The rising cost on various fronts is diluting the profitability of Indian paper mills, The waste paper price hike, spike in logistic cost and now the coal price have made paper mills out of the business.
“The coal price has been increased by almost 70 percent in past few days which has triggered our production cost by INR 3000 per tonne. The dwindling market demand has resisted us passing on the hike to end consumers. The continued price momentum in diesel has also skyrocketed our transportation cost multi-fold,” said Mr. Vinod Agarwal, Director at Paswara Papers Limited situated in Northern India.
Talking in Indian Corrugated Case Manufacturers’ Association (ICCMA)’s Congress 2021 at Greater Noida, Mr. Arpit Bangur, Executive Director at Shree Packers (M.P.) Pvt. Ltd explained the coal crisis, and said, “ If you talk about cost structure in terms of energy then it’s pretty high. Almost 50 percent of conversion cost goes into power and coal. There are different kinds of paper mills i.e smaller medium size and higher capacity mills. Generally, those mills which are having a higher capacity of more than 200 TPD would be operating on their own power generation, so the coal consumption for these kinds of mills would be higher as compared to smaller mills. In terms of conversion cost, the impact of coal prices would be higher on middle mills because they are also generating their own power using coal. At the same time smaller mills may not have impact of coal because they are taking electricity from the grid and using biofuel”
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