Indian paper industry battles headwinds: Results show mixed performance

The Indian paper and paperboard manufacturing sector is demonstrating robust market activity, with several companies posting significant market capitalisations. According to recent figures, JK Paper leads the pack with a market capitalisation of INR 6,599.07-cr. Following closely are: West Coast Paper Mills: INR 4,811.33-cr; Andhra Paper: INR 2,300.7-cr; Seshasayee Paper and Boards: INR 2,246.49-cr; Tamil Nadu Newsprint & Papers: INR 2,047.94-cr. These top manufacturers are involved in a wide range of paper and board product manufacturing.

The sector's landscape is further defined by the significant presence of diversified conglomerates. Notably, major players like ITC and Emami maintain substantial paperboards and speciality papers divisions, underlining the strategic importance of this industry segment within larger business portfolios. This presence highlights the industry’s complexity, where pure-play paper companies compete alongside divisions of massive, multi-sector enterprises.

Mergers and acquisitions activity also signals growth and consolidation in the industry. A recent major transaction saw ITC acquiring Century Pulp and Paper (CPP) from Aditya Birla Real Estate for a total cash consideration of INR 3,498-crore. Likewise, KJ Paper completed its sixth acquisition in 2025. And despite challenges in its core paper and printing segments, the company is strategically pushing into packaging solutions, increasing its stake in subsidiary Radhesham Wellpack and completing the acquisition of Borkar Packaging.   

In addition to the market leaders, the sector includes active mid-sized companies, such as Ruchira Papers (market cap of INR 400-cr) and Star Paper Mills (market cap of INR 350-cr), showcasing the depth and breadth of the Indian paper manufacturing ecosystem.

And yet, the paper sector continues to be caught in a structural squeeze. As one paper expert noted, the industry faces "demand volatility, rising raw material costs, and competitive pressures that have compressed margins across the sector."

The impact of cheap imports and higher wood costs was explicitly cited by multiple companies. Furthermore, the Goods and Services Tax (GST) regime, which saw the rate on paper and boards rise from 12% to 18%, created an inverted duty structure. JK Paper’s chairman and managing director, Harsh Pati Singhania, explained that this leads to higher input costs and a blockage of working capital, simultaneously making foreign paper conversion cheaper domestically and creating further pricing pressure. This disruption was also highlighted by Seshasayee Paper and Boards (SPB).

 Andhra Paper reported a sharp financial reversal, posting a net loss of INR 20.26-cr in Q2 FY26 compared to a profit last year. The steep decline was attributed directly to compounding operational disruptions at its Rajahmundry facility in July 2025. This included an illegal workers' strike, a subsequent lockout, and a planned 14-day annual maintenance outage. The company’s total PAT for the first half of the fiscal year collapsed by nearly 98.5% to stand at just INR 1.04-crore. Despite the short-term setback, Andhra Paper is proceeding with an INR 178-cr capital expenditure (capex) plan to increase the Rajahmundry capacity by 60% and upgrade its Kadiyam facility with a new tissue paper plant.

Emami Paper Mills reported a profit after tax (PAT) decline of 77.6% year-over-year to INR 1.70-crore in Q3 FY25, following a 69% decline in full FY 2024-25 PAT, primarily due to a surge in low-cost imports. However, relief may be on the horizon. The Directorate General of Trade Remedies (DGTR) recently imposed anti-dumping duties on virgin multi-layer paperboards imported from Chile and China. This regulatory action is expected to provide much-needed support to Emami Paper Mills, which has already achieved over 100% capacity utilisation for its existing packaging board unit following a capacity increase.

For ITC, the group’s consolidated Q2 FY26 results (ITC’s financials combine Paperboards, Paper and Packaging into a single segment) show revenue from paperboards, paper and packaging at about INR 2,2200-crore, up 5% year-on-year. The segment reported a profit of INR 191-crore (down 21.2% year-on-year) owing to sharp input cost pressures and weak realisations. The parent group’s overall PAT was INR 5,180-crore, up 4.1% year-on-year, with EBITDA at INR 6,252-crore (up 2.1%) and margin at 35.1%. The commentary reinforces that while the board and paper business remains challenging (due to imports and high wood cost), ITC is leveraging its sustainable forestry, value-add product mix, and cost optimisation initiatives.

For ITC’s Paperboards and Speciality Papers Division (PSPD), the second quarter underscored both resilience and recalibration. Revenue performance remained broadly stable, aided by strong domestic demand for packaging grades, even as exports softened. The Nadiad paperboard unit in Gujarat, commissioned recently under the company’s broader capacity expansion plan, continued its ramp-up, supplying high-quality boards for premium FMCG and food packaging applications.

ITC has steadily enhanced its sustainability portfolio, emphasising fibre security through its social and farm forestry programmes, which now cover over nine lakh hectares. Its internal circularity initiatives, such as waste paper recovery and pulping, helped offset part of the raw material inflation that has affected the wider industry.

Additionally, the company’s ongoing integration of its Nadiad and Bhadrachalam units is designed to optimise fibre use and reduce logistics costs. Sources indicate that the plant has also increased output of value-added products, including barrier boards and recyclable paper-based laminates aimed at replacing plastic substrates. These efforts align with ITC’s broader ESG goals and underline its push towards low-carbon manufacturing in both paper and packaging segments.

JK Paper faced significant pressure, with its consolidated net profit after tax (PAT) attributable to owners plunging by 41.8% year-over-year to INR 74.75-cr. The company stated its performance was "affected by higher wood cost and lower sales realisation due to continuing cheap imports." Reflecting a long-term strategy, shareholders approved raising the company's borrowing authority from INR 3,500-cr to INR 5,000-cr to finance projects like the BCTMP pulp mill.
Seshasayee Paper and Boards (SPB) reported a 28.25% year-over-year drop in Q2 PAT to INR 17.80-cr. The major drag was the export market, which saw a steep 55.6% decline in the first half of the year. This was directly linked to the imposition of steep tariffs by the US government, which forced the company to suspend exports to that market from June to September 2025. This disruption led to the company’s Tirunelveli unit operating at only 76% capacity. Domestically, the market was sluggish due to GST-related order inflow issues. SPB has restricted its investment plan for its mill development plan-IV (MDP-IV) but is proceeding with a separate investment into a special purpose vehicle (SPV) to develop solar and wind power capacity.

Chennai-based Tamil Nadu Newsprint and Papers reported a sequential turnaround, posting a net profit of INR 8.10-cr for Q2 FY26, reversing the previous quarter's net loss. Net sales also grew by 20.86% year-over-year to INR 1,090.73-cr. However, the recovery is fragile. Profitability remains thin with a wafer-thin PAT margin of just 0.74%. The company continues to grapple with structural issues, including an elevated debt burden (debt-to-EBITDA of 5.01 times), a weak return profile (ROE of 6.20% on average), and geographical concentration, all of which constrain its capacity utilisation and pricing power.

At INR 437.90, West Coast Paper Mills is down -0.18% from its most recent closing price. West Coast Paper Mills has been trading between INR 440.00 and INR 435.00. In the past five days, West Coast Paper Mills has declined by 1.82% and 20.06% this year. In its most recent quarter, the company reported a net profit of INR 54.39-cr. West Coast Paper Mills is scheduled to announce its financial results for Q2 of FY 25-26 today.

Outlook

Overall, India’s paper industry remains under cyclical strain. The combination of high input costs, regulatory friction, and cheap imports continues to weigh on profitability. However, structural positives, rising consumption of packaged goods, rapid growth in eCommerce, and increasing demand for sustainable alternatives to plastic, offer a long-term cushion.

Industry watchers suggest that the next growth phase will be driven by premium packaging boards, tissue papers, and speciality grades, rather than conventional printing and writing paper. Companies with integrated operations and strong sustainability credentials appear better placed to navigate the downturn and capitalise on the gradual recovery expected in FY27.