Paper Industry Report 2018 (1).pdf

Certain agricultural residue pulps take less time to

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for paper manufacturing as compared to wood fibre. Certain agricultural residue pulps take less time to process than wood pulps indicating that agricultural-based paper requires less energy & water and fewer chemicals. Bagasse and grain straws are the main agricultural residues used by paper industry. High availability of agricultural residues and various financial incentives provided by the government in the past lead to increased usage of agriculture residues fibre for paper production. For a variety of reasons including seasonal availability, problems with chemical recovery, brightness of the pulp etc, non-wood fibre sources account for a very small portion of global pulp production. Still it is believed that agro-based paper manufacturing is extremely cost-competitive and highly environmental-friendly than wood pulp, resulting in lower cost of production and could be a sustainable competitive advantage for companies. Chemicals are also one of the major cost drivers of paper and the degree of chemical usage depends upon the raw- material used in the paper-making process. There are a number of chemicals required to be added, particularly in the pulping and bleaching stage of paper production. Major chemicals used are chlorine, sodium chlorate, caustic soda, sodium sulphate, sodium sulphide, pulping aids, chlorine dioxide, oxygen, calcium hypochlorite, ozone and hydrogen peroxide. The other auxiliary materials, such as dyes, starch, clay and resin are less significant because of the relatively small quantities of usage. Recently paper companies have witnessed an increase in raw material costs as international pulp prices have reportedly increased from $650 a tonne around three months ago to $780 a tonne. Further, chemical prices and coal prices have also increased (imported as well as domestic). Consequently, companies are expected to increase prices to maintain margins.
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Industry Research I Paper 13 Financial Analysis The charts below give certain financial indicators of paper industry for a sample of _50 comapnies for the period…. Note: Dataset comprises of 50 companies in the paper and paper products industry Source: Ace Equity Revenues grew by 3.4% in FY16 and 9% in FY17 after registering a marginal drop in FY15, while, the operating and net profit margin expanded by approximately 350 basis points in FY17 on a y-o-y basis and the margin expansion was the highest in when compared to the previous 6 years. The expansion in profit margins was mainly on account of input costs as raw materials as percentage of sales dropped to 45% in FY17 from 48% in FY15 and lowered power and fuels costs which were lower on account of subdued coal prices and energy efficiency measures undertaken by the companies. The paper companies had borrowed in prior years for capacity expansion and consequently the debt levels had increased for the industry. As depicted above the interest cost as a % of sales increased fromFY13 and peaked in FY16, when it stood at 6.3%, further, due to subdued operating performance, the profitability decreased and interest coverage also declined.
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