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Slowdown Blues: Paper production at all-time low, book publishing sector takes a hit

In 2019-20, CMIE projects the paper output to drop further by 4.8 per cent to touch a new record-low level of 6.6 million tonnes

twitter-logo Niti Kiran        Last Updated: June 13, 2019  | 20:37 IST
Slowdown Blues: Paper production at all-time low, book publishing sector takes a hit
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Domestic paper production (excluding newsprint) touched an all-time low of 6.9 million tonnes during 2018/19. Data collated from CMIE shows that this is the second consecutive year of double-digit fall in the paper output-- (-)11.5 per cent in 2017/18 and (-)31 per cent in 2018/19. The rapidly falling demand for paper is expected to remain weak owing to the shift in consumption pattern from paper to digital technologies. Consumption of all kinds of paper (excluding newsprint) declined for the first time in 2017/18 by 16.4 per cent and stood at 10.9 million tonnes.

The consumption figure for 2018/19 is still awaited. In 2019-20, CMIE projects the paper output to drop further by 4.8 per cent to touch a new record-low level of 6.6 million tonnes. It expects the demand for corporate and packaging paper to continue to remain subdued in 2019/20. The office segment has been taking initiatives to reduce their business' carbon footprint by moving to an electronic storage medium.

The book publishing sector, which is another major user industry, has also taken a toll. This is because readers have now started turning to e-books, which can be accessed even through mobile platforms with greater convenience.

India's paper imports are estimated to remain flat in 2018/19 and are expected to increase further by 6.7 per cent in the subsequent year 2019/20 -- majorly because of jump in imports of waste paper. Waste paper is used as a substitute for pulp in paper manufacturing. Being a fibre-deficient country, which is hugely dependant on the import of raw materials, it is more convenient for India to import waste paper. Moreover, China's ban on mixed or waste paper imports has boosted its availability at cheap rates for Indian paper companies.

On the financial front, the aggregate sales growth of the 42 listed companies in the industry decelerated to 5.4 per cent year-on-year in the March 2019 quarter compared to 11.3 per cent growth in the previous quarter. It reported a 6.6 per cent drop in the bottom line due to a multi-fold rise in tax provision. Net profit margin contracted by 101 basis points to 7.5 per cent during the quarter under review.

The paper and newsprint industry witnessed the completion of four projects with capacity addition of 155.5 thousand tonnes per annum during the year ended March 2019. In 2019/20, nine projects worth Rs 2,390 crore are likely to get commissioned. These projects are likely to increase the industry's total manufacturing capacity by 338.4 thousand tonnes per annum during the reporting year.

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