With the ongoing nationwide lockdown, the paper and stationery industry sales has declined considerably. Due to restricted activities in the initial phases of lockdown, all corporates and educational institutions were shut down which weakened the sales all over the country. The packaging and print media sectors experienced a huge hit on their sales as the supply chains were disrupted due to the restricted activities.
The continuous extension of the lockdown from April- May has left the economy on a standstill and a report suggests that there is no recovery possible in the first half of the FY 2020-21
As per the Moneylife reports, the Indian Ratings report says that with the re-opening of the education & corporate sectors, the demand for writing and printing paper might recover in the second quarter of 2021. The manufacturing and logistics are resuming with the Unlock Phases of the lockdown giving a gradual push to the paper industry. But the domestic producers might not benefit from the gradual rise of sales because of the lingering import threat.
According to the report, India is the fifth largest consumer of paper with an annual demand of 19 million tonnes, holding a 4 percent share of the global demand. The report said that the domestic paper producers were already suffering because of the rise in imports in the first 10 months of FY 2019-20. There has been an increase of 18 percent in the imports of the paper and pulp which is putting the domestic producers out of business. The report suggested that the threat to domestic industries will continue to increase because of the subdued pulp prices. And as soon as normalcy returns the possibility of overseas manufacturers pushing there inventory amid a weak global demand is higher than ever.
The problem arises when despite of being exempted from the lockdown, more than 70 percent of the domestic industry could not resume operations due to approval issues, lack of labour and raw material availability, and disrupted demand and supply chain. The lockdown regulations forbade the sale of non-essential items online, which accounts for a large amount of the total demand. But with loosening up of the lockdown restrictions with the Unlock Phases the report expects growth in paper packaging demand from both industrial and e-commerce in the second quarter of 2020-21.
The report states that the packaging segment accounts for around 50 percent of the total paper demand followed by Writing and Printing paper (WWP) at 30 percent. The demand for WWP was hit the most because of the closing of the education and corporate sectors. The corporates have adopted a work from the home strategy for their employees, reducing the need of printing paper within the office premises to a huge extent. Also, the demand for Newspaper dailies has dropped down because of people avoiding newspapers and residential areas banning the entry of vendors to curb the risk of Coronavirus infection.
The demand for hygiene products has risen considerably which initiated a rise of 6.6 percent monthly growth in the wholesale price index of tissue papers. However, the shutting down of hotels and restaurants in the initial phases of lockdown had a negative impact on the consumption of tissue papers.
These factors combined with the increase in prices announced by several Chinese producers will take a toll on the paper prices and its demand in the next quarter.
With the closure of most schools and educational institutions during the Lockdown the stationery industry is suffering huge losses. The schools and colleges have resorted to online teaching which has reduced the demand for stationery items to a great extent.
According to a report published in Haryana Bhaskar, the stationery industry had a turnover of Rs 2000 Cr in April-June alone but this year the turnover could barely reach the Rs 400 Cr mark. The report says that around Rs 1600 Cr worth of stationeries is lying in the warehouses due to lack of demand.
The General Secretary of Delhi Stationery Association (DSA), Shayam Rastogi said that the goods were supplied from Delhi to other parts of the country. Due to the increase in Coronavirus cases, some states like Maharashtra, West Bengal, and Tamil Nadu are under complete lockdown hence affecting the demand of stationery items. Kanti Prasad, the Chairman of the DSA added that the business is at its best during the April-June season, the demands are so high that they have to take loans beforehand to fulfill the requirements but this year since there was very less demand the loan taken could not be repaid.
Satveer Sharma, the Chairman of a private school in Delhi said that due to the conduct of online classes the use of books, notebooks, and other school supplies has been reduced as the project, assignment, and activities conducted by schools from time to time cannot be conducted online.
As many as 2-3 lakh small shopkeepers are running out of business all over the country due to the current lockdown restrictions.