A new 100 tpd Voith tissue machine that started in June will help Pakistan’s Packages Ltd. increase volumes and quality, both in the domestic market and throughout the region. It is all part of a big plan to become a major regional player in numerous paper and board sectors.
Hugh O’Brian
Pakistan’s leading paper and board manufacturer, Packages Limited based in Lahore, has quietly been undertaking a very substantial USD 300 million investment program that includes startup of three new paper machines and a coater line over 24 months.
As a result of these projects the company’s annual paper, paperboard and tissue capacity has risen sharply from 100,000 tons to 350,000 tons. And, if all goes according to plan, a world-class board machine may be added next year, which will take the overall production to well above 500,000 tons/yr.
The new 35,000 tpy tissue machine, PM 9, started in June this year, while the new 100,000 tpy Voith PM 6 board machine came on line last year in June 2007. In addition, a high speed rebuilt Valmet coating line and a 120,000 tpy Voith printing and writing paper machine will start later this year, putting the company on a new trajectory for fast growth in the coming years.
With the new tonnage in place the company is projecting sales, which amounted to USD 173 million in 2007, to rise to around USD 300 million by 2009.
UNFOUNDED WORRIES. This was my first visit to Pakistan and I must admit I was just a bit uneasy. I had wanted to visit Packages Limited for many years as the Managing Director and CEO, Hyder Ali, is a very old friend of mine from university going back almost 30 years. We had been talking for a long time about me making a visit and finally, earlier this year, we firmed things up. However, as the trip approached and reports of instability and violence in Pakistan were appearing in the world press, I began to wonder if this was a smart decision.
As soon as the plane landed at Lahore Airport I realized that my concerns were totally overblown. The visit went extremely well, the city and people were very welcoming, and the combination of dynamic growth, modern facilities and professionalism at Packages Limited was truly impressive.
BLUE-CHIP PARTNERS FOR DECADES. A sign of this professionalism is quickly apparent when one looks at the international partners that Packages Ltd. works with. The company is the local partner of some of the world’s most respected and widely-distributed companies and brands, including TetraPak, Nestle and the Coca-Cola Company, among others.
In fact, the company Packages Ltd. was originally established in 1956 as a joint venture between the Ali Family of Pakistan and Akerlund & Rausing of Sweden, the predecessor to TetraPak.
BIG NEW GREENFIELD MILL STARTED UP LAST YEAR. Under the three-year investment program that got started in 2005, Packages has established a big, new pulp and paper mill in Kasur, 50 km south of Lahore, and very near to the border with India. On the 42 hectare greenfield site, known as Bulleh Shah Paper Mill (named after a famous 17th century Pakistani poet who came from the region), it has installed two large, modern paper machines, PM 6 and 7, as well as the modern rebuilt coater and a corrugating line, among other things.
With the startup of PM 7, a completely rebuilt 4.5-m wide Voith machine that was moved from the Stora Enso mill in Langerbrugge, Belgium, Packages Ltd. has made an important move to enter the higher-margin printing and writing paper sector in a big way.
The 2005-08 capital investment program is the result of a major change in strategy to look beyond its own needs for paper and board strictly for its internal captive converting operations. Until fairly recently, almost all of the tissue and board that Packages made was used in its own converted products such as tissue products, corrugated boxes, folding cartons and flexible packaging. A couple years ago the group management decided to take a different view of things.
“We realized that, to insure our continued growth for the future, we needed cost efficiencies in our production,” explains Hyder Ali. “To get efficiency we needed large scale units. Thus we have stepped up capacity with several big modern machines that allow us to sell on the open market and export the tonnage that we don’t use internally. We see this as a key means of supporting our growth while, at the same time, giving us a benchmark to measure our performance against. In addition, it also allows us to test the waters to become a key regional player in various grades without taking too much risk.”
ORIGINAL MILL SITE TOO TIGHT NOW. The Lahore mill, which was opened in 1968, simply had no room left for growth as the city had encroached on it over the past 40 years. Thus to allow expansion, the new Kasur site was necessary. Lahore will continue to be the center of Packages operations for products such as folding cartons for food, liquids, and consumer products packaging, as well as its growing flexible packaging business. Eventually most of the pulp, paper and board making lines will be in Kasur, although for the time being at least, tissue and DIP pulp is made at Lahore.
TISSUE STARTED IN 1981. Packages entered the tissue making business in 1981 when a small second hand Escher Wyss MG line, which is now shut down, was installed. In 1994 the company added PM 4, a Toschi unit that now makes around 10,000 tpy, after a rebuild in 1997 to a crescent former.
As part of the three-year investment project, the new PM 9 crescent former has been installed at the Lahore plant, and the converting lines have been expanded there. “We decided to go with a big 100 tpd machine as it was not much more money than a 50 tpd unit,” continues Hyder Ali. “We aim to grow so we don’t want to undersize the PMs. We also chose a top supplier like Voith because we wanted world-class technology. We have learned that it is cheaper in the long run to buy better technology.”
‘ROSE PETAL’ BRAND LEADS THE MARKET. In 1982, the company launched its ‘Rose Petal’ tissue brand which is today the leading brand on the small Pakistani market. Per capita consumption is an incredibly small 70 grams per year in this relatively poor country where 24% of the population are living below the poverty level.
“The market here amounts to about 11,000 tpy of quality tissue,” says Group Brand Manager Henna Ali, who is Hyder Ali’s sister. “We have around 70% market share with our Rose Petal, Tulip and Double Horse regional brands. There is also some imported tissue which comes in from topping off of container shipments, but it is not much.”
“With a population of 160 million people, we see our consumer base as only about 0.1-0.2% at this point, or 150,000-200,000 people. But there is good potential and the market is growing by 10-12% each year so we feel that by increasing tonnages of more affordable tissue we can grow the market. Before PM 9 started, we were completely sold out in tissue so there was no reason to sell anything at a lower price. With the new machine we will have the tonnage to create more demand through ‘market pull’ activities that are needed in a developing market like this.”
Consumer Products Manager Moeez Karim agrees: “We want to grow the size of the pie and capture the accelerated growth by increasing the volume share of our brands. We can grow the domestic market by recruiting new users via economy variants. For existing users we can develop the sector with new and innovative products. Also, we see good prospects in the AFH sector as it is growing 35% a year, from a small base. Today the split between At-Home/AFH is 90/10.”
STRAW CTMP PIONEER. In addition to the high-profile international partners, and the recent investment program, the company has also distinguished itself as something of a pioneer in the field of straw CTMP pulp production.
Straw makes up about 30% of the furnish at Packages, with production of 30,000 tpy of CTMP and 35,000 tpy of chemical straw pulp. The CTMP from straw is used for brown grades while the chemical straw pulp is used for bleached board, liquid packaging board and tissue. In tissue, straw CTMP content of up to 20% is used for facial grades and up to 30% for toilet rolls.
MOVE TO REGIONAL PLAYER. Obviously there is more happening at Packages Limited than I had realized. It is not often that any paper company, anywhere, builds a greenfield mill and starts up three top-level paper machines and a coater in such a short time span. There are so many more details that could be covered in this article but, for the time being this will have to suffice.
One thing is clear though: With these major capital investments in tissue, board and paper, and more to come, Packages Ltd. of Pakistan will be a key regional paper, board and tissue player to watch for in the future in Central Asia.