Green Rating Project - Key Findings of Pulp & Paper sector

Good environmental performance makes good business sense. And to support this rationale, CSE analysed the financial performance of the 28 firms that had been rated. The conclusion: there is a 60 per cent likelihood of a mill with fairly good environmental performance churning out profits.

Mind your business

The best performers environmentally are financially sound too. Take, for instance, J K Papers, the mill with the highest GRP score. The company enjoys a profit of 14 per cent (gross profit as percentage of turnover).

However, the GRP team also found a few companies — such as Grasim Industries Ltd which has a profit margin of 16 per cent — otherwise rated at the bottom for their environmental performance. This is a clear indicator that the profits that the company earns are not being used to improve their environmental performance. This despite the public uproar against the company on environmental grounds.

Land marks
Fibre requirements of the pulp and paper sector are met by bamboo, hard wood, agrowaste and wastepaper. The amount of land required by a mill to meet its raw material needs equals the ecological burden that the mills’ fibre sourcing has on the environment.

Land needed by mills to produce one tonne of paper

Company Ecological footprint (hectare)
BILT-Ballarpur Unit 4.85
The West Coast Paper Mills Ltd 1.3
Indian average 2.17










The average Indian mill's footprint is 2.17 hectares (ha) for every tonne of paper it produces. Taking the total annual production of paper to be around 3.2 million tonnes, the total land requirement of the Indian pulp and paper sector would be 6.4 million ha. With farm forestry programmes, that provide incentive to producers to supply raw materials, this requirement can be easily met. India has over 60 million ha under forest land and more available under private wasteland.

On the other hand, companies like Amrit Papers, Nath Pulp and Paper Mills and Rama Newsprint, which are in the bottom of the rating, are also running in losses. It’s time they realised environmental performance and financial performance goes hand-in-hand.

Small farms, big gains
Farm forestry brings huge benefits for ITC-Bhadrachalam and APPML.

The 1988 National Forest Policy (NFP), among other things, envisaged a forest cover of 33.3 per cent of the total land area. Sadly, it has remained just a vision. Down to a paltry 11.7 per cent, there is further threat that this may reach a single digit figure. With its insatiable demand for wood fibre, the pulp and paper mills are also to be blamed for the fast-depleting forest cover.

The NFP’s ban on the use of government forest land for raw material sourcing has not been able to stop some mills from meeting their fibre needs from these forests. And besides a few, there are hardly any mills who have taken the NFP’s direction of turning towards farm forestry (where small growers supply wood in the open market). While farmers get an income from their land, a regular supply of wood is ensured to the company through farm forestry. At the same time, it discourages cutting of native forests for fuel and other uses by the local community and helps in preserving the natural forest.

Andhra Pradesh Paper Mills Limited and ITC-Bhadrachalam, both in Andhra Pradesh, are two companies who have followed NFP’s suggestion and have benefited from the schemes.

ITC-Bhadrachalam has been carrying out farm forestry programmes since 1982. With a view to provide the farmers with a comprehensive package of high-quality nursery stock, technical help, buy-back guarantee and financial assistance for raising and maintaining the plantations, the farm forestry scheme was further strengthened in 1987. In 1997-98, as much as 66.15 per cent of the total raw material requirements was met through these schemes. Between 1987-95, it promoted farm forestry plantations in 1,138 villages in Andhra Pradesh and helped 6,185 farmers to raise farm forestry over 7,441 hectares of land.

APPML initiated farm forestry scheme way back in 1977, but it gained momentum in 1989. More than 1,500 hectares of land in six districts have so far been covered under the scheme, and thousands of farmers have benefited from it. The scheme focuses on tree species like subabul and casuarina. The mill has already set up 153 nurseries and prepares seedlings in its own nurseries and distributes it to the farmers.

The problem of diversity
Product diversity means more pollution

The more the variety of products a pulp and paper mill manufactures, the higher the pollution it generates. At least, this is what happens in India where the level of technology is very poor. Most of the Indian mills are small and they change their product type depending on the demand in the local market. However, the small-size of the mill does not make it profitable to switch to a technology which is best suited to make the required type of paper. Ill-suited and obsolete technology adds to the pollution load.

The problem of product diversity is not just limited to production technology. Most of the Indian mills do not have adequate technology to recycle their wastes. Effluent treatment plants (ETPs) are capable of handling discharges and emissions emerging from single-product paper plants only. With an increase in the types of paper produced, the efficiency of the ETPs plummets.

Production of single product gives competitors an edge in terms of optimisation of processes. Global giant, International Papers and Indonesian major, Asia Pulp and Paper, which is the parent company of Sinar Mas-India, are both producing single paper. Besides, their production is not dependent on the vagaries of a local market, but on the global market, where there is comparatively less variation in the demand for a product-type. Also, their large size gives them the opportunity to adopt cleaner technology, which also includes a factor of safety for product variations.

But, in India, small, unregulated mills usually cut into the pockets of bigger mills, forcing the latter to move away from limited number of products to a variety of products.

In search of fibre...
... mills have now reached the rich bamboo reserves in the country’s Northeast

The paper industry has literally come a long way with respect to raw material sourcing, specifically fibre. When paper mills were first set up they were able to procure most of their wood from forests in the vicinity. However, over a period of time the forests were depleted with no sustainable forestry practices being adopted. This forced mills to extend their search for wood to neighbouring states. As these forests have also met with a similar fate, paper units are now moving to the veritable treasure trove in the country’s Northeast.

For instance, Andhra Pradesh Paper Mills Limited (APPML) located in the East Godavari district. Almost 80 per cent of the total raw material comprises hardwood, 19 per cent bamboo and the rest wastepaper and market pulp. Although APPML has been able to meet most of its hardwood demand from its farm forestry programmes and open market, it still depends on natural forests for bamboo. The unit’s bamboo consumption varies between 15-20 per cent of the total requirement. Till recently, APPML procured its bamboo needs from Andhra Pradesh government forests. After protests by local NGOs, the government was forced to withdraw the allotment in 1998. This has forced the mill to turn to the neighbouring states for bamboo, or even the distant Northeast — the only region in India which still has bamboo reserves (see map: Bamboo travails). Going by APPML’s and other mills appetite for fibre, soon those reserves too might not be worth talking about.

Water, water everywhere
Indian mills continue to waste water resources

Indian mills use 250-300 cubic metres of water to produce 1 tonne of paper, according to CSE estimates.

A 1989 study conducted by the Bureau of Industrial Costs and Prices showed that the pulp and paper mills in India consumed around 805 million cubic metres (cum) of water to produce 2.7 million tonnes of paper — on an average around 300 cum per tonne of paper produced. They also reported that the water demand was not similar in all the mills and drastically varied between 130 cum to 450 cum per tonnes of paper produced, with about 80 per cent of the units consuming less than 325 cum per tonne of paper and 47 per cent consuming less than 300 cum per tonne. In general, requirements for water is least in straw and paperboard mills (75-1,000 cum per tonne) and highest in specialty paper mills (370-1,220 cum per tonne).

Today, almost a decade later, the water consumption pattern has not changed much. According to the CSE study, on an average, large-scale Indian mills still consume about 250-350 cum of water per tonne of paper produced. Water consumption patterns and effluent discharges of Indian mills still vary substantially from mill to mill, even when the same process and equipment is used, which should not be the case. In contrast to the Indian scenario, the average water consumption in US mills has come down from 142 cum per tonne of paper produced in 1989 to 72 cum in 1995. The poor showing of the Indian mills can be blamed on the water-pricing policy of the government. Water literally comes dirt cheap to the mills so there is no attempt to regulate its use.