Kerala Paper Products: commercial scale paper production with its own pulping streams

Kerala Paper Products: commercial-scale paper production with its own pulping streams

-KPPL expects INR 680 crores revenue target for the ensuing year Fy 23-24 at the current price levels.

-KPPL to take about 10,000 Ha of land on lease from the State Forest Department for raising Captive Plantation.

-New Paper Machine for packaging grade paper with all the necessary auxiliary facilities shall be installed under the Product Portfolio Diversification project

The revival of the Hindustan Newsprint Limited, a Central public sector unit that remained defunct for three years, as Kerala Paper Products Limited (KPPL) signals an alternative model of industrial development. By taking over the company, which had faced insolvency for long, through a resolution plan, the Kerala government has rolled out a Revival and Restart Programme (RRP) configured in two Phases for its revival and sustained operations.

In a special Interview with The Pulp and Paper Times, Mr. P Rajeeve, Kerala Minister for Industries, Law and Coir reveals that the entry of Kerala Paper Products Limited (KPPL) with its Newsprint portfolio to the market is at the right point of time. Here is the full interview:

Q: What market opportunities did you see behind taking over KPPL?

Positive signals are emanating from the market as the import prices of Newsprint are reeling high, touching all-time high levels. This situation has come around as few of the major overseas capacities of Newsprint switched to more attractive segments coupled with the shortage of raw material for recycled pulp. With this price level, major domestic manufacturers will be able to derive benefits, provided they meet the quality requirements. Coupled with this scenario, it may be seen that more than 50% of the domestic demand is met through imports only. So, the entry of KPPL with its Newsprint portfolio to the market is at the right point of time.

Q: Please elaborate on the KPPL’s revival plan phase-wise and what are the critical equipment to be installed or revived in order to save energy and water conservation?

The revival of the existing plant and machineries, the Revival and Restart Programme (RRP), is configured in two Phases. Phase 1 of the RRP entailed the revival of Paper Machine, De-inking Plant, Power Boilers & Turbine Generators and the associated auxiliary plants and utility services. Phase 1 which was estimated to be completed in 5 months’ time was successfully completed within the scheduled cost and timelines. Trial production was successfully taken in the Phase 1 plants. Hon. Chief Minister of Kerala, Shri Pinarayi Vijayan has officially inaugurated the successful commencement of the production process on May 19, 2022 at the spruced up KPPL campus. Phase 2 of the restart programme is being underway through revival activities in Mechanical Pulping, Chemical Pulping and Chemical Recovery Plants along with their auxiliary plants. Phase 2 is estimated to be completed by September 2022. By the completion of Phase 2, the entire existing facility shall be fully functional and KPPL shall be able to undertake commercial scale paper production with own pulping streams (recycled pulping stream and the wood pulping streams – chemical and mechanical) and thereby doing away with the requirement of purchased pulp.The total expected outlay for the revival package alone is Rs 154.39 cr.

Q: KPPL is also planning to expedite the steps to operationalise the wood pulping streams along with the chemical recovery plant and related auxiliary systems. Please shed some light.

Our original plan was to partially commence commercial-scale production by using own re-cycled pulp and purchased pulp after the completion of Phase 1. However, as the prices of the purchased pulp touching abnormally high levels, we have re-calibrated our strategies and put on hold the proposal for using purchased pulp and instead, trying to accelerate the operationalisation of the wood pulping streams – both mechanical and chemical pulping along with the revival of the chemical recovery plant.

In this regard, Government of Kerala has already given approval for sourcing pulp wood raw materials from the State Forest department at a subsidized rate as part of its committed effort to revive this unit, which was the foremost Newsprint manufacturer in the country, as a Public Sector Undertaking under the State Government. Government of Kerala is also planning to facilitate to provide the used paper/wastepaper generated at various Government institutions/agencies/departments of the State as raw material to produce re-cycled pulp at the De-inking plant of KPPL.

Q: Paper Industry is witnessing lots of price volatility in input costs like Coal, logistics and Imported Pulp putting the industry in a lot of uncharted waters. Do you think that it’s the right time to re-start KPPL?

True, the Industry is witnessing unprecedented turbulence in terms of the prices and availability of raw material, coal, fuel, imported pulp etc and very high level of uncertainties in managing the supply chain linkages. However, at the same time, Newsprint and other Grades of Paper are getting good price realisation. The companies which could lay their hands on a secured raw material base (both wood fibre and recycled fibre), could become the winners in this scenario. As mentioned earlier, Government is making all the necessary steps to see that adequate raw material is available for KPPL. One thing is for sure – In this troubled times only the best will survive and we would like to make KPPL one of the best in the industry in all respects.

Q: What will be KPPL’s products basket in order to face healthy competition from the private players? Please describe in detail the grade of paper, GSM and BF with Brightness for our readers.

KPPL shall be mainly anchoring the production of Newsprint of 45 & 42 GSM in the initial stages at a brightness level of  60-62 % ISO, breaking length of 5250 -5500 meters, tear factor of 60/42 and opacity of 92-95%. Subsequently, KPPL also plans to produce writing and printing paper grades for the Note book and Text book segments with a GSM range of 56 -70

Q: HNL was initially formed to manufacture Newsprint paper for the country which had gone into losses after the import duty had been reduced. But now due to the Russia –Ukraine War, it has increased the price of imported newsprint up to 80 percent. This is paving a way for local manufacturers to revive their newsprint production. How do you see this situation, will this benefit KPPL?

Since the anchor product of KPPL being Newsprint, the buoyancy in Newsprint prices shall be definitely beneficial for KPPL. However, the objective is to enable KPPL to sustain and survive even in the face of stiff competition and adverse price regimes. Since the writing and printing segments also currently fetching very  good realisation, the possibility of major manufacturers switching to Newsprint is highly unlikely. The production of Newsprint by smaller players is not expected to poise major threat to the prospects of KPPL

Q: HNL has stopped production since January 2019, what are new technological & mechanical up-gradation being put in place for making KPPL a modern unit in order to face any covid-like crisis in the future, diverting its production to more market-oriented paper products?

Subsequent to the revival of the existing plant and machinery, KPPL is set to implement a Modernisation and Technology Upgradation Project (MTUP). The Government has already provided approval for the MTUP. MTUP envisages to modernise the Effluent Treatment Process, Upgrade the Power Boilers, Implement state-of-the art bleaching processes in the Chemical Pulping Plant and modernise the Mechanical Pulping plant for realising  energy efficiency, improving productivity and meeting stringent environmental standards and stipulations 

Q: Deployment of any new paper machine is also under the revival plan? If yes please elaborate.

No new machine is envisaged under the revival plan. However subsequent to the revival of the existing plant and machineries, the Production Capacity Expansion and Product Portfolio Diversification project shall be rolled out in which new Paper Machine for packaging grade paper  with all the necessary auxiliary facilities shall be installed 

Q: Please shed some light on the KPPL’s fibre procurement strategy from captive farm forestry, and how it will benefit Farmers of Kerala and other states (if)?

In the initial stages, KPPL shall be banking on the State forest department for the pulp wood raw materials. KPPL has forwarded a proposal to the Government for leasing about 10,000 Ha of land from the State Forest Department for raising Captive Plantation and the Government has provided ‘in-principle’ approval for this proposal. Apart from this KPPL has got plans to procure the pulp wood raw material directly from the farmers at a remunerative price through the ‘Purchase at Gate’ (PaG) scheme 

Q: A4 copier paper segment is having very good market demand, Is KPPL planning to launch its copier paper also?

No. KPPL shall be leveraging the strengths of its machine, that is to produce high quality Newsprint and un-surface sized grades of writing and printing paper 

Q: What is KPPL’s revenue target for FY 22-23?

Since the commercial scale production is expected to be achieved during September/ October 2022 and further it is expected to take 2-3 more months to realise the full capacity utilisation, the revenue target for Fy 22-23 shall be about Rs 160 Cr only at the current price levels. The revenue target for the ensuing year Fy 23-24 shall be about Rs 680 Cr at the current price levels 

Q: Any other comment you want to mention to Converters, Traders and other paper segment stakeholders about KPPL’s start-up.

The revival of erstwhile HNL, which was under the administrative jurisdiction of Government of India and which was closed for more than 3 years and was on the verge of liquidation and extinction as Kerala Paper Products Limited, while retaining the company in the public sector by the Government of Kerala is a significant leap in the Industrial scenario in this part of the World.  This definitely signals an alternate model of Industrial development and a big message for the entire country. This is a historical, ‘one of its kind’ of moment as rarely these kinds of ‘revival’ and ‘coming back’ happens in the Industrial history of the country.
 

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