Indian paper industry could attract Rs 10,000 cr

The Indian paper industry is expected to attract Rs 10,000 crore investments in three to five years for setting up greenfield projects as well as capacity expansion of the existing plants.

Also, paper production in the country is likely to double to 22 million tonne in the next three years, said KS Kasi Viswanathan, chairman of PaperTech 2010 – an event to promote energy efficiency in the paper industry – which kicked off here on Wednesday.

According to Viswanathan, also the deputy managing director of Tamil Nadu-based Seshasayee Paper and Boards Limited, the paper industry has already initiated several measures for greater energy efficiency. The industry is already wood-positive as it is planting more trees than it is consuming, he added.

Among others, ITC is setting up one large paper mill. Seshasayee is also almost doubling its paper production from the present 120,000 tonne per year to 250,000 tonne in three years with an investment of Rs 350 crore, Viswanathan said.

However, the paper industry is faced with raw material supply constraints, mainly wood. The industry has been asking the government to allow the companies to take up industrial plantations to stabilise raw material supplies. At present, social forestry is the main channel for raising trees. It now takes about three to four years for the saplings to yield wood, he said.

Andhra Pradesh leads in contract farming of trees, and other states will soon follow suit, Viswanathan said, adding that contract farming can boost the revenues of farmers as the landing costs come to about Rs 2,500 to 3,000 a tonne and is less labour-intensive.

On an average, 40 million tonne wood, mainly from eucalyptus, subabool and casuarina, is used by the paper industry a year. Of the 11 million tonne paper produced, about 15 to 20 per cent is exported. The average export price now is between $800 (about Rs 36,800) and $1,000 (Rs 46,000).

Speaking on the occasion, Orient Paper and Industries’ managing director ML Pachisia said the company's paper unit in Madhya Pradesh, which was shut down for the last three months due to water scarcity, will restart its operations tomorrow (June 17).

Also, the group, which has a 5-million tonne capacity cement plant, will increase its capacity to 15 million tonne, he said, without giving details of investments or schedules. “Cement prices will be under pressure in the short term but will firm up in the long run,” he added.