The Mysore Paper Mills was restarted in 2014 after a three-year shutdown, but it has been plagued by performance issues ever since.
The mills' production capacity has been reduced significantly, with a current production of around 60,000 tonnes per annum, down from its original capacity of 100,000 tonnes.
The mills have been facing issues with raw material availability, power supply, and labor unrest, which have all contributed to its poor performance.
The government has been trying to revive the mills through various initiatives, including providing subsidies and incentives to the company.
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Government's Plan to Restart MPM
The Karnataka government is exploring a private route to restart the Mysore Paper Mills (MPM) in Bhadravathi, which would involve leasing the mill to a private bidder.
A Bengaluru-based consultancy, Infrastructure Development Corporation (Karnataka) Ltd (iDeCK), has been engaged as the transaction advisor to steer the process of leasing out the mill's operations to a private entity.
Prospective bidders have shown interest in operating the factory, provided they are granted exemption to grow eucalyptus and are free from liabilities.
The government had concluded that reviving the factory on its own was not viable, and efforts are being made to lease the mill to private bidders with exemptions and relief measures under consideration.
Karnataka Govt Explores Private Route to Restart
The Karnataka government is exploring a private route to restart the Mysore Paper Mills (MPM) in Bhadravathi.
The government has concluded that reviving the factory on its own is not viable, so efforts are being made to lease the mill to private bidders with exemptions and relief measures.
The state government has engaged the services of Infrastructure Development Corporation (Karnataka) Ltd (iDeCK) as the transaction advisor to steer the process of leasing out the mill's operations to a private entity.
Prospective bidders have shown interest in operating the factory, provided they are granted exemption to grow eucalyptus and are free from liabilities.
Tenders had been floated several times since 2017, but no bids were received, so a renewed push began in 2023 with meetings chaired by the industries minister and the chief secretary.
The government is considering waiving dues owed to KPTCL and MESCOM, though the Energy Department has refused to write off the principal and interest.
MPM still holds 750 acres in Bhadravathi, where the factory, staff quarters, schools, and public utilities stand, and most machinery remains intact inside protected buildings.
The government formally approved the closure of MPM in October 2021, terminating the services of 202 employees with compensation, but the High Court has directed that other displaced workers be accommodated in state-run boards and corporations.
Politics Behind MPM Corruption
The appointment of a politician as the chairman of MPM in 2000 marked a significant shift in the company's management, replacing IAS officers who previously held the position.
This change in leadership was initiated by S M Krishna, who was the chief minister at the time.
The BJP government followed this practice, appointing Araga Jnanendra as the chairman from 2009-10 to 2013-14, during which time the accumulated losses of MPM mounted to Rs 370 crore.
The government released Rs 175 crore towards MPM during Araga Jnanendra’s tenure, but the accumulated losses still increased significantly.
MPM owes a substantial amount to its workers, including Rs 55 crore in daily allowances, Rs 30 crore in gratuity dues, and Rs 20 crore in superannuation trust contribution.
The company also owes Rs 20 crore in leave encashment benefits and Rs 15 crore to contract workers, totaling Rs 145 crore.
The appointment of a politician as the chairman of MPM has had a lasting impact on the company's financial situation.
MPM's Performance and Issues
The Mysore Paper Mills (MPM) has been facing significant performance issues, with a major decline in its production capacity over the years.
The mill's production capacity has decreased from 78,000 tons in 2004-05 to just 42,000 tons in 2014-15.
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MPM has been struggling to meet its production targets, with a significant gap between its actual and planned production.
The mill's installed capacity is 78,000 tons per annum, but it has been operating at only 50-60% of its capacity in recent years.
The company has been incurring heavy losses due to its inability to meet production targets and increasing raw material costs.
MPM has been facing issues with power supply, with the mill relying heavily on expensive private power.
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Frequently Asked Questions
Why are paper mills closing in India?
Paper mills in India are closing due to a combination of factors, including raw material scarcity and increased import competition. Economic pressures also play a significant role in this decline.
Which is the first paper mill in Karnataka?
Mysore Paper Mill, established in 1937, is the first paper mill in Karnataka. It was founded by Nalvadi Krishnaraja Wodeyar, the then Maharaja of Mysore State.
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