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MarketExpress - Business News, Financial News & Research Portal | Author: PSB
Index
Paper Industry overview Indian paper market Competition/customer/consumer overview Short-study on specific paper/pulp segments Manufacturers comparative profile
Author: PSB
There are five paper product segments; specialty and tissue segments account for 5-15% volume share
Paper segments
Packaging
Newsprint
Specialty
Tissue
5% share in India, 15% share globally Bond paper MICR/cheque Dcor paper Cigarette paper Business card Greeting cards Photo material
Duplex
Coated paper
Uncoated paper
Art paper
Author: PSB
Indian paper market has different product portfolio mix; P&W products dominated by uncoated paper
Indian market at 11.6 MMT production has larger share of P&W products against global portfolio and growing at 8-10% CAGR; Uncoated paper and newsprint declining globally but growing in India
395 MMT
11.64 MMT
1%
9%
Client segment
Coated segment is a 0.5 MMT segment dominated by BILT and JK; offers better NSR than uncoated
BILT and JK dominate the coated segment; China drives imports with 80% share On average, coated paper has a higher realization of Rs.2000 than uncoated
0.5 MMT
Though attractive from NSR perspective, it will be difficult to match the Source: Secondary search scale advantage of BILT and JK
MarketExpress - Business News, Financial News & Research Portal | Author: PSB
Imports have created pricing pressures; smaller domestic cos thinking of exiting due to margin pressures
Lower import price has led to surge in import volumes, creating a potential surplus Imports not expected to be restrained despite efforts Anti-dumping duties by West driving dumping to India
Rs. 50-52
Actual volumes mght be lower due to recent rupee depreciation
Rs. 48-50
~180-210K*
US and EU have imposed antidumping duties on Chinese and Indonesian products Thailand too has recently announced levy on Chinese paper
Govt. has refused to impose anti-dumping duties earlier as well (Dec. 2009 ruling)
120K
Few companies (e.g., Century) are slowly exiting the coated market due to margin pressures from cheap imports, rising RM prices
The coated market is gradually diminishing for Indian players. We (Century) have stopped coated due to price attack from Chinese -Ex factory GM, Century
Author: PSB
Creamwove dominates uncoated segment though losing market share; Copier segment growing fastest
CAGR (07-11)
2.29 MMT
2.46 MMT
2.61 MMT
2.77 MMT
2.94 MMT
6% 16%
5%
4%
Author: PSB
Large capacity players play across spectrum focusing on Maplitho & copier
1.6 MMT
0.8 MMT
0.55 MMT
Author: PSB
Copier and Maplitho offer better MOPs and directionally better NSRs than Creamwove
MOP of paper product by competition (Mar 12 shown in Rs./kg)
Avg MOP: Rs. 49.85/kg Avg MOP: Rs. 46.6/kg Avg MOP: Rs. 43.3/kg
Source: Company data MarketExpress - Business News, Financial News & Research Portal | Author: PSB
Packaging
Newsprint
Specialty
Tissue
Duplex
Coated paper
Uncoated paper
Art paper
SS Maplitho
NSS Maplitho
P&W Maplitho
MarketExpress - Business News, Financial News & Research Portal
Ledger paper
Color paper
| Author: PSB
Century Paper Hindustan Paper JK Paper Andhra Paper Khanna Paper Whitefield Paper Rama Paper Seshayee Paper & Boards Ltd. Sirpur Paper Star Paper Mills Orient Paper TBD
100% 60% 85% 100% ~30% (est.) 100% 15% 100% 80%+ (est.) TBD
Uttarakhand (1) Assam (2), Kerala (1), Nagaland (1) Orissa (1), Gujarat (1) Andhra Pradesh (2) Punjab (1) Andhra Pradesh (1) Uttar Pradesh (1) Tamil Nadu (1) Andhra Pradesh (1) Uttar Pradesh (1) Madhya Pradesh (1) Orissa (1)
100K
80% (est.)
Kolkata
Author: PSB
Muzaffarnagar, UP (1) Shahjahanpur (1) Hoshiarpur, Punjab (1) Kashipur, UK (1) Punjab (3) Muktsar, Punjab (1) Sirmour, HP (1) Kashipur, UK (1)
Author: PSB
Copier Ledger 2%
60/70/80/100
COATED PAPER
Color paper 2%
60-90
Copier 16%
58/70/90
12%
58-95 80/90/100/130/170 Lamination Annual reports/ calendars, air-tickets etc
Govt. record keeping High-end books, Legal docs calendar, maps, diaries
BILT JK Paper TNPL Khanna Abhishek Industries ABC Naini Bindal KR Paper
(Optima Maplitho)
(Eco-brite)
(Grafika-Maplitho)
To launch To launch
To launch
Author: PSB
There are four broad categories of consumers with varying characteristics for A grade paper
Retail customer Description Individuals, small
business establishments
Publishing houses
Educational institutions
Government
Publishers of Academic institutes Government-industry educational materials publishing reports, internal i.e., notebooks, research materials magazines, specially books Publisher of noneducational materials magazines, literature Navneet, Rupa Publications IIT, IIM, NID, IISc MOFPI report
Medium-large order Large order size size Fulfilled by wholesaler Fulfilled by wholesaler Limited variety requirement Less variety High Wholesaler Low-medium Medium Wholesaler Low-medium
Customer loyalty
Author: PSB
There are four broad sales channels to reach the consumer; last three are still evolving
Distributor network Description
Current set-up of wholesale, dealers Drives almost all of the market
Own-shops
New emerging concept currently used by BILT (P3 brand) to contact and sell products to customer directly
Modern retail
E-commerce
Reliance Retail and Online sale of Paper Big-Bazaar tying up and office stationary with Office Depot and Staples to create one-stop shop of stationary
Example(s)
NA
BILT P3 Brand
Staple Future Jabong expected to stores at launch an online eKarnataka, commerce portal for Maharashtra & UP office supplies
Advantages
Can leverage existing knowledge Lower incremental investments margins with middlemen
Develop better Reduced supply chain in-efficiencies and understanding of middle-men costs customer needs (more suited for A-grade) High investment required (out of core business) Additional expenses of real estate, vendor mgmt. to weigh in Price pressure due to huge bargaining power of retail chains
Author: PSB
Paper manufacturers are increasingly focusing on branding and expanding across value-chain
Branding: JK Paper and BILT have led the way bringing the brand closer to retail customers Value chain expansion: BILT, ITC has diversified to stationary & retail to connect with customers, increase margins
BILT Retail
Author: PSB
Rayon grade pulp volumes have been rising at 7-10% CAGR in last 10 years due to two factors
Two factors have driven this growth globally High growth (10%+ CAGR) of the textile industry in China, India and Indonesia in the last decade pushing up demand for rayon Increased substitution of cotton with pulp-based rayon due to high-cotton prices
Globally companies are now investing heavily in capacity expansion to meet demand for this high-value product
Author: PSB
Rayon grade pulp manufactured by three players in India; Prices on record high correction expected
50% of Indias requirement of 0.4 MMT is imported Prices are ruling at record high of ~$1300/ton (Rs. 65K/ton); however correction expected to bring it down to Rs. 45-50K/ton
Prices shown in $/MT
403K MT
driven by global capacity expansion of 16% over current capacity of 6 MMT by ~26 firms globally
6 MMT
0.8 MMT
0.7 MMT
7.3 MMT
*BILT sources 90% of the hardwood required for the pulp from market and rest from Gov. auctions; exports are banned Source: Company corporate presentations
Author: PSB
The coated paper used in packaging of chewed tobacco is sold to tobacco manufacturers post processing
1 2
Tobacco mfr
Description
Manufacture single-coated paper (C1S) Product sold through dealers; dealer owns the customer Product samples tested by Gutka mfr before approval /order placement
Prepare final product using the printed reels on the production line
Example of players
Author: PSB
~50% of chewed-tobacco market uses satchets; Market size estimates to be ~ 20-30K MT, worth ~Rs.400 cr.
Satchet relevant segments makeup 50% of tobacco sales Coating paper market is estimated to be ~Rs. 250-300 cr.; Growth expected on-par with coated segment of 12%
10-15%
% share of Raw Material (primarily paper) for Uflex 1 RM/Coating paper market size (related to Gutka)
~50-55%
Industry volumes
Gutka
20-30K MT
Rs. 83K-120/MT
Author: PSB
~Rs. 100K
Rs. 72K
Product types
65 GSM chrome 55 GSM chrome paper 40 GSM poster paper
All states are expected to ban the sale of gutka under Food Safety Standards Authority rules notified by the Centre in August 2011 that prohibited the sale of tobacco or nicotine in food substances -The Telegraph, 3rd June edition
Features
Moisture proof High porosity High strength properties (burst factor) Quality printing surface (0.8pps)
Satchet sales of non-tobacco laced Gutka/Pan-masala should sustain demand for coated paper but volumes as of now remain small at 10-15% share?
Author: PSB
Thank You
Copyright MarketExpress - Business News, Financial News & Research Portal. All rights reserved. The information in this document shall not be duplicated, used or disclosed, in whole or in part without the consent of MarketExpress and the author. www.marketexpress.in - Financial News, Business News & Research Portal For Full report & Go To Market Strategy Consultancy Contact : research@marketexpress.in
Author: PSB