Q&A: Harsh Pati Singhania, MD, JK Paper

'Our paper industry largely produces from sustainable resources'

The Indian paper industry is growing rapidly and is addressing its input requirements in an environmentally sustainable manner, Harsh Pati Singhania, managing director of JK Paper, tells Dilip Kumar Jha. Edited excerpts:

With the US-based International Paper acquiring 53 per cent stake in Andhra Pradesh Paper Mills, do you see the Indian paper industry heading towards consolidation?
In the past, foreign players could not take advantage of the Indian opportunity for a variety of reasons, including small size of mills, fragmented markets, raw material availability, price sensitivity, etc. These will continue but as the market grows, the temptation will be much larger than before and so we could see some deals like this. But these will be gradual rather than a surge. It would also depend on global paper industry trends and how foreign players assess the Indian paper market’s pluses and minuses. Lack of abundant raw material resources will remain a deterrent in the plans of international companies.

How do you hedge your raw material risk against volatile pulp prices?
We are an integrated pulp and paper company. We require market pulp only when our paper machine capacity exceeds pulp manufactured in-house. We are, by and large, insulated from the volatility of international pulp prices. The quantity of pulp we buy when prices are lower is enough for several months' requirements. We regularly monitor trends regarding the availability and landed costs of pulp species from different sources. At the same time, it needs to be stressed that an aggressive farm forestry programme is the best hedge. Large Indian paper mills, including us, have been taking this activity to offset the difficulties of raw material constraints (wood availability), as we are not allowed to use degraded land for plantation.

Does poor quality scrap paper collection hit business sentiment in India ?
Poor quality paper collection from domestic sources increases dependence on imports. Some attempts are being made by the industry with the government to improve the collection and quality of waste paper available. We hope to come up with some workable solutions in the near future.

What are your future plans?
To meet the growing demand in India, we are expanding our paper capacity in Orissa, largely in the office and copier paper segment, to strengthen our market leadership position. We have just rebuilt our packaging board plant. Three product segments we are focusing on — office paper, coated paper (C2S) and high-end packaging board — are expected to show good growth. The project will also bring in modern technology that will lead to significant resource conservation, reduce cost of production and produce high quality paper. Major orders for machinery with international majors have already been placed. The capacity expansion will also reduce emissions and reaffirm our commitment to environmental care.

How is the paper industry preparing to cut a fewer number of trees for its raw material requirement?
The bulk of wood used in India is for fuel. The paper industry depends largely on man-made forestry for its requirement. Certifications like that of FSC (Forest Stewardship Council) add credibility to the fact that the industry is producing paper today from sustainable environmental resources. The clonal research being done by the bigger mills and a sizable distribution of healthy and high-yielding seedlings for use in farmers’ lands year after year are steps the industry is taking up for ensuring the industry does not want to harm the environment and, in a way, increases the green cover. For example, JK Paper alone distributes 35-40 million seedlings, including clonal varieties, annually.