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CORRUGATED PACKAGING:
Future Perceptions & Global perspectives
Evolving Business Paradigm
1thDecember 2010
M L Agarwal
Central India Packaging co Pvt Ltd
Hyderabad
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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
The Second Fastest Growing Economy
Among Highest Foreign ExchangeReserves
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
TODAY
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Fourth Largest Economy in terms of Purchasing Power Parity...
Among the Top 5 Economies (PPP) 2005
Source: CIA
INDIA TOO LARGE TO BE IGNORED
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Expected to be the Third Largest in GDP by 2020
Already Fourth Largest Contributor towards Incremental global GDP Growth
(3.2%) after USA (21.6%), China (9.4%) & Japan(6.4%) in 2005
0 5,000 10,000 15,000 20,000 25,000
GDP (US$bn)
Russia
India
Mexico
Brazil
China
Canada
Italy
France
UK
Germany
Japan
US
India & China the Worlds Leading Emerging Economies
INDIA AN EMERGING ECONOMIC POWER HOUSE
Source: KPMG
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One of the Largest & Fastest Growing ConsumerMarkets led by a rising Middle Class (400 Million
Strong)
Young India About 50% Population under 25 years
By 2050 share of Working Age Population (15-64
years) projected for China 52% & India 60%
Worlds Leading Knowledge Economy with highest
number of Qualified Engineers & among Largest Poolof Skilled Labour, Scientists, IT Professionals &
Managers
INDIA ADVANTAGE- Demographics
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Global hub for Outsourcing of Services & Manufacturing
IT & BPOs key growth drivers
Indias rapid emergence as a factor in the global economy
offers huge opportunities for Global Investors
Total FDI inflows up 42% to USD 7.5 billion in 2005
USD 25 billion accretion to FOREX Reserves fromInternational Investors in current year
85% of FCCBs in Asia in current year from India
alone. 2 years ago it was only 2%
Indias Foreign Trade booming with a growth of 25-30%
with Exports crossing USD 100 billion
INDIA ADVANTAGE
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Demand Growth
for Paper among
Fastest in theWorld
Share of Coated
Woodfree in
Printing/Writingincreasing rapidly
Corrugated Papers
are by far the
largest consumers
of Paper
Packaging Board
demand growth is
led by High-end
Bleached Boards
Total Demand 8.7 Mln. Tons
Excluding Newsprint-1.6 Mln. Tons
(2008-09)
High-End W/F (0.68 Mn T)
Coated Paper (0.25 MnT)
Splty. Paper (0.20 Mn. T)
Branded Cut-Size (0.17 Mn T)
Low-End W/F (1.40Mn. T)
PackagingBoards (1.20 Mn.T)
Corrugated PackagingPapers (3.2 Mn. T)
Fact Sheet
Per capita consumption 8.5 Kgs
Double digit growth in Branded Cut-Size papers, Pkg.
Boards, Coated Papers
INDIAN PAPER MARKETA SNAPSHOT
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Indias Large domestic paper market experiencing rapid growth (7-8% compared to
5-6% in past) aided significantly through enhanced domestic supply/ capacity
Education - Governments 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)
India Emerging as a Global Hub for High-Quality Printing at a competitive
cost
Strong Consumer Demand for Packaged goods fueling high growth in
Industrial grades of Paper & Boards largely led by growing disposable
incomes & Lifestyle changes
EMERGING TRENDS IN THE INDIAN PAPER MARKET
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Current - 2007 Projected - 2010
No. of Kraft Paper
M/C with 0.1 Mn T
Capacity1 8
Number of Mills withCapacity of 0.1 Mn T 3 19
Industry Striving to achieve International
Competitiveness through Scale A Large Number of
Significant Projects in pipeline
INDIAN PAPER INDUSTRYMOVING TOWARDS SCALE
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Other key sectors
Country Per Capita
Consumption(Kg)
China 42
Indonesia 22
India 8.5
Thailand 51
Malaysia 106
Philippines 16
Vietnam 14
An increase in
consumption by one kgper capita will lead to an
increase in demand in
excess of 1 million tons.
Source: Paperloop
Indias Low Per Capita Consumption offers a huge opportunity for consumption
growth
PER CAPITA CONSUMPTION
INDIA vs SELECT ASIAN COUNTRIES
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Other key sectors
An increase in
consumption by one kg
per capita will lead to an
increase in demand in
excess of 1.2 million
tons.
Source: ICCA
Indias Low Per Capita Consumption offers a huge opportunity for consumption
growth
PER CAPITA CONSUMPTION Corrugated Board
INDIA vs SELECT ASIAN COUNTRIES
Trends in Per Capita Corrugated Production in SE Asia and- 2005 and 2010
Country 2005 2010
Population Corr.Prodn.
Per Cap.Corr.Prod.
Popn Corr.Prodn.
Per Cap.Corr. Prod.
Mn Msm Sq M Mn Msm Sq M
India 1093.6 3900 4 1184.1 6968 6China 1275.6 25536 20 1310 35107 26.8
Indonesia 228.9 2172 9 243.0 2555 11Malaysia 24.0 1176 49 26.1 1336 51Pakistan 162.4 301 2 179.6 416 2Philippines 87.9 1131 13 95.9 1443 15Singapore 4.4 257 58 4.7 238 51Thailand 64.2 2593 40 66.3 3121 47
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Indian Corrugated Industry in relation to Rest
Top 15 Countries 2005 by Area of Output
Production2005
Forecast Growth 05 - 10
Country Msm Tonnes Msm Tonnes % p.a.
1 USA 39991 27157 2667 1811 1.3
2 China 25536 18598 16178 9571 10.3
3 Japan 13729 8770 473 206 0.7
4 Germany 7923 4051 672 237 1.6
5 Italy 6448 3829 851 471 2.5
6 France 5707 2967 397 165 1.4
7 Spain 4667 2645 789 368 3.2
8 UK 4324 2261 92 -64 0.4
9 Brazil 4005 2157 655 243 3.1
10 India 3900 2535 3068 1995 12.3
11 Canada 3485 1884 70 2 0.412 South Korea 3157 1834 684 288 4.0
13 Mexico 2922 1893 564 346 3.6
14 Thailand 2593 1669 528 241 8.6
15 Russia 2351 1322 1113 586 8.1
Others 35202 20504 7875 3863 4.1
46+ Total 163589 102755 35565 19743 4.0
D A CORR GAT D AC AG G D STR
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High Growth Economy
Increasing Spend on Education
IT Revolution
Growing Consumerism
Move towards OrganizedRetailing
Move Towards Scale ofProduction
Industry Consolidation
CompetitiveManpower
Cost
O pportunitiesCorrugated Packaging
EnormousDomestic
Marketpotential
Access toInternationalFinancing
Exports of
Boxes
Large Pool ofTechnicalPersonnel
INDIAN CORRUGATED PACKAGING INDUSTRY
A PARADIGM SHIFT
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Scarcity of VirginFibre
(Wood Pulp)
High EnergyCost
CustomerEmphasis on
HACCP /
ISO2200
Fragmented
Production
Operations
Lack of
Contemporary
Technology
Management of
Environmental
Issues
The biggest Industry Challenge is to Significantly raise the Per Capita Consumption
of Paper in India
CHALLENGES FOR THE INDIAN CORRUGATED INDUSTRY
VAT GST
Impact on
Business
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Fundamental Transformation in Investment Strategies of
Leading Industry Players led by Market Demand &
Competitiveness issues (Quality & Costs)
From Fragmented Production to Scale with ContemporaryTechnology
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 inRural India
From Domestic Markets to International Markets
INDUSTRY FOCUS
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