Pulp & Paper Industry

 

Overview

Paper is usually made up of plant fiber or wood pulp. Cloth usage in paper manufacturing would make good quality paper. The earliest paper – papyrus was made from reeds and paper technology seeped from Egypt to China to Japan and finally to Europe. Paper manufacturing was introduced in India in the tenth century that picked pace after World War II. Earlier, coniferous trees, better known as softwood, such as spruce or fir were preferred to hardwood or deciduous trees such as poplar and elm. However, the continuous increase in demand has brought almost every tree under the ambit of paper manufacturing. High-grade cigarette paper is made from flax. Countries with fewer resources use bamboo, hemp, jute or even straw or sugarcane to make paper. For letterheads, cotton or linen rags are used to make fine grade papers. Other raw materials include bleaches, dyes, chalk, clay, titanium oxide, rosin, gum and starch.   

The growth of this industry has usually mirrored the growth in GDP. In India, ITC Paper Boards and Specialty Paper Division and Ballarpur Industries Ltd. produce paperboard and pulp; Abhishek Industries Ltd. produce home textiles and yarn; JK Papers produce notebooks, and other paper books; Tamil Nadu Newsprint and Papers Ltd. is in to hardwood pulp, paperboard and sheets while Century Pulp and Paper manufacture printing and writing paper, tissue papers and RGP products. In early 2000s, this industry saw a few horizontal mergers but at present, the industry participants have a well-segregated structure where each player specializes in their core businesses.

 

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Outlook

India produced 13 million tons of paper in 2014. Indian paper and boards market is one of the fastest growing markets in the world and ranks 15 in terms of production. With the large population base and penetration not yet enforced completely by industry participants, this industry holds a lot of potential for capturing a strong market share. Although the per capita consumption is very bleak – 11 kg compared to global average of 56kg, this should increase due to several factors working in favor of this industry.  

JK papers have initiated operations to re-enter Maplitho paper manufacturing. Office paper is an evergreen segment to this industry. There is a slow but growing need for high quality office paper. Indian paper industry contributes nearly 3% to the total production of paper worldwide. Over INR 50,000 crore in turnover in this industry, it provides employment to more than 5 million people in the country. Paper mills - both old and modern are found in India and continuous up gradation helps keep the companies abreast with latest technologies. Despite this, Indian paper industry needs aid from the government to absorb the shock of rising raw material prices and export incentives.

 

Future Potential

Coal and wood prices are of major concern to raw material costs incurred by companies. 2014-15 saw an increase in wood prices by 37% and coal prices went up 15%. Farm forestry activities need to be developed to ensure the paper mills do not run out of cost effective raw materials. The market for uncoated paper is improving and this opportunity should be seized. The reduced spending across the board has led to thin prospects but with careful yet robust strategies, this industry needs a strong push from the domestic participants.

Although the current product mix includes 31% of the paper from chemical pulp, 47% from recycled fiber and 22% from agro – residues, this mix needs to be updated according to industry needs and promotion of recycled paper usage. This industry is inclined towards rural cities with close linkages to farming. With limited wood resources in India, innovation through better R&D is the need of the hour. Energy cost efficiency should be maximized without compromise on quality. Sustenance of farm forestry is a contributing factor to the stability of this industry, but stronger government support is what this industry really seeks.

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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