Indian Newsprint Industry ? Opportunities amidst Supply and Financial Risks

With the current operating rates of more than 90% (in some cases more than 100%) recorded by the newsprint manufacturers, the present supply-demand imbalances in the Indian Newsprint industry clearly signifies that it is high time to boost domestic production and satisfy the demand, rather than being excessively dependent on imports. Accepting the fact that imported newsprint is of superior quality compared to local newsprint, imports of the former grade can still be limited, making the industry shielded from unsystematic risks up to certain extent. In the process of manufacturing newsprint, de-inked pulp (recovered paper) ascribes around 35 to 40% of pulp mix. However, because of poor local collection/recovery rates (estimated at about 25% currently), the country is dependent on imported recovered paper, impacting the manufacturing costs and making the Indian newsprint noncompetitive. Moving forward, Indian Newsprint Industry is believed to be gradually transitioning towards strategic alliances with global matured paper manufacturers in the form of Joint Ventures, establishment of green/brown field projects and M&As to address the raw material, technology and capital scarcity issues in the domestic industry. On the other hand, the local partners who have built a vast experience in understanding the domestic demographic mindset and buying behavior of customers can develop synergies by focusing on the distribution and marketing aspects. Newsprint consumption patterns from the downstream newspaper market is quite different when it comes to English and regional language dailies. English dailies predominantly use imported newsprint, were as priority is more for the local newsprint among the regional language dailies. However, this would not be a matter of concern for the local domestic newsprint manufacturer as the downstream newspaper industry in India is dominated by the Hindi and other regional dailies with English dailies being restricted and targeted towards the urban population of the country.