Papermart
Special Feature

“Paperboard Demand Witnessed Upsurge Due to Increased Reliance on E-Commerce”

This article is a part of Silver Linings to the Corona Cloud feature

Mr. Madhukar Mishra, Managing Director, Star Paper Mills Ltd.

Operations and Workforce Management

Before Corona

The operations at Star Paper Mills were smooth and the staff was performing the assigned duties without any hassle.

After Corona

The outbreak of the COVID-19 pandemic exerted a huge impact on various businesses across industries all over the world and the paper industry was not an exception. In particular, the manufacturing activities were hit the most as the production process was not amenable to work from home, unlike other operations.

In the changed circumstances, there have been massive changes in terms of the deployment of the workforce. Furthermore, the manufacturers had to alter to the SOPs to safeguard the health of the employees.

As the lockdown was announced in March 2020, millions of migrant workers made their way back to their villages or hometowns. It led to employee shortages particularly for skilled-migrant employees, across the supply chain for the entire manufacturing sector.

Almost every section of society had been affected due to the lockdown. Corporates therefore increased emphasis on CSR activities during these difficult times.

Supply Chain Management

Before Corona

The supply chain systems in place worked trouble-free prior to the pandemic.

After Corona

There’s been an enormous disruption of global supply chains. During the beginning of the global outbreak of the virus, industries all over the world faced significant supply chain management (SCM) challenges. The supply of inputs to the paper industry also got impeded during lockdowns. There was an unforeseen disruption in the movement of materials due to sudden declarations of containment zones. Owing to the unprecedented interruption in the global economy and world trade, the production and consumption have been significantly impacted which constrained both the imports and exports of products across different sectors globally.

During the first wave of the pandemic, the local authorities were hindering movement by interpreting government orders in different ways at different places. The restrictions imposed on the movement of non-essential products and their manufacturing caused a disruption even for essential items as some of the non-essentials are key inputs in the production of essentials.

Market Scenario

Before Corona

The demand for writing & printing paper and copier segment was buoyant.

After Corona

With regard to the demand for writing & printing paper and copier segment, the enhanced use of electronic devices at workplaces and the continued closure of educational institutions have severely affected the demand for cultural grades of paper.

However, the demand for packaging board/paperboards has witnessed an upsurge due to the increased reliance on e-commerce by a majority of households, especially after the pandemic.

Profitability/Profit Margin

Before Corona

The profit margin was healthy.

After Corona

The reduction in the level of operations led to inefficiencies and losses.

Moreover, the increases in the cost of different inputs also posed a significant challenge to attain previous levels of profitability.

Expectations from the Government

After Corona

In general, the expectations regarding the response of the government to the COVID-19 pandemic can be termed into two major categories – health-related expectations, and policy-related expectations. In the former category, one of the key subthemes is the acceleration of the vaccination drives. The government can play a key role in educating the citizens on effectiveness and safety, as well as procuring and distributing them efficiently and equitably. Enhanced outlays on health care across the urban-rural landscape and doubling of medical/nursing colleges are some of the other areas holding urgent attention.

About the policy-related expectations, the businesses across Industries and the stakeholders are looking towards the government to increase expenditure and investments in a way that will provide an immediate boost to local demand. Furthermore, the reduction in income tax on individuals with a maximum slab of 25 percent, thereby increasing their disposable incomes, would be an encouraging step.

Additionally, with the central government’s vision – ‘minimum government, maximum governance’, the furtherance of ‘ease of doing business’ should be given utmost importance. Incentives provided by the government in backward areas will enable local job creation that would in turn decrease the migration to industrially-developed cities in search of livelihoods.

Future Outlook

After Corona

In the wake of the precautionary measures, recourse to digital technologies and automation has seen a sharp rise. It is estimated that there will be an accelerated adoption of automation technologies along with Robotics and Artificial Intelligence (AI). The deployment of digital/AI in manufacturing operations will gather pace in the future.

The enhanced use of electronic media in offices and educational institutes will impact the rate of growth of demand for paper. At the same time, we will witness increased demand for high-quality packaging paper/ materials. Sectors like travel and hospitality will also be impacted even after return to normalcy as businesses continue with work from home/virtual meetings etc. to some extent.

Besides, there will be a massive spurt in certain sectors due to the pent-up demand after the restoration of normalcy.