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Dharini Nagarajan

Quantum of pulp imports likely to increase in future

New Delhi , June 20

The imports of pulp and waste paper have registered a 14.04 per cent rise during the last fiscal. The value of the imports stood at $558.22 million in the fiscal 2005-06 compared with $489.51 million in the previous fiscal.

The imports of paperboard were on the rise as well witnessing a 39.55 per cent increase during the last fiscal to $982.03 million compared with $703.7 million in the corresponding period last year, according to Government data.

Rising cost

Analysts attribute the jump in imports to the rising cost of raw materials for writing and printing paper, duplex board and newsprint. While pulp, waste paper and paperboard have registered a significant rise in imports, the increase in newsprint imports has been around 10.08 per cent during the last fiscal.

According to Mr R.R. Vederah, Joint Managing Director, Ballarpur Industries Ltd (BILT) and President of the Indian Paper Manufacturers' Association: "The primary reason for the import of pulp and other intermediary products is because it is more cost-effective to do so." Analysts point out that the quantum of pulp imports is only going to increase in the future on the back of robust demand for paper in the country which is expected to grow in line with the GDP.

While companies such as BILT are resorting to acquisitions abroad to satisfy their raw material requirements, other paper firms such as Orient Paper and Industries Ltd (OPIL) are relying on local plantations to meet their needs. Mr M.L. Pachisia, Managing Director, OPIL, said: "We are not importing any pulp so far as we are able to meet our requirements though the local plantations."

Due diligence

On the other hand, BILT recently said that it was in the process of conducting due diligence of a Malaysia-based paper mill Sabah Forest Industries with an intention to acquire it and later build a paper mill on the premises. "The per tonne cost of wood or fibre in Malaysia is almost half than that in India and BILT wants to take advantage of these low costs to procure pulp from Malaysia," Mr Vederah said.

However, sources point out that there is not sufficient land available to achieve economies of scale. Industry watchers say that the Government nod for public-private partnerships for plantations in degraded forestlands in the country will go a long way in solving the issue. Mr Pachisia said: "Recently, there have been initiatives taken by the State Governments such as Andhra Pradesh Government which is exploring the possibility of public-private partnerships."

Further, speculation is rife about the entry of two foreign newsprint companies into India, which are looking to set up a newsprint production unit in the country with the material sourced domestically. This, analysts observe, could lead to a fall in the quantity of newsprint imported.

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