Corrugated box industry calls for price hike; inflation, input costs to blame

New Delhi, May 1 (KNN) Overwhelmed with increasing raw material cost and high inflation, India’s corrugated box industry, which has around 10-12 thousand micro and small units, is seeking price hike from their customers as many units especially in the northern and eastern part of the country which owing to highest raw material cost has shrunk the margin for the industry to almost nil.

“The corrugated box industry is a margin based industry where the profit margins are very thin and the industry is highly competitive. Increase in the raw material cost is killing the industry, especially in the northern part of India such as Uttar Pradesh, West Bengal, Punjab, New Delhi, Himachal Pradesh, Rajasthan etc, as the price increase is maximum in the range of Rs 4 - 4.50,” President of Federation of Corrugated Box manufacturers of India, Ramchand Arora told KNN.

The major buyers for corrugated boxes are FMCG companies followed by Pharmaceuticals, Dairy Products, white goods, textiles, automobile, and engineering product manufacturers.

Reeling under problem, the corrugated box industry in the Eastern region and Himachal Pradesh has called for a protest closure on May 2 and 3 here to inform the public about the crisis in the industry.

Other regional associations also may follow the closure if appropriate increases are not given by their customers.

"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 said in a release.

The President of the Federation said, “Paper mills are increasing the prices with immediate effects, but we are not able to pass the hike to the customers as they are very reluctant about not increasing the price.

“The corrugated box industry comprises of MSMEs which are too many in numbers and scattered, but the paper mills are small in number, around 20-25 paper mills in each region, so they unite and take calls easily,” Arora added.

“There is variation in increase of Kraft Paper prices from region to region, I request the customers of the Corrugated Box Users to give the desired increase. The industry is asking for a genuine hike or else many units will be on the verge of closure, so it’s our request to increase the price,” the President appealed to the customers.

In other parts of India, the increase in raw material price is around Rs 2/- to 3 /- , he added.

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.