Corrugated box makers cut output as demand slips

Vijay C Roy

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Chandigarh, May 19

The slowdown in demand for corrugated boxes from industries has cast shadow over Rs 20,000-crore packaging industry in the region.

Industry operating at 50-60% capacity

Globally, there has been a slowdown in demand and India is no exception. As a result, the industry is operating at around 50-60% of the installed capacity which is affecting their bottom lines. RK Garg, manufacturer

The manufacturers said the demand has fallen by 30-40% in the past few months. It can be gauged from the fact that kraft paper mills in North India have stopped production for a week due to declining demand for kraft paper, which is a key raw material for the industry. Kraft paper accounts for 90% of the total input cost for corrugated box industry.

“There has been a decline in demand from almost all sectors. Be it FMCG (fast-moving consumer goods), white goods or pharmaceuticals,” said Vishal Goel, managing director, Giriraj Industries.

Corrugated boxes are consumed across sectors in industries and trade for packaging purpose. But the decline in orders and exports from industries amid weakness in the domestic and global demand has led the corrugated box manufacturers to curtail production.

The manufacturers said capacity utilisation of corrugated box manufacturers is around 60-70% because of slowdown in certain sectors such as auto parts, home appliances and FMCG sectors.

There are around 2,000 corrugators spread across the northern region. The industry is fragmented and dominated by MSMEs and employs over 1 lakh workers.

“There is a shortage of demand globally and even inflation is on the higher side, affecting the productivity of the mills,” said Rajat Malhotra, proprietor, Aakriti Packaging.

Insiders say in May, the industry sees seasonal demand for apple and spirits packaging (wine and beer). “We normally receive high demand from Himachal Pradesh for the packing of apples in boxes, but owing to the delay in determining the size of the box, the industry is yet to commence production,” said corrugators.