“We started the bag unit last year and our capacity is 150,000 bags per month. Within two months, we will be adding equal capacity at a new location,’’ said Aditya Sharma, assistant vice-president (marketing), Birla Jute Mills.
Its current export obligations are such that the mill has had to ask the government not to place any more orders.
Gloster, which has one of the larger jute mills, has recently bought 70 acres on the outskirts of Kolkata, where it will invest Rs 200 crore in setting up a state-of-the art jute manufacturing unit, with a capacity of processing 100 tonnes of jute a day, in addition to the existing capacity of 170 tonnes per day.
In 2018-19 (FY19), Gloster’s net profit was Rs 44.15 crore on revenues of Rs 501.38 crore. Its operating profit margin was 19.66 per cent.
The demand for shopping bags is one of the main drivers of growth. Exports have grown from 30 million in 2013-14 to 56 million in FY19.
According to Sanjay Kajaria, former Indian Jute Mills
Association chairman and jute mill owner, extra capacity of around 15 per cent is being added overall because of the demand for bags. “Curbs on single-use plastic have been one of the biggest triggers of the revival for jute demand,” he said.
Industry sources say Tesco has removed all plastic bags from view in its stores and introduced jute bags, globally priced at around £1. Plastic bags are given only if a customer asks for them.
Nor is the switch to non-plastic bags confined to overseas. “There is a pick-up in domestic demand. Retailers and shopkeepers are switching to jute bags.
Customers, too, are using reusable bags,” said Ghanshyam Sarda, owner of the Kolkata-based Sarda Group, which has eight mills.
The demand is making mills profitable. No one these days is scrambling for orders — a far cry from the days when mills were dependent on government orders for jute bags
to package foodgrain. Moreover, in 2018, the Centre mandated packaging of 100 per cent foodgrain in jute bags
(up from 90 per cent) and 20 per cent for sugar. This alone has been a big boost. It’s true that growth in diversified jute products was galloping, but its share of output was still smaller, compared to conventional jute.
Greater government demand has ensured all mills are beneficiaries of the demand surge.
“The government has devised a mechanism wherein it knows the capacity of each mill and orders are placed according to mill capacity. Every mill is getting orders and payment is made in 10 days. This has made even the smaller mills sustainable,” said Sharma.
With demand comes the need for more labour and that is what jute mills
are struggling with. Industry estimates suggest a shortage of around 21,000 workers.
“The demand is such that mills warrant 100 per cent capacity utilisation, but they are running at 70-75 per cent capacity utilisation due to labour shortage,” said
D C Baheti, executive director, Gloster. Last year, jute workers saw an increase in minimum wages Rs 100 per day, taking the average wage to Rs 500.
“We will increase the payout further to attract workers. We want to provide a good working environment,” said Baheti.
How the wheel has turned full circle. The last time the jute industry
was in the news
was in 2014, when H K Maheshwari, chief executive officer, Northbrook Jute Company in Kolkata, was beaten to death by angry workers wielding iron rods, grilles and concrete slabs over working hours being curtailed because of stock issues. No one is talking of any curtailing now.