Times have been tough for Phoenix Pulp & Paper, but it looks as if the worst is over as the company gets back to the business of making pulp

By Anna Jenkinson

Phoenix rises again, ready for action

The explanation offered by the Thai authorities centered on allegations of pollution, but the former managers of the mill strenuously denied these claims. The mill was forced to close though and the subject has remained a matter of some debate since then. Newspaper reports and allegations of corruption and mismanagement have been common currency during the mill's recent history, but irrespective of how the disruptions started, the company was left with a tarnished image.

As a result, one of the new management's first tasks is to restore a positive image of Phoenix Pulp & Paper. As the company's director, Vashi Purswani says, "Our three main priorities are professional management, transparency and good governance." With these principles in place, the company feels it can get itself back on track and return to the business of producing world class pulp for domestic and international markets.

Phoenix's plant is relatively isolated in Khon Kaen, but the company benefits from low transport costs

The present management team won control of Phoenix following a shareholder vote in their favor at the 1999 annual general meeting on 16 June. The move concluded a power struggle that had been raging for several years. The names at the head of the company changed, with the old management ousted and minority shareholders reshuffled to the top of the pile. But the core of the company remains unaltered. Purswani recognizes how essential his workers are and has no plans to bring in a new team.

So far, things seem to be running smoothly under the new management. Production has restarted at the plant, trading has resumed on the Thai stock exchange and the pollution allegations have been withdrawn.

Phoenix also managed to make a small profit in 1999 - no mean feat given Thailand's recent economic climate. In fact, Phoenix was one of the few Thai companies to escape the trail of red ink last year. But Purswani is quick to admit that the new management could not take full credit for the improved results. A global pickup in the pulp market also played a large part in the mill's improving fortunes.

The mill is operating two lines at present. Line #1 started up in 1982 and produces mainly bleached bamboo pulp, although it can also make bleached kenaf and eucalyptus grades. In fact, the mill claims to be the world’s only market pulp producer that uses bamboe, eucalyptus and kenaf.

The daily capacity of line #1 depends on the raw material used. Using bamboo, the maximum capacity is about 360 tons/day, while eucalyptus yields 300 tons/day and kenaf about 240 tons/day. Pulp line #2 started operation in July 1994. The newer line's main product is bleached eucalyptus kraft pulp, with some bleached bamboo pulp output, depending on market demand. Line #2 has an average daily production of 305 tons.

The company believes it commands a unique position in the pulp market due to the mill's location, raw materials and low production costs. Situated about 450 km northeast of Bangkok in Khon Kaen province, the pulp mill is the only one in the region. Thailand's other big pulp producer, Advance Agro, is based in Prachinburi, forming a cluster with the country's paper mills around Bangkok. The relative isolation of the Khon Kaen mill means the pulp has further to travel to its domestic customers, but transport costs in Thailand are relatively low. In the company's view, the disadvantages are far outweighed by the fact that there are no competitors in the area, giving Phoenix easy access to the surrounding plantations.

The group is also vigorously pursuing sales in new markets in an effort to widen its customer base. China is considered an important target and Phoenix is aiming its output at the country's smaller paper mills. Thailand will also continue to be a key market for Phoenix, which hopes to maintain a 50:50 split between domestic and export sales.

Phoenix is keen to rebuild its environmental reputation

Green and clean

Environmental credentials are important for any pulp producer, but especially so for Phoenix in light of the pollution allegations which forced the mill to close.

The mill is working hard to secure international management accreditation, as can be seen from the numerous billboards around the mill sporting the slogan "Phoenix marches toward ISO 9002". When ISO 9002 is out of the way, the next challenge will be ISO 14000, which the company hopes to obtain by November 2000.

As for wastewater management, extensive measures have been taken to reduce the effluent discharge to its present level of 28 m3/ton. This compares with 126 m3/ton in 1991 and 230 m3/ton when the mill started up in 1982. Moreover, no effluent is discharged into the river. Instead, it is used to irrigate eucalyptus plantations under a company scheme known as Project Green.

Air pollution control is another important area for Phoenix. The odor-free air around the mill is due to the installation of a collection and burning system at the mill to control odors.

Looking ahead

With the mill back in action, Phoenix must turn its attention away from the past and toward the future. So far Purswani has taken a very hands-on approach, but he plans to hand over the running of the company to a new CEO who is due to be appointed in June.

Phoenix is also likely to get bigger. It remains to be seen if the outfit will revive its pre-crisis proposals to build a third line at the mill. But in the meantime, Phoenix is keeping a keen eye on acquisition opportunities in the pulp market. It appears that Phoenix is not just set on polishing up its image, but also on securing a permanent place among the world's leading pulp producers.

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