Hyderabad: Indian paper companies, which plan to expand capacity by more than 40% in the next five years, are buying wood-pulp farms and factories abroad to secure supplies of the key raw material even as they try and increase domestic pulp capacity.
The industry is expected to increase production to 10 million tonnes (mt) by 2012 from 7mt now and pulp capacity will match this growth, industry representatives said.
The companies currently use about 2mt of wood pulp and 2.5mt each of waste paper and agricultural residue as inputs.
Paper makers have been importing softwood pulp from Canada and Scandinavia, while hardwood pulp has been imported from Brazil and Indonesia, following raw material shortages that are expected to rise to about 2.5 lakh tonnes in two-three years, according to Pradeep Dhobale, president of the Indian Paper Manufacturers Association (IPMA) and chief executive officer of ITC Ltd’s paperboards and speciality papers division.
Major paper companies have drawn up ambitious expansion plans.
ITC Paperboards, as the cigarette major’s paper division is known, is on an expansion drive, taking its capacity from 3.8 lakh tonnes to 5.8 lakh tonnes and pulp capacity from 1.2 lakh tonnes to 2.2 lakh tonnes. The company meets its raw material requirements through its own plantations spread over about 65,000 hectares.
The Andhra Pradesh Paper Mills Ltd, controlled by the Kolkata-based Bangur Group, is strengthening its pulp capacity to replace imports.
It is also making an investment of Rs230 crore to set up an 80,000-tonne-a-year paper-making unit near Rajahmundry in Andhra Pradesh. The unit is expected to start production by the end of next year.
Andhra Pradesh Paper Mills has recently more than doubled its pulp line from 80,000 tonnes to 1.8 lakh tonnes and increased paper-making capacity from 1.55 lakh tonnes to 1.8 lakh tonnes.
Ballarpur Industries Ltd or Bilt, the leader in the writing and printing paper segment, has enhanced capacity with the acquisition of an integrated paper and pulp company, Sabah Forests, in Malaysia for $261 million (Rs1,122 crore).
Sabah’s 1.44 lakh tonnes paper plant will add to Bilt’s paper capacity of more than 4.6 lakh tonnes while the target’s 1.2 lakh tonnes pulp plant and its captive forests are expected to solve the Indian company’s raw material supply problem.
The New Delhi-based company is expanding its paper-making capacity by an additional three lakh tonnes in India by end-2008, with an investment of Rs1,200 crore.
The expansion in Malaysia will be completed in the second half of 2008, said Anil Pahwa, a Bilt spokesman. Bilt expects its capacity to touch the one-million-tonne mark.
In order to address the raw material shortage, IPMA is seeking government permission to have access to degraded forest land and wastelands on lease to produce pulp-worthy wood and wants import duty removed.