Rs 1500 cr box industry in East India under cost pressure; EICMA calls for strike on May 2-3
Updated: Apr 26, 2014 04:11:03pm
Kolkata, Apr 26 (KNN) Reeling under tremendous pressure due to rising input costs and the industry's failure to obtain suitable prices, the Rs 1500 crore corrugated box industry in Eastern has called for a protest closure on May 2 and 3 here to inform the public about the crisis in the industry.
The major buyers for corrugated boxes are FMCG companies followed by Pharmaceuticals, white goods, textiles and engineering product manufacturers.
"Eastern India Corrugated Box Manufacturers’ Association (EICMA) has been appealing for a 15-20 per cent hike in pricing due to the fact that – In the last three or four months, paper mills have raised the prices of Kraft Paper; the main raw material for the industry - by Rs 2,000-4,000 per tonne; There has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, power tariff and transportation costs and the prices of petroleum products have worsened the situation," EICMA today said in a release.
Further, “there has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, Power tariff and transportation costs and the prices of petroleum products have worsened the situation,” Dey said.
According to him, the final consumers (buyers of corrugated boxes) are refusing to pay higher prices and in most cases have persistently resisted in accepting these increases despite repeated requests.
In view of this, EICMA had called for an emergency meeting of its members and after unanimous approval of the members present, decided to call for a protest closure on May 2 and 3 to make people aware of the grave situation the industry is going through.
Currently, there are over 12,000 corrugators spread across India of which around 700 are from Eastern India, with average tonnage conversion of 45 lakh tonnes per annum in India and 5 lakh tonnes in Eastern India and more than 2 lakh tonnes in West Bengal.
The industry is fragmented and dominated by micro, small and medium enterprises (MSMEs), and employs more than three lakh workers directly and indirectly. The indirect work-team comprises a large number of women who work from their homes during spare hours, making fitments and other accessories that are often required in corrugated boxes.
"The margin for the corrugated box manufacturing industry has shrunk to almost nil because of the price rise in almost all raw materials, mainly Kraft Paper, which accounts for 70 – 75 per cent of the total input cost. In the last two to three months, paper mills have hiked their prices by around Rs 3,000 per tonne,” Dey explained.
Apart from this, there has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, power tariff and transportation costs and the prices of petroleum products have worsened the situation.
“Most customers have persistently resisted in accepting these increases. This may lead to a huge job cut and subsequent exit from the business if this situation persists", said Dey.
Despite all these adverse conditions, customers are in no mood to agree to an adequate price increase. Due to this the corrugated box industry is suffering huge losses. If the paper mills keep increasing their prices often and if box users resist a price increase, then many manufacturing units, most of which are family run small enterprises will have no option but to shut operations, he said. (KNN/SD)
The major buyers for corrugated boxes are FMCG companies followed by Pharmaceuticals, white goods, textiles and engineering product manufacturers.
"Eastern India Corrugated Box Manufacturers’ Association (EICMA) has been appealing for a 15-20 per cent hike in pricing due to the fact that – In the last three or four months, paper mills have raised the prices of Kraft Paper; the main raw material for the industry - by Rs 2,000-4,000 per tonne; There has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, power tariff and transportation costs and the prices of petroleum products have worsened the situation," EICMA today said in a release.
The final consumers (buyers of corrugated boxes) are refusing to pay higher prices and in most cases have persistently resisted in accepting these increases despite repeated requests, the release added.
"EICMA has been appealing for a 15-20 per cent hike in pricing, owing to the fact that in the last three or four months, paper mills have raised the prices of Kraft Paper - the main raw material for the industry - by Rs 2,000-4,000 per tonne, said EICMA president Milan Kumar Dey. Further, “there has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, Power tariff and transportation costs and the prices of petroleum products have worsened the situation,” Dey said.
According to him, the final consumers (buyers of corrugated boxes) are refusing to pay higher prices and in most cases have persistently resisted in accepting these increases despite repeated requests.
In view of this, EICMA had called for an emergency meeting of its members and after unanimous approval of the members present, decided to call for a protest closure on May 2 and 3 to make people aware of the grave situation the industry is going through.
Currently, there are over 12,000 corrugators spread across India of which around 700 are from Eastern India, with average tonnage conversion of 45 lakh tonnes per annum in India and 5 lakh tonnes in Eastern India and more than 2 lakh tonnes in West Bengal.
The industry is fragmented and dominated by micro, small and medium enterprises (MSMEs), and employs more than three lakh workers directly and indirectly. The indirect work-team comprises a large number of women who work from their homes during spare hours, making fitments and other accessories that are often required in corrugated boxes.
"The margin for the corrugated box manufacturing industry has shrunk to almost nil because of the price rise in almost all raw materials, mainly Kraft Paper, which accounts for 70 – 75 per cent of the total input cost. In the last two to three months, paper mills have hiked their prices by around Rs 3,000 per tonne,” Dey explained.
Apart from this, there has been a constant and steep increase in employment cost, cost of other raw materials like glue and stitching wire, power tariff and transportation costs and the prices of petroleum products have worsened the situation.
“Most customers have persistently resisted in accepting these increases. This may lead to a huge job cut and subsequent exit from the business if this situation persists", said Dey.
Despite all these adverse conditions, customers are in no mood to agree to an adequate price increase. Due to this the corrugated box industry is suffering huge losses. If the paper mills keep increasing their prices often and if box users resist a price increase, then many manufacturing units, most of which are family run small enterprises will have no option but to shut operations, he said. (KNN/SD)
Loading...
