 "Paper industry bracing for consolidation to smoothen backward integration")
The Rs 50,000-crore Indian paper industry could witness a round of consolidation and co-operation among various players in the next few years to collectively leverage fast changing manufacturing technologies and smoothen backward integration for raw materials.
This in the end could leave less than 10 big players in the domestic market as against the current 28 major ones.
The industry, which is highly dependent on wood pulp for manufacturing of paper and paper-based products, is also trying to widen its raw material base to lower cost of production.
India, which is the second most populated country in the world after China, consumes less than 10 kilograms of paper as against global average of 58 kilogram and US consumption of over 350 kilograms.
This also means that there is huge potential for the sector, which can be met through use of modern technologies.
India’s paper consumption is expected to grow to around 40 million tonnes by 2026 from the current 14 million tonnes. Industry sources estimate that new investments of Rs 90,000 crore is required in the coming few years.
The exponential growth of e-commerce in the country has opened up a new horizon and could contribute significantly to the demand where paper is being extensively used for packaging.
“Just like in all other sectors both globally and domestically, the Indian paper industry has to move towards adopting advanced technologies and here size would come into play. Those who can adopt new technologies in paper making would survive, while others would feel the heat,” Rajinder Gupta, chairman and managing of Trident Group, one of the fastest growing paper companies told Business Standard.
He said small paper making units that have a cumulative production capacity of less than Rs 1,000 tonnes of paper per day could find it increasingly difficult to survive the cut-throat competition in the sector.
“Our overheads are growing, while the number of compliances are also not getting lessened, all these makes me feel that those who can quickly adopt modern manufacturing technologies will be better off in the coming days,” Gupta said.
Subhash Garg, chairman of Ruchira Papers, said that technological adoption has to be swifter as the cost of non-wood based raw material for making paper is gradually coming at a par with wood-based raw materials.
“One has to update his technologies as quality of paper has improved so much in the last few years that paper made from non-wood raw materials is as good as those made from wood, while the cost of later is lower,” Garg added.
Apart from non-wood sources, Indian paper industry is actively promoting agro-forestry to meet its raw material needs, but a long gestation period acts as a hindrance.
“Non-wood based raw materials are increasingly becoming more popular in the paper industry in India. Having mapped with paper mill water use, companies are working to develop site specific plans at priority facilities that address additional efficiencies around water reuse and potential reduction,” Udo Schuertzmann, managing director of International Trade and Exhibitions India said. ITEI had organised one of the major exhibitions on paper in the capital recently.
Snapshot on Indian Paper Industry
1) India accounts for 2.6% of world paper production
2) India accounts for 1.6% of world paper consumption
3) The total size of the industry is estimated to be around Rs 50,000 crore
4) Per capita consumption of paper in India is 9.8 kilograms, while the global average is 58 kilograms
5) India’s paper consumption is expected to grow to around 40 million tonnes by 2026 from the current 14 million tonnes.
6) There are almost 28 established players in the Indian paper sector
7) The growth in e-commerce has opened a new opportunity for the sector
