Recently during Mr. Suresh Kilam’s (Executive Director, Asia Pulp & Paper) visit to India. We interacted with him about his views on the Indian Paper Industry & latest happenings at APP. These are the extracts of the dialogue.
What are your views & plans for the Indian paper industry?
In 1993-94, I was the one who acted as a mechanism in bringing the revolution in the Indian paper industry. That was the time when India was consuming around 3-4 million tons of paper and paper board and today it’s about 9 million tons. In future, I can foresee that in the next 5 years, around 7-8 million tons additional demand would be added which will elevate 9 million tons to about 16 million tons. And that ignites interest for our company to have presence in this market. We find potential to export to India as we have our own raw material so economically it is viable, but at the same time we are not dependent on Indian market for our capacities.
Indian market has a scarcity of raw material. If somebody wants to expand in the Indian paper industry they are required to expand on the unconventional raw-material. The availability of hard wood is not ample. Moreover, it’s not feasible for India to import raw material so they have to depend on the imported pulp. The pulp is volatile therefore Indian paper companies would not be able to produce paper at economical cost. So you will see lot of other countries exporting paper to India.
For the wood free uncoated paper we are not looking to export into this market as there is excess of capacity in India. For India to be a net exporter in the wood free uncoated segment it has to compete with the global players like us. Our intensions are very clear we don’t want to disturb the market. We want to make money and want others also to make money. So, we are basically functioning as a normal global player.
Brief outline about APP and it’s new capacities?
We are Asia’s largest company producing combined pulp, paper and packaging capacities of over 10 million tons in Indonesia and China both. We initiated one project in Hainan, of about 1.6 million tons of coated board, it’s the largest paper machine in the world and it will start the commercial production by May 2010. With this, the total capacity of the coated paper will be of 5 million tons, which again makes us the largest in the world. Further we have started a BCTMP pulp mill in Guangxi in China, producing 650,000 tons of mechanical pulp. A board machine of 1.5 million tons capacity has been installed there, which will start in 2011. A plant with a production capacity of 40,000 tons of wood free coated paper in Indonesia will commence production at the end of this year, under our plant called Indah Kiat Pulp&Paper Tbk.
About raw material scenario and the market scenario?
We primarily serve the domestic markets of China and Indonesia, wherein China consumes about 70 million tons of paper and paper board, and t h a t ‘ s advantageous for us as, the growth in China for paper and paper board is around 8-9%. Domestically, it takes about 2-3 years to absorb the new capacities. Thus you have to export and for export we look for the countries like Western Europe and North America and also to Middle East, South East Asia. India is also growing at the rate of 9-10% annually and still there is a vacuum. So, definitely we would like to export to India. Talking about the raw material, we have our own forests in Indonesia and China, with an area of 1.1million hectare. But these plantations are not enough so we are buying the raw material from other countries also.