As offices cut down on printouts, paper cos set to pass on excise cut to consumers

Office managers fancying cost-cutting by trimming copier and printout expenses could do better to rummage for fresh ideas now. Notebooks, copier paper and miscellaneous writing-printing paper are to be 4% cheaper from this week, thanks to paper mills vying with UPA government in generosity.

?The relief will be effective from immediate effect,? says Pradeep Dhobale, divisional chief executive , ITC Ltd-Paperboards and Specialty Papers Division (PSPD), after a meeting of IPMA (Indian Paper Manufacturers Association) to discuss the economic stimulus package and the 4% excise duty cut. The meeting decided to pass on the entire benefit of the duty cut to the end-consumer.

Although all paper mills have differentiated prices for each category and market segment, the writing-printing paper approximately costs Rs 50,000 per tonne.

?Since demand-push is our main agenda now, we will not soak up the duty-cut gains. Thus the end-payer would have to cough up Rs 2,000 per tonne less,? Dhobale, also IPMA president, told FE.

As much as 80% of the revenue in paper business comes from writing-printing paper alone. Thus major publishing houses could be the main beneficiaries.

Despite the large-hearted duty-ease to customer-end, the paper industry is reeling under the cost-push pressures, on for the last two years now. ?There is no reprieve in terms of adequate availability, cost and quality of raw material (wood, bagasse, wheat straw and critical input like coal, purchased power),? points out R Narayan Moorthy, secretary general, IPMA.

Equally worrying is the demand situation. Paper demand in India has been sluggish at around 8% for some time. Even when newsprint raced in 13% growth in 2002-2007, writing -printing paper, containerboard, carton board and other paper items reflected merely a growth of 5%, 11%, 9% and 1%.

Reacting to the economic stimulus package, Narayan Moorthy said that IPMA decided to pass on the benefits on the firm belief that it will lead to increase in demand of paper. The paper mills argue that growth in economy and paper consumption are closely linked. By the industry projections, the paper consumption is projected to reach 13.95 million tonne by 2015-16. ?India is worlds fastest growing market for paper,? says IPMA estimates.

Writing?s on the wall

• Notebooks, copier paper and miscellaneous writing-printing paper are to be 4% cheaper from this week

• As 80% of the revenue in paper business comes from writing-printing paper alone,the major publishing houses could be the main beneficiaries