Indian Paper Industry

Indian Paper Industry January 2008

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The global annual production of paper was 382.0 million tonnes in 2006 Paper and Paperboard Production – Global Market, 2002-20 (figures in million tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: CEPI; RISI; European recover paper council; ICEM World Paper Conference (November 2005); Research India analysis Consumption per capital, 2005 vs. 2006 (figures in Kgs) 2005 2006

Asian region is the largest producer and consumer of paper & paperboard in 2006 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: CEPI; RISI; European recover paper council; Research India analysis Paper and Paperboard Consumption – Region wise, 2006 (figures in percent) North America 26% Asia 39% Rest of the world 3% CEPI Countries 26% Latin America 6% 100% =381.2 million tonnes Paper and Paperboard Production – Region wise, 2006 (figures in percent) North America 27% Asia 36% Rest of the world 2% Europe 30% Latin America 5% 100% =382.0 million tonnes

In India, around 666 units are engaged in the production of paper and paper-board ,[object Object],[object Object],[object Object],[object Object],[object Object],Category-wise paper mills in India (figures in number) Source: DIPP; Water and agro industry; Mysore Mills estimates; Research India analysis Raw material-wise paper mills in India (figures in number) Wood 32% Recycled Paper 38% Agri-Residue 30% 38,93,048 70 >20000 Large 16,69,460 116 10000 –20000 Medium 9,17,880 123 5000–10000 2,96,980 107 2000–5000 75,522 69 <2000 12,90,382 299 Up to 10000 Small Capacity (TPA) Number of units Capacity Range Category

Due to high growth rate, Indian paper industry is very attractive for the foreign players Paper and Paperboard - Production in India, 2002-06 (figures in million tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: DIPP; Water and agro industry; Mysore Mills estimates; CIBA; CRIS INFAC; Research India analysis Paper and Paperboard - Import-Export, 2002-06 (figures in million tonnes) * Note: estimated figures * Installed Capacity Production Import Export

It is expected that paperboard would grow at a faster rate within paper industry Paper & Paperboard - Production and Consumption (figures in million tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: CII; IPMA; Bilt; Research India analysis Production Consumption

Projected Demand, Supply of Paper & Paperboard, 2005-20 (figures in million tonnes) Source - Financial Express, February 19 th , 2006 Source – Jaakko Poyry Report 2002 Demand Supply Source: CPPRI; Research India analysis It is estimated that demand would outpace supply Projected Demand, Supply of Newsprint, 2005-20 (figures in million tonnes) Demand Supply

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Due to high growth rate, Indian paper industry is very attractive for the foreign players Newsprint Production in India, 2002-06 (figures in million tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],Source: DIPP; The Central Pulp and Paper Research Institute (CPPRI),; Mysore Mills estimates; Research India analysis Newsprint - Import-Export, 2002-06 (figures in ‘000 tonnes) * * Note: estimated figures Installed Capacity Production Import Export

Uncoated wood-free paper market is primarily dominated by domestic players Source: Bilt; Research India analysis Uncoated Wood Free Paper Market, 2003-07 (figures in ‘000 tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],CAGR 9.76% CAGR 18.92% Copier Paper Market, 2003-07 (figures in ‘000 tonnes)

Coated wood-free paper is the fastest growing paper segment in India Source: Bilt; Research India analysis Coated Wood Free Paper Market, 2003-07 (figures in ‘000 tonnes) ,[object Object],[object Object],[object Object],[object Object],[object Object],Creamwove Paper Market, 2003-07 (figures in million tonnes) CAGR 5.19% CAGR 9.82%

Tissue paper segment is at a very nascent stage in India Source: ICICI direct Research, CRIS Infac; Research India analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],Speciality Paper Market, 2003-07 (figures in ‘000 tonnes) CAGR 7.46%

Description Trend Description Potential Implications Potential Implications Trend Strong economic growth Increased government focus on education Low consumption per capita Printing Industry Strong Consumer Demand for Packaged goods fueling high growth in Industrial grades of Paper & Boards largely led by growing disposable incomes & Lifestyle changes. Paper and Paperboard Industry – Key Drivers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Indian Paper Industry Strong economic growth Low consumption per capita Printing Industry Increased government focus on education ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],Strong economic growth Indian – GDP Growth Rate, 2003-07 (figures in percent) Indian – GDP Per Capita (PPP)*, 2003-07 (figures in US$) Source: CIA World Factbook; Research India analysis * Note: GDP on a purchasing power parity basis divided by population as of 1 July for the same year

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Increased government focus on education SSA – Total Fund Available, 2003-07 (figures in INR billion) SSA – Total Expenditure, 2003-07 (figures in INR billion) Source: Ministry of human resources development; Planning commission; Research India analysis

Low consumption per capita ,[object Object],[object Object],[object Object],[object Object],[object Object],Paper Per Capita Consumption in India, 2003-07 (figures in Kgs) Source: Earth trends; ICICI direct Research; CRIS Infac; Research India analysis Paper – Demand vs. Supply, 2007-11* (figures in million tonnes) * Estimated figures Capacity Demand (7Kgs per capita) Demand (8Kgs per capita)

[object Object],[object Object],[object Object],[object Object],[object Object],Outsourcing Opportunities Leading Print Markets, 2006-2011 (Figures in $ million) Source: PRIMIR; Pira International 2007; Research India analysis 73.0% 20,990 12,131 India 12 34.8% 16,550 12,277 Mexico 11 52.9% 19,192 12,552 Brazil 10 16.0% 16,074 13,856 Spain 9 10.3% 17,792 16,136 Canada 8 12.6% 26,000 23,096 Italy 7 15.0% 26,731 23,251 France 6 11.7% 39,030 34,937 UK 5 11.7% 43,329 38,794 Germany 4 60.0% 65,934 41,200 China 3 4.0% 88,363 84,976 Japan 2 8.1% 196,722 182,000 US 1 Growth 2006-11 2011 2006 Country Rank

Source: Business World; Company reports and presentation; Fitch ratings; Research India analysis Top 10 Paper and Paperboard Producer, 2007 (figures in ‘000 tonnes) BILT is the largest player both in term of revenue and installed capacity in 2006-07 Printing & writing Industrial grades Newsprint BILT NR Agarwal Group Century Textiles & Industries JK Paper Ltd Andhra Pradesh Paper Mills Ltd Tamil Nadu Newsprint Khanna Paper Mills Hindustan Paper Corp SK Bangur Group ITC Ltd Capital Expenditure Plans 55 2.9 Sirpur Paper Mills Ltd 75 3.9 Century Pulp & Paper 30 3.5 Seshasayee Paper 140 3.5 Rama Paper Mills Ltd 30 6.6 Hindustan Paper Corp 180 7.2 Hindustan Newsprint Ltd 90 8.2 West Coast Paper Mills 84 8.6 AP Paper Mills Ltd 200 12.0 Whitefield Paper Mills 200 25.0 ITC Ltd 1,449 103.2 Total 20 0.5 Orient Paper & Industries 30 0.9 Star Paper Mills Ltd 60 2.4 JK Paper Ltd 15 5.7 TNPL 240 12.5 BILT Capacity Addition (‘000 tpa) Capital Expenditure (INR billion) Company

Ballarpur Industries Limited (BILT) Revenue, 2002-06 (Figures in INR billion) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Revenue – Segment wise, 2006-07 (Figures in percent) 100% =INR 23.8 billion Paper 76% Paper products & office supplies 10% Pulp 12% Others 2% CAGR 2003-07 2.9% Source: Company reports; news article; factiva; Research India analysis

[object Object],[object Object],[object Object],[object Object],[object Object],Installed Capacity – Paper unit, 2005-06 (Figures in ‘000 tonnes) Installed Capacity, 2002-06 (Figures in ‘000 tonnes) Ballarpur Industries Limited (BILT) 75 Maharashtra Ashti -- Andhra Pradesh Kamalapuram 68 Orissa Sewa Haryana Maharashtra Maharashtra State 81 Shreegopal 125 Bhigwan 126 Ballarpur Installed capacity Paper unit

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ITC Limited – Paperboards & speciality Papers Revenue, 2002-06* (Figures in INR billion) Revenue – Segment wise, 2006-07 (Figures in percent) 100% =INR213.2 billion Paper 9.9% FMCG 68.2% Hotel 4.6% Agri-business 17.3% CAGR 2003-07 15.9% * Revenue for Paperboard, Paper & Packaging segment

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ITC Limited – Paperboards & speciality Papers Installed Capacity, 2002-06 (Figures in ‘000 tonnes) Installed Capacity – Paper unit, 2005-06 (Figures in ‘000 tonnes) 90 West Bengal Tribeni Tamil Nadu Andhra Pradesh Andhra Pradesh State 65 Kovai 210 Bhadrachalam 25 Bollaram Installed capacity Paper unit

JK Paper Limited Revenue, 2002-06 (Figures in INR billion) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Production – Segment wise, 2006-07 (Figures in percent) Coated and Branded Paper 46% Others 30% CAGR 2003-07 8.0%

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Installed Capacity – Paper unit, 2005-06 (Figures in ‘000 tonnes) Installed Capacity, 2002-06 (Figures in ‘000 tonnes) JK Paper Limited Installed capacity 55 125 Paper Gujarat Orissa State 47 Songadh (Central Pulp Mills) 127 Rayagada (JK Paper Mills) Pulp Paper unit

Orient Paper & Industries Limited Revenue, 2002-06 (Figures in INR billion) ,[object Object],[object Object],[object Object],[object Object],[object Object],Revenue – Segment wise, 2006-07 (Figures in percent) 100% =INR8.6 billion Paper 31% Cement 46% Electric Fans 22% Know-How & Service Fees 1% CAGR 2003-07 16.8%

[object Object],[object Object],[object Object],[object Object],[object Object],Installed Capacity – Paper unit, 2005-06 (Figures in ‘000 tonnes) Installed Capacity, 2002-06 (Figures in ‘000 tonnes) Orient Paper & Industries Limited Note: The operations of the Brajrajnagar plants have been suspended since 1999. Majority of the employees of this plant have opted for VRS. Machinery has also been sold off. Orissa Madhya Pradesh State 85 Brajrajnagar 76 Amlai Installed capacity Paper unit

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Paper – Demand Forecast Variety-wise Uncoated Paper, 2004-10 (figures in million tonnes) 1.9 2.0 2.1 2.2 2.3 2.4 Coated Paper, 2004-10 (figures in ‘000 tonnes) 290.0 320.0 350.0 380.0 410.0 460.0 Source: CPPRI; Research India analysis Industrial Paper, 2004-10 (figures in million tonnes) Kraft Duplex Grey and white board 3.4 3.6 3.8 4.1 4.3 4.6 MG Poster Speciality Paper, 2004-10 (figures in ‘000 tonnes) Kraft Duplex Grey and white board 240.0 260.0 280.0 300.0 320.0 350.0 MG Poster Craemwove Malitho (including unbranded copier) Branded copier Coated crome paper Art paper Art boards

Indian Paper Industry

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