Large paper mills are seeing an unprecedented inventory build up on slow sales, competition from imports — particularly in the printing and writing paper segment — and a tight-fisted approach to Government procurement.
Senior industry executives acknowledge that over 2 lakh tonnes of paper is in stock with mills.
Each mill under the Indian Paper Mills Association—commonly referred to as A-grade mills—stock anywhere between 20,000 and 40,000 tonnes.
The total paper consumption in the domestic market is estimated at 13 million tonnes with printing and writing paper making up about 40 per cent of this.
Also, leading paper mills such as JK Paper and International Paper APPM have reported losses in the second quarter.
Demand from the educational segment has dropped because of various reasons and demand from State Government-run text book societies is yet to pick up. Normally, a dozen tenders would have been floated by now for a total of about 3 lakh tonnes. But this is yet to happen.
For instance, Maharashtra which procures about 60,000 tonnes has bought only about 10,000 tonnes so far, according to a senior executive. Similarly, print orders are also down.
The publishers have been most affected in the higher education segment where the shift to e-books is most pronounced. But the exact numbers for this segment are not currently available.
Cheap importsAnother major challenge for paper mills is the cheap imports from Indonesia, which takes advantage of the FTA, with India and from China which is looking to dump surpluses caused because of slow off take in the US and Europe, said a manufacturer.
According to industry estimates, large brands supply about 75,000 tonnes of A4 sized copier paper a month.
But imports of about 5,000-8,000 tonnes a month and competition from smaller mills which supply about 12,000 tonnes a month are eating into the market.
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