COIMBATORE: The rising cost of raw material, coupled with a shortage of coal and shipping containers, has landed the corrugated box manufacturing industry in dire straits. Paper cost increased by 20 per cent in the last six months, manufacturers said and lamented that they struggle to fulfil to complete orders.
EV Radhakrishnan, president of the South Indian Corrugated Box Manufacturers' Association, told TNIE that the cost of paper, a primary raw material used in the manufacturing of corrugated boxes, increased manifold in the last six months. "Paper cost 24 per kg, but now has risen to Rs 40. The cost is increasing day by day. Similarly, the cost of gum, another raw material, has increased from Rs 28 to Rs 40 per litre," he said.
"Earlier, we used to spend Rs 2.5 lakh for a load (10 tonnes) of paper. Now one needs up to Rs 4.5 lakh for a load. On the other hand, we cannot pass on the cost to customers every time there is a change in raw material cost. Most manufacturers sign agreements to supply corrugated boxes for 3-6 months. However, the increase in raw material cost increases the production cost for the manufacturer," Radhakrishnan said.
Apart from the increase in the cost of paper, the demand for supply of paper had also hit the manufacturers by affecting their dispatch date, he said. Saying that many corrugated box businesses have shut down production temporarily, the association president claimed it affected women as the industry depended on women for 90 per cent of its workforce.
S Sanjeeth, who runs a corrugated box manufacturing company in Coimbatore, said, "In January, our production cost stood at Rs 12-15 per kg. Now, it is Rs 18-20. We have increased the price for corrugated boxes from Rs 48 to Rs 50 per kg. Also, the GST for the sale of corrugated boxes was increased recently from 12 per cent to 18 per cent. It has also hit the industry."
He demanded export of paper be restricted for some time to address the paper shortage and price rise and thus save the domestic market.
A paper manufacturer, on condition of anonymity, said, "There is a shortage of coal, which is used as fuel for melting of pulp, in the recent times. Due to this, most of the paper mills have been forced to down shutters. Also, the shortage of shipping containers has led to an increase in paper costs. Earlier, we used to buy a container of pulp $50,000 from the Middle East and European countries. Now, it has increased up to $1.25 lakh."