Big Paper Mills can never compete with small mills in Kraft paper segment

Big Paper Mills can never compete with small mills in Kraft paper Segment

Gujarat Paper Mill Association (GPMA) is working as an active association of paper mills in Vapi, Gujarat. GPMA is known for well-researched association in the packaging paper segment where its members’ kraft paper has been globally accepted resulting in earning foreign revenue for India. GPMA always raises its voice against the burning issue related to its members like the waste paper crisis and price fluctuations during the lockdown period. Recently, The Pulp and Paper Times bag the time of Mr. Sunil Agarwal, President of GPMA for an exclusive interview. We discussed the various issues of kraft paper industry, here are his views:

Vapi | 26th November 2020 | The Pulp and Paper Times:

Q1. In this tough Time, where demand is low and not seems to be overcome, what strategy GPMA suggests to paper mills across India to be adopted for surviving?

Time is the essence, patience will pay, this is the only mantra, people trying to fight this situation will end up facing dire consequences as waste paper availability across the globe is going down due to poor collection due to lockdown, paper mills will subsequently wash out their inventories and will have to purchase at higher prices landing up in the higher cost of paper, while the markets are not more than 30% open, produced material will fetch lesser price, resulting in heavy losses.

My opinion is to stay calm and have patience and wait for the markets to open up, in this game, coming first will be a looser.

Q2. Big paper mills manufacturing writing and printing paper have ventured into Kraft paper manufacturing also. Khanna Paper, Trident, Century so on, they have got good setup and technology to produce a quality paper. What GPMA’s planning to counter the wave of competition against big giants?

Manufacturing cost plays important role in Kraft paper making, more than 80% of mills in India make kraft, quantity produced in totality might be less, but numbers of mills are high, resulting in wafer-thin margins, competition is all year around, big mills are numbered and they have good profit margins, these big companies can never compete with small mills and can never sell at the prices on which existing kraft mills are selling. We don’t fear any big mill converting into kraft, they can survive whether by keeping their plants shut or exporting by making quality Kraft in comparison to the world.

Q3. Does GPMA think that big paper mills producing writing and printing paper turns into kraft manufacturing is justified in terms of the market's demand-supply circle?

Nobody can stop anybody, markets shift, so one takes his own decision and GPMA has never ever tried resisting in any way. A lot of paper mills poured in Morbi in last few years, yet GPMA never resisted, similarly any big mills converting itself does not make any difference, market demand and supply automatically balance everything with time, everybody finds his own way and settles.

Q4. In the shadow of China’s SWORD policy over recovered paper (RCP), how does GPMA evaluate the waste paper market post complete ban on waste paper import to China? Do you think more availability of waste paper at a cheap/negative price will drop the price of Kraft paper in the domestic market?

No, nothing big will change, fibre has always been short and will remain, china will ban waste paper imports, but will import finished waste paper (pulp) from various countries, waste paper will move to these countries, India will have its own share; the domestic market will not be affected. 

Q5. On the ground of quality and strength, How GPMA analyzes the quality of paper of its members' paper mills?

Exports have started from western India, many GPMA members have started to export in last three to four years, this has given room to quality up-gradation, every mill is now eyeing on exports and needs for keeping themselves best with international quality have risen, GPMA  members quality have risen and with time, more stringent quality will be produced.

Q6. Research and Development is the core activity for any Industry to survive in a competitive era. What is GPMA’s stand on this, what initiatives have been so far taken by your association? Any new development in packaging paper?

mostly all paper mills under GPMA have got themselves to a certain level in the quality field, continues efforts of GPMA with its members on quality standards for box making have resulted in near to zero complain material being exported and also in the domestic market.

The only bottleneck is a "odor/ smell" issue which GPMA is now eyeing upon, due to 100% water being recycled, the smell is still prevailing to some extent, but there are measure to overcome which mills have adopted, due to very high capital investment, it is still on the primary stage, but in the years to come this will be implemented by most of the mills of GPMA.

Q7. The Internet is a big and trendy media. Employing digital media in various activities and campaigns for the 'Paper Consumption Awareness' may change the perception of the people who are against the paper. What are the views and plans of GPMA in this regard? 

Absolutely, GPMA is with paper awareness programs, wherever it happens it is actively participating, but GPMA mills are into packaging grades, they are not affected by internet, still for other print media paper mills, GPMA is always there to stand with them and support.

Q8. If China bans the import of waste paper to its soil, do you think that the readymade pulp market will grow? Instead of making kraft paper, most of the paper mills may engage in pulp production and secure long-term orders. How does GPMA see this situation?

Absolutely, like we said earlier, India will have its own share, and exporting pulp will be a big business and GPMA members are doing this presently and see the future trend to rise.

Q9. The continuous Covid situation has ruined the financial health of the companies globally. What impact does GPMA see on existing employment as well as new employment? Will the industry go for layoffs or retain its employees? if yes, what percentage, it could be?

No, nothing has changed with GPMA members, most of the members are into packaging grades of paper, Kraft paper and duplex board is the only grades made by GPMA members, packaging grades come under essential services, covid has not affected severely on our industry, yes, initially few months we have faced this problem, then, later on, we all started and supply chain also was resumed. Employment impact was minimal and we don’t see a big shift.

Web Title: Big Paper Mills can never compete with small mills in Kraft paper segment