Paper industry growth after lockdown is expected to be unfavorable in the first quarter and rise by around 6% after that.
During April, a drop of 15-20% has been recorded in the sales as compared to that of the previous year. Indian Paper Manufacturers Association’s President (IPMA), A S Mehta, called this negative growth a one-time impact of the shutdown that would confine to only the first quarter of this fiscal. As per him, an escalation of 6% can be expected in paper industry growth after lockdown.
Mehta told that average production in the industry before the lockdown was 90-95%, with some manufacturers operating at even more than 100%. Hence, ongoing loss of industry can be compensated to some extent, depending on transport normalization and the opening of shops.
Packaging material production and newsprint are the only units that have been in continuous operations even amid lockdown. While the other units were under shutters until now, their usual practice of preserving two weeks’ inventory will now help the Rs 75,000-crore paper industry to stand back as soon as the lockdown ends.
According to Mehta, the increased dependency of people on electronic gadgets amid shutdown will not have any significant impacts on the usage of paper. The normalization of lives will bring paper consumption to the same pre-lockdown level, and the opening of government offices, stationery, and book shops will further increase its demand.
Mehta stated about the possibilities of some situation-based disruptions in recovery and drop in consumption. While, at the same time, he also highlighted the new consumption points that such a situation would generate. For example, the increase in home deliveries will raise the demand for packaging material.
How JK Paper is contributing to paper industry growth
Mehta is also the director and President of JK Paper. He has disclosed how the company is contributing to the paper industry growth after lockdown. The company has started two plants in Odisha and Gujarat, and the third is yet to be opened in Telangana. As the majority of employees are staying within the industrial township near the plants, the local administration has allowed them to commute.
Amid coronavirus uncertainties, JK Paper has been planning to cut the fixed costs by safeguarding employees’ jobs and salaries.