn

e

Source – Jaakko Poyry Report 2002

Projected Demand, Supply and Short fall of Paper & Paperboard

4.9 4.5

0.4

6.76.1

0.6

9.18.5

0.6

12.2

10.9

1.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2005 2010 2015 2020

Demand Supply Shortfall

Year

Pape

r Mill

ion

Tonn

e

17

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00

Supply

Demand

Supply

Demand

Supply

Demand

Supply

Demand

2005

2010

2015

2020

Industrial Cultural Others

p p

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00

Supply

Demand

Supply

Demand

Supply

Demand

Supply

Demand

2005

2010

2015

2020

Industry Cultural Others

Source - Financial Express, 19 Feb 2006 Source – Jaakko Poyry Report 2002

Paper Million Tonnes

Paper Million Tonnes

Projected Demand & Supply of Various Grades of Paper & Paperboard

18

1.62

0.730.89

2.16

0.86

1.30

2.90

1.02

1.88

3.88

1.20

2.68

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2005 2010 2015 2020

Demand Supply Shortfall

1.20

0.73

0.47

1.60

1.00

0.60

1.90

1.40

0.50

2.40

1.80

0.60

0.00

0.50

1.00

1.50

2.00

2.50

2005 2010 2015 2020

Demand Supply Short fall

Source - Financial Express, 19 Feb 2006

New

sprin

t Mill

ion

Tonn

es

Source – Jaakko Poyry Report 2002

New

sprin

t Mill

ion

Tonn

es

Projected Demand & Supply Shortfall of Newsprint

19

CELLULOSIC RAW MATERIALS - FUTURE TRENDS

2005

84%

2010

Recycled Fiber

Production – 6.5 Million Tonnes Demand Projected - 8.3 Million Tonnes

38%28%

34%

Agro based

40%28%

32%

Wood based

20

INDUSTRIAL WOOD DEMAND SCENARIO

0

2

4

6

8

10

12

14

2005 2010 2015

Million tonness of wood

Depends on agro/ waste paper use

The paper industry’s wood demand is expected to grow from 5.9 million tonness to 7.9 million tonness by 2010, and to over 10.6 million tonness by 2015.

~0.6 million hectares and 0.8 million hectares of land will be required by 2010 and 2020 respectively to meet paper industries wood demand.

5.9

7.9

10.6

21

AVAILABILITY OF AGRICULTURAL RESIDUES

Since 1970 agricultural residues have emerged as significant alternate raw material with total fiber use share being 29%.

The main agricultural residues utilized by the paper industry include bagasse, straws (wheat and rice) and grasses.

Availability of agricultural residues is good, but there are many limitations to their use

74

44

05

1015

202530354045

Agro Residue 2003 2010

Availability

Requirement by Paper Industry

Mill

ion

Ton

nes

22

RECYCLED FIBRE - RECOVERY & RECYCLING

Million tons

0

2

4

6

8

1995 2000 2003 2010

Recovery Imports Consumption

Import of waste paper is continuously increasing

At present more than 80% of consumption is met through imports.

INDIAN PAPER INDUSTRY IN GLOBAL PERSPECTIVES

24

0 20000 40000 60000 80000 100000 120000

Venezuela

Chile

Colambia

Argentina

South Africa

Australia

Thailand

Mexico

India

Taiwan

United Kingdom

Russia

Brazil

Indonesia

Sweeden

Korea

France

Finland

Germany

Canada

Japan

China

US

Paper & Board Capacity (2000)

‘000

tonn

es

India is among the top fifteen global producers

Source : ICRA report to IPMA : 2000

INDIAN PAPER INDUSTRY IN GLOBAL PERSPECTIVES

INDIA

PERCENTAGE OF WORLD PAPER PRODUCTION

World Paper & Board consumption is dominated by three major regional blocks-North America, Western Europe & Asia.

The Paper & Board production in India is nearly 5.5 million tons as against world paper production of 340 million tons.

India consumes nearly 5% of the Asian and 1.6% of the worlds consumption of paper and paper board.

North America, 31.0%

Rest, 9.0%Europe, 28.0%

India, 1.6%Asia, 30.4%

Indian Paper Industry in Global Perspectives… Contd…

26

CONSUMPTION OF BASIC INPUTS

Indian Paper Industry in Global Perspectives… Contd…

Input Norms(per tonne basis)

Mills in India (Wood Based)

Mills Abroad

Raw material, tonnes 2.0- 2.4 1.8-2.0

Energy, GJ 23-37 18-22

Water, m3 120-200 20-60

Chemical Recovery,% 85-95 95-98

Manpower, no. 14-20 5-7

Technical manpower, no. 2 4

Fibre Recovery, % 15 40

27

COMPETITIVENESS OF THE SECTOR

As compared to USA, Europe, the paper industry in India is far below the quality standards of the products.

It is not as competitive as in other Asian countries such as ; Japan, Indonesia, Thailand, Malaysia & China.

The paper industry in India is less competitive as compared to similar sectors such as; cement and capital goods.

The possible reasons which makes paper industry less competitive compared to other similar sectors are –

(i) Availability of good fibrous raw materials;

(ii) Level of technology.

28

Lack of required infrastructure such as; roads transports, railways, communications and sustained power supply.

Main reason for lack of availability of desired infrastructure is

Scattered location of paper mills.

Criteria for selection of site was raw material instead of infrastructure.

Ministry of Urban Development, Ministry of Transport, Ministry of Shipping & Ministry of Power can create the desired infrastructure.

INFRASTRUCTURE FACILITIES

29

The quality standards in other countries are maintained as per customer preferences

In India we still go by BIS norms which are much below the international standards.

General perception about the quality of products produced in India is poor.

As far as Printing papers and the Newspaper segment also by & large gives preference to the imported Newsprints.

The Indian paper industry uses 20 – 30% more raw materials; about 30% more energy, 200% more water & 10% more chemicals.

QUALITY STANDARDS

30

Raw Material Sourcing

Rational long term policy on Duties and Taxes

Technology Up-gradation Scheme

Policy for Industrial Plantation

Technology Up gradation & Restructuring

Product Focus

Implication of WTO

Capacity Expansion

Environmental Policy

Rational pricing policy for Power & water

IMPROVING

RETURN/MARGINS

INDUSTRY GOVERNMENT

STRATEGIES FOR IMPROVING COMPETITIVENESS

Environmental Credentials

31

Large Wood Based Mills

There are 22 mills producing 1.9 million tons of paper.

At 6% growth rate additional fiber requirement to meet projected demand is 2

million tons of wood.

Current plantations are not sufficient to cover the industry needs. Any shortfall

will have to be met through pulp imports.

Major Capacity Expansion – GreenfieldName of the Mills Capacity

t/dayCost (Rs. Crore)

A. P. Paper Mills 750 1800

J.K. Papers 180 235

West Coast Paper Mills Ltd. 300 230

ITC 600 2500

HPC 900 2800

Raw Material Requirement for Sustainability of the Industry

32

Agro Based Mills

Wheat straw & bagasse will be the mainstay raw material for the sector.

By 2010 , agro based fibre requirement to meet the demand would be 7.0

million tons.

Availability of surplus bagasse for paper industry is only 10 million tons and

difficult to be increased under present operational conditions of sugar mills.

Wheat straw availability is sufficient (22 million tons) therefore further

expansion should be expected to be based on wheat straw.

Raw Material Requirement for Sustainability of the Industry

33

Recycled Fibre

By 2010, the recycled fibre requirement to meet the demand will be 6 million tons.

If the present recovery rate is enhanced from 18% to 25% by 2010, availability from indigenous sources will be 1.5 million tons and 4.5 million tons will have to be met through imports.

Challenges before the Recycled Fiber Based mills

The availability of good quality waste paper at competitive price

There is a need to take immediate measure to organize the existing waste paper recovery system to increase the recovery rate from present 18% to 30% to be sustainable.

Raw Material Requirement for Sustainability of the Industry

34

Technology Improvements Needed

Wood Based Mills

Enhancement in productivity through adoption of advanced production techniques such as RDH/Super Batch.

New and efficient pulp washing systems should be adopted.

ECF bleaching with ClO2 followed by peroxide is recommended .

Enzyme bleaching should be adopted to reduce chemical cost and discharge of chloro organics.

Breast roll and blade gap formers improve paper quality and drainage and are important for Indian raw materials.

A good press section is important in India because fibers are short. Extended nip is the only good solution for Indian slow machines. One shoe nip press section would be the best technology.

35

Unsupported web run is normal in Indian dryer section when speedis higher than 600 meters/min, there should be single tier dryergroups to avoid web flutter and breaks.

Soft calendar are highly recommended and they could save bulk and improve opacity, strength and smoothness however this requires good CD profiles.

Films coaters and on-line calendars are recommended with good CD profiles.

Soft roll rewinders might be a low cost alternative to improve roll quality of this paper or coated papers.

Process automation level must be improved.

Technology Improvements Needed

36

Agro Based Mills

Technology improvement is needed for upgradation of quality of baggase and adoption of efficient washers for straws & bagasse.

Installation of chemical recovery to meet environmental compliance.

Recycled Fiber Based Mills

Inclusion of high density pulpers

For efficient contaminant removal, introduction of high density cleaners , turboseparators, fine slot screens and reverse cleaners in the fiber line.

Incorporation of modern deinking cells for production of deinked pulp

Screw press and dispersion system to reduce dirt and specks in DIP

Bleach towers for post bleaching of DIP

Improvements in paper machine area are same as in wood based mills.

Technology Improvements Needed

37

Requirements for Environmental Compliance

Installation of chemical recvcery or alternate option

Improved pulp washing

Oxidative bleaching

Reduced water consumption

Other waste management practices

Up-gradation of ETP & optimal use.

Wood Based MillsModified Technology for Pulping & Bleaching

Improved Pulp washing

Efficient use of water , reuse & recycling

Installation of odour control technology

Solid waste management & Disposal of hazardous waste

Up-gradation of ETP & optimal use

Agro Based Mills

38

Recycled Fibre Based MillsReduced water consumption through closure of water loops.

Waste management

Up-gradation of ETP & optimal use.

Requirements for Environmental Compliance

39

Newsprint Industry - Issues

Indian raw materials i.e. hardwood, reed, bagasse are not suitable for manufacturing TMP pulp.

Raw material and energy costs are high for CMP based newsprint mills.

Improvements neededMore use of domestic and imported ONP and OMG for deinking process to minimise cost of production.

Identify better raw materials like Eucalyptus globulus and E. grandis for producing chemi mechanical pulps.

There is a need to raise organised plantation of these species.

40

At present the MFN applied rates of Indian pulp & paper products fall with in the range of 0 to 15 percent. With 251 lines having 15 percent tariff (or import duties), 18 by 5 percent and 9 with noprotection at all.

If Swiss formula with value of coefficient being 15 gets accepted than all those tariff lines whose applied rate at present is 15 percent needs careful scrutiny.

Policy makers may need to insist that any negotiations on marketaccess are acceptable only on a pre-condition that all NTBs be removed under a fast track approach. This can be a powerful negotiating stand of India in the ongoing trade negotiations

Implication of WTO

41

ENVIRONMENTAL CREDENTIALS

European Union label is used in many products. In paper industry it is used e.g. in copy

papers. Criteria are related to pulp and paper industry’s emissions to water and air,

bleaching methods, energy consumption, etc. AOX level should be less than 0.3 kg/ton

of paper. Fibre raw material for paper should be waste paper or virgin fibre from

sustainable managed forests. Many European countries have additionally their own

eco-labels.

Similar concept could be developed for Indian conditions using overall environmental impact of the mill as criteria. The fibre base could be wood, waste paper or agro, as long as the paper is produced with an environmentally acceptable process.

SUGGESTED INITIATIVES

43

Technology Up-gradation/ Modernization

Modernization RequiredWood Based Mills

By and large modernized through its own resources in order to meet CREP requirement, howeverthe paper machine section need major rebuild up-gradation.

Needs restructuring to 1000t/day capacity.

Agro Based MillsImmediate attention required for

pulp washing

paper machine

black liquor handling and effluent treatment.

Recycled Fibre Based MillsNeed to be modernized by introduction of

deinking cells

pulp cleaning

slots screening equipment

paper machine rebuilds.

44

ACTION PLAN

45

GovernmentRevision of Forest Policy so that plantation can be increased.

Degraded forest lands should be identified by state govt. and be offered to indutry on long leases of plantations.

FDI in plantation programmes (with no change in land use)

Public –private partnerships

Allow duty free imports of waste paper

Encourage voluntary agreements to increase paper recovery

Equal subsidy be made available to paper industry at par with energy subsidy of bagasse

Funds for technology development

IndustryCooperation with farmers and State Forest Dept.

Search for foreign partners.

Public –private partnerships

Long term contract with printing/converting waste

Global sourcing, foreign partners

Sorting of imported mixed waste

Fibre fractionation to separate long fibres

Restructuring needed due to quality and environmental reasons

Develop pulping and papermaking technology based on non-wood fibre.

Wood

Raw Material

Recycled Fibre

Agro Fibres

ACTION PLAN….. Contd…

46

GovernmentAllow duty free imports of new and second hand machinery/equipment for technology upgradation.

Encourage cooperation & networking inside the forest cluster and other industries to make the sector more competitive.

R&D funding should be increased to 1% of turnover primarily through funding by industry.

Better availability and quality of coal.

More uniform energy policy by states

Uniform policy as regards to non-biodegradable materials.

Eco labeling scheme based on sustainable raw material base (wood/waste paper /agro) and environmental friendly processes.

IndustryBetter access to international financing

Seek for foreign partners

Focus on R&D to improve quality and to meet customers requirement.

More closure to international connections

Closure cooperation and interaction between CPPRI & Industry

Cogeneration in pulp & paper mills

Bigger mills and modernization to meet environmental standards.

Actively participate development of Eco label schemes so that industry’s can be taken into consideration.

ACTION PLAN….. Contd…

Research & Development

Environmental Policy

Energy policy

Finance