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Over 200 pc hike in 12 years

KNM grapples with production cost

Munir U Ahmed
KHULNA. May 2 7: Despite enhancing newsprint prices by more than 200 per cent over the last 12 years the Khulna Newsprint Mill's (KNM) continues to operate at a huge financial loss failing to check the rising cost of production.
The production capacity of the mills has also increased following the Implementation of a Taka 45 crore BMR (Balancing. Modernisation and RU.bmatfo.^ ■
According to official sources, the cumulative loss of the newsprint mills stands at over Tk 1OO crore apart from the outstanding loans and ad vances received from the financial Institutions.
In the past three financial years from 1988-89 to 1990-9 1 the total loss was estimated at over Taka 35 crore.
Wages and salary Increases, rise In prices of Inputs, per vudlng efficiency and over-stafTln^ oP the newsprint mills
are among the reasons for continued increase In cost of newsprint production, the sources disclosed.
The sources also pointed out that the mills produces only one grade of paper without recourse to cushion off the loss by producing other profitable varieties of papers.
The KNM has been officially prohibited from manufacturing other graces of paper since 1985 86. f •
The KNM started functioning In 1959 with the installation capacity of 50.000 tons of newsprint annually. Since 1970-71 the production In the mills started falling and came to Its lowest at 16.000 tons in 1976-77 It was only in 196 8 69 that the mills achieved the production level of 48,000 tons.
The price of the newsprint has been raised five times since 1968-69 when it was sold at Rs 1100 per ton. The price rose to Tk 2150 per ton In 1973 74 and Tk 3200 per ton in 1974-75.
The price further rose to Tk 13750 per ton In 1988 against the price fixed at Tk I 1000 in October 1987
The latest increase in the price of the newsprint effective from last year Is 18000 per ton, 60 per cent higher than the last price.
According to sources, cost of newsprint production has soared to about Tk 24950 per ton since months ago from Tk 19368 In 1991 due to price hike of various inputs and Increases In wages and salaries of 2829 mill employees. Nearly 300 workers and 20 officers are known to be in surplus of the approved setup.
The price of the Imported pulp which accounts lot about 20 per cent of the production cost increased to over 42000 per ton In 1990-91 from Tk 41570 per ton in 1989 90 The price of the chemical pulp per ton was Tk 16659 In 1982. Tk 1576 in 1973-74 and Rs 1088 In 1968-69.
Nearly 6000 tons of imported pulp arc required annually by the mills for Its capacity production of 48000 tons.
The price of the fuel which makes up about 34 per cent of the production cost has remained more or less unchanged since 1987-88.
If the mills Is permitted to pay the price of fuel at the Imported price as Is given to other mills In North Bengal then the production cost will
automatically come down, the sources opined. Annual consumption of fuel is around 60000 tons.
The price of the geoa wood which forms only eight per cent of production has been increased to Tk 15 per lakh eft from paisa six only.
Financial benefits of the mills employees have substan Hally increased over the years Total annual wages and salaries which constitute 14 per cent cost of production are Tk 10 crore at present while the expenditure under the head was Tk 2.72 crore in 1982-83. Tk 74 lakh in 1974-75 and Rs 45 lakh in 1968-69.
Increased prices of several other items including alum, soda ash. sulphur and imported spare parts and bearing cost of soft water have contributed substantially towards the rising cost of production.
Inspite of the repeated losses since 1985-86 BCIC has given Profit Bonus' lo the Mills employees every year.
The BCIC is contemplating enhancing the price on a plea that the forest ministry enhanced the gcoa wood, but it would be unwise to enhance the price more than 8 per cent, the sources disclosed.
The government subsidy should also be given to the mills lo keep the price at a reasonable level In the domestic market.
Meanwhile lo recoup the losses, the mill management is enhancing the prices of news print at Intervals affecting the newspapers and publishing industries In the country.