PAPCEL A.S.

1. Pulp and Paper is known to be a unique and oldest sector whose needs, demands and dynamics are different in many ways compared to other industries. What is your perception in this regard?

The customer's decision to invest into the paper industry is influenced by different indicators than in other industry branches; each type of industry has its own particularities. When we evaluate the main reasons why the customers buy our equipment: those are often specific technological requirements that do not appear in other industrial branches. Recently, one of the most important technological parameters that customers demand is the energy consumption of the purchased machinery. Requirements on lowering consumption of the raw material necessary for the paper production, e.g. water, power, steam etc., come as a matter of fact. Another essential feature is the whole procedure of primary fiber processing and lowering the amount of fiber in the reject so that the whole paper production process was as efficient and profitable as possible. From the economical point of view, key factor for our customers remains the price, the possibility to get a credit for the project, and last but not least the quality of provided sales and technical services. To get a contract, an essential matter is especially the offer complexity and reference projects.

2. For last 60 years, PAPCEL has been a leading provider of innovative solutions in Pulp and Paper Industry. Would you like to share some insights on the companys growth and expansion in this sector?

Probably the most important thing is the maintaining of personal contact with the customer and gaining the trust in the company abilities to deliver a comprehensive solution for their investment plan. A direct communication during problem solving and total trust between the two teams when complying basic tasks, e.g. during the paper machine construction, are essential. A close contact with the customer is our priority, and naturally customers value an ability of a supplier to offer complex services, i.e. not only to deliver the machinery, but to offer technological consultancy, financial support, being present during the bank meetings etc

3. What are your views on Indian Paper Industry practices? What are the major challenges? What action plan would you like to suggest to Pulp and Paper Industry manufacturers.

In India, there are many exporters not only from Europe but from Asia and America who see it as one of the key and very interesting markets. Those companies which are trying to penetrate this market are attracted mainly by a stable economic situation and a fact that many industrial branches are indicating growth. One of the most significant branches is the paper and pulp processing and producing segment. Possibilities of importing machinery are given historically by the number of paper productions in the country, population and high paper consumption per person. Due to the development of other industrial branches such as food, packaging and chemical industry, there is an assumption of growing paper and cardboard consumption. Limiting for a great deal of European importers is a significant pressure on the pressure prices, i.e. high competitive pressure, especially of the local producers who can offer lower production overheads. A significant factor for European companies might be a merger with local producers. Essential thing is to create one's own sales net. Business success in India depends on a good quality distribution net, e.g. via sales representation, etc.

4. What kind of value added solution you offer to the Pulp and Paper Industry? Your plans for new product developments? What are the opportunities you find in Pulp and Paper Industry?

The goal of PAPCEL is to offer a complex customized solution for each of our customers. That is our added value – to offer complex services that do not include only machinery delivery, but also involve an added value for the customer: a technological know-how, or economical services. Many of our customers are currently using the possibility of technological consultancy, we also offer business plan consultations and feasibility studies of a given project. Our technical development is now focusing especially on challenging the economic aspect of our machines. In the area of individual machine development for a paper machine line, we have aimed on film press and shoe press development. The greatest opportunity in the paper industry branch is for us acquiring new customers and new markets. For instance, India presents a challenge for our company; our goal is to keep on delivering and to get the first project for a paper machine reconstruction.

5. How can you create product differentiation by using IT, What makes you so different from your competitors in terms of developing these products?

Our designing department uses the most recent software for machinery projection and for various technological calculations, e.g. dynamic load, stock flow, etc. We have our own design department and we cooperate with engineering studios. We use software based on 3D modeling – our customers highly appreciate if we present their installations in 3D models.

6. ROI is the first question before finalizing a technology/equipment. Kindly justify the value on investment in Pulp and Paper Industry?

The return on investment is an essential criterion for each investor, or a businessman when deciding whether to invest. That is the case of our greatest projects such as paper machine construction in Russian Federation, where this equals a key criterion of the whole investment. Most of those projects are financed through Czech or local banks. It is not possible to finance a project when you do not know the return on investment, i.e. the moment when you start making money. That is one of essential moments of each business, and our sales department evaluates this carefully when creating a business plan for a business project. It is the most important criterion for the customer.

7. Looking at your company figures to date, you have shown growth every year. What are the reasons for prominent success every time?

The close contact with customers is essential. We are successful in gaining their trust in our delivery abilities and the customers keep coming back to us. In last five years, we have managed to win big investment projects with a financial volume exceeding 20 mil. Euros. We diversify our revenues; we are not dependent only on sales in one market. We have a wide net of sales representatives and because of that we are able to conclude interesting contracts in countries outside Russian Federation, we have been successful in Turkey, Egypt, Belarus, etc.

8. Emerging markets like India & other Asian regions are currently witnessing faster maturity in Pulp and Paper Industry towards adoption of IT driven systems and sophisticated technology applications. How do you foresee opportunities in such markets and what are your strategies to expand business in these markets?

It is essential to offer to the customer a quality technological solution to their problem. The key to success is a solution that is innovative and well-developed. Such a solution is for many customers one of the most important reasons for the purchase. It is very problematic to break through in Asian countries and in India with a high-quality technical solution for a reasonable price. There is a high pressure from the part of investors who compare the machinery purchase prices with local producers and that presents often an insuperable obstacle for the European suppliers, and also a main reason for their inability to assert their offers. Our goal is to gradually find a solution and to combine the production with the local Indian market. That is one of possible foundations to build our success on.

9. Pulp and Paper Technology (www.pulpandpaper-technology.com ) is a connecting point for buyers and suppliers across the global Pulp and Paper industry. Used daily as means of creating partnerships and as a point of reference by professionals within the pulp and paper industry, this comprehensive resource supplies the latest news releases, detailed information on industry projects, event information and careful segregation of products and services. What do you think about our websitewww.pulpandpaper-technology.com which promotes & brands Pulp and Paper industry today on such a wide scale?

Your website is full of information and recent data from the field of the paper industry. It is one of the best-maintained websites regarding the extent and depth of presented information. It helped us in the past to spread the awareness about our company, especially in Asian and Middle Eastern countries. It is good choice for promotion of references, company news, etc.