Previously positioned mainly in the away-from-home sector, Pudumjee last year moved into the consumer area as well. A key to growth for the future could be through a joint venture with an international partner for a big new mill.
Hugh O’Brian
Currently India’s largest tissue maker, Pudumjee is at a turning point as it seeks to retain leadership in the market. With several new tissue machines coming on line at competitors in India later this year, Pudumjee is looking at ways to expand in a sensible manner.
Mr. Ved Leekha is the Executive Director at Pudumjee Mills. He has had a long career in the pulp and paper industry working with such companies as BILT in India, Phoenix in Thailand, Sabah Forest Industries in Malaysia and the Mazandaran mill in Iran. Returning to India in 2000, he has been with Pudumjee ever since. As far as the future, he is clear that Pudumjee intends to maintain its leadership in the Indian tissue business.
“We are focusing on tissue as our growth area. Today we have an annual capacity of about 20,000 tons of soft crepe tissue and maybe 5,000 tons of hard uncreped tissue. We know we need to grow but want to make sure we do it in a smart way.” Today Pudumjee is mainly in the AFH tissue sector but in 2007 the converting arm of the company, Pudumjee Hygiene Products Limited, made a move into the at-home sector with the successful launch of two premium brands, Greenlime and Lush.
PM 8 MOVED FROM K-C IN GERMANY. Pudumjee’s mill site is in Pune, about 150 km south east of Mumbai on the west coast. Paper production is actually carried out by two separate companies located right next to each other, Pudumjee Pulp & Paper Mills Ltd and Pudumjee Industries Ltd. The two group Companies have five paper machines.
Of these, two are fourdriniers making various specialty and fine printing grades, and three are tissue machines.
However, only two of the tissue machines are running at the present time. PM 6 and PM 7 are the operating tissue machines which are 2.6 and 3.25-m wide Yankees running at speeds of 400-500 m/min. PM 8 is also presently located on the same site but it is idle. It is a second-hand machine that was previously located at the Kimberly-Clark mill in Koblenz, Germany and was moved to India in 1998. At the time, a decade ago, the market was not right for the higher quality and volume that PM 8 could make and it only ran for a matter of months before it was mothballed. Pudumjee is looking at plans to restart it, says Leekha, probably at a different site which would also include a new tissue machine, PM 9.
The reason PM 8 ended up at Pudumjee is because the company had a marketing joint venture in India with Scott Paper, which in turn was inherited by K-C. In 2004 the JV was dissolved. Today K-C continues to run converting lines mainly serving the AFH or professional business with soft tissue jumbo roll procured from Pudumjee, while Pudumjee have also gone into their own tissue conversion business since 2005.
TALKING TO INTERNATIONAL PARTNERS. “For the future, we are clearly focusing on tissue but we are at the same time examining all the options,” says Leekha. “One constraint we have is the mill site here in Pune, which is too small for expansion due to the location surrounded by residential area that has grown tremendously. We also have other problems here such as high local taxes and a lack of dependable energy supply. We had a bagasse pulp mill here which is now closed for environmental reasons. So growth here in Pune is not possible. For those reasons we are looking for a new mill site nearer to the coast which would be based on imported market pulp where we could move PM 8 and also install a new tissue machine, PM 9, to get a highly efficient and productive mill.”
To accomplish this, Pudumjee is exploring a potential joint venture with a multinational company. “We are talking to international partners who would help with financing to set up a JV for the new mill. We have had discussions with several good potential partners and expect to be moving forward soon.” If this project goes ahead at the as-yet undecided greenfield site, it would mean approximately 50-55,000 tpy of new crepe tissue capacity with PM 8 making around 23,000 tpy and new PM 9 about 30,000 tpy.
ALL FEELING THE SAME ELEPHANT. The Indian market, Leekha says, is difficult to measure, something I have heard numerous times on this trip through the country. For various reasons, nobody seems to have a good grip on the real supply or demand picture for tissue in India. “We are all feeling the same elephant and everyone has a different perception of what kind of animal we have,” laughs Leekha. “One guy sees a tail, the other an ear and the other a leg. This is a difficult market to analyze, and even more challenging to predict for the future.”
In his analysis, which he admits may not be 100% accurate but appears to be well thought through, Leekha breaks tissue down into two main categories: soft creped tissue and uncreped tissue (MG Poster) grades. And under the creped category he breaks it down further into soft crepe, meaning bath, facial and napkin grades, and wet-strength crepe, used for kitchen and hand towels.
“As far as domestic supply, we estimate about 40,000 tpy of soft tissue is made presently in India. We make about 20,000 and Orient, Premier and others possibly add up to a similar figure. On top of this, we think imports of quality soft tissue as jumbo rolls are 10,000 tpy maximum. And an additional 3-5,000 tpy of finished product is imported. So we think demand for the creped grades is maybe 60,000 tons per year. It could even be 70,000 but certainly not more.”
CAN LOWER GRADE TISSUE BE DISPLACED? A confusing factor in the analysis is the hard uncreped tissue made by many small paper mills producing 15-25 tpd. Some sources estimate this amounting up to 150,000 tpy while others say that is far too high. In any case, Leekha sees the market for quality creped grades growing at about 20% per year, from the small base of 60,000 tpy.
With the new capacity of high-grade tissue coming into the market, it is clear that some of the hard tissue will be displaced. This could be a key to growing the market, reasons Leekha. “The performance of this grade is very low, requiring more fiber and sheets to be used to inadequately do the same task. I think it is up to us to educate the market about this advantage that soft crepe tissue offers over the hard tissue (MG Poster).”
With Pudumjee at a turning point as it considers expansion plans, it appears that the important question is not what part of the elephant the various people in the tissue industry are seeing but how big the beast is. If and when someone can accurately answer that question, it will be the secret to getting the timing right for profitable investment in the potentially enormous Indian tissue market. .
PUDUMJEE SPECIALTY PAPERS
Pudumjee’s range of products touch each one of us in our everyday life through its usage in one form or the other. The Pudumjee Group, with its manufacturing operations established at Pune over 40 years ago, are pioneers in the production of greaseproof and glassine papers in India. These are used for packaging of food products, etc. The whole range of specialty and security grades of paper followed progressively over the years through in-house development, adding up to a prestigious portfolio which includes industrial grades like electrical insulation kraft, décor papers, interleaving for the metal industry, packaging papers for lamination and impregnation with protective chemicals, base paper for one-time carbon and carbonless and papers for flexible packaging pouches, packaging of medical supplies, etc.
The Pudumjee Group are the first and currently the largest manufacturer of soft tissues in India, covering a complete range of applications.
PUDUMJEE HYGIENE PRODUCTS LIMITED
Clearly focusing on the soft tissue potential, Pudumjee Hygiene Products Limited was established in 2005 with a mission of providing international hygiene solutions in India and is based on ‘Think Fresh’ philosophy. The first facility for the converting of tissue products was set up at Pune for marketing all over the country. Initially the thrust has been on the Institutional sale serving AFH or professional business and strategic steps have been initiated since last year to strengthen the retail business. The premium brands of the Company like “Greenlime”, “Olive”, “Fosilvra”, “Wave” and “Lush” have achieved a distinct positioning in the consumer minds and acceptability in the market place.
Strategic tie ups are being made for Healthcare products like disposable gowns, drapes, gloves, masks, sheets, etc. as well as into the area of miscellaneous cleaning chemicals and wellness categories like herbal/aroma therapy products. In two years the converting company’s turnover reached Rs.50 crores and is targeted to exceed Indian Rs.200 crores in the coming 3 years. (Note: 1 crore is 10 million rupees or about USD 235,000).
ABOUT M.P. JATIA GROUP
The Jatia family originates from the State of Rajasthan. The family acquired their first manufacturing company in 1972 and have since gone through diversified business, mainly through the acquisition route. The Patriach of the group is Mr. Mahabirprasad Jatia, the Chairman & Managing Director and the various group businesses are headed by his two sons, Mr. Shyam Jatia and Mr. Arun Jatia.
The activities of the group, employing over 2,000 people range from the manufacture of pulp&paper, tissues, real estate development, trading in commodities, distribution of IT products and bio-technology, etc. The group has a combined annual gross sales turnover exceeding the equivalent of Indian Rs. 1000 Crores.