20101201 RISI Conference

8/11/2019 20101201 RISI Conference

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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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Documents

20101201 RISI Conference