Better Days Ahead For Sme Paper Units
SMEs in the paper industry, which witnessed their net profits dwindle last year and
experienced sluggish growth on account of the global economic slowdown, are regaining their optimism. The reviving industrial scenario has made some of the small paper companies hopeful of witnessing better growth figures from the next quarter.Rise in domestic demand for paper owing to the robust industrial and economic growth in the country is expected to boost the margins of small-scale paper units.
Worst seems to be over
The paper industry in India has been struggling to cope with the recessionary pressures for some time now. The double whammy of low demand and stiff competition from cheaper imports has left several SME paper units in dire straits. However, analysts hope that the market scenario would improve soon and growth will pick-up.
The paper sector experienced tough times earlier during this financial year, as volume growth slowed down due to the softening of economic growth. However, demand for paper should pick-up again with improvement in economic prospects being in sight, said Kanti Sikdar, spokesperson of Lakshmi Paper Mills, a small-sized paper mill in Kolkata.
Analysts believe that strong corporate performance and high growth in segments such as education, fast moving consumer goods (FMCG) and pharmaceutical will boost the domestic demand for paper in the near term.
Paper consumption in India is linked to GDP growth and is greatly influenced by developments taking place in the aforementioned sectors. As these industries witness impressive growth, the demand for paper will also rise, said V Kumar, proprietor of Rakkripa Paper Company, a small-sized paper mill in Bengaluru.
The rising paper consumption in India may prompt SME paper mills to undertake big capacity expansion plans to help them manufacture high-graded paper products and meet the growing demand for paper.
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