MINI PAPER PLANT

A. INTRODUCTION:
Indian Paper Industry which is over 100 years old, was saddled with many
constraints, not of its own making, which have prevented it from growing to
its full stature. Of late, due to spurt in demand for paper in the context of
availability of good raw materials modernisation efforts are being
undertaken. Profitable margins being good, it has shown good signs of
progress. Paper is designated as a core industry. India’s per capita
consumption is a meagre 2.9 kg against 334 kg in U.S., 224 kg in Japan
and 134 kg in Taiwan. Even within the Asian bloc, China has an impressive
12 kg per capita; the Phillipines 8.5 kg and Thailand 17 kg, Malaysia (31),
Korea (80), New Zealand (150), Singapore (80), Hong Kong (140), Australia
(150) are other countries in the Asia-Pacific region which are significantly
ahead in paper consumption.

Considering the growing demand and availability of materials, smaller

capacity units can be operated most economically. In view of this, there is
a need to set up a larger number of smaller units in ideal locations.

B. PRODUCT USES & SPECIFICATIONS:

Products proposed, Uses and Applications:

Media Kraft Paper: This is used in corrugated box manufacturing and

by all the industrial packaging units. The main market lies in Chennai,
Madurai, Coimbatore, Virudhunagar and Sivakasi.

Plain/Ribbed Kraft Paper: This is used as wrapers for books and

notebooks and also in all packaging industries.

White Poster and Colour Poster: These are consumed by the printing
presses for wall posters and also for printing tickets, vouchers, etc.. The
main market is at Chennai and Sivakasi where there number of printing
presses exist.
Manila Paper: This is made out of No.1 white cutting, used for making
envelopes and will be marketed in Chennai and Sivakasi.

Tea Yellow Posters and Blue Match Paper: These are low grammage
papers extensively used in packing match box and crackers. The main
market is in Chennai, Sivakasi.

Grey poster and grey poster superior: This is extensively used in match
industry where match boxes are manufactured in automation process. This
type of match boxes can be seen in luxury hotels, airlines etc.. The major
customers are WIMCO, CORONATION, STANDARD FIRE WORKS etc..

Monoglazed (M.G.) papers can be broadly classified into three categories as

Kraft. Posters and Manila.

The list of product as envisaged to be manufactured under the above

mentioned three categories is given below:

1. M.G. Corugated Media Kraft Paper 80-180

2. M.G. Ribbed/Plain Kraft Paper 60-80
3. M.G. White Poster 60-70
4. M.G. Colour Poster 60-70
5. M.G. Phink Manila Paper 50-60
6. M.G. Yellow Poster 60-70
7. Blue Match 36-40
8. Grey Poster 40-60
9. Grey Poster Superior 40-60
* GSM - Grams Per Square Metre. Weight of paper is expressed in GSM.

C. MARKET POTENTIAL

INDUSTRY SEGMENTATION

Does paper have a future in the digital age? Ultimately, it is a question best
answered by the needs of the consumers, but based on the global demand
outlook, consumers still want paper well into the 21st century. World
demand for paper has doubled in the past 20 years and it is forecast to
double again by the year 2010.

Per capita consumption of paper & paper board in India at 5 Kg is very low
compared to other developing countries like China (17.2 Kg), Brazil (28 Kg)
for the year 2000. Therefore, despite the threat of paperless transaction,
scope for paper demand appears to be bright. In developed nations it is as
high as 152 Kgs per annum.

The challenge for the Indian paper industry to meet the ever-increasing
demand of paper, board and newsprint is getting crippled due to shortage of
fibres in the country. The future demand of paper is expected to grow from
5.6 MT at present TO 9.5 MT in 2010 and 13 MT in 2015. Demand for cream
wove paper and Map litho paper is expected to increase by 7-8%. Demand
for different kinds of coated paper has increased by 8% in 2002, duplex
board has recorded increase by 6.5%, kraft paper has registered a 6% rise in
demand and newsprint an impressive 10%.

It is also worthwhile to know the demand from the packaging sector which
has registered tremendous changes in the recent past. Thus the overall
market prospectus for paper products appears to be good and the demand
for industrial paper is expected to grow at faster rate than general paper
industries growth.

D. TECHNICAL ASPECTS:

Installed Capacity
The installed capacity per day is 20 MT per day. The annual installed
capacity is 6000 MT.

Plant & Machinery

Sl Particulars Nos.
1 A. Waste paper pulping section:
2 Hydro pulper 2
3 Stock Pump 1
4 High Density Cleaner 1
5 Turbo Separator T 400 1
6 Turbo Separator T 300 1
7 Johnson Screener 1
8 Thickner 1
9 Chest Agitator 6
10 Stock Pump 7
11 Single Disc Refiner 1
12 Double Disc Refiner 1
13 C.L. Box 1
14 Fan Pump 1
15 Centricleaner (A) - 1000 LPM 3
16 Centricleaner (B) - 500 LPM 3

B. PAPER MAKING SECTION:

17 Head Box 1
18 Wire Part 1
19 Heavy Press 1
20 MG Section 15” 1
21 Framing 1
22 MG Blower, Double Line 1
23 Pope Reel 1
24 Reeling Shell 10
25 Machine Drive Arrangement 4
26 Couch Pit Pump 1
27 Backwater Pump 1
28 Rewinder 1
MANUFACTURING PROCESS :

The process to be adopted for manufacturing paper from waste paper is the
conventional method of mechanical pulping. This process is a well
established one.

The major stages involved in the process are pulping, stock preparation and
paper making. It is a continuous process.

PULPING:
Waste paper is sorted manually to remove impurities and then transported
to the hydro pulper. With the addition of water in the hydra pulper the
waste paper is slushed to form pulp. The pulp from the hydro pulper at
4% consistency is screened through a Johnson screen at a consistency level
of 1%. Further impurities like stapler pins, etc. are removed in the sand
trap. To remove light plastic articles the pulp is sent through turbo
separator after which the pulp is thickened to 4% consistency level and fed
through refiners to obtain the requisite degree of fineness. The waste paper
pulp is taken to the next section.

STOCK PREPARATION:
In this section, the pulp is treated with chemicals, necessary filling materials
and dyes are added to it. The various chemicals and dyes added to the pulp
are normally Alum, Rosin, Caustic Soda, Silicate, Acid orange, Methy Violet,
Malaite Green,Direct Black etc. to obtain various grades of paper.
The requirement of various chemicals and the quality varies with variety of
paper to be produced. The treated pulp which is ready for paper making is
kept in the stock chest with continuous stirring up with the help of
agitators. The pulp stock is then sent to head box of paper machine after
cleaning it through centri-cleaners to remove heavy particles, additives etc.

PAPER MAKING:
Paper making process consists of two stages -
1. Wet Stage
2. Dry Stage

Machineries in the wet stage are generally called wet part and similarly dry
stage machineries called as dry part.

In the wet part an endless wire mesh running on rolls will continuously
drain water from the pulp. Pulp enters the paper machine Head Box at a
consistency of 0.5% to 1%. Application of vacuum in the Hydrofoils
positioned under the wire enables removal of water. The pulp now forms
into a wet mat. This is now lifted off and sent through a press for further
removal of water.

The web is now dried over steam heated MG cylinder where the dry part
starts. The paper obtained after drying is the final product with
monoglazing. The final moisture context in paper is about 3 to 5%. Final
product is slit and rewound paper core into reels and labelled.

Various grades of paper with different grammage are manufactured by

adjusting the valve and sluices at the Head Box.

The plant can be run continuously for a given variety of paper without
interruption. However, to change over from one variety to other, the paper
making operation has to be interrupted depending on the changes required
to be made either in pulping stage or in stock preparation.

Raw Materials
The major raw material is waste paper. Kraft waste and No.1 white cutting
waste are two varieties in the major raw materials. Banian cutting pulp is
also added based on the high burst factor requirement in the final product.
Apart from paper, a few chemicals and dyers are required in small
quantities. These chemicals can be procured from Madurai or Chennai
either through dealers or directly.
Land & Building
Land with an area of 3 acres is sufficient. The constructed area of the
building is 16000 sq. ft.

Utilities
Electricity :Power requirement is 480 KW.

Steam & Fuel Fuel is required for steam generation. The steam
requirement is about 2.3 tons for one ton of paper production.

Water: Water is required for pulp washing, steam raising and general
cleaning. 200 Kl ground water is required per day for cleaning.

Manpower ;
Category Nos. Monthly Total monthly
Works Manager 1 10000 10000
Supervisors 3 6000 18000
Electrical engineer 1 6000 6000
Mechanical eng. 1 6000 6000
Finishing/godown/store. 3 4000 12000
Skilled 30 4000 120000
Semi skilled 21 3000 63000
Unskilled 24 2500 60000
Security 6 2500 15000
Managing Director 1 12000 12000
Finance Manager 1 10000 10000
Marketing Manager 1 9000 9000
 Sales Representative 2 6000 12000
Accountant 1 5000 5000
Assistant 3 4000 12000
370000
Add : Benefits 20% 74000
Total 444000
Total wages per annum [Rs.lakhs] Rs.53.28lakhs
7. IMPLEMENTATION SCHEDULE:
The project is implemented within 6 months period.

8. ASSUMPTIONS:
1. Installed capacity is 20 MT, Annually it is 6000 MT.

2. The selling price is assumed at Rs.23.00 per MT on a conservative basis.

3. Cost of materials is assumed at Rs.9500 which is the current cost

including waste.

4. Consumables is estimated at Rs.3300 per MT, which is the cost of

chemicals.

5. Power charges is calculated for 480 HP for 24 hours for 300 days at

Rs.5.00 per unit.

6. Fuel charges per MT of production is Rs.2000/-

7. Repairs & Maintenance is calculated at Rs.50000 per month.

8. Admn. & General expenses is calculated at Rs.2.00 lakhs per month.

9. Selling overheads is calculated at 3% p.a.

10. Interest on Term Loan is calculated at 12% p.a.

11. Interest on Working Capital is calculated at 12% p.a.

12. Income tax is provided at 33.99% on profits.

MACHINERY SUPPLIERS

1. Scan Machinery Private Limited, Thudiyalur, Coimbtore

2. M/s.Pat Parth Engineers Ltd., 3rd Floor, Shivam Complex, Bhuyang Dev
Char Rasta, Ghatlodia, Ahmedabad 380061

3. M/s.Khalsa Engineering Works Ltd., Howrah., M/s.Honest Machinery

Private Limited, Surat, Gujarat.

RAW MATERIALS

All major dealers of waste paper are in Chennai, Coimbatore, Madurai,

Trichy.

1. M/s.Arul Murugan Traders, 481-A, Ramanuja Iyer St, Chennai 600021.

2. M/s.Arumugam Nadar, 10, Devaraja Pillai Street, Chennai 600 045

3. M/s.Nainiappa Waste Paper Mart, 25 Jeenis Road, Chennai 600015.

4. M/s.KMA Wastepaper Store, 51 Munichalai Road, Madurai 625009

5. M/s.Sree Senthiammal Traders, 16 Narasimmapuram, Kamarajar Salai

Madurai 625009

1. COST OF PROJECT Rs.lakhs

Land 3 acres 15.00
Building 48.00
Plant & Machinery 220.00
Electrical 45.00
Other Misc. assets 15.00
Pre-Operative expenses 30.00
Margin for WC 29.90
Total 402.90

'2. MEANS OF FINANCE

Capital 175.90
Term Loan 227.00
Total 402.90

3. COST OF PRODUCTION & PROFITABILITY

STATEMENTS Rs.lakhs]

Years 1 2 3

Installed Capacity (MT) 6000 6000 6000

Utilisation 60% 70% 80%

Production/Sales (MT) 3600 4200 4800

Selling Price Rs.23,000per MT

Sales Value (Rs.lakhs) 828.00 966.00 1104.00

Raw Materials 342.00 399.00 456.00

Consumables 118.80 138.60 158.40

Power 77.35 90.24 103.13

Fuel 72.00 84.00 96.00

Wages & Salaries 53.28 55.94 58.74

Repairs & Maintenance 6.00 6.60 7.26

Depreciation 74.39 56.10 42.35

Cost of Production 743.82 830.48 921.88

Admin. & General expenses 24.00 25.20 26.46

Selling expenses 24.84 28.98 33.12

Interest on Term Loan 27.24 23.84 17.03

Interest on Working Capital 15.37 15.37 15.37

Total 835.27 923.87 1013.86

Profit Before Tax -7.27 42.13 90.14

Provision for tax 0.00 14.27 30.54

Profit After Tax -7.27 27.86 59.60

Add: Depreciation 74.39 56.10 42.35

Cash Accruals 67.12 83.96 101.95

4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 2.00 57.00 25% 14.25 42.75
Finished goods 0.50 30.99 25% 7.75 23.24
Debtors 1.00 69.00 10% 6.90 62.10
Expenses 1.00 1.00 100% 1.00 0.00
157.99 29.90 128.09

6. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax 59.60
= 5%
Sales 1104.00
Profit before Interest and Tax 122.54
= 23%
Total Investment 530.99
Profit after Tax 59.60
= 34%
Promoters Capital 175.90

7. BREAK EVEN LEVEL

Fixed Cost (FC): [Rs.lakhs
Wages & Salaries 58.74
Repairs & Maintenance 7.26
Depreciation 42.35
Admin. & General expenses 26.46
Interest on TL 17.03
151.84
Profit Before Tax (P) 90.14
FC x 100 151.84 80 x
BEL = = x
FC +P 241.98 100 100
50% of installed capacity