In spite of a number of headwinds, the domestic paper sector outlook is positive and the prices are likely to firm up during the course of the year. The market has been growing steadily at 5-7 per cent per annum, according to KS Kasi Viswanathan, Managing Director, Seshasayee Paper and Boards Ltd.
During an interaction with the paper industry veteran on the sidelines of a CII meet on energy conservation, Viswanathan, who is also the Chairman of CII Papertech 2016, said the paper industry has been facing difficulties due to imported paper products coming into the country due to import duty reduction and free trade agreements (FTAs).
“The current duty structure has been favourable to importers and the industry has represented to the Government to bring about changes. There is tremendous pressure on domestic companies due to imported material,” he explained.
The performance of the paper sector varies depending upon the segment, be it newsprint, speciality paper and packaging material. Most segments are growing. Over the years, a number of people have predicted that due to computerisation and paperless offices, the demand for paper will come down. On the contrary, India is a large under-penetrated country, and the usage of paper and paper products in schools, educational institutions and government offices and corporate entities will continue to help the sector grow by more than 5-6 per cent per annum.
Referring to the difficulties faced in the sector, he said most of the large and medium-sized paper companies /mills have managed to secure their raw material through various sustainability initiatives. However, a number of agro-based small units have faced closure due to raw material issues and difficulties they face taking to the competitive world.
Waste paper usage
The usage of waste paper as a material for production of paper has been gradually growing over the years. It has gone up from about 33 per cent to about 55 per cent. There are indications that this is likely to go up to 65 per cent over the next few years. Paper recycling has its own issues, but if properly managed, it would help meet the raw material requirement, he said.
Domestic paper consumption is about 13 million tonnes per annum and there are indications that this is likely to steadily go up over the next few years. The growth will particularly come from tissue and packaging industry, the latter driven by various segments, including e-commerce.
On Seshasayee’s business, the MD said, “The company is focussing on consolidation of its business following the acquisition of a mill in South. We have a capacity of 1,80,000 tonnes per annum and are working at 100 per cent capacity utilisation.”