IFC, the private sector arm of the World Bank Group, will provide a long-term loan of US$40mn to West Coast Paper Mills, an integrated printing and writing paper manufacturer in India’s southwestern state of Karnataka.
IFC’s support will help the company modernise and expand capacity. Part of the loan will fund the installation of a new chlorine-free fibre line to eliminate a major source of pollutants from pulping operations.
The key demand drivers for paper consumption in India are increases in GDP, literacy levels, corporate spending, and industrial activity. Per capita consumption is estimated at 7kg per year – the lowest in the world and far below the global average of 56kg.
IFC’s loan, with a longer grace period and maturity than available elsewhere, will improve West Coast’s debt profile, aligning its debt service requirements with its ability to repay. This promises significant growth for the country’s paper industry.
SK Bangur, chairman of West Coast Paper Mills, says, “The paper industry in India has been highly fragmented, with a capacity of 6.8mn tons per year distributed among over 500 players, most of whom are informal companies. Plans by several players to consolidate and expand are underway. With IFC’s support, we hope to improve the sector’s efficiency and enhance our competitiveness.”
Paolo Martelli, IFC director for South Asia, says, “With this loan, IFC will help strengthen West Coast’s cost competitiveness, helping a key player in the paper industry achieve international standards in environmental and social performance. The project will also help increase the company’s capacity and enhance its productivity.”
KL Chandak, executive director of West Coast Paper Mills, adds, “A partnership with IFC will also let us significantly upgrade the environmental performance of our operations in Dandeli, Karnataka.”