E-newspapers gathers momentum; what lies ahead for Emami Paper Mills, one of India's largest newsprint producers?

E-newspapers gathers momentum; what lies ahead for Emami Paper Mills, one of India's largest newsprint producers?

You may be familiar with the struggles faced by companies like Kodak Camera and Nokia mobile phones, which were unable to adapt to the evolving needs of the business landscape. Today, we will discuss a comparable case in the paper industry, where a once-prominent leader in the newsprint segment in India is undergoing a transformation into a paperboard and packaging business due to shifting demand.

Emami Paper Mills supplies renowned newsprint customers such as The Times of India, The Economic Times, and Hindustan Times, while also catering to esteemed end users like HUL, Colgate, Lux, Kellogg's, and many international orders, including Samsung mobile phone boxes. Among its array of products, newsprint remained a standout success, and the company emerged as the market leader in the newsprint segment across India in 2008. However, with the growth of e-newspapers and digital media, will this growth sustain?

In recent years, there has been a decline in the circulation of print newspapers as more and more people choose to get their news online. To adapt to this changing landscape, companies like Emami Paper Mills are diversifying their product offerings by exploring opportunities in packaging and other paper-based products, such as multilayered boards. Remarkably, Emami Paper Mills has witnessed a significant increase in sales in recent years, with the paperboard business serving as the primary driver of growth. Currently, approximately 68.61% of their revenue is generated from the packaging/paper board business. The company ventured into the packaging board business in 2016 and has since become a notable success story in that segment.

Almost 70% of its revenue comes from India and 30% from exports.

The full story:-

Nestled in the charming town of Balasore, Odisha lies the renowned Emami Paper Mills—a symbol of pride for the region. As someone who hails from Odisha and has witnessed the growth of this remarkable paper mill, I am excited to delve into the story of Emami Paper Mills.

Emami Group and its Paper Division:

Emami Paper Mills stands as a division of the illustrious Emami Group, focusing on the production of writing and printing papers, newsprints, and multi-layered coated boards. Emami Group has very diversified business interests in fast-moving consumer goods (FMCG), edible oil, writing instruments, paper, healthcare, retail departmental stores and real estate.

 Boasting two manufacturing facilities in Balasore, Odisha, and Dakshinewar, West Bengal, Emami Paper Mills has an impressive annual productive capacity of 310,000 tons (in FY22). The company prides itself on using recycled fibers and a diverse range of imported virgin fibers as raw materials.

Indian Paper Industry's Remarkable Growth:

Currently, India is the sixth-largest exporter of carton boards worldwide, ranked just after China. Despite facing low-profit margins, the Indian paper industry has witnessed a significant surge in performance, especially following the COVID-19 pandemic. One prominent catalyst has been the growing emphasis on the principles of the 3R (Reduce, Reuse, and Recycle), leading to a shift in consumer behavior favoring paper over plastic. Packaging paper holds the largest market share at 68.61%, followed by writing papers and newspapers. Factors such as geopolitical reasons, soaring inflation, and the ban on plastic by the Indian government have all contributed to the industry's robust growth and increased profit margins.

The paper and packaging sector in India is experiencing rapid growth and holds immense potential for future expansion.According to their annual report, paper and packaging industry might show a remarkable compound annual growth rate (CAGR) of 26.7% from (2022-2027). This impressive growth is fueled by various factors, including the booming e-commerce industry, increased focus on food processing, pharmaceuticals, fast-moving consumer goods (FMCG), manufacturing, and the healthcare sector.

Key Factors Influencing the Paper Industry:

Several factors influence the business dynamics of the paper industry. Firstly, the availability and cost of raw materials, particularly wood fiber, significantly impact operations. Additionally, the energy-intensive nature of paper production makes fluctuations in energy prices a crucial factor that directly influences production costs. Market demand and price fluctuations are also pivotal, as consumer behaviour, economic conditions, and technological advancements shape the demand for paper products. The industry must adapt to changing preferences and explore new market opportunities in the era of digitalization. Moreover, international trade policies, tariffs, and exchange rates play a significant role due to the industry's global market dynamics.

Emami Paper Mills stands tall as a testament to India's thriving paper industry, exemplifying the remarkable journey of growth and success. With its commitment to quality, sustainable practices, and diverse product range, Emami Paper Mills continues to make a profound impact in the field.

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