Interview in PaperMart - Mr. Saifee Jani, Jani Sales Pvt Ltd, Mumbai.

You’re Comments on the price rise done by the duplex board manufacturers.

Paper mills have resorted to price increase aggregating about Rs. 5.50 per kg. (Which is roughly 25%) over the period of last 5 to 6 months. Reasons for the increase are (a) Due to steep oil price increase globally; all input costs have gone up such as chemicals, transportation, labor etc., (b) There has been a spurt in price of recycles fiber due to fiber shortage as recycling of fiber is being mandatory in Europe and USA and increased demand from other parts of world. (c) Recently the import cost again gone up due to rupee weakening. Therefore price increase by mills was justifiable.

What has been the overall impact on your business with these frequent increases?

AS a dealer of paper and paperboard, there is a direct impact on our finance as we have to pump in more funds to finance our purchase from the mills which is on cash basis. Mills do not give any credit but we have to extend credit to our customers and we have to incur the additional interest burden on the increased capital requirements. With the increase of about t25% price, our exposure also increased in the market and also due to unexpected price increases customers are delaying payments. Our margins are already squeezed and therefore with every price increase our return on investment is affected directly.

What are your expectations from the mill owners?

We expect that mills understand the situation and either give credit facility or introduce cash discount so that we get reasonable return on our investment as we are unable to increase our margins to the customers due to increased competition. Mills should also consider reducing penal interest burden to our customers. Bigger dealers have bigger exposure with large customers and Mills’ support is required to maintain volume business.

Do you foresee or expect the prices to come down in future?

We do not see any immediate possibility of price reduction. However, since the oil price is now come down, if the government reduces the fuel prices, it will impact the direct cost. Also there is already some softening of secondary fiber cost which will also give some relief to the mills and call for a price reduction, although there will be only a marginal effect due to the rupee becoming weaker.


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