Mr. S.K. Bangur, a person with a philosophy ‘simple living and high thinking’ has achieved strides in his industrial span. With the vision to expand and achieve the next level, West Coast Papers initiated a noteworthy project for capacity & technology enhancement. Along with this they have raised the bar for the paper people. This next chapter resembles the forward thinking of Mr. Bangur, the Chairman of West Coast Papers. Here are the excerpts of the interface with Mr. Bangur regarding the new project and his stand on industry scenario.
West Coast Paper has initiated a model project for the country with a huge investment of Rs1300 crores, to make themselves sustainable in terms of scale, technology, superior product quality, wide product range and environmental compliance. The project comprises of 725 TPD fiberline from Metso, 140,000 TPA paper machine from Voith, converting line from Bielomatik, chemical recovery plants from Enmas Andritz, around 40 MW power plant from BHEL, AFBC boiler from Thermax etc. The pulp plant will be operational by September 2009, while the paper machine and the power plant will be functional by January 2010.
Ideology behind adoptig the best technology
This technology will give us a stand in global competition. Paper consumption in India is greatly influenced by education, FMCG and pharmaceutical segments. This is a big demand driver for large paper companies that have consciously invested in state-of-the-art technology in the recent years. And thus to achieve higher efficiency, superior product quality and to create an environment friendly company we selected the state-of-the-art technology.
Benefits of capacity expansion
This expansion will give us an upper hand in the global competition as it results in better economies of scale and reduction of operating expenses. Moreover it will provide us the flexibility to improve product mix by adding high end products and also enable us to aggressively focus on copier paper segment.
Raw material is a grey area in our industry and if we don’t have constant availability of raw material then there is no use of latest technology & machines. With the expansion programe, our raw material requirement is expected to increase to 9 Lac MT per annum, from the existing 4 Lac MT per annum. To ensure consistent supply of materials, we initiated Core Plantation Scheme within a radius of 250 kms of Dandeli by partnering with local farmers. We focused on promoting and using waste land for hi-tech plantations of pulpwood trees such as Eucalyptus and Acacia. Today, an area of 16100 acres of degraded wasteland is covered under Core Plantation Scheme. We have plans to cover around 1 Lac acres of land under afforestation in a period of 5 to 6 years. Post commissioning of the new fibreline, we would also be able to reduce 10% of our raw material requirement. The paper industry needs policy directions from the Government as far as availability of land is concerned for raising plantations, which will meet the raw material requirement of paper mills on sustained basis.
Effects of recession
Our company was hardly affected by recession as all the finance was arranged before the recession hit the Indian market and thus we were able to get finance at nominal interest rates. On the contrary, recession proved to be a benefit for us as the prices of machine were reduced to certain extent. Indeed the demand for paper has dropped a bit but we foresee that there would be an increase in demand in future i.e. by second half of 2010.
Challenges faced during expansion phase
Setting up the new machine along with the existing plant without affecting the ongoing production was quite a difficult task as to set up heavy machines, ample space and massive civil work was required. Overall additional care has been taken to minimize the downtime cost which delayed our project.
Indian paper industry: The Perspective
I foresee a growth of around 3% to 4% in the Indian paper industry. Moreover the paper industry in India is fragmented on a large scale and comprises of an assortment of medium and small mills, which increases the unorganized competition in the market in terms of price and quality. Surviving in the market would be very difficult for small capacities as the market price, cost and meeting environmental norms will create a problem. On the whole it will be the survival of the fittest in the industry. The paper industry is poised to mature with the economic development owing to drivers like educational programmes, improved standard of living & increase in corporate activities.
Over capacity is a phase through which every industry sooner or later passes. It’s like a cycle which prevails in the market, but after some time gets diluted within the industry. There is no single reason, it is a combination of different factors taken together, like expansion by most of the paper companies, increasing size of small mills, an un-organized sector leading to flawed demand projections.