Covid-19: Paper Industry losing INR 500 Cr. distributive trade every month

The current pandemic and especially the impact of second wave has been disastrous for the country as a whole. The number of cases per day has broken all records reaching nearly 400,000 per day. The shortages of several life saving devices and medicines such as Oxygen, Oxygen compressors, concentrators, oximeters, ventilators, testing facilities, medical supplies, and especially injections such as Remdesivir and Actemra 400 and also non-availability of ICU and hospital beds, have all resulted in a large number of deaths. The long working hours, mental stress and lack of motivation amongst frontline and health line workers have added to the misery. This situation has brought about chaos and disruption in the normal working of all the stakeholders. All the more so the breaking down of medical services country wide has led to increased mental stress and anxiety levels. This situation is not at all conducive for the normal working of either the manufacturer, trade, converter and or the consumer. 

The domestic paper sector cannot but remain aloof from the impact of the current pandemic and its implications. The distributive chain seems to be certainly fractured and broken at present. The domestic manufacturer though allowed to run its establishment, it being a continuous process, still needs to source raw materials which do not come under the purview of being essential and as such do not get any preference. Similarly, the finished product also does not merit priority for its movement. 

Changes in the consumer behavior during the pandemic have accelerated the decline in demand especially in the writing and printing paper segment. The domestic manufacturers ‘do not care attitude’, doing away with decades of traditional norms, unilaterally violating the customs laid out in the “ Paper Trade Customs As Agreed by IPMA & FPTA“, disregarding the interests of the domestic markets, increased emphasis on exports, adopting and practicing transactional pricing, prices changing on an hourly and daily basis, lack of mutual trust and respect, and inadequate and reasonable margin in proportion to the risks involved, are some of the reasons that are likely to impact the sustainability and survival of the manufacture. 

The expected demand for writing & printing paper simply vanished as a result of the impact of pandemic due to the closure and or non-opening of educational institutions. The continuation of work from home on a large scale also resulted in decline of demand. This resulted in pressure on prices, leading to reduction in prices. 

There are no financial concerns for the domestic paper manufacturers. Since last couple of years, the domestic players are in a very happy state of affairs and have made exceptionally good profits. With prices increasing upwards substantially and increased demand for exports the domestic producers are in a really happy state.

With various stages of lock down in different states the distributive trade is impacted as result, with operations partially and or fully closed for an indefinite period. The resultant impact of closure of operations of the distributive trade and its tremors are felt in the entire chain of supply. The country’s distributive trade and specifically paper & paperboard very conservatively is losing Rupees 500 crores every month. All the more so it does not receive any sort of financial assistance, subsidy or grant, and or any concession of any nature whatsoever from any government, central and or state, and or any government bodies and or any banks and or financial organizations. It is very pertinent to note that the domestic manufacturer has never put forward a helping hand to the distributive trade. And yet it is to the credit of the members of the distributive trade to continue running their operations with a heavy heart but with a smiling face to fulfill its commitments to its vendors and customers.

The writing’s is on the wall. Consider the facts for yourselves. In a three-month period from January to March 2021 the domestic paper manufacturers played a game of one up manship by increasing prices of writing and printing grades by Rs.10,000 to 15,000 per ton in 10-15 installment. Similarly, kraft paper manufacturers raised prices by Rs.10,000 to 12,000 per ton in 8-15 installments during the three-month period. Carton board manufacturers increased prices ranging from Rs.15,000 to 20,000 per ton in 10-15 installments whereas coated paper manufacturers increased prices from Rs. 15,000 to 25,000 per ton in 15-20 installments. Not only prices were revised frequently but domestic supplies were curtailed in order to increase exports. This led to the entire supply chain being in a situation of flux and as result created instability. 

The domestic producers need to win back the trust and confidence of the distributive trade and customers to ease the impact of speed breakers.