CNBC-TV18 recently interviewed Girish Agarwaal, Director, DB Corp. During the interview, Agarwaal stated that India is a big market for Russian newsprint companies, reported moneycontrol.com.
Below is a transcript of Agarwaal’s interview with CNBC-TV18 as reported by moneycontrol.com.
What is connection of Russia and the newsprint? Does India import from Russia and how has been the rouble devaluation?
Agarwaal’s comment - See what has happened, generally Russian companies are not looking at Indian market in a last couple of years but because of the sanction being imposed to them from the European countries they are now looking at Indian markets. And also India gets the advantage when I import the newsprint from Russia compared to North America because of the marine freight it's cheaper, comparatively lesser distance. So that way India would be happy to get the material of newsprint from Russia and for Russian manufacturers it is a big market which is opening for them now.
What percent of import comes from Russia and how does it compare as a percent of the total supply which we import?
Agarwaal’s comment - It all depends from company to company. For example till last year Russia was negligible but suddenly last two quarters Russia is now improved. Almost 15 percent of our newsprint is coming from Russia and we feel that in the quarters to go ahead it may even increase on that and also overall the newsprint prices have come down by almost USD 40 which was hovering around USD 580 - 600 has come down to USD 540 - 560 and indications are that going forward this may further go down by maybe another USD 20.
Has there been a change then in the newsprint prices in Q3 compared to a quarter ago as well as a year-on-year (Y-o-Y) basis?
Agarwaal’s comment - If I see a year ago we were almost at 37,200 which this quarter looks like we will be at 35,000. So there is a saving of some INR 2,200 per tonne. And also another advantage which has come on the newsprint is the inland freight. Because of the diesel prices going down and the inland freight costs about seven percent in the overall cost of the newsprint. And in this seven percent around 12 percent is the saving because of diesel. So that's also helping us in a way of the overall newsprint prices to come down.
How are margins expected to pan out on the back of this decline in newsprint prices. In Q2 at 25.7%, can it improve from here?
Agarwaal’s comment - See generally speaking every one percent saving in the newsprint cost adds on to one and half percent on my EBITDA. So we feel that in this quarter it should be either flat newsprint cost or should be couple of percentages down. So that advantage will come to us in the EBITDA overall numbers.
Will you be looking to pass on the benefits of lower print prices?
Agarwaal’s comment - Generally as you know newspaper prices are anyway subsidised by advertising. So the paper which may cost me Rs 6-7 a unit, I sell it for INR 3 per unit. So I don't think there is no question of passing on the benefit because we are anyway reducing the subsidy per se.
