“The combination of three things is the prerequisites for bringing the products of your company at par with the international standards – the kind of technology you use, the quality of raw material, and the relevant skill set,” says Mr. Narain Jaiprakash.
Century’s rayon and/or paper grade pulp, and writing and printing paper unit were established in 1984 at Lalkua, near Nainital in the state of Uttarakhand. Its second paper unit, based on bagasse manufacturing, is adjacent to the existing pulp and paper plant at Lalkua. It was established in 1995, followed by recycle plant in 2004. The company also has a prime-grade tissue paper plant at Lalkua. The company’s fiber line (pulp plant), with a capacity of 1.62 lakh tonnes per annum, and multilayer packaging board plant, with a capacity of 1.8 lakh tonnes per annum, are near completion. Production has begun and is expected to stabilize in due course.
Paper Mart interviewed Mr. Narain Jaiprakash, CEO, Century Pulp & Paper to discuss the ongoing plans in the company. Century is investing INR 600 Cr (INR 6 billion) over the next 3-4 years in the pulp and paper business to strengthen its presence in the market place, said Mr. Narain. Excerpts:
Paper Mart: To start with, tell me the developments at Century over three years including the last financial year.
Narain Jaiprakash: We were inactive in 2012 as the company was making cash losses. For the last four years, Century is doing quite well. We are progressing fairly well. If we take the bottom line, the average growth has been more than 85 percent in the last four years.
PM: Probably Century is the only mill or among the few mills to have a base of all three raw materials. How does the raw material mix help you in producing the product mix that you have?
JP: Century is indeed at tremendous benefit because of the raw material base it has. We can use any raw material, be it wood, bagasse, or recycled waste paper. We can even make paper with the amalgamation of the raw materials that exist with us. The variability of raw material gives us an edge over other paper manufacturers in terms of cost optimization, making different products, and going for an innovation in grades which suit time and need.
You can design a single product with various kinds of raw materials. You just need to set the formulation at the end of the day to finalize the specifications. It’s not the raw material but the final specification of the product which needs to be met. The customers are not much concerned about the raw material a paper manufacturer is using. They are attentive to the specifications one is delivering. You can deliver those specifications with the various types of raw materials.
PM: Century also probably has the most comprehensive range of portfolio. Please elaborate a bit on that.
JP: At Century, we are manufacturing rayon grade pulp for the textile industry along with producing absorbent kraft paper which is going to the laminate industry. We are manufacturing paper out of bagasse, board, and recycled paper. Besides, we are manufacturing premium grade tissue, which I guess is only manufactured by us in the country. It is of 12.5 gm GSM. Multi-layer virgin packaging board is also produced by us. We have a complete product portfolio. You can say when one vertical is not doing well, another is supporting us. That’s an advantage with us.
PM: Century is among first few pioneers in multi-layer packaging board. How is the competition on that front? Also, tell us about the challenges you faced intermittently with regards to technology updation required from time to time.
JP: The first four-layer machine we bought from Voith and were the first to install that machine, and now TNPL will be the second one. Others are also experimenting with assembled kind of machines, but they do not have the exact kind of technology. Such board machines may be equivalent, but they can’t produce the exact quality what we are producing with Voith. Learning this technology is different as compared to other technologies. Since the machine was first of its kind, we, of course, got a little trouble to skill our manpower in the initial stage. The manpower is however skilled now and we are getting the return.
PM: Though tissue consumption has been very low in India, the growth is quite encouraging. What do you have to say about it?
JP: Tissue consumption is low but the growth is in the range of 10 percent. It’s the fastest growing segments in the paper category because it is connected with the hygiene of the people, and day-to-day uses in various chores. Therefore, the growth is more than 10 percent. Whereas the packaging board is growing at the rate of around 8-9 percent and paper is growing at 3-4 percent.
PM: Do you have any expansion plans for packaging board or any other grades?
JP: Yes, Century is investing INR 600 Cr (INR 6 billion) over the next 2-3 years in the pulp and paper business to strengthen its presence in the market place. The indicated sum is mainly to augment the capacity in paper, tissue, and board. The planned expansion in these segments is to happen phase-wise. The first-phase, starting in 2018, would take care of tissue capacity expansion owing to its brisk growth and much demand of Century’s exiting tissue products. In subsequent phases, from 2019 onwards, the work on paper and board expansion would begin.
PM: Tell us about the new additions to your product basket.
JP: We have done many new product launches. Innovation, you can say, is our driving pillar. We have replaced somewhere around 18-20 percent of our old products with the new ones. This is giving us a competitive edge in the market over our contemporaries. Whatever new we are launching in the market, it is giving an extra mileage to us in terms of the top-line and the bottom-line. We have launched few new products, especially in board. We have some new products in tissue as well – high-strength tissues, which are going for the sanitary napkins and few Japanese companies are permanent buyers from us.
PM: Four years back, Century was financially on back-foot and a then turnaround has been effected to make the company back on financial viability. Tell us about the factors that have helped Century in the turnaround.
JP: There were multiple factors responsible for this turnaround. The market reach and the customer affinity were the biggest reasons. The customers at the end are driving the main show. Besides, there was a lot of overhauling of system and processes. A lot of work has been carried out to improvise the overall organizational behavior for improving the human resources and outcome thereby. Also, a lot of work has been carried out in reducing manufacturing cost as well as in augmenting the efficiency. Of course, innovation and customer affinity were the leading factors. Whatever we have done at the backend has been accepted by the customers. The customers have received well each of our newly launched products. As a result, we achieved the present situation.
Moreover, the dry port has come at Kashipur. There is a dry port at Moradabad as well. Earlier, we were shipping out goods from Mumbai; that’s now possible either from Moradabad or from Kashipur. This has so far given us a substantial cost saving. There were a lot of things which were carried out to reduce the cost in terms of logistics, manufacturing cost, buying, manpower cost, and chemicals. Wherever there was a scope, we tried to bring it back in order to add it to the bottom-line.
PM: On cost minimization front, what steps did you implement to improve your customer reach by setting up quick conversion centers in various parts of the country?
JP: Yes, we have opened three conversion centers; they are in Baddi, Kundli, and Bharuch. The major requirement of the customers was the short delivery time of the board. Earlier the delivery time was somewhere around 21 to 40 days. With these conversion centers, we have it brought down to minimum 24 hours and maximum 96 hours. That was the only requirement of the market. Whenever it takes a long time to deliver the products, everyone needs to hold a lot of inventory in their warehouses and that incurs cost.
Moreover, once you are keeping inventories at the conversion center, the customers also become assured about the availability of material at the center. In the time of some emergencies too, the customer need can be met easily. This has really helped us in securing the trust of customers associated with us. Moreover, it has given us a good mileage in terms of volume. We have immediately moved our board volume in last four years. In 2012, we were selling somewhere around 2,500 tonnes and today, we are selling 14,000 tonnes. The capacity was there, but it was not getting utilized.
PM: Tell us something about Century’s activities on environment compliance and sustainability side.
JP: We have done a lot on environmental compliance. We have spent around Rs. 110 Cr for upgradation of our liquid effluent treatment plant, air discharge, and solid waste disposal. Right now, we are quite comfortable. We are complying with all the norms. As we are in the Ganga basin area, the compliance pressure is too high. Whatever we are discharging, it’s within the norms. All our outflows are connected with the online monitoring system of CPCB and the State Pollution Control Board. The things are in good shape right now.
PM: Century also exports a substantial amount of production to overseas countries. Is there any new addition to your export market?
JP: We are exporting around 3000-5000 tonnes/month, which is quite substantial. We are adding customers from the UK and US; especially the packaging board is getting accepted in premium markets of UK and US. These are our new additions besides the Gulf and African countries. Our product quality is at par with these countries.
PM: What has been instrumental in making your product at par with their products and is accepted in those markets where the quality is already there?
JP: We have the same technology and machines which the other countries are using. It was just the skill gap. Now with the continuous training and imparting skills, the team is equipped to make that kind of quality products has been accepted. The combination of three things is the prerequisites for bringing the products of your company at par with the international standards – the kind of technology you use, the quality of raw material, and the relevant skill set. The kind of attitude you work with is also required. We deliver the combination of all these things along with the international quality. We have got very strong processes. That is taking care of the system on a continuous basis.
PM: In the last four years, Century has done a lot of work on everything from the supply chain and manufacturing process to environmental compliance. Did you face much difficulty in the way?
JP: I think it is not much difficult. You just need to plan the things. You need to set your priorities right; decide what you have to align first and what a little later, and keep doing that with passion and motivation. You need to continuously train your team to meet all the expectations, which are upgraded every day from the market or the customer side. The innovation was the drive, which has helped us in understanding the expectations of the market as well as our customers. Based on that, we have upgraded our skills in terms of manpower. And, we have upgraded our systems, processes, and our equipment and machines.
PM: Which is the one thing you would like to change immediately for the betterment of the pulp and paper industry?
JP: It’s a difficult question to answer, but my message would be that the industry needs to change its thought process. We have to start thinking out of the box. Thinking a little differently is what I think is missing from the industry. The day we will start thinking out of the box, the shape of the industry would become different from what you see today.
PM: Tell us about your views on the growth outlook of this industry in coming 5-6 years.
JP: I am anticipating a good growth especially on the tissue side. Also, I am anticipating a good growth in packaging; it may be a recycled one or virgin packaging. The specialized paper segment is also going to grow. Writing and printing paper is growing at a slow speed, which is around 3-4 percent. It surely has a slow growth, but we can look for some innovative products on same machines and look at the future prospects in a positive way. That is my anticipation for the pulp and paper industry.
PM: You recently came up with a video ‘Life without Paper’. Can you tell us more about it?
JP: This is a kind of message to the society to dispel a lot of myths about the paper industry. It’s a way of communication to the society that without paper it is difficult to think. This is a message to the society that you still cannot live without books or textbooks. It’s also about giving employment to the farmers and creating carbon balance. Paper is not being manufactured by forest tree but the crop tree having a life cycle of 4-5 years. Thus, this video is there for the people to understand the message.
PM: Any final words on behalf of Century.
JP: Yes, we are there to serve the rising expectations and needs of our customers and we are confident of our abilities to do so. I am assuring my customers that we are driving our customers with the new thought process and we will be up to their expectations.