Paper prices should remain stable for rest of the year

TRADE TALK/ RR Vederah

The paper industry is on an expansion mode. Demand is rising and prices are also increasing. With all these, companies are posting better revenues and profits.

Ajay Modi speaks to R R Vederah, managing director of Ballarpur industries (Bilt), the country's biggest paper producer, and former president of the Indian Paper Manufacturers' Association, to get a clear picture of the sector.

Do you think rising paper prices are contributing to inflation?

I don't think the increase in paper prices has in any way contributed to inflation. The industry has hiked prices by about Rs 1000-1500 a tonne in the current financial year, which is about 3-4 per cent hike.

Will the country see an increase in paper imports as domestic demand may outstrip production?

Demand will exceed production in the coming years. Moreover, with the customs duty coming down to the Association of South East Asian Nations (Asean) levels, imports are bound to rise.

How will imports affect the domestic producers?

The Indian paper industry, pre-empting challenges from imports, is taking steps to improve quality and productivity. The industry is trying to ensure the imported paper doesn't have a quality edge.

Why are paper prices being hiked so frequently?

The industry is grappling with the rise in prices of raw materials in recent times. Over the last one year, hardwood pulp prices have moved from $525 to $625 per tonne. In such a scenario, increasing prices becomes necessary.

How is the industry coping with the raw material shortage in the country?

The industry is procuring about 6 million tonne of wood from farm forestry operations. We will continue to do so. Besides this, we have proposed to the government a multi-stake partnership programme that entails a tripartite association between the landowner, the land user and the promoter of plantation. Under this policy, the land holding size will be in the range of 5-50 hectares and it will be given on lease for a period of 30 years through a competitive bidding process.

Is the industry planning more price hikes?

Prices should remain stable for the rest of the financial year. Most companies have already increased prices 4-5 times this year.