IPPTA Zonal Seminar 2017, with its exclusive focus on packaging paper, was organized on August 4-5 at Aurangabad. The focus on packaging paper was naturally mandated by burgeoning packaging paper demand, growing at double digits in recent years.
The pulp and paper industry’s growing attention on packaging segment products necessitated the organization of focused events wherein issues, opportunities, and trends of this segment could be systematically discussed. Moreover, the increased demand of packaging paper grades also coincides with increased pressure on manufacturers with regards to quality, capacity, and technology. The IPPTA Zonal Seminar this time was unique also because of inclusion of customers and customers’ customers, i.e. the end user to lend their perspectives to the discussion and suggest what mills can do to meet the newer requirements generated by the packaging industry.
Besides introductory inaugural session, broadly setting the framework of the zonal seminar, the two-day event saw five exclusive sessions, dedicated on specific issues of pertinence. These sessions largely discussed in exhaustive manner the issues and topics such as readiness of the paper industry to handle emerging needs of packaging, packaging developments and future needs, challenges in collection/ gradation of recycled fiber in India, etc. The delegates expressed their pleasure over the issues covered in the seminar and said in unison that such exclusively focused events would surely pave the way for better, efficient, and growing packaging segment of the industry.
Introducing the objectives of the seminar, Mr. M. K. Goel, Secretary General, IPPTA, said, “The personal effort of Maharashtra Paper Mills Association is praiseworthy in making us all gather here. There are around 45 paper mills in Maharashtra producing 1 million tonne of paper, with most of them manufacturing kraft papers. The adjoining state of Gujarat manufactures about 3 million tonne of paper, out of which more than 2 million tonne are kraft paper. This data amply vindicates that the kraft packaging is growing leaps and bounds.”
“There are a few different things that we will see this time in IPPTA’s zonal seminar with an exclusive focus on packaging grade paper. We decided to go a step forward and have invited our customers’ customers. A session on wastepaper and recycled fiber has been conceived to underline the significance of recycled fiber and how we can optimize the collection and gradation of this fiber. The session is dedicated to all those kraft mills, which use wastepaper as their raw material and for them it is very difficult to get a sustained quality of wastepaper.”
Fast Changing Packaging Industry Landscape
Mr. Manish M Patel, MD, the South India Paper Mills Ltd., Karnataka was invited to the seminar for delivering the keynote address, wherein he underscored the rapid growth made by the packaging sector and said that IPPTA has simply put the focus on the packaging segment to be a strong partner of that growth. “The technical inputs need to be oriented towards the market, and that is the kind of focus I would like to bring in this particular session today by focusing on what our customers want from us,” he said.
He explained, “Our customers are before the end consumer. The end consumer is served by people who supply them packaging material and paper is a raw material for them. The end users are fast moving consumer brands or manufacturers making white goods, electrical goods, garments, fruits and vegetables and engineering products. These are the broad segments that use corrugated packaging in a big way. The largest segment of demand, i.e. 60-65 percent for the corrugated boxes is the FMCG sector. The demand for corrugated boxes in this segment is growing at 8-10 percent per year. The total production of the corrugated boards and boxes is around 8 million tonnes in 2016-17. The approximate value of corrugated box output is INR 20,200 Cr.”
Mr. Patel also pointed out that the corrugated box making industry and its supplier industry (kraft paper) are highly fragmented. “There are about 15,000 small-scale, large-scale, and micro-scale corrugated box making units in both organized and unorganized sectors. On the other hand, there are about 400 containerboard kraft paper manufacturing units with installed capacity of 7.5 million tonnes per year,” he said.
Mr. Patel underscored two historical factors contributing to extreme fragmentation and low technology in the industry. He said, “The first one is the reservation of the corrugated box making for the SSI with an investment cap of INR 10 million till 2008. This resulted into low capex entry barrier, proliferation of low productivity, low output and low quality box making facilities across the country. The second reason is the structure of the excise duties. ED/CENVAT on paper was based on raw material and mill capacity. Prior to 2006, mills with 3500 tonnes/year were completely exempted from excise duties. For the production above 3500 tonnes/year, ED was 16 percent. Corrugated boxes were exempted too from charging ED/CENVAT. So, there was an alignment of exempted people and non exempted people.”
“Now, much of this has changed. The industry is changing rapidly. The box making industry is also changing rapidly and it is in flux. After de-reservation in 2007 and removal of caps, investment is going on in this industry. Prior to 2007, the industry was completely dominated by semi-automatic board making facilities. The process was very discontinuous and of low productivity. But, with the investments caps removed and increasing demand from the end users, the corrugated board making process is now automatic and continuous. The degree of sophistication of these machines is based on the amount of investment. But generally, almost all FMCGs have specified to buy boxes made from automatic plants only.”
Mr. Patel provided further data to show how the semi-automatic packaging box manufacturing units are still the largest consumer of packaging paper produced by mills. “According to the latest statistics, we have around 400 manufacturers with automatic (continuous) board making facility. Still, about 12000-15000 manufacturers use semi-automatic process. If we look at the output share, the automatic plants in our estimation are consuming 45 percent of the total paper and 55 percent is still going to the semi automatic.”
Mr. Patel also was able to exhibit a pattern of new investments in the packaging box making units in certain geographical areas of the country. “Around 35 percent of the new investments are in North India as lots of these are Greenfield investments because of the tax concessions given in the hilly states like Uttarakhand and Himachal. 30 percent of the investment is in the West India, 25 percent in the South, 6 percent in the East and 4 percent is in Central, of the total 400 plants. The geographic distribution is in this pattern but this is also likely to change with the new GST regime,” he said.
The changes in the box making industry are driven by trends brought by end users, Mr. Patel opined. “With the new geographic locations based on changes in taxation policies (like implementation of GST), the customer will now look to be nearer to the market or logistically better off. Another big factor is that the brand owners are now going in for own facilities. This will lead to higher capacity, more productivity, and automated packaging,” he said.
“With the advent of GST, new investments by large FMCG brand owners are likely to be made based on logistical advantage or convenience and better regional presence. Also, the e-commerce market is growing. Yes, it is an area which increases the consumption of packaging but we are not anywhere near to US as yet. The corrugated box vendor has to upgrade his box and box making capabilities to meet the emerging requirements. The manufacturer has to make changes in terms of consistency of strength and aesthetics and try to reduce wastage and downtime on packaging lines,” said Mr. Patel.
Production, Quality, and Environment: A Much Needed Synergy
Mr. Pawan Agarwal, President – IPPTA recounted how his journey started with manufacturing of kraft papers and what kind of problems then existed in the kraft paper production. “Those were the hard days and hard times. And, I am amused to see same problems persist even today. The same sort of disconnect between manufacturers and consumers, or between end-consumers and brand owners, still prevails. We have to think seriously about it. Times are changing and times are challenging; but in this challenging and changing times we really have a sea of opportunities,” said the IPPTA president.
Mr. Agarwal shared the instances of disconnect with the customer while producing packaging grade paper. “There is hardly any concept of customer delight in our mind. What we think is how we can produce more without investing much in the machine and the plant, or how we can really produce more with the existing infrastructure, or how we can squeeze more with whatever limited technology we have,” he said. This kind of manufacturing practice has an evident impact on overall quality, environment, and efficiency parameters of mills, pointed out Mr. Agarwal.
He further noted, “The time has come when we need to explore the newer opportunities and justify the actual need of the customers. I fail to understand what is stopping us to do so! However, we all are conscious that we require changing the way we are making packaging paper, especially the kraft paper. There are many mills, I know of, who are achieving zero liquid discharge by simply closing the circuit and not employing the required technology. They are compromising hugely on the quality of the product. The technology is the right answer for most of the problems of kraft paper mills and of end-consumers. In a kraft paper mill, we cannot compromise with the production for sure and simultaneously we cannot think of compromising on the quality part and ignore our environment. All these three we have to keep in mind and only then we can form an organized strategy. I therefore say times are challenging but opportunities are there.”
Expressing the paper industry’s cumulative concern over environment and various sustainable practices, Mr. Agarwal said, “We really cannot ignore our environment. The paper mills are not in the good books of any of the environmental agencies, whether it be governmental or non-governmental, on account of various reasons, viz. the amount of water we consume, the amount of waste we generate, and the amount of apathy we show towards the environment. The mills have realized it, especially in the northern part of the country. The western part is conscious as well of the very fact. But in the northern part, because of the Ganga river basin movement, we have been forced to realize this that it cannot continue further.”
“The mills now are in panic owing to stringent regulatory regime over environment and have started to reduce their water consumption and environmental footprints. The quality might suffer in the shorter terms but I request the customers that they should emphasize only on those parameters which are really required for a kraft paper manufacturing mill. We should not look forward to something of high level which we don’t require. The customers should be logical when demanding so many quality parameters from kraft manufacturing companies because ultimately environmental preservation is for all of us. For that there has to be a dialogue between the two. This is the reason IPPTA has consciously taken the decision to involve customers and end-customers at this platform with us and start some serious deliberation on the requirements.”
Mr. Agarwal hoped that IPPTA would provide the right platform for judging the right kind of technology, not only for the machines but so many other areas of kraft manufacturing plant. He also spoke on how the yield of wastepaper can be increased in the wastepaper based mills. “We say that raw material is a sparse commodity therefore we need to increase the yield of whatever is available to us. If we look at our pulpers, there are so many kinds like low consistency, high consistency and so on. We have got one solution for all. If we have one pulper then we are using that pulper for all kinds of raw materials. Today, we have to explore the technologies like drum pulper, in which we can use any kind of waste paper. The energy consumption is 50 percent of the conventional pulpers. In many cases, the yields are much more. The cross yield is really a factor but we can consider not only the top manufacturers in the world but also some of the second best in the East European countries or in China. There are so many domains which can really be touched upon by kraft paper manufacturing mills,” he said.
Concluding his speech, the IPPTA president said, “On the environment compliance part, I am pretty sure that we are going to see zero liquid discharge in a wastepaper based kraft paper mill within two-three years.”
Technology Upgaradtion, R&D, and Environment Sustainability: Keys to Future
Mr. Sunil Agarwal, President, Gujarat Paper Mills Association said, “I have been associated with the paper industry for the last 20 years and I still see the industry using the same equipment which it was using 30 years back. There hasn’t been any upgradation on the technology side. The machines we are using today were used by Europeans countries years ago. The industry needs new technologies suitable to current times. We can definitely contribute to the ongoing R&D and shall receive a fruitful output in the form of resulting inventions.”
Mr. Nandkishor L Kagliwal, Chairman, Nath Group of Industries said how IPPTA had been doing a commendable job in sensitizing the paper industry towards problems and more particularly to issues related to technology. In the coming years, it is technology which is going to define success. Our manufacturing abilities in terms of equipment, plants and machinery have though come a long way, we still need to focus on our research and development as technology is something which takes decades to develop. We need to have institutions where we work on process technology, process development based on the requirements of the consumers. I entirely agree that the survival is going to depend on three factors, i.e. quality, cost and service. The consumer is going to be demanding. He would like to get the best quality in least cost and when it comes to service, it has to be yesterday, i.e. before time; it doesn’t have to be tomorrow.
“We also have to be an industry which is environmentally sustainable, socially acceptable and at the same time economically profitable. This is going to be a challenge. Another challenge is the manpower. You have so many opportunities in different fields that it is difficult to find technically qualified people, particularly at the grass root level, the people who are properly trained, equipped and motivated to work. Most of the paper mills are located in hinterlands where there is hardly any social eminence; the working conditions can’t match what an IT company provides; therefore, this is another challenge of training people and ensuring that they remain motivated. What we could do in a country as large as India that we could build as many training institutes as possible. Every region must have an institute providing various training programs in the form of refresher and diploma programs. This is one area where the industry has to concentrate.”
IPPTA’s Future Vision: Bio-based and Circular Economy
IPPTA has envisaged a future vision combining together all conceivable issues and opportunities that the Indian pulp and paper industry has with regards to production, technology, quality, environment, etc. Speaking on the future vision, IPPTA president Mr. Pawan Agarwal said, “A committee has been formed with three members – Mr. Ved Krishna, Mr. Neehar Aggarwal and I, to decide the future vision of IPPTA. We formed another core group with Mr. Ved as the head and so many others from outside the industry. We have formulated the vision of IPPTA and are going to have another meeting sometime in October where we will be taking up some other issues as well. Probably, the next year in Delhi, we will be presenting the whole new IPPTA.”
Mr. Ved Krishna, Vice President, IPPTA sharing details of the future vision said, “Just before I read the vision I think one very important information is that not only have we formed the vision document, we have gone ahead and formed an advisory committee/board who will actually take this vision forward. We have amazing people on that board including Mr. Manish Patel and Mr. Pradeep Dhoble. Mr. Dhoble, who was heading ITC, is chairing the board now.”
“This is a great opportunity for us to implement the vision document and modify it as time comes and hopefully we will lead the industry to a place where it will become much more relevant in the worldwide space. So, the vision that we have formed to take the industry forward is that we shall provide a platform for the interaction and development of technologies in the pulp and paper to capture opportunities in the bio-based products in circular economy. It is basically putting the pulp and paper in the space of bio-based economy which includes all the environmental ideas we have talked about and widening the spectrum to look at the end of life which is the circular economy. I hope that we keep on sharing about the vision a lot more.”
Paper Industry’s Readiness to Meet Emerging Packaging Needs
In the seminar, an entire session was dedicated to fathom the readiness of the paper industry to meet the emerging needs of the packaging industry and the responses were also elicited from end consumers. Responding to a question whether the paper industry is able to meet the customer’s specifications and needs, Mr. Deepak Joshi, Vice President (RM), Garware Polyester said, “As a customer, I will come straight to the point. When we communicate with the supplier, we tell them what kind of quality we want from them for the boxes. I am not from the industry but my requirements related to a box are aesthetic sense, appearance and quality, which I am not getting from Indian paper mills. As a customer, I would like to tell all of us that we need to grow to that kind of level in the industry where we can serve our manufacturing for the benefit of the industry.”
There is substantial import of kraft liners in India, which indicates a sort of quality deficit home-manufactured kraft liners. On asked why customers are importing kraft liners, Mr. Ajay Patel, Executive Director, Laxmi Board and Paper Mills Pvt. Ltd., said, “I think over the last six months, the import of kraft liners into India, as compared to few years, has dropped quite a bit. There are mills now making good kraft liners, virgin top-liners and high strength paper which are consistent in strength and shape. It is not that paper is not available in India. Many mills are doing high standard jobs. Of course, the challenges are always there; shape variations do occur; but we will try and source intelligently to overcome this.”
Answering to whether Indian paper packaging comparable to International packaging, Mr. Rajkumar Mathur, Assistant General Manager – Materials at Mahyco said, “Coming from the agricultural market, we basically look for strength. The packaging should be compatible enough to go in the ships and then we look for sizes. That is the most crucial point for us. The seeds being delicate require proper protection and for the look we are using purely kraft paper boxes. Only the text information is there on the boxes because in our case outer box is just to carry the things. It is not being displayed anywhere. What is displayed is the product. We convert all those boxes into kraft paper and we get rid of the shape variation. We make the box so sturdy that it would not get damaged from inside.”
“Basically, now we are looking for performance based specification. The industry trend is moving forward. We are getting many things in the form of good quality material. If we talk about corrugators, they say that they will give the performance specifications. We need our BCT and size requirements to be met.”
Mr. Nishikant Jain, MD, Sydler Remedies Pvt. Ltd. said, “Initially, we were going to the customers, convincing them to reduce the weight of the box and go for the good strength boxes. The customers were somehow not happy with that and thought that there is some price benefit to the supplier. But, they are slowly coming to see our point. They are now realizing that it is better to go for light weighted boxes with good strength.
Mr. Manish M Patel spoke on what needs to be done for automatic packing at customer’s location. He said, “We work with several brand owners and look at automatic case lines. The most important thing is the corrugated panel box has to be very flat and every slot should be very accurate, especially when the flaps are opened or the flaps are closed. Conventionally, the industry is having a die-cutting-solution for that but it is not an option when you are looking at performance based packs. The die-cutting solution inherently compresses the board. Accuracy from die-cutting is also limited. The flap joints need to be accurate. When you run your corrugators and auto-plants, your boards have to be absolutely flat because if you put it into a slotter and the board is curved, the slot accuracy and the crease line accuracy are compromised. The board has to be flat and for that the paper has to have the right kind of moisture profile.”
Mr. Prakash Rathi, MD, Kaygaon paper Mills Ltd. said, “There is a shortage of fiber in India and we have to accept this fact. And, honestly, the problem will remain so even in the future. This is a challenge for our industry that whatever fiber which is available, we have to make the best out of it using our knowledge and technology and give the best product. As our customer industry is developing, corrugators and paper mills are also developing. We hope in coming times we would be able to meet packaging industry’s quality specifications to its satisfaction.”
Answering how a manufacturer can standardize products to the needs of the customers, Mr. Pawan Agarwal said, “I think more than standardizing and showcasing the products, there should be several permutation and combination. What I feel is that there is a need for local paper associations to sit with their converters and customers once in a while and try to understand the end consumers’ requirements and work towards standardizing our manufacturing processes rather than standardizing the specifications. We can definitely deliver as per the expectations. We can definitely maintain the moisture profile; we can deliver strength and aesthetics; but the whole idea is making commercial sense out of it.”
“The biggest issue is the shorter deckle of the Indian machines. This is the biggest hurdle. Because of that we are not able to standardize. Those who have 2.5 m of machine have demands from corrugators of 1.8 m, 1.6 m and so on. It is becoming a hurdle to maintain a balance between the two segments (automatic and semi-automatic), which the paper mills has to overcome.”
Summarizing customer’s point of view for corrugated boxes, Mr. Kirit Modi, Chairman & Managing Director, Horizon Packs said, “Of late, the end consumer is becoming more and more demanding in terms of quality and service. Fortunately, corrugated box industry has come a long way to deliver those kinds of boxes and because of that they are comfortable to move to RCT from BF and ultimately to performance based packs. The packaging industry has to now sit with paper mills actively to get the right corrugated paper because the technological leaps which the corrugated box industries are taking as compared to the paper mills is much faster and bigger in scale. The investments level has gone up in box industries. The demands of the end consumers and compliance levels are becoming more and more important. All these matters are needed to be conveyed to the mills.”
Mr. Nishikant Jain said, “This concept of box making is now changing from customer’s perspective as well. Initially, the thought process was like more weight more strength. Now it is changing; a good strength box does not need to be of more weight. We are convincing customers to go for strong yet light-weight boxes. However, I would like to convey the one issue we are facing with the modification of paper, i.e. the cracking issue of the paper is increasing. It is the side effect of the modification. With size-presses coming in the mill, the cracking is increasing. It has to be remedied.”
Mr. Anil Loya, Managing Partner, Akansha Packs said, “Customers are not ready for RCT based boxes. In fact, if I talk about semi-automatic plants and their customers, they are still not that educated. Interaction between the customers and the corrugators is required. As on today, there still is demand of BF-based boxes.”