Indian Paper

Industry
 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 The global annual production of paper was 382.0 million tonnes in
2006

Paper and Paperboard Production – Global Market, 2002-20

(figures in million tonnes)
• The annual global paper and paperboard production was
490.0 approximately 382.0 million tonnes in 2006. It is expected
402.0
to increase to 402.0 million tonnes by 2010 and 490.0
366.0 382.0
321.4 328.1
360.0
million tonnes by 2020.
• 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:
2002 2003 2004 2005 2006 2010 2020
- 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
Consumption per capital, 2005 vs. 2006 printed material intended for mass distribution
(figures in Kgs) • The US is the largest market for paper product and
324.0 2005
commands high per capita consumption. Asia’s main
312.0
markets are China, Japan, India, Malaysia, Singapore and
2006
247.0
228.0
Thailand.
- In 2005, Japan had the highest per capita consumption
(247 kg), followed by Singapore (228 kg), Malaysia (106
106.0 kg), Taiwan (51 kg) China (42 kg), Indonesia (22 kg)
51.0 42.0
and Philippines (16 kg).
22.0 16.0 14.0 6.57.0 - India’s per capita consumption is estimated to be as
US A J apan Singapore Malaysia Thailand China Indonesia P hilippines Vietnam India low as 7.0 kg in 2006.

Source: CEPI; RISI; European recover paper council; ICEM World Paper Conference (November 2005); Research India analysis
 Asian region is the largest producer and consumer of paper &
paperboard in 2006

Paper and Paperboard Production – Region wise, 2006

(figures in percent) • The US is the largest producer and consumer of paper
100% =382.0 million tonnes and paperboard in the world. On a regional basis, Asia
Europe North America emerged as the largest producer and consumer of paper
27%
30% and paperboard in 2006.
• The paper and paperboard industry has witnessed a
radical shift in last decade.
- Due to the strong economic growth in both China and
India, the demand for paper and paperboard is
Rest of the increasing at a fast rate i.e. 8-9%.
world Latin
2% America Asia - Latin America in the south and Indonesia in the east
5% 36%
are emerged as a fibre supplier with a concurrent
decline in the North American pulp industry.
Paper and Paperboard Consumption – Region wise, 2006 • North America, Europe and Asia dominate the global
(figures in percent) pulp and paper industry. Asia, mainly China and India,
would emerge as an important market for pulp & paper.
100% =381.2 million tonnes
- It is expected that Asian market would account for
North America
CEPI Countries
26% 60% of global incremental production during the
26%
period 2004-2020.
- The share of fast developing Asian markets, excluding
Japan, in global consumption is estimated to increase
to 34% by 2010 from the 32% in 2006.
Rest of the - The share of mature markets like North America and
world
3% Latin Europe would fall to around 50% by 2010 from the
America Asia
6% 39%
52% in 2006.

Source: CEPI; RISI; European recover paper council; Research India analysis
 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 In India, around 666 units are engaged in the production of paper
and paper-board

Category-wise paper mills in India

(figures in number)
• India is the 15th largest paper producer in the world. It
Category Capacity Number of Capacity (TPA)
Range units provides employment to nearly 1.5 million people and
contributes INR25.0 billion to the government's
Small Up to 10000 299 12,90,382
exchequer.
  <2000 69 75,522 • In last 55 years, the number of paper mills has increased
  2000–5000 107 2,96,980 from just 17 mills in 1951 to more than 666 units engaged
  5000–10000 123 9,17,880 in the manufacture of paper and paperboard, out of which
nearly 568 are in operation by 2006.
Medium 10000–20000 116 16,69,460
- Capacity utilization of the industry is just 79%, due to
old technology. Moreover, 194 mills under the purview
Large >20000 70 38,93,048
Raw material-wise paper mills in India of the Board of Industrial and Financial Reconstruction
(figures in number) (BIFR) and nearly 60 mills (with a capacity of 1.3
million tonnes is closed).
Recycled Paper
Wood
38% • Indian paper mills can be categorised based on the raw
32%
materials - wood/forest based mills, agro-residue based
mills and wastepaper-based mills.
- 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-
Agri-Residue
30% wood raw material.

Source: DIPP; Water and agro industry; Mysore Mills estimates; Research India analysis
 Due to high growth rate, Indian paper industry is very attractive for
the foreign players

Paper and Paperboard - Production in India, 2002-06

(figures in million tonnes)
Installed Capacity
8.1
7.4 7.7 Production • India is self-sufficient in manufacture of most varieties of
6.5
6.2 6.4
5.9 5.9 paper and paperboards.
5.6
5.2
- 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, the companies
also need to rely on imported wood pulp and waste
2002-03 2003-04 2004-05 2005-06 2006-07 paper.
• In last 5 years, capacity was increased mainly through
expansion and modernisation of the existing facilities
rather than setting up greenfield projects.
Paper and Paperboard - Import-Export, 2002-06 • The per capita consumption of paper in India is very low
(figures in million tonnes) Import i.e. 7 Kgs in 2006, as compared to an average
0.4
0.3
Export consumption of 28 Kgs and 58 Kgs in Asia and world
0.3
0.3 0.3
0.3 respectively. The per capita consumption is expected to
0.2 increase to 12 Kgs by 2020.
0.2 0.2
0.2
• 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.
2002-03 2003-04 2004-05 2005-06 2006-07

*
* Note: estimated figures
Source: DIPP; Water and agro industry; Mysore Mills estimates; CIBA; CRIS INFAC; Research India analysis
 It is expected that paperboard would grow at a faster rate within
paper industry

• 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 related to
Paper & Paperboard - Production and Consumption
GDP growth in the country. In the past, it has shown
(figures in million tonnes)
Production the 1:1 relationship with the GDP growth rate.
Consumption - With expected GDP growth of 9-9.5%, the demand for
21.0
20.0 Newsprint and Writing & Printing Paper is expected to
grow at the same rate.
13.9 14.0
• Continued availability of raw materials would be a big
8.3 9.0 challenge for the industry in the next 5-10 years.
According to the Indian Pulp and Paper Technical
Association (IPPTA), the paper industry is expected to
fall short of demand by 1.1 million tonnes by 2010-11
2009-10 2014-15 2019-20 due to raw material constraints.
• According to ITC’s estimates, the total demand for paper
is around 8.0 million tonnes and is expected to grow to
10.0 million tonnes by 2012 and 21.0 million tonnes by
2020.
• According to Indian Paper Manufacturers Association
(IPMA), consumption of paper in India is set to double
from the current 7.0 million tonnes per annum by 2015.

Source: CII; IPMA; Bilt; Research India analysis

 It is estimated that demand would outpace supply

Projected Demand, Supply of Paper & Paperboard, 2005-20

(figures in million tonnes) Demand
14.9 Supply
12.2

11.1 9.5
9.1
9.5 8.2
8.3 8.0 6.7
6.8 6.1
6.2
5.8 4.9 4.5

2005 2010 2015 2020 2005 2010 2015 2020

Projected Demand, Supply of Newsprint, 2005-20 Demand

(figures in million tonnes) 3.9
Supply 2.4

2.9 1.9
1.8
1.6
2.2 1.4
1.2
1.6
1.0
1.2 0.7
1.0
0.9
0.7

2005 2010 2015 2020 2005 2010 2015 2020

Source - Financial Express, February 19th , 2006 Source – Jaakko Poyry Report 2002
Source: CPPRI; Research India analysis
 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Appendix
 Due to high growth rate, Indian paper industry is very attractive for
the foreign players

Newsprint Production in India, 2002-06

(figures in million tonnes)
Installed Capacity
1.5
1.4 Production • In 2006, there were around 77 mills listed in Schedule to
1.3 1.3
1.2
the Newsprint Control Order, 2004 as mills
1.0
0.9 manufacturing newsprint paper – of which 2 in Central
0.8
0.6
0.7 Public Sector, 2 in State Public Sector and 73 in Private
Sector.
• The production of newsprint has increased at a CAGR of
12.5% over the last 5 years. The production of newsprint
2002-03 2003-04 2004-05 2005-06 2006-07 in 2006-07 (April-August 2006) was 420,000 tonnes.
• According to the International newspaper marketing
association (INMA) estimates that approximately more
than 360.0 million literate people in India are still not
Newsprint - Import-Export, 2002-06
(figures in ‘000 tonnes) reading newspaper. Thus, increase in the number of
Import
840.0 newspaper reader would also increase the demand for
750.0 Export
670.0 680.0 newsprint.
520.0 • The demand for newsprint in the country is met partly
from indigenous production and partly by import. Free
imports and low customs duty have made newsprint
market competitive.
0.0 3.0 5.0 10.0 2.4 - There are no price or quantitative controls. Various
2002-03 2003-04 2004-05 2005-06 2006-07 policy measures have been taken to improve
production and availability of newsprint.
*
* Note: estimated figures
Source: DIPP; The Central Pulp and Paper Research Institute (CPPRI),; Mysore Mills estimates; Research India analysis
 Uncoated wood-free paper market is primarily dominated by
domestic players
Uncoated Wood Free Paper Market, 2003-07
(figures in ‘000 tonnes)

CAGR 447.2
9.76% 415.0
381.0
362.0
307.0

• Uncoated wood free paper market is mainly dominated

by the domestic players. It is highly commoditised and
competitive segment. All players compete with each
other on the basis of cost.
2002-03 2003-04 2004-05 2005-06 2006-07 • Uncoated wood free market, including both hi-bright and
low-bright, grew to 860,000 tonnes in 2006-07 from
814,000 tonnes in 2005-06.
Copier Paper Market, 2003-07 - Of the total uncoated paper market, hi-bright accounts
(figures in ‘000 tonnes) for 52% in 2006-07 and 51% in 2005-06 respectively.
- Hi-bright paper segment includes super printing
CAGR 215.0
18.92% 190.0 paper, NSD and SS Maplitho etc.
169.0
• Due to strong economy growth, the demand for copier is
106.0
119.0 also increasing. It includes paper, which are cut in
different size, for desktop printing and copying.

2002-03 2003-04 2004-05 2005-06 2006-07

Source: Bilt; Research India analysis

 Coated wood-free paper is the fastest growing paper segment in
India
Coated Wood Free Paper Market, 2003-07
(figures in ‘000 tonnes)

CAGR
320.0
9.82% 293.0
270.0
244.7
222.5 • Coated wood free paper is the fastest growing segment
in India, with a growth rate of 9.2% in 2006-07. Within the
coated segment
- The two side coated paper market grew by 13% to
155,000 tonnes in 2006-07, compared to 140,000
tonnes in 2005-06
2002-03 2003-04 2004-05 2005-06 2006-07
- The two side coated board market grew by 9.0% to
62,000 tonnes in 2006-07, compared to 60,000
tonnes in the previous year.
Creamwove Paper Market, 2003-07 • Coated paper segment witnessed a shift towards high
(figures in million tonnes)
value and good quality blade coating paper. The
CAGR companies are also facing stiff competition and price
1.4
5.19% 1.4 pressures from imports – mainly from China and
1.2 1.2
1.2 Southeast Asian countries.
• Creamwove paper is a basic printing paper material,
mainly caters to excise book makers. This segment is
highly competitive and commoditised.

2002-03 2003-04 2004-05 2005-06 2006-07

Source: Bilt; Research India analysis

 Tissue paper segment is at a very nascent stage in India

• Specialty paper market has grown at a compound rate of

7.46% in last 4 years, due to strong domestic demand.
- According to CRIS Infac, speciality paper segment is
Speciality Paper Market, 2003-07 expected to grow to 297,000 tonnes by 2008, an
(figures in ‘000 tonnes) increase of 7.2% over 2006-07.
CAGR • Tissue paper industry has emerged as a new sub-
7.46% 277.0 segment within the paper industry in India. Tissue market
258.0
239.0
221.0 is at a very nascent stage in India. Due to increasing
205.0
disposable income, the consumers are adopting the
tissue culture.
- The Indian market for tissue paper is only 30,000
tonnes per annum, while that in China is 3.0 million
tonnes.
2002-03 2003-04 2004-05 2005-06 2006-07 - With the increasing preferences towards hygiene
products, the demand for tissues is expected to grow
at a faster rate. Moreover, the entry of new players
like BILT would also increase capacity.

Source: ICICI direct Research, CRIS Infac; Research India analysis

 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 Paper and Paperboard Industry – Key Drivers

Strong Consumer Demand for Packaged goods fueling high growth in Industrial grades of
Paper & Boards largely led by growing disposable incomes & Lifestyle changes.

Low consumption per

Strong economic growth
capita

Indian Paper Industry

Increased government
focus on Printing Industry
education

Trend Description Potential Implications Trend Description Potential Implications

• Indian economy is growing at• Strong economic growth • The paper consumption in • The impact of just 1 kg
Strong more than 8% rate over the would fuel the demand for Low India is just 7 Kgs per increase in per capita
economic last 4 years. paper and newsprints. consumption per capita, as compared to consumption would lead to
growth capita global average of 50 Kgs increase in demand by 1.1
• The government expects • The industry would witness a
that economy would continue large capital investment both per capita. million tonnes of paper.
to grow at the same pace for by domestic and
the current fiscal 2007-08. international players.

• In 2007-08, the central • Increased rates of literacy

Increased Printing Industry • There are approximately • Indian printing industry would
government has allocated and improved school 130,000 printing presses in grow from $12.1 billion in
government
INR106.7 billion for SSA infrastructure would result in India. 2006 to $20.9 billion in 2011.
focus on
programme. greater demand for paper. • Indian printing and • The strong growth in printing
education
• It allocated INR6.9 billion packaging industry is industry would also fuel the
(4.1% of total fund) for growing at a CAGR of over demand for paper in the
textbook in 2006-07 16.2% since 1989. future.
 Strong economic growth

Indian – GDP Growth Rate, 2003-07

(figures in percent)
9.2
• Indian economy has grown at a 7-8% rate in last 4 8.5 8.4
7.5
years. All the sector contributed in GDP growth, such
as manufacturing, FMCG, services etc. Manufacturing
and services industry contributed approximately 90% 4.3

of the growth.
- A strong economy contributes to consumption of
papers in all sectors - office, education and
personal consumers. 2002-03 2003-04 2004-05 2005-06 2006-07
• Due to improving living standard and higher disposable
incomes, the demand for branded high end paper and
hygiene paper products has increased in last 3-4
years. Indian – GDP Per Capita (PPP)*, 2003-07
- The demand for upstream market of paper (figures in US$)
3,800.0
products, like, tissue paper, tea bags, filter paper, 3,400.0
3,100.0
light weight coated paper, medical grade coated 2,900.0
2,540.0
paper, etc., is picking up with the growth of
economy. These developments are expected to
give strong support to the paper industry.
• Strong consumer demand for packaged goods is
fueling high growth in industrial grades of paper &
boards, largely led by growing disposable incomes and 2002-03 2003-04 2004-05 2005-06 2006-07
lifestyle changes.

* Note: GDP on a purchasing power parity basis divided by population as of 1 July for the same year
Source: CIA World Factbook; Research India analysis
 Increased government focus on education

SSA – Total Fund Available, 2003-07

(figures in INR billion) 172.4
• The government has increased its focus on education
and initiated several central and state-level 129.4

programmes to increase the literacy rate.

• Indian government started its flagship programme 67.7
Sarva Shiksha Abhiyan (SSA) in 2001 to achieve the
36.4
goal of Universalisation of elementary education. 20.9

- It aims to provide useful and relevant elementary

education for all children in the 6 to 14 age group 2002-03 2003-04 2004-05 2005-06 2006-07
by 2010.
- In 2007-08, the central government has allocated
INR106.7 billion for SSA programme, moreover, SSA – Total Expenditure, 2003-07
an equal amount would also be allocated by states (figures in INR billion)
government. 147.8

- Of total fund available, the government allocated

INR6.1 billion (4.7% of total fund) and INR6.9 100.0

(4.1% of total fund) for textbook in 2005-06 and

66.0
2006-07 respectively.
• An increasing expenditure on textbook offers a good 30.6

opportunity for the companies. 13.1

2002-03 2003-04 2004-05 2005-06 2006-07

Source: Ministry of human resources development; Planning commission; Research India analysis
 Low consumption per capita

Paper Per Capita Consumption in India, 2003-07

(figures in Kgs) 7.0

6.0
• India accounts for nearly 15% of the world population,
4.8 4.6
it consumes only 1% of the world paper consumption. 4.4

- The paper consumption in India is just 7 Kgs per

capital, as compared to global average of 50 Kgs
per capita.
• With the increasing literacy rate and strong economic
growth, the per capita consumption of papers is 2002-03 2003-04 2004-05 2005-06 2006-07
expected to increase in the future
- According to Economic Survey, per capita
spending on education, as a percentage of GDP, Paper – Demand vs. Supply, 2007-11*
has increased from 1.2% in 1983 to 4.4% in 2003, (figures in million tonnes) 10.5
11.0

9.6 9.8
at a CAGR of 7.1%. 9.2
8.6 8.8 8.7
9.3 9.0
8.2
• The impact of just 1 kg increase in per capita 7.3
7.7 7.8

consumption would lead to increase in demand by 1.1

million tonnes of paper.

2007 2008E 2009E 2010E 2011E

* Estimated figures Capacity Demand Demand

(7Kgs per capita) (8Kgs per capita)
Source: Earth trends; ICICI direct Research; CRIS Infac; Research India analysis
 Outsourcing Opportunities

• According to Indian Printing, Packaging and Allied Leading Print Markets, 2006-2011
(Figures in $ million)
Machinery Manufacturers’ Association (IPAMA) Rank Country 2006 2011 Growth 2006-11
estimates, the printing industry in India provides 1 US 182,000 196,722 8.1%
employment to 1.3 million people and consists of 2 Japan 84,976 88,363 4.0%
more than 130,000 presses. 3 China 41,200 65,934 60.0%
• According to Pira International study (2007), the 4 Germany 38,794 43,329 11.7%
Indian printing industry would grew at more than 70% 5 UK 34,937 39,030 11.7%
by 2011. 6 France 23,251 26,731 15.0%

• Massive investments in printing industry spurring 7 Italy 23,096 26,000 12.6%

Growth at a CAGR of over 14% 8 Canada 16,136 17,792 10.3%

- India would emerge as a global hub for high-quality 9 Spain 13,856 16,074 16.0%

printing at a competitive cost 10 Brazil 12,552 19,192 52.9%

- Strong consumer demand for Packaged goods 11 Mexico 12,277 16,550 34.8%

fueling high growth in Industrial grades of Paper 12 India 12,131 20,990 73.0%

and Boards largely led by growing disposable

incomes & Lifestyle changes

Source: PRIMIR; Pira International 2007; Research India analysis

 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 BILT is the largest player both in term of revenue and installed
capacity in 2006-07

Top 10 Paper and Paperboard Producer, 2007 Capital Expenditure Plans

(figures in ‘000 tonnes)

461.0 22.0 Company Capital Expenditure Capacity Addition

BILT
(INR billion) (‘000 tpa)

32.0 367.0 ITC Ltd 25.0 200

ITC Ltd
BILT 12.5 240
146.0 96.0 80.0
Whitefield Paper Mills 12.0 200
SK Bangur
Group
200.0 110.0
AP Paper Mills Ltd 8.6 84

Hindustan West Coast Paper Mills 8.2 90

Paper Corp 170.0 95.0
Hindustan Newsprint Ltd 7.2 180

Khanna Hindustan Paper Corp 6.6 30

215.0 15.0
Paper Mills
TNPL 5.7 15
Tamil Nadu 114.0 76.0 25.0 Century Pulp & Paper 3.9 75
Newsprint
Rama Paper Mills Ltd 3.5 140
200.0
Andhra Pradesh Seshasayee Paper 3.5 30
Paper Mills Ltd
128.0 29.0 Sirpur Paper Mills Ltd 2.9 55
JK Paper Ltd JK Paper Ltd 2.4 60
113.0
Star Paper Mills Ltd 0.9 30
NR Agarwal Printing & writing
Group Industrial grades Orient Paper & Industries 0.5 20
Newsprint Total 103.2 1,449
Century Textiles
& Industries

Source: Business World; Company reports and presentation; Fitch ratings; Research India analysis
 Ballarpur Industries Limited (BILT)

Revenue, 2002-06 • Founded in 1945, with the name of Ballarpur Paper and
(Figures in INR billion) Straw Board Mills Limited. The company changed its
name to Ballarpur Industries (BILT) in 1975. BILT is the
-07
CAGR 2003 largest paper manufacturing company in India.
2. 9% 23.8
21.2
19.7 20.0 20.8 • The company product portfolio includes - coated wood
free paper, uncoated hi-bright paper (Maplitho), business
stationery, copy paper, and speciality & fine paper
• In 2006, BILT controlled approximately 21% of Writing
and Printing Paper (WPP) market and approximately
53% of the coated paper market.
• The company is pursuing both organic and inorganic
2002-03 2003-04 2004-05 2005-06 2006-07
strategy to increase its installed capacity to 1.0 million
tonnes paper by 2010.
- In 2006, the company acquired a paper
manufacturing firm, Sabah Forest Industries, in
Revenue – Segment wise, 2006-07 Malaysia. The acquisition not only help the company
(Figures in percent) to secure the future supply but also provide a
100% =INR 23.8 billion platform to the company to enter the South-east and
east Asian market
Others • To maintains its leadership in the market, BILT is
Pulp
2%
12% focusing on 4 key areas:
Paper products &
office supplies
- Securing raw material supply
10% - Rapidly developing larger scale of operations
- Continuously innovating to introduce new products
and grow new markets
- Creating a de-risked corporate financial and capital
Paper
structure
76%
Source: Company reports; news article; factiva; Research India analysis
 Ballarpur Industries Limited (BILT)

Installed Capacity, 2002-06 • The company operations span across 6 units, together with a
(Figures in ‘000 tonnes) capacity of 480,000 tonnes and a pulp mill of capacity
100,000 tonnes manufacturing rayon grade pulp, in the state
480.0 480.0 of Andhra Pradesh (Kamlapuram Unit).
457.5
386.0 386.6
406.6
407.3 • BILT is also expanding its production capacity in both coated
369.9 383.4
358.9 and non-coated paper, to take its current capacity of 480,000
tonnes in 2006 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
2002-03 2003-04 2004-05 2005-06 2006-07 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
Installed Capacity – Paper unit, 2005-06 be supplied by Voith, Germany, while some equipment will
(Figures in ‘000 tonnes)
be sourced locally from suppliers like L&T, etc.
Paper unit State Installed capacity • In July 2007, the company also initiated a restructuring plan,
under which it would transfer 3 manufacturing units at
Ballarpur Maharashtra 126
Bhigwan, Ballarpur and Kamalapuram, to a separate
Bhigwan Maharashtra 125 company called BILT Graphic Paper Products, which would
be transferred to Ballarpur Paper Holdings BV (BPH) after
Shreegopal Haryana 81
court approval. By this exercise, the company would transfer
Sewa Orissa 68 its commodity business, which is capital-intensive and would
focus on the speciality and consumer-focused products
Kamalapuram Andhra Pradesh --
business.
Ashti Maharashtra 75
 ITC Limited – Paperboards & speciality Papers

Revenue, 2002-06*
• ITC’s paperboards and specialty paper unit was created
(Figures in INR billion)
after the merger of ITC Bhadrachalam Paperboards
Limited with ITC in 2002.
003-07
CAGR 2 21.0
• The company produces paperboards and specialty paper
1 %
5 .9 19.0
15.7 for all types of carton-consuming segments including
11.6 12.5 cigarettes, foods, beverages, pharma, personal care &
toiletries, durables and match shells.
- ITC also makes some of the premium graphic boards
used for greeting cards , covers, sleeves, tags and
playing cards.
2002-03 2003-04 2004-05 2005-06 2006-07
- It produces both virgin and recycled boards spanning
the full requirement of a packaging customer.
• ITC paper unit exports nearly 15% of the coated papers to
Revenue – Segment wise, 2006-07
customer requirements in Malaysia, Sri Lanka,
(Figures in percent)
Bangladesh, Iran, Australia, UAE, UK, Italy, Poland and
100% =INR213.2 billion Russia.
Agri-business
• The paperboard, paper & packaging segment is one of
Paper
17.3% 9.9% main focus area of the company, accounted for
Hotel approximately 10% revenue of the ITC group. The
4.6% company wants to maintain its leadership in value-added
coated boards segment by using latest technology.
• ITC is also looking to integrate its operation fully by
creating in-house pulping capacity. In 2007, it has a
240,000 tonnes of Elemental Chlorine Free pulp capacity
FMCG
at Bhadrachalam mill
68.2%

* Revenue for Paperboard, Paper & Packaging segment

 ITC Limited – Paperboards & speciality Papers
• The company has four manufacturing units:
Installed Capacity, 2002-06
(Figures in ‘000 tonnes) - Bollaram unit is a value addition plant, which gets paper from
ITC's other units and adds value like coating and
polylaminating.
390.5
352.5 365.8
352.5 352.5 - Tribeni plant manufactures cigarette tissues to fine papers,
309.0 packaging papers and specialties. It has 3 paper machines
225.0
238.0 237.0 - Bhadrachalam unit has 3 board machines and 2 smaller
225.0
paper machines.
- Kovai unit was acquired from BILT in 2004. It has a single
board machine, producing coated duplex boards greyback
and whiteback made with 100% recycled fibre.
2002-03 2003-04 2004-05 2005-06 2006-07 • ITC's paperboards business has a manufacturing capacity of
352,000 tonnes per annum and it produced 390,000 tonnes of
paperboards and 139,000 tonnes of value added paperboards in
2006-07.
Installed Capacity – Paper unit, 2005-06 • In 2007, the company initiated 2 major capacity expansion
(Figures in ‘000 tonnes) projects - 90,000 tonnes paperboard machine and 100,000
tonnes paper machine for manufacturing uncoated paper
Paper unit State Installed capacity
including branded copier grades.
- The total paper production capacity of the Bhadrachalam
Bollaram Andhra Pradesh 25 plant would go up to 400,000 tonnes annually by April 2008.
the production capacity of Kovai unit would also increase to
Bhadrachalam Andhra Pradesh 210
180,000 tonnes by October 2008.
Kovai Tamil Nadu 65 - The division is also looking for opportunities to set up a
greenfield project at a cost of INR25.0 billion for foraying into
Tribeni West Bengal 90
the coated wood free paper market, either in Madhya
Pradesh or Andhra Pradesh.
 JK Paper Limited

Revenue, 2002-06
(Figures in INR billion)

7
• Founded in 1962, JK Paper Mills (JKPM) started its
2003-0
CAGR % operations with an annual capacity of 18,000 tonnes. It
8.0 9.3
8.4 is promoted by the H.S. Singhania Group.
7.2 7.3
6.8
• JKPM is the first paper company to get TPM
Certification from JIPM, Japan and 3rd paper company
in the world.
• JKPM is the largest producer of branded papers in
India. The company is a market leader in copier
2002-03 2003-04 2004-05 2005-06 2006-07
varieties and SS Maplitho segment.
– Due to low capacity, the company started to
outsource coated paper in 2003. Outsourcing and
trading contributed approx. 10% of total sales.
Production – Segment wise, 2006-07
(Figures in percent) • The company has a wide range of branded products in
its portfolio. It sells approximately 40% of paper
produced under various brand names - JK Copier, JK
Others Excel Bond, JK Bond, JK Savannah, JK Copier Plus
30%
and JK Easy Copier.
– The other major product is JK Maplitho, a superior
uncoated Writing and Printing paper.
– It sells its products through a nationwide distribution
network of approximately 100 distributors and 2,500
Coated and dealers.
Branded Paper
46%
 JK Paper Limited

Installed Capacity, 2002-06

(Figures in ‘000 tonnes) • JKPM’s strategy its to focus on value added product
segments and enhance its premium product portfolio. In
line with its strategy, it expanded its value-added cut-
196.0
172.0 172.5 180.1 180.0
185.0
180.0
size papers and coated varieties portfolio.
150.0 150.0 150.0 – It started a 46,000 tonnes per annum plant in
Rayagada, Orissa to enter into coated paper and
boards segment in 2005.
– It commenced commercial production of multilayer
duplex board in Gujarat with an annual production
2002-03 2003-04 2004-05 2005-06 2006-07 capacity of 60,000 tonnes in October 2007.
• JKPM follows its growth plans through capacity addition
and its market expansion plans through outsourcing &
Installed Capacity – Paper unit, 2005-06 trading.
(Figures in ‘000 tonnes) – The company exports its products to more than 40
countries including Sri Lanka, Bangladesh, Middle
Paper unit State Installed capacity East, Africa, Australia, Singapore, Malaysia etc.
Paper Pulp • In 2006-07, JKPM registered its highest ever sales
Rayagada Orissa 125 127 volumes at 210,000 tonnes, owing to high capacity
(JK Paper Mills) utilisation of 110%, improved operating efficiencies and
higher sales in the copier and coated Paper segments.
Songadh Gujarat 55 47
– The plants currently operate at more than 120%
(Central Pulp Mills)
capacity utilisation with an aggregate annual output
of over 180,000 tonnes per year of paper and pulp,
using latest technology.
 Orient Paper & Industries Limited

Revenue, 2002-06
(Figures in INR billion)

7
2003-0
CAGR % 12.6
6.8
1
10.1 • Founded in 1939, Orient Paper & Industries Limited
7.5
8.6 (Orient Paper) is a part of the CK Birla Group and
6.8
diversified into Paper, Cement and Electric Fans. The
company also announced its plans to enter into CFL
business.
• The company produces a wide range of writing, printing,
2002-03 2003-04 2004-05 2005-06 2006-07
industrial and speciality papers. It is also a market leader
in the domestic tissue paper industry with over 50%
market share.
– Tissue paper is one of the fastest growing segments
Revenue – Segment wise, 2006-07
(Figures in percent) of paper. The growth in the use of tissue paper is
positive for the company.
100% =INR8.6 billion • In 2007, the company raised approx. INR1.7 billion via a
Know-How &
right issue, part of which would be utilized to create
Service Fees Paper additional tissue paper capacity of 20,000 tonnes at
Electric Fans 1% 31% paper plant.
22%
– The company plans to hike the capacity of the Amlai
paper unit by 50% from the existing 80,000 tonnes a
year at an investment of INR1.0 billion.

Cement
46%
 Orient Paper & Industries Limited

Installed Capacity, 2002-06

(Figures in ‘000 tonnes) • The company plants is situated in Amlai, Madhya
Pradesh with an annual capacity of 76,000 tonnes. The
76 76 76 76 76
company also provided technical and financial aid to
Pan African Paper Mills (EA), to set up a pulp and paper
mill in Kenya.
• Orient Paper Mills has chosen Toscotec for the supply of
a new tissue plant. The plant will be installed in Amlai,
India and will have an overall capacity of 59 tons/day.
2002-03 2003-04 2004-05 2005-06 2006-07 – The project involves a full turn-key installation
including Modulo tissue machine, all tissue machine
accessories, a slitter rewinder, complete stock
preparation plant, approach flow system, high
Installed Capacity – Paper unit, 2005-06 efficiency steam heated hood and integrated steam
(Figures in ‘000 tonnes)
distribution plant, vacuum plant, distributed control
Paper unit State Installed capacity system, A.C. drive and the complete electrical plant.
It also includes erection supervision, commissioning,
Amlai Madhya 76 start-up and training.
Pradesh
– The Modulo 50 tissue machine would be equipped
Brajrajnagar Orissa 85 with single layer headbox, crescent former section,
single press section and a 15ft Steel Yankee Dryer
– Site erection would be completed between April to
Note: The operations of the Brajrajnagar plants have been November 2008. Main delivery is scheduled by June
suspended since 1999. Majority of the employees of this plant have
opted for VRS. Machinery has also been sold off.
2008, and start-up is scheduled for end of 2008.
 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 Conclusion

• Indian paper industry is currently in the midst of a transformation with major capital expenditure (capex)
underway and improving operating efficiencies is the major concern of the all players. All players are
committing a large amount of investment, focusing on:
– Improving the operational efficiencies through rightsizing pulping capacities
– Brown-field capacity expansions
– Backward integration into captive power
– Adherence to pollution norms by chemical recovery
• The paper industry would witness an investment worth INR100.0 billion capex in next 2-3 years. The top
10 domestic players in paper sector would account for around 70% of the capex planned to be
implemented between 2007-09.
• Metso Corporation must tap the opportunities available in the Indian paper industry. Although big players
form the considerable market share, but the company should also tap the medium and small players for
expansion in India.
 Contents

Global Paper Industry

Indian Paper Industry
Size & Growth
Sub-segment
Key Drivers
Key Players
Conclusion
Appendix
 Paper – Demand Forecast Variety-wise
Uncoated Paper, 2004-10 Industrial Paper, 2004-10
(figures in million tonnes) (figures in million tonnes)
2.4 4.6
2.3
0.2 4.3
0.3
2.2 0.2 4.1 0.3 0.3
2.1 0.2 0.3
0.1 2.0 3.8
0.2 0.3
1.9
0.1 0.7 0.3 3.6
0.3 0.3
0.6
0.7 0.7 3.4
0.3 0.3
0.3 1.4
0.6 0.3 1.3
0.6 1.2
1.1
1.0
1.0

1.3 1.4 1.5 2.6

1.2 1.2 1.3 2.2 2.4
2.0 2.1
1.8

2004-05 2005-06 2006-07E 2007-08E 2008-09E 2009-10E 2004-05 2005-06 2006-07E 2007-08E 2008-09E 2009-10E

Craemwove Malitho (including Kraft Duplex Grey and white board MG Poster
Branded copier
unbranded copier)

Coated Paper, 2004-10 Speciality Paper, 2004-10

(figures in ‘000 tonnes) (figures in ‘000 tonnes)
460.0 350.0
410.0
109.0 320.0
380.0
102.0 300.0
350.0 96.0 280.0
320.0 90.0 260.0
290.0 85.0 240.0
80.0 177.0
159.0
142.0
127.0
101.0 113.0

143.0 154.0 166.0

114.0 123.0 133.0

2004-05 2005-06 2006-07E 2007-08E 2008-09E 2009-10E 1/1/1900 1/2/1900 1/3/1900 1/4/1900 1/5/1900 1/6/1900

Kraft Duplex Grey and white board MG Poster

Coated crome paper Art paper Art boards

Source: CPPRI; Research India analysis