On the recession, and how it affected the paper industry
With the initial rise in prices and demand, new projects and capacities were being launched. Enamored with an optimistic demand growth, companies invested in adding paper capacities enthusiastically and thus were unprepared – psychologically, financially or physically for the sudden recession, which has magnified the problem. Even though our demand growth has shrunk, our economy is still growing. In developed countries, the newsprint and media related papers scenario was already on a negative track, with capacities getting suspended or shut, and the situation was worsened by the recession. Though selling off our existing production in these times is difficult, new capacities are being bunched. However, there will not be a considerable loss due to this.
Mantra for survival in difficult times
Growth may not follow an expected straight curve; there will be period of lulls and dips, which every Indian company should prepare for by being globally competitive. Even though one might have enough orders for coming months, he should think of global competitiveness as a contingency plan. There will always be outlets for paper. Manufacturers should be prepared, as they will be compelled to export unless willing to sacrifice huge drop in prices.
Mr. Gopalaratnam strongly advises: “Global competitiveness encompasses three aspects of business: quality, cost-pricing, and environmental compatibility. These are good times to improve things; companies will have to observe their organizational set-up to manage costs, eliminate wastes and improve operating efficiency.”
On views & importance of the safeguard duty
Indian paper converters will consider the safeguard duty unfair. However, overseas papermakers, unable to sell within their normal trade channels, will find it advantageous to use India’s low rate of duty. Reckless imports will affect the domestic manufactures and create deficits in our forex reserves. Though the safeguard duty won’t be a catastrophe, the consumer’s reaction at being deprived of paper at lower prices is quite understandable.
On Seshasayee’s expansion
In January 2006, Seshasayee commenced implementation of the Rs. 350 crore Mill Development Plan to streamline the company with the Charter on Corporate Responsibility for Environment Protection. This project has made the company self-sufficient for its wood pulp requirements. Besides this, a new model recovery boiler, and a Black Liquor Evaporation Plant, A lime Re-burning Kiln, and a Turbo-Alternator Set are also being installed. Another important aspect of this Plan is the RDH System, a sustainable solution for our energy needs. It enables efficient energy consumption in the pulp cooking process, and produces pulp with better strength, better features, lower kappa and lower chemical consumption.
To expand our capacity, we had initially signed an MoU for a used paper machine with a Canadian company. However, due to an initial delay on their approval, and then the sudden recession, we have put this decision on hold.
On Seshasayee’s substantial exports, and losses in 2008
We were one of the earliest to export, and did fairly well, exporting about 15%. However, due to last year’s low prices, we had to curtail exports to 5-6%. We are small in capacity, and under no compulsion to export. Secondly, with a huge product portfolio, we have the luxury of choosing a destination for marketing which can realize higher profits. Seshasayee’s 2008 fall in profits was caused by the adverse exchange rate, and the runaway prices of imported coal. This year, we plan to export 10% of our production and minimize losses. Neither do we want to lose the market, nor do we want to crowd the market with new capacities creating pressure on prices.
On Seshasayee’s innovations and CSR, and a combination of the two
We are the first to treat waste water for irrigating sugarcane fields. For the past 25 years, we have been making and selling sugar, and using the byproduct bagasse as a raw material. We have also been working for the past 15 years to develop a gasification system to convert black liquor into heat and power. We are also applying biotechnology, to organic farming, to develop fertilizer grades, and organic fertilizers.
Commenting on passion for paper and technology
We began traveling widely when we were only 5 years old in the industry, and thus have been exposed to a lot of new technology. We try to adopt, and then adapt this technology, to improve energy consumption, raw material yield or the environment.
This concept of improving technology permeates our business and thinking; if something is worth doing, we should do it really well.
On the importance of environmental sustainability
For India, a country slowly becoming a newspaper publishing hub, it is crucial. The green aspects of paper and pulp have always been of emphasis at Seshasayee. Our Environment Management System has an ISO 14001 accreditation. Apart from installing an RDH system we have Power and Recovery Boilers equipped to electrostatically arrest dust emissions. The company has installed and operates an Anaerobic Lagoon, for high BOD liquid effluents and a Secondary Treatment System, for total mill effluent.
The Alchemist of Bagasse
Paper Mart pays tribute to the pioneer Late Shri S. Viswanathan on his 8th death anniversary, for his contribution to the industry.
Quite a few know the Late Shri S. Viswanathan as the first industrialist to have produced paper & newsprint from bagasse, but only a few people know him as a labour lawyer and freedom fighter. He was known as SV in corporate circles.
After defeating pioneer industrialist Shri V. Seshasayee in labour court, SV was invited on the board of his company Tiruchi. Though his labor-ethics made the decision difficult, he was persuaded by friends to try this for a year. SV might have gone back to law within a year, but before the year was over, the ailing Shri Seshasayee breathed his last on Oct.19, 1958. He was satisfied about his choice of candidate to handle the house of Tiruchi. Indeed, SV pursued what Late Shri Seshasayee had been planning in his final days – to firstly set up an electro porcelain unit to use Neyveli clay, and a paper mill whose license was pending. He went on to promote four major units in a short span of four years.
Seshasayee Paper & Boards Ltd. (SPB)
With admirable foresight, he sought to meet the constraints of insufficient forest wood for making paper, by using agro-waste. He started a paper mill with bamboo because he was aware that bagasse route would be difficult. Thus, in November 1960, his 20,000 tons paper mill rolled out its first reel.
SV for Bagasse
The SPB experience encouraged SV to put up a bagasse based newsprint mill for the Tamil Nadu Government, which evoked resistance. This only emboldened him to elevate bagasse from waste to wealth, audaciously defending bagasse with arguments about the 40 year maturation period of bamboo varieties versus bagasse’s annual availability.
Overseas trials to use bagasse for paper pulp which had begun in 1856 were unsuccessful due to the fiber’s heterogeneous and short structure, compared to bamboo or wood. However, SV was confident of vigorous research and experimentation in improving the initial work of bagasse enthusiasts.
Other challenges lay ahead. Sugar mills were wary of parting with bagasse, their alternative-fuel. Though SV had agreed to supply alternate fuel to the participant sugar mills, they refused, following which he set up Ponni Sugars and Chemicals in 1984, as a backward integration to supply bagasse to his paper mill. Due to a possible cost increase in bagasse produced paper, SV successfully obtained an excise relief proposal for bagasse, elevating it to the status of raw material.
Tamil Nadu Newsprint & Papers Ltd. (TNPL)
SV’s desire to set up a bagasse based Newsprint Mill for the Tamil Nadu Government went back to 1965, but the engineering needs and capital cost estimates couldn’t be met due to a major fall in Rupee value. SV waited for 15 years.
In June, 1976, R.V. Subrahmanyam, Adviser to the Governor, looking after the Industry portfolio requested SV to propose an industrial venture. SV offered to do an approach document for a bagasse based newsprint mill, based on a Cuban version.
In 1977, SV successfully petitioned M.G. Ramachandran (MGR), Chief Minister, for a Rs. 100 crores bagasse-based newsprint mill project. TNPL was incorporated with SV as Chairman. Following political fluctuations, SV resigned, only to be reinstated as Chairman, TNPL.
SV’s team undertook intensive efforts, including interface with international mills, following which TNPL was able to achieve a bagasse based 300 TPD newsprint/240 TPD fine grade mill, with an outlay of Rs.230 crores, in 36 months. The company rolled out quality newsprint on Oct.13, 1985 with imported pulp. Newsprint from bagasse was made later. World Bank hailed TNPL as the most successful unit of its funding.