Report on

Paper and Board industry of Pakistan

Authors

AHMAD SAJJD SHABBIR

SOHAIB MEHMOOD

August 19, 2010

SPA (University of Management Technology)

Acknowledgment

At the very outset we would like to thank in our own humble way the Almighty Allah for giving

us the resources, the comprehension and the strength for completing this task.

We are also indebted to our supervisor Mr. Khalil Ahmad Arbi for his guidance and supervision,

which has played a vital role in the completion of this research.

In addition we are thankful to our families who have been supportive during our MSBF work.

We are extremely grateful to our parents who always wanted the best for us and encouraged us to

carry on.

Abstract

This research repot is based on ‘Paper Industry’ in Pakistan in perspective of looking its ways of

working and to find out steps to improve its performance. All the want of this study is due to its

economical scope because economy is always under the influence of those industries that

produce ever needed articles. Paper is a thing that is always in strong demand. And highly

demanded articles are pillars of economy that support the whole country. But these pillars are

supportive with their whole strength only if they are produced well.

Contents

1 INTRODUCTION & SCOPE ......................................................................................................... 7

1.1 RESEARCH METHODOLOGY AND DESIGN ...................................................................................... 8

2 OVERVIEW OF THE SECTOR .................................................................................................... 9

2.1 HISTORY OF PAPER........................................................................................................................ 9

2.1.1 THE ORIGIN OF PAPER..................................................................................................................9

2.1.2 DEVELOPED IN CHINA ................................................................................................................ 10

2.1.3 SPREAD TO OTHER AREAS........................................................................................................... 10

2.1.4 SPREAD TO MUSLIM WORLD......................................................................................................10

2.1.5 RECENT FORM............................................................................................................................ 11

2.2 ISLAMIC CONTRIBUTION TO PAPER MAKING............................................................................... 12

2.3 HISTORY OF PAPER INDUSTRY IN PAKISTAN ............................................................................... 13

2.4 TYPES OF PAPER AND THEIR USES ............................................................................................... 14

2.5 FIRST FIRM IN THE SECTOR ......................................................................................................... 22

2.6 SOME EARLY FIRMS IN THIS SECTOR........................................................................................... 24

2.7 HOW SECTOR DEVELOPED, ANALYSIS......................................................................................... 25

2.8 GOVERNMENT ROLE IN DEVELOPING THE SECTOR..................................................................... 26

2.9 SWOT ANALYSIS OF THE SECTOR............................................................................................... 27

2.9.1 STRENGTHS................................................................................................................................ 27

2.9.2 WEAKNESS................................................................................................................................ 27

2.9.3 OPPORTUNITIES......................................................................................................................... 27

2.9.4 THREATS.................................................................................................................................... 28

3 SUPPLY SIDE SITUATION......................................................................................................... 29

3.1 TOP FIVE BIG NAMES IN THE SECTOR .......................................................................................... 29

3.2 ANALYSIS OF BIG NAMES ............................................................................................................. 30

3.2.1 PACKAGES LIMITED ................................................................................................................... 30

3.2.2 CENTURY PAPER & BOARD MILLS LTD ...................................................................................... 33

3.2.3 FLYING BOARD AND PAPER PRODUCTS....................................................................................... 35

3.2.4 FLYING KRAFT PAPER M ILLS ..................................................................................................... 36

3.2.5 PREMIER PAPER MILL LTD ......................................................................................................... 37

3.3 PRODUCTS PRODUCED IN PAKISTAN ........................................................................................... 38

3.4 INNOVATION IN THE SECTOR....................................................................................................... 39

3.5 INTERNATIONAL SITUATION, IMPORT AND GROWTH ANALYSIS ................................................. 40

3.6 PROBLEMS AND ISSUES IN SUPPLY SIDE....................................................................................... 48

4 DEMAND SIDE SITUATION ...................................................................................................... 50

4.1 SOURCES OF DEMAND .................................................................................................................. 50

4.2 SOURCES OF GROWTH ................................................................................................................. 51

4.3 INTERNATIONAL SITUATION........................................................................................................ 52

4.4 GROWTH AND EXPORTS OF SECTOR ........................................................................................... 53

4.5 TRENDS AND CONSUMER PREFERENCES...................................................................................... 55

4.6 PROBLEMS IN DEMAND SIDE SITUATION ..................................................................................... 55

5 POLICY ISSUES........................................................................................................................... 56

5.1 GOVERNMENT POLICIES TILL NOW REGARDING SECTOR ........................................................... 56

5.2 OBSTACLES FROM GOVERNMENT SIDE ...................................................................................... 56

5.3 INFRASTRUCTURE SITUATION FOR THE SECTOR......................................................................... 57

5.4 GOVERNMENT POLICIES ARE HELPING THE SECTOR TO GROW.................................................. 57

6 CONCLUSION.............................................................................................................................. 58

7 RECOMENDATIONS .................................................................................................................. 59

8 BIBLIOGRAPHY.......................................................................................................................... 60

Tables:

Table 1 .......................................................................................................................................... 41

Table 2 .......................................................................................................................................... 41

Table 3 .......................................................................................................................................... 42

Table 4 .......................................................................................................................................... 42

Table 5 .......................................................................................................................................... 42

Table 6 .......................................................................................................................................... 45

Table 7 .......................................................................................................................................... 46

Table 8 .......................................................................................................................................... 46

Table 9 .......................................................................................................................................... 47

Table 10 ........................................................................................................................................ 47

Table 11 ........................................................................................................................................ 49

Table 12 ........................................................................................................................................ 53

Table 13 Detail Paper and board products Exports of Pakistan.................................................... 54

1 INTRODUCTION & SCOPE

With the passage of time there have been lots of changes in ‘Paper Industry’. No doubt, in every

country of the world it is a very important sector because today paper is used almost in each and

every field of life as educational and non-educational, formal and casual, personal and social.

Paper is used at every inch of our daily life i.e. for books, notebooks, diaries, newspapers,

magazines, letter pads, different types of cards, raping papers, binding sheets, envelopes, bags

for carrying grocery etc.

Different industries are very important but mostly they are field bound or it can be said that their

scope revolves around some specific area. But paper industry has a vast scope having the reason

that it is involved in every walk of life. Paper industry is a very active sector that also plays a

vital role in the economy of a country.

In this research first we will try to find whether this sector is as much developing and efficiently

working as required today. If it is not working up-to the-mark then it must be improved to

increase economical growth rate and employment, secondly we will do the analysis of previous

years of imports and exports of the sector and finally government policies for the development of

the sector and recommendations that can help to groom this sector more. So, this sector has a

significant place on the ‘Pages’ of a researcher to be discussed about.

1.1 Research methodology and design

The sector regarding Paper Industry is analyzed on the bases of its performance in this part of

research report. The purpose of this analysis is to check out the current situation of the sector and

steps to improve the above mentioned sector and its impact on our economy. This study contains

the following design and research tools.

The system of collecting data for research projects is known as research methodology. The data

may be collected for either theoretical or practical research.

Some important factors in research methodology include validity of research data, Ethics and the

reliability of measures. For this measurement of data about some specific matter we use some

specific way and method of research.

The present research has a Qualitative Approach to find out the facts about the performance and

role of “Paper Industry”. While, it is important to identify sector regarding paper industry and

discover all the possible steps to improve this sector in perspective of Pakistani economy.

The Qualitative research has an inductive method to find out the facts. (Johnson 2005). I shall

find out the data about Paper Industry in Pakistan through an analytical survey of this sector. The

behavior of research is social and practical. But with Qualitative method, Quantitative tool is also

used to analyze data. That is why, it’s a mixed research in perspective of using method and tools.

The tools in this research are interviews with related people of Paper Industry and secondary data

from different reports and internet.

2 OVERVIEW OF THE SECTOR

2.1 History of paper

We can divide the history of ‘Paper’ in five parts.

2.1.1 The Origin of Paper

The origin of paper comes from Egypt and the River Nile. The term ‘paper’ is derived from

‘Papyrus’. It is the marsh grass called Cyperous Papyrus that thrived in the valley of the river

Nile. The Egyptian cut the stem of the plant into thin strips and soaked in the water of the Nile.

This softened the stem. Then these strips were arranged to form a mat and pounded to form a

thin sheet. This sheet was dried in sun light. The resulting sheet was used for writing. It was easy

to carry around because it was light. The Egyptians, Greeks and Romans used these sheets to

record events, write spiritual texts and create works of art. It has been discovered that the

Mayans made something similar to keep records in the second century AD. That was like a mat

and nothing like the paper that we use today.

Form of paper like a mat around 2400 B.C.

2.1.2 Developed in China

Invention of paper as we know it today is attributed to T'sai Lun. He was respected as a patron

saint of papermaking. It is said that T'sai Lun experimented with different materials and

developed the art crushing the fiber of plants until each strand was separated. These separated

fibers were mixed with water and dipped into a huge vat. Then this layer of fiber was dried and

the product that was formed was paper. The paper was thin, flexible and strong and had a fine

smooth surface. The process of making paper was kept a secret within China till the 3rd century.

2.1.3 Spread to other areas

During 3rd century it spread to Vietnam and then to Tibet. Paper was introduced in Korea in the

4th century and to Japan in the 6th century. Then it spread slowly to Asia and Nepal.

2.1.4 Spread to Muslim World

In 751AD when the Tang dynasty was at war with the Muslim rulers on the banks of the Tarus

River. The Muslims captured a Chinese caravan that had many papermakers as well. They were

taken to Samarqand and they taught the Muslims how to make paper. Then eventually

Samarqand became an important center for the production of paper. From here the paper makers

moved west to Baghdad, Damascus and Cairo.

2.1.5 Recent form

When the Moors of North Africa attacked Spain and Portugal they took the paper making

technique with them and papermaking finally found its way to Europe in the 12th century.

Charles Fenerty of Halifax made the first paper from wood pulp (newsprint) in 1838.

Charles Fenerty was helping a local paper mill maintain an adequate supply of rags to make

paper, when he succeeded in making paper from wood pulp. He neglected to patent his invention

and others did patent papermaking processes based on wood fiber.

In 1856, Englishmen, Healey and Allen, received a patent for the first uneven paper. The

paper was used to line men's tall hats. American, Robert Gair promptly invented the corrugated

cardboard box in 1870. On December 20, 1871, Albert Jones of New York NY, patented a

stronger corrugated paper (cardboard) used as a shipping material for bottles and glass lanterns.

In 1874, G. Smyth built the first single sided uneven board-making machine. Also in 1874,

Oliver Long improved upon the Jones patent and invented a lined corrugated cardboard.

(The first recorded historical reference to grocery paper bags was made in 1630. The use of

paper sacks only really started to take off during the Industrial Revolution: between 1700 and

1800.)

2.2 Islamic contribution to paper making

Muslims were responsible for inventing papermaking machines and spreading paper and

throughout the world. The world's first paper mill was set up in Baghdad in early 7th Century

AD. There were over fifty paper mills in Baghdad by the beginning of 8th century AD.

Production and employee attendance records of some of these mills survive to this day.

Papermaking rapidly spread throughout the Muslim empire into Damascus, Egypt, Morocco and

most Islamic countries by the 9th century AD. Muslim papermakers also invented the use of flax,

cotton, wood, and other substitute fibers (including waste paper) to prepare paper and canvas.

Although the export of paper from the Muslim Empire to Byzantium and other parts of the

Christian Empire was allowed in small quantities by the 11th century, paper was disfavored by

the Christian Church as a manifestation of Muslim efforts to dominate trade and culture. Efforts

were made for hundreds of years to boycott its use. Finally, in 1221 AD, a decree from Holy

Roman Emperor Frederick II declared all official documents written on paper to be invalid.

Muslim engineers, at the request of influential Italian entrepreneurs, built Europe's first paper

mill in Italy by early 15th century. The invention of Gutenberg's printing press in the mid 15th

Century forced a change in Church's attitudes toward paper, and bulk supplies continued to be

sold by the Ottoman Turks and Egyptians to Europe till the 17th Century, until Europe became

self sufficient in paper production.

2.3 History of paper industry in Pakistan

Being a new and separate state, at the time of independence Pakistan was under developed.

Because of this reason Pakistan had no paper and paper board manufacturing unit. The needs

regarding paper were met through imports.

In 1952, first paper unit was established. Its production capacity was 500 tons per annum. Then

more units were set up in Punjab, NWFP and Sindh, producing various grades of paper, using

local and imported raw materials. But due to poorly planned growth in the 80’s and 90’s, many

of the units are lying closed from that time.

At present, in Pakistan there are about 100 units in the organized and unorganized sectors.

Collectively, these units have a set up capacity of 650 thousand tons per annum. The units in

organized sector have a capacity of 20 to 300 tons per day. The organized sectors have 575

thousand tons production capacity from 26 paper manufacturing units. These units produce

Writing and Printing Paper, Wrapping and Packing Paper, White duplex coated, Un-coated

board, Chip Board and other board.

In Punjab, about 70 percent of the paper mills are located, in Sindh 20 percent and 10 percent in

NWFP. Punjab has a vast concentration due to availability of abundant underground water and

wheat straw used as primary raw material. Only a few mills have a capacity of more than 100

tons per day. Where as, majority of the mills have low production capacities. Production capacity

of these units ranges between 1500-88000 tons on annual basis.

2.4 Types of paper and their uses

Abrasive Kraft

Used For: Abrasive Kraft is used for making sand paper used in roughening applications.

Absorbent Kraft

Used For: Used for Laminates, tube making and defence applications.

Alkaline Paper

Paper having pH values greater than 7 made by an alkaline manufacturing process.

Anti Rust Paper

Paper which has the property of protecting the surfaces of ferrous metals against rust

Antique Paper

Printing paper having good bulk and opacity with rough or matt surface

Art Paper

Used For: Brochures, calendars, magazine covers, magazine text, where high quality printing is

required

Azurelaid Paper

A laid paper usually bluish green in color having a good writing surface

Barograph Paper

Red thin paper coated on one side with a white wax, so that the needle of the barograph leaves a

red line on a white ground, sold in rolls and coils and to suit the type of barograph.

Base Paper This paper is generally used by a converter to either coat or laminate. Different

grades are available for different applications. Used For: Mostly used for converting into a value

added grade

Beedi Wrap Paper

Used For: Used for decorative purposes in different colours.

Bible Paper

Thin white opaque heavily loaded, used for printing bibles. Not suitable for pen and ink, because

of its absorbency.

Blade Wrapper (SS)

Used For: Used for making of small packs for keeping razor blades.

Bond Paper

This paper has good strength properties, good stiffness and good aesthetical look. The name

"bond" was originally given to a paper which was used for printing bonds, stock certificates, etc.

Important characteristics are finish, strength, and freeness fro Used For: Mostly used for

letterheads and for image building stationery

Book Paper

A general term used to define a class of papers used by the book publishing industry; most

commonly used for the book text paper but also for book cover paper.

Business Forms Paper

Paper made for the manufacture of business forms. Used For: Used for business forms and data

processing such as computer printouts.

Carbon Base

Carbon is normally manufactured in lower grammages like 20 gsm or less. The most important

property in this paper is porosity which should be controlled at about 15-20 ml/min, so that

absorption leads to cost increase while less absorption makes poor quality of carbon paper which

is used many a time.

Carbonless Paper

Paper stock specially treated or coated to provide copies without the use of interleaved carbon.

The copy process requires mechanical pressure such as from writing or typing and sometimes a

chemical reaction. Used For: Application forms, computer stationery, time saving stationery.

Also used in copying applications without carbon paper

Cardboard

A range of various boards such as pulp board, paste board, Bristol board, ivory board, art board,

chromo board in the form of a coherent sheet or web used for printing, packaging, decorating etc.

Cast Coated Paper

A coated paper with high gloss and absorptivity in which the coating has been allowed to harden

or set while in contact with a mirror like polished chrome surface.

Chromo Paper

China clay (kaolin) coated on one side. The coating on one side could be glossy or matt as per

requirement of the customer. Used For: Mainly used for self adhesive stickers, calendars ,

posters, labels and for applications where only one side has to be printed

Cigarette Slide

Used For: Used for making of Cigarette Slides (180-200 gsm).Pulp board are multi layer boards

can be used

Cinema Poster

Used For: For printing Cinema posters, Wall papers

Clay Coating Base Paper

Used For: Used for coating with Clay for making chromo and art paper

Coated Paper

Paper could be coated on either or both sides. Coating applied on the paper could be as per the

requirement. For example, china clay coating for glossy paper used for high quality printing or

gum coated paper for use of printing stamps Used For: Could have different applications for

different coated papers

Copier Paper

Mainly used for copying. Used extensively in photocopiers, plain paper faxes, etc. and other

office stationery. Thickness could range from 70 GSM onwards. Used For: Copying, typing,

plain paper faxes, general stationery

Creamwove Paper

Used For: Used for Computer Stationery purposes.

Defence Krafts

Used For: Used for Laminates, tube making and defense applications.

Diazo Base Paper

The process involves coating of paper with diazo solutions and a coupler. This is exposed to ultra

violet rays coming through the image. The final print is developed by making the coating

alkaline. In some cases it is developed by ammonia vapour. Used For: Used for making of

ammonia paper for image recording.

Electrical Insulating Papers

Used For: Used for Electrical insulation.

Extensible Sack Kraft

This paper is characterized by very high stretch and high capability to absorb tensile energy.

Used For: Used for packaging in sacks, the bulk commodities.

Fax Base Paper

It is first coated with photo conductive zinc oxide on which images exposed. Hence electrical

conductivity / resistivity is to be controlled to ensure that the image is not conducted through the

paper to the other side Used for: For making Fax images

Flexible Carton Board

Used For: Used for making Flexible Cartons.

Fluorescent Paper

Used For: Used for Labels, Posters and decorative applications.

Fluting Medium

Used For: Used for Corrugated Board manufacturing.

Foil Base Poster, Board

Paper is laminated with metal foil using a suitable adhesive. Hence paper must have porosity to

accept glue. Used For: Used for lamination of paper with metal foil.

General Writing Paper (Note book)

Paper used for Note Books should have excellent bulks because note book should appear bulky,

as otherwise it will be perceived as having less number of pages. Another important factor is

Cobb, since writing ink must go into the paper instantly and dry.

Used For: Used for note books.

Glassine Paper

These papers are characterized by very low porosity (air permeability less than 10 cubic cm min.

Preservation of aroma and perfection against attack of external environment to the packed

contents are also important qualities of the subject papers.

Used For: Used for food packaging’s and other special wrapping applications.

Greaseproof Paper

These papers are characterized by very low porosity (air permeability less than 10 cubic cm min.

This gives resistance to grease and moisture. Preservation of aroma and perfection against attack

of external environment to the packed contents are also important qualities of the subject papers.

Used For: Used for food packaging’s and other special wrapping applications.

Gypsum Board

Used For: This is used for making panel boards for interior partitions, false ceiling etc.

Ice Cream Cup

Used For: Used for making Ice Cream Cups.

Inter Leaving Kraft

Used For: Inter Leaving Kraft is used for separation of steel sheets in a stack.

Kite Poster

Used For: Used for decorative, purpose, Kites

Label Paper

Labels are normally printed on offset machine. Hence good wax pick is required. Wire side of

the paper used for application of gum should have adequate porosity. Good printability,

compressibility, absorbency and ink hold out give satisfactory printing. Used For: Used for

printing of labels in multi color.

Laser Paper

Used For: Used for printing purposes where Laser beams are used.

Liner Board

Used For: Used for Corrugated Board manufacturing.

Metalisation Base Paper Used For: Used for vacuum metalisation for packaging applications.

MICR Cheque Paper

MICR stands for Magnetic Ink Character Recognition. Codes, figures and words are read by

computer by magnetic field created on them. By careful formulations the paper is designed to

react against a wide range of ink eradicators. It gives a characteristic colored stain of "flare up"

on contact with acid, alkali, bleach and organic solvents like acetone, benzene, and ethanol.

Used For: Used in making of cheques which are processed by computer.

Multi Part Stationery

Used For: Multi part stationery paper is used for computer applications where number of copies

are printed in one attempt.

Newsprint

It has to be made with adequate strength properties and surface characteristics; especially wax

pick. Optical properties brightness is required for better readability and appeal (with ink to paper

contrast which improves readability of print) and opacity. Used For: Used for printing our daily

news papers and associated issues. It is used under very stringent shop-floor conditions by the

news paper blouses for printing our daily news papers and associated.

One Time Carbon (OTC) Paper

A carbon paper intended to be used once as opposed to many times or multiple use carbon

papers. Used For: Mostly used in multi-part continuous stationery.

Poly Extrusin Base Paper

Used For: Used for Poly Extrusin for packaging.

Shell Boards

Used For : Used for making of Cigarette Slides (180-200 gsm).Pulp board are multi layer boards

can be used

Soap Wrapper Poster (ARSR)

Used For: Used for Wrapping of Soaps and detergents.

Tea Bag Paper

Used For: Used for retail packing of tea.

Textile Tubes and Cones

Used For: Used for Laminates, tube making and defense applications.

Twist Wrap tissue

It possesses properties of with standing breaking stress when twisted during packing of toffees.

High bursting strength combined with excellent machine runnability makes it suitable for special

packing operations which require papers with high twisting properties.

Used For: It is used in packing of pharmaceutical products after poly lamination or coating.

Wall Paper

Coated with multiple coolers or floral designs. Used For: Used as an alternative to paint. To give

better aesthetic appeal to the walls

Yellow Pages

Paper used for this needs to have high bulk (1.1 to 1.2), high tensile strength of about 2 kg/15

mm in MD and good opacity (90%) so that the fine print made on thin paper like 40 GSM would

be readable on both side. Excellent reel build up is required for smooth feeding during printing.

This requires every uniform profile of bulk, gsm, caliper, moisture etc.

Used For: Used for printing classified addresses and information in telephone directory.

2.5 First firm in the sector

Karnafuli Paper Mills was established at Chandraghona, Chittagong, which is Now

Bangladesh http://en.wikipedia.org/wiki/Bangladesh in 1951 by the Pakistan Industrial

Development Corporation (PIDC) at a cost of Rs 67.57 million. At that time, there were 31

enterprises that produced hand-made paper in East Pakistan. These enterprises and an industrial

unit that produced carbon paper together employed 122 workers, of whom 55 were men, 51

women and 16 children.

KPM was the first paper manufacturing industrial establishment registered under the

FACTORIES ACT. At the time of its establishment, it was the biggest paper mill in Asia with its

three thousand workers. It was established under a World Bank loan supported by a consortium

of suppliers from USA, England, Germany, Sweden and Italy. The factory went into production

in 1953 with an installed capacity of 30,000 tons of paper per year. The capacity utilization,

however, went down within a few years of its establishment. In 1964, KPM was sold out to the

Dawood Group of Pakistan, which undertook a balancing, modernization and rationalization

(BMR) programme.

KPM sold its paper to both East and West Pakistan. The price of its paper was the same in both

wings. In fact, users of KPM paper in East Pakistan paid a price higher than its actual cost plus a

normal profit. They compensated for the cost of transportation of the paper to West Pakistan and

thus implicitly financed the subsidy enjoyed by its users in that province.

Immediately after the WAR OF LIBERATION, KPM became an ABANDONED PROPERTY.

Bangladesh Industrial Development Corporation (BIDC) took over its control very soon and

started to search for new markets for its products.

In 1952 at West Pakistan’s first PIDC managed paper mill was established in Rahwali,

Gujranwala. Mr. Wajid Sayid now chairman of Sayid Paper Mills and the pioneer of

Papermaking in Pakistan has played a leading role in establishing this industry in Pakistan. He

has played an instrumental role in the establishment of medium size mills, and pioneered the use

of indigenous raw materials in ALL grades of paper being manufactured in Pakistan.”

2.6 Some early firms in this sector

After humble beginning of the Paper industry in Pakistan

Given are the some early paper and board firms in this sector

1. West Pakistan P.I.D.C concept mill. Rahwali (Sethi Straw Board)

2. Lasani Paper and Board Mills.

3. P.P.P (Now Mandiali Paper Mills)

4. Charsadda Paper Mills. (Now Flying Paper Mills)

5. Packages Limited

6. Cherat Paper sack limited

7. Sayid Paper Mills

8. Security Papers Ltd

9. Century paper mill Pakistan

10. Abbas Paper & Board Mills (Pvt) Limited

11. Premier Paper Mills since

12. Flying paper and board mills

13. Premier Paper mill

2.7 How sector developed, Analysis

In perspective of analyzing the development rate and its major reasons, we will have to take a

look at rise and fall in the Production of paper and board industry during last two decades from

1990 to 2010. Different factors are involved in the increase and decrease in the production of

paper industry. Such as ever changing policies of government influence production of paper both

positively or negatively according to the required or unwanted implementation respectively,

social aspects that influence need and production of paper, educational programs by the

government and increase in schools and colleges by the private sector, load shedding and

inflation etc. To understand the production ratio in these twenty years, I am going to give a brief

overview dividing these years into four parts of five yearly periods. That would be from;

1: 1990 to 1995

2: 1996 to 2000

3: 2001 to 2005

4: 2006 to 2010

1. During the period of 1990 to 1995 over all production in the above mentioned sector

increased. In this period first four years got good increase in production as in 1990 it was

88.6 in Paper Board and 64.2 in all types of Paper. Where as, continuously increasing

from 1991 to 1994 it became 133.2 in Paper Board and all types of paper was 129.3.

That was a good increase. In 1995 increase in the production was 208.4 in all types of

paper but it came down in paper board and became 106.2.

2. In 1996 and 1997 the increase was seen in board paper up to 197.6 but decrease in all

types of paper to 149.0. Afterwards it continuously increased till year 2000, in paper

board up to 246.3 and others 284.8.

3. In 2001 there was bad decrease in production in both board paper 187.6 and other paper

137.9 but from 2002 to 2005 continuous increase in board paper 476.7 and all types of

paper 167.7.

4. This forth and last period started with a decrease in production from year 2006 and the

decrease was in board paper 464.7 and others 161.7. Then in the years 2007 to 2008 the

decrease to 449.6 in board paper and increase in all types of other paper up to 252.5 was

seen. But the last years of this period 2009 and 2010 have come up with continuous

decrease in both paper board 330.7 today and all types of other paper 185.4 today.

2.8 Government role in developing the sector

One of the issues that our industrial sector has been struggling with is the lack of continuity in

fiscal, monetary and economic policies. In retrospect, a sound industrial sector relies as much on

a stable government policy as it does on the skills of the private businessman. The paper and

paperboard industry has been dealt reeling blows by the successive wave of governments and

know-all bureaucrats that seem to be completely unaware of ground realities. Paper and

paperboard was the industry of choice in imposition of Central Excise duty for decades. Finally

Govt is failed to develop the sector due to corruption, mismanagement and bad Governance.

2.9 SWOT analysis of the sector

2.9.1 Strengths

1. Availability of raw materials due to agricultural country

2. Lots of work force

3. Competitive raw materials

2.9.2 Weakness

1. Weak research and development facilities

2. Lack of competitive infrastructure

3. Tariff and local duties irregularity

4. Dumping of cheap products

5. stagnation—research inability from universities and research organizations

6. Low R&D

7. Regulatory impact

8. Production costs

2.9.3 Opportunities

1. Increasing literacy rate

2. Increasing demand of paper

3. Improved training

2.9.4 Threats

1. Increase in Regularity duty and anti-dumping duty on paper sector

2. Rising raw material prices

3. Electricity shortages

4. Gas shortage

5. International competition, including technology by competitors

6. Economic crises

7. Law and order situation

3 SUPPLY SIDE SITUATION

3.1 Top five big names in the sector

Name of mill Installed capacity(Per Annum)

1. Packages Limited

302,000 Tons

2. Century Paper & Board Mills Ltd

240,000 Tons

3. Flying Group of industries (Flying Board

& Paper Product)

100,000 Tons

4. Premier Paper Mill Ltd

50,000 Tons

5. Flying Group of industries (Flying Kraft

Paper Mills)

40,000 Tons

3.2 Analysis of big names

3.2.1 Packages Limited

Packages Limited is a leading packaging manufacturing company of Pakistan. It is the sole

largest industry in Pakistan serving about 35% needs of the country. Syed Baber Ali Shah, who

was the first managing director of Packages Limited went to Sweden in 1954 to negotiate the

contract with AB Akerland & Rausing of Sweden. AB Akerland and Rausing had been the

leading paper converters in Europe. Pakistanis needed technical collaboration with their Swedish

partners. In the beginning, the first problem was the selection of the site. Finally, Lahore was

selected due to the following reasons:

· Easy availability of workers.

· Easy availability of raw material.

· Easy transportation all over the country.

A B Akerlund & Rausing packaging company brought machinery and expert technicians while

the Ali Family provided the necessary capital, land, labor, local expertise and management. Syed

Baber Ali was the first Managing Director.

Packages Limited started operating in May 1957 with a paid up capital of Rs. 4.94 million as a

joint venture between the Ali group and Akerland & Rausing of Sweden. Initially, Packages

produced cartons for the cigarette, tea, confectionery, soap, pharmaceutical products and other

consumer products. These cartons were produced from paper and board supplied from mills in

Chittagong, Khulna, Charsadda and Peshawar. However the quality and quantity of paper and

board supplied was inadequate. Over the years, the company continued to enhance its facilities to

meet the growing demand of packaging products. Additional capital was raised from sponsors,

International Finance Corporation and from the public in making the total paid up capital to Rs.

31 million in 1965.

As a first step, Packages commissioned its own paper mill in 1968 having production capacity of

24,000 tons of paper & paper board based on waste paper, agricultural waste, wheat straw and

kahi grass. As the demand continued to grow, it led the company to expand and by the end of

1998 its annual capacity was increased to 50,000 tons of paper & board and corresponding

converting ability.

Since 1982, Packages Limited has a joint venture in Tetra Pak Pakistan Limited with Tetra Pak

International to manufacture paper for liquid food packaging and to sell Tetra Pak packaging

equipment. After Tetra shape, it also introduced brick shape packing. Both shapes are very

popular among liquid preservation industries. The main industries covered by Packages Limited

are, Tea Industry, Tobacco Industry, Food Industry, Pharmaceutical Industry, Sweets &

Confectioneries, Soap Industry, Shoe Industry, Tissue Industry…

Since 1957, Packages has been producing inks for its own consumption. In 1993, the company

agreed to form a joint venture with equity participation from Coates Lorilleux, world’s second

largest printing ink manufacturer to produce inks for Packages Limited and the general market.

Packages Limited own ink manufacturing facilities now transferred to new company, “ Coates

Lorilleux Pakistan Limited”. In July 1994, Coates Lorilleux Pakistan Limited; in which Packages

limited has 55% ownership, commenced production and sale of printing inks.

Now Packages Limited is exporting its managerial skills & technical expertise to the third world

countries like Indonesia, Tanzania, Kuwait, Saudi Arabia, Nigeria, Zambia, Somalia & Russia. It

has also started the export of tissues to Iran, Bangladesh, Sri Lanka, Indonesia, United Arab

Emirates and Maldives.

Packages Limited has a large workshop. This workshop is capable of making, repairing and

replacing the damaged parts. The RD & Control Department were also established to ensure the

quality and standard of the products.

Packages Limited is having 2674 employees. Today Packages Limited is considered to be a

leader in Packaging field in Asia.

3.2.1.1 Corporate profile

Board of Directors

� Towfiq Habib Chinoy (Chairman)

� Syed Aslam Mehdi

� Khalid Yacob

� Matti Ilmari Naakka

� Shahid Aziz Siddiqui

� Syed Hyder Ali (Managing director)

� Shamim Ahmad Khan

� Syed Aslam Mehdi

� Syed Shahid Ali

� Tariq Iqbal Khan

Advisor

� Syed Babar Ali

Company Secretary

� Adi. J Cawasji

� Rating Agency: PACRA

� Company Rating: AA

Auditors

� A.F. Ferguson & Co.

� Chartered Accountants

Legal Advisors

� Hassan & Hassan - Lahore

� Orr, Dignam & Co. - Karachi Factories

Kasur Factory

Bulleh Shah Paper Mill (BSPM) 10-km Kasur Kot

Radhakishan Road, District Kasur, Pakistan

Tel. : (049) 2717335 - 43

Fax : (049) 2717220

Karachi Factory

Plot No. 6 & 6/1, Sector 28, Korangi Industrial Area,

Karachi-74900, Pakistan Tel. : (021) 35045320,

35045310 Fax : (021) 35045330

3.2.2 Century Paper & Board Mills Ltd

Century Paper & Board Mills Limited (CPBM), established in 1984, was listed at the Karachi

Stock Exchange in 1990 as a flagship company of the Lakson Group.

The Company has manifested itself as a Quality Producer of Packaging Paperboard and has

attained a position of Preferred Supplier among its Customers. The Company maintains Strategic

Business Relationships with leading Packaging and Converting organizations.

Located at 62 KM, Lahore – Multan Highway N-5, Distt. Kasur, the Company maintains a fully

integrated Pulp and Paper Mill with all the necessary support systems.

CPBM is managed by a Competent team of professionals in all the relevant fields like Process &

Paper Technology, Engineering, Finance and Business Management as well as Human Resource.

More than 60 Engineers of different disciplines are currently working at its Mills with well-

trained subsequent tiers of supervisors and operators. Human resource asset comprises of 1600+

personnel.

OPERATION

Century is a leading manufacturer of quality Paper and Board with a total rated installed capacity

of 230,000 tons per annum.

The product mix includes Writing & Printing Paper, Poster Paper, both Coated and Un-Coated

Board in various grammages, sizes and form.

The Mills comprises of 7 Paper and Board Machines out of which PM-3 & PM-6 are designated

for paper production whereas PM-1, 4, and 7 are essentially Board production machines with

both off-line and on-line coating facilities.

The latest addition being the state of the art, environment friendly machine PM-7 based on

recycled fiber, capable of producing 130,000 Tons/annum of premium quality Coated Packaging

Board was commissioned in 2008.

The Mills also includes a Box Plant having a corrugation facility capable of an output in excess

of 30 million M² sheets and 60 Million of corrugated containers of various sizes and weights,

with up to 3-colour printing.

The corrugation facility shall be doubled in the first half of the current year 2009.

PM-2 and 5 are exclusively engaged in producing quality liner and fluting papers.

3.2.2.1 Corporate Information of Century paper mills

Board of Directors

� Iqbal Ali Lakhani – Chairman

� Aftab Ahmad- Chief Executive Officer

� Zulfiqar Ali Lakhani

� Amin Mohammad Lakhani

� Tasleemuddin Ahmed Batlay

� A. Aziz H. Ebrahim

� Syed Shabahat Hussain - Nominee

Director (NIT)

ADVISOR

Sultan Ali Lakhani

AUDIT COMMITTEE

� Zulfiqar Ali Lakhani – Chairman

� Amin Mohammed Lakhani

� Tasleemuddin Ahmad Batlay

COMPANY SECRETARY

Mansoor Ahmad

AUDITORS

BDO Ebrahim & Co Chartered

Accountants

3.2.3 Flying board and paper products

Flying paper industries Ltd was formed in 1983 as a flagship company of Flying Group of

Industries. The company has manifested itself as quality producer of paper. We have strategic

business relationships with leading Paper industries. Flying Paper Industries Ltd. has integrated

pulp & paper mills based on local wheat straw.

Flying Paper Industries is managed by a team of professionals which comprises process & paper

Technologists, Engineers, Chartered Accountants, Cost & Management accountants, MBA’s,

and Administration & Human Resource specialists. More than 20 Engineers of different

technologies are currently working at Mills with well-trained supervisors and operators. Total

strength of Flying Paper Industries Ltd is more than 700 employees

Flying Board & Paper Products ltd is associated company of Flying Group of Industries.

Incorporated in 1988. The company has manifested itself as quality producer of writing/printing

paper. We have strategic business relationships with the leading Paper industries. Flying Board

& Paper Products ltd has integrated pulp & paper mills based on local wheat straw. The main

plant & machinery has been supplied by TAE KWANG (KOREA).

The mills are situated at 26km Lahore Sheikhupura Road, Sheikhupura and came into

commercial production in 1990.

3.2.4 Flying Kraft Paper Mills

Flying paper industries Ltd was formed in 1983 as a flagship company of Flying Group of

Industries. The company has manifested itself as quality producer of paper. We have strategic

business relationships with leading Paper industries. Flying Paper Industries Ltd. has integrated

pulp & paper mills based on local wheat straw.

Flying Paper Industries is managed by a team of professionals which comprises process & paper

Technologists, Engineers, Chartered Accountants, Cost & Management accountants, MBA’s,

and Administration & Human Resource specialists. More than 20 Engineers of different

technologies are currently working at Mills with well-trained supervisors and operators. Total

strength of Flying Paper Industries Ltd is more than 700 employees

M/s Flying Kraft Paper Mills (Pvt) Limited is pioneer in the manufacturing of extensible sack

kraft paper used in the paper bags for cement industry. The unit is capable to cater the entire

requirement of sack kraft paper of the country. The project was acquired from M/s Pakistan

Paper Corporation in the year 1992. The plant was converted into sack kraft paper manufacturing

unit, with the technical assistance of CLUPAK Inc.USA. Before installation of our plant, the

whole demand of sack kraft paper was met by the imported sack kraft paper causing huge

draining of precious foreign exchange.

The main unit is situated in Charsadda, where the extensible sack kraft paper is being produced.

It is situated on a land covering 1400 kanals with the covered area of 1,095,500sft. A very

beautiful officers colony and workers apartments are being constructed in the factory, where

modern facilities are provided to the workers and officers of the company.

3.2.5 Premier Paper Mill Ltd

Premier Group of industries is engaged in paper manufacturing business since 1979,

having annual capacity of 50000 M Tons.

Premier Paper Mill Ltd welcomes you the flagship company of the premier group of industries in

Pakistan established 1979.

We are producing widest range of paper i.e.

1. Printing paper

2. Writing Paper

3. Computer Paper

4. Ledger Paper

5. Photocopy Paper

HEAD OFFICE

Mr. Mohammad Saeed (Director)

Mr.Shabbir Malik

23-Ahmed Block, New Garden Town,

Lahore Pakistan

Ph:+92-042-5885717

Ph:+92-042-5866084

E-Mail:ppml@wol.net.pk

MILLS

8 KM, Lahore Road,Kot Saleem

Sheikhupura 39350,Pakistan

Ph: +92-563-406611-12

Ph:+92-563-406613

E-mail:ppmltd@skp.wol.net.pk

3.3 Products produced in Pakistan

1. Writing and printing paper

2. Packaging board

3. Liner board (A type of paperboard used in making corrugated cartons)

4. Corrugate medium

5. Continuous computer reels

6. Tissue and Security/banknote paper

7. Newsprint

• Sayid Paper Mills became the first manufacturing unit in 2000 to produce newsprint

3.4 Innovation in the sector

Since paper industry of Pakistan is vital industry and to be competitive in the world market this

sector must be innovative

In paper and board industry of Pakistan there come process innovation as a result of process

innovation many companies improved their technologies in manufacturing process and if we talk

about product innovation some of big names like packages and century paper and board mills are

continuously improving there products by spending there lots of budget in R&D.

And if we talk about immaterial, organizational or soft innovation in paper industry of Pakistan

some of the big companies introduce new production concepts and supply chain management as

well as they are working on value added services to support products.

But still lots of continuous work and consistent policies are required by the government to

compete in the world market.

3.5 International situation, import and growth analysis

To fill the demand and supply gap paper and paper board products are imported from Finland,

Canada, USA and China. Newsprint comprises the major imported finished product followed by

white dup/coated board. Break-up of various types of paper and paper boards imported during

the last five years up till 2003 and in 2007 it will decreased to 151,360 tons which is quit healthy

and further in 2008 it come on 36520 ton only as shown in table-1.

Pakistan imported paper and paperboard valuing $100 million in 2000 which increased to $176

million in 2004, table-2. The import of pulp and waste paper was $28 million, 2000, that

increased to $46 million in 2004, table-3. Also indicated in table-4 import of cut

paper/board/articles. The imports were $18 million in 2000 which increase to $43 million in

2004.

The table-5 figures depicted the import of paper machinery which also rose from $3 million in

2000 to $11 million in 2004.

Table 1

Imports (Quantity in Tons)

Table 2

Years 1997-98 1998-99 1990-00 2000-01 2001-02 2002-03 2006-07 2007-08

Writing & Printing Paper 6,898 7,391 7,086 6,675 10,838 11,886

Wrapping & Packing Paper 16,455 16,491 18,578 18,400 21,282 28,548

White Dup / Paper Board 31,614 41,906 41,197 41,543 56,105 55,870

Coated Paper / Chip / Other

Board

7,507 11,277 10,321 10,502 11,215 12,519

Paper of all kind 4,672 5,571 6,021 7,199 8,097 9,452

Sub-total 67,146 82,636 83,203 84,319 107,537 118,275

Newsprint 54,865 63,134 77,167 59,684 70,793 76,334

Total 122,011 145,770 160,370 144,003 178,330 194,609 151,360 36520

Table 3

Table 4

Table 5

Cost of Production

Production cost comprises of 58 percent for raw materials, 10 percent labor, 12 percent fuel and

energy and 20 percent other overheads. Break-up of cost per ton of production of Paper & Paper

Board for the last four years is given in table-6.

Price of Inputs

Prices of various inputs are tabulated in table-7.

The prices of imported pulp, waste paper and chemicals show declining trend whereas the prices

of local raw materials, electricity and Furnace Oil show rising trend. The principal raw materials

for manufacturing of Paper & Paper Board are wood pulp, waste paper pulp and agricultural

wastes. The agricultural wastes like bagasse, rice and wheat straws, cotton linters and cotton

wastes are locally available. The secondary inputs are chemicals. The inputs for production of

pulp are calcium carbonate, soda ash, caustic soda, sulphur and chlorine whereas the chemicals

used in bleaching pulp are chlorium, caustic soda, lime, sodium chlorate and sodium peroxide.

Alum, starch, rosin, clay and other chemicals are used at paper making stage. Caustic soda, rosin,

starch, alum and lime stone are indigenous chemicals while the other are imported.

Pulp and Waste Paper

Wood pulp is imported while waste paper is available locally as well as imported. Wood pulp is

imported mainly from USA, Sweden, Canada and Far East while waste paper is being imported

from USA, UAE, Saudi Arabia and Singapore. Imports of Wood Pulp and waste paper during the

last six years is tabulated in table-8

Waste Paper

Imports of waste paper from various countries during the last six years is tabulated in table-9

Imports of Paper and Paper Board Products

Pakistan imports large quantities of newsprint paper. Their imports during last 3 years were

207,644 M. Tons.

Newsprint is the major imported finished product followed by white duplex/coated board.

Break-up of various types of paper and paperboard imported during the last five years is shown

in table-10.

Raw Material

The main raw materials used in Pakistan are wheat straw, bagasse, kahi grass, rice straw and

wood pulp. The mechanical process is not suitable for these raw materials as it produces powder

on grinding which reduces strength of the product. The chemical processes are considered

practical for pulping of such short fibers. To manufacture paper, different types of pulps are

blended in desired proportions in a stockblending chest where imported long fiber wood pulp is

also mixed. Baggasse is the residual by product of sugar industry. Traditionally it has been used

in boilers as fuel by the sugar mills as no alternate source of fuel like gas or coal was available.

The availability of cheap coal for power generation has motivated sugar mills to convert their

power generation facilities to coal fired boilers. Only minor modifications in the boilers are

required. Therefore, it is expected that beggasse will be available in abundent quantity.

The existing demand of the country is being met by local production and imports. However,

investment opportunities exist for the revival of idle capacity through up gradation of technology

and availability of raw material at competitive rates.

To produce paper and paperboard products about 15,000 to 17,000 MTPY of imported chemicals

were used during the years 2000-01 and 2001-02. The percentage recovery of short fiber from

various raw inputs is Bagasse 28 to 31 percent, Wheat straw 33 percent, River grass 26 percent,

Wood 40 percent, Cotton linter 85 percent, Waste Paper 75 to 80 percent. Wood pulp is imported

while waste paper is available locally as well as imported.

The principal raw materials for manufacturing of paper and paper board are wood pulp, waste

paper pulp and agricultural wastes. The agricultural wastes like bagasse, rice and wheat straws,

cotton linters and cotton wastes are locally available. The secondary inputs are chemicals. The

inputs for production of pulp are calcium carbonate, soda ash, caustic soda, sulphur and chlorine

whereas the chemicals used in bleaching pulp are chlorium, caustic soda, lime, sodium chlorate

and sodium peroxide. Alum, starch, rosin, clay and other chemicals are used at paper making

stage. Caustic soda, rosin, starch, alum and lime stone are indigenous chemicals while the other

are imported.

To produce paper and paper board products, approximately 15000 to 17000 M. tons of imported

chemicals were used during the year 2000-01 and 2001-02.

Table 6

Table 7

Table 8

Table 9

Table 10

3.6 Problems and issues in supply side

As we all know that Pakistan is facing all time worst conditions, currently flood is continuously

disturbing the country above all these things due to unfair and pathetic decisions of the

government we are facing electricity shortage, gas shortage, fuel shortage and all kinds of those

shortages which are necessarily required to run the business. Before these problems continuously

boob blasts and suicides attacks swirly disturbed the paper industry as well as whole business in

the country.

With all above problems Pakistan paper industry was catering the 65% demand of the paper in

the country and they were bearing the high cost of doing business, energy crisis and production

loss, “but still, they were selling our products with a minimized increase around 8-10 percent”.

But after imposition of regulatory duty, the total quantum of duties increased to Rs 35,000 per

tonne from 25,000 per tonne for commercial importers, chairman All Pakistan Paper Merchant

Association (APPMA)

In Pakistan due to mismanagement and bad governance Around 95 percent import of finish paper

products are made in name of waste paper under misquoting and false declaration by the

commercial importers this effect of Government as well as the local manufactures

Due to problems discussed above annual production of paper industry decreased as given in

table 11.

Table 11

Production of Paper industry of Pakistan

4 DEMAND SIDE SITUATION

4.1 Sources of demand

In 2002, people worldwide read over 1.80 billion magazines, 3.94 billion books, and 4.16 billion

newspapers worldwide - all printed on paper. Our money, marriage certificates, documents

which literally govern our lives, are made out of paper. Our children play with paper dolls, paper

masks, paper board games, and paper kites. Your ticket to a movie is made out of paper. Even

the batteries in your TV remote control contain paper, and so does your television itself. Thanks

to computers, which were once expected to make ours a paperless society, we now generate even

more paper than ever before. How would you ship light bulbs, water glasses, or your new

microwave oven without the corrugated containers that protect them? The largest category of

paper products today is the one we take most for granted - paperboard. Corrugated board is used

to ship 95% of all manufactured goods, sometimes even paper itself!

In Pakistan in all above sector paper and board are used but if we talk about specifically the

demand of paper in Pakistan then the major institutes that need paper are given below

1. Punjab Textbook Book Board Pakistan

2. Sindh Textbook Book Board Pakistan.

3. N.W.F.P Textbook Book Board Pakistan

4. Baluchistan Textbook Book Board Pakistan

5. Printing Corporation of Pakistan

6. All Major Universities Like Punjab University

7. Newspapers

8. Others

4.2 Sources of growth

The directors of century paper mills and Sayid paper mills feel that due to high demand and with

the friendly policies of government paper and board sector of Pakistan have a good chance to

grow. They said that if government control the exchange rate and low the interest rate our

manufactures has a potential to increase the exports and help to grow economy.

Currently various impediments are affecting growth of Pakistan Paper and Board Industry.

Menace of dumping of paper and board form Far Eastern countries at under invoiced rates is

infringing level playing field. Under invoicing tends to reduce duty for commercial importers,

while local producers are subject to excise duty, sales tax and other corporate and local taxes.

Under-invoicing also affects national exchequers in face of lower than actual duties. Similarly,

the prevalent imbalance of tariff structure deteriorates the operational profitability of local

producer’s vis-a-vis foreign producers. Duties on various raw materials mainly chemicals are

substantially higher compared to that on finished Paperboard creating distortions to the local

industry as imported material costs 50 per cent of total cost of production. Local paper and board

Industry is also under tremendous pressure due to high rates of Fuel and Power compared to

competitor countries. Fuel cost forms about 40 per cent of manufacturing costs in paper and

paperboard production.

4.3 International situation

The most direct way of achieving sustained economic growth is to become self sufficient in

items that promise growth potential and to increase exports.

The enormous export potentials of the paper and board industry remain an untapped treasure in

Pakistan. Over the years, the industry has attained a height where it is serving and adequately

meeting the entire paper and printing needs of the industry including the multinational

companies. The pharmaceutical and other multi-national companies working in Pakistan are fully

satisfied with the quality of services, the paper industry is providing to them. The industry has

proved its worth not only within the country but also carved a respectable place all around the

world and supplying quality paper products to Far Eastern Countries, Middle East, European as

well as the United States.

The credibility of this industry is reflected in the fact that when foreign visitors were avoiding

visiting this part of the world following terrorist attacks at French Engineers in Karachi,

participants from over 25 countries visited the International exhibition "PRINTPAK 2002"

recently held at Expo Centre in Karachi.

4.4 Growth and Exports of sector

Since with all problems growth in exports seen in the PAPER & BOARD sector of Pakistan but

slight decrease in 2005-06 as shown in table 12 and detail exports by product wise are given in

table 13

Table 12

Growth in exports

Years Value in $ 000

2001-2002 510

2002-03 778

2003-04 2,053

2004-05 3,736

2005-06 2093

Source EPB

Table 13 Detail Paper and board products Exports of Pakistan

4.5 Trends and consumer preferences

As we all know that world become the global village and now customers remain well updated

and become more quality conscious instead of quantity conscious so now days a company having

good competitive advantage and innovation in their products can persist only. In paper and board

industry of Pakistan the reason of becoming market leaders of packages and century paper mills

is their competitive advantage and innovation in their products.

To get good profits and become market leader each company must have good R & D department

with skilled and specialized people.

4.6 Problems in demand side situation

Since there are many problems in demand side situation but some important problems are given

below

• Low literacy rate

• Low per capita consumption

• People prefer to get information through net instead of books

• Lack of Innovation in use of local raw materials

• Lack of strong brand recognition

• High taxes imposed by the government etc

5 POLICY ISSUES

5.1 Government policies till now regarding sector

Since government is the major stake holder in the economy but unfortunately the domestic paper

industry is going through difficult times for the last couple of years partly due to depressed

economic environment, law and order situation, further forced imposition of new taxes and

duties. In addition, the government has adopted policies which are favorable only to imports

particularly from dumping of goods from Indonesia, Korea and Taiwan.

Finally government is not playing good role regarding the development of the sector.

5.2 Obstacles from Government Side

• Government once again failed to provide competitive infrastructure which is very

necessary for the development of the sector

• Tariff and local duties irregularity

• Continuous increase of prices of paper products like books and copies by government

• Imposition of 15 percent excise duty

• 25 percent regulatory duty

• and 20 percent anti dumping duty

• continuous load shedding

• law and order situation

5.3 Infrastructure situation for the sector

Pakistan's infrastructure is poor and suffers from decades of neglect. Roads and railways are

insufficient and in poor condition. Both the telephone system and the provision of electricity are

hampered by corrupt and inefficient governmental service providers, which increasingly face

competition from private entrepreneurs. And now days due to worst flood Pakistan is facing very

problems in redeveloping the infrastructure.

The development of Pakistani infrastructure is very slow Current flood again takes Pakistan in

the 1960,s and it will take again 10 to 15 years to establish roads and infrastructure.

Finally for paper and board industry only Lahore is suitable now days due to flood.

5.4 Government policies are helping the sector to grow

As discussed above due to many reasons government is failed to provide help for the

development of the sector, but if government take some initiatives like decrees in taxes, duties

etc then this sector can develop easily.

6 Conclusion

Finally the import of paper and paper board is subjected to 25% import duty and 15 % regulatory

duty, 18 % sales tax, 2 % withholding tax and 1 % special excise duty which is on very higher

side, after imposition of such high duties import of paper and paper bord dropped from 64,054

tons in the year 2008 to only 19,000 tons in 2009, after the first quarter of 2010 import stood

only 50 tons which is very alarming. Besides reduction in imports also hit revenue collection

which has dropped from Rs 1.6 Billion in 2008 to 527 million in 2009 and in first quarter 2010it

is just Rs 0.15 million.

This is an alarming figure in view of the budget deficit of the current year, since huge quantity of

paper and paperboard was coming illegally into Pakistan from Afghanistan and other border

countries to fill the gap between demand and supply. The total demand of paper and paperboard

is approximately 850,000 tons per tons per year, whereas total domestic production is

approximately 500,000 tons per year and the gap b/w demand and supply is 350,000 tons, while

the legal import is very limited, and the import tariff in Pakistan as compared to other countries

is very high at 25% in India, Vietnam it is only 10 % and in China, Japan, and Singapore t is 0%.

Due to high cost of paper and paperboard of Pakistan’s export of printing material had fallen

drastically.

The rising cost of such paper and paperboard products, which contribute to and enhance learning

is fatal to the vitality of the education sector as well.

So immediately remedial action must have to take to save the paper and paperboard industry of

Pakistan

7 RECOMENDATIONS

• The government should enhance competitiveness by bringing the prices low down to

International prices.

• Duty should be reduced on the imported raw material (including wood pulp, chemicals,

waste paper, plant and machinery).

• Development Institutions should be made at macro level for the Pulp and Paper industry.

• An incentive package should be introduced to revitalize the projects in difficulties.

Arrangements should be made for proper procurement, storage and supply of the

agricultural crop waste to the industry at reasonable rates as these can be used as raw

materials.

• Bagasse can be used for making newsprint, which has not been fully explored. Efforts

should be made to attain optimum capacity utilization by up-gradation of technology and

availability of raw materials at competitive rates

• Due to current flood many mills face very losses so government has to announce interest

free loans for them for rehabilitation

• Withdrawal of 15 per cent Excise Duty on locally produced paper and board

• Levy anti-dumping duties to combat cheaper imports from Far East.

8 Bibliography

Aizad Sayid. (2002, JULY Tuesday). Analysis of Pakistan Paper Industry. Retrieved Auguest

12, 2010, from Aizad Sayid Blogs: http://www.aizads.com

Akbar, M. (2010, Auguest 01). Manager. (Sajjad, Interviewer)

APPPBMA. (n.d.).

Business Recorder. (2010, March 27). Business Recorder. Retrieved Auguest 10, 2010, from

Pakistan First financial Newspaper: http://www.brecorder.com/index.php?id=1036142

Century paper Mills . (2009). Annual Report . Karachi: Century Paper Mills.

corrosioncost. (n.d.).

Flying Paper. (2010, May 13). Flying Paper Mills. Retrieved Auguest 97, 2010, from

http://www.flyingpaper.com.pk

IAR. (2006, July 23). 10. Retrieved Auguest 13, 2010, from Indian Pakistan Trade Unit:

www.iptu.co.uk

IAR. (2006). International advisory reports . Pakistan : IAR.

Paperonline. (2009, Auguest 2). Retrieved Auguest 13, 2010, from Paper Online:

www.paperonline.org/myths-and-realities

Razi Syed. (2010, February 14). Daily Times. Retrieved Auguest 08, 2010, from Newspaper:

http://www.dailytimes.com.pk/default.asp?page=2010\02\14\story_14-2-2010_pg5_9

Wikipidia. (2002). KarnaFuli paper Mill. Retrieved from Wikipidia:

en.wikipedia.org/wiki/KarnaFuli_Paper_Mill

Limitations

The extent to which study is reliable, it is important to note the limitations under which the study

has been conducted. These limitations are as follows:-

• Due to current situation of country it was not possible to meet all the representatives of

the companies of the industry.

• It being my first attempt to undertake such a study, thus inexperience is also an obstacle

to accomplish the project in proper way.

• Due to lack of accurate data, consumption, imports and local production have been

estimated with great care-(D.F 15%)