Paper mills hope to do well despite high raw material prices

Agro-based paper mills in Punjab are hoping to do well in this financial year, in spite of sharp increase in the prices of raw materials.

According to sources in the industry, raw material prices have risen by 10-12 per cent this year as compared to last year.

At present, in Punjab there are 75-80 paper units that utilise waste paper, wood pulp and agri residue as raw materials. Of those, at present there are 25-30 agro-based paper mills in Punjab (including small, medium and large) which use agricultural residue like wheat straw, kanagrass (sarkanda), etc as raw materials for manufacturing paper.

Shreyans Industries Executive Director and CEO Anil Kumar told Business Standard: "In the last financial year, the crop was not so good; as a result, the raw material prices increased. Last year, wheat straw was priced at Rs 2,700-2,800 per tonne. But now it is priced at Rs 3,100-3,200 per tonne. Similarly, rice husk, which is used in boilers in power generation or for converting water into steam, is available at Rs 2,100-2,200 per tonne, as compared to Rs 1,700-1,800 per tonne last year."

Sources also said that in order to reduce the cost, some of the agro-based units are also utilising waste paper to manufacture paper but their number is quite small.

"In spite of all this we hope to do well in this financial year, because we don't face any problem while passing the rising input cost to the customers," Kumar added.

At present, the per capita consumption is approximately 6 kg per annum in India, which is very poor as compared with corresponding figures of developed countries like the US, Canada and Japan, where it exceeds 250 kg per annum.

So there is great demand in the market. Therefore, it is the demand which will boost the paper industry in Punjab as well as in other parts of India.

However, it might be difficult for the Indian paper industry to compete in the global market because the energy consumption figures of the paper industry in India are 800-1500 kwh per tonne of paper as compared to 400-800 kwh per tonne of paper in European countries.

Earlier, Haryana Governor AR Kidwai had expressed concern while addressing the Indian Pulp and Paper Technical Association conference, which was held in Chandigarh recently.

He said: "India can become the largest producer of paper in the world if the paper mills in the country reduce the cost of production, and bagasse, a waste of sugar mills, is used as raw material for paper production."

He said the cost of energy per unit in India was higher as compared to other developed economies. This is because of diminishing resources of natural conventional energy like coal and significant dependence on the import of crude.

Therefore, it is imperative that immediate steps are taken to reduce specific energy consumption levels. "No industry can afford to be not cost competitive," he added.