During the Federation of Paper Traders’ Associations of India (FPTA) conference in Goa on 27 September 2024, Pawan Agarwal, president of the Indian Paper Manufacturers Association (IPMA) emphasised the Indian paper industry’s strategic role in meeting the increasing demand for packaging paper and paperboard. According to a recent research study by IPMA, the annual growth rate is set to rise significantly, with key segments — tissue, cupstock, and packaging paper — poised for expansion.

According to a report published by IPMA in September 2024, the packaging paper and paperboard market is growing at an annual rate of 8.2%. As per the industry body, domestic consumption of packaging paper and paperboard in 2023-24 was about 15 million metric tonnes, nearly 65% of the total paper, paperboard and newsprint market of 23 million metric tonnes in the country.

The writing and printing (W&P) paper market is growing at around 3%. Within the segment, copier paper is growing at the fastest rate of 4.5%. Currently, it accounts for nearly one-fourth of the total domestic paper, paperboard and newsprint market.

The fastest growth of 13.3% per annum is being exhibited by the tissue segment, followed by cupstock growing at 10.5%. However, both tissue and cupstock have relatively smaller market size together accounting for about a 4% share in total domestic consumption.

The per capita paper consumption in India is currently at a low of 16-kg, while the global average is 57-kg. Developed countries have more than 200-kg of per capita consumption of paper.

India’s share in world production of paper is about 5% (fifth largest producer in the world), with an estimated production of around 22 million tonnes per annum in 2023-24.

Rising demands for paperboards

Today, India’s current folding box board (FBB) market stands at approximately 1.5 million metric tonnes, whereas the market for duplex boards is almost 4.5 million metric tonnes annually. Both categories have vast growth potential, but to protect themselves from the fluctuations in demand for these products, paper mills are emphasising flexibility in production for both virgin and recycled boards.

Prabhakar Venneti, executive vice president of sales for marketing and commercial at ITC-PSPD, told PrintWeek, “India’s virgin board production is 25% and the share of recycled in carton board production is 75%.”

According to the IPMA, paper consumption in India will reach 30-million tonnes by March 2027. The numbers are well-projected given the strong economic fundamentals of the Indian economy. This will bring new business to Indian companies, fuelling demand for sophisticated and high-end packaging.

In real terms, this translates into opportunities in segments of food services/food packaging, pharma, consumer electronics, apparel, education and publishing and FMCG. Market pundits say, “Packaged foods will witness an 8.8% CAGR (2023-28) and 6.4% incremental demand till 2028 (lakh tpa). Meanwhile, for the pharma segment, it is an 8.4% CAGR (2023-28) and 5.5% incremental demand till 2028 (lakh tpa). The personal care segment will witness a 10.2% CAGR (2023-28) and 1.8 incremental demand till 2028 (lakh tpa).”

 

A strong growth phase

The industry is in a strong growth phase.

Today, the global share of packaging materials is 43% for plastics, 34% for paper and board, 12% for metal, 6% for glass, and 5% which comprises others.

Many Indian paper companies have entered the next phase of expansion due to high-capacity utilisation and strong balance sheet position. Paper mills in India have announced investments which are aimed at venturing into newer segments and providing superior-quality papers and paperboards.

Import concerns

One of the issues facing the paper industry in India is the threat of cheaper imported paper due to dumping. In a recent instance, the Ministry of Commerce and Industry, Department of Commerce (Directorate General of Trade Remedies) has initiated an anti-dumping investigation into imports of virgin multilayer paperboard from Chile and China PR.

The surge in imports is mainly due to a massive 142% growth in imports of paper and paperboard from ASEAN, which enter the country at zero import duty under the ASEAN-India free trade agreement.

Imports of all major grades of paper are showing a rising trend, with imports of uncoated writing and printing paper, coated paper and paperboard witnessing the highest rates of growth.

Paper imports from Indonesia more than doubled (108.3%) during the April-October period of the ongoing financial year. Imports from Thailand grew by 73.4% during the same period. The biggest rise is seen from Singapore, as paper imports surged by over 500%.

The rapid rise in paper imports (almost 142% from ASEAN countries), is because they enjoy zero import duty on paper on account of the free-trade agreement. India signed free-trade agreements (FTAs) with the Association of Southeast Asian Nations (ASEAN) and South Korea. And so, under the FTA, such countries are allowed to export paper to India at zero import duty.

India provides import tariff concessions to China and other countries under the Asia Pacific Trade Agreement (APTA). It offers a 30% margin of preference.

This reduces the import duty on most grades of paper to 7% from 10%.

The domestic industry has been urging the government of India to take steps to reduce imports.

Recently, the IPMA filed an application on behalf of the domestic industry before the designated authority for the initiation of an anti-dumping investigation concerning imports of virgin multi-layer paperboard originating in or exported from Chile and China PR.

The applicant alleged that material injury is being caused to the domestic industry due to dumped imports and has requested for imposition of an anti-dumping duty on the imports of the product.

The product under consideration is a multilayer board made of white/virgin wood pulp, whether coated or uncoated. It is predominantly used as a material in the packaging industry due to its strength and purity. It is used for packing food, cosmetics and pharma products.

 

ITC-PSPD looking to expand

ITC-PSPD is looking to expand its capacity for virgin paperboards. The group will be targeting around a million metric tonnes of virgin paperboard in the next three years. This is going to be a major investment.

ITC-PSPD has undertaken and implemented multiple new projects. This includes a new décor paper machine at Unit Tribeni, state-of-the-art coating and fusion board machines at Unit Bollaram, plus a pulp mill enhancement at Unit Bhadrachalam.

Venneti said, “We have made significant investments in green technologies, the latest being a high-efficiency recovery boiler at Unit Bhadrachalam. ITC is committed to investments in the areas of energy conservation, increasing the share of renewable energy in our manufacturing and acquiring capabilities for sustainable product offerings.”

 

JK Paper growing

JK Paper is on the fast track to growth. The company intends to invest Rs 100-150-crore annually. JK Paper’s board of directors have approved the establishment of a hardwood bleach chemical thermo-mechanical pulp (BCTMP) plant at its unit CPM in Songadh, Gujarat. JK Paper will invest Rs 650-crore in the project.

On 16 May 2024, JK Paper’s acquisition of a balance of 15% equity shares of its subsidiary companies Horizon Packs and Securipax Packaging was approved. Following this acquisition, Horizon and Securipax will become wholly-owned subsidiaries of the company. In real terms, this translates into 12-16% growth in the corrugation business in the future.

The Singhania-backed group operates three manufacturing plants with a total capacity of 761,000 tons per year in Gujarat, Odisha, and Telangana.

Recently, the company’s Fort Songadh mill has ordered a new BCTMP line and an evaporator line from Valmet. The new line will manufacture high-quality BCTMP pulp for lightweight coated board production. The start-up is scheduled for the end of 2025.

Meanwhile, its new packaging board capacity started production during FY 2021-22 and is in ramp-up mode.

 

Emami remains ambitious

Emami Paper (EPML) aims to become a Rs 5,000-crore company by 2025. Vivek Chawla, CEO and whole-time director at Emami Paper Mills, said the group remains ambitious about growth. Currently, Emami produces 3,50,000 tonnes of fibre-based products, of which 2,00,000 tonnes are packaging boards. The group operates several mills in Eastern India and is looking to expand its capacity to target growth in new sectors and geographies. We have heard that Emami Paper is rebuilding a new metering-size press by Valmet.

Chawla added, “Despite current market conditions, we are enhancing our machinery to support multiproduct capabilities aligning with our expansion goals.”

 

TNPL expanding

Tamil Nadu Newsprint and Papers (TNPL) is planning to expand its business by setting up a new unit for tissue manufacturing. Production of 100 tonnes of tissue per day is being projected.

TNPL started with the capacity of producing 90,000 tonnes per annum. After multiplying its capacity, today it stands at 4,40,000 tonnes per annum, in an eco-friendly manner.

The company is the world’s largest bagasse-based paper mill, consuming 1.40 million MT bagasse per year and ranking third in installed capacity and second in printing and writing paper production in the country.

TNPL is to implement the second phase of the mill expansion plan, for capacity enhancement of Unit II. It also unveiled an ambitious expansion: a 100 tonnes per day tissue plant planned for Unit II. The Tamil Nadu-based factory is planning diversification into notebook manufacturing.

 

Andhra Paper’s long-term growth rate

Andhra Paper’s net sales decreased by -33.86% and it has declared negative results for three consecutive quarters. However, it has a high management efficiency and a healthy long-term growth rate. The production facilities at Rajahmundry and Kadiyam have a total production capacity of 2,40,000-tpa. As per a market report, Andhra Paper has undertaken a capex amounting to Rs 523-crore and has envisaged funding it through a debt of Rs 260-crore and the remaining through internal accruals.

Andhra Paper has approved a capital expenditure of Rs 400-crore to rebuild and upgrade the existing pulp mill. The company is to set up an integrated greenfield project at Unit: Kadiyam and install approximately 1,75,000-tpa board machines along with ancillary infrastructure.

 

West Coast on acquisition mode

In September 2023, West Coast, the fifth largest paper manufacturer in India, received the national company law tribunal’s approval to acquire Uniply Decor.

West Coast acquired 72.20% of the equity stake in Andhra Paper for Rs 911.09 crore during FY19. Established in 1955, West Coast is engaged in the manufacturing of writing and printing papers, cupstock paper boards, optic fibre cables, etc. It has an installed paper manufacturing capacity of 3.20 lakh MTPA at its manufacturing plant in Dandeli, Karnataka. The company is backwards integrated with a 2.47-lakh MTPA in-house pulp production capacity and 1.75-MW captive power plants (CPPs).

 

Seshasayee to increase capacity

Seshasayee Paper & Boards secured environmental clearances for project MDP - IV to augment paper capacity from 1,65,000 to 2,31,000-tpa and pulp capacity (wood and bagasse) from 1,80,000 to 2,52,000-tpa at its Erode unit.

The company has approved an investment worth Rs 405-crore to increase the production capacities of paper and pulp by 20% at its Erode unit. The board of directors of SPB gave their nod to the Mill Development Plan IV, Phase I (MDP-IV-PI), subject to the approval of the Ministry of Environment, Forest and Climate Change.

 

Pakka’s solutions for food packaging

Pakka is setting up a new production facility in Guatemala, which will be the first overseas facility for the company; Pakka is undergoing an expansion at its Ayodhya plant which entails setting up a new paper machine - PM4, a new power plant, capacity enhancement of existing paper machine and pulp mill; Pakka is now listed on the National Stock Exchange.

For the Ayodhya plant, the company has raised Rs 244.7-crore. The facility is expected to become functional by 2026.

Pakka’s latest range of flexible packaging solutions includes three offerings designed to meet diverse needs in the food packaging industry. The M1 is a paper-based compostable structure, providing superior barrier properties and heat and cold sealability. The M3 is a recyclable and compostable paper-based structure that combines excellent barrier properties with effective heat sealability.

The Indian paper story

According to government data, out of over 900 paper mills, only 553 are operational in India.

While the major players, such as ITC, JK Paper, and West Coast, are all in the diversification mode, even the mid-size players are looking forward to exploiting the growing market. For example, Nath Industries aims for 50% paper division revenue from exports. The company undertook expansion projects of Rs 75-crore in FY 2022- 23.

Kuantum Papers is set to debottleneck and upgrade all four paper machines and pulp mill, to increase production capacity to 600-tpd. It is setting up a specialty paper machine.

Naini Papers commissioned a 1,00,000-tpa new wood fibre line (bleached hardwood kraft pulp). It also ordered a 1,30,000-tpa new specialty fine paper machine from Valmet, which is expected to start in 2025.

NR Agarwal Industries has set up a 500-tpd board machine at Unit 5, expandable to 900-tpd.

Orient Paper announced plans for modernisation and capacity debottlenecking of operations with a capex of Rs 475-crore.

Satia Papers added a fourth paper machine with 1,00,000-tpa capacity.

Trident installed a shoe press on its PM2 machine to increase its production capacity by 50 TPD. It has two paper machines, yielding a production capacity of about 480 TPD. The company is looking at the B2C segment, moving up the value chain by making paper products.

 

Looking ahead

As per IPMA, during the last five to seven years, over Rs 25,000-crore has been invested in efficient capacities and the induction of green technologies. The government’s ban on the single-use plastics industry has opened doors for the paper industry to contribute towards the environment.

The government has launched the National Transit Pass System (NTPS) to facilitate the seamless transit of timber, bamboo, and other forest produce across the country. This happened in December 2023. This system will be beneficial for wood-based mills.