Paper Makers Rise On Price Hike Buzz

Scrips of paper manufacturers have staged a rally on the bourses in the last few trading sessions on bargain buying backed by rumours that the companies have decided to hike the paper prices and pass on to consumers, dealers said.

Though the stock today closed at lower levels over their previous close, there has been a spiraling movement in last few trading sessions. Ballarpur Industries (BILT) gained 27 per cent from Rs 41 on June 7, 2002, to the today's closing of Rs 49.90. Balkrishna Industries rose 25.8 per cent from Rs 30.60 on June 7 2002 to the day's high of Rs 38.50. Orient Paper surged 58 per cent from Rs 16.55 on May 30, 2002, to Rs 24.75 and AP Paper advanced 24 per cent from Rs 38.85 on May 31, 2002, to the current Rs 47.10.

 

After having witnessed depression in stock prices and volumes, in the past few sessions they have staged a rally .A clutch of favourable developments in the paper sector triggered a recovery in these scrips. Recent reports suggest that leading companies in the industry have decided to pass on cost increases to customers.

Paper manufacturers are increasing the prices of their products following the increase in prices of newsprint and paper in international markets, analysts said. The huge inventory pile-up that dogged the writing and printing paper sector in FY 2001-02 is now being wiped out said analysts.

Reports also indicate that the import of raw material for paper including pulp, wastepaper and newsprint is likely to increase by at least 10 per cent to 15 per cent in 2002-03 to keep up with the growing demand for paper in the domestic market, as per estimates of the Indian Paper Manufacturers' Association (Ipma).

Fiscal 2001-02 was one of the most difficult years for the paper industry. While prices of writing and printing paper fell about 6 per cent, newsprint prices tumbled 30 per cent. According to estimates, both production and sales of pulp and newsprint went up 5 per cent in FY 2001-02.

However, threat from imports as a result of falling import tariffs continues to be one of the biggest challenges for the Indian paper industry.