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Star Paper Mills


Star Paper Mills operates in the paper/paper boards industry supplying to reputed clientele such as HUL, Pearson Education and other major publishers.

The company reported reasonably stable revenues but declining profits over the last few years – reporting operating losses on revenues of about 250cr in the last financial year.  It operated with a moderate debt load.

The business suffers from general wood supply shrinkage and consequent cost increases.  Players in the paper industry generally lack pricing power, thereby suffering shrinkages in margins on cost increases.  Moreover, the industry has added substantial capacity in the last year, which is not fully absorbed yet.  Further, it is also exposed to increased imports as a result of overseas players unable to sell in their own slowing markets and power/fuel price increases.

Operating in a cyclical industry, high interest rates have a double impact on the business by slowing down demand as well as increasing capital expenditure costs.

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