Karnaphuli Paper Mills (KPM), the largest state-owned paper mill of the country, has run into trouble as its production capacity has declined below 40 per cent mainly due to its age-old machinery, sources said.
Since its inception, the paper mill had a production capacity of 30,000 tonnes which now came down to 12,000 tonnes annually, they added.
The state-run mill has been incurring losses for 26 years. Once KPM was a profitable concern, but now it turns into a loss-making company. It has been staggering with losses continuously from the fiscal year (FY) 2009-10 till FY 2014-15.
The paper mill made losses of some Tk 1.12 billion, Tk 1.54 billion, Tk 2.09 billion, Tk 2.77 billion and Tk 3.55 billion in last five years since FY 2010-11.
The mill may face closure or go for privatisation if such trend continues in future, a high official of Bangladesh Chemical Industries Corporation (BCIC) said.
KPM has long been facing acute financial crisis. It has recently sought Tk 709 million as subsidy from the finance ministry to continue its production, he added.
The BCIC often asks the mill management and employees to turn the giant mill into a profitable concern. Otherwise, the mill will be considered a 'sick industry' and appropriate steps will follow, he added.
It incurred a loss of over Tk 3.55 billion as of June, 2015. Besides, the loss is estimated to be Tk 377 million and 266 million in the revised budget of the current fiscal year and the next fiscal year. Accumulated losses of the mill will stand at Tk 3.93 billion as of June 2016.
A source concerned said the loss is incurred solely due to hike in input cost of the mill.
Some Tk 1.61 billion have been provided to the cash-starved mill as loan to overcome its financial crisis, he added.
KPM produces various kinds of paper in three categories -- writing, printing and wrapping papers. It meets a major portion of the country's requirements.
The growing private sector will dominate the market and push up the prices of the products unusually if the paper mill is closed, an industries ministry official said.
Under BCIC, the mill was set up on five acres of land at Chandraghona, 49 km from Chittagong city. The then Pakistan Industrial Development Corporation set up the mill in 1953 at a cost of US$ 15 million.
The integrated pulp and paper mill was set up because of an abundant supply of raw materials like bamboo and tropical wood from forests in Chittagong Hill Tracts.
It employs over 2,500 people. About three lakh people are directly or indirectly involved with the mill for their livelihood.
When contacted, Deputy Secretary (BCIC 1 and 2) of the Ministry of Industries Md Mahbub-UL-Alam said the government has plans to upgrade and modernise the paper mill.
"We have requested the government to provide the KPM with funds to help continue its operation smoothly," he added.
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