AV CELL: A business venture between India and Canada
February 1, 2007 By Pulp & Paper Canada
The term “global economy” has become a buzz phrase that is familiar in many fields, as well as in the pulp and paper industry. This is a story of global synergy and co-operation that has created a uni…
The term “global economy” has become a buzz phrase that is familiar in many fields, as well as in the pulp and paper industry. This is a story of global synergy and co-operation that has created a unique relationship not only between two diverse nations, India and Canada, but between its people. After all, what does the small town of Atholville, NB, have in common with Pilani, located near the Rajastan Desert in India? The answers are the focus of this month’s feature on the operation called AV Cell.
It started in July 1997 with a letter from Frank A. Dottori, former chief executive officer of Tembec, to the AV Birla Group in India. In it, he proposed a possible partnership between the two companies for acquiring a pulp mill in Atholville, NB. At the time the Birla Group was in the process of setting up a new greenfield pulp project in the Indian province of Punjab, which was projected to meet the increasing requirements of the corporation’s rayon plants in India, Thailand and Indonesia. One month after the initial correspondence, a team from India that included Shri Vallabh Sharda, visited Atholville and concluded that the idea had merit since, with a reasonable capital expenditure, the plant could be converted into a dissolving pulp mill of 300 TPD capacity. Sharda, now the vice president and chief operating officer, said, “I worked on this project from the very first day, so its present-day success has great personal meaning to me.”
A mere three months later, after a period of due diligence, the AV Birla Group signed a joint venture agreement with Tembec and, on January 8, 1998, AV Cell was incorporated.
The proposed pulp project in Punjab was abandoned, and a new relationship with the mill in New Brunswick began. Sharda recalled, “In contrast to the Indian experience, I was surprised when [then] Minister of Finance Edmund Blanchard came to meet me on my second visit to Atholville to elaborate on various industrial projects in New Brunswick. This encouraged us to take up various issues to the government in Fredericton and helped speedy acquisition of the mill.”
The final purchase took place on February 20, after various agreements with the province of New Brunswick, the previous owners REPAP, and the local unions. A new era had begun. Senior operations manager Paul Schriver recalled, “The reopening of the mill represented an end to the difficult times that all the mill workers in the area had had to endure with the multiple closures in the nineties.” Ashley Irvine, fibreline manager added, “We see ourselves as survivors having lived through much uncertainty in the past.”
AV Cell is located in Atholville, a town of approximately 2,000 people, in northern New Brunswick, situated on the banks of the Restigouche River and Chaleur Bay.
In 1920, the Fraser family built a lath, lumber and shingle mill which operated successfully for a decade. However, fuelled by the natural resources abundant to the province, growth was inevitable. In 1930, the Restigouche Company, with an investment capital of $2.5 million, made the conversion to a pulp mill, producing 150 TPD of bleached sulphite pulp for the paper industry. Additional equipment was installed in the mid thirties, allowing for the production of dissolving pulp for rayon and cellophane. This was phased out in the fifties when the mill switched from a calcium base of production to ammonia-based pulp. The following decade saw drastic changes with the last of the river drives on the Restigouche, and the conversion from coal to oil-burning furnaces.
It was not until the early 1980s that a major modernization project led to the conversion of the ammonia sulphite mill to a bleached magnesium bisulphite softwood and hardwood pulp mill. In 1986 Fraser sold the operation to Noranda. The nineties proved to be especially challenging for the mill, the employees and the town itself. With closure of the mill in 1991, trying times were ahead for employees who in many cases had three generations of their families working in the industry.
Three years later, new owners REPAP brought renewed life to the mill by renaming it Alcell. It remained operational until 1996, when market conditions forced its shut down. It was the Tembec and Aditya Birla Group agreement of 1998 that has brought stability and continuous operation for the past eight years. “We now have 261 dedicated employees working at AV Cell, with an average experience of over 20 years,” said Sharda. “They have lived through many closures and changes in ownership and direction throughout their years, and this fact alone makes them a team of survivors, innovators and entrepreneurs.”
The marriage of technology and environment was always significant to the new owners, and in 2002 AV Cell committed to implement Tembec’s Impact Zero environmental management system (EMP). The EMP uses ISO14001 standard as a management tool. The mill received IS014001 registration in May 2002. AV Cell was OHSAS 18001 certified in October 2004 for health and safety management. On January 28, 2006, AV Cell achieved a milestone by successfully completing 612 days with no lost time due to injuries. The introduction of a health and safety management system has been instrumental in defining, evaluating and monitoring all the hazards and risks of injuries present in all tasks.
A special emphasis has also been given to energy conservation schemes and to the reduction of fossil fuel usage. Specific programs initiated during 2004-2005 under Tembec’s wide energy co-ordination drive made AV Cell a first place winner at the 92nd Annual Meeting of the Pulp & Paper Technical Association of Canada.
Aditya Birla Group
Known as India’s first truly multinational corporation, the Aditya Birla Group is global in its vision with a foundation rooted in Indian values. A $8.3 U.S. billion conglomerate with a workforce of 72,000 employees belonging to over 20 different nationalities, the group prides itself on being a dominant player in all the sectors in which it operates (see sidebar). It operates 72 manufacturing centres that span India, Canada, Thailand, Indonesia, Malaysia, Philippines, Egypt, Australia and China.
The roots of the corporation date back to the 19th century when Seth Shiv Narayan Birla started trading in cotton, and at the same time laying the foundations for the House of Birla. In the early part of the 20th century, Ghanshyamdas Birla set up industries in critical sectors such as textiles and fibre, aluminium, cement and chemicals, areas in which the corporation is still active today. He emerged as one of the foremost industrialists of pre-independence India. His grandson, Aditya Vikram Birla, continued in the family footsteps, and by the late 1960s was the first to set in motion the family dream of creating a global business empire that would put India on the world map. His vision was that globalization meant not just geographic reach, but the creation of a strong home base back in India. He was proud of India and took equal pride in being Indian. Kumar Manglam Birla, present chairman of AVBirla Group and great-grandson of Ghanshyamdas Birla expanded the business sevenfold since 1995 and took the group’s presence beyond Asia to Canada, Australia, China and the U.S. It is during the time of Shailendra K. Jain, business director of the pulp and fibre business, that the expansion of Canada’s pulp business took place in 1998.
Shri Vallabh Sharda
Shri Vallabh Sharda, vice president and chief operating officer of AV Cell, is the personification of that corporate spirit laid down by Seth Shiv Narayan Birla. Born in Rajastan, India, he was educated as a chemical engineer and has seen his career take him to pulp and viscose fibre plants around the world. Since 1974, he has been involved in the technical, marketing and management sides of the pulp and fibre industry. His arrival in Canada in 1997 was, “not so much a culture shock, but an adaptation to a differen
t kind of winter than I have ever known,” he laughingly said. “While culturally we are different, we immediately shared a common goal in making this project work, from the support of the former Minister of Finance Edmund Blanchard to that of the Mayor of Atholville. I remember feeling very welcomed.”
Nine years later, Sharda is described by insiders as a man with an amazing work ethic whose dedication to the success of the mill is unquestionable. “He has a reputation for being a tough but fair negotiator, and he gets things done,” added Shriver. “His arrival and settlement in New Brunswick has given us a better understanding of the Indian way.” It seems fitting, in an ironic way, that Shri Vallabh Sharda celebrates his birthday on July 1, Canada Day.
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AV CELL and AV BIRLA Group
* Viscose staple fibre production with 25% market share of the world is the main business of AV Birla Group.
* Strategically it is important that the Group secures its main raw material, dissolving pulp supply to a large extent at economic value.
* Reduction on market dependence of pulp purchases gives leverage to buy the balance pulp at competitive prices in the global market.
* AV Cell produces 50% softwood blend pulp, hence the Group owns captive sources of softwood pulp.
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