Killing the Nagaon and Cachar Paper Mills

Killing the Nagaon and Cachar Paper Mills

Not long ago, the Nagaon and Cachar paper mills of Hindustan Paper Corporation were thriving, their paper much in demand in this region, and as far afield as Bihar, Delhi and Rajasthan. The HPC mills were busily churning out quality printing & writing paper suitable for educational purposes like producing textbooks, along with other varieties of top grade paper as per demand. Up to 2008, their yearly production was 1 lakh 15 thousand tonnes, outstripping the installed capacity of 1 lakh tonnes. Thereafter within a decade, the two mills have closed down, their downfall a study in graft and mismanagement at various levels. It reinforces the belief that government run entities selling a commercial product have little or no chance to be successful. The loss to the State is considerable, leaving apart the public money invested in the two paper mills. Just before Nagaon Paper Mill closed down in March 2017, it could supply paper to Assam government at around Rs 54,000 per tonne and produce 270 tonnes daily. With ITC stepping into the breach, Assam with its raw material riches has become dependent on paper produced outside. The price of paper rose to Rs 72,000 per tonne; presently, standard quality paper is being procured at rates of Rs 96,000 per tonne and may cross Rs 1 lakh soon. Since this is the paper used to make our ‘free textbooks’, it gives an idea of the subsidy burden Assam government is forking out. Meanwhile, with HPC out of the picture for good, private paper producers now have a stranglehold on the market, setting prices at will. As for employees of the stricken HPC paper mills, there seems no end to the uncertainty and misery that has befallen them. The State government has put forward a proposal for Rs 1,800 crore financial package to the Centre to help revive the two mills. The NDA government has been liberal with promises of help, and is learnt to be mulling a Rs 1,000 crore plan that involves roping in private companies. But this PPP route seems to have been closed off for now, with the National Company Law Tribunal (NCLT) early this year ruling against HPC in a case filed by a supplier seeking its dues.

The HPC board of directors has been suspended, while the Interim Resolution Professional (IRP) appointed by NLCT is taking stock of HPC’s liabilities. Even if a financial package materialises to revive HPC, its financial creditors, primarily banks, must first be paid; this will be followed by statutory payouts including income tax, excise duties, insurance premiums, provident fund payments and so on; dues outstanding to employees and operational creditors (like contractors) have only third and fourth priority. So despite the Centre releasing Rs 90 crore through budget to help pay salary to employees, that money has also been held up as the IRP goes about deciding who gets what. A full scale revival package could end up costing the Centre upwards of Rs 3,000 crore. This could deter any private group from coming forward to take up the burden; instead, it might as well ask why it should not be given a free hand to invest in new paper mills and infrastructure. Be as it may, the NCLT will have to take a call by this year’s end about the future of Nagaon and Cachar paper mills. The employees are passing sleepless nights fearing the tribunal may finally order liquidation of the mills. But the NCLT could put the ball in the Central government’s court with a request to revive the two mills. With the general elections ahead in April next year, it is likely the government will make more promises of revival and put off any hard decision that could rebound politically.

This means the uncertainty over the two HPC mills will not be ending anytime soon. But the financial hardship of the employees is a daily nightmare, deprived as they have been of salaries for over one and half years now. Their savings are gone, their failure to deposit income tax means no more loans from banks, their insurance premiums and EMIs continue to pile up. Those who have retired are yet to receive gratuity, there is no knowing when (or if) they will start getting pensions — the mess is compounded by non-payment of pension and PF dues by the company for several years now.

Insiders keep asking what happened to the Rs 400 crore fund once set up for salary security — the accrued interest would have sufficed to pay employee dues regularly. There are other disturbing questions about corrupt government appointees heading HPCL who have reduced it to bankruptcy, irregularities in procuring bamboo, failure to lift coal from Coal India Limited and allowing electricity dues to ASEB rise steeply to Rs 45 crore by March 2017. All these point to corruption running riot at different levels of management, and a section of union leaders bought off to keep mum. The upshot is that the majority of employees, dedicated and honest, who once made their mills so profitable, now stand betrayed on all sides. The Centre has opted for a policy to allow duty-free paper imports from ASEAN countries, putting domestic players at disadvantage while they battle rising input costs, implement clean technology and set up farm forestry. Desperate to merely survive, workers of public sector players like HPC can hardly prepare for winds of change buffeting the paper industry.

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