Investors

 

GLOBAL SCENARIO

Paper industry occupies a prestigious position, among the various manufacturing enterprises globally, in view of its significant contribution to the society. Role of paper in promotion of literacy, propagation of information and knowledge, packaging of commodities and valuable commercial goods, makes it an indispensible product. Paper industry is also a significant player in the world economy. Global consumption of paper and paper board grew from 169 million tonnes in 1981 to 253 million tonnes in 1993 and to 352 million tonnes in 2005. Current consumption of paper is to the tune of 400 million tonnes per annum, roughly half of this consumption is shared by North America and Europe. However, share of North America and Europe has been declining since 2006; while that is steeply rising in China, India and other developing economies of Asia. With the growth in consumption, recycling of paper is growing gradually throughout the world; at present almost 65% of the paper produced each year is recycled.

The major driver for demand of paper in the global markets is due to increase in usage of paperboards in packaging as well as printing applications. Increasing awareness amongst consumers towards eco-friendly packaging solutions, that would be more inclusive with the eco-system and animal habitat have been one of the main reasons that is driving the packaging industry to come up with innovative packaging solutions that are convenient for the consumers. Globally, the paperboard packaging market has grown moderately in the last few years despite sluggishness in other paper sector and this growth is expected to continue.

INDIAN PAPER INDUSTRY

The Indian Paper and Paper Board market is the 15th largest market in the world. With a growth rate of 7% it is also one of the fastest growing markets with further growth potential due to large population base and low per capita paper consumption compared to world average. Substantial thrust on literacy and education, changing lifestyle, growth in organised retail and increase in disposable income will further boost up paper consumption in the country. The consumption of paper is closely linked to the economic development of a country. In India, it is gradually improving with economic growth, industrial production, expenditure incurred on the print media, Government is spending in education, etc.

Paper and paper board industry in India is segregated in four major segments – Writing and Printing paper (W&P), Paperboard (Industrial paper), Speciality Paper and Newsprint. In 2014-15, W&P paper was estimated to form the largest share of the domestic paper market at 41% followed by paperboard at 37%, newsprint at 18% and speciality paper at 4% (Source CRISIL Research Paper 2016).

The revenue of paper industry of India is expected to reach up to USD 11.83 billion by 2017. About 70% of the total installed capacity of paper production in India is accounted by the states of Gujarat, West Bengal, Orissa, Andhra Pradesh, Karnataka and Maharashtra. Uttar Pradesh, Tamil Nadu, Haryana, Kerala, Bihar and Assam together account for about 25% of the total paper production in India. India’s paper consumption has grown at a steady rate of 6% - 8% in the last five years. The Indian paper industry has an annual turnover of about Rs. 40,000 crores. India has 17% of the world’s population, but it consumes just about 3% of paper globally. Low per capita consumption, which is about 10kg only in contrast to global average of 55 kg indicates the future potential of paper and paperboard industry in India.

Having a large population base, any sort of increase in per capita paper consumption will cause a substantial increase in paper demand in the country. With the growth in GDP and increase in literacy, paper consumption in India is forecasted to go up. Consumption of paper and related products in India is set to double by 2020, from the current level of 13.4 million tons.

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