Rise in cost of newsprint will force papers to reduce pages

Domestic newsprint prices have surged, registering a 25-30% price hike. Publishers say they might be forced to initiate some balance-out measures, such as increasing the cover-price of newspapers, reducing the number of pages and hiking ad-rates. According to the players, newsprint accounts for 35-50% of the total cost of newspaper companies. Imported newsprint price has also seen a marginal increase of almost 5%. With the decrease in the rate gap between imported and domestic newsprint, publishers are now moving towards imported newsprint, which has led to a setback for domestic newsprint mills.

K.K. Goenka, MD, Prabhat Khabar, said that the increase in raw material prices has led to a rise in production cost. "Earlier, the difference between domestic and imported newsprint was more than Rs 5 per kg. Now we are gradually shifting towards the imported newsprint, as the price gap has shrunk to Rs 2 per kg. On the consumption front, we are reducing the number of pages to cover the losses. Some of the Indian mills manufacturing 'B' quality papers are wrapping up their businesses. However, 'A' quality domestic newsprint is still competing with imported newsprint. As per market the situation, newspapers are increasing cover prices of newspapers," said Goenka. Harivansh, chief editor of Prabhat Khabar added, "Smaller groups like ours will bear the brunt as this hike will have an adverse impact on the profits. Also, neither the government nor the private players are willing to increase the ad revenue share."

Publishers explained that availability of wastepaper, which is required for production of newsprint, in the West has reduced by 50% and in Europe by 20-30%. This shortage has had an adverse impact on the prices of raw material, thus further affecting newsprint prices in India. "This has adversely affected the language and Hindi dailies as domestic newsprint was a feasible product for them," said Sunil Poddar, MD, Poddar Global.

Since October 2010, Indian mills have increased newsprint prices by four to five times. Publishers believe that there will be an upward pressure on prices also because of loss of supply from Japan mills.

"The hike is indicative of certain parameters as prices vary by roll size, supplier, mill, opacity, GSM (weight of the paper) etc," said Mitrajit Bhattacharya, president-publisher of Chitralekha Group.

Other factors responsible for the hike include rise in crude oil prices, hike in freight charges (for import of newsprint) and the mismatch of demand and supply ratio.

24 April 2011 — The Sunday Guardian.