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Price Rise: Thoughts that can go across

Price Rise: Thoughts that can go across

Price is the crucial part of any business. A little mismatch can upset any business and it affects everyone down the line specially the middle level people who actually finishes the product and supply it to the end consumer. Price rise happens in the paper industry quite often due to some unforeseen reasons but its affect can be seen on everyone. The big converters may absorb the effect to some extent but what about the 1000’s of small converters they are the one who actually feels the brunt of these unforeseen price fluctuations. This survey will help us to understand the thought flow of the converters in lieu of these unforeseen price rises and certainly provide with the varied solutions to minimize the effect of these price fluctuations.

himanshu

Mr. Himanshu Gupta

Joint Managing Director

S. Chand & Co. Ltd.

(New Delhi)

Problem faced with respect to price fluctuation and how you overcome this situation?

The customer faces the problem regarding fluctuation of paper price. At S. Chand, we negotiate on regular basis with the 3-4 paper mills and usually we do the annual contracts with the paper mills. After dealing 3-4 big paper mills we every time keep the watch on the prices.

What are the reasons for this Price Fluctuation?

There are multi reasons for the price fluctuation in the industry, some of them mentioned below:

a. Fluctuations in the cost of raw material.

b. Due to import policy for pulp of the Government.

c. Paper demand and supply scenario in the domestic market and in the international market.

d. Due to natural calamity in regard to import of paper pulp for example earthquake incidents in Chile.

Can this problem be tackled (YES/No)? Suggest some Remedial Measures.

It is not easy to tackle this problem.

Grades used by us

Maplitho Paper for Offset Printing varying from 50 GSM to 90 GSM

Does customer accepts / support in the price fluctuations?

NO

n sarmah

Mr. N. Sarmah

Proprietor,

Saraighat Offset Press

(Guwahati, Assam)

Problem faced with respect to price fluctuation and how you overcome this situation?

The problems include decrease in profit margins and increase in price of other related goods which makes it difficult to convince the customers about the price rise.

What are the reasons for this Price Fluctuation?

The reasons behind this price fluctuation are the various government policies and taxes and even the paper industry main motive is to earn money. Before when the paper used to come from aboard the price were reasonable but after the government changed its policies, the paper industries has increased their prices and ultimately the small converters and the customers are suffering from the rise in price.

Can this problem be tackled (YES/No)? Suggest some Remedial Measures.

Yes, this problem can be tackled, the government and the paper industry should agree on a price which is reasonable and will be stable. Also the paper industry main aim should be to have a reasonable and stable price rather than earning profit.

Grades used by us

Gloss & Matt Art paper, Maplitho, Cream wove

Does customer accepts / support in the price fluctuations?

NO

Rajender

Mr. Rajender P Ghansela

General Manager (Production)

McGraw-Hill Education (India) Pvt. Ltd.

(Noida, Uttar Pradesh)

Problem faced with respect to price fluctuation and how you overcome this situation?

Due to regular hike in paper price we are facing lots of problems in term of stable prices and availability of paper, as in text books paper forms 60-65% of the cost. Unbudgeted price hikes, impacts cost of production, which leads to sacrifice in margin, compromise on quality etc. By increasing our product price we have a brunt on our unit sales. We overcome with this situation by using customized paper, reducing paper wastage and by increasing price of our books.

What are the reasons for this Price Fluctuation?

It is basically due to demand and supply situation in market. Various mills are exporting paper in large quantity which impact prices and availability in domestic market. Also there was shortage of pulp in international market due to Chile situation. We expect paper industry to provide clear roadmap of tackling paper pricing and availability in market.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Yes, we think this problem can be tackled by increasing production capacity of mills; government should introduce some incentive schemes for paper industry.

Grades used by us

Maplitho and Offset Paper in 58/60/70/80 GSM

Does customer accepts/support in the price fluctuations?

YES

tushar

Mr. Tushar Dhote

Managing Director

Dhote Offset Technokrafts Pvt. Ltd.

(Mumbai, Maharashtra)

Problem faced with respect to price fluctuation and how you overcome this situation?

It affects profitability and can lead us to an uncomfortable situation with clients to whom we have already quoted price and cannot ask for a sudden price change.

What are the reasons for this Price Fluctuation?

There can be a lot of reasons for price increase such as basic raw material required in the process of manufacturing, Government duties, fuel prices, market indicators such as sensex and due to upgradation of equipment etc.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

YES, it can be curtailed through proper communication and advance notification through respective associations. Some consumable manufacturers have signed a MOU which prevents them from increasing the price unless the raw material price is affected.

Grades used by us

Ballarpur, Khanna, JK, Century and Imported Art Paper

Does customer accepts/support in the price fluctuations?

YES

pramod

Mr. Pramod Borkar

Managing Director

Borkar Packaging Pvt. Ltd.

(Goa)

Problem faced with respect to price fluctuation and how you overcome this situation?

Margins get affected and there are immediate repercussions on the cash flow. Another worry is loss of market share. To overcome this situation, we continue putting pressure on the existing clients for a price rise while ensuring that business is not lost. Further we focus on niche segments which are not crowded by converters because of advanced technology required. We also to try take existing packaging up the value chain in terms of both, aesthetics & technology.

What are the reasons for this Price Fluctuation?

Reasons can be of both natures; partially genuine and partially market opportunity encashment. It’s a growing country which makes it fairly unpredictable as well. The requirement for board is showing a healthy 2 digit percentile annual growth. In terms of capacities added, sometimes there is a mismatch which also tends to push the prices up.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

• One way commonly suggested is to have a body of converters than can present their problems to the industry in a collective manner.

• Encourage new mills so that competition heats up.

• Converters should look at other markets like exports with higher margins.

Grades used by us

Duplex Board, Virgin Board, FBB and Safire/Ultima, Kraft Paper

Does customer accepts/support in the price fluctuations?

YES

pradeep

Mr. Pradeep Jain

Managing Director

Vidya Prakashan Mandir Ltd.

(Meerut, Uttar Pradesh)

Problem faced with respect to price fluctuation and how you overcome this situation?

If the fluctuation is such that it can be absorbed then the prices are kept on the same level. If the fluctuations are steep then it has to be passed on to the consumer. The price change is applicable from the fresh batches.

What are the reasons for this Price Fluctuation?

The input costs of many variables are responsible for the price fluctuation. It can be anything from raw material available procurement, transportations, front expenses, taxation and even government policies.

Can this problem be tackled (YES/No)? Suggest some Remedial Measures.

The remedy can to be keep prices remain stationary for a specified period.

Grades used by us

All grades of A, B & C Quality paper

Does customer accepts/support in the price fluctuations?

Yes

namit

Mr. Namit Lodha

Director

Lodha Offset Limited

(Jodhpur, Rajasthan)

Problem faced with respect to price fluctuation and how you overcome this situation?

The unusual price fluctuations have resulted into losses for almost all manufacturers as the end customers normally do not digest the above fact. Moreover, paper prices have been changing every now and then, which means that you take a price quote of some paper today and by the time you are ready to place an order, you may be subjected to a revised price due to unforeseen reasons, which directly affects the on time delivery to the customer.

What are the reasons for this Price Fluctuation?

• Global pulp shortage

• Unstable raw material prices

• Seasonal demand and supply gap

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Yes.

• The only way out to this situation seems is to enter into mutual commitment and agreement with your suppliers where prices remain valid for a certain period of time and this should happen in the entire supply chain.

• The second solution seems is to keep sufficient stocks of paper for few months production so that, increasing paper prices do not hit you immediately, though it would require an handsome monetary investment.

Grades used by us

Writing & Printing Paper, Duplex Board

Does customer accepts/support in the price fluctuations?

NO

sumit

Mr. Sumit Khanna

CEO,

Beeta Tissues Pvt. Ltd.

(New Delhi)

Problem faced with respect to price fluctuation and how you overcome this situation?

I feel price fluctuation always reduces credibility of suppliers and decreases the market sentiments. As a result the converters get insecure and confused leading to decrease in purchase. “GO SLOW-wait and watch”, is my formula to overcome the situation.

What are the reasons for this Price Fluctuation?

Demand and supply gap (high) at a global level ,inconsistent supply of raw material could be the possible reasons.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Can’t say?

Grades used by us

Tissue – Napkin, Toilet, Facial, Kitchen

Does customer accepts/support in the price fluctuations?

NO

chockalingam

Mr. R.Chockalingam

Chairman

Srinivas Fine Arts Pvt. Ltd.

(Sivakasi, Tamilnadu)

Problem faced with respect to price fluctuation and how you overcome this situation?

Once the print order is booked it is very difficult to get revision in prices, but the paper mills always charge the prices prevailing on the date of dispatch. The printer can demand better price by rending value added services, quality supplies, timely deliveries, cost effective measures, creativity etc which will enable the printer to retain the customer, who will be happy to absorb the price increase which is beyond the control of the printers. The printers skill set should be to first retain the customers and pricing issues should be given second priority.

What are the reasons for this Price Fluctuation?

• Price changes in paper pulp

• Dollar appreciation

• Freight increase

• Power tariff increase

• Demand supply gap.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Yes,

• To add certain percentage in cost of paper in anticipation while booking the print order.

• To keep stock of paper for at least 3 to 4 months requirement and load the interest cost to the print buyers.

This is also subject to risk of locking of funds, idle inventory and quality deterioration.

• To quote prices linked with prevailing rate of paper and the price will change automatically whenever paper price increases.

• Federation of Master Printers should represent strongly and coordinate with the mills regulate the paper prices.

• Forward contract system should be introduced like Cotton, Sugar etc.

Grades used by us

Coated / Uncoated Paper & Paper Boards, Fusion Boards

Does customer accepts/support in the price fluctuations?

NO

vijay

Mr. Vijay Kumar

Director

MGK Printing Works Pvt. Ltd.

(New Delhi)

Problem faced with respect to price fluctuation and how you overcome this situation?

Prices offered to the customers are difficult to stabilize. To counter this we stock the inventories, increase our sales target in order to bear the loss due to price fluctuation.

What are the reasons for this Price Fluctuation?

• Increase in the prices of the raw material

• Government policies & taxation structures.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

YES, it can be minimized through proper flow of communication and transparency.

Grades used by us

Art Paper, Chromo Paper & Duplex Board

Does customer accepts/support in the price fluctuations?

YES

Mr. Nikhil Mittal

Director

Sona Printers Pvt. Ltd.

(New Delhi)

Problem faced with respect to price fluctuation and how you overcome this situation?

As a printer a lot of problem is faced with long term clients who fix rates annually. Many others tend to hold orders for some time to see if the rates will come down leading to delays and more deadline pressures. As, a paper stationery converters, heavy rate fluctuations lead to fluctuating MRP’s which is not a very healthy scenario with the consumer market.

What are the reasons for this Price Fluctuation?

International pulp rates are used as a tool to manipulate paper prices in India.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Yes, to a limit, like long term agreements with the mills will help.

Grades used by us

Maplitho, Art Paper, SBS, and Duplex Boards

Does customer accepts/support in the price fluctuations?

NO

rohit

Mr. Rohit Kuthari

Director

Antarctica Ltd.

(Kolkata, West Bengal)

Problem faced with respect to price fluctuation and how you overcome this situation?

Irrational and sudden price increase does affect one and all. We had to supply finished products at quoted prices and suffer loss. We were forced to look at the option of importing paper / paper board.

What are the reasons for this Price Fluctuation?

• Gap between supply and demand

• Mills have formed a cartel; all of them decide to go for price increase together.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

Yes, allow duty-free imports immediately till paper mills expand capacity and improve quality. Printed books are allowed duty-free imports. Glazed News Prints are allowed duty-free imports, export is suffering on account of huge increase in price of duplex boards and kraft papers 30 – 40%.

Grades used by us

Coated Duplex, Coated / Uncoated Papers

Does customer accepts/support in the price fluctuations?

NO

vishwanathan

Mr. T.S. Viswanathan

Partner

Subramaniam Brothers Pvt. Ltd.

(Chennai, Tamilnadu)

Problem faced with respect to price fluctuation and how you overcome this situation?

The fundamental fear due to price rise is loss of orders due to increase in prices. As, there is always a big time lag for the next suitable order to get generated, the only thing is, to what extent we can arrest reduction in our profitability. Only after effecting two to three supplies at old prices we slowly negotiate with our customers and bring to them the price increase matter. The customers would also slowly realize that price increase has taken place and if they even go to another converter the issue would be the same.

What are the reasons for this Price Fluctuation?

The main factor is cost push inflation. So, when the government increases the prices for coal, oil, forest timber or water charges then paper mills do increase correspondingly. Internationally the prices of paper also are no way coming down. Environmental factors & natural disasters also affect the prices.

Can this problem be tackled (YES/NO)? Suggest some Remedial Measures.

I would suggest that as far as paper converters are concerned they should always anticipate an 8% increase in paper prices. My only request to the paper mills is that they should increase the price of paper by this percentage on 1st April every year. Thereafter they should not increase for that year. Haphazard increases would lead to lots of confusions and also decrease in production and productivity.

Grades used by us

High Bright Maplitho, Superfine, Offset Printing High Quality in Reels about 90%, Coated Paper and Duplex Board about 10%.

As stated our customer does not accept price fluctuations?

YES

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