Which major factors, according to you will drive the demand for paper in next few years? Considering the fact that the Indian paper industry is highly fragmented, do you foresee consolidation in the paper industry?

We feel that the strong growth in the GDP and rising literacy rate will drive the demand for paper in next few years. Also the resurgence in FMCG sector will augur well for the industry as FMCG packaging also provides an opportunity for the paper industry. Similarly the demand for tissue papers etc. will increase in future due to the growing service industry.

Yes, consolidation is on the cards, especially post WTO with larger imports into the country. However commodity space like printing & writing paper and paperboards are expected to be facing issues of consolidation and not specialty papers.

Who are the other major players in the segments, in which Yash paper operates, say Kraft paper etc?

Yash Papers Ltd. (YPL) chooses to operate in small specialty segments where it can add value. It is the largest player in the low-grammage Kraft segment where it operates today and plans to be the largest in the poster segment where it proposes to expand. The major competitor for present wrapping grades is Star Paper Mills and for the Poster segments is Andhra Paper, BILT and Star.

What is the approximate market size of the Kraft paper and Poster grades market and the company's share therein? Kindly throw some light on the export operations of the company and the potential therein.

Total market size of low grammage kraft paper is approximately around 40000 MT while poster grades market is around 250000 MT. YPL's share in low grammage kraft paper is 40% while we intend to have a 10% share in the poster grades market.

Currently our exports are all around the globe. The major countries are Australia, New Zealand, Africa and Middle East. The present export levels are around 20% of sale and the company targets 40% exports for the upcoming project.

Though the industry is growing at a CAGR of around 6%, most of the players in the recent quarters have witnessed fall in sales, even the volume growth has been stagnant. What reasons do you attribute for the same?

There are significant additional capacities being added by mid sized players in the commodity segment, especially writing/ printing and duplex board. This supply into the market has still not balanced out, however, this seems to be temporary and the demand growth would act as a leveler in coming periods.

Why does the company operate in niche areas rather than popular segment of printing and writing paper that accounts for a larger share of paper production?

The company chooses to be a large player in a niche segment rather than a small player in a large segment. We also feel that specialty industry would experience less volatility on further opening of markets.

The company mainly uses Bagasse as the raw material. Considering the fact that most of the sugar mills have started using Bagasse as alternate fuels and possibility of lesser amount of rainfall that can adversely affect its production, what remedial measures has the company taken in this regard?

There are capacity expansions and new capacity setups in the anvil for the sugar industry. There would be an additional supply of over 70,000 MT per year of bagasse in the surrounding area within the next 2 years. The company can easily substitute bagasse for wheat straw that is available in plenty in the area.

How does the company plan to expend Rs 23.5 crore that it intends to collect from the public offer?

The total cost of the upcoming project is around Rs 85 crore. The balance amount has already been tied up with the bankers. With the funds, the company would set up:

· 70 TPD Specialty Poster paper line.

· 130 TPD integrated pulp line.

· 6 MW captive power unit.

· A Chemical recovery unit.

What percentage of total demand for Kraft paper is met through imports? Who are the major importing countries in this regard?

India is only importing odd lots of low-grammage kraft that get dumped by Canada, Indonesia and China. The lots depend on availability and are not regular.

Most of the companies have increased paper prices in last few months. Has Yash paper also increased their product prices? Is the increase in prices attributable to increasing demand or to offset the rising input costs? Do you intend to increase the prices again in the immediate future?

Yes, the last year has seen a 15% increase in prices from YPL. It is to offset increase in input prices. Yes there should be a price revision in the second quarter.

How does the reduction in import duty on paper affect the prospects of Indian paper industry in general and the company in particular?

The paper industry would be affected due to the reduction in import duty on paper to an extent where the gap between the domestic prices of paper and the landed costs of imports has reduced. The company is in a specialty grade that it exports around the globe already. It should not be majorly affected by imports.

Where do you foresee Yash paper in next three years? What is the topline and bottomline target of the company in the near and far future?

Yash Papers intends to be the largest player for its grades in the country in next three to five years. The topline would be over 90 Crores and bottomline over 15 Crores.

Any message for the shareholder of the company?

The Company has ensured shareholder value by paying regular dividends and posting healthy profits. This is a major step towards the future growth of the Company and we are confident of the support of the present and future shareholders.