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Indian Paper Industry, Q3 2011
Credit Analysis & Research Limited, Aug 2011, Pages: 87
The Indian Paper Industry is the world’s fastest growing paper market, growing at a CAGR of 6.7% over FY06-11. India paper industry is broadly classified into three segments – namely Printing & Writing (P&W), Newsprint and Paperboard & Industrial Packaging (Paperboard). Paperboard is the largest segment, accounting for 45% of total domestic paper demand, followed by P&W (35%) and Newsprint (20%). The industry is further categorized on the basis of raw-material used for manufacturing paper into forest-based (with a share of 21%), agro-based (23%) and recycled fibre-based paper (56%).
Over the next five years, paperboard demand is expected to grow at the fastest rate across the segment due to strong demand from organized retail market and flexible packaging products. Newsprint demand is expected to grow with rise in literacy rate and increased focus of print media companies on regional market. P&W demand is forecast to grow with increased govt spending on education and improved activity from service & manufacturing sector.
While the industry demand outlook looks positive in the near-term, margin is expected to remain under pressure as significant capacity additions in the recent past will limit domestic producers’ ability to pass on the full rise in raw-material cost to end consumers. However, slowdown in future capacity additions and positive demand outlook will improve the industry demand supply equilibrium and increase the bargaining power of producers over the medium term. This study indicates that many paper companies have abandoned/deferred their paper capacity expansion plan on account of funding issues, significant increase in domestic supply due to recent capacity additions, delay in procuring environmental clearances, etc.
Indian Paper industry can be broadly characterized as 1) capital, energy and water intensive, 2) highly fragmented structure and 3) poor economies of scale due to use of obsolete technology. To compete with large efficient international players, the authors believe domestic producers should focus on reducing cost of product and improve quality of finished product. Considering the fragmented nature of industry, the authors believe that consolidation is imminent in the long-term to reduce the level of competition.
This report on ‘Indian Paper Industry’ gives valuable insight on the industry demand supply fundamental, industry cost competitiveness structure, competitive and regulatory scenario, scope of mergers & acquisitions, expansion plans, financial profile of the industry, and performance analysis of key industry players.
The report provides the authors Outlook and Challenges on Indian paper industry for the next 5 years. It provides the demand outlook for each paper segment, along with key problems/bottlenecks. It also discusses the key initiatives need to be taken by companies & government to improve the industry profitability. It also provides the comparative study of the usage of different pulp fibre used in India from point of view of efficiency, profitability and sustainability.
Products mentioned:
- Paper
- Printing & Writing
- Newsprint
- Paperboard & Industrial Packaging
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