Minor Project Report on J K Papers

Introduction
JK PAPER Limited engages in the manufacture and sale of printing and writing paper
primarily in India. The company provides its products through a network of distributors and
dealers.
Established in 1962 JK Paper is the leading player in office paper, coated paper and
packaging board segments. With two major integrated Pulp and Paper Mills at Rayagada
(Odisha) near the Eastern coast of India and Songadh (Gujarat) on the West coast, the
company has a combined capacity of 4,55,000 tons annually. Being the pioneer of branded
paper in India, the Company exports its Branded Copier Papers and Packaging Boards to 35
countries covering USA, Middle East, Southeast Asia, SAARC and African countries.

JK Paper Ltd. has two large integrated paper manufacturing units – JK Paper Mills,
Rayagada, Odisha and Central Pulp Mills, Songadh, Gujarat with a combined capacity of
4,55,000 TPA. It is the market leader in Branded Copier paper segment and among the top
two players in Coated Paper and high-end Packaging Boards.

Its products are sold through extensive distribution network of 188 wholesalers, 10 depots &
4 regional marketing offices, and covering nearly 4,000 dealers. It offers a wide product
range and its brands are synonymous with premium quality paper.

Wide Product Portfolio

 Office papers- JK Cedar , JK Copier, JK Easy Copier, JK Sparkle ,JK Copier Plus and JK
Excel Bond. New brands 'JK CMax' and JK Max have established presence in market place.
 Packaging boards- JK TuffCote, JK Ultima ,JK TuffPac , JK IV Board
 Printing & Writing Papers- JK Cote , JK Ledger, JK SHB, JK Evervite, JK Finesse ,JK
Elektra, JK Lumina, JK Ultraprint, JK Esay Draw
 Speciality Papers- MICR Cheque paper, Parchment , Cedar digital

Leading exporter of Branded Copier Papers from India with exports to 35 countries.

JK Paper has recently invested substantially (about Rs 1775 crore) in expanding and
modernising our capacity at JK Paper Mills Rayagada. It involved state-of-the-art machines
with 1,65,000 TPA of paper capacity and a pulp mill with 2,15,000 TPA. This has
significantly reduce water and energy usage.

As part of a larger commitment & respect for environment, the Company has sustained its
efforts for increasing the green cover within 200 Km area from the plant sites at Jaykaypur,
Distt. Rayagada (Odisha) and Fort Songadh (Gujarat). It has planted close 17,000 Ha in
2014-15 under this programme. Most of these are planted with Eucalyptus, Casurina and
Subabul clones as per requirement. The planted area was 14% higher than previous year thus
taking the total coverage under the programme to 1.33 Lakh Ha.
JK PAPER LTD. - COMPANY HISTORY
J K Paper Ltd (formerly Central Pulp Mills) a member of HS Singhania Group is originally
promoted by Parkhe Group of Pune to manufacture Paper and Paper products. The Company
is India's largest producer of branded papers and a leading player in Coated Papers and High-
end Packaging Boards. It has two integrated Pulp and Paper Plants at Strategic Locations
Unit JKPM in East (Rayagada Odisha) and Unit CPM in West (Songadh Gujarat). The
company which fell sick and referred to BIFR was taken over by JK Corp Ltd a member of
the HS Singhania Group in 1992. JK Corp. holds 44.76% in the equity of this company as on
Nov 6 2003.The company has turnaround in a short period of time with the rehabilitation
package by HS Singhania Group companies JK Corp Ltd and JK Industries. JK Paper today
has an combined installed capacity of 150000 tpa with two integrated Paper Mills at JK Paper
Mills Orissa (Inst. Cap 100000 tpa) and Central Pulp Mills Gujarat (Inst. Cap 50000 tpa). The
company's paper mills are operating with a health average capacity utilisation of 115%.
Further the company has purchased a Pulp Drying Plant from Finland in 2001 to increase the
output and realization of market pulp. The plant was commissioned during the year itself. J K
Paper has also been consistently exporting its products to markets such as Sri Lanka
Bangladesh and several West Asian Countries. The company is the first paper mill in India to
have been accredited with ISO 14001.The company enjoys the locational advantage in
respect of sourcing raw material. It sources all its bamboo requirements with in the 200 kms
radius of the plant. Further for long term continuous source of raw material the company is
running social forestry and farm forestry programmes in 11 districts of Orissa and 3 districts
of Andhra Pradesh covering a total area of over 20000 Ha. In 2001-02 it has distributed 27
million saplings covering over 5200 hectares under plantations in Orissa AP and Gujarat J K
Paper has been a pioneer in every field related to the manufacture and marketing of paper. It
has the distinction of being the Largest manufacturer of branded copier paper in India.; First
to introduce surface sized maplitho in India.; First to introduce high quality bond paper
'Finesse' in A4 size consumer friendly retail packs of 100 sheets. First to introduce laser paper
in India. The company has introduced two new value-added products i.e. MICR Cheque
Paper and Cup-stock Board and both of them have well received in the market. The company
which is well known for its success in creating brand in paper industry with having top two
paper brand (i.e JK Copier[contributing 140 cr. to co's turnover in FY02-03] & JK Easy
Copier) in its basket the company has initiated outsourcing of paper products in India. This
outsourcing activity was kick started in the end of 2001-02 and gathered momentum last year.
The company has outsourced JK Cote (positioned in upper art paper segment) from an
international producer who produces as per the specification of JK Paper. The company
outsources domestically JK Eco Cote (caters to price conscious Chrome paper segment) and
'JK Eco Print'. The Scheme of Compromise and/or Arrangement between JK Corp Limited
and The Central Pulp Mills Limited was approved and sanctioned by the High Court of
Orissa and High Court of Gujarat and become effective on 5th November 2001. Subsequent
to this the name of the company was changed to JK Paper Ltd from The Central Pulp Mills
Ltd. Latest Development: JK Paper is planning to upgrade over half of its paper
manufacturing capacity to manufacture coated paper. The upgradation (Conversion from non-
coated to coated) to cost around Rs.60 crs. During the year 2016 the Company had issued
11910000 Equity Shares of Rs.10/- each at a price of Rs.42/- (including premium of Rs.32/-)
aggregating to Rs.50 Crore on preferential basis to the Promoter and constituents of the
Promoter Group. Consequently, the paid-up Equity Share Capital of the Company increased
to Rs.148.53 Crore from Rs.136.62 Crore. The proceeds of the said issue have been used
towards augmenting the Net Worth of the Company. During the year under review the
Company had issued 7428240 Equity Shares of Rs. 10/- each at a conversion price of
Rs.56.37 per Equity Share consequent upon the conversion of the Foreign Currency
Convertible Bonds (FCCBs) (Series 2) to the holders of such FCCBs. The Company had also
converted its FCCBs (Series 3) into 7428240 Equity Shares of Rs. 10/- each at a similar
conversion price during the financial year 2017-18 and consequently the paid-up Equity
Share Capital of the Company stands increased to Rs. 163.39 Crore on the date of signing of
this Report. During the year 2018 Euro 17.1 million FCCBs were converted resulting in
increase in paid up Equity Capital of the Company from Rs 155.96 crore to Rs 175.50 crore.
Since then all the remaining FCCBs (Euro 2.4 million) have been converted enhancing the
Equity Share Capital to Rs.178.24 crore.

Performance
YTD 1-Month 3-Month 1-Year 3-Year 5-Year 10-Year
JK Paper -33.60 -13.35 -27.07 -41.52 19.28 27.14 12.98
S&P BSE Small Cap* -17.14 -7.72 -15.10 -27.99 -0.67 3.42 6.54
S&P BSE FMCG* -9.49 -3.27 -6.75 -15.25 7.24 8.34 15.50
Company's return has been calculated on basis of BSE's price.
As on Aug 26, 2019
*As on Aug 23, 2019

Annual Ratios (%)

1-Year 3-Years 5-Years
Growth
Revenue 14.50 10.14 13.38
Net Profit 63.07 91.26 50.37
EPS 61.45 85.34 44.88
Book Value 22.13 15.51 15.08
Average
Operating Margin 28.19 23.94 20.14
Net Margin 12.85 9.48 6.01
Return on Net worth 23.09 18.36 11.84
Return on Investment 24.12 18.64 14.12
Interim Growth Ratios (%)
QoQ YoY YTD
Quarterly
Revenue -11.68 -10.37 -11.68
Operating Profit 9.93 29.36 9.93
Net Profit 21.31 43.10 21.31
EPS 21.31 43.11 21.31
TTM
Revenue -2.53 5.51 -2.53
Operating Profit 6.54 43.87 6.54
Net Profit 9.38 62.01 9.38
EPS 9.38 59.11 9.38

Peer Comparison
Market Revenue Net Net RoE Price to Price to
Cap (R Cr) Profit Margin (%) BookEarnings
(R Cr) (R Cr) (%)
JK Paper 1,798.48 3,173.82 478.21 14.74 23.09 0.83 3.76
International Paper 1,758.03 1,455.78 216.23 14.69 30.14 2.13 8.13
APPM
West Coast Paper 1,521.44 2,056.03 314.11 15.10 30.57 1.26 4.84
Mills

Insider Trades
Date Person Buy / Transaction No of Price Value
Sell Type Shares (R) (R Lakhs)
Jul 01, Anshuman Singhania Buy Market 52,800 127.60 67.37
2019
Jul 01, Bharat Hari Singhania Buy Market 105,600 127.60 134.75
2019
Jul 01, Harsh Pati Singhania Buy Market 158,400 127.60 202.12
2019
Jul 01, JK Credit and Finance Ltd Sell Market 1,300,000 127.60 1,658.80
2019
Jul 01, Raghupati Singhania Buy Market 380,200 127.60 485.14
Fund Houses invested in the stock
Fund Jun-19 Mar-19 Dec-18 Sep-18 Jun-18
BOI AXA Mutual Fund 0.288 0.322 0.473 0.362 0.500
Reliance Mutual Fund 0.163 0.163 1.036 0.236 0.236
Canara Robeco Mutual Fund 0.158 0.158 - - -
Quant Mutual Fund 0.002 0.002 0.002 - -
Figures given above are % of equity capital

JK Paper Ltd. (JKPL) is Indian branded paper manufacturing company. It is engaged in

manufacturing of Fine papers and Packaging boards. The company has two mills located at
Rayagad, Orrisa and Songadh, Gujarat. The various products offered by JKPL include coated
and uncoated printing and writing papers. JKPL also produces stationary products such as
notebooks, note pads, along with photoglossy & Matt paper for developing photo prints.

The company produces these papers under brand name JKexcel, for stationary, and JK
PHOTOVISTA, for photo prints. The company also offers wide range of coated packaging
boards such as JK Tuffcote, JK Ultima, JK IV Board, JK Purefil base and many more. JKPL
is headquartered in New Delhi, India.

Business Review's JK Paper Ltd.contains a company overview, key facts, locations and
subsidiaries, news and events as well as a SWOT analysis of the company.

This SWOT Analysis company profile is a crucial resource for industry executives and
anyone looking to quickly understand the key information concerning JK Paper Ltd. business.

Business Review's JK Paper Ltd.: SWOT Analysis & Company Profile reports utilize a wide
range of primary and secondary sources, which are analyzed and presented in a consistent
and easily accessible format.

Business Review strictly follows a standardized research methodology to ensure high levels
of data quality and these characteristics guarantee a unique report.
Products
The company provides various office documentation papers, including photocopy and
multipurpose papers for use in desktop, inkjet, and laser printers; fax machines; photocopiers;
and multi-functional devices. It also offers premium watermarked and landmarked business
stationery papers for corporate and individual applications. The company provides its office
documentation products under the JK Copier Plus, JK Copier, Sparkle Copier, JK Copier
Easy, JK Excel Bond, and JK Savannah brand names.

In addition, the company offers uncoated writing and printing paper under the JK Evervite,
JK Maplitho Paper, and JK MICR cheque brand names for various applications, such as
printing of books, calendars, and maps; making premium diaries, exercise books, notepads,
and scribble pads; food grade applications; and for making cheques. It also produces MICR
cheque paper, as well as high-end pulp boards, ledger papers, and parchment grades.

The company also provides a range of coated paper and board under the JK Cote and JK Eco
Cote brand names for use in posters, brochures, folders, premium books, calendars, direct
mailer, catalogue, pamphlets, labels, and book jackets. Additionally, it offers high-end coated
packaging boards for packaging industry under the JK TuffCote, JK Ultima, JK PureFil base,
JK TuffPac, and JK IV Board brand names.

Markets
The company exports its products to Sri Lanka, Bangladesh, the Middle East, Africa,
Australia, Singapore, and Malaysia.
PESTLE ANALYSIS OF THE PAPER INDUSTRY
The pulp and paper sector present one of the energy intensive and highly polluting sectors
within the Indian economy and is therefore one of the main particular interest in the context
of both local and global environmental discussions. Increases in productivity through the
adoption of more efficient and cleaner technologies in the manufacturing sector will be most
effective in merging economic, environmental, and social development objectives.

POLITICAL FACTORS AFFECTING THE PAPER INDUSTRY

Policy
India's pulp and paper sector has been protected by government policy for more than three
decades. Controls on production, distribution and prices impeded the growth of the industry
substantially. During the paper shortage in the 1970s and further on in the 1980s the
government actively supported the venture into the paper sector in providing financial
incentives to technocrats and entrepreneurs through financial institutions (Datt and
Sundharam, 1998). To protect the rising small paper mill industry and ensure their existence
along with larger, more economic paper mills thee government gave a variety of excise
concessions and reliefs. In 1974, the Government of India enforced paper manufacturers to
produce white paper and supply it at a concessional rate to the educational sector and to the
governmental departments. Fiscal levies accounted to as much as 35%-40% of the selling
price adding to the already high-cost based prices of paper.
The government additionally established high import duties on imported paper and
paperboard to reduce import dependency. Export of paper was banned during the whole
period. (1998)

The Government of India reacted on the lasting stagnation and financial problems of the
sector in the 1980s in removing price and distribution controls on white printing paper in
1987. This allowed the paper industry to receive profitable returns on paper products and thus
provided incentives to increase capacity utilization and establish new capacity. Also, the
Government of India exempted paper units from excise duty, provided they used 75% of non-
conventional raw materials for production. However, this exemption was abolished again in
the 1990s. The concept of broad-banding has been extended to paper products since 1985-86.
This implies that firms now experience the freedom to manufacture any variety of paper
within the overall limit of licensed capacity (1998).
Since 1992, the government has taken further measures to improve the situation of the paper
sector. They include excise rebate to small units, abolition of customs duty on the import of
paper grade pulp and wood chips, removal of statutory control over production, price and
distribution of white printing paper and provision of infrastructural support by increased
allocation of coal and wagons. While import duty on paper in 1991-92 was as high as 140% it
has since gradually been reduced from 65% to 40% and further to 20%% in May 1995. Yet,
customs duty on inputs and intermediates have not been brought down on 11 a similar Scale.
Import of wood pulp for the production of newsprint and newsprint products are allowed on a
more flexible scale. Moreover, obligations regarding licensing and excise duty have been
alleviated. While the Monopolies and Restrictive Trade Practices Act (MRTP ACT) from
1991 abolished industrial licensing for almost all industries, the paper and newsprint industry
except the bagasse-based units has not been exempt yet. Reasons for continued licensing of
these industries were given as: security and strategic concerns, social reasons, hazardous
chemicals and environmental impacts.
Growth of paper industry in India has been constrained due to high cost of production caused
by inadequate availability and high cost of raw materials, power cost and concentration of
mills in one particular area. Government has taken several policy measures to remove the
bottlenecks of availability of raw materials and infrastructure development. For example, to
Overcome short supply of raw materials, duty on pulp and waste paper and wood logs/chips
has been reduced.

ECONOMICAL FACTORS AFFECTING THE PAPER

INDUSTRY
Pulp and Paper Production in India
Although per capita paper consumption in India is very low compared to other countries the
paper industry holds a considerable share in manufacturing production. Today more than 380
small and big paper mills produce a variety of different paper, paperboard as well as
newsprint products. Cultural paper constitutes the biggest share in production with 41% (in
1991), followed by Kraft paper with a share of 27%, paperboard with 17%, newsprint with
12% and specialty paper at 3%. Installed production capacity increased substantially from
0.77 million tonnes2 in 1970-71 to 3.95 million tonnes in 1994-95. Production, however, has
not increased accordingly. While in 1970-71 production ran at almost full capacity, in 1994-
95, only 2.5i million tonnes of paper and paper board were produced. Capacity utilization had
decreased from 99% in 1970-71 to a low of 60% in 1992-93 and slightly increased again to
64% in 1994-95.
Size, type and quality of the paper producing units are very diverse. As of 1995, more than
50% of _paper and paper board products were produced in only 38 paper mills. The average
size of a paper mill in India was 10,400 tonnes per year (tpa), compared with 85,000 tpa in
Asia and about 300,000 tpa in Europe and North America. About two thirds of India's paper
mills have a capacity of less than 18,000 tpa (Meadows, 1997). Large mills are defined as
mills with an installed capacity exceeding 20,000 tpa. Medium size mills have a capacity
between 10,000 tpa and 20,000 tpa while small mills are defined as mills with a capacity of
less than 10,000 tpa. According to this definition, only 48 large mills holding a share of 52%
of total capacity were counted in India in 1990. The range of size within this category varied
considerably, between 20,000 tpa and more than 100,000 tpa. Large mills account for nearly
90% of the cultural paper production. Small and medium size paper mills became important
when due to a severe paper shortage in the early 1970s the government promoted the
immediate establishment of small, readily available paper units. This following cheap second
hand technologies were imported that could be set up in any part of the country. AS a result
of the paper shortage and Overall government pricing policy the small and medium sector
with more than 300 paper mills accounted for almost 50% of installed capacity and
production in 1992. They produce primarily low-quality paper such as Kraft paper and
paperboards from recycled paper and various Agro fibres. Yet, the small units suffer from
high production costs, uneconomic operation, low quality and negative impacts on the
environment. About 150 small mills are currently closed or sitting idle. Already old when
imported further degraded since, which has led to the current situation of low productivity,
low efficiency, excessive resource consumption, obsolete technologies, capacity
underutilization and low scale of operation.
International competition and the high quality and low production costs of imported paper
will also force many small mills to close. Furthermore, most small and medium size pulp and
paper mills cannot economically provide chemical recovery and pollution control systems.
Therefore, they are highly polluting industries contributing substantially to the overall level
of emissions and environmental problems.
Demand for paper and paper products has continuously been increasing over time.
Consumption of paper and paper board equalled 1.2 million tonnes in 1980-81 and increased
to 2.6 million tonnes in 1994-95. This trend is expected to be maintained in the future. Per
capita consumption of paper, in 1995, was one of the lowest in the world. Nevertheless,
production today as in the past could not meet demand.
Imports accounted for about 7% of consumption in 1980-81. With the increase of capacity
through small mostly agro-based paper mills in the early 1980s, imports of paper and paper
board decreas ed to only 2% of consumption in 1985 and to less than 1% in 1990-91. In
1994-95, however, they reached up again to over 10%. Shortage of newsprint has been even
higher both in the past and today. On average, about 0.2 million tonnes of newsprint (about
40% of consumption) had to be imported in the last few years.
Meeting this rising demand will provide a major challenge to the Indian pulp and paper
sector. The industry will have to undergo significant modernization and expansion processes.
Existing mills will have to renovate and modernize in order to optimize capacity utilization.
During this process small agro-based mills are most likely to not survive. They will have to
close down due to incapability to meet environmental standards, to operate on
economies of scale and to compete against larger agro-based mills for raw materials. Small
recycled fibre-based mills are more likely to sustain market forces in adopting measures to
cut production costs by importing waste paper or pulp. However, their existence crucially
depends on the overall development of the international market price for these materials.
Most likely these prices will increase as demand for wastepaper increases worldwide, and
wastepaper recovery rates are already very high in many developed countries. Medium
agro/recycled fibre-based mills are expected to possess cost effective potentials for both
modernization and expansion. Similarly, arge integrated mills have a high potential to
undergo the needed modernization and expansion restructuring. Expansion, however, can
only be based on forest material to the extent of 25% according the guidelines issued by
national forest policy in 1989. They will thus need to mainly be based on recycled fibres,
purchased pulp or dedicated forest management.
SOCIAL FACTORS AFFECTING THE PAPER INDUSTRY

Linked to the economic factors above social changes have significantly impacted the paper
industry in relation to changing demographics in terms of the customers it targets. As such
then changes in customer's needs and preferences for quality paper products and changing
preference towards the paper rather than fibre or plastic has increased the pace of the demand
in terms of meeting these needs. Increased globalization arguably has led to customers
demanding faster responses to their needs creating much more Competitive business fields
attempting to satisfy these desires. The industry is not only about technology but about
pictures illustrating the industry attempt to relate to the lifestyles of consumers. This is
because customers have become more environmental sensitive as well as technique and
quality orientated as a result of higher educational levels and income levels creating much
more discerning customers in relation to these.
The sociological context of human resource has been a major influence. Flexibility in terms
of labour in Indian paper industry has been mainly achieved by enlarging the scope of tasks
and a relaxation of organizational boundaries within the business industry. As a result, it
provides employment to nearly 1.5 million employees in India to meet the growing demand
for paper. Paper manufacturers are producing white paper and supply it at a concessional rate
to the educational sector and to the governmental departments as well as per regulation given
by the government.
TECHNOLOGICAL FACTORS AFFECTING THE PAPER INDUSTRY
Currently, governmental as well as sector initiatives focus on overcoming the acute raw
material constraints, implementing and adopting better technologies, increasing production,
productivity and efficiency, expanding to economies of scale and decreasing environmental
effluents. Various new technologies are entering the Indian market that support these
movements.
Presently, large paper mills are more efficient, using better and more modern technologies
and appropriating economies of scale. Additionally, they provide chemical recovery facilities
which reduce both emissions and external energy requirements. However, the large paper
mills also face severe basic problems such as high production costs, raw material constraints
and low productivity. Overall performance has been best in medium size firms with regards
to average profitability
LEGAL FACTORS AFFECTING THE PAPER INDUSTRY
The abolishment of customs duty on imports of paper grade pulp and Wood chips was
accompanied by a sharp rise in international prices of wood pulp and waste paper in 1994 that
escalated the costs of production considerably. Many, particularly small paper mills cannot
compete in the market any longer and have to either reduce production or go out of business.
Indian paper industry has been de-licensed under the Industries (Development & Regulation)
Act, 1951 with effect from 17th July, 1997. The interested entrepreneurs are now
Entrepreneurs' Memorandum (IEM) with the Secretariat for Industrial Assistance (SIA) for
setting up a new paper unit or substantial expansion of the existing unit in permissible
locations. Foreign Direct Investment (FDI) up to 100% is allowed on automatic route on all
activities except those requiring industrial licenses where prior governmental approval is
required. Environmental regulations have been set up following increasing environmental
impacts in the line with rapid industrialization as well as greater awareness of environmental
protection and ecological balances. The Environmental Protection Act was implemented and
a Central Pollution Control Board established to set up discharge standards that should be
enforced by State Pollution Boards. The standards have become more stringent over time.
Since 1989 even small paper mills have to follow discharge standards in the form of minimal
standards regulating liquid, air and solid waste discharges.
ENVIRONMENTAL FACTORS AFFECTING THE PAPER INDUSTRRY

Raw Material Constraint

Regarding the use of raw materials in India one can categorize three types of mills: forest-
based mills, Argo waste/residue-based mills and recycled fibre-based mills. In 1992, forest
based raw materials account for about 49% of total raw material inputs for paper, paper board
and newsprint production, while the share of agricultural residues and wastepaper amount to
29% and 22% respectively (Sharma et al., 1998). The consumption shares of forest-based
materials have been declining over time and is expected to further decrease to 47% by 2000.
The share of agricultural residues shows a steadily increasing trend from 1980 to today and is
expected to further rise in the future. At the same time wastepaper use which has risen from
13% in 1985 will approximately hold its share. The small paper mills set up in the early
seventies almost exclusively use Argo waste/residues as raw materials for paper production.
Large mills, so far, have mainly been based on forest material for paper production. This
includes bamboo, hardwood and eucalyptus. While Argo waste/residues such as rice straw,
wheat straw, etc. are relatively short cycled regenerative and abundant, the availability of
forest based raw material is rather limited.

Reduction of forest material consumption:

With the implementation of central and state government policy towards forests protection
and forestation, pulp and paper mills now have to take responsibility for the reduction of
forest material consumption and forestation efforts. The government is encouraging the
industry to create plantations on degraded forest and waste land (dedicated forest program).

The overall constraint of raw materials will force the paper industry in future to rely more and
more on imports of pulp or final paper products. To Overcome the raw material shortage the
government has liberalized the import of raw materials and given excise concessions for the
use of non-conventional raw materials.

Environmental Impact
The pulp and paper industry is a chemical process industry with major impact on the
environment. The potential pollutants from a pulp and paper mill can be classified into four
categories: (1) liquid effluents, (2) air pollutants, (3) solid wastes and (4) noise pollution. The
environmental problems faced by large and small paper mills are entirely different. Pollution
control is more difficult for small and medium size agro-based units. Chemical recovery in
these units is not economically viable and therefore black liquor and lime sludge are not
being burned for heat recovery. It is estimated that a 30 tpd small paper mill 10 can be almost
three times as polluting as an integrated paper mill of 200 tpd. For the same reason as
wastepaper production requires substantially less energy than other processes its
environmental impact is also much lower. As shown in Sharma et al. (1998) water pollution
in the form of wastewater is up to 90% lower compared to wood and agro-based production.
Solid waste from wastepaper production is shown to amount to only a tenth of that from agro-
based production. The type and quantities of solid waste generated differ considerably across
mill types.
Stricter environmental regulations added to the constraint on raw materials. As mentioned
above programs such as the dedicated forest program were implemented implying increasing
costs for firms to ensure sufficient availability of raw materials. Furthermore, environmental
regulations regarding air, water as well as solid waste effluents forced many small paper mills
to close down. Small and medium size pulp and paper mills very often cannot economically
provide chemical recovery facilities. They therefore suffer from higher emissions as well as
higher external energy requirements since recovered chemical and waste products can
effectively be used for cogeneration of steam and electricity. The decom position analysis
allows to gain further insights on the contribution of both input factors and productivity
change to output growth.
SWOT ANALYSIS
Competitive strengths
 Large and growing domestic paper market
 Some competitive PMs in newsprint, carton board and coated wood free
 Relatively low personnel and fuel costs (although personnel productivity is lower than
in many competing countries and the quality of coal varies)
 Up to date research institute (CPPRI)
 Know how in non-wood pulping and applications
 Well-developed printing industry
 -Local market knowledge
 English language

Competitive weaknesses
 Fibre shortage, especially virgin wood fibre
 Small and fragmented industry structure, many non-competitive mills/machines (both
quality and cost wise) + fragmented market
 Highly skilled and job specific manpower is not available
 Quality and availability of some of the domestic pigments and chemicals
 Environmental problems of most of the small pulp mills and also some big mills
 Low level of internationalisation of the industry
 Low standard of converting industry
 Infrastructure, transportation
 High cost of raw material including wood, non-wood and waste paper
 High energy costs (from grid)
 High cost of financing
 Lack of local capability for design and development and machinery manufacture +
process control system

Competitive opportunities
 Enormous domestic market potential
 Modem, world scale paper machine would be cost competitive in most grades
 Forest plantation potential Development of the industry cluster on broader basis
(including paper industry and related industries: machinery + chemicals) based on FDI
and use of local personnel.
 Integrates of combined wood and agro based papermaking
 Market DIP mill
 Increasing use of carbonates and fillers
 Government literacy program - increasing demand for printing/writing papers
 WTO: foreign participation/FDI would speed up restructuring
 Low labour costs (allow e.g. cost-effective sorting of imported mixed waste)
 Back haul possibilities for containers to lower waste paper transport costs
 Export potential
Competitive threats
 Unprepared mills for international competition (WTO entry) both on price and quality
 Decline in capacity due to environmental pressures
 Decline in capacity as some of the segments group of mills are unable to compete at
national and international levels with respect to quality and cost of products.
 Short term planning for raw material
 Fragmented market makes entry for a world scale unit difficult
 Delayed forest plantations, deficit of wood fibres
 Lack of international perspective in project development and implementation
 Capacity of announced projects is small considering market growth-will speed up import
growth
 Weakening competitiveness of domestic industry due to shortage and cost of basic inputs
 Perceived difficulty of operating environment reduces the speed of FDI
CONCLUSION
In this paper, we analysed the India's pulp and paper sector from various angles. We
developed economic as well as engineering indicators for technological change and political,
social, legal and also the environmental factors. We discussed our findings within a broader
context of structural and policy changes in the sector. The economic analysis showed that
productivity has decreased over time with a bias towards increased use of material over
labour and capital inputs. The decrease was mainly due to the increased number of small and
less productive units that were set up following the acute paper shortage in the early 1970s. In
the sub period of 1982 to 1990 along with the establishment of larger plants as well as first
liberalization measures productivity showed increasing though fluctuating trend. Yet, since
1990, the sector has suffered a tremendous downfall in accordance with Overall economic
recession.
The paper sector has been marked by continuous shortages in supply of various products,
especially white printing paper and newsprint. Meeting future demand, which is expected to
increase considerably, will continue to be a challenge as major expansion and modernization
efforts would have to be undertaken while raw materials scarcity prevails and price
development on international markets is unfavourable to the industry.
Future production has to be economically viable and environmentally sound and needs to be
more efficient in terms of resources use and production. As major policy changes have been
implemented in the 1990s to overcome the acute problems in the paper sector. We further
pointed out low cost potentials for reducing environmental pollution and improving Overall
plant productivity. However, the implementation of initiatives towards energy efficiency is
being hampered by barriers both of general and process specific nature occurring at the macro
and micro level of the economy. Lack of information about potential savings and existing
technologies are among the barriers. Energy and environmental audits could substantially
help overcome these barriers. The analysis reveals that energy policies in general and price-
based policies in particular are efficacious for Overcoming these barriers in giving proper
incentives and correcting distorted prices. Through the removal of subsidies energy prices
would come to reflect their true costs, while environmental taxes could be imposed to
internalize the external costs (including environmental costs).