Jan 12, 2017 03:25 PM IST | Source: CNBC-TV18

Expect margin pressure to ease in next few months: Star Paper

In an interview to CNBC-TV18, GP Goenka, Chairman of Star Paper Mills spoke about the latest happenings in his company and the sector.

In an interview to CNBC-TV18, GP Goenka, Chairman of Star Paper Mills spoke about the latest happenings in his company and the sector.

Below is the transcript of GP Goenka’s interview to Reema Tendulkar and Prashant Nair on CNBC-TV18.

Prashant: Could you talk to us a little bit of what, if any, the impact of demonetisation has been on your business?

A: Our sales have not been affected as of now. We have problems vis-à-vis our raw material and energy costs, but other than that, we have had no problems.

Prashant: So, you are saying raw materials and energy costs. Could you explain that a little bit? What do you mean? To what degree have you faced problems?

A: The energy costs of coal and furnace oil have both gone up fairly substantially, partly because of international prices. So far as raw material is concerned, it is based on availability and based on the crop of the farmers, etc. So, it has gone up reasonably substantially.

Reema: Were you able to pass on the higher cost to your clients? Have paper prices gone up in response to increased costs?

A: Only very marginally. We have tried to increase prices from January. I do not know whether market will take it, but as of now, we have increased some prices for some of our products.

Reema: So, on a blended basis, what would have been the increase in the prices of your output products?

A: We will wait for the implementation. Some of our peers have not increased prices, we have, because we do not have any stock, so we can afford to increase prices a bit.

Prashant: With higher raw material costs and only some margin increase in end output, should we expect some weakness in your overall margins? And if possible, could you define the extent to which we could see that?

A: There is a margin pressure, most definitely, but we hope over the next month or so, we should be able to recoup most of it.

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