“We see some exciting new segments where the paper industry can grow at a good pace”: Pawan Agarwal

-150,000 TPA brown-field project: Naini Papers is eyeing flexible packaging segment
- Growth of WPP segment  is not going to be as good as it was perhaps before COVID so there would be some sluggish growth
- Overall industry getting benefit and the consumers of India getting benefit from the coming of APP to India

Recently, The Pulp and Paper Times met Mr. Pawan Agarwal, Managing Director, Naini Papers Limited. We discussed various insights into the Indian paper industry, demand growth, digitalisation impact, future demand prospects of Writing and Printing paper, and Naini’s investment in brown field project dominance of packaging paper over publishing paper. Here are Mr Agarwal’s views: 

New Delhi | 2023 | The Pulp and Paper Times:

Q: Asia Pulp and Paper is setting up a massive paper making infrastructure in Maharashtra (INDIA). What impact do you see from this new mega capacity of 1.2 million tonnes per annum? Will the market dynamics be under pressure?

I see, there is a lot of space for further production increase in India and since Asia Pulp and Paper (APP) is coming up with a Greenfield project so I would say it's a welcome step and it is going to take the industry forward to the next level. Market is growing, various segments of markets growing with APP coming into India. So I see overall industry getting benefit and the consumers of India getting benefit from the coming of APP to India. 

Q: Post COVID, what is the current market paper scenario?

The dynamics of market have changed a lot post COVID and I see a lot of changes coming up. Number one, the traditional way of doing business has totally changed now and we are having more and more online meetings, more frequent online meetings. And as far as product basket is concerned, many mills have changed their product basket. Post COVID, like fine paper’s demand is not as good as it was before COVID and we are seeing that it may decline in coming days for writing, printing paper I'm talking about and also for newsprint. So those mills have found other areas to focus upon and the main area is hygiene products, and single use plastic has been banned but there is no substitute in India today and mills are working on providing the good substitute for single use plastic. So packaging is going to grow significantly in the coming days and many of mills are focusing on environmentally friendly packaging solutions. We see some exciting new segments where the paper industry can grow and grow at a good pace. So I would say next decade is going to be very exciting for Indian paper industry. We can produce not only for Indian market but also for exports.

Q: what appreciation in writing printing paper prices do you see in coming time?

You see this is all market dynamics, I would not like to comment on pricing part because we are linked globally today and there are several phenomena. You see Russia -Ukraine war, it can have an impact, then anything goes wrong with China, it can have an impact. So it is dynamic pricing. So let us not go into that. I can only say that the future of Indian paper industry is good and even if it is writing and printing segment, we are not going to see sharp decline in coming years though growth may not be as good as it was pre COVID, but it's good.

Q: Tell us about Naini Paper’s new brown-field project, which being set up in Uttrakhand? What are the market factors working behind this?

You see again, as I mentioned, the government of India has done away with single use plastic and today the consumers such as big companies who are wrapping their produce into BOPP films and plastic films, they really don't have a viable domestic option available to them. So we see a lot of market potential in this area. So this project basically is eyeing flexible packaging segment. Today, Flexible packaging when you say 99% is plastic film based but there is lot of scope. Companies like Nestle have announced 2025 is a year when they would like to do 100% environmentally friendly packaging. So we are eyeing those big consumers who are looking for sustainable packaging solutions. So this, this machine would be producing substitute for single use plastic and that would be environment friendly.

Q: Please shed some lights on the capacity of the machine and GSM range you are going to manufacture 

The tonnage would be close to 150,000 tons per annum and the GSM range is right from 40 GSM to 170 GSM.

Q: What will be the product basket, sir?

It would be as I mentioned, a specialty paper and we will be producing on this machine as per the demand of the consumers, as per the needs of the consumers. So it is going to be challenging. There will be a lot of products, it would be going to the food industry and it would be going to FMCG to replace their BOPP film packaging, flexible packaging and we'll be producing some coated grades as well. But all would be for packaging applications.

Q: Please shed some lights on earlier CAPEX you done in 2018 

We invested to streamline our hardwood fiber line and chemical recovery. This is going to be a new investment in the machine.

Q: what is the expected date of start-up of new machine?

It would be commissioned sometime in January 2025.

Q: what future do you see in next two years for the writing printing paper?

You see writing printing paper is going to stay strong. I mean it's not going anywhere and but as I mentioned, the growth is not going to be as good as it was perhaps before COVID so there would be some sluggish growth. The growth numbers may not be as strong but definitely you can expect it to grow by maybe 3 to 4%. 

Q: Last year, Government of India has implemented the Paper Import Monitoring System (PIMS) to check on imports. Some of the Paper Trader Association is saying that it is certainly a curb on the import and it is not providing a fair level playing field to traders.

You see, government policies are based on various considerations. I would say, it's not a curb, it's a check. I mean they want the reasonable imports to be allowed, the legitimate imports to be allowed, but not the dumping. So in garb of imports, there were a lot of products that were coming into India which were not through a legitimate channel. It was sort of dumping by those companies. Like their site cuts were being dumped into India at a very, very low price. So this was hurting the Indian paper industry. So government has put his house in order now with implementing this thing. And this is going to be a trial for other products also from the government side. And we are so very happy that government has finally taken this step. And it is not going to hurt even the importers. You see, it was not benefiting anybody and it was just the dumping from those companies into the country. And I think now it would be a fair opportunity for even the domestic players to compete with the overseas counterparts.

Q: International Monetary Fund (IMF) has predicted the that in 2023, there will be a recession around the globe. So what do you think? Any impact on the paper industry?

I failed to understand the logics of economists many a time. And many a times they say something which really doesn't happen even if it is a recession. So recession doesn't mean that demand is going to die. Demand will be there. When they say recession, then we have to really look into the numbers. And it is such a complicated thing. Let us not go into that. Let us keep on responding to whatever comes up for us in the market in the coming days. And I feel recession when you say recession, inflation is going up in Europe and there's a recession in Europe, but demand is there. Demand is not going down. You look at their growth numbers in Europe, none of the countries has reported negative growth so far. So in 2023, it could be tough from liquidity point of view. It could be tough from the availability of funds for various investments. But from demand point of view, I really don't see a challenge in 2023. Thank you. 

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