Sirpur paper Mills on the verge of closure

Adilabad: The Sirpur Paper Mills Limited, one of the oldest mills in the country, is on the verge of closure. The production came to a halt four months ago and the possibility of it resumption of production is bleak. The farmers have stopped supplying raw material with the dues piling up. The livelihood of 500 staff workers, 1,550 permanent and 1,600 contract employees is at stake. Even permanent staff is not getting their salaries properly.

• Production stopped since November 24, 2014
• Livelihood of 500 staff, 1,550 permanent and 1,600 contract employees at stake
• Mill management fails to capitalise on the assistance given by the State govt

With a good intention to develop the backward Adilabad region, the mill was established in 1938. The production commenced in 1942 with a capacity of 5,200 tonne. The productivity peaked to 83,550 tonnes in 2002. But the rise in productivity did not last long and eventually the mill suffered heavy losses.

Trade unions allege that the main reason for the fall from profit-making venture to loss-making unit is the apathy on the part of the management. “The closure of the factory was premeditated. There was a drastic fall in production for the last three years. Diversion of funds by the management and selling expensive machinery as scrap led to the company’s losses,” explained Rajanna Kushana, general secretary, SPM mazdoor union, CITU.

Alleged misuse of funds started at the time when the No. 8 machine, the management claimed to have got installed. The company borrowed Rs 400 crore to buy the new machine. But, there were allegations that an old machine was bought instead of the new one. Incidentally, the machine failed to reach its optimum production potential. Apart from this, the management had allegedly squandered funds in the process of building a hotel. What is more, the factory, which recorded Rs 30 crore profits in 2009, soon slipped into losses to the tune of Rs 18 crore.

Despite Chief Minister K Chandrashekar Rao holding out an olive branch to the management in line with the State’s new industrial policy and Home Minister Naini Narasimha Reddy being elected as president of the recognised union of the mill, the management remains adamant in its attitude.

The management is insisting on Rs 100-crore fund for revival of the mill. But it is not confident of persuading the banks to lend such a massive amount. In fact, the State government in good faith released Rs 6.5 crore as an incentive to ensure that the mill is put back on rails.

The government also has promised free power supply for six months and a considerable subsidy on subabul trees. But the management has failed to grab the opportunity to revive production. The union representatives and management have met in presence of the Home Minister. A meeting with bankers has also been convened. All the hopes of workers hinge on the State government which is determined to ensure that the mill is restored to its past glory. All that is required now is a shift in the attitude of the management.

Raise and fall of SPM (Graphic chart)

Year Production (in tonnes)

1942 5, 100

1959 16, 280

1966 34, 950

1972 39, 950

1974 61, 550

2002 83, 850