2010-Market Facts - Indian Paper Industry

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CONSULTING, MARKETING & SERVICES IN BUSINESS AND INDUSTRY
(SPECIALIZED IN PAPER INDUSTRY)
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World Watch the Indian Paper Industry

India is one of the few economies expected to fare relatively well this year in Asia, along with the oft-talked-about China.

The International Monetary Fund (IMF) is forecasting an average GDP decline for emerging Asia, excluding India and China, of 2.9% this year.

However, while Indian growth is expected to slow markedly in 2009 before starting to rebound toward the year end, GDP growth is still predicted to reach 4.5%, and accelerate to 5.6% next year.

In fact, India is the fastest-growing market for paper globally, according to the Indian Paper Manufacturers Association (IPMA). Growth in the country's paper industry has mirrored that of GDP, climbing by an average of 6-7% annually over the last few years.

The market is fairly self-contained, with much of paper and board demand met by domestic products. Imports are notable in some grades, though, in particular newsprint. Indian goods do not play a major role in export markets yet.

Last year, the country's paper and board consumption totaled 9.0 million tonnes. The IMPA reckons this will reach 13.95 million tonnes by 2015-2016.

With production of around 8 million tonnes and imports totaling some 1.4 million tonnes last year, there seems to be plenty of scope for expansion to meet this anticipated demand.

A few investment projects are in the pipeline for the next couple of years, with a total capacity increase of almost 2.4 million tonnes. However, this would still leave a gap between domestic supply and demand - an opportunity perhaps for importers or for Indian players to grow even further.

The economic growth of any industry depends upon its TECHNOLOGICAL competence, sustainable quality as per cutomers satisfaction at competitive cost. The Indian Paper Industry accounts for about 2% of worlds production, and is around 8 Million Tones per Annum for Paper and Board, Indian Paper Industry should plan at least 14 Million Tones by 2020 as per the Projected Demand considering growth and demand in recent years, The Indian Paper industry should pepare to overcome various Constraints in its Growth. Industries taking due timely care can only survive and grow in this severe competitive age.

MARKET FACTS

*Globalisation has leveled the competitive playing fields between the industrial and emerging market countries where competitors have an equal opportunity to sell their products in a free market without restrictions.
*India ranks amongst the top 15 global consuming countries (over 6 Metric Tonnes (MT)/annum).
*With 10 per cent growth in per capita consumption in paper over the last one year, India has emerged as the fasted growing paper market in the world from 7.5 kg per capita consumption in 2007-08, the figure has gone up to 8.3 kg. “Pulp and paper industry is growing rapidly with an estimated CAGR (Compounded Annual Growth Rate) of 7-8% projected over the next decade.
*The Indian paper industry accounts for about 1.6% of the world’s production of paper and paperboard. The estimated turnover of the industry is Rs. 25,000 core (USD 5.95 billion) approximately.
*The Indian consumption stands at 5.4 kg/ capita as compared to world’s average of 52kg/capita and Asian average at 38 kg/capita. The comparative clearly defines the magnitude and scale due for advancement.
*The daunting issue that needs to be addressed is the shortage of raw material in order to bridge the demand and supply gap, projected at 15 million tones by 2015 and 20 million tones by 2020.
*The government has announced Customs duty exemptions for the newspaper and magazine publishing industry, which has been hit by the current economic slowdown.
*In a notification, the Finance Ministry exempted newsprint as well as uncoated paper used for printing of newspapers from Customs duty. It also exempted light weight coated paper used for printing magazines from the duty.
*In order to encourage publishers of foreign newspapers like the Wall Street Journal, The Independent and several others to start the facsimile editions of their international editions in India, the government has allowed up to 100 per cent foreign direct investment (FDI) in the segment.
* Indian Paper industry has evolved into Agro-based industry from its earlier character of a forest-based industry
*India has 660 paper mills apparently 38 mills are responsible for 60% of total production. This is a very strong indicator that investment and technology is needed for upgradation of existing mills.
*The Central Research Institute for Jute and Allied Industries has been requested to bring the technology for manufacturing newsprint using jute.
* Indian patterns of demand have changed with the buying power of the emerging middle class and a more rapid increase in demand for quality value added products.
* India is a fast-growing market. It is among the top ten markets, bigger than China. This is not really because the Chinese market for serious non-fiction in English is small than that of India. It is just that rampant piracy takes off a huge chunk of that market, leaving the official market small than India’s. In conformity with the perceived comparative advantage of the two countries, while China is entrusted with the physical production of books, the pre-print processing is outsourced to India on a large scale.
*There is ample space for the paper producers, equipment and technology suppliers and more so for the trade players, to draw an effective strategy to chart aggressive growth.
*No doubt the inevitably effects of economic slow down on Paper Industry has slowly started showing up. However, several perceptible key drivers of growth capable of propelling the Indian paper industry are still very much in place and there is ample space for the paper producers, equipment and technology suppliers and more so for the trade players to draw an effective strategy to chart aggressive growth.

*Raw Material Constraints Additional space for planned plantation, Energy subsidy to sugar mills limits the availability of bagasse, increased use of secondary fibres, agrcultural residues and well defined aggressive waste paper collection system et are required to overcome raw material scarcity.

*Use of Upgraded Technology Most of the mills are looking for upgraded technology to reduce specific water, energy and raw material consumptions with improved quality production, use of improved instrumentation and controls etc.

*Economy of scale Small agro based mills have either shifted to secondary fibre as raw material or have increased their prodution capacities to install chemical recovery systems.
*Productivity Quality Improvement Global competitiveness requires proper quality and productivity maintenance and thus sustained planning for continuous improvement in production.
*Environmental Issues All the Industries are expected to follow minimum environmental discharge and utilization norms, environmental reuiremetn for different sectors of paper mills are different and are to be tackled in the yars to come. Such as solid waste disposal, Colour removal, bleach effluent, tackling Black Liquor in small and medium agro based mills by adopting latest technologies are all major areas of concern.

Efforts must be made in building up new capacties so as to meet the growing demand in next decade. Goverment intervention is necessary in Easy Finance, Availability of raw material, Uninterrupted supply of energy at affordable price and Skilled Manpower
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