In a CNBC-TV18 interview, GP Goenka, Chairman, Star Paper Mills spoke about the latest happenings in his company and sector.
Below is the verbatim transcript of the interview.
Ekta: Some time ago, there was some concerns that demonetisation would impact the paper industry in terms of orders, etc. It has been a few months since demonetisation has been done. Your sense in terms of whether business has bounced back to exactly what it was pre-November 8?
A: I would say so, yes. All profits are about the same, sometimes in a month it was slightly up or slightly down. But, surely the demonetisation impact seems to have disappeared.
Ekta: Can you tell us, broadly in a sense, what kind of volumes are you doing or what is the amount that you are servicing in terms of orders as compared to October?
A: Exactly the same volume. As I said, it is varying between 5 percent plus-minus.
Ekta: So, what is the volume growth right now, not alluding to Q3 specifically, but what you have done in FY17 on an average?
A: It is averaging just over 6,000 tonnes and we seem to be holding steady on that number. We have been concentrating more in terms of quality, in terms of the value of our product. That is what we have been concentrating more rather than on the volume.
Ekta: What about capacity utilisation right now? Can you give us a sense in terms of what kind of capacity utilisation you have?
A: 110 percent.
Ekta: So then there would be need to expand capacity?
A: That is a very expensive proposition. The next phase of our expansion is going to be predominantly concentrating on plugging the loopholes. There are certain areas, where we are not as savvy as some others are, be it in terms of power or some value added products and that is what we are now concentrating. Our expansion will be based in these areas.
Ekta: That brings me to the point about your margins because Q3, you had seen a drastic improvement in margins on a year-on-year basis, 20 versus 11 percent. If you are saying that there is scope for efficiency in the company, do you think there could be further improvement in your margins?
A: As and when we implement these proposals, yes.
Ekta: So, what is sustainable?
A: It also depends on the supply-demand situation in the market. Currently, there is an advantage, which we are extracting for one or two major units being closed. So, there is hidden advantage. I cannot say that we are not benefiting out of their misfortune. But, certainly, our efficiencies have improved, our product is better. So, a combination of the two is helping these units.
Prashant: I was looking at trades which have happened in the market over the last many days, this month actually. There seems to be selling almost every other day from Punjab National Bank. I could look up about six lakh odd shares or so.
A: It is their call, they were encashing on their money. It is their treasury operation, so it has got nothing to do with us.
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