Economy

As raw-material prices bite, paper mills in Maharashtra, Gujarat teeter on the edge

Our Bureau Mumbai | Updated on January 12, 2018 Published on February 03, 2017

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125 mills may have to shut down; 40,000 jobs at stake

More than 125 craft paper mills in Maharashtra and Gujarat are on the verge of closure due to the sharp spike in raw material prices.

Paper mills in India use imported waste paper as raw material for recycling. However, due to the increase in consumption of waste paper in the overseas market, prices have gone up by 35 per cent for Indian companies.

As a result, paper mills lose ₹6 per kg of paper sold. If this deficit is not covered, paper mills in Gujarat and Maharashtra, with an annual turnover of ₹12,000 crore, will be forced to close down, said Sunil Agarwal, President of the Gujarat Paper Mills Association.

Paper mills import about 20 lakh tonnes of waste paper per annum.

However, the supply of waste paper to India and China has been hit, with US paper mills using waste paper for re-cycling instead of virgin fibre, he said.

Mills in China, he said, have raised prices by ₹7,000 per tonne in the last 2-3 months, while prices in the US have gone up by ₹4,000 a tonne and may further increase by ₹3,500 a tonne in the near future. Both countries can afford to buy their raw material by paying 35 per cent more.

For Indian companies, the import cost has gone up by another 12 per cent as the rupee has depreciated from 61 to 68.50 against the dollar in the last 3-4 years.

Prakash Rathi, President, Maharashtra Paper Mills Association, said that in the last three years, paper mills in India have had to reduce prices by 12 to 15 per cent despite rising costs, including that of coal, local waste, paper, chemicals, wages and power.

With paper mills not even recovering the cost, 125 mills face closure and 40,000 jobs could be lost in the near future, he said.

Published on February 03, 2017
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