SUMMER TRAINING PROJECT(FIRST PROGRESS REPORT)

MARKETING STRATEGIES OF BILT

UNDERTAKEN AT

“ BILT”

Submitted in the partial fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the SupervisionSubmitted by

and Guidance of MBA 3RD

Semester

Mr. Ajai Pal Sharma Govind Singh (06917003909)

SESSION: 2010 - 2011

TECNIA INSTITUTE OF ADVANCED STUDIES

(Approved by AICTE, Ministry of HRD, Govt. of India)Affiliated To Guru Gobind Singh Indraprastha University, Delhi

INSTITUTIONAL AREA, MADHUBAN CHOWK, ROHINI, DELHI- 110085

E-Mail: director.tecniaindia@gmail.com, Website: www.tecniaindia.orgFax No: 27555120, Tel: 27555121-24

CHAPTER-1: COMPANY PROFILE AND FUNCTIONAL ANALYSIS

BALLARPUR INDUSTRIES LIMITED - A MULTINATIONAL COMPANY.

HEAD OFFICE:

THAPAR HOUSE, 124, JANPATH, NEW DELHI – 110001PH: 011 – 41699283, 41699370

REGIONAL OFFICE:

CG HOUSE, 4TH FLOOR, Dr. A.B ROAD, WORLI, MUMBAI – 400025

COMPANY’S REGISTERED OFFICE ADDRESS:

Ballarpur Industries LimitedP.O. Ballarpur Paper Mills - 442 901Distt. Chandrapur, Maharashtra

PLANT LOCATIONS:

UNIT BALLARPURP.O. Ballarpur Paper Mills–442 901Distt. Chandrapur, Maharashtra

UNIT KAMALAPURAMTownship - 506 172, Distt. Warangal,Andhra Pradesh

UNIT SEWAGaganpur, P.O. Jeypore Railway Station,Distt. Koraput - 764 002, Orissa

UNIT SHREE GOPALP.O. Yamunanagar, Distt. Yamunanagar,Haryana - 135 001

UNIT BHIGWAN105 Milestones, Pune-Solapur Highway,Bhadalwadi - Paundhwadi,Near Bhigwan Taluka, Indapur,Distt. Pune - 413105

UNIT ASHTIP.O. Ashti - 442707, Tehsil Chamorshi,Distt. Gadchiroli, Maharashtra

EMAIL ADDRESS: www.bilt.com www.biltpaper.com

GEOGRAPHICAL AREAS

REGIONS NORTH SOUTH WEST EAST

AREAS

Delhi

Ludhiana

Amritsar

Chandigarh

Patiala

Kanpur

Lucknow

Meerut

Agra

Varanasi

Paharanpur

Moradabad

Jammu

Rohtak

Jamunanagar

Chennai

Sivakasi

Tirupur

Bangalore

Hyderabad

Kochi

Kerala

Coimbatore

Madurai

Secunderabad

Vijaywada

Vishakhapatnam

Ernakulam

Pondicherry

Hubli

Mumbai

Ahmadabad

Jabalpur

Goa

Pune

Nagpur

Nashik

Aurangabad

Indore

Surat

Kolhapur

Calcutta

Cuttack

Raipur

Patna

Bhagalpur

Nepal

Guwahati

Ranchi

NATURE OF THE ORGANISATION AND BUSINESS:-

It is a manufacturing organization in which raw material in the various forms is converted

into final products.

TYPE OF INDUSTRY & BUSINESS:-

It comes under secondary sector and it is a major player in paper industry in India.

MARKETING ANALYSIS

BILT, in the recent years has evolved as a more dynamic, knowledge-driven organization

with a singular focus on creating stakeholder value. Aimed at making the organization

more market-oriented and customer-centric, the following initiatives are to drive BILT

forward in the rapidly changing business environment:

Brand Building

Increasing brand involvement for the products amongst customers to reduce market

fragmentation and attain 'generic-brand' status for BILT via strategic branding.

De-commoditisation and service orientation

Redefining the paper industry with customer at the center-stage.

Wider product range

Adding high value-added products to BILT's portfolio expanding it to cover the widest

range of basic to high-end usage paper products.

Product-mix rationalization

Maintaining an intelligent product-mix based on value and demand curves to maximize

returns

Exploring global markets

Reaching out to international markets with world-class products while maintaining

leadership in India

Captive Market Share

Sustaining and strengthening BILT's leadership position in its market segments way

ahead of competitors.

Extending 'Touch-Points'

Building a wider and 'intelligent' distribution network that enables BILT to serve its

markets in a customized and localized manner and attain higher penetration, without

losing the economies of scale.

Physical Proximity

Company’s distribution network and understanding of local requirements is unmatched in

the Indian paper industry. Over the decades, BILT has transitioned from the 'metro'

concept to cross country distribution. While Company’s five manufacturing facilities

for paper and pulp are strategically spread across the country, we have assiduously

brought our products within physical proximity of the customers. Company’s network of

126 dealers - the largest within the industry in India - is present across the principal

consuming centers of the country and is the key fulcrum to this proximity.

As the leader in the Indian paper industry, BILT stands for certain fundamentals.

Some of these are performance led growth, proactively seizing opportunities. The

company has always thrived on a high utilisation of quality production assets,

implementation of cutting-edge technologies, a captive raw material base, flexi-

manufacturing as well as a continuous expansion in capacity through intelligent de-

bottlenecking.

In its attempt to stay ahead in the competition, the Company has been shifting

towards being a marketing – led organisation, under which they have taken several

progressive measures aimed at creating a brand synonymous with consistent quality

and convenient proximity to the customer. To achieve this, the Company has adopted

a four-pronged sales & marketing approach that includes Distribution, Customer

Focus, Branding and Exports.

The Company is taking innovative steps in all the aspects related to its products,

starting from R&D to Distribution.

Market Leader:

Ballarpur Industries Limited is the market leader in the Indian paper industry, with over

50% of coated wood free grade rolling out of its plant. The company enjoys near

monopoly in Bond Paper market and nearly 45% share of the hi-bright Maplitho market

in India.

Backward Integration:

BILT is planning to become a fully integrated paper player in the industry. For that BILT

has entered into 10 year contract with the Maharashtra government for ensuring cheap

and regular supply of Bamboo. The company has also initiated farm forestry for cheaper

raw materials and has cornered Indonesia and Malaysia for this activity due to its

strategic geographic location.

BILT is also involved into Farm Forestry for planting of tree species that are suitable for

industrial wood. BILT is currently operating its farm forestry programs in the states of

Orissa, Chhattisgarh, Andhra Pradesh and Maharashtra.

Capacity Expansion;

The company has nearly doubled its production capacity to over 1 million ton per annum.

It has taken aggressive steps to penetrate the market with new capacity. With the increase

in paper prices, company is placed well to encash on the increased capacity, which will

now come into play.

Value Unlocking:

The group company Avantha Power has filled DRHP for an Initial public offer for Rs

12500mn, BILT owned 5% in the company, going forward we expect the company to get

more value among the peers. BILT is also planning to get its Sabah’s Dutch Holding

company listed in overseas market, which will enable them to raise money from overseas

markets at a comparatively low cost. The company has 80% stake in Sabah Forest

Industries. It is the Malaysia’s largest pulp and paper mill.

FINANCIAL ANALYSIS

Financial highlights of year 1st July, 2008 to 30th June, 2009

Total Income

Decreased by 0.3 per cent from Rs. 2,847 crore in 2007-08 to Rs. 2,838 crore in 2008-09.

Paper Revenue

Increased by 9.3 per cent from Rs. 2,425 crore in 2007-08 to Rs. 2,651 crore in 2008-09.

Domestic Paper Revenue

Increased by 13.5 per cent from Rs. 1,992 crore in 2007-08 to Rs 2,260 crore in 2008-09.

Operating Profit (PBDIT)

Decreased by 8.3 per cent from Rs. 715 crore in 2007-08 to Rs. 656 crore in 2008-09.

HUMAN RESOURCE ANALYSIS

HR played a key role of strategic influencer, and in alignment with business goals,

delivered on numerous initiatives. The Performance Management process was given

additional focus with an aim to increase productivity, to ensure that employees stretch

their potential and to build on a culture of continuous improvement. At BILT , it believe

that employees engagement with higher expectations leads to maximum contributions.

The web-based tool aligning individual and company goals has given exemplary results.

Acquisition and retention of talent continues to be a major thrust area and several

business leaders are engaged in the process of hiring, training, developing and retaining

key resources. As a regular practice, BILT visits various reputed colleges and

universities for campus recruitments. BILT recruited over 40 Management Trainees and

GETs directly from campuses. The business expansion is being supported by a

commensurate organisational growth at BILT and consequently it is engendering exciting

new opportunities for employees —creating the atmosphere to embrace change and

advancement.

LOGISTIC ANALYSIS

In order to become a globally competitive company, BILT has adopted the Total Quality

Management or TQM framework to continuously benchmark its processes against the

best in the world. BILT's TQM initiative has already started bearing results.

A culture of cross-functional, cross unit teamwork has been inculcated, which has

significantly increased efficiency. A scientific problem solving methodology has been

implemented across all functions. Process owners have been identified and positioned

across all the units. They, in turn, have created their own cross-discipline teams. This has

ensured on-going process up-gradation and continuity. Integration of cross-functional

disciplines like production and marketing has led to the development of more relevant

and more cost effective products.Constant monitoring at the shop floor level has led to

valuable learning on how to raise productivity and quality.India consumes about one-

sixth of the world average of 30 kgs of paper per capita, a figure that is likely to change

manifold due to the visible changes taking place in the Indian market context and

demographic dynamics. In addition, rising input prices will have to be matched with a

corresponding increase in realisations for the industry to maintain a competitive

advantage. In its attempt to reduce the cost of sourcing, the Company has initiated Farm

Forestry Program, which currently has approx. 21,900 hectares of land under plantation

in the captive areas of manufacturing locations. As per the projections made by Coal

India, the domestic demand supply gap of coal for the year 2001-12 would be around 95

million tones. Also, quality of coal is the issue for India. To reduce the impact of this

risk, the Company has started importing coal of higher quality leading to more cost

effectiveness.

INFORMATION

VISION

To become a leading creator of Shareholder Value in the Paper Industry and to

consistently outperform expectations and deliver superior value to both our Customers

and Stakeholders

MISSION

We will energise our people, with a positive culture that rewards innovation, breeds

initiatives and encourages intelligent risk taking and we will use the energy of our people,

develop and implement leading edge technologies and draw on both to deliver effective

world-class solutions to our customers

CORE VALUES

Honesty

To be principled, straight-forward and fair in all dealings

Integrity

Maintaining the highest standards of professionalism.

Flexibility

Adapting ourselves to always stay a step ahead of change.

Respect for individual

Giving each person room to contribute and grow

Respect for knowledge

To acquire and apply leading edge expertise in all aspects of our business

Team performance

The team comes first; none of us is as good as all of us!

PRODUCT RANGE

Coated Wood Art Paper

Art Paper C2S

Bilt Emperor Art Paper C2s

Bilt Royal Art Paper C2s

Art Paper C1s

Bilt Emperor Art Paper C1s

Bilt Royal Art Paper C1s

Black Centered Board

Sunlit Coated Art Board

Uncoated Woodfree

Hi-Brights

Sunshine Super Printing

Ta Maplitho Nsd Premium

Ss Maplitho

Sunshine Reprographic Printing

Bilt Royal Print Plus

Sunshine Envelop Printing

Creamwove

Easy Print

Ss Maplitho Nss (Ashti)

Ta Creamwove

Coloured Printing

Ta Coloured Printing

Duplicating Paper

Ta Duplicating White

Business Stationery

Bonds

Bilt Royal Executive Bond (Parent Sheets)

Bilt Royal Executive Bond (Retail Packs)

Sunlit Bond

Super Lucky Criss Cross

Parchment

Lucky Parchment

Bilt Matrix

Bilt Matrix Premium Note-Pads

Bilt Matrix 5 Subjects Note-Pads

Bilt Matrix Writing Pads

Bilt Matrix Conference Pads

Bilt Matrix Executive Pads

Bilt Matrix Office Pads

Bilt Matrix Premium Multi-Purpose Paper

Copy Paper

Premium Copy Paper

Bilt Copy Power

Economy Copy Paper

Bilt Image Copier

Packaging Paper

Kraft Paper

Eskp

Mfk

Multiwall Paper Bags

Biltpak

Speciality And Fine

Ivory Board

Super Lucky Ivory Board

Cartridge

Sunshine Super Cartridge

Ledger

Ta Azuerlaid Ledger

Industrial Grades

Posters

Ta White Poster

White Poster Td Loaded 4%

Ar Grade Poster

Acid Free Poster

Electrical Grade

Bilt Tertrans Transformer

Bilt Elektra

Laminate Grade

Print Base

Barrier Paper

Bleached Absorbent Kraft

Coloured Base (Bluish Grey,Dark Ivory,Ss Grey,Dark Grey,Slate Grey,Signal

Red,Bfl Red,Violet Base,Teak Base,Gold Rust)

Base Paper For Carbon

Cta

SIZE OF ORGANISATION.

Area: Over 1.7 million square metres

No of Employees – 5000 & above

Turnover in Crs – 8798.2 million(on 31st December 2009)

ORGANISATION STRUCTURE OF THE COMPANY.

CHAIRMAN↓

VICE PRESIDENT↓

DY. GENERAL MANAGER↓

GENERAL MANAGER↓

DY. MANAGER↓

MANAGER↓

ASSISTANT MANAGER↓

EXECUTIVES↓

SUPERVISORS↓

WORKERS

MARKET SHARE & POSITION OF THE COMPANY IN THE INDUSTRY

The Company has consciously focused on establishing a leadership position in the high

growth product segments to leverage the opportunities expected from a rapidly growing

domestic economy, as well as a demanding international environment.

The Company has the highest annual installed capacity in India – around 4,51,000 tonnes

of pulp and paper.   The market share of BILT on an average is about 14%. In the coated

paper segment, the share is 65 %, bond paper 40 % and copier paper 15 %. Company is

the only producer of Coated paper and boards through state-of-the-art Blade Coated

technology.

Due to its superior quality and the shifting consumer preference for world-class

products, the demand for these blade-coated products has been growing at over 20% for

last 2 years.

BIlt operates primarily in this growing market space. Its principal market is India and it

also caters directly to the Malaysian and South east asian markets through its

international subsidiary, SFI. It also exports to other parts of the world including the

matured markets but this is still a small share of its market portfolio.

In terms of size, India is the 15th largest paper consumer in the world. But in terms of

growth, it is one of the fastest growing markets. With an annual growth rate of 6.5 per

cent over 2008-09, the total paper consumption in India is close to 8.6 million MTPA .

The market size is expected to double by 2015 and increase to 20 million MT by 2020.

LEADERSHIP IN THE COMPANY

Company has nine-member Board of Directors.

Mr. Gautam Thapar (Executive and Promoter Director).

Mr. R. R. Vederah (Managing Director) and

Mr. B. Hariharan (Group Director - Finance).

Mr A P Singh – Nominee of LIC  

Mr R K Ahooja  

Mr Sanjay Labroo  

Mr A S Dulat  

Dr Pramath Raj Sinha  

Mr Ashish Guha

CHAPTER -2: Job Specific analysis

Report on working of comapny

I have been told to make a project report on the working of the company with the help of

studying 4 P’s of marketing in detail. The project report is the main criterion of

performance in the company by me. The main task of trainees in the company is to

anlyze the marketing strategies of the company with the help of primary and secondary

data. With the help of interaction with various dealers and customers, the marketing

strategies adopted by the company are analyzed.

CHAPTER – I RESEARCH PROBLEM AND PURPOSE

INTRODUCTION

Marketing strategy is a process that can allow an organization to concentrate its limited

resources on the greatest opportunities to increase sales and achieve a sustainable

competitive advantage. A marketing strategy should be centered on the key concept that

customer satisfaction is the main goal. A marketing strategy combines product

development, promotion, distribution, pricing, relationship management and other

elements; identifies the firm's marketing goals, and explains how they will be achieved,

ideally within a stated time frame. Marketing strategy determines the choice of target

market segments, positioning, marketing mix, and allocation of resources. Marketing

strategy determines the:

Market segmentation

choice of target market segments

positioning

marketing mix,

Allocation of resources.

Marketing strategy is a method of focusing an organization's energies and resources on a

course of action which can lead to increased sales and dominance of a targeted market

niche. It is most effective when it is an integral component of overall firm strategy,

defining how the organization will successfully engage customers, prospects, and

competitors in the market arena. Corporate strategies, corporate missions, and corporate

goals. As the customer constitutes the source of a company's revenue, marketing strategy

is closely linked with sales. A key component of marketing strategy is often to keep

marketing in line with a company's overarching mission statement. A marketing strategy

can serve as the foundation of a marketing plan. A marketing plan contains a set of

specific actions required to successfully implement a marketing strategy. For example:

"Use a low cost product to attract consumers. Once our organization, via our low cost

product, has established a relationship with consumers, our organization will sell

additional, higher-margin products and services that enhance the consumer's interaction

with the low-cost product or service." A strategy consists of a well thought out series of

tactics to make a marketing plan more effective. Marketing strategies serve as the

fundamental underpinning of marketing plans designed to fill market needs and reach

marketing objectives.

Strategies based on market dominance - In this scheme, firms are classified

based on their market share or dominance of an industry. Typically there are four

types of market dominance strategies:

o Leader

o Challenger

o Follower

o Nicher

Porter generic strategies - strategy on the dimensions of strategic scope and

strategic strength. Strategic scope refers to the market penetration while strategic

strength refers to the firm’s sustainable competitive advantage. The generic

strategy framework (porter 1984) comprises two alternatives each with two

alternative scopes. These are Differentiation and low-cost leadership each with a

dimension of Focus-broad or narrow.

o Product differentiation (broad)

o Cost leadership (broad)

o Market segmentation (narrow)

Innovation strategies - This deals with the firm's rate of the new product

development and business model innovation. It asks whether the company is on

the cutting edge of technology and business innovation. There are three types:

o Pioneers

o Close followers

o Late followers

Growth strategies - In this scheme we ask the question, “How should the firm

grow?” There are a number of different ways of answering that question, but the

most common gives four answers:

o Horizontal integration

o Vertical integration

o Diversification

o Intensification

"BILT is India's largest paper company with gross sales of 2368.8 crores and the only

Indian company to rank amongst the top 100 paper companies in the world"

Ballarpur Industries Limited (BILT), part of the US$ 3 Billion Avantha Group, is the

undisputed leader of the Indian paper industry. It is India's largest manufacturer and

exporter of paper, with a strong presence in all segments of the usage spectrum, including

writing and printing (W&P) paper, industrial paper and speciality paper. Complementing

this is a diversified production infrastructure with six manufacturing units spread across

the country.

BILT has evolved as a dynamic, knowledge-driven organization focused towards

creation of stakeholder value. In the process, it has also transformed the paper industry

from its traditional 'commodity market' mindset to a branded one. A concerted

programme of innovation and technological excellence helps it proactively respond to the

needs of each individual segment. Today, BILT not only has the range, but also a well

entrenched distribution network that enables it to reach customers, any time, any place.

PROBLEM STATEMENT

Bilt is by far the largest paper manufacturing company in India. The present research

would identify whether Bilt will be able to maintain its position at top through its

marketing strategies. Instead of using simple promotional techniques, the company

maintain its top position in the paper industry. In today time, the awareness of consumer

is increasing and the competition has become severe. There are various players in the

market which give neck to neck competition to the company so main problem which lies

in this company is “To maintain the top position in the industry.”

OBJECTIVE

1. To analyze the marketing strategies of Bilt in terms of Product, Price, Place,

Promotion and Packaging.

2. To identify the competitive advantage of Bilt in the Paper industry in terms of

a. Promotional activities

b. Brand value

c. Customer perception

d. Brand offerings

3. To do SWOT and PEST analysis of the company related to marketing aspects.

4. To study the 4 p’s of the company in detail.

SCOPE

Functional Area -Marketing

Time of Study - Last 3 years marketing strategies

Geographical Area- Employees from company premises.

Dealers from NCR.

Focus of the study:

Bilt is the largest paper manufacturing company in India but its marketing strategies is

somewhat different in comparison to other companies who promote their product in such

a way that they can cover large segment of population through advertisement in

Television, Radio etc but Bilt uses some other strategy to attract its target audience, focus

of the study is on the marketing techniques used by the Bilt to reach its target customers.

Relevance of the study:

Relevance of the study lies in the fact that even with other promotion methods and

different marketing techniques other than advertisement in Television, Radio, Newspaper

etc. company can still be at the top in their area of business.

CHAPTER - II REVIEW OF LITERATURE: With the help of various books, journals and internet, the review of concepts and theories

and review of previous research finding is taken place.

Some previous research on marketing strategies is also studied.

Some book are also reviewed of “Marketing Management” to clear concepts and theories.

A Case study is properly reviewed here which is:

BALLARPUR INDUSTRIES LTD.: ALIGNING MARKETING STRATEGYIN A TURBULENT ENVIRONMENT

Ballarpur Industries Ltd. (BILT) is the leader in the fragmented Indian writing and

printing paper industry, with Rs.21.5 billion sales turnover and approximately 20 %

market share. BILT Did not have any focused marketing strategy nor a marketing team

and was interested only in pushing the stocks out of its plants prior to 1999. In 1999, the

new Vice Chairman and Managing Director (VC & MD) appointed a Marketing Head

whose task was to turn the production oriented firm into a market oriented firm as a

proactive measure to develop competitive advantage before the competition heats up.

During the period from 1999-2003, he set up a marketing team of seventy people,

designed and implemented necessary systems and procedures for improved service

delivery, undertook efforts in mapping the consumer and end user markets, invested in

branding BILT and its products and strengthened the distribution network to connect

better with its consumers and end users. In 2003, the V.C & MD was considering three

long term strategic options for BILT (i) develop BILT as a national writing and printing

paper distribution company (ii) forward integrate into printing (iii) continue the

traditional growth model. The V.P Marketing now finds it necessary to evaluate the

impact of the marketing initiatives made during 1999-2003, recommend the appropriate

strategic option and formulate marketing strategy for that can best leverage BILT’s

marketing strengths and help develop sustainable competitive advantage.

A marketing strategy combines product development, promotion, distribution, pricing,

relationship management and other elements; identifies the firm's marketing goals, and

explains how they will be achieved, ideally within a stated time frame.

Previous Research

CHAPTER - III CURRENT SCENARIO

The paper industry in India is more than a century old. At present there are over 600

paper mills manufacturing a wide variety of items required by the consumers.

 These paper mills are manufacturing industrial grades, cultural grades and other

specialty papers. The paper industry in India could be classified into 3 categories

according to the raw material consumed.

1. Wood based

2. Agro based &

3. Waste paper based

While the number of wood based mills are around 20 and balance 580 mills are based on

non-conventional raw materials.

The Govt. of India has relaxed the rules and regulations and also delicensed the paper

industry to encourage investment into this sector and joint venture are allowed and some

of the joint ventures have also started in India. The paper industry in India is looking for

state-of-art technologies to reduce its production cost and to upgrade the technology to

meet the international standards.

It is estimated that the paper industry would be growing at the present rate of 7-8% of

compounded rate and would require 9.5-10 million MT by the end of the decade from the

existing production of around 6.7 million tonnes.

Paper industry in India is the 15th largest paper industry in the world. It provides

employment to nearly 1.5 million people and contributes Rs 25 billion to the

government's kitty. The government regards the paper industry as one of the 35 high

priority industries of the country.

The Indian Paper manufacturing Industry, which is highly power and capital intensive, is

broadly divided into paper, paperboards, and newsprint. Increased consumer spending

and improvement in conversion technology is expected to be the growth drivers for this

industry. The literacy level in India which is on the increase is further set to improve the

demand for paper. Indian Government’s policy for reducing the peak import tariffs for

paper each year, and pursuing the policy of actively entering into Regional Trade

Agreements (RTA) with ASEAN countries has further set up the momentum for growth

in this industry. These agreements along with further reduction in import duties are

expected to boost the demand for paper in the coming years.

India is the second most populous country in the world however, the per capita paper

consumption is among the lowest at 4.5 kg, while South Asian and global averages are 24

pounds and 117 pounds respectively. But the demand for paper is increasing given the

rising disposable incomes particularly of the expanding middle income group. The

literacy level in India which is on the increase is further set to improve the demand for

paper in the future. The Government of India’s increased budget allocation for education

sector is expected to further improve the literacy rates in both urban and rural areas,

resulting in increased demand for writing paper. Given the billion plus Indian population,

per capita increase in consumption will significantly increase the demand by one million

tons per year.

The healthy growth in the paper industry was driven by a strong growth in the economy,

increasing sophistication of the Indian consumer, and the emergence of packaging as a

key driver of product differentiation. Amongst the various sub segments value added

paperboards segment catering primarily to the packaging needs of the pharmaceuticals,

personal products and foods sectors, continued to grow at a substantially faster pace of 20

percent. The domestic newsprint market is likely to be bullish throughout 2006 in

anticipation of strong buying support from the newsprint consuming sectors. Both

English and vernacular newspapers are expanding the circulation leading to an increased

demand for paper

Indian manufacturers are upgrading their manufacturing technologies to remain

competitive and to retain their market share in the country. Many Indian firms have

started exporting their products to other countries as well. This export-led growth and

exposure to international products have forced the Indian firms to change product

packaging. These firms have started improving the printing and packaging of their

products to retain the product appeal among the customers both in Indian and abroad.

The Indian import of paper is expected to continue for the next five years and beyond to

meet the expanding local demand. Indian firms also import pulp from other countries.

The Indian paper manufacturers have started facing serious challenges. The major threat

faced by many Indian paper manufacturers is the shortage of quality raw material at

globally competitive rates. Noticeably due to the restricted availability of wood and

thereby pulp, prices have risen significantly which has affected the paper manufacturers.

Importantly for the paper companies pulp and energy are the two main components of

product cost. The supply situation is expected to remain tight in the coming time as well.

Another cause for concern is the consistent denial of permission by the central

government to allow paper manufacturers the development of degraded forestland, which

would enable them to source quality raw material at reasonable prices.

Major Players

Andhra Pradesh Paper Mill Ltd

Ballarpur Industries Ltd.

ITC Limited

JK Paper Ltd.

Pulp Mills (CPM)

Pudumjee Pulp & Paper Mills Limited (PUDUMJEE)

Seshasayee Paper and Boards Limited (SPB)

Tamil Nadu Newsprint and Papers Ltd.

The West Coast Paper Mills Ltd.

Customers

End users of paper are both industrial and individuals. The Indian pharmaceutical

industry, Indian consumer products industry sector, processed food industry segment, are

the major end users of papers for packaging their products. Schools, colleges, offices are

also major end users of paper. Book publishing firms, print media and newspaper

publishers are another major industrial end users of paper. The expanding printing and

packaging sectors are the intermediate end users of paper.

BILT vs JK Paper Ltd.

The Rs 12,000 crore Indian paper industry is poised to see the clash of the titans in the

form of Ballarpur Industries Limited (BILT) versus JK Paper Ltd. The war-cry -‘building

brands’. While JK Paper is going to launch five branded products this year, BILT plans to

launch three to four branded products. Besides, both will focus on the key growth areas

including coated paper and branded copier paper. The strategy is also to climb the value

chain with specialised products.

JK Paper’s strategy is to increase the share of branded products in their stable from 35 per

cent to 50 per cent in the next two years. A key thrust area is the writing and printing

segment, which accounts for 37 per cent, in terms of volumes of the total paper industry.

The focus points within this segment are the branded copier segment which is growing at

10 to 15 per cent, coated paper growing at 9.5 per cent. Seen in comparison to the general

6 per cent growth in paper demand in the country, it is small wonder that the companies

are zeroing in on these focus areas.

The Rs 600 crore JK Paper has a multi-pronged approach. Says its vice president

(marketing & sales) Rajiv Sheopuri, “Our endeavour is to create new markets in paper.

The strategy is to span the paper industry in totality.” With this view, it is looking at

getting into coated paper as well as low quality paper, segments in which the company

does not have a presence. It is looking at outsourcing (either domestic or international) or

acquisition options to get into these categories within this year. BILT, on the other hand

has a market share of 53 per cent in the coated paper segment, while it is a major player

in the notebook paper category. JK Paper is also planning to rev up its activities in the

premium bond segment, where BILT’s Royal Executive Bond has a 62 per cent share. JK

paper is going to launch many value-added products including premium cheque paper.

The plans are to get into packaging paper which is a substitute for plastic.

BILT plans to double the volumes of its branded copier, Copy Power, in the next six to

nine months. JK Paper with its brands JK Copier and JK Easy Copier claims to be the

market leader in this category. BILT is also going to launch premium branded packaging

boards with graphic application soon — BILT Exelcia and BILT Oyster. Both the boards

are targeted at the high end cosmetics and garment companies. It also plans to launch

branded notepads and envelopes. Says Vice President (sales and marketing), BILT,

Yogesh Agarwal: “The idea is to identify the vacuum in the market and establish a

presence.”

Key Highlights:

The Paper sector is in the midst of cyclical upswing driven by improved demand

and increase in the price of the products. BILT is the market leader in the Indian

paper industry and would be the key beneficiary from the positive outlook for the

sector.

The improved performance of Bhigwan and Ballarpur plant will drive higher

volume and improved performance of the company.

There is an expectation of increase in paper prices by 2000-2500 per ton; this will

further improve profitability of the company.

Copiers and coated papers are the fastest growing segments, at an annualized rate

of 15-20 %, while high-quality packaging boards are growing at about 12%.

The company is considering diversifying into manufacturing of container board

andcorrugated boxes, through brownfield expansion to cut on the acquisition

costs.