Introduction

Paper: a common commodity

• has been in use since 1 BC
• Said to be developed first by chinese
• Records of old Chinese paper fragments prove Paper
to be older than 100 BC
Oldest samples of paper at Amalfi
Paper Meusum Italy

Fun Fact
The First Paper Ever
wasn’t the thin flexible
sheet we know today,
but more hard, thick
and a mat-like
substance
The Creator of Paper
• The Han Dynasty has been credited with the invention of
paper
• Cai (or Tsai) Lun, also dubbed the saint of papermaking ,is said
to be the creator of the first paper like substance.
• Crushing of several plants together to extract the fibers,
mixing the fibers with water and then dried to make paper.
 But is that true?
• The word Paper actually comes from the
name of the plant Papyros, which is a
greek name given to this plant
• This plant only grows on the shorelines of
Middle-eastern rivers. Historical records
show the Babylonians and then the early
egyptians making use of this plant
• However the history of paper as we know
it today begins in china, with Tsai Lun
 Paper travels around the world
• Chinese were able to guard the secret art and skill of
Papermaking up until the late 7th century AD.
• Only Chinas’ direct neighbors, Korea and Japan had access to
paper
• In the late 7th and early 8th century AD, Arabian Muslim
Traders arrived in China, and contributed heavily to the
spread of this knowledge. Many cities under the Muslim
Caliphate developed paper “mills” where paper was
manufactured in huge quantities for the reproduction of The
Holy Quran and other books were also written. (e.g baghdad)
• Even though the Muslims took Paper with them to Europe via
trade, paper wasn’t popular until late 13th century
Paper As We
Know It
Today
 Usage of Paper
• Writing and printing
• Packaging
• Decorating
• Cleaning
• Labeling and marking
• Commercial and industrial use
Why did we chose to evaluate Paper &
Board Industry
Perhaps the most important reason for doing so
was its vast importance and huge scope. As
products of the paper industry are, in one way
or another, involved in every aspect of life.
Paper industry, though facing a huge backlash
due to environmental concerns, is one whose
demand is ever growing and of tremendous
importance, both in Pakistan and Globally.
About Our Report (AIM & IMPORTANCE)
The aim of our research based report is to initially
highlight the importance of Paper Industry in
Pakistan. As it is a growing sector, our report achieve
this objective by focusing on an analysis of past
trends in the industry, the financial and
administrative performances of major players, and
changes in the demand conditions over time. In
addition, we willl be utilizing Swot and Diamond
models to better assess all the above mentioned
information for a more relevant analysis.
About Our Report (METHODOLOGY)
Research conducted was by both primary and
secondary means. This means, that in addition to
visiting the “Light House Paper Market” (Biggest
Retail Market in Karachi) and evaluating the
financial statements of the big fishes, we also
utilized published reports analyzing Pakistan’s
Paper Industry. Using Qualitative and
Quantitative analysis, our group aims to ensure
academic authenticity in all of our analysis and
ensure that the analysis is as up to date and
authentic as possible
Growth and Evolution

Paper and Board Industry

 History
• 1947 : No paper/ paper board plant in Pakistan

• Complete dependence on paper related good being imported.

• 1952: PIDC set up for industrial establishment.

• 1953: PIDC (under WB loan) set the first paper mill in Chittagong (East Pak) -
Karnaphuli Paper Mills. (largest in Asia)

• separation of East Pakistan in 1971, Karnaphuli Mills became part of Bangladesh.

• Pakistan now had to turn towards setting up paper mills in the country.

• Currently: 100 paper manufacturing units in Pakistan. 70% in Punjab, 20% in Sindh,
and 10% in KPK.

• Capacity: 650000 tons per annum. Smaller units have a capacity of 20 to 300
Paper and tons/
Board Industry
day.
Evolution of the major Players
(Major representatives of the industry)
Packages
Ltd.
1956 : Joint Venture with Ali Group.

1968: set up their first pulp and paper mill, partnering with IFC,
Washington.
Within 35 yrs, cap raised to 30000 ton. – Largest in Pak.

1982: Rose Petal

1993: Joined with Mitsubishi. (Polypropylene

Film)
1996: Cap raised to 60000 tons.
Packages Lanka was set up in Sri Lanka
2005: Bulleh Shah Mills – Kasur.

Through out 2000s : Continuous development + carton

production.
Paper and Board Industry
Premier Paper Mills

• 1985: First mill in Lahore.

• one of the leading Paper manufacturers in
Pakistan
• writing, printing, photocopy papers.
• capacity of 25,000 M Tons per annum.
• technological and skill improvement to gain
competitive edge.

Paper and Board Industry

Flying Group of Industries

• 1984: First paper mill, Lahore.

• writing paper, photocopy, kraft, tissue paper.
• major aim being to substitute imports.
• owns seven manufacturing units, four pulp
mills, and sack producing units.

Paper and Board Industry

Century Paper & Board Mills (Lakson Group)

1990: commercial production , Lahore.

has seven Paper & Paperboard Making Machines with
integrated Pulp Mills. (to meet demand + substitute
imports).
2003: “Agnati” Italian corrugators (imported machinery),
raising its capacity to 230000 tons/ annum.
exports to several countries
signed an agreement worth Rs 13b with a South Korean
firm, to install eight plants; project is to be completed by
end 2019.

Paper and Board Industry

 Sayid Paper Mills

1975: Started production, Lahore (small

scale)
1994: set its own mill.

By 2000, became the first firm to use de-

inking of paper as its primary process
2001, it started production of news
print in Pakistan

(evolutions of players are major enough to have impacted the

paper industry in terms of demand fulfillment, revenue
generation, R&D, innovation in production concepts, variety,
quality - all of which aided the growth of this sector).
Paper and Board Industry
Types of paper produced in Pakistan
• Broadly classified in three major categories i.e.
Packaging Board, Container Board and Writing
and Printing Papers.

• Writing and Printing paper: magazines, newspapers, catalogues,

writing, copying.
• Paper board: strength + light weight. Used for packaging; from
FMCGs to larger sized cartons. (SBP 2017)
• Liner board: a thin cardboard used for the flat facings of corrugated
container board.
• Corrugated Medium.
• Continuous computer reels
• Tissue Paper
• Security/ banknote paper
• Newsprint: Used in newspaper printing.
Paper and Board Industry
Paper Production

• Basic idea: pressing together cellulose fibers

extracted from plants and trees so they knit and
fuse to form a strong, solid, flexible mat.
• Raw Materials: Wood (or others - plant based
materials/ recycled paper), water, chemicals, fuel.

Paper and Board Industry

Paper Production Methods: Evolution

Initial Period-- Handmade Process.

• Bamboo/ jute/ raw plant material placed in a large vessel filled with
water.

• beaten to a pulp to make a thick suspension of fibers.

• metal mesh called a mold that sits inside a wooden frame, and is
dipped in this suspension; pulp drains through the water.

• mat is placed to dry under pressure.

• Hung to dry.
• Advancement was made in coming times by using huge stones to grind up wood
logs. Called Ground wood Process.
Paper and Board Industry
 Contemporary--Kraft Process

• Production and acquiring of fibre - from trees (hard/soft wood), used

paper, agricultural residues. WOOD FIBRE
• Chemical or mechanical processing of fibre into pulp. FIBRE PULP
• Conversion of pulp into paper by running the pulp through a paper
machine. PULP PAPER
• Converting the paper into products such as boxes, office paper, etc.
PAPER PRODUCTS

(explained)--
> Paper and Board Industry
 1 2

foudrien
er

roller

digester

Can also use materials other than wood – agri/ de ink.

Paper and Board Industry
Overview

Paper and Board Industry

Major Input Source

However, in Pakistan, Non wood pulp is used most.

Paper and Board Industry
 Methods used in Pakistan

Neutral sulfite semi-chemical pulping process (NSSC):

• Pakistan is also one of the few countries in the

world to use this.
• doesn't use wood as raw input, rather agricultural
waste
• Century Paper use wheat straw. Charsadda use
straw/ kai
• bagasse, kai grass rice straw, cotton waste.
• easy local availability. Compared to shortage of
wood.

Paper and Board Industry

 Wood based:

• low density of forests in Pakistan + unhindered de-forestation

overtime = inconsistent wood supply.

• The soft wood forests in the country exist in extreme

northern hills.

• to keep up with the international standards, currently some have

taken up wood pulp as the input. (majority uses non wood).

• imported mainly from USA, Sweden, Canada and Far East.

Paper and Board Industry

 Waste Paper:
• recycles back the used paper to be used as an input for paper
production.

• Recent idea; grew with the growth of sectors.

• Collected from:
1. offices, factories, firms, banks, publishing companies;
2. trash dealers from private persons from their homes.

• Low paper supply, so low waste supply + inefficient collection

mechanism.

• part of it is local, part is imported from USA, UAE, Saudi Arabia and
Singapore.

• Sayid paper mills – promoting sustainability in local industry

Paper and Board Industry
• Demand grew … procedures increased … Chemical usage increased.
• Locally available : Caustic soda, rosin, starch, alum, lime stone.
• Imported - sulphur, chlorine, sodium chlorate and sodium peroxide.
• Imports of machinery increased as the major players try to keep up
with innovation and R&D.
• The evolution in production methodology has also played a role
towards environmental damage.

Paper and Board Industry

Innovation Potential

• have gained competitive advantage through product + process

innovation. (major players)

• Reliance on imports as raw materials has curbed the potential

for smaller players to grow.

• ..Measures to attain local wood input to be taken (eucalyptus)

• Non wood input cannot be relied upon (seasonal crops)

• Recycled paper is a very sustainable method; but not

efficiently managed in Pak.
Paper and Board Industry
• Energy consumption is high. (30 per cent of man.)

• training of labor.

• R&D. Needed in areas of machinery production +

chemicals. Would lower costs.

• Value addition as per the demand of supported

industries : High quality standards in the FMCG
would increase innovation potential through
competition.

Paper and Board Industry

 Government + Economic Policies + Issues:

• Increasing demand, inadequate supply, mills

having under-utilized capacity, reflects a loophole
in the policies.
• President PBIF, Zahid Hussain :
• “paper industry needs immediate attention by
government for the sector to flourish”
• “Even if big units focus on chain management and
value addition, they are constrained by lack of
industry friendly government policies”

Paper and Board Industry

• Local shortage (quality/ quant) Imports of Paper/ Goods …
• Imports are subject to : - 25% import duty, 15% regulatory duty, 18%
sales tax, 2% withholding tax, 1% special excise duty…
• Hence, gap in demand/ supply filled through illegal trade. So either
taxation needs simplification OR aid the local production to grow.
• High paper price (import duties on pulp + chemical + paper) – led to
misquoting of imported paper as waste paper (as it was taxed 10%
rather than 25%). 95% importers did this.
• Local manufacturers face 15% Excise Duty (reflects in price). – Deter
investment.
• High paper price … impacts supported industries (books, printing
etc.)

Paper and Board Industry

• Dumping - obstacle to local industry growth. Practiced by: Brazil,
China, Indonesia, Japan, Thailand (under invoicing by these
exporters) …
• Stating price < actual price to avoid taxation…
reduces duty for commercial importers, while local producers are
subject to various taxes
• application was lodged by private paper mill against it (2015), (due
to 35% increase in dumping in 2014-2015). NTC then took notice
to impose anti-dumping duties, by 2018. Anti-Dumping Duties
Rules (2001) was already present.. Shows dormancy of policies!
• Currently : Pakistan Customs is detecting under-invoicing at a large
scale ($6b attributed to China alone). New law aims to suggests
imprisonment for certain years to prevent the practice.

Paper and Board Industry

• Dumping Stats

Paper and Board Industry

• Duties on various raw materials > that on finished
paperboard. Distorts local industry.
• high policy rates also deter borrowing, hence less
investment.
• Govt shall ensure uninterrupted provision of fuel and water
at low cost. (essentials in paper prod).
• lack of research facilities in universities. , other countries
encourage this, for example, PPERA, an alliance of American
universities, promoting paper+pulp education and
recruitment in this sector
• depressed economic environment+ law and order situation.

Paper and Board Industry

 Demand
• Internationally:

- demand of paper and paper products is very high throughout the world.
- generates about $200 billion per year.
- was thought that offices will be made paper free by 2011 but it wasn’t
possible.
- 350 million tons of paper is being produced annually.. 579 million tons
by 2021.
- Where does so much paper get used?
money, marriage certificates, paper games, paper kites, movie tickets,
books, magazines, to large paperboard containers.
Paper and Board Industry
• Not a prime industry of Pakistan; in developing stage (life
cycle).
• Consumption of Paper in Pak > domestic supply (900000
tons in 2011). 65% local, 35% imports.
• The per capita consumption of paper and board is a low of
3.4 kg. (75-100kg in developed countries). However, the
trend in demand growth is +ve.
• population of Pakistan - 203,709,174 (6th largest); as per UN
report. ). 29% of it belongs to the age bracket of 15 to 29.
39.8 % is urban…
• Increased: per capita income + youth + urbanization
• More: businesses+ transactional work + education

Paper and Board Industry

• Education schemes by government + more educational
institutes = more books (demand for paper increases via
printing and publishing sector).
• packaging sector.

- Punjab Food Authority imposed an embargo on the sale of

open-food products (Food Regulation 2017)
- FMCGs. Seeing double digit growth.
- Increase in awareness of hygiene and urbanization, boost
demand for packaging.
• Response : Packages Ltd raised capacity. Century Paper has
approved plans for installing additional capacity up to 130000.
Cherat installed a new paper sack line.

Paper and Board Industry

 In all …

Electronics Pharmaceuticals Tetra paks

FMCGs

PAPER Newspaper
Cement sacks DEMAND
+
printing

Food + packaging Education Banking

Paper and Board Industry

Marketing

Paper and Board Industry

 Marketing Research
Two Kinds of
Customers

B2B: B2C:
• Board: Mostly used in • Hygiene: Umbrella term
packaging and for all tissues and
construction, and sanitation needs.
demand is cyclical. Demand for these is
• Packaging: Most fulfilled locally.
important product, as it is • Textbooks, Copies, Etc.:
the driver of business Demand for these is not
growth for the industry. filled locally, as
Paper and Board Industry newspaper is imported
grew 7.72% in the past from abroad.
year.
Paper and Board Industry
 Highest Growth in Categories, October 2018
12.00%

10.00% 10.30%
9.83%

8.00%
7.72%

6.00%

5.48%

4.00%

2.00%
2.19%

1.23%

0.00%
Engineering Products Food, Beverages, and Paper and Board Electronic Products Leather Products Rubber Products
Tobacco

Paper and Board Industry

 Trends in the Industry
1) Move towards making paper production
environmentally friendly.
• Due to the obvious harms of deforestation and high use of
fuel (fuel is 12% of the entire cost), paper is environmentally
unfriendly.
• However, a change is being done via producing a new kind
of paper: recycled paper
• Or in some other cases, reducing the unethical use of
timber, reducing electricity usage, and increasing efficiency.
• Examples:
• Packages Ltd. spent $20 million in the past 5 years towards
environmentally friendly processes Paper and Board Industry
 • Packages Ltd. can even produce 100% recycled paper to replace
its current non-recycled product line.
• Cherat and Roshan packaging have EHS policies in place.

2) Specialization in Core Sectors

• Due to rising demand in multiple product lines, and the
benefits of economies of scale, there is increased
specialization in companies
• Example: (on next slide)

Paper and Board Industry

Name of Firm Specialty Product Line
Packages Ltd. Hygiene and flexible
packaging
Security Papers Ltd. Money printing, financial
instruments’ printing, and
educational certificates.
Century Paper and Board Packaging board.
Dadbhoy Sack Limited Paper packaging for bulky
goods.
Roshan Packages Flexible packaging and
machine-finished paper
Paper and Board Industry
 Customer Services
• Multiple products are provided:

Paper and Board Industry

• Along with products, services are provided in the
form of:
• In B2C environments:
• Customer helplines to assist and/or answer any complaints.
• In B2B environments:
• Delivery of goods
• Guarantee to return defective goods.
• Technicians and engineers to ensure packaging is properly
utilized by clients.
• These are standard guarantees that are the
industry’s standard.

Paper and Board Industry

 Segmentation

Segmentation

Geographic Demographic Behavioral

• Urban • Ages 25+ • Regular

• Top-10 • Males and occasion
presence females both • Customer
seeks highest
• High • SEC A, SEC B,
quality for
population and SEC C
lowest prices
density • Convenience
• Paper
products are
necessary
Paper and Board Industry
 Segmentation Disclaimer
• Segmentation variables are general and not firm-
specific, due to the sheer number of firms and
diversity of B2C products in the industry.

• Also, in B2B settings segmentation is not

considered as firms enter competitive bidding for
firms without too much consideration for what the
firm is for, as long as it is reliable and pays timely.

Paper and Board Industry

 Positioning
• As most firms are B2B, they do not have a distinct
positioning and are positioned on the following:
• Reliability;
• Cost-effectiveness;
• Discounts;
• And specialty.
• However, in B2C firms there is a difference in
positioning: this positioning is based on image
differentiation.
• i.e. Moveeta’s positioning is based on cheap prices.
• Rose Petal’s is based on premium quality and reliability.
Paper and Board Industry
 Distribution Channels
• In B2C:
Packages Ltd. uses this strategy.

Producer Retailer Consumer

Most small firms use this strategy, i.e. Moveeta.

Producer Distributor Wholesaler Retailer

Consumer
Paper and Board Industry
• In B2B:

Producer Business

Producers may use their own distribution vehicles or

hire a transport company to get goods to businesses.
Most firms fall into this category.

Paper and Board Industry

 Pricing
• The components of cost are as follows:
• Raw materials (58%)
• Labor (10%)
• Fuel and energy (12%)
• Other overheads (20%)
• Key trends in costs:
• Prices of imported wood pulp has shown a declining
trend.
• However, prices of local materials, including energy, are
rising.

Paper and Board Industry

• Newsprint---an important raw material for textbooks,
copies, etc.---is rising in price and in imports.
Total Cost of Inputs
120

100

80

60

97.36 96.5
40 81.6
72.64 71.4
64.11

20

0
1999 2000 2001 2002 2003 2004
Paper and Board Industry
 Promotion
• Only four firms employ ATL methods (television and
other advertisements) to the public.
• Packages Ltd. employs BTL methods as well in malls
and shopping areas.
• However, in B2B settings most firms advertise
through trade shows, calls to executives, and
sending business proposals. Hence their advertising
budget is low.

Paper and Board Industry

Name of Company Marketing Expenses
(PKR ‘000)
Packages Ltd. 1,167,835
Roshan Packages 168,677
Century Paper and
129,204
Board Ltd
Cherat Packaging 98,022
Merit Packaging 39,524
Security Papers Ltd. 5779
2018 figures

Paper and Board Industry

 Quality and Technology
• As established firms have a hold over the entire
paper and board industry, they have large sums of
capital. So they can always afford to be up-to-date.
• One testament to this is: local paper and board
products’ exports were PKR 8,064,095 (2016-2017).
• However, even though local paper has excellent
quality, there are longstanding issues with the price
of raw materials (due to tariffs) and their lack of
local availability.

Paper and Board Industry

• This explains the less than optimum capacity
utilization of major firms, even though there is
excess demand.
• This also explains the increasing paper imports
from abroad.

Paper and Board Industry

 2017- Quantity
Years 2000-01 2001-02 2002-03 2016-17* 18* in tons
Writing and Printing Paper 6,675 10,838 11,886 43272 47456
Wrapping and Packing Paper 18,400 21,282 28,548 58625 59,212
White Dup/ Paper board 41,543 56,105 55,870 28583 16635
Coated Paper/ Chip / Other
board 10,502 11,215 12,519 69562 70,124
Paper of all kind 7,199 8,097 9,452 82133 95,849

Sub-total 84,319 107,537 118,275 282,175 289276

Newsprint 59,684 70,793 76,334 117,000 121,000

Total 144,003 178,330 194,609 399,175 410276

*Projected figures.

Paper and Board Industry

• Firms are still engaged in improving their
capabilities.
• Packaged Ltd:
• In 2017, it setup an offset printing setup for folding cartons.
And Packages Ltd. has a dedicated Research and Development
and Control Department to ensure efficiency and top-quality.
They even follow the ISO-9001 standards and have 57 quality
improvement teams.
• Century Paper and Board:
• In 2008, it adopted the Oracle ERP system to manage its
systems and departments. In 2015, it setup a world-class
multi-layer board machine.

Paper and Board Industry

 Logistic Management
• 3 main processes:
• Harvest
• Trees are cut and branches are removed. The tree is then cut
into logs.
• Logs are transported from harvest areas to mills through
terminals.
• Often this cutting is part of a firm’s processes, in which case it
is ‘integrated’ into the company.
• Pulp-making
• Conversion of pulp logs to chips. Chips are mixed according to
desired pulp quality.
• Chips are boiled and washed, and impurities from fibre
are separated.
Paper and Board Industry
 • Chemical is added to fibres and they are bleached to attain a
color.
• Harvesting and pulp-making are completed in 12
hours of each other.

Procurement Production

Sales Distribution

Paper and Board Industry

 Major Players in Pakistan
• The top 5 firms are as follows:
• Package Limited:
• Specialty---Hygiene and flexible packaging.
• Provides 35% of Pakistan’s supply.
• 2674 employees.
• Century Paper and Board:
• Specialty---Packaging boards and writing paper.
• 1800 employees.
• Flying Board and Paper Products:
• Specialty---Packaging and construction boards
• 700 employees
• Premier Paper Ltd.
• Specialty---Non-wood white paper for multiple uses
• Flying Kraft Paper Mills
• Specialty---Primarily wood white paper for multiple usesPaper and Board Industry
Name of firm Total Capacity Capacity
Utilization
Packages Limited 302000 62.2%
Century Paper 270000 67%
and Board Ltd
Flying Board and 100000 62%<x<66%
Paper Products (figures are
estimates as
company is
private)
Premier Paper Ltd 50000 72%<x<75%
(figures are
estimates as
company is
private)
Flying Kraft Paper 40000 72%<x<75%
Mills (figures are
estimates as
company is
private)
Paper and Board Industry
 Number of Companies
• 100 units in the formal and informal sectors.
• Combined capacity is 650,000 tons per annum.
• The organized sectors have 575,000 tons per
annum of capacity from 26 units.
• The number of listed firms is 10, and these firms
collectively control 75% of the formal paper-making
output.

Paper and Board Industry

 Distribution of Industries

KPK
10%

Sindh
20%

Punjab
70%

Punjab Sindh KPK

Paper and Board Industry

• Reasons for distribution:
• Most firms are located in Punjab because:
• Of greater groundwater availability
• Proximity to border for imports
• Availability of wheat, bagasse, and raw material for non-
wood pulp.

Paper and Board Industry

 Market Share of Firms
• As the listed firms control 75% of productive
capacity, they can be said to represent the entire
paper and board industry in its entirety.

Paper and Board Industry

Name of Total Sales (Rs. Share
Company ‘000)
Packages Ltd. 20,699,488 36%
Century Paper 18,964,573 33%
and board
Cherat Packaging 7,091,653 12%
Limited
Roshan Packages 4,031,387 7%
Limited
Security Papers 3,466,918 6%
Limited
Merit Packaging 2,449,541 4%
Limited
Pakistan Paper 788,228 1%
Products Limited
Balochistan 1,943 0%
Particle Board
Limited
Total Sales 57,493,731

Paper and Board Industry

Financial Ratio Analysis

Paper and Board Industry

Main Industry players in Pakistan
comprising of about 75% production

• Top five companies according to market

capitalisation:
• Packages Limited
• Century Paper and Board Mills
• Cherat Packaging Limited
• Security Papers Limited
• Merit Packaging Limited

Paper and Board Industry

Profitability
Analysis
• 2012: inflationary pressures, PROFITABILITY
energy situation
60.00%
• Rising trend due to: 50.00%
• prudent management of raw
40.00% 14.72% 16.87%
material costs 10.77% 9.89%
• lower fuel and energy costs 30.00%
1.58% 6.13% 8.73%
13.07%
11.91% 13.18% 11.69%
• volume growth offset by price 20.00% 10.40% 9.65% 10.22%
discounts passed onto the
10.00% 15.64% 17.74% 19.17% 19.87% 17.93%
customers on the back of 15.21% 15.57%
deflationary trends in the raw 0.00%
material and fuel & power costs 2012 2013 2014 2015 2016 2017 2018

• Fall in 2018: Gross Profit Margin Operating Profit Margin Net Profit Margin

• increase in raw material prices

partly due to devaluation of Pak
rupee by 26%; conversion costs
that may not have been passed
on to the customers during the
year
Paper and Board Industry
Leverage
Analysis LEVERAGE
• Debt to Equity falling since more Long Term Debt to Assets Ratio Long Term Debt to Equity
financing through equity than Total Debt to Assets Ratio Solvency Ratio
debt 180.00%
• Total Debt to Asset and Long Term 160.00%
Debt to Asset ratios stable but 140.00%
slightly falling 120.00%
100.00%
• Reason? Due to
80.00%
• Liquidity Ratio shows a rising 60.00%
trend due to active focus on 40.00%
strengthening working capital 20.00%
cycle and took initiatives to 0.00%
rationalize inventory levels and 2012 2013 2014 2015 2016 2017 2018
trade debts.
• Continued improvements in
working capital efficiency
supported positive cash flow
generation from operations.
Paper and Board Industry
 PRICE TO EARNINGS RATIO
60.00 55.13

50.00
40.00
30.00
16.07
20.00 11.04
6.11
10.00 2.93 3.04
0.00
2012 2013 2014 2015 2016 2017 2018
-10.00
• Rising EPS due to increasing -20.00 -25.73
profitability -30.00
• Slightly falling due to rising costs • Rising PE ratio until 2016
in 2018
EPS
25.00

20.00 22.43
21.33 21.88
15.00

10.00 13.47
9.79
5.00
6.01
0.00
2012 2013 2014 2015 2016 2017 2018
-5.00
-4.05
-10.00
Paper and Board Industry
Dividend DIVIDEND
Analysis Payout Ratio Dividend Yield Dividend Cover DPS

• Increasing DPS 2018

• Increasing Dividend 2017

Cover due to 2016
profitability 2015
• Stable Payout Ratio 2014

2013

2012

-8.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00

Paper and Board Industry

Du Pont Analysis DU PONT
18.00% 6.00
• Net profit margin trades 16.00%
5.00
off with asset turnover. 14.00%
Higher NP margin, lower 12.00% 4.00
10.00%
Asset Turnover 3.00
8.00%
• Leverage sharing an 6.00% 2.00
4.00%
inverse relation with ROE. 1.00
2.00%
As Leverage rises, ROE falls 0.00% 0.00
and vice versa 2012 2013 2014 2015 2016 2017 2018

• ROE and NP margin Net Profit Margin Return on Assets

Return on Equity Asset Turnover
Total Assets/Total Equity

Paper and Board Industry

SWOT ANALYSIS

Paper and Board Industry

SWOT ANALYSIS

Paper and Board Industry

SWOT ANALYSIS

Paper and Board Industry

SWOT ANALYSIS

Paper and Board Industry

 Diamond Model
• Factor Conditions
• Raw Material:
• Wood-based material: The wood pulp raw material is in short
supply, because of a shortage of coniferous pine.
• The soft-wood forests in the northern parts of NWFP and Azad
Kashmir are inaccessible.
• Poplar and eucalyptus trees are used in the pulping process.
• Agricultural waste: For this straws, bagasse, and grasses are used.
All these materials are available in great supply domestically.
• Other raw material: This includes waste paper, cotton linters and
waste, these are also available locally.
• Pulping chemicals: Some of these chemicals have to be
imported, almost 30% of them, the rest are locally available.

Paper and Board Industry

 • Box Board Making Chemicals:
• Alum, starch, rosin, clay, and other chemicals that are locally
available.
• Demand Factors:
• Increase in population:
• The population is increasing at 1.49% per annum, this increases
demand in the education sector for paper. The standard of
living also increases demand for paper products.
• Increase in education:
• Education spending has increased 10% over the last year in
Pakistan, and youth make up 54.8% of the population---ages 0
to 24.

Paper and Board Industry

• Economic activity:
• With increase in economic growth in the country, in the form of
the entry or birth of massive industries and businesses and
FMCGs, the demand of paper is increasing.
• Technology:
• This decreases the use of paper products, for previously
discussed reasons.
• Urbanization:
• The rate of urbanization is 2.68 since 2011. As more people
move into urban areas, the demand for paper increases.

Paper and Board Industry

• Firm strategy, structure, and rivalry
• Firm strategy:
• Firms, due to the majority of them being of almost equal size,
seek growth and a larger share of the total market, which is
growing steadily in the status-quo. This strategy forces
companies to innovate and increase the industry’s competitive
advantage.
• Structure:
• Structure is oligopolistic, with 10 major firms in the country.
This industry structure increases competition with firms, and
there is no room for making cartels, as product differentiation
is high. This boosts competitive advantage as every firm vies for
the upper hand.

Paper and Board Industry

 • This has led to the strengthening of the domestic paper and
board industry, leaving little room for imports, and often only
in the form of raw material.
• Rivalry:
• Rivalry is high because of the following reasons:
• High growth of industry.
• Brand identity.
• Similar cost structures.
• High demand for innovation and research.
• This leads to increased growth of firms and development of a
competitive advantage.

Paper and Board Industry

• Related and Supporting Industries
• Related Industries:
• Education sector
• Publication sector
• Media and newspaper sector
• Food industry, cosmetic industry, and pharmaceutical
industries
• FMCG good producers
• Financial sector
• Supporting Industries:
• Chemicals industry: for necessary chemicals
• Wood-pulp industry: for raw materials

Paper and Board Industry

 • Agriculture industry: for straws, wheat, and grasses.
• Power industry: for the supply of energy.
• Transport industry: for transporting paper products to
customers and raw material to the firm.
• Government Policies
• Documentation:
• Due to the environmental damage, documentation is required
for many tasks conducted by the paper industry, which slows
down firms and/or increases costs for hiring legal staff.
• Regulatory and Import Duties:
• Wood pulp and newspaper material is imported, but due to
high tariffs these raw materials have increased costs, and
hence a smaller competitive advantage.
Paper and Board Industry
 • Anti-Dumping:
• Anti-dumping have been discussed earlier.
• Deforestation:
• Strong policies against deforestation, as forest area is only 4.8%
of Pakistan’s total land, far below the 20-30% recommended
internationally. This increases costs and reduces competitive
advantage.
• Chance:
• Natural Disasters:
• Flooding, which is a menace to the paper industry, has the
chance of occurring and hurting the industry.
• Political/national stability:
• Terrorist attacks can lead to instability, which will reduce
demand. Paper and Board Industry
• Recession/economic slowdown:
• Economic slowdown can happen, as it currently is, and cause
demand to decrease.
• Foreign exchange rate depreciation:
• Rupee can depreciate, leading to a hike in raw material and fuel
prices, raising costs.

Paper and Board Industry

 Future Scenario
• As the industry matures and firms are established
in their respective product lines, exports will grow.

• Due to increased awareness of paper industry’s

damage to the environment, there will be a move
towards going ‘paperless’ in the textbooks, copies,
and related markets.

• Firms will grow more competitive and as the grow,

imports will continue to rise, especially of wood
pulp.
Paper and Board Industry
 Conclusion
Paper and Board Industry is an industry that is
involved in every aspect of life, and thus is
vital to every enterprise, no matter what the
industry. On 14th Jan 1947, when Pakistan
came into being, much administrative distress
was caused due to the unavailability of paper
products and paper Industry, and a general
disarray of the industry for many years to
follow..
 Conclusion
Today too, we conclude from our many
extensive analysis, Paper and Board Industry
has been unable to formulate properly, and
this in turn has resulted in Pakistan not
realizing competitive analysis. Enough stress
cannot be placed on the affect on the
economy if our local paper industry Collapses.