“The cost of capital is too high in India, creating a hindrance in adopting new technology”

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Find the exclusive interview of Mr. David Dostal, Chairman of Board Papcel a.s., conducted by The Pulp and Paper Times.

“The cost of capital is too high in India, creating a hindrance in adopting new technology”: Mr.David Dostal

PAPCEL is a Czech company with more than 65 years of tradition in manufacturing and deliveries of complete papermaking machinery for production of all the commercially available and used paper grades. The Pulp and Paper Times meets Mr. David Dostal, Chairman of Board- Papce (In above picture)l during his visit to India and try to know what is Papcel's lookout for the market and strategies for Indian Paper Industry. Here is the discussion: 
23 March 2018 | Ghaziabad | The Pulp and Paper Times

Q. How much Indian Paper Industry is open to accept the new process technology?

A. I think, People are eager to get the new technology, they like presentation of new invention, they like visiting references and they like learning and getting best practice from abroad. I think they are spending lot of time in negotiation with a supplier trying to improve the knowledge, get the new ideas. I see the trend that more people from paper industry accept the new technology and are interested to implement it in their manufacturing facilities.

Q. Normally 'Productivity and Profitability' are the major concern for any paper mill in India, How does Papcel find itself ready to accept these concerns?

A. Yes, we are very much concern to these two factors. Productivity is mainly given by the width and Speed of the machine. Papcel after the acquisition of PMT, ICONe and ABK group, is able to propose most modern machine with a maximum width and speed. But of course up to now there is no demand for such a size of the machine in India. There is much more demand in china for example. Of course, trend is changing here in India, the new projects which are planned and announced, are bigger than once which were done before. Indian Paper Industry is going towards improvement in productivity and efficiency. The most important is 'cost of the Capital'. In India, Cost of the capital is too high if the interest rate is less than the process of improvement of productivity would goes much faster. Today, growth of owners is very limited due to expensive 'funds'. What I also feel that, Owner of paper mills also afraid to source the good from abroad due to high exchange rate risk.

Q. 'After sale service' has been the main challenge for any supplier especially if they are out of India, how is Papcel trying to fulfil the need of after sale service?

A. Since we entered the market, we understand this from the beginning. We have started our own sale service engineering office here in India. We are developing this office increasing the number of people touching to total strength of 14 working in India catering different area of operations. We have procurement manager, electrical & instrumentation engineers, mechanical designers, process application manager and a specialist for stock preparation area. So we understand that in long term, if we want to be successful, we need to make good service structure. So the first step has been done, now by the acquisition of PMT, ICONe and ABK - the integration of their products making us competent to deliver more new products in market. After the acquisition, customers are more convince with Papcel and generating enquiries on our products. We are in discussion of big projects as well ongoing rebuild and supply of key components.

Q. Why a Paper Mill should Choose Papcel in comparison of local and other foreign suppliers? What are your 'distinguished' parameters to be considered by a mill?

A. You know paper market is segmented, so you have customers who are highly focussed on technical side, so we can serve them; we have range of good products with many of the references in the past. We can satisfy these customers and their need of good service as having own service team. Secondly, the customer who is in growing stage, they are not as big need the combination of local manufacture and new technology from abroad. Also we can offer the proposals where we combine the new technology, key components with local after sale service. We have association and corporation agreement with local company, for example with Servall. We are now pitching the proposal jointly in the market. For smaller paper mill, this segment should be mainly served by the local supplier because of price is more important for these paper mills and financial resources are limited as well.                                                     

Q. Do you have any solution that can work collectively for paper mills only to reduce the cost of operation?  

A. One solution is not correct, every customer need customized solution, different mixer of products and services. Everyone has different approach to financial resources so we try to be flexible and to understand customer's requirement in putting the proposal accordingly. The Proposal are tailor-made depend on case by case. Also we can offer most Morden concept.

Q. The sourcing of used machinery from Europe and Chine are rapidly capturing the Indian Market. How Papcel will throw this situation out in order to stand as OEM supplier?

A. We are active in this segment also proposing used machinery; but we are not like a dealer who buy and sell machinery, we are interested only in projects where some kind of rebuild, modifications and a change from the production programme, if there are some services included in the package –yes we are interested because return on investment is much bigger.              

Q. Please correct me if I am wrong to say that this is the golden period for paper industry. How Papcel is ready to tap the market especially for next five years?

A. We would like to generate minimum 20 million euro revenue from Indian market every year.

Q. Are you planning to put any manufacturing facility in India? 

A. There was planning to do it and we were in very advance stage of thinking about the joint venture and on the advance stage of required process to implement but then we gave the priority to the acquisition in Europe. We acquired Gapcon Tissue and PMT. We have put on hold any investment in acquisition in India for time being. 

Q. Indian paper mills run on traditional method more, How Papcel is planning to educate them to adopt new technology like any kind of local seminar or training?

A. Yes, it is a good idea but we haven't planned it, we do this case by case. When we get the enquiry we negotiate with suppliers, share best knowledge we have with them. Of course we would like to use first the common platforms like IPPTA meeting. In last meeting our expert had a speech about a very new concept on Tissue machine. So we will continue this. We would like to organise 'Open House' for the customers. We will invite and show them our latest deliveries.   

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