9 min read.Updated: 24 Jan 2022, 12:46 AM ISTNabarun Guha
How the closure of two paper mills in Assam brought life to a standstill for employees, suppliers and townships
On the last day of 2021, 62-year-old Mohan Singh, a resident of Binnakandi in Assam’s Cachar district, died while being taken to a hospital in Shillong. He was suffering from liver and heart disease. Singh, a father of four, was an employee of the Cachar Paper Mill. “He was ill even before the mill closed in 2015, but his condition worsened after the closure. With no job and salary, his savings got spent on treatment and the stress took a toll on his health," said one of Singh’s colleagues, on condition of anonymity.
The Cachar Paper Mill, located at Panchgram in South Assam’s Hailakandi district, has been shut since October 2015. Its sister entity, the Nagaon Paper Mill in Central Assam’s Morigaon district, has not functioned since March 2017. Both are units of Central PSU Hindustan Paper Corporation Ltd (HPC), which is currently under liquidation. HPC also had two subsidiaries, of which one mill, Hindustan Newsprint Ltd, was recently taken over by the Kerala government. The other mill is in Nagaland.
Like Singh, many were rendered jobless after the closure of the two mills and some succumbed to illness. Indeed, with his death, the toll since the closure reached 99, including four who committed suicide. “Mohan Singh’s story is the story of every employee in the mills. People are dying because they cannot afford treatment," said Singh’s colleague. The employees haven’t been paid for five years.
But it isn’t just the employees that have been affected. The closure has had a cascading impact that has affected the bamboo industry, which supplied raw material to the mills. It has also reduced the hitherto thriving townships of Panchgram (Cachar) and Jagiroad (Nagaon) to ghost towns.
Waiting to exhale
When the Cachar mill shut, the employees had no inkling that it would never open again. “When Cachar Paper Mill suspended operations in October 2015, it had a stock of almost ₹100 crore worth of raw material, including 50,000 tonnes of bamboo, 12,500 tonnes of coal and 2,500 tonnes of lime. With this stock, we could have continued production for three more months," says Manabendra Chakraborty, president of the Joint Action Committee of Recognized Unions (JACRU), Nagaon and Cachar Paper Mills.
“Initially, they never told us that the mills would remain closed for so long. When the salaries stopped, we tried to make ends meet with our savings. When our savings were depleted, we took loans. Later, even shops stopped giving items on credit as our earlier debts had not been cleared," says Chakraborty. “People pawned their household items to keep their homes going and many took loans from private moneylenders.."
A similar script played out at the Nagaon Paper Mill, located a little over 300 km from Cachar, at Jagiroad. In its heyday, the Nagaon Paper Mill consistently produced over 100,000 tonnes of writing and printing paper every year. “The day before the mill shut down, we produced 270 metric tonnes of paper. We had absolutely no idea that the mill was going to be shut down," says Ananda Bordoloi, an employee of Nagaon Paper Mill and general secretary of JACRU.
Today, the 570-acre campus of the Nagaon Paper Mill, once a bustling town just a 90-minute drive from Guwahati, looks haunted. In shambles now, the mill still holds assets worth thousands of crores. “Most of our machines came from countries like Germany and Sweden. We—both Nagaon and Cachar Paper Mill—in fact, had our own captive power generation plants. We didn’t have to depend on anybody for power," says Deben Kalita, who was in charge of the production department at the mill, and retired in 2020.
Why the mills died
Several factors led to closure of the two mills. In 2007, they faced a shortage of bamboo, the raw material they used for paper production. That year, Mizoram and Tripura, two primary sources, witnessed widespread bamboo flowering. This phenomenon takes place every 48 years, leading entire groves of a species, miles apart, to flower simultaneously and then die.
Worse, when bamboo plants flower, they attract rodents, bugs and locusts, which multiply and go on to destroy other crops. Mizoram witnessed bamboo flowering in 1911 and 1958, and on both occasions, it culminated in a devastating famine. Bamboo flowering is therefore considered an ill-omen by many in the North-East.
The 2007 flowering did not cause a famine but it certainly proved to be an ill-omen for the Cachar and Nagaon paper mills. The scarcity led to the price of bamboo spiking from ₹1,020 per tonne in 2005-06 to ₹4,231 per tonne in 2008-09, increasing the cost of the finished products.
“Muli bamboo, which is grown in Mizoram, Tripura, Manipur and the north Cachar Hills, was our main raw material. We faced a shortage for almost seven years, till the plants regenerated," says Dipak Chandra Nath, who worked in the electrical department of the Cachar Paper Mill.
Just as the bamboo supply began to improve, the mills faced a new crisis in a coal shortage. The National Green Tribunal’s ban on coal extraction and transportation in Meghalaya hit the mills hard, says Nath. “It was a costly affair to bring coal from the Margherita oilfields (in Tinsukia, Assam) cash down. So, our management started bringing coal from Indonesia and Australia, through the Haldia dock in West Bengal. However, the Australian coal didn’t suit our boilers and affected our machinery," says Nath, who is also the general secretary of the Cachar Paper Mill Officers and Supervisors Association.
The closure of the mills hit their 1,200 employees hard. The shutdown also had a powerful ripple effect, affecting the livelihoods of around 400,000 people in the bamboo industry. “The entire bamboo business in the northeast has been affected by the closure," says Kalita of the Nagaon mill.
“More than 100,000 youth involved in supplying bamboo to the Nagaon Paper Mill became jobless after the mill shut down," says Gopal Poddar, former president, Bamboo Contractors Association, Nagaon Paper Mill.
The closure of the Cachar mill, the largest industrial unit in the Barak Valley, also changed the fate of Panchgram and Jagiroad. Enterprises that depended on the mills and mill workers for business have had to shut shop.
Lopamudra Chakraborty, whose father worked in the Cachar Paper Mills, still can’t forget the days she spent there. “I was born and brought up in Panchgram. It was such a beautiful town, nestled amidst the hills. It was known as the pride of the Barak Valley. People from every religion, community, caste and creed lived together, celebrated together. Now, it lies in an absolutely dilapidated condition," she says.
The story is no different at Jagiroad, which depended on the Nagaon mill. There, it even affected a promising pedagogical programme for youth seeking employment in the mills. In 2015, Jagiroad College, in partnership with HPC, started a course called Pulp and Paper Technology. The department started well, with 93 students passing out in four years. However, with the mills defunct, it ended the course in 2018.
“It became impossible to offer the course after the Nagaon mill shut down. The closure also diminished the chance of the graduating students getting employment," says NN Swargiary, the only permanent teacher in the department. He now runs a shop near Jagiroad College.
Failed revival efforts
HPC has been facing insolvency proceedings for more than three years now. On 14 December 2021, Kripanath Mallah, a BJP MP representing the Karimganj constituency, asked in the Lok Sabha if “the government is planning to revive the non-functional paper mills to restore sources of employment for lakh of youths in Assam?"
Responding to the question, Minister of State for Heavy Industries Krishan Pal Gurjar—HPC falls under the purview of his ministry— stated that the National Company Law Tribunal (NCLT), New Delhi, in an order dated 13 June 2018, had directed the initiation of corporate insolvency resolution proceedings against the PSU. “HPC is under liquidation on the directions of NCLT and the National Company Law Appellate Tribunal (NCLAT). The liquidator … is undertaking the process of liquidation," he said.
When the process began, HPC’s creditors had claims to the tune of ₹2,899.90 crore. Of this, the claims of financial creditors, including IDBI Bank, Canara Bank, SBI and NABARD, stood at ₹1,025.17 crore.
In February 2019, HPC’s finance team wrote to resolution professional Kuldeep Verma, detailing the company’s liability towards employee-related dues amounting to about ₹414 crore. These include unpaid salaries, PF, gratuity and leave encashment dues.
Under an NCLT directive, the timeline for the HPC liquidation process has now been extended to 10 October 2022. Thus far, six auctions have been organized by the liquidator. However, till date, no party has really shown any interest, despite the base price being reduced with every auction.
“The initial auction reserve price for the two mills was ₹1,139 crore. After the last auction, the value was down to ₹530.97 crore," says JACRU’s Chakraborty. “We think the mills have been grossly undervalued and are worth at least ₹5,000 crore. Both the mills have a 15 MW power plant each and the Cachar Paper Mill has three oil reservoirs. All these need to be taken into account."
Abhijit Barooah, chairman, North East Council, CII, thinks that reviving the mills may not make sense. “If an industry has to run, it needs to have economic viability. You can’t keep it afloat by giving subsidies. No bidder coming to buy these mills shows there is an inherent problem," he said.
Jatindra Nath Deka, retired additional director, industries department, says the asset quality has also been affected. “Buying the mills won’t be viable as the machinery has corroded. An investment of more than ₹1,000 crore is required to install new machines."
Double engine yet to deliver
Both the mills are owned by a Central PSU. When the Sarbananda Sonowal-led BJP government came to power in Assam in 2016, there were high hopes that the ‘double engine government’ (BJP governments both at the Centre and in the State) would revive the paper mill.
Interestingly, before the Assam assembly poll in 2021, JACRU released a statement seeking to have the BJP’s Himanta Biswa Sarma as chief minister as Sonowal had failed to deliver. When Sarma actually became the chief Minister last year, the mill employees again became hopeful.
The Sarma government held multiple meetings in an attempt to find a solution. Finally, the government and the employees’ association reached an agreement last September. It was decided that the Assam government would acquire the assets and provide a relief package of ₹570 crore to the employees. The government would approach the NCLT through the official liquidator to take over all the assets. However, three months on, the employees are yet to receive a penny.
Meanwhile, the Kerala government’s takeover of Hindustan Newsprint Limited, which was earlier an HPC subsidiary, has sparked hope in Assam. “If a single-engine government can revive a defunct mill in Kerala, why can’t our double-engine government do the same," asks Chakraborty.
The average age of most of the employees in the mills is 45 years, says Nath, adding that there are few employment options available to them. It is also challenging for the workers to reskill and seek new jobs at this age.
In any case, since they have not been formally relieved by the mills, the workers are not in a position to seek formal employment elsewhere. This has forced them to work odd jobs to keep their homes going. “Many work as daily wagers, while some have set up small businesses. Others rear ducks in the staff quarters," says Bordoloi.
The mill workers are still hopeful that 2022 will bring them some cheer.
“We have faith in the government. Our Prime Minister talks about ‘Atmanirbhar Bharat’. Rather than importing paper from China, Bangladesh, Malaysia and Indonesia, the government should revive these mills."