See newsprint prices dropping by 25%: HT Media

Rajiv Verma, CEO of HT Media, says, “I expect prices to come down by at least 25% — between 20%–30% — but there will be some time before you see this kicking in because of the large inventories,” he said.
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Dec 12, 2008, 12.42 PM | Source: CNBC-TV18

See newsprint prices dropping by 25%: HT Media

Rajiv Verma, CEO of HT Media, says, “I expect prices to come down by at least 25% — between 20%–30% — but there will be some time before you see this kicking in because of the large inventories,” he said.

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See newsprint prices dropping by 25%: HT Media

Rajiv Verma, CEO of HT Media, says, “I expect prices to come down by at least 25% — between 20%–30% — but there will be some time before you see this kicking in because of the large inventories,” he said.

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Rajiv Verma, CEO, HT Media

Newsprint prices had seen an upsurge for couple of months, but print media houses are beginning to believe they have peaked out and the situation is becoming more favourable now. Rajiv Verma, CEO of HT Media , giving his perspective, says, “I expect prices to come down by at least 25% — between 20%–30% — but there will be some time before you see this kicking in because of the large inventories,” he said.

 

On how the slowdown would impact the company, Verma said, “We are trying to see what other sectors which are holding, which are the sectors that are going to see slowdown.” He added,” Some sectors like education, which are completely insulated by the market fluctuation, and elections, will be helping the environment. However, right now, it’s very uncertain to give a fixed picture on what kind of slowdown we would expect in pricing.”

 

Here is a verbatim transcript of Rajiv Verma’s exclusive interview on CNBC-TV18. Also watch the accompanying video.

 

Q: How will your margins pan out in the second half of financial year 2009 vis-ΰ-vis the first half? Not just newsprint prices, fuel charges also are lower. Do you see a significant fall in your costs? A world, also, on your margin front — how would you expect ad rates to pan out?

 

A: The way we see the future panning out, we are going through some very uncertain times. This kind of turbulence has not been seen in the market since the past several decades, therefore it’s difficult to say how things are going to pan out. As far as advertisers are concerned, we don’t depend on one–two customers but we depend on lots of customers who come together and ultimately make our customer base.

 

So the question is that our readers are going to stay with us but our advertisers and what decision they are going to make in the coming few quarters is going to determine where the margins go. About that, there is lot of uncertainty right now.

 

Q: Have you already dropped ad rates? What is the expected fall and what is the fall that already had to happen, both for advertising volumes and advertising pricing?

 

A: As far as advertising volumes are concerned, there is an amount of slowdown, which is visible. That, however, got, to an extent, balanced by the fact that there was some amount of election spending, which will continue into the quarter or two to come depending on when the general elections get announced. Though, on the whole, you are going to see some amount of slowdown in spending, which will lead to volume reduction in advertising.

 

While there is a slackening of commodity cost that has happened across all commodities, newsprint has been a bit slow to react given the fact that only few players operate in the market and they are able to decide the pricing for a particular market at which they would like to sell.

 

My view is that we are going to see some slackening happening in that and prices will come down.

 

Q: By how much would you estimate prices to come down?

 

A: A large part of newsprint is imported. Therefore, there is a long pipeline, there is a lot of shipment on the sea, and you work with long leave time and large inventories. I expect prices to come down by at least 25% — between 20%–30% — but there will be some time before you see this kicking in because of the large inventories.

 

Q: Likewise, can you give us a number on your revenue picture as well since you said both volume and pricing will take a hit? What kind of revenue slowdown can you see in the second half?

 

A: It is very hard to say because we are in very uncertain times. I don’t think anyone can make a guess — we are trying to see what other sectors which are holding, which are the sectors that are going to see slowdown. Some sectors like education, which are completely insulated by the market fluctuation, and elections, will be helping the environment. However, right now, it’s very uncertain to give a fixed picture on what kind of slowdown we would expect in pricing.

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See newsprint prices dropping by 25%: HT Media
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