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| The strong corporate earnings growth in the country is expected to bring cheer to the paper industry. Overall economic growth and expected rise in international prices of paper and paper products may well make 2004, a year of prosperity for the industry. |
| The positive factor this year is the good corporate profits. With the increase in the profits of companies, the advertisement spend will go up and so will paper consumption, analysts opine. |
| Presently, the demand and supply situation in the country is stable. Local consumption is closely linked with the industrial and service sector performances. |
| Currently, there is an upward momentum in the industrial segment which is expected to push up paper demand by about 5-6 per cent per annum. |
| Moreover, the domestic prices are linked with the international prices and analysts believe that a turnaround in global prices will have a direct and positive impact on domestic prices. |
| Analysts expect a recovery in global paper demand and prices. Globally the paper industry has started showing signs of recovery. |
| Paper industry has a strong co-relation with the world GDP growth which is expected to grow at 3.4 per cent per annum. With this the paper prices are also set to firm up. |
| In the domestic market since there has been no organic growth as no fresh capacity has been added. This supply constraint will lead to stronger paper prices. The only capacity expansion has been through modernisation and de-bottlenecking. |
| The paper industry is highly cyclical in nature and bears a strong co-relation with global macro-economic factors. |
| The balance between demand and supply is determined by the economic scenario in developed countries where about 70 per cent of paper and paper board is consumed. |
| The performance of the economy in these countries will continue to influence paper demand globally. Domestic capacity of paper estimated to be 6.7 million tonnes and has an effective utilisation of 80 per cent. |
| However, industry restructuring through mergers and acquisitions are expected to augur well for the sector. The Indian paper industry is highly fragmented and it has been always plagued by shortage of raw material. |
| There are about 540 odd manufacturers in the organised sector and an equal number in the unorganised sector with capacities ranging from as low as 600 tons per annum (TPA) to 1.00 lakh TPA. |
| Units having 7500tpa and less capacity account for 20 per cent of the industry, with those in the 7500-16,500tpa accounting for for 25 per cent, mills in 16500-33000tpa class for 20 per cent and units of more than 33000tpa accounting for 35 per cent of the total industry size. |
| The top 10 players account for 31 per cent of the total industry output. |
| According to a report by a foreign brokerage firm, the major problem for domestic paper producers continues to be scarcity of raw material. |
| Wood requirement for paper is expected to increase from 5.2 million tons in 2000 to 13.2 million tons in 2020. While the paper demand is expected to continue to increase, availability of hardwood is expected to decline due to low afforestation level. |
| However large paper companies are trying to mitigate the risk by encouraging farmers to plant hardwood by distributing seedlings. A number of paper manufacturers are shifting towards non-conventional raw material such as bagasse and waste paper. |
| Environmental concerns and their compliance were other important issues which a number of paper manufacturers were facing. |
| The companies going in for capital expenditure would have to invest in facilities of international standards in order to reduce emission in the chemical recovery process. |
