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" I am a workaholic, having started my career when I was 14 years old," says industry stalwart, Ajay Goenka, chairman and managing director of Rainbow Papers. "I joined my father and the family business as paper distributors, and was able to contribute to expanding our business, increasing the turnover from 50 tonnes per month to 1000 tonnes per month."

After gaining experience as paper trader and distributor, Goenka turned his attention to manufacturing, establishing a small company Rainbow Papers in 1987, with an annual capacity of 6000 tonnes. Rainbow Papers today is among the top manufacturers in India, with annual turnover of 305,000 tonnes.

"We started producing craft paper, graduating to printing and writing paper; and duplex board. Those times there were no exports of paper from India, and I ventured into Tehran and then Dubai to market our 'value-for-money' products. Today, we export 28% of our annual production, to countries in Europe, the UAE, Brazil, Bangladesh, Indonesia, Egypt and other countries. Our policy from day one has always been sell and then produce, and not vice versa. We have no finished stocks, only inventory of raw materials, and so we are never under any pressure. The first dealer we appointed was in 1992 and the last appointment was in 1995. We have a clear understanding with distributors and so there is no disagreement when we export directly to customers."

Elaborating on the advantages of exports, Goenka explained that both domestic and international logistics were a cause of concern, though in many cases exporting to international markets worked to their advantage since Rainbow does not need to pay excise duties and VAT, both charges levied in domestic supplies. "While proximity to the port works in our favour, freight charges on goods transported locally by road are much higher than those exported by sea."

On the subject of technical innovation, Goenka opined, "Paper industry is a capital intensive industry, and the cost of borrowing in India is almost 14-15%, which is very high. Out of the 480 units in India, most companies are proprietary, operating in traditional style. With the exception of 30-35 firms, most of the others do not own power plants. At Rainbow, we have been investing in modernisation since 1994. We have also received 3-ISO certifications."

Rainbow Paper owns a 15-mega watt, thermal captive power plant and another 20-mega watt plant is under installation, said Goenka, adding that the entire power produced is consumed inhouse.

The manufacturer has also undertaken various projects to generate wealth out of waste, including a brick-making machine, with a capacity to produce 20 million bricks annually, generating an additional income of Rs 120,000 (USD 2400) per day. The bricks and blocks are made from fly ash, a residue of the power plant. The other projects are- a laminate sheet manufacturing plant, which makes corrugated and plain sheets, useful for roofing and as replacements of plywood in manufacturing furniture and packaging boxes made from sludge.

Dwelling on the challenges posed through expansion plans and increased investments in technology by manufacturers in the Far East, Goenka conceded that China was growing in a big way, but since Chinese companies owned high speed machinery, it would not be possible to change sizes frequently, which was what Indian markets need. "Also, with the withdrawal of government subsidy, project costs are increasing and so Chinese products are becoming expensive. Also, dealing with China requires longer lead periods, so we tend to gain from these factors."

Refuting the question-Is paper industry suffering?, Goenka elucidated, "I don't think so, while the new generation check newspapers online, there is increased demand from the packaging sector. Many countries have continuous demand for school books, study material, copier paper and with people becoming more aware of the hazards of plastics, packaging materials like plastic cups, bags etc are being replaced by paper products. So, the paper industry is not really suffering."

Rainbow has initiated a CSR project in collaboration with Gujarat government, allocating Rs 10 crores (USD 2 m) to creating an institute offering short term development diploma courses on paper making, offering free training and placements. "There are two benefits to be derived from this project. While it is a CSR activity of the company, the other advantage would be that most new incumbent paper traders from the country would have visited our plant within one year. They will become familiar with the capacity of our plant, the 190 varieties of paper we produce and at the end of it, if we are able to successfully convert 10 dealers, it could lead to an increase in our production by 1 million tonnes. Initially we intend to invite dealers from India, and then graduate to a global level."

"Success is dedication and decision making," concluded the chairman and managing director of Rainbow Paper. "We don't want to sell paper, we want to sell the product."

HIGHLIGHTS
  • Rainbow Papers Limited was established in 1987
  • The company was established with an annual capacity of 6000 tonnes
  • Currently, the annual turnover is 305,000 tonnes, 28% of which is exports