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Economic Analysis of Indian Paper Industry

Decent Essays

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Market Forces: Supply and Demand
Understanding trends, drivers, elasticity and revenues
(With example of ITC paperboard & specialty papers division)

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Indian Paper Industry Structure: * The Indian paper industry accounts for about 2% of the world production of paper & paperboard; currently ranks 15th in the world. * Estimated turnover of Rs. 25,000 crore approximately; contribution of about Rs. 2920 crore to the exchequer. * The industry provides employment to more than 0.12 million people directly and 0.34 million people indirectly. * Over 800 players are currently present in the industry and the total estimated capacity is about 11.1 million Metric Tonnes. * Most mills in India are small; a few mills have …show more content…

However, despite the higher level of technology being used in the corporate sector, there has been no decline in the demand for paper. In fact, demand for paper has increased.
In the industrial segment, paper competes with substitutes such as polymers, wood and steel for use in packaging applications. Given their lower prices and the increasing focus on appearance, polymers pose a threat to paper in industrial applications.

Supply:
The total number of mills in the country as of 2010-11 was around 800. During the last four years the capacity has increased by 7.3%. Given the increase in demand for paper, there have been significant capacity additions in the past few years with total capacity reaching 11.1 million tonnes in 2010-11. This increase in capacity has led to a decline in the operating rates to levels of 78-79%.
Pricing:
Paper prices in the W&P segment marginally increased for all varieties in 2010-11 as compared to 2009-10. The prices of W & P paper rose by 5.6 per cent in 2010-11, due to the steady demand, which grew by 6.8 per cent over the same period. Price of creamwove, maplitho and art board increased by 2.1, 7.4 and 6.6 per cent, respectively in 2010-11. In the industrial paper segment, paper prices saw a sharper rise in 2010-11 as compared to the writing and printing segment. The average industrial paper prices have increased at 16 per cent while the demand for the same has grown at 6.7 per cent. Both duplex board and kraft paper

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