Paper industry in for consolidation, shake out, predicts BILT chief

The Indian paper and pulp industry landscape is likely to be significantly altered by 2020 with the entry of new players and consolidation in the sector, according to Yogesh Agarwal, Managing Director and CEO of Ballarpur Industries Ltd.

Predicting a shake-out, he said, “It will be an easy call to sell out for Indian promoters facing the heat from growing competition and low profitability. Only the best will survive.”

Delivering his keynote address on India Engaged at the Fourth RISI Indian event here, the BILT chief said the capital intensive paper industry in the country is facing several challenges, including the availability of raw materials and difficulties in access to cheaper capital.

The entry of foreign players with the likes of International Paper by buying out Andhra Pradesh Paper Mills, and the possibility of several others coming into the country, will pose a big challenge to domestic players who face difficulties such as access to cheaper capital, he said.

The market environment is likely to change for Indian companies as new and differentiated products are introduced. The country has had no significant capacity additions in the last 15 years due to the unattractiveness of the industry and a reluctance to accept new technologies.

“The changes in the last three-four years in the global market and in India will have a far reaching impact on the sector as the competition is likely to intensify. The ability to read and understand how the paper industry will shape up by 2020 will set apart those who can meet challenges and others who do not have the capability to manage and adapt to changes,” he said.

The demand for paper products will go up in India but the challenge is to remain cost competitive. The cost of fibre, other raw materials and energy all have a major say on the industry.

During the year thus far, BILT has taken up plantations equivalent to what we have managed in the last four years, thereby aiding growth of farm forestry, he said.

rishikumar.vundi@thehindu.co.in