CORRUGATED PACKAGING:

Future Perceptions & Global perspectives

Evolving Business Paradigm
4th October 2011

M L Agarwal

Central India Packaging co Pvt Ltd

Hyderabad - India

1
 THE CHANGING FACE OF INDIA …..
YESTERDAY
• Slow Growth Rate
• High Rate of Inflation
• Poor Credit Availability
• Very Low Foreign Exchange
Reserves
• License & Control Regime
• Isolated Economy & Markets
• Fragmented Industry & Markets
• Serious Infrastructure Bottlenecks
• Low on Self Belief and National
Pride
2
TODAY
• The Second Fastest Growing Economy
• Among Highest Foreign Exchange
Reserves
• On way to Free Market Economy
• Integrated with the Global Economy
• Promising Consumer Markets
• Significant Investment in Infrastructure
Creation for Industry
• Mature Market for IT & ITES
• Exports becoming more vibrant
• Growing Self Belief & National Pride
•

3
 INDIA TOO LARGE TO BE IGNORED

Among the Top 5 Economies (PPP) 2005

Fourth Largest Economy in terms of Purchasing Power Parity...

15.0 12.4

10.0 8.2

3.9 3.7
5.0 2.5

0.0
US China Japan India Germany

Source: CIA

4
INDIA ADVANTAGE- Demographics

• One of the Largest & Fastest Growing Consumer

Markets led by a rising Middle Class (400 Million
Strong)

• ‘Young India’ – About 50% Population under 25 years

¾ By 2050 share of Working Age Population (15-64
years) projected for China 52% & India 60%

• World’s Leading Knowledge Economy with highest

number of Qualified Engineers & among Largest Pool
of Skilled Labour, Scientists, IT Professionals &
Managers

5
 INDIA ADVANTAGE

• Global hub for Outsourcing of Services & Manufacturing

¾ IT & BPO’s Æ key growth drivers
• India’s rapid emergence as a factor in the global
economy offers huge opportunities for Global Investors
¾ Total FDI inflows up 42% to USD 7.5 billion in 2005
¾ USD 25 billion accretion to FOREX Reserves from
International Investors in current year
¾ 85% of FCCBs in Asia in current year from India
alone. 2 years ago it was only 2%
• India’s Foreign Trade booming with a growth of 25-30%
with Exports crossing USD 100 billion

6
7
 INDIAN PAPER MARKET – A SNAPSHOT

Demand Growth Total Demand 14 Mln. Tons

for Paper among
Fastest in the
Splty. Paper (0.20 Mn. T)
World
Branded Cut-Size (.4 Mn T)
Packaging Boards (2.20 Mn.T)
Share of Coated Low-End W/F (3.40Mn. T)
Woodfree in High-End W/F (1.68 Mn T)
Printing/Writing
Coated Paper (1.2 Mn T)
increasing rapidly
Corrugated Packaging
Papers (4 Mn. T)
Corrugated Papers
are by far the
Fact Sheet
largest consumers
of Paper • Per capita consumption 12.15 Kgs
• Double digit growth in Branded Cut-Size papers, Pkg.
Packaging Board Boards, Coated Papers
demand growth is
led by High-end
Bleached Boards
8
 EMERGING TRENDS IN THE INDIAN PAPER MARKET

• India’s Large domestic paper market experiencing rapid growth (7-8% compared to
5-6% in past) aided significantly through enhanced domestic supply/ capacity
• Education - Government’s High Priority Area(6% of GDP) another Key Growth
Driver
• Massive investments in Printing Industry spurring Growth at a CAGR of over 14%
(Over 100,000 Printing Presses in 2005)
¾ India Emerging as a Global Hub for High-Quality Printing at a competitive
cost
¾ Strong Consumer Demand for Packaged goods fueling high growth in
Industrial grades of Paper & Boards largely led by growing disposable
incomes & Lifestyle changes

9
INDIAN PAPER INDUSTRY – MOVING TOWARDS SCALE

Industry
IndustryStriving
Strivingtotoachieve
achieveInternational
International
Competitiveness
Competitivenessthrough
throughScale
Scale AALarge
LargeNumber
Numberofof
Significant
SignificantProjects
Projectsininpipeline
pipeline

Current - 2010 Projected – 2015

No. of Kraft Paper
M/C with 0.1 Mn T 2 20
Capacity
Number of Mills with
Capacity of 0.1 Mn T 8 30

10
 PER CAPITA CONSUMPTION
Other key sectors
– INDIA vs SELECT ASIAN COUNTRIES

Country Per Capita

Consumption
(Kg)
China 42

Indonesia 22
An increase in
consumption by one kg India 12.15
per capita will lead to an
increase in demand in Thailand 51
excess of 1.2 million
tons. Malaysia 106

Philippines 16

Vietnam 14
Source: Paperloop

India’s Low Per Capita Consumption offers a huge opportunity for consumption
growth
11
 PER CAPITA CONSUMPTION Corrugated Board
Other key sectors
– INDIA vs SELECT ASIAN COUNTRIES
Trends in Per Capita Corrugated Production in SE Asia and
- 2005 and 2010
Country 2005 2010

Population Corr. Per Popn Corr. Per Cap.

Prodn. Cap. Prodn. Corr.
Corr. Prod.
Prod.
Mn Msm Sq M Mn Msm Sq M

An increase in India 1093.6 3900 4 1184.1 6968 6

consumption by one kg China 1275.6 25536 20 1310 35107 26.8
per capita will lead to an Indonesia 228.9 2172 9 243.0 2555 11

increase in demand in Malaysia 24.0 1176 49 26.1 1336 51

excess of 1.2 million Pakistan 162.4 301 2 179.6 416 2

tons. Philippines 87.9 1131 13 95.9 1443 15

Singapore 4.4 257 58 4.7 238 51
Thailand 64.2 2593 40 66.3 3121 47

Source: ICCA

India’s Low Per Capita Consumption offers a huge opportunity for consumption
growth
12
 Indian Corrugated Industry in relation to Rest

Top 15 Countries 2005 by Area of Output

Production
Forecast Growth 05 - 10
2005
Country Msm Tonnes Msm Tonnes % p.a.
1USA 39991 27157 2667 1811 1.3
2China 25536 18598 16178 9571 10.3
3Japan 13729 8770 473 206 0.7
4Germany 7923 4051 672 237 1.6
5Italy 6448 3829 851 471 2.5
6France 5707 2967 397 165 1.4
7Spain 4667 2645 789 368 3.2
8UK 4324 2261 92 -64 0.4
9Brazil 4005 2157 655 243 3.1
10India 3900 2535 3068 1995 12.3
11Canada 3485 1884 70 2 0.4
12South Korea 3157 1834 684 288 4.0
13Mexico 2922 1893 564 346 3.6
14Thailand 2593 1669 528 241 8.6
15Russia 2351 1322 1113 586 8.1
Others 35202 20504 7875 3863 4.1
46+Total 163589 102755 35565 19743 4.0
13
 INDIAN CORRUGATED PACKAGING INDUSTRY –
A PARADIGM SHIFT

• High Growth Economy Enormous

Domestic
Access to
Market
International
• Increasing Spend on Education potential
Financing
• IT Revolution

Competitive
• Growing Consumerism Manpower
Cost

O
• Move towards Organized
Retailing
pportunities
• Move Towards Scale of Corrugated Packaging
Production
• Industry Consolidation
Large Pool of Exports of
Technical Boxes
Personnel
14
CHALLENGES FOR THE INDIAN CORRUGATED INDUSTRY
Lack of
Contemporary
Technology
Scarcity of Virgin
Fragmented Fibre
(Wood Pulp)
Production
Operations

Customer High Energy

Emphasis on Cost
HACCP /
ISO2200
VATÆ GST Management of
Impact on Environmental
Business Issues

The biggest Industry Challenge is to Significantly raise the Per Capita Consumption
of Paper in India
15
 INDUSTRY FOCUS

• Fundamental Transformation in Investment Strategies of

Leading Industry Players led by Market Demand &
Competitiveness issues (Quality & Costs)

• From Fragmented Production to Scale with Contemporary

Technology

• From Manufacturing mind-set to Customer Centric

• From Commodity to Branding

• Large Scale Modernisation at user end- both in Printing &

Packaging

• Focus on Value-Added Products

• Increasing Retail consumption of Branded Products in

Rural India

• From Domestic Markets to International Markets

16
17