‘Corona Virus Impact’ closed down the Paper Mills; Nationwide ‘Lockdown’ disrupted the supply chain of Paper Industry

‘Corona Virus Impact’ closed down the Paper Mills; Nationwide ‘Lockdown’ disrupted the supply chain of Paper Industry

Finished Paper prices could be on the higher side after the lockdown period.

New Delhi | 27th March 2020 | The Pulp and Paper Times:

The nationwide lockdown due to coronavirus has badly disrupted the supply chain for paper mills. However, the Order and Guidelines of the Ministry of Home dated 24.03.2020 exempts production units, which require continuous process, after obtaining the required permission from the State Government, from the lockdown announced for 21 days from 25.03.2020.

The inward (raw material, inputs) and outward (finished products) supply chains disrupted and no truck movements, virtually impossible even for continuous process production units to operate. In order to comply, the government guidelines on Corona outbreak ITC PSPD has announced to close down its Bhadrachalam unit. In a notice issued by the ITC says “ In order to prevent the spread of Corona Virus, COVID-19, the unit management has decided to close down the production activity of unit Bhadrachalam from 25th March till the further notice. It may be noted that this is a temporary closure, due to the pandemic and applicable wages will be paid during this period,”

Talking to The Pulp and Paper Times, Mr. Siddharth Chowdhary, Whole-Time Director at Shree Rama Newsprint Limited said that “Yes, we have completely shut down the production activity on our one machine of writing and printing paper since 22nd march. But for the second machine, which is in the transformation stage, we are facing lots of pressure from newsprint consumers and local administration for producing the newsprint. So, we started the newsprint manufacturing for the last 2 to 3 days.”

A major kraft paper manufacturer in Northern India, Paswara Papers has also closed down its production activity from 22nd March, bearing significant losses of production and revenue. “Not only, we support the government's step in order to curb the pandemic but also demand a ‘relief package’ for the paper industry in sustaining its existence. We seek government's intervene in waiver of loan interest and GST deferment up to some time,” said Mr. Vinod Kumar, Director at Paswara Papers Ltd.

According to sources, the ‘lockdown’ has shut down all the ‘hubs’ of paper mills in western Utter Pradesh, Kashipur and Bazpur in Uttrakhand. A major writing and printing paper manufacturer in Madhya Pradesh, Orient Paper & Industries Limited, has also been closed down its production.

“After the lockdown period, when the market gets reopen, we are assuming a dip of 25 percent in the demand of finished paper (packaging paper) because of the disrupted supply chain. It will take almost one week time to restore the normalcy in the supply chain like availability of labour, raw material, and other required items.” Said Mr. Amit Singla, Managing Director of PSB Papers Pvt. Ltd. a major kraft paper manufacturer in Bazpur, Uttrakhand.

It’s a huge loss of paper manufactures especially for the writing and Printing segment. “Our peak demand season for the consumption of writing and printing paper is from March to May but if lockdown gets on for a longer period than it will be a loss. The situation is very daisy and there is lots of uncertainty in the price of paper especially after lockdown. Also, we are optimistic about good demand in packaging paper,” said Mr. Akshay Jain, Director at Silverton Pulp & Papers Pvt. Ltd.

Seshasayee Paper and Boards Limited, which has been closed down on 24th March is not able to get the transportation of a single piece of wood to run the paper mill. Talking to The Pulp and Paper Times Mr. P. K. Vasist, Vice President (Marketing) explains the situation “the anticipation of paper price fluctuation is very unpredictable right now. There is a paper stock at all levels like dealers, wholesalers, and retailers. How the market will behave after the lockdown is purely uncertain. Demand will pick up in 10 to 15 days after opening up of the market.”

“Paper mills in Meerut and Muzaffarnagar have got permission to continue their production but they want to remain closed. Kraft paper mills owners in this region don’t want to empty their finished paper stock only to explore the market opportunities after the lockdown period. The lockdown period will create ample demand for packaging paper because it would have been sucked from the market and they (paper mills) can sell their stocks on higher-margin to the dealers and corporate buyers, after lockdown” say Mr. Naresh Singhal, President, Waste Paper Merchants, and Raw materials suppliers Association.

Despite the Government notification, which brings paper production under essential services, Paswara Paper has a different view on this matter altogether, “due to the pandemic, labours are not willing to come on work. They want to remain closed in their homes. Apart from this, other essential items like fuel, coal, and chemicals are also not available due to lockdown” Mr. Vinod said.

The major fear that capturing the paper mill's attention is the overhauling and maintenance of the idle paper machines. “The cleaning and maintenance of the plant and machinery are continuing process in paper industry, but the lockdown has disrupted this process which could lead us to fixed asset loss,” Mr. Vinod said.

“On a wide scale, the Government should give relief in GST and Income tax for the corporate sector for fulfilling the losses up to some extent,” Mr. Singla further said.

The association of Newsprint manufacturers has also written to the Union Government to issue a direction to states to declare paper production as an essential service after newsprint producers in some states faced difficulty in operation following the 21-day lockdown.

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