Monday, February 11, 2013

Its overseas expansion

Satobumi Taguchi, Deputy General Manager (Paper Trade Dept.), Overseas Division, Nippon Paper Group, Japan, talks to B&E’s Gyanendra Kumar Kashyap & Ashutosh Harbola about Nippon’s vision 2015 and its overseas expansion.

B&E: You were mulling to buy an Australian firm. Has the deal been materialised?
(ST): Australia has a commercial publishing market with sustainable growth and low domestic productiom ratio. We have acquired the firm (Paper Australia from PaperlinX) for $459.98 million. While the completion of the deal provides us an opportunity to expand our business into Australia, we will certainly plan to leverage from the deal to create a global presence.

B&E: You import 9% of soft wood and 60% of hard wood from different countries and a big chunk comes from Australia. Don’t you think Nippon is too much relying on Australia?
(ST): As far as Nippon is concerned, about 14% of the total supplies were met from our own plant. Furhter, I feel there is no such relation of dependence on any specific country. Buying is a different factor, but due to our presence in different categories like pulp manufacturing, paper mills etc, we have a wider pool to choose from. Australia is a big supplier and we have great relations with that country. Also, the deepening relationship with PaperlinX will contribute to our overseas expansion in the near future.

B&E: The demand of pulp supply is shifting from North America and Europe to Asia. Don’t you think China is coming up as a big competitor?
(ST): So far as the Asian market is concerned, we export to Singapore and other Asian countries. This is a part of our strategy and precisely a weak-link as far as China is concerned.

B&E: Of late, prices of soft wood and hard wood have risen to $1,000 and $850 per tonne respectively. Don’t you think these high purchasing cost is affecting your profit margins?
(ST): It’s not the soft wood or hard wood, prices of other raw materials and shipping costs have also risen significantly. Be it fuel or anything. But, what gives us an advantage is that we are not only in papers, but also into manufacturing pulp. That’s why our profit margins are not that affected.

B&E: The paper and pulp industry can get into bio-fuels that could solve a lot of power needs and even economical also. Your comments?
(ST): I think this is the next big thing a paper and pulp industry should get into. In fact, more and more renewable energy sources can be created and as our responsibility to the nature, we also need to pay attention to that point.

B&E: Have you ever thought on issues like recycling?
(ST): We are already recycling our paper. we recycle almost 100% of our newspapers and 50% of magazine paper as we understand that these are limited resources which can be conserved by recycling.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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