Companies

JK Paper plans to increase plantation in Myanmar

Suresh P Iyengar Mumbai | Updated on January 16, 2018 Published on September 23, 2016

Lower supply : The paper industry requires 10 mt of wood annually and the supply is pegged at 9 mt

Harsh Pati Singhania

JK Paper is exploring the possibility of enhancing forest plantation in Myanmar to secure its key raw material for operations in India.

The paper industry, which has made an investment of ₹20,000 crore in the past five years, is hit hard by high pulp prices. Globally, pulp prices have plunged, helping companies in China, Indonesia and Korea to export paper to India at low prices. Though the domestic industry is protected with an import duty of 10 per cent, most of these countries tap into the Indian market duty-free or by paying marginal duty as they have signed a free trade agreement or bilateral treaty.

Harsh Pati Singhania, Managing Director, JK Paper, said the company is looking to secure pulp requirement by enhancing plantation in Myanmar, as the wait for a dedicated policy on industrial plantation in India is getting longer.

“We already have forest plantation in Myanmar and we want to increase the coverage rapidly over a period of time. The import of pulp, paper and allied products at $4 billion is expected to increase to $18 billion by 2026 and in the absence of raw material security it would become difficult to add new capacity,” he said.

The industry requires 10 million tonne of wood annually and the supply is pegged at 9 mt. Though the paper industry does farm forestry on 90,000 ha annually, the raw material shortage pegged at 1 mt may widen with the growing demand.

The area under JK Paper’s contract plantation went up 3.5 per cent to 17,700 ha last fiscal, with the distribution of 8.13 crore saplings. This has made the company plant more trees than it cuts for captive use.

Of the 29 million hectares of degraded forest land, Singhania said the paper industry has urged the government to allow plantation on 2.5 million hectares for industrial use.

Wood pulp prices in India are about $150 a tonne while in Brazil and Indonesia it is about $50 and $80 a tonne, respectively. This apart, the distance between the pulp plant and wood sourcing location is about 150-2000 km against the global average of 50-200 km. Given the high logistics cost in India, the paper industry is not able to compete with low cost imports seeping into the country.

Globally, India is the fastest growing market for paper. It registered a growth of 7 per cent last fiscal and the demand is expected to touch 27 mt by 2030 from the current level of 27 mt. The industry has to invest ₹90,000 crore over 15 years to meet the growing demand. In the past five years, the paper industry has made an investment of ₹20,000 crore to put up additional capacity.

Published on September 23, 2016
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