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Crisil Ratings in its latest report has said that operating margin of writing and printing paper manufacturers is set to contract 400-500 basis points to 15-16 per cent this financial year (FY25) - following a similar correction last fiscal from the unusually high level of fiscal 2023 - driven by costlier hardwood and softwood and softening realisations.

Further, it stated revenue is projected to decline 2-3 per cent this fiscal year-on-year - after a price-led decrease of 6-7 per cent last fiscal - largely reined in by subdued realisations. Volume is expected to grow a tepid 2-4 per cent this fiscal owing to the continued shift towards digital communication, partly offset by the government’s focus on expenditure in the education sector and increased work from office.

Gautam Shahi, Director, CRISIL Ratings, said that on the profitability front, two factors will drive the compression this fiscal. One, writing and printing paper realisation will continue to correct from the abnormal highs of fiscal 2023, driven by low-cost imports from China and East Asia amid modest demand, resulting in a decline of 5-7 per cent in writing and printing prices. Two, domestic wood costs will continue to surge due to increased demand from competing wood-based industries and reduced wood output caused by lower plantation during the pandemic. Besides, Shahi asserted that imported wood prices are expected to rise 18-20 per cent due to international supply disruptions.