SEPTEMBER 2018

Kehra paper mill is striving for new markets

No smell. This is the important observation that the journalist makes immediately after stepping out of the car in the parking lot. In the past, the largest employer in the region has had issues with the “smell of money”.

Bashyam Krishnan, the head of the board of Indian nationality lights up when he hears about the lack of smell. Sustainability is clearly close to the heart for him. According to Krishnani, many measures have been taken and tens of millions invested in recent years in order to solve the smell issue, but also to make the factory more environment friendly in general sense. The man himself is running the Horizon Cellulose and Paper AS since the end of 2013.

There is space in the Baltic and Nordic markets

The reason of the visit of Äripäev is the paper bag production line recently set up in the factory. Under Krishnan’s lead, they try to give the paper they produce additional value already before it goes out of their gate. In his opinion, Horizon is really good at it – even better than the customers whom the raw paper is sold to. In the same time, Krishnan stresses that the general principle is not to make competitors out of customers. Therefore, they are planning to sell the paper bags mostly to the Baltic and Nordic countries, where there is still space on the market.

Krishnan does not reveal the cost of the line, but the investment program of Horizon for 2017–2018 is a total of 25 million Euros. Largely, it is directed by the regulative framework of the EU, which foresees the decrease in the use of plastic, including plastic bags. Horizon’s new line should produce about 15 million bags a year, which are suitable for restaurants, retail stores and butchers. You can pack open food in the bags as well.

Why should an Estonian retail chain, for example, include Horizon paper bags in their assortment?

Krishnan counts the advantages of Kehra’s products on his fingers. Firstly – the material. No recycled materials are used in Kehra bags (do not read anti-environmentalism out from that). Krishnan lets you touch their product – the paper is really very smooth compared to an ordinary bag found in a shop and the impression is even synthetic in a weird way. Krishnan says proudly that high-resolution text and pictures can be printed on the bags.

The other sales argument is aesthetic – the bags must definitely be of an earthly brown colour, which suggests environmental friendliness to the customers. And thirdly, the products are durable. A regular shopping bag should carry 30 kilograms of weight – basically, you could carry dumbbells in it.

For Krishnan, confidentiality and keeping business secrets is very important. It is very clearly stated, what can be photographed and what not. Therefore, the information about partners whose logos cover the new bags is preserved only in the memory of the journalist. But we can say that soon, even most ecologically-minded consumers will be able to use the new product category of the paper mill.

Kehra factory was opened in 1938, so the factory is running for the 80th anniversary already. Some of the buildings from back then are still standing next to the new ones. Krishnan wishes that the photographer would take pictures of the new ones. Unfortunately, the machines are currently letting out steam. A malicious viewer could take the harmless water vapour for chemical fumes. “It is not common at all,”Krishnan assures. For the sake of honesty, I must note that the smell that could not be felt in the parking lot can be sensed on the territory of the factory.

The catastrophe was averted

Almost all Estonian heads of state of Estonia have visited the factory starting with Konstantin Päts. It is no wonder – it is clearly the largest employer in the region, if not to say a monopoly. In 2008, when the crisis emerged, the factory was shut down for a while due to debts. The gas was turned off and Eesti Energia threatened their largest customer with cutting their power. Jüri Lillsoo, the head of Anija County, described the situation to Äripäev with the word “catastrophe”. The factory employed 500 people back then.

Today, the factory has a similar number of employees, 416 on the averagelast year. According to last year’s financial report, the average gross wage was more than Estonian average– 1425 Euros. Driving around on the factory’s territory with a chauffeur, you can only spot a few workers. The general view altogether is deceivingly quiet, although hundreds of thousands of cubic meters of wood goes through the factory each year.

Sonny Aswani, the head of the parent company Tolaram Balticssaid four years ago that the crisis made them break out of the factory’s comfort zone. “Neighbouring markets, especially in Europe, were in decrease and we had to bring our activities to a more international level. We went to new markets, mostly in South and Central America, and to far markets like Australia. We adjusted the product, found new ways of use for it. Earlier, we were very dependent on the cement sector, which in turn is dependent on the construction sector, which is dependent on the real estate market. We fell victim to the fall of one sector and had to find niche markets. So we began to look for solutions for the product elsewhere –In food production industry, in agriculture, as protective package,” he counts. All that required considerably more sales work.

“All the sales managers, heads of marketing and other managers here – including the CEO. We all went to the market. I even sent the members of the technical crew out to do sales. We did everything in our power –knocked on doors, broke the doors down if necessary, went to fairs, pulled people’s hair if there was no other way to agree on a meeting,” As wani said. Last year, Horizon doubled its net benefit to 8,6 million Euros. About half of that was paid out in dividends.