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| Paper and newsprint producers will be forced to hike the prices once again as rising input costs would out pressure on bottomlines. |
| However, despite the pressures the outlook for the industry is still buoyant and it is expected to grow by 15 per cent in the next year with numerous capacity expansions on the cards. |
| The rise in caustic soda prices by over 45 per cent in the last year affected the industry both globally and locally, as the chemical is an important ingredient in the production of paper. |
| Besides, the rising fuel costs and power costs are also expected to exert pressure on the bottomlines. |
| Internationally, the prices of writing and printing paper have been raised by roughly $50 per tonne over the last two months to counter this. |
| The industry in the US saw a rise in prices upto $650 per tonne in September, followed by Asia in October where the rise is between $620-$650 per tonne. Analysts point out that prices of paper have been hardening globally since July of 2003, and have risen by roughly 50 per cent with five significant hikes, from $400 per tonne to the current levels. |
| Domestic prices are expected to go up by roughly 5 per cent across the board, including writing and printing paper, and specialty industrial papers. |
| The industry is made up of around 500 players but only 50 per cent of the total 10 lakh tonne capacity is operational. The top 10 companies including ITC, Ballarpur Industries (BILT), JK Papers and Tamil Nadu Newsprint, currently account for 70 per cent of the total production. |
| On the policy front, the Centre has stipulated that the factories have to set up chemical recovery plants by 2006 to reduce the pollution caused by the chemical effluents. |
| The cost of setting up such a project is expected to put a number of inefficient plants out of work. |
| However, this move is eventually expected to reduce the dependence on externally procured chemical inputs. |
| Certain companies are also putting up soda ash recovery plants that get rid of the effluents, but this did not suit processing of caustic soda. It is however cheaper than setting up a full recovery plant. |
| In addition, India is also facing stiff competition from China in the writing and printing paper segment. China has factories upto even 2000 tonne per day (TPD) capacities. |
| Indian factories on the other hand have barely 400 TPD capacity, which is negligible in comparison. |
| In this scenario, companies like the Rs 30 crore Yash Papers that manufactures specialty industrial papers, have decided to continue focussing on niche products. |
| The company is also undertaking an expansion worth Rs 83 crore, and will set up a chemical recovery plant to be operational by 2006. |
| While there is an expected over all growth in the industry, analysts point out that it would be especially applicable for wood-based and bagasse-based paper manufacturing units. |
| Pulp-based and waste paper-based units, are not expected to see a large portion of the growth, as the inputs are expensive and largely imported. |
