Te­jas Kho­day,

Co-founder&ceo, FYERS

Dalal Street Investment Journal - - SPECIAL REPORT -

In­dia is the fastest grow­ing mar­ket in the global pulp and pa­per in­dus­try at 6-7% growth per year, whereas glob­ally the growth has been much lower in com­par­i­son. In re­cent years, there has been a ma­jor shift of de­mand to­wards Asia due to the sharp di­ver­gence in growth prospects be­tween In­dia and the rest of the world. In spite of hav­ing over 16 per cent of the world's pop­u­la­tion, In­dia pro­duces only 3 per cent, and on a per capita ba­sis, the con­sump­tion is less than one-fifth of the global av­er­age. The pro­lif­er­a­tion of e-com­merce has con­trib­uted to the growth in the pack­ag­ing boards seg­ment at around 12-15 per cent. It is pro­jected that by 2025, the in­dus­try will grow by 70 per cent. The profit mar­gins are very low and it is a game of vol­ume growth. Hence, com­pa­nies with a fo­cus on qual­ity and cost con­trol will come out ahead in the long run. Also, their for­tunes are de­pen­dent on pulp prices, which have to be partly im­ported to the ex­tent of 15-20 per cent. Although pulp prices have re­duced, lo­gis­tics and ma­te­rial han­dling are causes of con­cern. Be­sides that, it is im­por­tant to note that there are no im­port tar­iffs or anti-dump­ing poli­cies, and hence, there is a threat of dump­ing from China and In­done­sia af­ter the US im­posed a coun­ter­vail­ing duty in 2015. In such an en­vi­ron­ment, the com­pa­nies which have a low debt-to-eq­uity ra­tio and val­u­a­tions are sta­ble in­vest­ment op­por­tu­ni­ties.

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