The baseline projection for global growth in 2016 is a modest 3.2 percent broadly inline with last year. The recovery is projected to strengthen in 2017 & beyond drivenprimarily by emerging market and developing economies as condition in stressed economiesstart gradually to normalize. But uncertainty has increased & risk of weaker growthscenario is more tangible. Major macroeconomics realignments like slowdown &rebalancing in China decline in commodity price especially for oil with sizableredistributive consequences a related slowdown in investment trade and declining capitalflows to emerging market & developing economies are affecting prospectsdifferentially across countries & regions.
Indian economy grew by 7.6% in the FY 2015-16 & in the last quarter of fiscalgrowth rate was 7.9 % making good progress approaching fast towards average GDP growthrate of 8 % achieved during the 2003-2011. There is a good bit of improvement in economywhich was comparatively not in great shape when our dynamic Prime Minister Mr NarendraModi came into power in 2014. Inflation has been contained around 5% and forex reservesare also in good shape. Lot of changes has happened on the policy front it is the factthat actions have happened & are continuing to happen. Various measures are beingtaken by Government to boost investment & growth in sector like infrastructureincluding highways & railways as well as in the innovation entrepreneurs & energysector.
In the last 20 years globally the usage of Paper has increased from 92 million ton to208 million ton witness the growth of 126%. The average document is copied 9 to 11 times.About 12 million ton of papers were produced in India in 2015-16 while imports were 2.3million tones. Imports have been increasing significantly the last four to five year atmore than 16 % every year. Muted demand globally resulting paper companies in Asiaparticularly China exporting surplus capacity to India which intensify competitivepressures. The paper sector has witnessed a supply glut on account of significant capacityaddition in writing & printing and paper segment over 2009-12 demand on other handhas not increased as expected. Demand for paper & paperboard grew at CAGR of 5.5 %over the last five years while capacity rose by 7 % in the same period. On the input costside fibre cost has increased but paper manufacturer are unable to pass on cost puttingpressure on their margins. Inadequate demand growth in India vis a vis considerablesurplus capacity in ASEAN countries China results excess supply of paper & resultantsharp decline in paper price.
FY 2014-15 was a difficult year for the Company. During the year performance ofcompany was adversely impacted due to higher interest cost fall in sale price & underutilization of plant capacity due to various reasons. Large imports from China Russia& Canada has affected our sales realization likewise multiple usage of recycled gradesof waste paper has resulted increase in the cost of procurement. The company has beenfacing severe liquidity crunch & stringent bank policies in providing the necessaryfinancial assistance has resulted difficult environment for the company to run itsoperations.
In the new financial year your company will continue to focus on excellence across allits operations commercial as well operational. We are hoping for reduction in costbetter demand conditions hence higher prices. We will strive hard to bring down ourinterest cost by becoming operationally & financially much smarter than before.
Finally I would like to take this opportunity to express my gratitude to ourstakeholder for their continued support & confidence in us & I hope to continue toreceive your support in future.
CHAIRMAN & MANAGING DIRECTOR