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“Paper prices in the past (pre lockdown) were much higher and printers were viable then so they ought to be viable now”- Madhukar Mishra

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Exclusive Interview of Mr. Madhukar Mishra, Managing Director- Star Paper Mills

“Paper prices in the past (pre lockdown) were much higher and printers were viable then so they ought to be viable now”-  Madhukar Mishra

Completely stop the import of Waste Papers; it will give a tremendous boost to local recycling

17th March 2021 | The Pulp and Paper Times:

Star Paper Mills Limited established in 1938, is an integrated Pulp and Paper Mill. It produces a wide range of Industrial, Packaging and Cultural Papers catering to almost all segments of the Consumers. Star has a distribution network throughout the Country. The Pulp and Paper Times visits Star Paper Mills and meets Mr. Madhukar Mishra, Managing Director- Star Paper Mills. to discuss the various paper industry issues. Here is his views:

Q.The Covid pandemic has hanged up the market dynamics totally; Paper mills are on the line of product diversification. Paper mills of Writing & Printing mfg. are shifting on Kraft paper production. How does Star Paper evaluate this scenario? Will this trend be sustained for a longer time?

The current situation is a transient phenomenon due to poor offtake of Writing & Printing grades. Once the Schools and Colleges will be fully operational, the Writing & Printing demand will be restored and Mills will be back to normal product mix. As far as, Star is concerned, Star brand has been synonymus with high quality Kraft for decades. We have introduced some new and special grades in this segment.

Q. After being invested a lot of money in the capacity build-up, Research & Development and quality standards, still lots of branded and signature paper are being imported to India for use in various printing applications, where are we lacking in global competition?

The Indian Paper Industry lacks cost competitiveness due to higher domestic wood and energy prices. Paper, being a capital intensive industry, has also suffered on account of higher domestic interest rates. There are also some niche products, where volumes do not justify local manufacture, such products will contiue to be imported.

Q. China, as a policy matter, has completely stopped deforestation. This has resulted in the rise of imports of pulp and paper, will the price of a white paper surge in the future in a continuous manner? 

China is a major player and its decisions obiviously have a significant effect. While there may be temporary imbalances, paper prices by and large move in sync with pulp. So if Pulp prices stay up, Paper prices are bound to increase.

Q. The Printing industry says that the credit period from the dealer has reduced drastically. Every second day, the rates of paper are rising. The paper mills have orders in their hands, How you see this situation, up to what extent do you support this claim of printers?

We are not privy to the terms between printing industry and dealers. As far as we are concerned, our credit terms have remained same over the last several years.

Q. The printing industry has alleged that Paper mills are citing various reasons such as fewer imports due to restrictions on China. Also, the European mills are producing less; the availability of containers as well as logistics and power costs are impacting the final pricing. The printing industry is under the pressure of viability phobia. How you justify this allegation?

In the aftermath of lockdown, paper prices dropped to unbelievelable and unviably levels due to lack of demand and intense competition. There is some recovery now and volumes are stabilising as for viability of printing. Paper prices in the past (pre lockdown) were much higher and printers were viable then so they ought to be viable now. I must also mention that Paper Mills are also facing brunt of input price increase due to recent hike in caustic and other chemicals, as well as imported coal etc.

                     

Q. Please Star Paper mill’s expansion or capacity build-up plan if any in the future?

As of now, the focus is on stabilising & regaining pre Covid levels. Once this phase is over, a fresh plan will be formulated.

Q. Import of paper in post lockdown months has significantly dropped. Do you think this is a market opportunity for the paper mills to escalate the price of paper? Please explain.

I think import of Paper has dropped because there is reduction in overall demand. Paper Mills are not operating at full capacity and have acummulated stocks. Any price escalation is only a correction of earlier excessive drop and not due to imports.

Q. How much growth do you see in the Writing & Printing segment in 2021?

In this scenerio, If industry is able to achieve pre lockdown volumes, it will be a good development. Demand from education segment is not yet in full swing. Many other user segments are also still to reach pre-lockdown levels.

Q. When will you predict the downtrend in the price of W & P, coated and uncoated paper in 2021?

As we have mentioned earlier, the global pulp prices have a major impact and it is difficult to predict policy responses of major players like China. But if the global pulp prices cool down, prices of all grades of paper will naturally follow suit.

Q. Indian Paper Mills are exporting the paper at a marginal profit just to cover up their cost of paper making. Because of Excess finished paper export, India is heading towards the fibre deficiency in the context of Higher Imported Waste Paper Price (315 USD/ MT). Don't you think, Indian Paper Mills should stop the paper export just save the local recycling system, paper conversion industry & also itself from producing costly paper. Please share your views.

I personally believe that like China, India should also completely stop import of Waste Papers. If we are concerned about the environment, we should also not become a dumping ground for other countries' trash.

I believe if the import of waste paper were to be completely stopped, it will give a tremendous boost to local recycling, which is only around 35% as compared to 70-80% in many developed countries. It will also lead to creation of many job opportunities in local recycling. Livelihood of multitudes engaged in recycling is also important and better prices provides an economic incentive to people active in recycling field.


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