Buoyancy in Paper Demand will touch 20.7 Million Tonnes by FY 2020

Buoyancy in Paper Demand will touch 20.7 Million Tonnes by FY 2020

-JK Papers registered 30% growth in its net profit.

 -Century Textiles to divest its cement asset enabling the growth of pulp and paper and other businesses.

New Delhi: The demonetization’s impact on the economy is all set roll back. The derailed GDP index and Economy once again are posing strong demand in all sectors across India. Liquidity in the market is improving causing capacity enhancement in most of the Industrial process, Paper industry is one of them.

According to the rating agency Care Ratings, “it expects theoverall paper demand to grow at a compounded annual growth rate (CAGR) of 6.7per cent to touch 20.7 million tonnes in FY20” said its papers.

Demand for packaging paper and board segment that caters to industries like FMCG, Food and Beverage, pharmaceutical, and textiles among others, is expected to grow at a CAGR of 8.9 percent and reach 11.4 million tonnes in FY20 due to increased urbanization, requirement of better quality packaging of FMCG products marketed through organised retail, and increasing preference for ready-to-eat foods.

The indication of robust Paper demand can be assumed by the profit of big giant’s paper mills. Shree Ajit Pulp and Paper has posted net profit of Rs.7.67 crores for the 12 months period ended March 31, 2018 as against Rs.6.43 crores for the 12 months period ended March 31, 2017. JK Paper reported 30.68 percent rise in its standalone net profit to Rs 73.60 crore for the fourth quarter ended March 31, mainly driven by volume growth and better operating margins. The company had posted a net profit of Rs 56.32 crore in January-March quarter a year ago. Net profit of West Coast Paper Mills  rose 73.72% to Rs 223.23 crore in the year ended March 2018 as against Rs 128.50 crore during the previous year ended March 2017. Sales declined 3.34% to Rs 1710.20 crore in the year ended March 2018 as against Rs 1769.34 crore during the previous year ended March 2017.

Printing and writing segment demand is expected to grow at a CAGR of 4.2 per cent and reach 5.7 million tonnes in FY2020 on the back of an anticipated pick-up from the education sector with improving literacy rates and growing enrollment as well as increasing number of schools and colleges.

On the price front, it observed that tight markets, low Chinese pulp inventories, lack of supply coming to the market, and healthy demand are the primary factors that provide an upside to the prices in 2018.

 In this raw to putting up more viability in W & P segment, Century Textiles and Industries’ decision to divest its cement asset to UltraTech Cement will not only unlock value for shareholders, but also provide the company an opportunity to deleverage its balance sheet. The deal will enable the growth of its other businesses - textiles, pulp and paper and real estate.

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