A GLOBAL / COUNTRY STUDY AND REPORT on

PAPER INDUSTRY OF SOUTH AFRICA
Submitted to
(N. R. Institute of Business Management, Ahmedabad) IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION

In

Gujarat Technological University
UNDER THE GUIDANCE OF

Faculty Guide Prof. Juhi Shah Prof. Shweta Bambuwala Prof. Neha Rohera

Submitted by Ravi Shah - 117350592016 Mohammed Bharmal - 117350592042 Pratik Govani 117350592057 Zil Shah - 117350592062 Vaibhav Chauhan 117350592115 Kandarp Thakkar - 117350592155 [Batch: 201113] MBA SEMESTER IV
(N.R. Institute of Business Management)
MBA PROGRAMME

Affiliated to Gujarat Technological University Ahmedabad April, 2013 DECLARATION

We, Ravi Shah, Mohammed Bharmal, Pratik Govani, Zil Shah, Vaibhav Chauhan and Kandarp Thakkar hereby declare that the report for Global / Country Study Report entitled “PAPER INDUSTRY OF SOUTH AFRICA” is a result of our own work and our indebtedness to ot her work publications, references, if any, have been duly acknowledged.

Place: Ahmedabad Date:

NAME

SIGNATURE

Ravi Shah Mohammed Bharmal Pratik Govani Zil Shah Vaibhav Chauhan Kandarp Thakkar

117350592016 117350592042 117350592057 117350592062 117350592115 117350592155

Page | i

N. R. Institute of Business Management (GLS-MBA)

Certificate

This is to certify that Mohammed Bharmal, Vaibhav Chauhan, Pratik Govani, Ravi Shah, Zil Shah, Kandarp Thakkar Enrolment Numbers 117350592042, 117350592115, 117350592057, 117350592016, 117350592062 and 117350592155 respectively student of N. R. Institute of Business Management (GLSMBA) have successfully completed their Global Country Report titled on “Paper Industry of South Africa” in partial fulfillment for the requirements of the MBA programme of Gujarat Technological University. This is his original work and has not been submitted elsewhere.

Director

Faculty Guide

(Dr. Hitesh Ruparel)

Prof. Juhi Shah Prof. Shweta Bambuwala Prof. Neha Rohera

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PREFACE
To be an MBA student is a matter of pride which helps you to develop from a normal human being into a disciplined and dedicated professional. In the management field you cannot create success storied if you are not well learner. Mere theoretical knowledge can’t help you in any field whether it is management, technology, research or any other field. The only thing that can help you is having a sound practical knowledge of the concerned field is a part of my learning in management field and also fortunate of the MBA programme. We have been fortunate to receive practical knowledge in one of premier organizationNRIBM. We have tried to present whether knowledge we gained and learned at NRIBM during our project period in a very systematic manner.

Institute of Business Management which has given us an opportunity to get practical knowledge in the field of management and also for helping us to undergo this project. Finally. Last. This project was an excellent opportunity for us to relate our classroom course to the real business. We are obliged to N. . R. we should like to thank all those who directly and indirectly contributed to this project. Most importantly we would like to thank Prof. Juhi Shah. but not the least we would like to thank our parents.Page | iii ACKNOWLEDGEMENT We express our heartfelt gratitude towards the people who have been of great help to us in carrying out this project in the best manner possible. The learning during this project has been a great experience. who had directly or indirectly helped us in preparing this project report and gave their valuable time to help us. and her support in the preparation of this project and guiding us.

ETIQUETTE IN SOUTH AFRICA: Several greeting styles are prevailing in South Africa. The South African people celebrate their 21st and 40th birthdays by giving huge party and a lavish gift for the near ones. Birthdays and Christmas are the two main occasions for giving present to someone. They view world as narrow. The population of South Africa includes the original black peoples and European. Many urban areas in South Africa have a different ethnic group that reflects the whole population. and they give value to human civilization above materialism.Page | iv EXECUTIVE SUMMARY SOCIAL ANALYSIS South Africa is one of the most diverse countries among the world. Major differences are seen in communication style . Chinese. Indian and many more from rest of the world have migrated to South Africa. More than half of the white people living in rural areas are Afrikaner farmers who are descended from the Calvinists descended. Many rural black people of South Africa are still attached and follow their old traditions. it depends on the type of person you are meeting and also on the culture and tradition the person follows. most of the South Africans shake hands and maintaining their eye contact with a smile on their face. THE FAMILY IN SOUTH AFRICA: The South African family consists of the small nuclear families and extended families. THE RURAL/URBAN DICHOTOMY: In South Africa a huge differences is seen between the rural and urban areas. There are two main occasions in the South Africa when the tradition of gift giving takes place. Page | v South Africans do not believe in long relationships or creating a personal relation in conducting a business. The South African culture and etiquettes is much complicated and not easy describe due to its diversity. The colored and more conservative/conventional Afrikaans cultures gives more importance to extended families than the small and nuclear families. These people are more of a transactional nature. on the other hand the urban black people are more and more influenced by the urban environment and international and modern life style that surrounds them. while the white English-speaking community gives more importance to the nuclear family. While meeting or gathering with foreigners.

In most part of South Africa the people keep harmonious working relationships among each other and avoid conflicts. the white Afrikaners – the Dutch descendants. DEMOGRAPHY: The population numbers approximately more than 50 million. Tswana. it purely depends on the cultural heritage on an individual. These people often use the metaphors and sporty language to demonstrate a point. along with the white Afrikaners. Venda. Pedi. the Bantu speaking people and the European colonist had many conflict against each other which continued till democratic transformation of 1994. a multiracial that speaks Afrikaans and/or English. After the annihilating the San and Khoj. Most of the South Africans. although ethnic. Swazi. and the Indian immigrant who primarily speaks Tamil and Urdu. the French. more than two percent are Indians. HISTORY AND ETHNIC RELATIONS: The South Africa has rich abundant of early human fossils which are found in Sterkfontein and other places. Xhosa. Coloureds are eight percent. and while giving the citizenship to all the inhabitants of European descent. etc. denied that status to people of colored until the democratic transition of 1994. who herded domestic animals. prefer to meet face-to-face above common communication means such as telephone email. Seventy percent of the populations in South Africa are the black Africans. The earliest modern citizens were the San known as Bushman – hunter gatherers and the Khoi people called the Hottentot. and a variety of Dutch. The result of this incorporation was the emerging of the nations like Zulu. and other minorities come under less than two percent of the population. the German people speaking Afrikaans. These European decent retain a connection to Europe and also maintain their identity of being the South Africans. . and Tsonga. letter. Sotho. The black African rulers founded a large.prevailing in South Africa. the English speaking descendants of British. which comprises of formally recognized Bantu-speaking groups. The San are said to have their presence in South Africa since thousands of years and the rock art. History says that Afrikaners considers themselves as the true South Africans. the ancient cave paintings give the evidence of their presence in South Africa. whereas the white people make up eleven percent of the total population. It is very important to develop mutual trust and understanding before any business negotiation. powerful kingdoms and nations at the time of colonial expansion possible through Page | vi incorporating neighboring leaders.

The diversity and division within cultural groups and the balance of problems between those groups throughout the 20th century prevented civil conflict among the ethnic groups in the country. in particular. packaging. A total of 207. etc.400. Major Grades of Paper are printing. which is only African producer of pulp and paper after Swaziland. In 1910 the newly formed Government of the Union of South Africa set up a commission to investigate the extent and nature of manufacturing in South Africa. 370.There is a strong sense of cultural separateness and individuality which coincides with the practical forms of cooperation and common identification of population. personal products. writing. As a result Mondi is reconsidering major investments following the downturn in the international pulp price. equating to 1.000 tons of printing and writing paper and more than million tons of other paper and paperboard each year.5 bn market. 1.4% of South Africa’s gross domestic product (GDP).000 tons of chemical wood pulp. the industry expanded rapidly. The manufacture of other converted paper products. when a Cape Town woman. The major pulp and paper companies operating in South Africa are Sappi and Mondi. Pulp and paper sector’s direct contribution to South Africa’s balance of payments (BoP) in 2010 was an impressive R4. with new factories opening almost every year in the 1950s. 960. others are . followed a similar history. the packaging industry became increasingly concentrated. The packaging industry grew and diversified along with the growth of the South African economy. By the turn of the nineteenth century. In the post World War 11 years. In 2009. such as tissue products and printed articles. the forest and forest product sectors value-add was R23 billion. South Africa is the nation. Margins in South Africa have traditionally been 6% higher than overseas making it a very lucrative $US 2. there were scores of cardboard box makers in Cape Town.5 bn. and on the Reef.000 tons of newsprint. South Africa produces approx. The Page | vii company planned to spend R500 mn including R 268 million on upgrading the Kraft Piet Retief Linerboard plant and the Merebank mill. So uth Afri ca ’s Paper and Pul p I ndus try The paper packaging industry in South Africa is said to have been started in 1780. used paper to wrap fruit and send it to the Dutch East Indies. 315. and now dominated by a few large companies. During the 1970s and '80s. South Africa imports $US 400 mn of paper and paperboard each year.000 tons of mechanical wood pulp.967 people are employed in the sectors value chain.

554 Corrugated materials/containerboard Other wrapping papers 993.Page | viii Paper Production & Consumption in South Africa 2011 (All values in metric tonnes) Paper Paper Paper Paper Production Newsprint 316.725 Import 13.900 Export 55.060 173.169 Tissue 203.265 862.025 0 778.169 87.235 89.352 .759 562.113 Printing/writing 473.247 250.512 Consumption 275.119 11.420 89.480 58.211 302.

402.984 119.034 2. B) Sappi .435 Board 27.739 million EUR Profit: 357 million EUR Production: 5 million MTPA Employees: 23.411 65.298 586.876 Total 2.919 Major Players of the industry are: Mondi Group Sappi Nampak Mpact South African Paper Mills Major Products offered by the Industry are: Containerboard Kraft Paper Page | ix Corrugated Packaging Industrial Bags Extrusion Coatings Consumer Goods Packaging Advanced Films & Components Office Paper Professional Printing Paper Coated and Uncoated Paper Present trade with quantity and amount of paper firms in South Africa A) Mondi Group Revenue: 5.008 43.202.655 786.876 27.Other paper 98.400 Approx.

provide a means of expanding output. Barriers Applicable to Paper Industry of South Africa Water Licenses Skill development & Technology transfer Investment Demand of raw materials exceeds supply Trade Policies in Paper Industry of South Africa South Africa supplies less than 2% of international demand.9 million MTPA Employees: 3. Page | x WTO – General Trade Implication for Paper Industry of South Africa Achieving free and fair trade in forest and paper products a statement by leading global forest and paper industries in Geneva. though physical volumes have grown substantially over the last decade. This principle . taking accounts of established WTO provisions in respect of developing countries. or a combination of these mentioned approaches. South African companies have evidently established themselves as significant players in the international market. Switzerland July 2003.821million Profit: R313 million Production: 0. These industry representatives are united in their belief that accelerated trade liberalization of forest and paper products.4 million MTPA Employees: 15. whether by ambitious formula approach to eliminate tariff. consumers or exporters in the world pulp.100 Approx.347 million USD Profit: 104 million USD Production: 5. paper and board industry. expansion of current zero to do zero deals. Although South Africa is in a position is not among the dominant producers.Revenue: 6. mainly through the WTO. economic and employment growth and easing poverty. C) Mpact Revenue: R 6.WTO members should move with the greatest possible speed towards the goal of eliminating all tariffs on forest and paper industry products.700 Approx.

They made a distinction between available and emerging technologies. the use of recycled paper and paper production proper.recognizes that raw material exports from a region or country could be beneficial and thus value can be added to them locally. There are different policies for: Tariffs Nontariff Measures Antidumping Measures Page | xi Government Procurement Property Right Protection Technological Advancement Taking Place into the Paper Industry of South Africa A large number of innovations in technology. Demand Drivers for Paper Industry Increase supply of raw materials (fiber) Ease supply constraints for downstream processing activities Increment in downstream processing activities Ease supply constraints for self-governing saw millers . process and management in the pulp and paper industry that can contribute to more environmentally kind pulping and bleaching methods. better use of recycled paper and fillers and recycling of in house water. Emerging technologies are stock preparation (pulping).

2 8.2 million tonnes and annual production was 7.114 1.1 5.199 1. the country produced around 9.3 6.2 million tonnes of paper. and with currently undertaken expansions. touching around 11 million tonnes in 2011-12and 15-16 million tonnes by 2015. The Indian Paper Industry accounts for about 1.20% 1.182 1.6% of the world’s production of paper and paperboard.2 8.95 billion) approximately and its contribution to the exchequer is around Rs.60% 8.10% 2011 10 6. 2918 crore (USD 0.40% 9.4 3.10% 2009 9. the annual operating capacity was 9.3 4.5 8. with a growth of 10.60% 1.Page | xii I ndia ’s Pa per and Pul p Indus try Indian Paper Industry is a booming industry and is expected to grow in the coming years.8 7.50% 12 8.4% annual growth rate.In 2009.40% 10. The expected turnover of the industry is around Rs 25.18 10.4 kg during 2008-09 to 9. In 2009-10.30% 1.000 crore (USD 5.2 kg in 2009-10.096 2005 7 2006 7.147 1.10% 2010 9.4 million tonnes.40% 1.131 1.7 1.8 6.69 billion). The consumption of paper cannot be ignored and this awareness is bound to bring about changes in the paper industry for the better. Estimated paper demand Paper demand statistics Per capita consumption (Kg) Growth (%) in per capita consumption Indian population (mn) Growth (%) Total paper demand (mn MT) Growth (%) 7.164 1.10% Major Players in the Industry Ballarpur Industries Limited (BILT) Hindustan Paper Corporation (HPC) ITC Tamil Nadu News Print Limited (TNPL) JK Paper Page | xiii Major Products offered by the Industry .20% 1. another 1. The paper industry growth is forecast at 8.50% 8.80% 1.80% 2008 8. growing at an average 7-8% compared with 2% growth rate in developed countries.5 million tonnes is expected to be added by 2012.6%.80% 2007 7. Per capita consumption increased from 8.50% 10.

230 MTPA Employees: 3. 800.9 Crore Production: 886. 1041. Economies of scale.000 Approx. 819 Crores Production: 558.000 Approx.712MTPA Employees: 2.31 Crore Production: 282. 3.667 Crores Profit: Rs. 88. Defragmentation of industry Modernizations of mills Building new capacity Meeting additional demand of paper . Page | xiv Barriers to Paper Industry in India Enhancing Industry’s competitiveness for facing worldwide competition.38 Crore Profit: Rs.Writing Printing Stationery Kraft paper Recycled board and virgin board Tissue paper Newsprint paper Present Trade with Quantity And Amount of Paper Firms in India A) Ballarpur Industries Limited (BILT) Revenue: Rs.500 Approx. 4747.884 MTPA Employees: 3.8 Crore Profit: Rs. C) ITC Revenue: Rs. B) Hindustan Paper Corporation (HPC) Revenue: Rs.

bamboo based. chemicals and other utilities and increasing demand of high brightness paper are forcing the paper industry to adopt improved pulp washing systems and modifications in bleaching practices. grad and utilize the recyclable waste paper Present Trade Policies in Terms Import-Export in Paper Industry of India India imports about two million tonnes of pulp (soft wood and hardwood) and waste paper (sack waste for unbleached grades. wood and bagasse are producing pulp with conventional Kraft process and are well equipped with chemical recovery system while the small and medium size paper mills based on agro-residues are following soda process without chemical recovery. increasing energy cost. Rigorous environmental laws. Large sized mills. sort. Govt. include excise rebate to small units. children’s comic books and comics which is exported to Middle East. the govt. Page | xv Technological Advancement Taking Place into the Paper Industry of India Now Indian mills are increasing their capacity for putting up the chemical recovery system. customs duty on inputs and intermediates has not been brought down on comparable scale. Major exports are following grades of papers: A4 copiers. South-East countries. Grow th Drive rs of In d ia’s Pap e r an d Pu lp In du stry Economic growth Targeted growth of 12% for manufacturing sector Increasing literacy rate Increasing govt. MG varieties which is come from small agro based mills. coated duplex which are mostly recycled fiber and large quantity of converted products like books. Import duty on paper and pulp in 1991-92 was 140%. Yet. customs duty on the import of paper grade pulp and wood chips. Eastern Europe and US.Productivity improvement Creation of raw material base Environmental up gradation. envelopes and magazine waste) for newsprint. it has since gradually been reduced from 65% to 40% and further to 20% in 1995. Since 1992. green technology Setting mechanism to collect. Total import of wood pulp for the production of newsprint and newsprint products are allowed on more flexible scale. spending on education . wood-free which is from bamboo and agro waste by small mills. has taken further steps to improve the situation of the paper and pulp sector. remove statutory control over production. stationery items. distribution and price of white printing paper and provision of infrastructural through increased allocation of coal and wagons. magazines.

Kraft Paper.000 Crores R 2. Speciality paper. Bags. Office and Professional Printing Paper . Packaging Coatings. Advanced Films &Components. 25. ITC. TNPL. paper. Release Industrial Liner.5% growth) Higher proportion of young adults Increasing living standards Demand for high quality magazines Lifestyle changes & media growth Page | xvi Industry Comparison of India and South Africa INDIA SOUTH AFRICA Per capita consumption Total production 9. JK Industry. Containerboard. Newsprint paper Goods Packaging. Hindustan Paper Mondi Group. Consumer Paperboard.5 Million MTPA Total Turnover of the Industry Major Players Rs.600 Crores BILT. Mpact Corporation. Sappi Group. NAPMAC.Population growth Changing demographics Higher urbanization (2.2 kg 86 kg 11 Million MTPA 4. Products Offered by the firms Writing and printing paper.

Present Market Shares (%)

BILT 17%, Hindustan Paper Corporation 8%

ITC 16%, TNPL 9% JK INDUSTRY 7%

Technological Advancement

Fiber line

A sectoral analysis of wood, paper and pulp, R & D, Fiber quality

Barriers

Enhancing competitiveness

Industry’s to face worldwide of

Water

licenses,

Skill technology finance, transfer, Land

development and

competition, Economies scale, of industry, De- fragmentation

Investment

tenure, Demand of raw material exceeds supply

Page | xvii Modernization of mill

Building new capacity, Meeting additional demand of paper, Productivity improvement, Creation of raw material base, Environmental up gradation, green technology, Setting

mechanism to collect, sort, grad and utilize the recyclable waste paper

Requirements of Resources

Fibers,

wood,

technological

Fibers, ical

wood, technolog

resources, Pulp resources, Pulp

Comparison between BILT and MONDI

Ballarpur Industries Limited (BILT) Location Revenue Profit Production Business Market India Rs. 4747.8 Crore Rs. 800.9 Crore 886,230 MTPA India, Malaysia

Mondi Group

South Africa 5,739 million EUR 357 million EUR 5 million MTPA Europe, Russia, South Africa and emerging markets (approx. across 30 countries)

Buying business in other countries

Malaysia

Austria, UK, France, Russia, Slovakia, Poland, Hungary, Denmark, Netherlands, Bulgaria, Italy, and Mexico

Page | xviii

Subsidiaries

Ballarpur International

Austria’s Neusiedler AG

Graphic Paper Holdings B.V. BILT Graphic Paper Products Limited Sabah Forest Industries Largest pulp and paper company of Malaysia BILT Tree Tech Limited

and Frantschach AG Cofinec in Poland Russia’s Syktyvkar mill And in many more countries

Divisions

For Indian country only

Europe & International and South Africa (two divisions separately)

Strategically views

Integrity

Leading market positions

Imagination Individual

High-quality, low-cost asset base Focus on performance

Key Products

1. Coated woodfree Art Paper C1S Art Paper C2S Art Board C1S Black Centered Board LWC SBS Board

1. Containerboard • • • • Appearance Kraft Semi Chem Recycled

2. Kraft Paper • Sack Kraft Paper Market Pulp Specialty Kraft Paper

2. Uncoated Woodfree Hi-Brights Creamwove

• •

3. Corrugated Packaging 3. Business Stationery Bonds • • Eco Line Easy Line
Page | xix

Industrial Grades Ivory Boards Posters • • • • • • • • • • • • • • • Smart Line Packaging Types Applications Technologies 4. Extrusion Coatings • • Technical Coatings Consumer Coatings 6.Key Products (Cntd. Release Liner • • • • Building / Roofing Envelopes Fiber Composites Graphic Arts . Specialty and Fine Cartridge Ledger 6.) 4. Copy paper Premium Copy Power 5. Industrial Bags Pasted Open Mouth Bags Pasted Valve Bags Pinch Bottom Bags Refuse Bag Protector Bags Terra Bag FIBCs / Big Bags Features Filling Equipment Industrial Bags production video Eurosac presents Russell the Spruce 5.

Consumer Goods Packaging • • • • • • • • Stand Up Pouches Reclosable Bags (FlexZiBox) Non-Reclosable Bags Paper-based Bags Microwaveable Packaging Labels Special Product Features Printed Laminate and Barrier Materials Rollstock • • Printed Mono Film Rollstock Biodegradable Films Sustainex 8.) • • Medical Tapes 7. Advanced Films & Components • • • • • • Diaper components Femcare components Label film Laminating film Tube Laminating Films Surface protection films (temporary) Page | xxi .• • Hygiene Labels Page | xx Key Products (Cntd.

Professional Printing Paper • • • • Digital printing Pre-print Offset printing Green Range . Office Paper • • • • • Multifunctional papers Color laser papers Creative Papers ColorLok Green Range 10.Key Products (Cntd.) • Surface protection films (permanent) • • Transport and pallet protection Industrial films for form-fill-seal (FFS) applications 9.

forest and forest product sectors value add was R23 bn. Packaging and Tissue papers’ import is increasing. packaging. coatings. consumer goods packaging. Major part from this is invested in local resources. Imports have continued to increase fairly strongly at around 3. corrugated packaging. annual growth rate has surpassed the international average. In 2009. Mpact. advanced films &components. equating to around 1.5 million MTPA per annum.526 million per annum to South Africa’s economy. contributing R 3.5% per annum since 2006.000 million in 2011. 1970 onwards. industrial bags. with most other grades decline as exports. tissue papers. 1 in Kraft paper in Europe No. 1 in office paper and UFP in Europe No. But Mondi and Sappi have major of the industry stack. release liner.5% of South Africa’s GDP. professional printing paper. Per capita consumption is 86 kg per year and total production is 4. newspaper. Nampak. A total of 2 lacs people are employed in the sectors value chain. etc. 1 in in corrugated packaging Europe emerging No. South African Paper Mills. Major players of the industry are Mondi. etc. Pulp exports are growing strongly in recent years. It shows that there is significant growth in consumption of packaging and tissue paper. The overall industry turnover is reached to R 26. etc. 1 in industrial bags in Europe Page | xxii FINDINGS Findings from South African Paper Industry The pulp and paper manufacturing industry is an important contributor for South African economy. Major grades offered by the industry are for printing. Kraft paper. Major products offered by the industry are containerboard. innovation and local human power. writing. Sappi. . office paper.Market Positions 53% of the coated woodfree paper market An impressive 80% of the bond paper market 35% of the hi-bright Maplitho market No.

grading and utilization of recyclable waste paper are the main barriers to the industry. writing and printing paper having 29. Paper mills of India have remarkable opportunity to improve their profit margin by increasing their investments in automation systems and enterprise solutions. and integrating them to achieve collaborative production management. modernization of mills. Major players in the industry are BILT. Moreover. Improving industrial competitiveness to face global competition. satisfactory invested assets and its focus on very low cost production continue to be major competitive advantages. HPC. No availability of good-quality fiber. Energy cost has increased on account of inadequate availability of coal thereby increasing imports.49 million tonnes per annum in FY2012.000 crores Indian paper industry is of about 1. technologic obsolescence and environmental compliances are a big challenge. plant size that is uneconomical.6%. sorting. TNPL.6% stack. which is caused by less availability and high cost of raw materials. meeting incremental demand of paper. By having technology from company like Mondi. Growth rate is of about 8. India’s per capita usage of paper has become doubled in the last decade and this growth is expected to continue.2 kg. It is one of the quickest growing markets in the world. newsprint having 19.Findings from Indian paper Industry The INR 25. India is the 15th largest paper consumer in the world. Writing and printing paper. Page | xxiii Per capita consumption is 9. ITC. which amounted around 11. etc. Identification of the Opportunity to Get Supplies from the Foreign Market for Indian Company to Get Cost Advantages Major issue for India's pulp and paper sector is very high cost of production. specialty paper. paperboard. defragmentation of industry.5% and specialty paper having 3.4% annually. 11 million MT of paper production is done in each year. Paperboard accounts for around 47% of the total market size. Mondi’s great quality. . newsprint paper are the major products offered by the industry. with approximations proposing a market size increase to 20 million MTPA by 2020. Indian mills can reduce their cost of production.6% of the world’s paper and paperboard production though the country is having stack of about 16% in the global population. environmental up gradation and green technologies. setting mechanism for collection. creation of robust raw material base. building new capacities. productivity/quality improvement. economies of scale.

So. which is used by the South African industry for the recycling of paper. Kraft paper. BILT can import other than writing and printing papers from Mondi group to cater Indian market. While South Africa’s main export is Pulp and it is growing strongly. They have also their presence in specialty paper and the tissue paper business. So. with some grades increasingly exported. industrial bags. While Mondi group is an international paper and packaging group specialist in containerboard. envelopes waste and magazine waste) for newsprint. pre-print and offset paper. corrugated packaging solutions. Mpact. coatings. films. Page | xxv CONCLUSION The major Paper industry firms that we have discussed here like Mondi. So Indian paper industry should use the technology. release liners. Recycling rate is continues to improve. where which is easily available. filled with various new and valuable paper products that they provide to the people of South Africa. specifically to drive the reduction of costs and therefore remain economical. Sappi. Gap Analysis between Indian and South African Paper Industry India’s major import is Pulp (softwood and hardwood). Nampak. The trade . consumer bags & pouches as well as office.Page | xxiv It appears that in South Africa there is increasing pressure for the collection of recycled materials. Gap Analysis between MONDI and BILT BILT caters primarily to the writing and printing paper segment. Over a million metric tonnes of paper was collected for recycling with a value of approximately R640 million. India imports about two million tonnes of pulp and waste paper (sack waste for unbleached grades. etc. here India can import pulp from the South Africa.

taking places in this firms also noticeable and profitable to the economy of the country. The legal aspects and barriers in Paper and Pulp industry are also hard to understand and manageable. Also we can see that when compared to the paper industry of India the results are somewhat satisfactory. The working of the paper industry in both the countries is different and from the findings it is clear that the South African paper sector remains highly concentrated. Large number and variety of products are offered in South Africa. Necessary raw material like Pulp is easily available there. Technically and economically South Africa focuses on paper and pulp industry more than the Indian paper and pulp industry. South Africa comes up with the lots of innovative and modern techniques in production. BILT can expand its product line from writing and printing paper segment with the help of MONDI Group. BILT can cater Indian market with the variety of paper products. They also can have technological advancement to have low cost production. There are opportunities to enter the paper industry in South Africa but with the help of deep research and required resources only. With the challenges like management of risks, growth of paper industry, currency exchange, availability of raw material, global economy, environmental laws and government laws, it is necessary to understand the whole structure of the Paper industry. Indian paper industry is in growth stage and this industry will be booming in upcoming years and in this time joining hands with South African paper industry will be very fruitful for us. Paper industry plays the vital role in the growth of both countries’ GDP.

Page | xxvi

TABLE OF CONTENT

PREFACE ………………………………………………………………………….. ACKNOWLEDGEMENT ………………………………………………………..... EXECUTIVE SUMMARY ………………………………………………………...

III IV V

Chapte r

To pic

Page No.

No .
1 PAPER INDUSTRY OVERVIEW
1.1 GENERAL INFORMATION ABOUT THE PERFORMANCE OF PAPER INDUSTRY OF SOUTH AFRICA 1.2 MAJOR PLAYERS AND OVERALL PRODUCTS OFFERED BY THE PAPER INDUSTRY OF SOUTH AFRICA 1.3 PRESENT TRADE WITH QUANTITY AND AMOUNT OF PAPER FIRMS IN SOUTH AFRICA 1.4 WTO – GENERAL TRADE IMPLICATION FOR PAPER INDUSTRY OF SOUTH AFRICA 1.5 BARRIERS APPLICABLE TO PAPER INDUSTRY OF SOUTH AFRICA 1.6 TRADE POLICIES IN PAPER INDUSTRY OF SOUTH AFRICA 1.7 TECHNOLOGICAL ADVANCEMENT TAKING PLACE INTO THE PAPER INDUSTRY OF SOUTH AFRICA 1 9 2 0 2 6 1 7 1 6 1 0 1

2

1.8 INVESTMENT PATTERN AND FINNCIAL DEPENDENCY OF PAPER INDUSTRY IN SOUTH AFRICA 1.9 REQUIREMENTS OF RESOURCES FOR THE PAPER INDUSTRY IN SOUTH AFRICA 1.10 DEMAND DRIVERS FOR PAPER INDUSTRY 1.11 OVERVIEW TO INDIAN PAPER INDUSTRY 1.12 MAJOR PLAYERS AND OVERALL PRODUCTS OFFERED BY THE PAPER INDUSTRY OF INDIA

3 1

3

2

3 8 3 9 4 3

Page | xxvii

1.13 PRESENT TRADE WITH QUANTITY AND AMOUNT OF PAPER FIRMS IN INDIA

49

54 1.14 BARRIERS TO PAPER INDUSTRY IN INDIA 57 1.15 PRESENT TRADE POLICIES IN TERMS IMPORT-EXPORT IN PAPER INDUSTRY OF INDIA 1.16 TECHNOLOGICAL ADVANCEMENT TAKING PLACE INTO THE PAPER INDUSTRY OF INDIA

58

1.17 INVESTMENT PATTERN AND FINANCIAL DEPENDENCY OF PAPER INDU 59

4 GAP ANALYSIS BETWEEN INDIAN AND SOUTH AFRICAN PAPER INDUSTRY 99 100 100 4 5 CONCLUSION BIBLIOGRAPHY 101 103 .2 BALLARPUR INDUSTRIES LIMITED 2.1.3 COMPANY COMPARISON 93 97 3 FINDINGS 3.18 GROWTH DRIVERS FOR PAPER INDUSTRY IN INDIA 1.1 OVERALL FINDINGS FROM SOUTH AFRICAN AND INDIAN PAPER INDUSTRY 98 3.1 MONDI GROUP 64 65 81 2.19 INDUSTRY COMPARISON 60 62 2 CASE STUDY OF COMPANIES 2.3 GAP ANALYSIS BETWEEN MONDI AND BILT 3.2 IDENTIFICATION OF THE OPPORTUNITY TO GET SUPPLIES FROM THE FOREIGN MARKET FOR INDIAN COMPANY TO GET COST ADVANTAGES 3.

4 1. 1.Page | xxviii LIST OF TABLES Table No. 4 2. 8 TECHNOLOGICAL PATHWAYS ESTIMATED PAPER DEMAND PAPER TYPES AND ITS’ APPLICATIONS HPC PRODUCTS DEMAND FORECAST COMPARISON BETWEEN INDIAN AND SOUTH AFRICAN 6 5 PAPER INDUSTRY 2. 5 PRODUCTION STATISTICS MONDI’S OPERATING COUNTRIES FINANCIAL SUMMARY PROFIT AND LOSS STATEMENT OF BILT COMPANY COMPARISON 7 6 7 8 8 2 8 8 9 6 2 7 4 0 4 1 4 6 5 2 To pic Page No. 1 2. 2 RECYCLING RATES PAPER PRODUCTION AND CONSUMPTION IN SOUTH AFRICA 2011 1. 5 1. 3 2. 2 2. 6 1. 3 1. 7 1. 9 9 . 1 1.

Page | xxix

LIST OF CHARTS
Chart No.
1. 1 1. 2 MAJOR GRADES OF PAPER COMPARISON OF DOMESTIC PRODUCTION AND TOTAL 6 PAPER IMPORTS 1. 3 1. 4 1. 5 1. 6 1. 7 1. 8 2. 1 2. 2 PAPER CONSUMPTION DOMESTIC PRODUCTION TOTAL EXPORTS TOTAL IMPORTS MAJOR INDIAN PLAYERS COST STRUCTURE STRUCTURE OF MONDI GROUP CONTRIBUTION TO GROUP REVENUE 6 7 7 8 4 2 5 0 7 0 7 5

To pic

Page No.
5

2. 3 2. 4 2. 5

PAPER PRODUCTION AND NET SALES DEBT EQUITY RATIO AND PBDIT PAPER MAKING PROCESS

8 7 8 7 9 2

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Chapter-1

Paper Industry Overview

Page | 1

1.1. General information about the performance of Paper industry of South Africa
1.1.1A brief history of paper products in South Africa

The paper packaging industry in South Africa is said to have been started in 1780, when Cape Town woman, used paper to wrap fruit and send it to the Dutch East Indies. By 1780, 'East Indiamen from the Netherlands' regularly delivered paper and card board for the making of packaging in southern Africa.

By the turn of the nineteenth century, there were scores of cardboard box makers in Cape Town, and on the Reef. In 1910 the newly formed Government of the Union of South Africa set up a commission to investigate the extent and nature of manufacturing in South Africa. Among those who gave evidence were Mr. W.E. Laughton, Paper Bag Maker, and Messrs Weinberg Brothers, cardboard box makers of Cape Town. At this time paper packaging manufacturers such as Laughton and Weinberg relied on imported paper and board, and Mr. Weinberg "doubted whether paper could be made in South Africa, even with special protection".

In 1920, a new company was launched by immigrant, John Herzberg. The Company, together with Oscar Fruman's Transvaal Box Manufacturers, and Willie Kalmanson's Universal Cardboard and Box Corporation, were the early forerunners of what we know today as Nampak. In 1933, two Port Elizabeth firms began to produce multiwall paper sacks for cement packaging. In the early days, boxes were made by hand. Sheets of cardboard were cut to size with the help of a ruler and knife, and the pieces were stapled or glued together. In Cape Town in the 1920s, the workforce was largely made up of women, who worked long hours for piece rates.

the packaging industry became increasingly concentrated. Rheem. Hortors. 1. Cellulose Products opened its doors. Alex White. In the post World War 11 years. Leuchars and Hepburn (HLH). In 1948. the industry expanded rapidly. Local tissue production began a little later than the other converting industries. By 1939. At first they resisted the entry of local paper onto the market. Aries. Harwill. 970.000 tons of printing and writing paper and more than one million tons of other paper and paperboard each year. Mondi and the Dutch group KNP BT have restructured their paper merchanting interests in South African companies Paperlink and Finwood.000 tons of newsprint. such as tissue products and printed articles. The major pulp and paper companies operating in South Africa are Sappi. Transpaco and Coates Brothers are other local operatives while Swedish company Ekman Liebig established a South African presence in late 1995. equatorial climate of these parts has meant that trees grow quicker than in most paper and pulp producing countries north of the equator.000 tons of chemical wood pulp. Clegg. Nampak and Carlton Paper control 70% of the SA tissue industry. in particular. Other companies involved in the forestry industry are parastatal Safcor and Hunt. Paris and Johannesburg Stock Exchanges. Kohler and its subsidiary Carlton Paper. Page | 2 1. But the relationship between the local paper industry and the printers grew.000 tons of mechanical wood pulp. In addition. and Mondi. local printers were already well organized. The warm. the industry was already largely reliant on local printing papers. and started to produce tissue wadding. and Consol. The manufacture of other converted paper products. which together share more than 80% of the market. South Africa produces approximately 370. Bowler Metcalf. when Sappi's first paper mill began to sell domestically produced paper.2 Overview to South African paper industry South Africa is the only African producer of pulp and paper other than Swaziland. Between them. and it grew in various forms. followed a similar history. which had planned to sell 50% of its holdings to Sappi and Mondi before competitions board intervention recommended that Anglo American and Mondi acquire 100% of the holdings and swap it to foreign interests in exchange for offshore assets. Downstream packaging companies include Nampak. which is listed on the London. Commercial printing in South Africa was established as early as packaging. which forms part of the Anglo American Industrial Corporation group of companies. South Africa has a relatively rich source of raw materials from the pine forests of the Kwazulu-Natal and Mpumulanga regions. Nampak's factories at Klip River and Cape Town produce 50 000 tons/year. During the 1970s and '80s.The packaging industry grew and diversified along with the growth of the South African economy.1. with new factories opening almost every year in the 1950s. 316.500. throughout the nineteenth century. Plastall. South Africa imports some $US 400 million of paper and paperboard each year. and is now dominated by a few large companies. and by the time Sappi launched its printer‟s award in 1979. Carlton Paper produces 47 000 t/year. .

plan to implement a recycling operation that will operate within Soweto. Mondi has begun rationalizing its assets with the aim of focusing on its core activities – pulp. Phase one will be a $US 25 million tissue mini-mill for Soweto that will produce 10.5 billion market. Jacaranda Tissue. Mondi invested over R540mn in its Richards Bay pulp and linerboard mill. collecting its waste paper for raw material. the organization could be selling large amounts of forest land and seven saw mills. The new plant would almost eliminate the use of virgin pulp and consume 72. However the drop in world prices towards the end of 1995 caused a downturn in profitability. In 1999. Kohler has authorized subsidiary Carlton Paper to spend $US 35 to build a waste paper recycling plant at the Enstra facility near Springs.either in Soweto or cloned to another township. The technology has been provided by Kimberley-Clark. Since .000 tons of waste paper per annum.Margins in South Africa have traditionally been 5% higher than overseas making it a very lucrative $US 2. Page | 3 In early 1996 the HLH sold its 50% interest in softwood operations to Sappi for R 220 million. Mondi acquired Hunt Leuchars & Hepburn's mining timber and Sivacel export interests for $US 220 million. also costing $US 25million. paper and packaging and move away from the solid wood sector.000 tons/year. depending on investor interest.1. a second 10 000 tons/year facility. will be added . The 1994 / 1995 upswing in paper and pulp markets worldwide has also buoyed the South African market. Sappi has undertaken to acquire from the Industrial Development Corporation (IDC) its investment in Saiccor at a future date. run by Ntsiki and Ian Gwebu.to the township community. the company extended its marine pipeline in Natal in order to reduce the effects of the factory waste on the environment. If the community concept works out. near the golden highway. A site for the Sowetan mini-mill has been secured at Devland. As a result Mondi is reconsidering major investments following the downturn in the international price of pulp. This acquisition will probably be paid for in the form of Sappi Limited equity. In order to remain internationally competitive and increase output. 1. with Sappi reporting a record 291 % increase in EPS for the year ended February 1995 and Mondi experiencing a 20 % increase in turnover during 1994. Since the late 1990s. The company planned to spend R 500 million including R 268 million on upgrading the Kraft Piet Retief Linerboard plant and the Merebank mill. a Finnish consulting company that has developed the mini-mill concept and will provide the technological know-how. A crucial stakeholder will be Eco-S. and making and selling their products mainly toilet paper and kitchen towels . As a result.3 Paper and Economy The pulp and paper manufacturing industry is a key contributor to the South African economy.

The industry is not without its own economic challenges but has been making a steady recovery since the 2008 recession which resulted in a decline in pulp and paper demand. A total of 207. local innovation and local people power. equating to 1. This is primarily due to the fact that Sappi‟s chemical cellulose mill is a market leader and has increased production at its Saiccor mill in Umkomaas. 1. Much of this is invested in local resources.4 Major Grades of Paper Chart 1.1.1. Recovery is being driven mostly by packaging and tissue grades. primarily in textiles but it could also be used to produce bio plastics.1 Major Grades of Paper 1. Page | 4 Pulp and paper‟s direct contribution to South Africa‟s balance of payments in 2010 was an impressive R4. the forest and forest product sectors value-add was R23 billion.5 Summary Findings from 2011 Production Import and Export Statistics June 2012 Overview . contributing R35. 26 million annually to South Africa‟s economy. Sappi is investing a further R2. This pulp has many end uses.1970.5 billion. its annual growth rate has outdone the international average.4% of South Africa‟s gross domestic product (GDP). KwaZulu-Natal. In 2009.967 people are employed in the sectors value chain.4 billion in production of chemical cellulose at its Ngodwana mill in the province of Mpumalanga.

however. increasing costs and global over capacity in products like newsprint. consumption per capita has risen. Please note that all graphs are indexed against 2006. as South Africa‟s Living Standards Measure profile develops. However. which has the value of 100.3 Consumption Paper . Chart 1. generally speaking. we are no longer seeing the effects of massive stock changes related to the recession‟s impacts on packaging and paper. showing the first indications of a per capita decline.86 kg/per person change is a statistically significant movement given that. however. Printing and writing grades are.2 Comparison of domestic production and total paper imports South African consumption profile Overall. The 0. profitability and therefore the sustainability of producing certain grades in South Africa may be a challenge going forward. with rising imports.As the worldwide recession pales.The left axis is a numerical value given to a product relative to its performance in the base year of 2006. Selected grades of pulp. Printing and writing grades are definitely under some pressure. the local pulp and paper industry has settled out with some grades of paper showing small growth in demand. so tissue and packaging demand should grow. packaging and tissue are still produced sustainably in South Africa. Page | 5 Chart 1. driven by the increased consumption of packaging and tissue.

Chart 1. as an indexed comparison. tissue 101 and pulp 146. Chart 1. packaging grades 81. tissue 114 and pulp 105. This is a fair representation of where the productive focus has moved to. One would expect this focus to continue into the future. These trends appear to be well established. Again.5 Total Exports . with most other grades decline as exports. printing and writing 62.4 Domestic Productions South African exports Pulp exports are growing strongly.Page | 6 South African production Comparative statistics (indexed to 2006) show the following: printing and writing 75 (or 25% lower than 2006). packaging 104.

5% per annum since 2006. This is of grave concern to the sector and unless something is done to stem the tide.6 Total Imports Raw materials . Given that consumption is marginally lower and production is broadly off peak. imports have continued to increase fairly strongly at around 3.Page | 7 South African imports Almost across the board. substitution appears to be gaining momentum in some areas. further machine closures can be expected. tissue 135 (as with packaging) and pulp 62. emphasizing market growth). Chart 1. As an indexed comparison we see printing and writing at 114. packaging grades 125 (plus local production up.

16 9 250.900 562. Page | 8 Table 1.0% Table 1.411 58. specifically to drive the reduction of costs and therefore remain competitive.2 Paper production and consumption in South Africa 2011 (All values in metric tonnes) Paper Production Newsprint Printing/writing Corrugated materials/containerboard Other wrapping papers Tissue Other paper 993.42 0 89. Over a million tonnes of paper was collected for recycling with a value of approximately R640 million.Rising costs in energy and fiber will see the greater use of recovered fiber or collected waste paper in paper manufacture.000 hectares of land for trees by 2018.512 173.480 98. Water licenses for planting trees have been granted for some 30.119 65.000 hectares but tree licenses are still not easily obtained despite the government‟s promise of 100.247 43.55 4 .11 3 862.1 Recycling rates Recycling rates Recovered paper as a % of recoverable paper 2011 59. with some grades increasingly being exported.211 302.265 Paper Consumption 275.5% 2010 58. Recycling It appears there is increasing pressure for the collection of recycled materials.43 5 316.008 87.235 89.759 Paper Import 13. A potential feed in tariff for bagasse for energy could threaten two of the country‟s paper mills in KwaZulu-Natal. The recycling rate continues to improve.169 203.025 0 11.060 Paper Export 55.35 2 119.725 473.984 778.

400 people with operations across more than 30 countries.034 27.87 6 2.876 2. to the conversion of packaging papers into corrugated packaging and industrial bags.298 586.402. predominantly in Central Europe and Russia.655 786. company's business expanded in Western Europe and USA. when Mondi's former owners Anglo American plc built the Merebank mill. After acquisition of Nordenia in 2012.Board Total 27. its former HQ. and contribution from South Africa. It is a constituent of the FTSE 250 Index. Mondi came to Europe in the early 1990s to start a long period of expansion through acquisition. Following more than two decades‟ growth and consolidation in South Africa.2 Major Players and Overall Products offered by the Paper Industry of South Africa Mondi Group Mondi is an international paper and packaging company employing over 23. It is fully integrated across the paper and packaging process – from growing of wood and the manufacture of pulp and paper (including recycled grades).202. declined.91 9 Page | 9 1. . It has primary listings on the Johannesburg Stock Exchange and the London Stock Exchange. History The roots of the global business that is now Mondi were first planted in 1967 in South Africa.

Mondi began operating as two divisions: Europe & International and South Africa. Containerboard Kraft Paper Corrugated Packaging Industrial Bags Extrusion Coatings Release Liner Consumer Goods Packaging Advanced Films & Components Office Paper Professional Printing Paper . Special technologies. The Mondi Group consists of two main divisions: Europe & International and South Africa. Ukraine and Italy. the Netherlands.and offset printing segments. Uncoated Fine Paper includes office and printing paper as well as paper for the pre. Russia. many major companies – often market leaders in their home nations – became part of Mondi. which is central to Mondi's future expansion plans into emerging opportunities in Asia and the Americas. Page | 10 Product Offerings Containerboard. corrugated products as well as bags and specialties and serves diverse industries. the UK. Mondi produces uncoated fine paper. Czech Republic. and corrugated packaging solutions (shelf-ready and heavyduty packaging. From January 2008. Cofinec in Poland. Mondi converts Kraft paper into bags and specialty products for rugged industrial applications. Poland. These included Austria‟s Neusiedler AG and Frantschach AG. Slovakia.Mondi run businesses in countries including Austria. France. in place of the former Mondi Packaging and Mondi Business Paper business units. laminating. trays and boxes) are used for diverse industrial applications including the food sector. both virgin and recycled. Denmark. Bulgaria. Mondi became an independent dual-listed business in mid-2007 when they successfully demerged from Anglo American with listings on the London and Johannesburg Stock Exchanges. as well as operations in Mexico. such as extrusion coating. and Russia‟s Syktyvkar mill. During this time. Bags and microwaveable packaging are produced of film-based flexible packaging. Hungary. These bags are compatible with high-speed filling and used primarily in the cement and construction industries. siliconsing and printing facilitate other uses and applications.

converters. The company sells its products to merchants. based in Southern Africa. . Founded in 1936 in South Africa and headquartered in Johannesburg. chemical cellulose and forest and timber products for Southern Africa and export markets.Chemical cellulose production of 600. The company conducts its business through three business units: Sappi Fine Paper. Sappi Forest Products. Sappi Fine Paper is managed through three regional business units: Sappi Fine Paper North America.1 million tonnes per annum (TPA) . and casting release paper used in the manufacture of artificial leather and textured polyurethane applications. Sappi Forest Products and Sappi Trading. Southern Africa and Asia. coated and uncoated specialty paper.100 employees worldwide. Sappi Fine Paper has manufacturing and marketing facilities in North America. Europe.000 TPA . produces commodity paper products. Sappi has its largest market in Europe.8 million TPA of paper pulp production .Sales in over 100 countries . printers.Manufacturing operations in nine countries on four continents . with a share of 54% Paper production of 5. publishers and other direct customers. pulp. It also manufactures uncoated graphic and business paper. Sappi is a producer of coated fine paper and chemical cellulose. Sappi Fine Paper Europe and Sappi Fine Paper South Africa.2.15.Page | 11 SAPPI Sappi Limited is a global pulp and paper company group.

4. . S. all of which can be converted to any size within our machine deckle of 1700mm on paper machine no. The market for this would be Pharmacies. 2. Testliner. The company has been operating for the past five years. Paper Mills operates three paper machines and which currently produces approximately 15 000 tons per year. counter reels. They also produce gift wrap and this can be delivered in single rolls. South Africa. Orange. The mill manufactures G. The bags will be manufactured from plain brown paper and printed paper.Pink. This paper is available from 40gsm to 230gsm. Green. Fluting Paper and White Kraft Paper. 1. They are also setting up a plant to manufacture paper bags. and 3100mm on paper machine no. plain Kraft. We could also do continuous prints. flat sheets. sheets. 2100mm on paper machine no. is an independent paper mill situated in Durban. They produce colored paper . Curio shops.Product Offerings 1 Side Coated Print 2 Side Coated Print  2 Side Coated Web  Kraft paper Prestige Uncoated chemical Tissue 1 Side coated 2 Side coated Containerboard Uncoated mechanical Page | 12 SOUTH AFRICAN PAPER MILL South African Paper Mills (Pty) Ltd. retail stores etc. Having an in-house converting plant enables us to supply the paper in reels.T. Ribbed Kraft.A. counter rolls or reels and are available in a variety of patterns and colors. Blue and any other specific colors that customers may require.

Envelopes 3. Paper Cores 6. Test Liner 3. SFK Page | 13 They are currently exporting to the following countries: Botswan Dubai Germany Ghana Ivory Coast Kenya Malawi Mauritius Nigeria Tanzania Uganda United Kingdom Zambia Zimbabwe Product Range 1. Corrugated Sheets 7. This enables us to produce paper with special prints and this can be done in reels or sheets. School Book Covers 2. This can be supplied in rells or sheets. The paper is currently used locally and internationally to manufacture: 1. Gift-wrap 4. Fluting Paper . Ribbed Kraft Paper 2. Paper Bags 5.They also have an in-house sheeter and web printing machine. We also produce SFK (single face kraft) which is widely used in the packaging industries.

700 people. Mpact employs over 3. is one of the largest paper and plastic packaging businesses in southern Africa. communities. recycled-based carton board and containerboard. offices and an extensive network of agents and dealers. churches. paper manufacturing and recycling. Mozambique and Zimbabwe. Wrapping Paper 8. 23 of which are manufacturing operations. housing complexes. These strong market positions allow us to meet the increasing requirements of customers. Exercise Book Cover paper 6. based in South Africa. Namibia. polyethylene terephthalate (PET) performs. recovered paper collection. which listed as a separate entity on the JSE and demerged from Mondi* in July 2011. achieve economies of scale and achieve cost effectiveness at our various operations. Packaging Paper 9. The Group. Approximately 90% of our revenue is derived from these product lines. White Kraft Page | 14 Mpact Mpact Limited.4. Paper Business The paper business consists of three divisions: corrugated packaging. with 30 operating sites. styrene trays and plastic jumbo bins. . formerly Mondi Packaging South Africa. kerbside.and post-consumer material sourced from a multitude of paper pickup programmes including commercial. Recycling We are the largest paper recycler in South Africa. Case Paper 7. schools. Recovered paper sources include pre. Envelope Paper 5. has the leading market position in southern Africa in corrugated packaging. The recycling division has seven sites across the country.

we sell Baywhite. 1. a premium quality white-top kraftliner produced by Mondi Limited.400 Approx. In addition.100 Approx.347 million USD Profit: 104 million USD Production: 5. C) Mpact Revenue: R 6. for which we have exclusive distribution rights in South Africa and subSaharan Africa. corrugated boxes.739 million EUR Profit: 357 million EUR Production: 5 million MTPA Employees: 23.9 million MTPA Employees: 3. die-cut cases.700 Approx. .Paper manufacturing (Paper) The paper division manufactures recycled-based packaging and industrial paper grades such as containerboard and carton board.3 Present trade with quantity and amount of paper firms in South Africa A) Mondi Group Revenue: 5. which we use to manufacture corrugated packaging. Corrugated The corrugated division manufactures and sells a comprehensive range of printed and unprinted converted corrugated products.821million Profit: R313 million Production: 0.4 million MTPA Employees: 15. B) Sappi Revenue: 6. folded glued cases. trays and point-of-sale displays. including board.

or a combination of these approaches. employment and economic growth and alleviating poverty. taking account of established WTO provisions in respect of developing countries.4 WTO – General Trade Implication for Paper Industry of South Africa Achieving free and fair trade in forest and paper products a statement by leading global forest and paper industries in Geneva. an expansion of current zero for zero deals. This statement expresses strong industry support for accelerated trade liberalization in wood and paper products through the World Trade Organization (WTO) Doha Development Agenda. Mexico. industry representatives agreed that: WTO members should move with the greatest possible speed towards the goal of eliminating all tariffs on forest and paper products. Reviewing progress in the Doha negotiations. particularly through the WTO. A successful and robust outcome from the Doha negotiations is critical to ensuring the future expansion of the world‟s forest and paper industries.Page | 16 1. 54 percent of world trade in wood pulp and 25 percent of world trade in paper. The Doha negotiations offer an unparalleled opportunity to eliminate trade barriers. Switzerland JULY 2003. New Zealand and the United States as well as the forest industry in Australia and the paper industry in South Africa. whether by an ambitious formula approach to tariff elimination. Chile. This statement reflects the views of forest and paper products industries in Canada. These industry representatives are united in their belief that accelerated trade liberalization of forest and paper products. Representatives of these industries met in Oaxaca. in May 2003 to discuss the progress in the Doha negotiations and to consider options for furthering the interests of the global forest and paper industries in these critical negotiations. put in place more effective trade rules and address the specific concerns of developing countries. Between them these industries represent 34 percent of world trade in wood products. . provides a means of expanding output.

in September 2003. To consult regularly amongst themselves with a view to co-coordinating their respective positions and strategy in respect to the Doha negotiations. Mexico. and To explore opportunities to present these views and any subsequent considerations to WTO officials and national delegations in Geneva and as appropriate at the WTO Ministerial Meeting in Cancun. and They will seek more effective rules and disciplines to address the use of subsidies. and That Trade Ministers meeting in Cancun resolves to keep the Doha negotiation to its original timeframe for conclusion by 1 January 2005. Industry representatives further agreed: To convey the views in this statement to their respective national governments and to industry stakeholders and the general public in their countries. in September 2003. Greater clarification. but before the WTO Ministerial in Cancun. Mexico. Page | 17 Industry representatives called on their respective national governments and all member countries of the WTO to ensure: That effective modalities for non-agricultural market access were identified as soon as possible.The goal of eliminating non tariff barriers should also be pursued with speed given their increasing prevalence and effect in blocking trade expansion. . refinement and more disciplined application of anti-dumping provisions is required.

Communities can sometimes not afford the required environmental impact assessment. and sometimes incomplete application forms also add to the delay. delayed return on investment. are as follows: • Water licenses: Issuing of water licenses has become a serious obstacle for forestry development. maintenance and harvesting operations and consequently. Furthermore. there is also a delay from the regulatory government departments. . • Demand of raw material exceeds supply: The demand of raw material far exceeds supply and this has resulted in the closure of most downstream processing industries especially in furniture and small-scale saw milling industry.5 Barriers Applicable to Paper Industry of South Africa Key economic constraints. As a result there is some level of reluctance to invest in forestry business. Long rotations in forestry require long term capital for establishment. there is lack of proper consultation and mobilization with communities in line with forestry development protocols. which are holding back development in the forestry sector. The communities also require business skills to manage their operations effectively. • Investment finance: Tree planting cannot take place without securing investment finance. Lack of personnel capacity in regional office. The small players in the industry are mostly affected by this due to the vertical integrated nature of the industry where big companies own plantations and small businesses rely on supply from DAFF plantations.Page | 18 1. Also. More jobs will still be lost if the demand/supply equation is not addressed amicably. • Skills development and technology transfer: The new forest growers and beneficiaries of land reform do not necessary have the skills and relevant technology to grow the trees optimally. • Land tenure: Most of the land that has been identified as suitable for new affore station is tribal or land belonging to communities where land claims settlement issues still need to be resolved before tree planting can take place.

Lesotho. South Africa. the industry was a net exporter to the value of R1.1 billion. ITAC continues to receive requests from a number of industries for tariff protection. though physical volumes have grown substantially over the last decade. South Africa‟s average applied duty in 2011 was 8. being a world leader in the pulp and paper technology. and 35 percent of it was destined for exports. Although South Africa is in a position is not among the dominant producers. This principle recognizes that raw material exports from a region or country could be beneficial and thus value can be added to them locally. Thirdly. It is believed that annual wood demand facing the forestry industry will almost double from the current consumption of 19 million cubic meters by 2011. South African companies have evidently established themselves as significant players in the international market. . The International Trade Administration Commission (ITAC) is tasked with administering South African trade laws. South Africa effectively sets the level of MFN tariffs applied by all SACU countries.6 Trade Policies in Paper Industry of South Africa Introduction To Trade Policies In 2006. The pulp and paper sector of the industry is hence of utmost importance to the economy. consumers or exporters in the world pulp. and the Southern African Customs Union (SACU). which links the trade regimes of Botswana. traditionally dominated by North America and the Scandinavian countries. and Swaziland. the Southern African Development Community. paper and board sector of South Africa is small but has a significant place in the international export market. The industry employed some 250 thousand people directly and some one million people indirectly (Ministry of Water Affairs and Forestry. Almost 97 percent of tariffs are charged on an ad valorem basis. Import Policies Tariffs South Africa is a member of the World Trade Organization (WTO). South Africa applies the SACU common external tariff (CET). and U.1 percent. 2006. South Africa has a strategic competitive advantage. The pulp. the long term growth prospects of the industry are assessed to be excellent. there are strong income incentives for downstream wood processing industries to integrate backwards so as to plant more to earn more. The economic significance of commercial forestry is expected to increase in the future which can be attributed to a constellation of factors. Namibia. with rates ranging from 0 percent to 96 percent.S.7 billion which was roughly 7. As a member of SACU. Firstly. Secondly. South Africa supplies less than 2% of international demand. The total turnover in 2006 was around R13. paper and board industry.Page | 19 1.8 percent to the overall exports of manufactured products. In practice.

U. and excessive regulation. The South African government introduced a National Industrial Policy Framework and Industrial Policy Action Plan (the Framework) in 2007. i. antidumping measures. plastic fabrication. paper. The Framework sets out specific mechanisms to assist these sectors. biofuels. business process outsourcing. ashes. In September 2007. residues. and serve as a further impediment to enter South Africa‟s apparel market. Page | 20 For example. including: capital and transport equipment.e. the rate that generally cannot be exceeded under WTO rules. ITAC subsequently announced its intention to terminate antidumping duties on several imported products because the sunset review of those duties had not been initiated before the expiration of the five year period as calculated under the court‟s interpretation of South African law. automotive goods and components. and goods subject to quality specifications.. and clothing and textiles. import permits. by notice in the Government Gazette. of goods of a specified class or kind. Nontariff Measures The Minister of Trade and Industry is authorized to prohibit imports into South Africa. thus creating a de facto ban on most used goods. except under the authority of.S. Other categories of controlled imports include waste. tourism. scrap. and pharmaceuticals. pulp. and a potential reduction of selected import duties on inputs and components. authority to impose duties had expired prior to the initiation of the sunset review for that product. apparel exporters expressed concern about increases in South African tariffs on over 120 clothing items in late 2011. and in accordance with. including used clothing. The ITAC requires import permits on used goods if such goods are manufactured domestically. and furniture. including a comprehensive review of import duties that has been underway for the last few years. forestry. Tariffs for these products were increased from 20 percent and 40 percent up to their WTO bound rate of 45 percent. Antidumping Measures Transparency and due process remain issues with respect to the actions of ITAC and its administration of South Africa‟s antidumping laws and regulations. the conditions stated in a permit issued by the ITAC. with the goal of promoting value added industries in eight sectors. South Africa‟s Supreme Court of Appeal ruled that ITAC had improperly calculated the five year expiration date of antidumping duties imposed on A4 paper imported from Indonesia and that.companies have cited protective tariffs as a barrier to trade in South Africa. Other often cited nontariff barriers to trade include customs valuation above invoice prices. as a result. chemicals. .

Intellectual Property Rights (IPR) Protection Enforcement of intellectual property rights (IPR) in South Africa presents challenges. The National Treasury is working with the DTI to align preferential procurement regulations with the BEE Code of Good Practice on Procurement in order to help standardize how firms are evaluated on their compliance with industry BEE scorecards. These regulations would give preference to bidders who comply with BEE objectives and would include BEE thresholds in tender evaluations. as well as Page | 22 . South Africa uses government procurement to promote the empowerment of the historically disadvantaged majority population in South Africa through its Black Economic Empowerment (BEE) strategy. This obligation requires the seller/supplier to engage in local commercial or industrial activity valued at 30 percent or more of the value of the imported content of the total goods purchased or leased under a government tender. 80 percent of the tender evaluation would be based on the bid price and 20 percent on the supplier‟s commitment to BEE objectives. companies would earn 90 percent of their points from their bid price and 10 percent from their commitment to BEE objectives.000). some members of the business community have expressed concerns about lax enforcement of IPR laws against imports of infringing goods. In recent years. and construction. Although law enforcement authorities often cooperate with the private sector in investigating allegations of trade in pirated or counterfeit goods. designated more warehouses for securing counterfeit goods. See the section on Investment Barriers for more details on BEE. The government has appointed more inspectors. introduced in 1996. and police officials. South Africa‟s Preferential Procurement Policy Framework Act of 2000 (the Framework Act) and its implementing regulations created the legal framework and a formula for evaluating tenders for government contracts. South Africa is not a signatory to the WTO Agreement on Government Procurement. or services with an imported content equal to or exceeding $10 million (or the rand equivalent thereof) to an industrial participation obligation. border police. the DTI has been working on regulations to clarify the Framework Act and to incorporate the objectives of the Broad-Based Black Economic Empowerment Act of 2003. South Africa‟s National Industrial Participation Program. services. To augment this.Page | 21 Government Procurement Government purchases are made through competitive tenders for goods. equipment. subjects all government and parastatal purchases or lease contracts for goods. the South African government has introduced measures to enhance enforcement of the 2004 Counterfeit Goods Act. and improved the training of customs. For tenders valued over one million rand. In procurement valued up to one million rand (about $130. destroyed counterfeit goods.

Although completion of the Codes of Page | 23 . industry is increasingly concerned about illegal commercial photocopying.S. The Cape High Court awarded costs against the importer. successfully obtained a civil injunction against a major DVD rental chain that was parallel importing their product. provided the DTI approves and provided the multinational has a global corporate policy of owning 100 percent of the equity in its subsidiaries. in 2011. DTI is also working with universities to incorporate IPR awareness into college curricula. such as the creation of DTI‟s enforcement unit. libraries. especially at universities. and the establishment of Commercial Crime Courts in several cities. The number of arrests for trading in pirated or counterfeit goods has increased in the last few years. the growing number of counterfeit production facilities. U. and Internet piracy. The South African government has also formed an interagency counterfeit division including the DTI. There have been some concerns that the South African Customs Administration interpreted a 2011 court ruling as limiting its ability to seize potentially infringing goods that are marked for transshipment through South Africa. industry has also expressed concern about software. South Africa has taken steps to improve enforcement. SARS has launched a public awareness campaign about the seriousness and impact of IPR crimes. companies had pressed for the right to use such “equity-equivalent” mechanisms. U. advertisements of “burn -toorder” services. Services Barriers Investment Barriers In February 2007. procurement from black-owned companies. There is no direct legal protection for local distributors against parallel imports. In addition. This interpretation is still being debated within the South African government. complainants can take both civil and criminal action against IPR offenders. However. who is appealing the decision. employment. monetary losses from counterfeiting and piracy remain high. with special attention to counterfeiting issues related to merchandising for the 2010 World Cup soccer tournament in South Africa. Counterfeit medicines are also a growing problem. Many U. the South African Revenue Service (SARS).slow and cumbersome court proceedings. and other on-campus venues. The Codes permit multinational corporations to earn BEE equity ownership “points” for empowerment actions in non-equity areas. Under South African law. acting individually. the DTI published Codes of Good Practice in the Government Gazette that included a new generic scorecard to measure a company‟s level of BEE in areas such as equity ownership. several members of the Motion Picture Association of America. management. and the unwillingness of South African Internet Service Providers (ISPs) to shut down infringing sites or access thereto. and development of black-owned enterprises. optical disc. Despite efforts to improve IPR enforcement. and the South African Police Service to improve coordination on IPR enforcement.S.S.

The law requires government accreditation for certain electronic signatures. mining. Government.za” domain name. Page | 24 Other Barriers . There is uncertainty. In early 2009. as to whether equity-equivalent plans approved by DTI under the Codes of Good Practice would automatically satisfy equity requirements imposed by the transformation charters. some argue the sector is now governed by the Codes of Good Practice. Industry is still evaluating the extent to which this legislation. The law was designed to facilitate electronic commerce. will affect the ability of South African and foreign companies to receive and send trans border flows of personally identifiable data. Several “transformation charters” have also been negotiated by stakeholders in sectors such as financial services. which has led to complaints that the approval process is slow and nontransparent. only one multinational company had received DTI approval of an “equity-equivalent” program. and unions have so far been unable to agree on a revised charter. Electronic Commerce The Electronic Communications and Transactions Law govern all companies that conduct electronic commerce in South Africa. Because the time period for publishing the sector specific charter in the Government Gazette has lapsed. By the end of 2009. and petroleum. These charters are intended to promote accelerated empowerment within particular sectors. but has been criticized as imposing significant regulatory burdens. It is expected that many of these charters will be converted into binding sector codes. and requires a long list of disclosures for websites that sell via the Internet. takes government control of South Africa‟s “. which is still awaiting action by the National Assembly. the South African Law Reform Commission submitted draft legislation and discussion documents on privacy and data protection for public comment and held a series of workshops on the draft legislation. a DTI-approved equity-equivalent plan was determined not to satisfy the requirements of a charter.Good Practice has cleared up much of the uncertainty that surrounded BEE. a charter was reopened after labor unions complained that the charter‟s equity requirements were too generous to banks. In at least one case (the information and communications technology sector). they are complex documents and much about their interpretation and implementation remains unclear. although talks continue. banks. In the financial services sector. however.

One shortcoming of the Act has been its failure to protect whistleblowers against recrimination or defamation claims. both enacted in 2009. and the Office of the Auditor-General.S. For a number of years.7 Technological Advancement Taking Place into the Paper Industry of South Africa . However. and obliges public officials to report corrupt activities. U. and telecommunications sectors are still dominated by state-owned or state controlled monopolies. have helped to increase transparency in government. like the Public Service Commission. bars the payment of bribes by South African citizens and firms to foreign public officials. the Office of the Public Protector. Some. Page | 25 1. South Africa has no fewer than 10 agencies engaged in anticorruption activities. high rates of violent crime create a strain on enforcement capacity and make it difficult for South African criminal and judicial entities to dedicate adequate resources to anticorruption efforts. The 2011 Prevention and Combating of Corrupt Activities Act defines graft.Ownership Patterns While South Africa‟s business environment has improved dramatically in the post-apartheid era. and other foreign companies have complained of difficulties in the procedures for obtaining temporary work permits for their skilled foreign employees. Following the April 2011 elections. Business Mobility Many economic sectors in South Africa experience severe difficulty in recruiting because of skills shortages and emigration. the Zuma administration pledged to make anticorruption efforts a high priority and initiated a presidential hotline to receive reports of corrupt practices. Transparency and Corruption Laws such as the Promotion of Access to Information Act and the Public Finance Management Act. transportation. the energy. are constitutionally mandated to address corruption as part of their responsibilities.

In the acid precipitation process. increasing the dry solid content of the black liquor.g. and thus to reduced steam and electricity production. Table below lists the available and emerging technologies in stock preparation (pulping). reduction of any throttling and/or investment in a condensing turbine to utilize a potential steam surplus are considered. be increased by raising the steam quality (when investing in new boilers). They made a distinction between available and emerging technologies. Available technologies are already implemented by a number of firms. acid precipitation. the fibers are used for production of pulp (or paper). together with an increased steam demand in the evaporation plant due to the increased evaporation load from wash filtrates. decreasing any throttling and/or reducing the process steam demand. Increased electricity production due to increased dry solid content of the black liquor. Lignin extraction In the kraft pulp process. acid precipitation is closer to commercialization and thus is the process assumed when lignin extraction is discussed. which thereafter can be filtered and washed. electricity is generated in back-pressure turbines. the use of recycled paper and paper production proper. but are not yet common practice within the entire sector. Technology pathways at present time Increased electricity production For kraft mills. and the rest of the wood components – lignin and parts of the hemicelluloses – are dissolved in the black liquor. utilizing the steam produced in the recovery boiler and any other boilers before it is used in the production processes. CO2 is used to precipitate the lignin.3 Technological pathways . and investing in a condensing turbine.A large number of innovations in technology. increased use of recovered paper and fillers and in-house water recycling. Lignin can be extracted from the black liquor by using either e. process and management in the pulp and paper industry that can contribute to more environmentally benign pulping and bleaching methods. Page | 26 Table 1. lignin extraction will lead to reduced heat content in the black liquor in the recovery boiler. Emerging technologies are those technologies in the development phase or that have been implemented only in a very few firms. Currently. From a mill energy systems perspective. The electricity production can. for example.

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Further. the PPI.Carbon capture and storage (CCS) Being large energy users. The potential for heat integration of post-combustion CO2 capture to kraft pulp and paper mills who show that thermal integration is possible to a substantial extent. Since the main source of CO2 from the pulp and paper industry is boiler flue gases. pulp and paper mills have large on-site emissions of CO2. pre-combustion and oxy-combustion. is suitable for implementation of carbon capture (CC). since a large share of the CO2 emissions associated with the European PPI are biogenic. if CCS is implemented the levels of CO2 in the atmosphere can be further reduced in comparison to implementing CCS only on fossil emission sources. Page | 29 Black liquor gasification (BLG) . like other energyintensive industry branches. there are in principle three technology options for capture: post-combustion. Hence.70% of the total cost and thus cannot be neglected. In this thesis. post-combustion using chemical absorption is considered since it is the only technique not requiring any reconstruction of the boiler. Since these emissions are associated with only a limited number of geographical sites. For post-combustion with chemical absorption the energy cost for capture is 50. for CC to be economically and technically realistic the source of CO2 must be large enough and the energy demand of the capture process should preferably be possible to integrate (fully or partly) with other processes at the capture site.

which currently is being most developed and is closest to commercialization. The amount of steam. Page | 30 1. additional fuel needs to be burned in the (bark) boiler if the steam production is to be unchanged. As in the case of a conventional recovery boiler.The black liquor generated in the kraft pulp process is burned in the recovery boiler in order to recover the cooking chemicals and produce steam for the mill process steam demand. Another alternative for the recovery of chemicals and energy in the black liquor is to use BLG. however. On the other hand. Introducing BLG will alter a mill ‟s energy balance. since this is the technology.8 Investment Pattern & Financial Dependency of the Paper Industry in South Africa . For the case of biofuel production. the BLG technology considered is the one based on the Chemrec process. the BLG unit also generates a product gas which can be used to produce either biofuels or electricity. In this thesis. the BLG unit will have a net surplus of steam. the mill‟s electricity production will decrease and for the case of electricity production it will obviously increase. Due to the lower steam production. will be lower than if the same amount of black liquor is burned in a recovery boiler.

etc. the Netherlands.9 Requirements of Resources for the Paper Industry in South Africa Pulp and Paper Process . Mpact Mpact Limited. Sappi Sappi was formed in South Africa in 1936 to serve South African consumers with locally produced paper. based in South Africa. Sappi done acquisition with many European companies like Hannover Papier (Germany). 23 of which are manufacturing operations. Russia. South Africa. they came to Europe in the early 1990s to start a long period of expansion through acquisition. is an independent paper mill situated in Durban. Hungary. has the leading market position in southern Africa. South African Paper Mill South African Paper Mills (Pty) Ltd. as well as operations in Mexico. Usutu Pulp Company (Swaziland).Mondi Group The roots of the global business that is now Mondi were first planted in 1967 in South Africa. Following more than two decades ‟ growth and consolidation in South Africa. M. Denmark. the UK.S. Page | 31 1. France. These included Austria‟s Neusiedler AG and Frantschach AG. During that time. The pulp needed for our paper products is either produced within Sappi or bought from accredited suppliers. Also Sappi takes a 34% equity stake in the Jiangxi Chenming joint venture (China) and 75% stake in S D Warren (U. The Group. is one of the largest paper and plastic packaging businesses in southern Africa. They became an independent dual-listed business in mid-2007 when we successfully demerged from Anglo American with listings on the London and Johannesburg Stock Exchanges. Sappi is a global company focused on providing dissolving wood pulp. Namibia. Bulgaria and Italy. They have bought businesses in countries including Austria. Poland.). which is central to our future expansion plans into emerging opportunities in Asia and the Americas.real. The company has been operating for the past five years. paper pulp and paper based solutions to our direct and indirect customer base across more than 100 countries. which listed as a separate entity on the JSE and demerged from Mondi in July 2011.A. formerly Mondi Packaging South Africa. when their former owners Anglo American plc built the Merebank mill. with 30 operating sites. many major companies – often market leaders in their home nations – became part of Mondi. and Russia‟s Syktyvkar mill. Cofinec in Poland. Mozambique and Zimbabwe. Slovakia.

Chemical processes dissolve most of the glue that holds the fibers together (lignin) while leaving the cellulose fibers relatively undamaged. but there is more Page | 32 damage to the fibers. The third category. such as newsprint. lignin will degrade in time. which is the most common. chemical recovery. . The most common mechanical pulping technique involves separating the cellulose fibers by pressing logs against wet grindstones or by passing wood chips between counter revolving grooved metal disks (refiners). combines the two processes and is most common in the paper industry. 1995. mechanical. In a first step raw materials are processed into pulp and in a second step paper and paper products are produced out of this pulp. 1. or combined chemical-mechanical techniques. pulping. Wood Preparation Wood preparation involves breaking wood down into small pieces suitable for subsequent pulping operations. This process results in high quality paper with a yield of only 40%60% of the weight of the dry wood. 2. The lower quality fiber limits the use of this process to less expensive grades of paper. The sulfite process uses a mixture of sulfurous acid and bisulfate iron (typically from sodium sulfite). In chemical pulping wood chips are cooked in an aqueous solution at high temperature and pressure. Lignins and other residues are not removed. and papermaking.The pulp and paper industry converts fibrous raw materials into pulp. The Kraft process. the integrated pulp and paper mills. Pulping can be performed using chemical. The ratio of wood to other materials used for pulp depends on the resources available. In addition. The five principal steps in pulp and paper production are wood preparation. Pulping breaks apart the wood fibers and cleans them of unwanted residues. bleaching. uses a sodium hydroxide and sodium sulfide solution. The following step by step description is adapted from the World Energy Council. The remaining fiber is provided by recycled materials or by non-wood plant sources. paper and paperboard. Pulping Wood is ground and pulped to separate the fibers from each other and to suspend the fibers in water. Different plant categories exist depending on whether they only produce pulp (pulp mills) for further processing or only paper out of purchased pulp and/or recycled waste paper (paper mills). This process requires little energy. Major Wood preparation processes include debarking and chipping. This results in a higher yield.

During preparation. Chemical pulping produces a waste stream of inorganic chemicals and wood residues known as black liquor. Agro-based mills use a soda process while newsprint mills use mechanical. the pulp is made more flexible through beating. Mechanical pulps are treated with hydrogen peroxide or sodium hydrosulfite to reduce the light absorption of the lignin rather than remove it. drained and dried in a continuous process. Sodium sulfide is also recovered. In another. The wood residues provide the fuel and the chemicals are separated as smelt which is then treated to produce sodium hydroxide. chemical thermo-mechanical. 4. pressing and drying. timber. many of which are connected to steam turbine cogeneration systems. and pulp and paper sector. Papermaking Papermaking consists of preparation.Combined chemical and mechanical pulping can produce varying grades of paper depending on the particular process used. and decorative papers. The black liquor is concentrated in evaporators and then incinerated in recovery furnaces. chemimechanical and chemi-thermo mechanical (CTMP) processes. and sizing materials are added at this stage. The Kraft process produces a darker pulp which requires more bleaching. The process alters or removes the lignin attached to the wood fiber. a mechanical pounding and squeezing process. 3. dyes. Chemical pulps are bleached through the use of alternating treatments of oxidizing agents and alkali solutions. a pulp matt is formed in layers with water removal and treating occurring between deposits. Chemical Recovery Chemical recovery regenerates the spent chemicals used in Kraft chemical pulping. printing. In one of the most common papermaking processes. Page | 33 1. Large Indian mills that are predominantly based on forest raw materials use the Kraft process. Forming involves spreading the pulp on a screen. forming. The water is removed by pressing and the paper is left to dry. the paper is pressed. filler materials. 5. preparation and drying are the most energy intensive processes. and semi-chemical. chemical. These processes include thermo-mechanical.10 Demand Drivers for Paper Industry The Genesis Analytics report identified constraints that must be considered an opportunities that can be exploited to accelerate the growth in the forestry. Following . Bleaching Bleaching whitens pulps for the manufacture of writing. Pigments.

apart from water and electricity. Page | 34 Increase supply of raw material Plantation forestry is an important element in the forestry value chain not only for its ability to create jobs in rural areas but also as the main raw material supply. there is scope for smaller players to participate in waste paper recycling which this document advocates for the development of support measures to encourage the participation of BEE and SME companies in further downstream beneficiation activities. Ease supply constraints to downstream processing activities A number of saw millers and furniture manufacturers (independent) do not own their own plantations and have to rely on existing plantations that in the case of saw milling also own similar operations. This result in some of these companies experiencing difficulties in securing timber for processing. Initiatives should thus be developed for skills and technology transfers to these groups. pulp and paper manufacturers to operate depend on the availability of timber.discussions with various stakeholders. The capital requirements of internationally competitive pulp and paper mills coupled with the vertically integrated nature of the industry have prevented smaller players from participating in this area of activity. timber. However. The ability of saw millers. timber. to downstream industries. (2) rehabilitation and improved management of the existing forestry through accelerated restructuring of categories B and C of the existing DWAF plantations and (3) increased use of recycled paper through dedicated efforts by both government and private sector to increase the percentage of recoveries. Technology Transfer and Skills Development The Forestry Charter being developed will speed the transformation of the sector and should result in increased ownership of forestry and downstream processing assets by historically disadvantaged groups and communities. Increase downstream processing activities The vertically integrated nature of the industry means that smaller players do not participate in higher value-added activities. pulp and paper sector has narrowed the list down to four critical elements that need to be addressed. pulp and paper industries: Increase supply of raw materials (fiber) Three principal sources for maintaining and increasing the availability of fiber have been identified as follows: (1) increase in the afforested area. This situation is compounded by the fact that for logistical reasons it is sometimes not economical to supply small orders. this strategic framework for the development of the forestry. furniture manufacturers. The vertically integrated nature of the industry means that independent small and medium enterprises in saw milling and furniture manufacturing are the worst affected by the . This growth framework deals with four main elements that must be addressed or sustained and accelerated growth of the forestry.

The shortfall in supply will have to be met by imports. Page | 35 Ease supply constraints to independent saw millers Saw milling is a very important stage in the forestry value chain as it processes the timber to supply to the construction and furniture industries. While most of the large sawmills get most of the supply from their own plantations or from long-term arrangements with plantation owners. Due to their . The Genesis study estimates that the saw milling industry contributed about R1. the government has been the major investor in long rotation plantations. the allocation of licenses for new plantations should aim at ensuring that independent smaller players in processing activities get a fair and adequate share of timber. The long payback period required for investments in long rotation softwood is likely to discourage both the communities and the large role players in the private sector from investing. it is in the country‟s interest to support the development of long rotation plantations in the long-term. While raw material imports could supply the industries in the short to medium term. which in the case of furniture will be manufactured products thereby depriving the country of local beneficiating opportunities. The situation is exacerbated by the fact that this is typically the long rotation softwood (18-30 years).3bn to GDP in2004 and employed in excess of 20. This consideration is reinforced by the fact that most of the area suitable for new softwood plantations are in communally owned land. The government either needs to continue investing in long rotation plantation forestry or to develop support measures to encourage investments in long rotation plantations.000 people. The supply of timber needs to be addressed from both the short to medium term perspective of ensuring the availability of supply to independent manufacturers and the longterm perspective (new a forestation) of ensuring the long-term sustainability of supply to small and large enterprises. A special situation exists in the case of the solid wood sector. In the long term. which are already in supply deficit.scarcity of supply. small sawmills and micro mills. In the short to medium term. The sector can be broken down into three categories. The increase in the supply of fiber is thus the pre-condition for the sustainability and expansion of downstream activities. Historically. measures need to be put in place to ensure that small and medium sized enterprises in downstream processing activities get a fair and adequate allocation of timber from plantation forests. large sawmills. which increases the time horizons for returns and hence the investment risk. Although these measures will not address the increase in available raw materials. a number of the independent saw millers (small and micro) rely on the existing plantation forestry owners or auctions or supply from state owned forestry company. which supplies the construction and furniture industries. SAFCOL for their inputs. they will alleviate the problems being experienced by the smaller players.

a worldwide certification with regard to principles and standards on environmental impact. Besides the saw millers. Through the implementation of the Forestry Charter.small orders. Over the past few years. land use another practices. Some small grower schemes in KZN are aligned to the big players (Mondi or Sappi) who provide financial and technical support. The long-term contracts that lock in customers need to be reviewed and scrutinized. with more than 80% of plantations attaining Forest Steward Council (FSC) certification. However short-term measures are necessary to reduce the negative impact on job losses. It is accepted that a majority of these groups lack the capital resources. the terms and conditions of sale faced by small and large scale saw millers should be investigated to determine whether there is any anti-competitive behavior. From a competition policy perspective. the skills and the technological know-how to manage the plantations to their full potential. the independent small furniture manufacturers are facing the same problems. they cannot participate at auctions due to minimum requirements required. Sappi and Mondi are regarded as world leaders in selective breeding and cloning of eucalyptus species. • Encourage and support timber imports destined for downstream processing. the transfer of existing state owned plantations to small growers and community based grower schemes. Two possible measures in the short-term are: • State owned plantations playing a larger role in ensuring that the small and micro saw milling companies get an equitable share of allocations. especially from the neighboring states. It is therefore important that a skills development programmed be drawn for this purpose. Skills development and technology transfer should be implemented in conjunction with the issuing of new licenses and the transfer of existing plantations to small growers and communities. The unreliability of supply to independent small mills increases the risk of these companies closing down and the resultant loss of jobs. Skills Development and Technology Transfer South Africa is recognized as one of the world leaders in the technology and sustainable maintenance of plantation forests. a number of plantations have been transferred or licensed to small independent growers or community grower schemes. The yield of South African plantation forests is estimated to bemore than two times higher than those of similar plantations in some northern hemisphere countries and comparable to other southern hemisphere countries. This programme needs to go beyond the training in plantations to incorporate the transfer of modern technologies . In addition. some of the saw millers are experiencing problems in ensuring the availability of supply as they are at the lower end of the scale in terms of priority. we expect an increase in plantation share of these groups. Page | 36 the streamlining of the regulatory processes. Increased new plantations in the long-term can rectify this.

use should be made of our teaching or research institutions that have developed expertise in the sector to enable small enterprises and community groups to achieve the relevant skills and technologies. timber board. pulp and paper. furniture. the two largest companies. Increase in timber processing is directly related. Government. Although there are only two pulp manufacturers in SA. which would have been an economically viable mode of transport. The technological support needs to look at both the yields and the quality of supply. Currently. efforts must be made to encourage processing and attract investment in the areas closer to plantations. Nampak and KimberlyPage | 37 Clark) producing about 96% of paper products while the rest of paper manufacturers get their input material from recycled paper. At the plantation level. Increase downstream beneficiation activities As mentioned above. The integrated nature of the industry also places entry barriers on paper production requiring virgin fiber inputs with the four largest manufacturers (Sappi. the small players do not participate in value-added activities. pulp and paper industries are at the higher end of the value chain. It misrecognised that most of the increase in new plantations in KZN or those areas of Eastern Cape closer to KZN could supply the existing pulp mills in KZN but should also stimulate the development of a new saw mill or chipboard manufacturing in the area. The vertically integrated nature of the industry (limits the availability of wood fiber) and the high capital requirement presents barriers for new entrants in pulp manufacturing. If the regional economies are to grow.processes for plantations and processing activities. road transportation of timber is expensive compared to rail or sea and becomes economically less viable for distances beyond 200km. to the increase implantation forestry. charcoal. we believe that no special support measures are necessary to increase either the number of pulp mills and the number of players in the industry. with time lag. This certainly presents opportunities for timber processing before transporting. . Mondi. Sappi and Mondi have played a big role in developing the small growers through their small grower schemes. The increase in the number of larger independent players in plantation forestry should in the long-term act as a catalyst for one or more pulp manufacturing facilities. saw milling. Furthermore. Our ability to produce high value added products especially in furniture manufacturing will also depend on the quality of timber supply. plantation forestry is the foundation for a number of downstream processing activities including wood chips. In addition to this. This programme or similar programme should be extended to include other downstream activities in the forestry value chain. Several research papers and documents have shown that the economies of countries that have grown fastest are those that have moved towards higher value added manufacturing activities. The area with the most potential in the EC is not linked by rail or sea to KZN. the Forest Industry Education and Training Authority (FIETA) and the larger players should work towards developing a skills development and technology transfer mechanism for the smaller players. The furniture. This has however been limited to areas where the small growers could supply the pulp mills owned by these companies.

as such. However. The industry provides employment to more than 0. Page | 38 1. rail transport remains the most critical element in the development of the industry as it will integrate the plantation and processing areas with the developed nodes and reduce the cost of transporting products. However.000 crore (USD 5. 2918 crore (USD 0. The large capital requirements for pulp and paper manufacturing mean that it is unlikely a facility of this kind will be developed in the Eastern Cape in the near future.34 million people indirectly. to deal with recycling of wood waste. A number of projects have been undertaken internationally and to a far lesser extent. a large volume of wood chips from independent manufacturers is exported.69 billion). It is a well known fact that the use of plastic is being objected to these days.95 billion) approximately and its contribution to the exchequer is around Rs. the higher prices that wood chips can fetch internationally encourage them to export rather than selling locally for further beneficiation. Excessive use of non degradable plastics upsets the ecological equilibrium.11 Overview to Indian Paper Industry The Indian Paper Industry is a booming industry and is expected to grow in the years to come. These opportunities need to be explored further and the necessary technologies acquired or developed to convert waste to higher value-added products. The dti needs to play a larger role in supporting the municipalities get these projects off the ground. use of plastic is being discouraged. The development of these clusters should help support a number of projects or proposals by local government. many of these proposals have not been implemented and in some cases bankable business plans need to be developed. This environmental cost can however be changed into an opportunity through recycling.12 million people directly and 0. Currently. The local and district municipalities in both the EC and KZN have developed a number of project proposals in wood processing including in many areas wood waste/saw dust management. woodchip milling plant. wood waste processing and furniture manufacturing. The land filling of solid waste from the downstream processing activities like saw milling. The estimated turnover of the industry is Rs 25. a national strategy needs to be developed to manage wood waste and other waste including waste paper recycling.6% of the world‟s production of paper and paperboard. there are few plastics which do not possess the property of being degradable. Given the potential for job creation and reducing the negative environmental impacts. locally.Whilst the lack of rail transport presents opportunities for further beneficiation. woodchips etc has a negative environmental impact. The Indian Paper Industry accounts for about 1. The usage of paper cannot be ignored and this awareness is bound to bring about changes in the paper industry for the better. The opportunities for downstream processing activities for timber processing lie in saw milling. . The Strategic Competitiveness Unit has begun a processor developing forestry/wood-processing clusters in both the EC and KZN. These wood chips could be further beneficiated locally in the form of an additional pulp mill or supplying the existing pulp mills. mainly to Japanese manufacturers. The reason being.

4% annually.3 kg in 2008-09 to 9.321 billion. 120 billion in 2009. In 2009-10. demand grew at a 3. 7 May. Besides. The Indian paper industry‟s market size has been estimated at Rs. filter paper. an increase in consumption by one kg per capita can potentially increase annual paper demand by a million tons. growing at a CAGR of 10. Export opportunity: A number of European and US paper mills are shutting down owing to overcapacity and cost issues. touching 11.000-crore Indian paper industry accounts for about 1.4% CAGR from 3. newsprint (19. 2010).4 million tons in 2009 (Source: CRISIL .com).7 million tons in 2004 to 4. light weight online coated paper and medical grade coated paper (Source: Business Line.The Rs.5%) and speciality paper (3. possess a sustainable growth opportunity on account of growing environment consciousness.18 kg) compared with 42 kg in China and 350 kg in developed countries (Source: Assocham).5% from around Rs.6%) according to CRISIL Research. 321billion in 2008-09. India is among the world‟s fastest growing paper markets. 77.4% while consumption is pegged at a CAGR of 9% till 2012-13 on account of a growing demand for tissue paper. 7 May. 2010). 195 billion in 2003-04 to Rs.570-crore Indian packaging industry (as on April 2010) grew around 15% year-onyear (Source: Indianpackagingshow. implying a large scope for correction. 25. an attractive export opportunity for Indian paper mills.6%). paperboard accounts for nearly 47. the country produced 9. India‟s paper production is forecasted to grow at a CAGR of 8. Page | 39 Positive macro triggers: Low per capita consumption: India‟s per capita paper consumption grew 10. The paper board market size was about Rs. utilizing agriculture-based raw material. The paper industry growth is forecast at 8. Indian paper manufacturers. Packaging industry: The Rs.6% in2009-10 (from 8.5 million tons in 2011-12and 15 million tons by 2015 (Source: Business Line.3% of the total market size.6% of the world ‟s paper and paperboard production even though the country accounts for nearly 16% of the global population. followed by writing and printing paper (29. In India. tea bags.18 million tons of paper. growing at an average 6-7% compared with 2% growth in developed countries (Source: Assocham).

business card paper and greeting card paper) is expected to increase at around 8% CAGR.8 6.147 1. consumer durable and retail segments. Changing lifestyles: With improving domestic living standards.Research). 20% and 3%respectively.18 10. Demand and supply: Domestic paper demand grew steadily at a CAGR of 6.80% Source: Census 2001. paperboard demand will grow at a 7% CAGR due to a healthy growth in industrial production and recovery in the consumer goods sector.131 1.30% 1. Demand for writing and printing paper is expected to grow 6.10% 1.50% 12 8.7 8.164 1.8 million tons in 2003 to 9. textile.60% 7.114 1.20% 2007 7. Page | 40 Table 1.80% 1. driven by the government‟s thrust on education and overall economic growth.80% 2008 8.60% 1.3 4.10% 2009 9. share of the paperboard segment in total demand has increased.4 Estimated paper demand Paper demand statistics Per capita consumption (Kg) Growth (%) in per capita consumption Indian population (mn) Growth (%) Total paper demand (mn MT) Growth (%) 2005 7 2006 7.1 5.40% 9.10% 2011 10 6. while the writing and printing.3 6.5 8.20% 1. fine art paper.40% 1.10% 2010 9.2 8.With rising economic growth. IPMA. FMCG.199 1.182 1.50% 8.8 7. riding a growth in the pharmaceutical.5% – from6. cigarettes.40% 10. Karvy estimates Production .3 million tons in 2009 (Source: CRISIL Research).5% CAGR. demand for speciality paper (tissue paper.2 8.4 3. The paperboard segment accounts for around 47% of demand. National Sample Survey Organization. newsprint and speciality paper segment accounts for nearly 30%.096 1.50% 10. It is expected that by 2014.

the US government withdrew a subsidy of USD 125-150 per ton for the treatment of black liquor (generated during pulp manufacturing). the annual operating capacity was 9. Price Raw materials and power constitutes the major cost. China‟s 45 kg. accounting for around 55-60%of the total costs. reaching an all time high of USD 974 per ton as on 2009 (Source: CMIE).5 Paper types and its’ applications Paper type Uses Varieties Demand drivers . The withdrawal of the subsidy discouraged wood use for pulp manufacture.4 million tons. resulting in an increase in price of pulp globally. Page | 41 As per CRISIL estimates. In 2009. Moreover. Consumption As paper consumption is linked to economic development. the domestic prices of paper are expected to increase over2010-11 and 201112. world average per capita consumption of 56 kg and Asian average of 46kg. owing to lower capacity additions and higher demand growth. adding about1.18 kg in 2009-10.1 million tons and annual production was 7. and with currently undertaken expansions.5 to 2 million tons between 2008 and 2012. Table 1. Paperboard prices are likely to increase by 10-12%. Per capita consumption increased from 8.3 kg during 2008-09 to 9. The paper industry faces a demand-supply mismatch. The cost of pulp has been rising after the global slump.The Indian paper industry is fragmented. another 15 lac tons is expected to be added by 2012 (Source: CRISIL Research). boosting the demand for its alternative – waste paper. most of which are in the writing and printing segment. The manufacturers are increasing capacity significantly. resulting in price rise. which is a harmful effluent and by-product of kraft paper manufacture. Further. India has emerged as one of the world‟s fastest growing paper markets. the top five producers accounting for around 20-22% of the total Indian paper capacity. a growth of 10.6% (Source: Assocham).even though this is low compared with Japan‟s 250 kg. Korea‟s 170 kg. an earthquake in Chile recently disrupted pulp supplies of about three million tones.

industrial production and development in packaging technology and substitution by other materials Speciality paper Tissue paper. stationery Cream map litho. insulation grades. paper for specialized industrial usages such as steel mill kraft. growing circulation and readership Newsprint paper Printing of newspapers and magazines Page | 42 1. grey and white board and MG posters Glazed and standard paper Consumption of this paper variety is linked to the standard of living as well as per capita income Growing economy. level of business activity. printing. Population growth. fine art paper. level of literacy. recycled board and virgin board Growth in the packaging industry. copier and coated paper Paperboard Industrial purpose Kraft paper. public and private spending on education. increasing presence of modern retail formats and growth in the printing industry paperboard.Writing and printing paper Writing. etc Duplex.12 Major Players and Overall Products offered by the Paper Industry of India Ballarpur Industries Limited (BILT) Hindustan Paper Corporation (HPC) . wove.

Bilt Paper PLC is focused on the manufacture of bulk .ITC Tamil Nadu News Print Limited (TNPL) JK Paper Khanna Paper Mills West Coast Paper Mills Rama Newsprint & Paper Mills Andhra Pradesh Paper Mills Orient Paper & Industries Star Paper Mills Chart 1. three of the Indian facilities and the Malaysian facility will be operated by Bilt Paper PLC and the remaining three Indian facilities will be retained by the Ballarpur Group. Of the Ballarpur Group‟s seven manufacturing facilities. six in India and one in Malaysia.7 Major Indian Players Page | 43 Ballarpur Industries Limited (BILT) The Ballarpur Group is the largest manufacturer of writing and printing paper in India.

Imagination and 3.coated and uncoated paper and viscous grade fiber while the rest of the Ballarpur Group will focus on the manufacture of copier paper.value that will endure. markets or geographies. imagination and respect for individuals. The company has a dominant share of the high-end coated paper segment in India. With integrity. VISION "To Create Lasting Value" They strive to create lasting value for all their stakeholders through extraordinary efforts. giving it geographic coverage over most of the domestic market. an impressive 80% of the bond paper market and nearly 35% of the hi-bright Maplitho market. speciality paper and tissue paper and Retail and OSSB. In India. shareholders and society. the company has six manufacturing units. besides being India's largest exporter of coated and uncoated paper. Lasting to us means timeless . people. regardless of changes in their businesses. they will create enduring value for their employees. Values 1. Integrity 2. customers. It accounts for over 53% of the coated wood-free paper market. By constantly setting and redefining the gold standard in every business they operate in. partners. Individual Page | 44 PRODUCTS Art Paper C1S Art Paper C2S Art Board C2S Black Centered Board Creamwove Bonds Premium Copy Power Cartridge .

the per capita annual consumption of paper at about 4 kgs in India is among the lowest in the world today. They need paper every day for widening the frontiers of our knowledge.LWC SBS Board Hi-Brights Ledger Ivory Boards Posters Page | 45 Hindustan Paper Corporation (HPC) HPC at A Glance Paper is more than an industrial product. Yet. A Crusader for Literacy . It is the cultural barometer of a nation.

6 HPC Products Sr. It was against this background that the Government of India set up the Hindustan Paper Corporation (HPC) on May 29. 1 2 3 4 HPC Products Cream Wove Surface Sized Maplitho Computer Stationery Paper Computer Stationery Deluxe GSM Range 45 – 90 58 – 120 52 – 80 58 – 80 . The stagnation led to frequent shortages of cultural varieties of paper.35 lacs tonnes of paper and newsprint. HPC is the holding company for Hindustan Newsprint Ltd. slowed down in the sixties owing to the escalation of cost and the scarcity of forestbased raw materials. Today it is one of the largest manufacturers of paper and newsprint in South East Asia. Over a period of three decades. it was designed to be a catalyst for industrial growth in the North-East. two of which are units and two are subsidiary companies. HPC has been playing a dominant role in the socio-economic development of the North-East region. There was also the national task of developing the industrially backward regions for balanced socio-economic growth. HPC has built up a total capacity of about 3. Besides. (NPPC). No. (HNL) and Nagaland Pulp & Paper Company Ltd. The growth. A Catalyst for Growth HPC was entrusted with the task of producing substantial volumes of cultural varieties of paper and newsprint to maintain stability of price in a volatile market. Nagaon Paper Mill (NPM) and Cachar Paper Mill (CPM) function directly under HPC ‟s control and their performance is reflected in HPC‟s operating results. causing hardship to common consumers. however. Background The planned development of the paper industry in India began only in the post-independence period. Page | 46 Table 1. Simultaneously.HPC is an extended arm of the Union Government to intensify the movement for literacy through the growth of the paper industry. 1970. HPC Mills HPC group has four paper mills. It was also engaged in the task of developing indigenous expertise for setting up large newsprint and paper mills.

Paper 5 6 7 8 9 10 11 12 13 Deluxe Maplitho Copier Paper White Offset Printing Newsprint Duplicating (Full Size) Duplicating (Cut Size) Colored Printing Offset Cartridge Telephone Directory Printing Paper 58 – 120 75 – 80 60 – 75 52 60 – 63 60 – 63 45 – 54 110 .98% Concentration .130 40 14 15 16 17 Typewriting Paper White Cover Caustic Flake Caustic Lye 40 – 45 110 – 130 Purity .48 .50% Page | 47 ITC .

the focus is on Value Addition. New Product Development. Quality Enhancement and Sustainability backed by a Marketing and Technical team with the capability to constantly enrich relationships and deliver ever increasing satisfaction levels. Processes.Vision To be a valued player in the global Pulp. and Conforming to larger sustainability values Products They are the largest manufacturers of Packaging and Graphic Boards in South Asia accompanied by a diverse range of Specialty Papers & Boards fulfilling a variety of needs.13 Present Trade with Quantity and Amount of Paper Firms in India A) Ballarpur Industries Limited (BILT) . seeking a more effective medium to present. Strongly market driven. Service and People Continuous enhancement of Value for all stakeholders. Packaging & Graphic Boards Coated Virgin Boards Coated Recycled Boards Specialty Boards Poly Coated Cast Coated Graphic Specialty Papers Cigarette Tissues and Components Fine Printing Packaging Décor Niche Products Page | 48 1. pack and protect content or products in a world overloaded with messages. Paper and Paperboard business by Leadership in Quality – Products. The bandwidth of products has increased continuously and moved up on the Value-Quality scale and today represents one of the preferred set of choices for any discerning global customer.

The concept of broad-banding has been extended to paper products since Page | 49 1985-86.230 MTPA Employees: 3. This allowed the paper industry to receive profitable returns on paper products and thus provided incentives to increase capacity utilization and establish new capacity.38 Crore Profit: Rs. C) ITC Revenue: Rs. 4747.8 Crore Profit: Rs. India‟s pulp and paper sector has been protected by government policy for more than three decades.884 MTPA Employees: 3. However.667 Crores Profit: Rs. Also.Revenue: Rs. 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. 3. provided they used 75% of non-conventional raw materials for production. Controls on production. Fiscal levies accounted to as much as 35%-40% of the selling price adding to the already high-cost based prices of paper. During the paper shortage in the 1970s and further on in the 1980sthe government actively supported the venture into the paper sector in providing financial incentives to technocrats and entrepreneurs through financial institutions.000 Approx. 88. 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 exemption was abolished again in the 1990s. 800.9 Crore Production: 886.712MTPA Employees: 2. 819 Crores Production: 558.000 Approx. the Government of India exempted paper units from excise duty. To protect the rising small paper mill industry and ensure their existence along with larger. The government additionally established high import duties on imported paper and paperboard to reduce import dependency. B) Hindustan Paper Corporation (HPC) Revenue: Rs. distribution and prices impeded the growth of the industry substantially. Export of paper was banned during the whole period. In 1974. 1041.500 Approx. more economic paper mills the government gave a variety of excise concessions and reliefs. This implies that firms now experience the freedom to manufacture any variety of paper within the overall limit of licensed capacity. .31 Crore Production: 282.

CRISIL Research expects input costs to increase in the medium term.2 per cent based on wood. Over the last few years. The entrepreneurs are now required to file an Industrial Entrepreneur Memorandum with the Secretariat for Industrial Assistance for setting up a new paper mill or substantial expansion of the existing mill in permissible locations. Going Page | 50 forward. Several policy measures have been initiated in recent years. is confined only to certain specialty papers. Import. are sick and /or lying closed. Capacity. Production and Raw material There are. about 515 units engaged in the manufacture of paper and paperboards and newsprint in India.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.7 Cost Structure . The country is almost self-sufficient in manufacture of most varieties of paper and paperboards. At present about 60. with further growth in demand. air and solid waste discharges. The capacity utilization of the industry is low at 60%. Transportation and employee costs also account for a substantial part of total cost. due to higher demand and lower availability. at present. To meet part of its raw material needs the industry has to rely on imported wood pulp and wastepaper.8 per cent of the total production is based on non-wood raw material and 39. power cost and concentration of mills in one particular area. however. most input costs. Several policy measures have been initiated in recent years to remove the bottlenecks of availability of raw materials and infrastructure development. About 194 paper mills. The standards have become more stringent over time. Government has completely relicensed the paper industry with effect from17th July. Since 1989 even small paper mills have to follow discharge standards in the form of minimal standards regulating liquid. duty on pulp and waste paper and wood logs/chips have been reduced. especially raw material costs. Most of the paper mills are in existence for a long time and hence present technologies fall in a wide spectrum ranging from oldest to the most modern. particularly small mills. Chart 1. To bridge the gap of short supply of raw materials. Performance of the industry has been constrained due to high cost of production caused by inadequate availability and high cost of raw materials. have been on the rise. Cost structure Main costs for a paper manufacturer are raw materials. Foreign participation is permissible. power and fuel. and chemicals. 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. 1997.

Introduction of eco labeling system where in products made from recycled fiber are rated higher than the products made from virgin fiber. In 200607. As indicated by our research. straw. However.) and wastepaper (recycled paper).7 percent. etc. Introduction of modern and effective collection and grading system. Imported wastepaper accounted for 15 percent of production and imported pulp for 6 percent. imported raw materials will cater to around 27 percent of the domestic production by 2011-12. (iii) For Agro Based Industry . and this result in higher consumption of imported raw materials. agri-residues (bagasse. Page | 51 (ii) For Waste Paper based Industry Import of waste paper at minimum import duty. cotton.Raw material – Forecast Domestic manufactures use three types of raw materials in the manufacture of paper. However. domestic supply will not be able to keep pace with demand.forest products (wood and bamboo). demand for raw materials is also expected to increase correspondingly. agri-residues for 32 percent and domestic waste paper for 17 percent. Raw Material (i) For Wood Based industry Revision of forest policy so that plantation can be raised by industry/Cooperatives of farmers/State Government. over the next 5 years. with production expected to increase at a CAGR of 6. wood accounted for 30 percent of production. De-graded forest land to be made available to the industry for raising plantations.

5 mt and the newsprint industry about 1. Of this. much lower than many other developing economies. CRISINFAC estimates the growth at 7. Domestic paper industry The domestic paper industry is estimated at around 10 million tonnes yearly. in small & medium scale industries.Funds to be made available for technology upgradation for handling and processing of agro residue fiber. the packaging grade paper segment is around 4. The figure in China and Indonesia is estimated at 42 kg and 23 kg. respectively.8 mt.6% in the next 5 years.7 mt.2 kg. The domestic yearly per capita consumption of paper is only 9. coated paper and duplex board segments will grow at a faster pace Page | 52 Table 1. However. the writing and paper segment accounts for 3.7 Demand Forecast . all segments of the industry are growing at eight to nine per cent or above. Forecast: Growth in Indian paper industry is expected to accelerate. Branded copier.

14 Barriers to Paper Industry in India Enhancing Industry‟s competitiveness to face global competition Economies of scale De-fragmentation of industry .Page | 53 1.

Fallings from the forest. Here are some of the key issues: 1. does very little to bridge the gap between supply and demand. increasing the amount of forests. are provided to the industry for pulping. with no resolution in sight in the immediate future. and residues from the agriculture industry for its pulp needs. lack of a coherent and updated manufacturing policy. The paper companies provide the necessary financial backing and saplings for the farmer to plant trees and also guarantee a minimum price per tree once harvested. generating rural employment. The forest land in India is owned by the government and is not available for use as plantations by the pulp and paper industries. this initiative. limitations on raw materials. Inadequate investment in infrastructure. and the supply of each is limited and problematic. and providing much-needed relief to the industry. grading and utilization of recyclable waste paper Despite the country‟s positive growth potential. . hardwood. the idea appears to be a win-win scenario for all parties. mainly bamboo. sorting. although very highly recognized and cheered on by many environmental and social groups. However. and lack of a broad power supply has created a situation where only about 60 percent of paper-making capacity is being used. Page | 54 The Indian paper industry has proposed multiple scenarios in which degraded forest land around pulp mills is made available for plantations of pulpable species of trees. Some in the paper industry have entered into particular partnerships with farmers to encourage planting trees. recycled paper. this proposal in various forms has been debated in government circles for over 15 years. Raw Materials Availability of raw materials is one of the biggest barriers to growth of the industry. investment in India is fraught with considerable challenges. however. with approximately 200 small mills currently underperforming (having incurred losses exceeding their net worth) or closed. With declining forest lands. So far.Modernization of mills Building new capacities Meeting incremental demand of paper Productivity/quality improvement Creation of robust raw material base Environmental upgradation and green technologies Setting mechanism for collection. India depends on wood.1 Wood Availability of wood is very low compared to the United States and Europe. and eucalyptus. 1. this source of much-needed fiber is declining at a rapid rate. antiquated labor policies. From all accounts.

according to the Indian Paper Manufacturers Association (IPMA). Most of the recycled paper is imported from the United States and other western countries. Increase in demand from China and reduction in consumption of paper in developed countries are pushing the prices of paper upward. sometimes lasting into years. but their use has many challenges. In addition. but has no provision for union recognition (e. and ports can benefit all industries. 44 percent of the industry‟s fiber needs are met by recycled fiber. (some predating India‟s independence) may not be conducive to a sound operating environment. and grading of recycled paper does not exist in India. 2. Relaxation of import duty on wastepaper could be well received by the industry. rice and wheat straws. Infrastructure India‟s infrastructure has seen improvement. including pulp and paper.1. Bagasse/ Straw . provided the competitiveness of the value chain is encouraged by the government. 1. The Trade Union Act of 1926 provides for the recognition of the unions. primarily due to their negative effect on paper quality and the investments in equipment required to combat pollution.2 Agro-based sources Agricultural residues such as bagasse. with outsiders not concerned about the company or its employees playing a prominent role. The outdated labor laws.3 Wastepaper According to the IPMA. Resolutions of disputes are known to take an inordinate amount of time. and it varies among states.g. thus limiting their availability for use in paper. 4. 3. Improvements in roads. through a secret ballot procedure). Labor India has a large available pool of unskilled and skilled labor and the advantage of very low labor costs. collecting. and cotton stalks provide approximately 21 percent of the industry‟s fiber source. An effective system and infrastructure for sorting.. This has led to a multiplicity of unions. The act allows any seven workers to register as a trade union. Page | 55 The Indian paper and paperboards industry has potential and also capabilities to service the growing demand in domestic and international market and also to create huge employment avenues in the rural-India through agro/production forestry and at mills. Regulation of labor management relations are in the purview of state governments. railways. but still has a long way to go and pales in comparison to many developed countries.Growth in agro residues has been encouraged by various fiscal policies of the government since the 1970s. however. India is not immune to the financially lucrative global phenomenon of using agriculture products as an alternative fuel source.

envelopes waste. cup stock for white grades and magazine waste) for newsprint. etc.15 Present Trade Policies in Terms Import-Export in Paper Industry of India India imports about two million tonnes of pulp (soft wood and hardwood) and waste paper (sack waste for unbleached grades. 5. Page | 56 1. soft tissue. The imported coal price had crossed USD 100/MT. this may not be able to sustain the future growth of the Industry. wet strength papers. Europe.Though annual availability of agro residues is large yet. Energy Cost The Government of India has recently withdrawn core sector status hitherto enjoyed by the paper industry. environmental issues involved. Dubai and Singapore: label stock. extensible kraft. Also. Cost of coal is escalating and prospect of availability of quality coal is diminishing. taking due account of quality of paper required. such steep price rise had resulted in escalation of cost of production of those mills which happened to be dependent on imported coal for generation of steam/power. The following prime grades of paper are imported from USA. insulation kraft. filter paper. power purchased from the grid is proving expensive for the industry. Moreover. tea bag tissue. bagasse is increasingly used by sugar mills for co-generation of power and no more easily available to the paper mills as raw material. decorative .

India has surplus to export some grades. Page | 57 1. The shift in raw material sourcing wastohard woods. They include excise rebate to small units. wood and bagasse are producing pulp with . children ‟s play books and comics. 1996) Import of wood pulp for the production of newsprint and newsprint products are allowed on a more flexible scale. the government has taken further measures to improve the situation of the paper sector. Eastern Europe and USA: A4 copiers. coated papers/boards and some specialties. obligations regarding licensing and excise duty have been alleviated. Large sized mills. South Eastern countries. this source has drastically dwindled over the years. Bamboo was the major raw material for the pulp and paper industry. Reasons for continued licensing of these industries were given as: security and strategic concerns. Traders in major metro cities of Mumbai. Stock lots of all grades totaling about 200. abolition of customs duty on the import of paper grade pulp and wood chips. It exports following grades of papers to Middle East. The growth of the Paper Industry gathered momentum during 1955-60. (CMIE.000 tonnes arrive every year mostly from USA and Europe. While the Monopolies and Restrictive Trade Practices Act (MRTP ACT) from 1991 abolished industrial licensing for almost all industries. Bangalore and Delhi import these. calendars. magazines. price and distribution of white printing paper and provision of infrastructural support by increased allocation of coal and wagons. but within creasing anthropogenic pressures resulting in shrinkage and deforestation. MG varieties (from small agro based mills). the paper and newsprint industry except the bagasse based units has not been exempt yet. wood-free (mostly from bamboo and agro waste by several small mills). Cochin. Yet. digital papers. customs duty on inputs and intermediates has not been brought down on 11 a similar scale. Moreover. Since 1992. removal of statutory control over production. agro-residues like bagasse. books.laminates. Chennai. coated duplex (mostly recycled fiber) and large quantity of converted products like stationery items.16 Technological Advancement Taking Place into the Paper Industry of India Fiber Line The Paper Industry in India has shown significant progress during the successive Five Year Plans. thermal papers. Earlier. straw sand secondary fibers. natural forests provided are day available source. based on bamboo. social reasons. hazardous chemicals and environmental impacts. overlay tissue. 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.

The promotion of wood based industry carries the potential to make a vital contribution towards the creation of rural livelihood and the restoration of ecological balance. Now these mills are increasing their capacity for putting up the chemical recovery systems. chemicals and other utilities and increasing demand of high brightness paper are forcing the paper industry to adopt improved pulp washing systems and modifications in bleaching practices. A part from this. which runs BILT‟s farm forestry programme in several states in India. and Bilt Tree Tech Limited (BTTL). Malaysia‟s largest pulp and paper company. Page | 58 1. Sabah Forest Industries (SFI).17 Investment Pattern & Financial Dependency of the Paper Industry in India Ballarpur Industries Limited Ballarpur Industries Limited (BILT) is India‟s largest manufacturer of writing and printing (W&P) paper. Stringent environmental legislations.conventional kraft process and are well equipped with chemical recovery system while the small and medium size paper mills based on agro-residues are following soda process without chemical recovery. (BIGPH). the industry is also gearing up to grow its own raw material. increasing cost of energy.V. BILT Graphic Paper Products Limited (BGPPL). BILT‟s subsidiaries include Ballarpur International Graphic Paper Holdings B. .

It has four manufacturing units in India.BILT‟s acquisition of SFI. HPC group has four paper mills. HPC is the holding company for Hindustan Newsprint Ltd. J. in eastern India and Central Pulp Mills in Songadh (Gujarat).Paperboards and Specialty Papers Division (ITC-PSPD) is basically a umbrella company of ITC group. Over the years. It operates two integrated Pulp and Paper Mills in India: JK Paper Mills in Rayagada (Orissa).K. South East Asia. (NPPC). (HNL) and Nagaland Pulp & Paper Company Ltd. and elevated BILT‟s ranking among the global top 100. for a consideration of Rs 233 crore. in 2007 was a watershed event – it was the first overseas acquisition by an Indian paper company. Malaysia. two of which are units and two are subsidiary companies. SAARC and various African countries. The Company has an export footprint for high value branded products and Packaging Boards in the Middle East. Nagaon Paper Mill (NPM) and Cachar Paper Mill (CPM) function directly under HPC‟s control and their performance is reflected in HPC‟s operating results. located near Coimbatore.18 Growth Drivers for Paper Industry in India Economic growth Targeted growth of 12% for manufacturing sector Increasing literacy rate Increasing government spending on education Population growth Changing demographics Higher urbanization (2. Page | 59 1. Paper Limited JKPM was commissioned in 1962 with an integrated pulp and paper plant with 18000 TPA installed capacity. In 2003 ITC signed an agreement to acquire Bilt Industrial Paper Company‟s (BIPCO) paperboards business. it transformed BILT into a major regional player. in western India.5% growth) . Hindustan Paper Corporation The Government of India set up the Hindustan Paper Corporation (HPC) on May 29. production capacity been enhanced with the addition of 4 more paper machines. ITC ITC. 1970. They took over the Centarl Pulp Mill in 1992.

efficient usage of resources. recycled paper forms 30% of the component as raw materials. number of mills of capacity 50000 tons per annum or more is not more than 25. TN Newsprint and Century Pulp and Paper already have recycled fiber. Less than half a dozen mills account for almost 90% production of newsprint in the country. Paper sector is dominated by small and medium size units. unfortunately it stands fragmented. improve productivity and build new capacities. the Kochi based paper mill company is investing Rs. . ITC is setting up one large paper mill. etc. It has invested high speed pressure formers to improve the quality of duplex board. Capital investments of the industry in the past few years The Indian paper industry is expected to attract Rs 10. Among the larger mills. The company which produces Kraft paper for packaging and duplex Page | 60 board has two production units one at Chalakkudy and another in Edyar in Kerala. Seshasayee is also almost doubling its paper production from the present 120. Despite the fact that the Indian Paper Industry holds its importance to the national economy.000 tonnes in three years with an investment of Rs 350 crore.000 tonnes per year to 250.Higher proportion of young adults Increasing living standards Demand for high quality magazines Lifestyle changes & media growth Increase in advertising and direct mailers Growth Pangs The increasing demand for paper brings with it new challenges of economies of scale.000 tpa. Indian paper industry is struggling to get raw materials at effective price as there is no government policy to favor paper industry for forestation and also at importing pulp. Though quality of final product remained a concern till few years had been sorted out with advanced technology. and value chain management.000 crore investments in three to five years for setting up green field projects as well as capacity expansion of the existing plants Among others. There is a growing need to modernize the Indian mills. need to develop and expand sustainable use of fiber. 180 million to expand its production capacity to 85. Internationally. Growth of the Industry in the Past Years Larger players may shift to use waste paper for raw material. Sree Sakthi Paper Mills. The expansion programme was completed by end of April 2010.

600 Crores .000 Crores South Africa Per capita consumption 86 kg Total production 4.5 Million MTPA Total Turnover of the Industry R 2. 25.19 Industry Comparison India Per capita consumption 9.Page | 61 1.2 kg Total production 11 Million MTPA Total Turnover of the Industry Rs.

Hindustan Paper SOUTH AFRICA Mondi Group. Bags. Industrial Extrusion Coatings. Corrugated Kraft Packaging. Hindustan Paper Corporation 8% ITC 16%. Office Paper.Table 1. paper and pulp. Products d firms Offere by Writing and printing paper. Sappi Group. the Paperboard. Fiber quality Investment Pattern Self start and acquisition with domestic and foreign companies Self start and acquisition with domestic and foreign companies Page | 62 . JK Industry. Paper. TNPL. NAPMAC. TNPL 9% JK INDUSTRY 7% Technological Advancement Fiber line A sectoral analysis of wood.8 Comparison between Indian and South African paper Industry INDIA Major Players BILT. Newsprint paper Containerboard. research and Development. Consumer Goods Packaging. MPact Corporation. Speciality paper. Release Liner. ITC. Professional Printing Paper Present Market Shares (%) BILT 17%. Advanced Films &Components.

Setting sorting. competition.fragmentation development technology industry.Barriers Enhancing competitiveness Industry‟s to face global of of Water licenses. Meeting incremental demand of Investment finance. technological resources. Modernization of mills Building new capacities. Pulp Fibers. Environmental up gradation and technologies. De. Economies scale. paper mechanism grading and utilization of recyclable waste Requirements of Resources Fibers. Land tenure. Skills and transfer. wood. base. Pulp . Creation of robust raw material green for collection. Demand of raw material exceeds supply paper. technological resources. wood. Productivity/quality improvement.

1 MONDI GROUP .Page | 63 Chapter-2 Case Study of Companies Page | 64 2.

recognizes the need to integrate sound principles governing safety. France. VISION At Mondi. we now began operating as two divisions: Europe & International and South Africa. in place of the former Mondi Packaging and Mondi Business Paper business units.Mondi is an international packaging and paper Group. Russia and South Africa and emerging markets. when our former owners Anglo American plc built the Mere bank mill. STRATEGY Mondi‟s strategic positioning demonstrates the required combination of focus and flexibility to deliver results across the business cycle as we: build on leading positions in packaging and UFP. cost-effective and sustainable way. . Following more than two decades‟ growth and consolidation in South Africa. business conduct. environmental and economic activities into business practices and decision-making. Russia. During this time. Its key operations and interests are in central Europe. high-quality asset base by selectively investing in production capacity in lower-cost regions and realising benefits of upstream integration (including forestry). HISTORY The roots of the global business that is now Mondi were first planted in 1967 in South Africa. the UK. as such. our vision is straightforward – to create long-term value for our stakeholders by transforming renewable natural resources into innovative product solutions that meet customer needs in a responsible. as well as operations in Mexico. Page | 65 maintain our low-cost. Denmark. Slovakia. particularly in high-growth emerging markets. the Netherlands. Hungary. with production operations across 30 countries and over 25. Poland. From January 2008. These included Austria‟s Neusiedler AG and Frantschach AG. we came to Europe in the early 1990s to start a long period of expansion through acquisition. social. Bulgaria and Italy. Mondi aims to be the best-performing paper and packaging Group in the world and. We became an independent dual-listed business in mid-2007 when we successfully demerged from Anglo American with listings on the London and Johannesburg Stock Exchanges. which is central to our future expansion plans into emerging opportunities in Asia and the Americas. many major companies – often market leaders in their home nations – became part of Mondi.700 employees. We have bought businesses in countries including Austria. and Russia‟s Syktyvkar mill. Cofinec in Poland.

benefiting from our ability to manage inventory actively amid changing market conditions. market shares in its key markets. Mondi‟s UFP business is reaping the rewards of its integrated low-cost positioning.5 billion in its high-quality. Our bias towards emerging markets is in line with our vision of focusing on low-cost. a new recovery boiler in Frantschach. While our strategy clearly focuses on emerging markets. . delivered through business excellence programmes and rigorous asset management. low-cost asset base and our state-of-the-art operations are delivering superior returns across the cycle. and in many cases leading. Ongoing initiatives are directed towards ensuring efficient procurement of our most critical raw materials and operational efficiency. The Bags & Coatings business enjoys good. Mondi continues to enjoy a uniquely strong market position in the Bags & Coatings business in both Eastern and Western Europe. while the recently restructured corrugated business delivered strong results. The Group has approved certain energy related investments across a number of its operations. The Group benefits from exposure to faster growing emerging markets such as Eastern Europe. High-quality. where the coatings and consumer packaging segment enjoys very attractive growth rates and returns. with 71% of the Group‟s net operating assets and 50% of revenue by destination based in these geographical areas. high-growth regions and on businesses offering leading market positions and operational synergies with existing businesses. Focus on performance Our relentless focus on cost containment ensured that the Group‟s fixed cost increases remain within inflation in the countries within which we operate. The focus of these and other projects still under consideration is to improve energy efficiency and self-sufficiency whilst providing opportunities to capture additional benefits in the form of electricity sales. We will therefore continue to support our market position in Bags & Coatings with our existing Western European assets. Page | 66 Our working capital levels are well contained within the Group‟s target of 10-12% of turnover. Mondi has invested more than €4. Russia and South Africa.Focus on performance through continuous productivity improvement and cost reduction. including a bark boiler in Syktyvkar. Leading market positions Mondi continues to focus on achieving the right product and geographic mix in order to promote sustained profitability. and a steam turbine in Richards Bay. The energy related projects mentioned above will also provide benefits through a reduction of procured energy. low-cost asset base Over the past 10 years. a steam turbine in Stambolijski.

1 in industrial bags in Europe No.1 Structure of Mondi Group Europe & International Division Mondi's Europe & International Division comprises four business units: Packaging Paper. Fiber Packaging. Mondi pursues its strategy of leading market positions. 2 in virgin containerboard in Europe No. Consumer Packaging and Uncoated Fine Paper. 1 in office paper and UFP in Europe No. 1 in commercial release liner in Europe Key products and operations . 1 in kraft paper in Europe Page | 67 No. Chart 2. and commitment to continuous operational improvement. 1 in corrugated packaging in emerging Europe No. Market positions No. low-cost. Within this structure.STRUCTURE Mondi operates as two divisions: Europe & International and South Africa. 1 in recycled containerboard in emerging Europe No. high-quality asset base.

Mondi has invested in the construction of one of the world ‟s fastest containerboard machines (1. among other things. including conventional boxes and trays. animal feed. flour and milk powder. chemicals. including ultra-strong and air-permeable bags with sophisticated closure techniques. Russia and Slovakia A network of four mills producing virgin and recycled containerboard and 15 corrugated packaging plants. seeds. mainly in Central and Eastern Europe Kraft paper converted into industrial and consumer bags. These products are used to package. . shelf-ready packaging (SRP) and heavy-duty packaging. cement. at six mills and 58 converting plants mainly in emerging and Western Europe Leading European producer of release liner. Industrial bags: Mondi is the world‟s largest producer of industrial bags and offers a wide variety. Page | 68 Industrial bags Mondi is the world‟s largest producer of industrial bags and offers a wide variety. animal feed.1 million hectares of forest in the Komi Republic in Russia. pet food. To meet the corrugated industry‟s increasing demand for excellent lightweight liners and flutings. each catering to the specific requirements of different packaging concepts. cement. extrusion coating products and consumer bags Containerboard A wide-ranging portfolio of corrugated case materials (virgin and recycled containerboard) is produced for corrugated box applications. among other things. with an allowable cut of 5. as well as automotive parts and organic and bio-waste. Radio frequency identification (RFID) enabled corrugated cases are an integral part of the Group‟s portfolio.strong and air-permeable bags with sophisticated closure techniques. chemicals. These products are used to package. Israel. Corrugated Packaging Mondi is a leading supplier of all forms of corrugated packaging. from industrial applications (including building and chemicals) to consumer packaging (including food.1 million m3 of wood per annum UFP is produced at plants in Austria. point-of-sale displays. as well as automotive parts and organic and bio-waste. A wide range of grades is offered. Kraftpaper Kraft papers within the Advantage range are widely used.700 metres/minute) in Poland. seeds.2. medical and pharmaceuticals). including ultra. flour and milk powder.

high-quality innovative products. labels and others. and supplies the packaging converting industry with the full range of laminating films (including barrier. elastic films and frontal tapes as well as for siliconised films Page | 69 for individual sanitary napkin packaging in the hygiene industry. pet care. anti-fog as well as recloseable properties). Uncoated Fine Paper . converting (for FMCG). fiber composites. Mondi customises its release liner to address specific customers ‟ product requirements. worldwide sales network and unique machine set-up. Mondi is able to serve its customers globally with extrusion coated products and service solutions. household & detergents as well as industrial applications. hygiene. Consumer Packaging The acquisition of 99. silicon sing and printing. Due to its transatlantic production. Advanced films & components Mondi is a specialist for blown and cast film extrusion for the development and production of films and filmbased solutions for a variety of industries. Release Liner Mondi is a leading global supplier of silicone-coated and speciality release liner. specifically designed for the pressure-sensitive adhesives industry. paper-based and other barrier materials. laminating. peel. most prominently toiletries & hygiene. providing technologies such as extrusion coating.93% of the shares in Nordenia International AG in October 2012 further positioned Mondi as a global player in the consumer packaging business with a significantly extended product range.Extrusion Coatings Mondi is an innovative supplier of plastic. garden products. tapes. Mondi is a trusted partner for the world ‟s leading label stock producers. Given the broad range of adhesive applications and components available today. The applications served include graphic arts. medical. Mondi advanced films and components and consumer packaging are applied in a wide variety of areas. and excellent service. food & beverages. Mondi is also a leading supplier for innovative diaper components comprising elastic laminates.

MAESTRO® and IQ. Key products and operations 307. 1 in office paper in South Africa No.and soft-wood pulp and virgin containerboard produced at the Richards Bay pulp and containerboard mill in KwaZulu-Natal UFP produced at the Mere bank paper mill in Durban. Well-known brands include Color Copy. Forestry . Russian and South African producer of UFP. from the management of our own forests right through to the procurement of our wood and fiber through the supply chain. It is therefore in our interest to ensure that we meet and support the requirements of sustainable forestry practices.000 hectares of plantations in KwaZulu-Natal and Mpumalanga provinces Hard. Page | 70 OPERATIONS Forestry & Pulp Wood Wood is Mondi‟s most important raw material. UFP and containerboard operations. as well as the Russian Snegurochka and South African ROTATRIM brands. South Africa Division Mondi was founded in South Africa in 1967 and the South Africa Division includes forestry. KwaZulu-Natal Market positions No. pulp. 2 in white top kraft liner in South Africa Joint Ventures Mondi also has major shareholdings in a number of other businesses in Europe and South Africa: Mondi Shanduka Newsprint (50% owned) is a leading supplier of newsprint and telephone directory paper in South Africa and selected export markets.Mondi is a leading European. used for a wide range of office and professional printing applications for inkjet and laser printing.

break down pollutants. In our natural forests. are vital to watershed protection and soil formation. or logging in tropical rainforests. Page | 71 Recovered paper has become an indispensable raw material for our business and. illegal logging. clean the air and water. felled areas are left to regenerate naturally and poor regeneration is supplemented with plantings. the raw cellulose-bearing material is broken down into its individual fibers. chemicals are used to dissolve the lignin and free the fibers. air and water. Production Chart 2. Pulp Wood is an essential raw material for all of our virgin fiber-based products. In chemical pulping. We use pulp in our own production and also sell it wholesale to third parties. recycle nutrients. Forests provide a range of goods and services. Although Mondi is involved in the felling of trees. or it may be produced by the re. and timber obtained from controversial sources. population growth. particularly in developing countries. and as an operator in an industry that potentially has a high impact on the natural environment. In the pulping process.As a significant holder and manager of land. Primary concerns include deforestation resulting from illegal logging in protected or high conservation value (HCV) areas. From wood fiber we produce pulp. The main factors contributing to deforestation and forest degradation are increased agriculture. which makes it an energy.2 Contribution to Group Revenue . The pulp and paper manufacturing process also requires a large amount of process water and energy (in the form of steam and electrical power). the basic ingredient of all paper and paper-based packaging. amounting to 30% of our total pulp consumed. at least one more tree is planted.and natural resourceintensive one.pulping of recovered paper. in 2011. we consumed 1. and has strict fiber sourcing controls. we recognize our stewardship role and responsibility in using natural forestry resources in a sustainable way. For every tree felled in our plantation forests. prevent soil erosion and water run-off. maintain the chemical balance of soil.5 million tonnes of recovered fiber. poverty and urbanisation. we are not party to deforestation. The pulp for paper-making may be produced from virgin fiber by either chemical or mechanical means. Mondi is not involved in illegal logging. and play a major role in regulating climate. They serve as habitats for two-thirds of terrestrial animal and plant species.

1 Production Statistics Six months ended Six months ended Year Ended 30 June 2012 Europe &International Containerboard Tonnes Kraftpaper Tonnes Softwoodpulp Tonnes 1.042.011.741 1.937 489. 2011 31 December 2011 991.757 2.279 992.772 30 June.238 1.954.984 955.284 Internalconsumption .Page | 72 Production Statistics Table 2.009.970 535.

758 376 609 2.578 934.005 1.169 1.357 702 .958 3.797 373 1.799.050 1.577 154.213 3.194 85.707 606 2.Tonn es External Tonn es Corrugatedboardandboxes Industrialbags Coatingandreleaseliners Consumerpackaging Uncoatedfinepaper Mm² Munits Mm² Mm² Tonnes Newsprint Tonnes Hardwoodpulp Tonnes Internalconsumption Tonn es External Tonn es South AfricaDivision Containerboard Tonnes Uncoatedfinepaper Tonnes Hardwoodpulp Tonnes Internalconsumption Tonn es External Tonn es 907.588 77.

454 115.402 128.991 199.668 496.584 161.01 million tonnes Corrugated board and boxes: 1.931 527.606 206.914 Europe & International Uncoated Fine Paper UFP: 1.337 1.882 257.509 58.955 61.859 68.284 153.379 126.770 95.548 188.371 975.1 million tonnes UFP: 22% Corrugated Containerboard: 2.150 96.121 58.310 712.837 637.889 1.680 233.632 58.400.000 tonnes Industrial bags: 3.518 31.936 527.817 51.251 129.646 101.105 132.226 483.337 330.4 million tonnes Newsprint: 199.000 tonnes Corrugated: 19% Bags & Coatings Page | 73 Kraft paper: 956.575 98.03 million tonnes Coatings and release liner: 3.000 tonnes Pulp: 1.205 316.715.686 282.9 billion units Pulp: 1.033.516 114.886 97.2 million m2 Pulp from virgin fibre: 792.536 124.642 43.963 169.388 320.4 million m2 .

Europe & International 2.700 employees 102 operating sites located in 30 countries 2.4 million hectares of land managed Operate out of two geographical divisions: 1.000 tonnes Pulp: 753.000 tonnes Newsprint: 8% MONDI AT A GLANCE 25. South Africa Corporate offices in South Africa and the UK CEO: David Hathorn Joint chairmen: David Williams and Cyril Ramaphosa Listed in Johannesburg and London Page | 74 Countries where Mondi operates Table 2.Bags & Coatings: 35% South Africa Division UFP: 234.000 bone-dry tonnes South Africa Division: 6% Newsprint Newsprint: 313.000 tonnes Woodchips: 206.000 tonnes Containerboard: 258.2 Mondi’s operating countries International Africa Europe including Russia .

1 in corrugated packaging in emerging Europe No. 1 in commercial release liner in Europe South Africa Division: No. 1 in kraft paper in Europe No. 2 in white top kraft liner in South Africa Page | 75 PRODUCT RANGE . Mondi has a skilled. 1 in industrial bags in Europe No. 1 in recycled containerboard in emerging Europe No. 1 in office paper and UFP in Europe No.400 people. with 82 unique operating sites located in 28 countries employing a total of 23. 1 in commercial release liner in Europe No. 1 in office paper in South Africa No.1 2 3 4 5 6 7 Jordan Lebanon Thailand Malaysia Mexico Oman USA 8 9 Morocco South Africa 10 11 12 13 14 15 16 17 18 19 Austria Belgium Bulgaria Czech Republic Finland France Germany Greece Hungary Italy 20 The Netherlands 21 Poland 22 Russia 23 Serbia 24 Slovakia 25 Spain 26 Sweden 27 Turkey 28 UK 29 Ukraine Mondi‟s operational footprint at 31 December 2011 traverses the globe. trained and committed workforce who undertakes their jobs in a safe and productive manner within the dynamic Mondi culture. Leading market positions Europe & International Division: No. 2 in virgin containerboard in Europe No.

Corrugated Packaging • • • • • • Eco Line Easy Line Smart Line Packaging Types Applications Technologies 4. Kraft Paper • • • Sack Kraft Paper Market Pulp Specialty Kraft Paper 3.1. Containerboard • • • • Appearance Kraft Semi Chem Recycled 2. Release Liner Building / Roofing . Industrial Bags • • • • • • • • • • • Pasted Open Mouth Bags Pasted Valve Bags Pinch Bottom Bags Refuse Bag Protector Bags Terra Bag FIBCs / Big Bags Features Filling Equipment Industrial Bags production video Eurosac presents Russell the Spruce 5. Extrusion Coatings • • • Technical Coatings Page | 76 Consumer Coatings 6.

Sustainex 8. Office Paper • • • • • Multifunctional papers Page | 77 Colour laser papers Creative Papers ColorLok Green Range . Advanced Films & Components • • • • • • • • • Diaper components Femcare components Label film Laminating film Tube Laminating Films Surface protection films (temporary) Surface protection films (permanent) Transport and pallet protection Industrial films for form-fill-seal (FFS) applications 9. Consumer Goods Packaging • Stand Up Pouches • Reclosable Bags (FlexZiBox) • Non-Reclosable Bags • Paper-based Bags • Microwaveable Packaging • Labels • Special Product Features • Printed Laminates & Barrier Materials Rollstock • Printed Mono Film Rollstock • Biodegradable Films .• • • • • • • Envelopes Fiber Composites Graphic Arts Hygiene Labels Medical Tapes 7.

up 8% Strong cash generation of 353 million Significant strategic acquisitions: 1. Professional Printing Paper • • • • Digital printing Pre-print Offset printing Green Range Served Industry • • • • • • • • • • • Automotive Building & Construction Chemicals & Dangerous Goods Farming & Agriculture Food Industrial Paper & Packaging Medical & Pharmaceutical Office & Printing Paper Pet Food Photographic & Graphic Toiletries & Hygiene FINANCIAL DATA AND PERFORMANCE Operational and Financial Highlights (Half Yearly Report-2012) Good operating performance after a challenging start to the year Return on capital employed of 13. Swiecie´ minorities acquired for 296 million 2.840mn €5.3%. in excess of the Group‟s through-the-cycle target of 13% Interim dividend of 8.10.740mn €269m .9 euro cents per share. 655 million acquisition of Nordenia agreed Page | 78 Key Figures (Half Yearly Report-2012) Group revenue Total assets Underlying operating profit €2.

3% 31.840 436 269 217 223 2. except for percentages and per 30 June December share measures 2012 2011 2011 30 June From continuing operations Group revenue Underlying EBITDA1 Underlying operating profit1 Underlying profit before tax1 Profit before tax 2.3 Financial Summary Six months ended Six months ended Six months ended 31 EUR million.797 438 268 216 157 .942 526 354 296 300 2.Return on capital employed Basic earnings per share Interim dividend 13.9€ cents Financial Summary Table 2.7€ cents 8.

2% 15.9 Basic earnings per share from continuing operations Basic earnings per share (EUR cents) (EUR 30. 1.7 30.0 41. As more fully set out in note 11 of the half-yearly financial statements.7 39.Per share measures (EUR Basic underlying earnings per share cents) (EUR Basic earnings per share – alternative measure2 cents) 30. the effects of the recapitalization and the demerger of Mpact (formerly Mondi Packaging South Africa) and the Mondi Limited share consolidation have been adjusted in the 2011 comparative earnings per share figures to reflect the position as if the transaction had been completed on 1 January 2011.5 Page | 79 Group Return on Capital Employed (ROCE4) 15. This . The directors have elected to present an alternative.6 18.0% Notes: The Group presents underlying EBITDA.9 41.1 31.2 29.5 24.9 38. 2. operating profit and profit before tax as measures which exclude special items in order to provide a more effective comparison of the underlying financial performance between reporting periods.7 31. non-IFRS measure of earnings per share from continuing operations.

based on the consolidated number of shares. 3. The company has a dominant share of the high-end coated paper segment in India. BILT‟s subsidiaries include Ballarpur International Graphic Paper Holdings B. an impressive 80% of the bond paper market and nearly 35% of the hi-bright Maplitho market. which runs BILT‟s farm forestry programme in several states in India. BILT Graphic Paper Products Limited (BGPPL).R. (BIGPH). Malaysia ‟s largest pulp and paper company. BILT has mega brands such as BILT Royal Executive Bond. BILT Image Copier and BILT Matrix that have now become an integral part of office stationery. Jungle King and Hannah Montana. Vederah is the Managing Director and Executive Vice Chairman. Free cash flow per share is net increase in cash and cash equivalents before the effects of acquisitions and disposals of businesses and changes in net debt and dividends paid divided by the net number of shares in issue at the end of the reporting period. besides being India's largest exporter of coated and uncoated paper. Building on its unmatched paper quality. Spiderman. Page | 80 2. Hotwheels. BILT Student Stationery has . Sabah Forest Industries (SFI). Winnie the Pooh. BILT Copy Power.is intended to enable a more useful comparison of earnings per share from continuing operations. and BILT Tree Tech Limited (BTTL). ROCE is the 12 month rolling average underlying operating profit expressed as a percentage of the average rolling 12 month capital employed. Mr. In India. 4. It accounts for over 53% of the coated wood-free paper market. giving it geographic coverage over most of the domestic market. BILT ventured into the paper-based office stationery segment. the company has six manufacturing units. The company markets its stationery through a well-established network of 350 retail distributors spread over 270 locations. BILT Ten on Ten notebooks are targeted at students and are also available with licensed characters such as Barbie. adjusted for impairments and spend on strategic projects which are not yet in operation.2 Ballarpur Industries Limited OVERVIEW AND HISTORY Ballarpur Industries Limited (BILT) is India‟s largest manufacturer of writing and printing (W&P) paper.V. R.

knowledge sharing and support.won „Product of the Year‟ award for the last three consecutive years. Malaysia. it transformed BILT into a major regional player. By constantly setting and redefining the gold standard in every business they operate in. adopting responsible business practices. For their shareholders . understanding of their needs and proactively providing solutions. and elevated BILT‟s ranking among the global top 100. knowledge sharing.value that will endure. In 2005. BILT forayed into organized retail through P3 – Paper. In 2008. Lasting to us means timeless . customers. imagination and respect for individuals.value through quality products and services. With integrity. For their customers .value through building mutually beneficial long term relationships. BILT‟s acquisition of SFI.value by focusing on the development needs of the communities they engage with. regardless of changes in their businesses. Since then. they will create enduring value for their employees.value in the form of professional growth. For their partners . partners. shareholders and society. and developing the spirit of enterprise. For society .up. Page | 81 VISION "To Create Lasting Value" They strive to create lasting value for all their stakeholders through extraordinary efforts. . For their employees .value through a high return on investment. the leading player in hygiene tissue products in the domestic retail market. in 2007 was a watershed event – it was the first overseas acquisition by an Indian paper company. and making a sustained effort to preserve the environment. Print and Pens – serving both B2C and B2B clients across India. through an enabling work environment. people. a profitable and sustainable growth platform. BILT entered into the tissue and hygiene business with two brands: Etiquette and Spruce. implementation of best practices and growth in their personal life. and helping them optimize their business potential. the company has acquired Premier Tissues India Limited. and contributing to their business growth. markets or geographies.

geographies) Encouraging and implementing original ideas and "out-of-the-box" thinking Being agile and responsive to change Leveraging knowledge and technology to drive innovation INDIVIDUAL .Page | 82 VALUES INTEGRITY.that drives their actions Constantly searching for "the new" in all spheres (be it products.in both personal and professional relationships Following ethical business practices Honoring their commitments to all stakeholders Being open and sincere in all their dealings Being accountable and taking ownership Providing genuine value through their products and services IMAGINATION . offering equal opportunity Encouraging openness and freedom of expression Ensuring prompt response to issues and concerns Empowering and stimulating employees to realize their potential .a commitment to valuing people Respect for individuals and recognizing their contribution Being fair. IMAGINATION. INDIVIDUAL INTEGRITY . markets. processes.

FINANCIAL HIGHLIGHTS Paper Production Paper production is decreased by 0.429 MTPA in 2011-12.6 per cent from Rs. 4747.1 crore in 2010-11 to Rs. Debt Equity Ratio It is decreased from 1.4 Debt Equity Ratios and PBDIT . 875. Page | 83 Chart 2.1 in 2010-11 to 0. Chart 2.7 per cent from 846. 800. PBDIT PBDIT is decreased by 8.9 crore in 2011-12.9 in 2011-12.5 crore in 2010-11 to Rs. 4498.230 MTPA in 2010-11 to 840.5 per cent from Rs.3 Paper Production and Net Sales Net Sales Net Sales is increased by 5.8 crore in 2011-12.

4 Profit and Loss Statement of BILT .Page | 84 Profit And Loss Table 2.

In contrast. The category includes blade coated. is better positioned in growing markets. It also has a presence in speciality paper and the tissue business. respectively.2 per cent and –5. In the first six months of CY2012. At the global level.8 per cent compared to the same period of the previous calendar year. with its core market in India and Malaysia through SFI. While the high technology blade coated products grew by 18 per cent. Japan showed growth of 1.3 per cent. however. Coated Wood-Free Consumption of coated wood-free in India increased by 23 per cent to 567. including India and China. air knife and cast coated products. demand was also down by –1.Page | 85 PAPER BUSINESS — INDIA Market Developments BILT caters primarily to the writing and printing paper segment. significant differences in this overall growth across the regions.5 per cent.4 per cent. demand for writing and printing paper de-grew by 1. with BILT continuing to maintain and develop its leadership position in the country. grew by 2. Nevertheless. which prompted above away from plastic laminated packaging to . North America and Europe registered declining demand of -7. The spurt in air knife demand was due to a specific change in packaging regulation by government.000 MTPA in FY2012. air knife grew by a staggering183 per cent. it will have to continuously deal with various challenges emerging from contraction of the global pieas a whole. And the Asian economies. BILT. There are.6 per centin CY2011 versus CY2010. For the first six months of CY2012.

the C2S paper market grew by 8 per cent to282. grew by 8 per cent in FY2012. Moreover. low value product segment. Ten on Ten and BILT Matrix and has maintained its second spot in this highly competitive market.000 MTPA inFY2012. it has laid greater importance on optimizing its product mix for greater profitability. the Company is well positioned to claim market leadership in this segment. Uncoated Wood-Free During FY2012. the coated market can be segregated into one-side coated (C1S) and both-sides coated (C2S). it‟s divided between paper products and board products. The mill packed copier market in India grew by 12 per cent during FY2012 to 501. The segment is characterized by intense competition with participation of all major players in the Indian paper industry. Image Copier. it is by far the largest segment in India. Within blade coated products. While maintaining a commanding presence in each product category. Copier Copier is a forward integration of the uncoated wood-free paper segment. At another level.000MTPA.6 million MTPA in 2011-12.500MT in FY2012. With this objective. BILT has four major brands in the market Copy Power. the Indian uncoated market comprising the Low Bright and Hi Bright segments grew by 4 per cent to 1. Hi Bright. and is estimated at 1. There are almost 40 brands at various price points.paper laminated packaging. This includes map litho paper cut in sizes and having the characteristics best suited for desktop printing and copying.130. with steady ramping up of production. the Company has been focusing on the higher value Hi Bright segment. This market is growing at around1 per cent. and BILT maintained its leadership position in the category. At one level. Cream wove This is a high volume. In volume terms. The market for uncoated wood-free in India is highly fragmented with a multitude of products and manufacturers. This is a fast growing segment. and a highly price sensitive market. BILT has strategically maintained a minimal presence in this segment. Page | 86 BILT continues to offer a wide range of products in the uncoated wood-free segment and remains the largest player in this space. 150 MTPA and the C2S board market grew by 12 per cent to 104. Tissue and Hygiene .000 MTPA. each with sub-optimal capacities. BILT developed a special product especially aimed at this application and sold close to 43. The segments largely restricted to domestic players and price trends are set by domestic competition. which accounts for around 61 per cent of the uncoated map litho segment. It is characterized by several producers.

Business Stationery -Bonds 4. Consolidated domestic sales grew by 22 per cent overFY2011. Operating profit of the consolidated business in FY2012 was about ten times that of FY2011. Industrial Grades -Ivory Boards -Posters OPERATIONS As a consolidated entity. improvements in the product mix and operational efficiency. Page | 87 PRODUCTS 1. various initiatives were undertaken at Premier Tissues that yielded results in terms of better revenues and profits. Speciality and Fine -Cartridge -Ledger 6. BILT‟s paper manufacturing operation spans across five production units in India.Sewa (Odisha) and Ashti (Maharashtra). . During FY2012. Coated wood free -Art Paper C1S -Art Paper C2S -Art Board C2S -Black Centered Board -LWC -SBS Board 2. and fixed cost reduction.The business operations at BILT‟s tissue division were fully migrated to Premier Tissues (India) Limited. Bhigwan(Maharashtra). Uncoated Wood free -Hi-Brights -Creamwove 3. Copy Paper -Premium Copy Power 5. which was significantly higher than the market growth. This was achieved through multiple interventions including price correction. These include Ballarpur (Maharashtra). Shree Gopal (Haryana).

wheat straw. France. cultivated extensively in USA.Short Fiber. Albizzia & Wattle trees are more suitable hard wood trees for paper making and have a very high rate of growth Grasses . bagasse and corn straw are used for paper pulp making. Acacia. Only a small proportion of raw cotton in form of short fibre linters comes directly to paper mills Cotton Rags .Like spruce & pine which have a long fibre. rice. Difficult in barking and chipping.This gives more strength in paper or paper board Linen . Belgium & Ireland .Linen fiber is derived from the bast tissue of the stem of the flax plant. Straw has been reported as suitable for paper making. sarkanda etc.In India. Hard Wood . Hungary. Straws .It is a seed hair from cotton plant after extracting cotton.Page | 88 PAPER MAKING PROCESS RAW MATERIAL Chart 2. sabai grass.5 Paper Making Process Soft Wood . Cotton Linters . are used for making paper. Russia.Several types of long grasses like bamboo. one ideal raw material for paper making. Eucalyptus.

The chips are loaded into a digester and cooking liquor is added. wood logs/bamboo are to be chipped into small pieces (some wood species cannot be chipped directly and needs debarking). Either batch digester or continuous digesters are used in cooking. a period known as the cooking period. CHIPPING Bamboo or Wood as such cannot be used for pulping. During chipping. For better operation of the process. Chips of size less than 5 mm (dust and pin chips are taken to Boiler House for burning as fuel for generating steam). Within the chemical process there are two types - . ropes etc. After about 45 minutes or more as per raw material the chips have to be passed through the impregnation zone where hot liquor (340 degree F) is circulated through the chips for heating. Utilization of this would reduce load on demand of fresh fibers. The chips and liquor are mixed as the chips are pumped to the top of the digester.Hemp .This Fiber occurs in the leaves of a plant of the plantain family that grows in the Philippines Islands Sisal Hamp . For economical operation of pulping plant as well as for better penetration of cooking liquor. Manila . About 80% of the waste paper is used in the manufacture of paper boards. the chips (which have not become pulp) are washed with weak liquor through washing stages that follow.It comes to paper maker in the form of spinning waste. the cooking liquor penetrates the chip. chips are generated in various sizes. The cooking process requires wood. Then by pressure cooking. Russia & America. After passing through the cooking zone. twine. In India the use of recycled fiber is only 20 percent compared to 40 percent in developed countries. The top section of the digester is pressurized to 160 psi and more. bamboo or other raw material fibers are separated from unwanted ingredients. only chips of size 5-35 mm are taken. cordage.The fibre comes from the leaves of the plant Agave Sisalana and is used for making rope & twine. There are various designs of chippers. Waste Paper . PULPING Pulp is obtained by removing lignin and other impurities from the wood & other raw materials through a cooking process (Lignin is the glue that holds the fibers of the wood in their form). bamboo or other raw material chips. Hemp is the bast tissue of an annual shrub found extensively in India.The demand of waste paper for manufacturing of paper is increasing every day. As the chip mass passes downward. The actual pulping occurs at 355 degree F in about 90 minutes. the wood. Chips of size more than 35 mm are taken into rechippers and again chipped to an acceptable size. Small scale units depend almost entirely on waste paper as raw Page | 89 material. The process is called chipping and the equipment used for chipping are called chippers.

So the main objectives of bleaching the pulp can be set out as follows. by the sulphate process most of the chemicals are recovered and reused. a dandy roller near the end helps to smooth out the paper. shives and bark fragments. to manufacture white paper they need to remove yellowness without physically or chemically damaging the fiber. Sulphate Process "(Alkaline process)" 2.due to aging. ADDITIVES Additives are added to paper pulp. These deleterious elements are lignin traces. Bleaching also should help to reduce the fiber bundles. with washing in between stages. In the process the paper gets some glaze like coating also. Additives like dyes & starch are also added. The calendars are series of . The objective is to remove 93% to 95% of the water in the finished paper. with improvement in various properties. Addition of fillers like talcum & calcium carbonate is very common & besides acting as fillers they add brightness to the paper. On the other hand. When the paper reaches the end of the wire mesh it is transferred to a felt blanket which conveys it through many steam heated driers to remove the excess moisture. during subsequent operations. Bleaching Pulp is normally done in a step-wise sequence using different chemicals and process conditions at each stage. while dissolving lignin and other unwanted residuals. non. resins. These additives must be finely ground. To increase brightness of the pulp by removal or modification of some of the unwanted elements in the unbleached pulp. To lower viscosity of the pulp for optimum flow. Barium Sulphate & Zinc Sulphide. Other fillers are Titanium Dioxide. The dandy roller improves the formation of the paper web by application of pressure. Sulphite Process "(Acid process)" Some hard woods may be dissolved with difficulty by the sulphite process. Page | 90 BLEACHING Although cellulose fiber is white in color. REMOVING WATER Removing water is the next important stage. For this the pulp is passed through a rapidly moving wire mesh called fourdriner. Then it is made to pass through a series of calender stacks. metal ions. due to residual lignin traces remaining on the fibers.cellulosic carbohydrates etc. Bleaching for brightness improvement should also help to keep the pulp stable without turning yellow or lose strength or reduce brilliance . Bleaching should be done with minimum mechanical action of fibers. As the paper flows along the wire mesh and water is drained along the way. Therefore.1. the pulp appears creamish.

a range of premium. Applications Small decisions can make big differences. The next step is rewinding on a metal or fiber core. So.choose the right paper to suit your needs. A4. . Today Royal Executive Bond is available in a range of exquisite colors – Camelle (off white). Applications Accounts Cards Corporate publication Drawing sheets Industrial Publicity material Books Certificates Covers Examination material Magazines Stationery Calendars Corrugated boxes Desktop printing important documents Packaging Tickets NEW AT BILT BILT launches a mega. through which the finished paper will pass to smoothen down. Page | 91 PAPER Finally the Paper is produced. take an informed decision . The last stages after this are sheeting. The right paper you buy redefines your image and expenditure. In all print jobs more than 60% of the costs are incurred on paper alone. Coral pink & Meadow green in varied grammages (70. from the right source and at a right price could make a big difference in terms of quality and costs. Aquas (blue). Moonbeam (white). Smart choices create big successes.polished iron rollers stacked one on top of the other. FS. That is where getting the right paper. packing & testing. Also on offer are envelopes in matching colors to complete your communication needs. country-wide campaign for its Royal Executive Bond papers BILT Royal Executive Bond. A3). watermarked business stationery paper has commanded a leadership position in the market since its inception in the year 1999.85 & 100gsm) and an array of consumer friendly sizes (B5.

3 Company Comparison Ballarpur Industries Limited (BILT) Revenue: Rs. across 30 countries) . 800. Malaysia Mondi Group South Africa Europe.230 MTPA Mondi Group Revenue: 5. Page | 92 2. The print campaign starts on 12th July and ends in September. General Interest & Business magazine and trade magazines.8 Crore Profit: Rs. Press ads shall feature in leading News & Business dailies.5 Company Comparison Ballarpur Industries Limited (BILT) Location Business Market India India. South Africa and emerging markets ( approx. Russia.739 million EUR Profit: 357 million EUR Production: 5 million MTPA Table 2. 4747.A print media campaign has been developed to create awareness for Royal Executive Bond and showcase the wide range of products available under the same.9 Crore Production: 886.

V. UK. Poland. low-cost asset base Individual Focus on performance . Italy. countries Subsidiaries Ballarpur International Netherlands. France. Denmark. Bulgaria. Slovakia. and Mexico Austria‟s Neusiedler AG and Graphic Paper Holdings B. Hungary.Buying business in other Malaysia Austria. Russia. BILT Graphic Paper Frantschach AG Cofinec in Poland Russia‟s Syktyvkar mill Products Limited And in many more countries Sabah Forest Industries Malaysia‟s largest pulp and paper company BILT Tree Tech Limited Page | 93 Divisions For Indian country only Europe & International and South Africa (two divisions separately) Strategical views Integrity Leading market positions Imagination High-quality.

Key Products 1. Containerboard • • • • Appearance Kraft Semi Chem Recycled LWC SBS Board 2. Kraft Paper • 2. Speciality and Fine Cartridge 4. Business Stationery • Bonds Eco Line Easy Line Smart Line Packaging Types Applications Technologies • • 4. Coated woodfree Art Paper C1S Art Paper C2S Art Board C1S Black Centered Board 1. Industrial Bags • Pasted Open Mouth Bags Ledger . Copy paper • Premium Copy Power • • 5. Uncoated Woodfree Sack Kraft Paper Market Pulp Specialty Kraft Paper • Hi-Brights • Creamwove 3. Corrugated Packaging 3.

) the Spruce 5. Industrial Grades Ivory Boards Posters Page | 94 Key Products (Cntd. Extrusion Coatings • Technical Coatings .• • • • • • • • • • Pasted Valve Bags Pinch Bottom Bags Refuse Bag Protector Bags Terra Bag FIBCs / Big Bags Features Filling Equipment Industrial Bags production video Eurosac presents Russell 6.

Consumer Goods Packaging • • • • • • • • • • Stand Up Pouches Reclosable Bags (FlexZiBox) Non-Enclosable Bags Paper-based Bags Microwaveable Packaging Labels Special Product Features Printed Laminates & Barrier Materials Rollstock Printed Mono Film Rollstock Biodegradable Films .Sustainex 8.• Consumer Coatings 6. Release Liner • • • • • • • • Building / Roofing Envelopes Fiber Composites Graphic Arts Hygiene Labels Medical Tapes 7. Advanced Films & Components • • • Diaper components Femcare components Label film Page | 95 .

• • • Laminating film Tube Laminating Films Surface protection films (temporary) Key Products (Cntd. Office Paper • • • • • Multifunctional papers Colour laser papers Creative Papers ColorLok Green Range 10.) • Surface protection films (permanent) • • Transport and pallet protection Industrial films for form.fill-seal (FFS) applications 9. Professional Printing Paper • • • Digital printing Pre-print Offset printing .

1 in office paper in South Africa . 1 in corrugated packaging in emerging Europe No. 1 in industrial bags in Maplitho market Europe No. 1 in office paper and UFP in Europe An impressive 80% of the bond paper market No. 1 in kraft paper in Europe 35% of the hi-bright No.• Green Range Market Positions 53% of the coated wood-free paper market No.

No. 2 in white top kraft liner in South Africa Page | 96 Chapter-3 Findings .

Imports have continued to increase fairly strongly at around 3.5 million MTPA per annum. A total of 207. release liner.1 Overall Findings from South African and Indian Paper Industry South African Paper Industry The pulp and paper manufacturing industry is a key contributor to the South African economy. But Mondi and Sappi have major of the industry stack. Mpact. the forest and forest product sectors value-add was R23 billion. 26 million annually to South Africa‟s economy. newspaper. The overall industry turnover is reached to R 26. Since 1970. It shows that there is significant growth in consumption of packaging and tissue paper.967 people are employed in the sectors value chain. corrugated packaging. contributing R35. Pulp exports are growing strongly. its annual growth rate has outdone the international average. Nampak. Per capita consumption is 86 kg per year and total production is 4. Packaging and Tissue papers‟ import is increasing. Indian paper Industry The Rs. 25.4% of South Africa‟s gross domestic product (GDP). . equating to 1. local innovation and local people power.Page | 97 3. Major products offered by the industry are containerboard. etc. with most other grades decline as exports. Kraft paper. advanced films &components. writing.000-crore Indian paper industry accounts for about 1. office paper.5% per annum since 2006. In 2009. etc. Sappi. Major players of the industry are Mondi. tissue papers. Much of this is invested in local resources.6% of the world‟s paper and paperboard production even though the country accounts for nearly 16% of the global population. industrial bags. consumer goods packaging. extrusion coatings. etc. packaging. professional printing paper.000 million in 2011. Major grades offered by the industry are for printing. South African Paper Mills.

followed by writing and printing paper (29. specifically to drive the reduction of costs and therefore remain competitive. etc. While issues related to technology. creation of robust raw material base. ITC. India‟s per capita consumption of paper has almost doubled in the last decade and this growth is expected to continue.2 kg. defragmentation of industry.11 million MT of paper production is done in each year. raw material shortage is a disadvantage affecting all. uneconomical plant size. Mondi‟s high-quality. India is the 15th largest paper consumer in the world. with estimates suggesting a market size increase to 20 million MTPA by 2020. Major players in the industry are BILT. meeting incremental demand of paper.5%) and speciality paper (3. Writing and printing paper. The recycling rate . paperboard.6%). TNPL. Energy cost has increased on account of inadequate availability of coal thereby increasing imports. Per capita consumption is 9. No availability of good-quality fiber. environmental up gradation and green technologies. setting mechanism for collection.6%). modernization of mills. productivity/quality improvement. newsprint (19. Paperboard accounts for nearly 47. newsprint paper are the major products offered by the industry. speciality paper. It is also one of the fastest growing markets in the world. HPC. and integrating them to achieve collaborative production management. technologic obsolescence and environmental compliances are a big challenge. economies of scale.49 million metric tonnes per annum (MTPA) in FY2012. capacity and environment come directly under the purview of companies. grading and utilization of recyclable waste paper are the main barriers to the industry. Page | 98 Enhancing industry‟s competitiveness to face global competition. Paper mills in India have tremendous opportunity to improve their profit margin by increasing their investments in automation systems and enterprise solutions. sorting. 3. By having technology from company like Mondi. Moreover.2 Identification of the Opportunity to Get Supplies from the Foreign Market for Indian Company to Get Cost Advantages Major issues confronting India's pulp and paper industry are high cost of production caused by inadequate availability and high cost of raw materials. Growth rate is of about 8. Indian mills can reduce their cost of production. which amounted to some 11. well-invested assets and its focus on low-cost production continue to be major competitive advantages. It appears that in South Africa there is increasing pressure for the collection of recycled materials.3% of the total market size.4% annually. building new capacities.

with some grades increasingly being exported. corrugated packaging solutions. So Indian paper industry should use the technology. While Mondi group is an international paper and packaging group specialist in containerboard. It also has a presence in speciality paper and the tissue business. 3. cup stock for white grades and magazine waste) for newsprint.3 Gap Analysis between MONDI and BILT BILT caters primarily to the writing and printing paper segment only. where which is easily available. industrial bags. envelopes waste. Kraft paper. films. consumer bags & pouches as well as office. extrusion coating. BILT can import other than writing and printing papers from Mondi group to cater Indian market. here India can import pulp from the South Africa. India imports about two million tonnes of and waste paper (sack waste for unbleached grades. release liners. While South Africa’s main export is Pulp and it is growing strongly. Over a million tonnes of paper was collected for recycling with a value of approximately R640 million. So. which is used by the South African industry for the recycling of paper. So. pre-print and offset paper.4 Gap Analysis between Indian and South African Paper Industry India’s major import is Pulp (softwood and hardwood). . Page | 99 3.continues to improve.

Page | 100 Chapter–4 Conclusion Page | 101 .

The major Paper industry firms that we have discussed here like Mondi. South Africa comes up with the lots of innovative and modern techniques in production. Indian paper industry is in growth stage and this industry will be booming in upcoming years and in this time joining hands with South African paper industry will be very fruitful for us. Necessary raw material like Pulp is easily available there. global economy. BILT can expand its product line from writing and printing paper segment with the help of MONDI Group. There are opportunities to enter the paper industry in South Africa but with the help of deep research and required resources only. Also we can see that when compared to the paper industry of India the results are somewhat satisfactory. Large number and variety of products are offered in South Africa. The working of the paper industry in both the countries is different and from the findings it is clear that the South African paper sector remains highly concentrated. etc. growth of paper industry. BILT can cater Indian market with the variety of paper products. The trade taking places in this firm is also noticeable and profitable to the economy of the country. Sappi. filled with various new and valuable paper products that they provide to the people of South Africa. Paper industry plays the vital role in the growth of both countries‟ GDP. The legal aspects and barriers in Paper and Pulp industry are also hard to understand and manageable. it is necessary to understand the whole structure of the Paper industry. environmental laws and government laws. availability of raw material. currency exchange. Mpact. With the challenges like management of risks. Nampak. Page | 102 . Technically and economically South Africa focuses on paper and pulp industry more than the Indian paper and pulp industry. They also can have technological advancement to have low cost production.

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3% 19.273 13.2 514 831 .3 Cash generated from operations Net debt 353 1.6 403 1.cents) (EUR Interim dividend per share cents) (EUR Free cash flow per share3 cents) 8.25 9.9 8.200 59.

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