Company Registration

Kraft Paper Business: Know All About It

calendar08 Dec, 2022
timeReading Time: 4 Minutes
Kraft Paper Business: Know All About It

Kraft Paper is a robust paperboard material that comprises wood pulp and recycled materials. The pulp undergoes a bleaching process where chemicals are used to improve the durability, strength, and thickness of the fibres without making them hefty. Kraft Paper can be found in a number of varieties, including printed, white, black, coloured, etc. Kraft Papers are recyclable and thus can be subjected to complete decomposition, making them a valuable material. Kraft Papers are widely used in an assortment of packaging applications, including bags, envelopes, composite cans, cartons, pouches, etc. The demand for Kraft Papers is increasing owing to their unmatched elasticity, strength, durability, and price. The write-up will talk about the different aspects of the Kraft Paper Business in detail.

What makes a Kraft Paper Business a profitable venture?

  • Kraft Paper[1] is produced via chemical pulp and it is widely used in the packaging industry. Nations like China, India, and Brazil have witnessed a steep rise in Kraft Paper consumption in the past few years.
  • The Indian Kraft Paper market size accounted for 8.5 MT in 2021, which is likely to double by 2027, registering a CAGR of 9.5 percent from 2022-27. India contributes to 3 percent of the global annual demand for Kraft Paper. Owing to unprecedented characteristics and ever-rising urbanization, the Kraft paper market size is expanding every passing day.
  • The Kraft Paper industry is likely to witness a CAGR of 3 percent alongside a market growth of almost 19 billion by the end of 2025. The major source of demand for Kraft Paper comes from the sectors like real estate, food, personal care, etc.

Mandatory Registrations for the Kraft Paper Business

You could enter into the Kraft Paper Business as a wholesaler, exporter, manufacturer, or all of them. To be a manufacturer, you need to make a considerable investment in equipment and land. However, the profit you earn here will be much higher than what you will reap as a distributor. Below is the breakdown of licenses you need to secure to start a venture like this.

As a Distributor or Exporters having godowns

  • Trade License (its applicability varies as in some states you may only need to secure a shop and establishment license)
  • GST Registration (in case you are earning above the threshold limit or engaged in inter-state supply of goods)
  • Permanent Account Number
  • Fire NOC
  • Import Export License (for shipping products outside India)
  • Opening of current bank account

As a Manufacturers

  • Business registration either as a private limited company, OPC, LLP, or Partnership Firm.
  • Factory license (Mandatory for units having more than 20 or more workers regardless of whether the unit uses the power or not)
  • Fire NOC (mandatory for units 15 m high or facilities prone to fire-related mishaps. It is granted by the respective Fire department)
  • Pollution NOC (State Pollution Control Board (SPCB) grants the pollution NOC in the form of Consent to Establish (CTE) & Consent to operate (CTO). The CTO will serve as the final approval)
  • GST registration
  • Udhyam Aadhar registration (not mandatory but useful for accessing government funding schemes)
  • Trademark registration (you will need to secure your intellectual assets like brand name, logo, or tagline)
  • Contract Labour License (Mandatory for units hiring 50 or above labourers via a third-party contractor)

After securing these permits, your kraft paper business shall become legally enforceable and hence you can carry out operations without any legal hindrances.

Key Facts to Consider for Kraft Paper Business

  • Some basic machinery requires for Kraft Paper manufacturing includes Fourdrinier machines, digesters, refiners, pulpers, chip processors, chippers, paper webs forming equipment, and pulp processors.
  • The secondary operations used in Kraft Paper mills include calendaring, sizing, saturation, glazing, coating, corrugating, folding, slitting, perforating, and sheeting. This secondary processing may be completed off-machined via dedicated pulp and paper processing equipment.
  • While incorporating as a private limited or one-person company, applicants must share charter documents like the Memorandum of Association and Article of Association with the Ministry of Corporate Affairs (MCA).
  • Spice+ e-form is now being used for incorporation purposes. It is available on the MCA’s web portal under the services section.
  • The business structures like Partnerships and Limited Liability partnerships fit those who wish to work as a partner. LLP is the best option for partners who want to serve limited liability and doesn’t want to put their earnings at the stack in case of crisis. Partnership-based models also work fine, but they are not as transparent and flexible as the LLPs.
  • Trade license is granted by the State’s municipal corporation. Its applicability is not in force in every state. In some states, distributors or exporters having godowns need to secure a Shop and Establishment license.
  • A factory license is a must-have requirement for manufacturers. It falls under the Factories Act of 1948 and it is applicable to units (power-driven) having 10 or more workers and facilities (non-power driven) having 20 or more workers.
  • Before applying for Fire NOC, every business owner must install prescribed fire-fighting equipment within the premises. Also, there should be an emergency exit, as recommended by the authority,
  • Pollution NOC is granted by SPCB in a phase-wise manner. In the first phase, the authority grants the Consent to Establish (CTE), which serves as a permit to construct the facility as per the authority’s directions. Post-meeting the compliances concerning CTE, the applicant must apply for CTO (consent to operate), which will serve as the final approval.

Conclusion

Kraft Paper Business has immense potential and it can be a profitable venture for any aspiring entrepreneur. Depending on funding capabilities and compliance threshold, one can enter into this venture as a manufacturer, distributor, or exporter. Compliance fulfilment is an important part of this venture as it attracts a host of legalities based on the nature & scope of the business. Therefore, it is advisable to get in touch with a professional firm to keep things simple and easy.

Read Our Article: How to Avail a Company Registration Certificate?

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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