Local corrugated carton industry faces growing concerns over skyrocketing prices of paper
The corrugated carton industry in Sri Lanka faces pressure and unprecedented challenges as the global prices of all types of papers continue to skyrocket since October last year. Many corrugated and brown box manufacturers here are going through the toughest situation in the industry’s history and fears grow as it’s the longest period as well with no sign of it easing up any time soon, stressed the Lanka Corrugated Carton Manufacturers’ Association.
The prices of brown kraftliner and brown recycled grades including testliner, and corrugated medium papers will continue to soar, with various sources predicting further price hikes in the coming weeks. During the last four months alone, prices have gone up by as much as over 50pct in Sri Lanka with no price stability, anticipating that this situation will only get worse without adequate support and involvement from key stakeholders.
This comes in the wake of a drastic shortage in paper due to the pandemic coupled with disruptions in supply chains including costly freight charges. Further, there has been a significant rise in demand for papers from China to meet its domestic needs following the country’s ban on importing all wastes from various countries, mainly direct recovered paper, from earlier this year. This resulted in Chinese paper mills importing recycled brown pulp and both recycled and unbleached Kraft linerboard to use it as a pulp or a fiber source to produce paper, apart from counting on other sources such as local recovered paper within the country, imported recycled as well as virgin pulp.
It goes without saying that cartons produced in Sri Lanka have a far more superior quality when compared to other countries, as source materials, i.e. waste paper from topnotch suppliers in Europe, USA and Australia. However, the recent second wave of coronavirus taking its toll in these countries has affected waste paper collection, leading to problems in its availability and rise in prices. And on top of all these is the freight shortage.
Just as the economy seems to recover from the detrimental impact of the pandemic this only adds a growing worry, burdening the packaging industry which plays a pivotal role in various industry sectors from electronics and FMCG to various products brought through e-commerce, a sector that is experiencing exponential growth resulting in higher demand for corrugated carton.
Sri Lanka’s total carton production stands at 150,000 metric tons annually, primarily serving the B2B market. There are more than 40 corrugated carton manufacturers, and about ten of them make up a whopping 70pct plus market share. Many manufacturers today are equipped with fully-automatic, state-of-the-art plants with an appetite to continuously invest in innovation, research and development to increase quality, consistency and durability of their cartons.
Needless to say that corrugated box manufacturing is an eco-friendly industry recycling brown boxes as well as waste paper. And it certainly deserves various avenues and opportunities to sustain and thrive in its operations, and this is a critical moment for key stakeholders, authorities and officials to step in and help support the industry.
Cabinet approves rationalization of VAT exemptions and abolition of SVAT System
The Cabinet of Ministers granted concurrence to the resolution forwarded by the Minister of Finance, Economic Stabilization and National Policies to remove most of the releases from Value Added Tax (VAT), further retaining releases that ease the pressure on low – income families to secure the fundamental sectors of the economy as well as the releases for sectors such as education, health and agriculture, as well as to revise the provisions applicable for the Value Added Tax (VAT) act so that the Simplified Value Added Tax (SVAT) methodology can be canceled with effect from 01.01.2024 by introducing a more formal methodology for repaying the Value Added Tax (VAT) and to instruct the Legal Draftsman to prepare a draft bill for the purpose.
Venora Lanka Power Panels to set up assembly plant in Australia
By Hiran H.Senewiratne
Sri Lanka- based, export- oriented manufacturer, Venora Lanka Power Panels (Pvt) Ltd, with a state of the art electric panel factory at the Export Processing Zone, Biyagama, will set up an assembly plant in Australia.
“Once we set up the electric panel assembly plant in Australia, we will export all our panels from Sri Lanka and that plant will do 30 percent value addition to the product to supply that market, the company’s chairman/ Managing Director, engineer Sagara Gunawardena told The Island Financial Review.
Gunawardena said that the company is a value- addition assembly plant and he would be investing AUS $ 2 million for the project to be set up in Melbourne and hire 100 engineers and other professionals. He explained that the venture has enormous potential.
Venora Lanka provides power panels to mega projects in Sri Lanka and exports to Bangladesh, Maldives, Kenya, Ethiopia, Seychelles and Myanmar. Panel assembling is strictly in compliance with IEC 61439 standards, it was explained.
Gunawardena added: ‘I firmly believe that, being a truly customer focused organization, every employee and every process in the organization has to be aligned behind delighting customers. Therefore, at a time when the country is facing a major dollar crisis, my company would be aiming at bringing dollars into the country, while providing employment for local professionals, especially engineers.
‘At Venora Lanka we do not try to change customers’ mindsets. Instead, we take time to understand what they really want and focus our brand on delivering that. Venora is values- driven first and cost- driven second – creating a unique brand proposition.
‘Since the US dollar rate has come down, it is our concern that importers and suppliers do not change their prices, which is really affecting the manufacturing sector.
Company sources added: ‘The company has several wings of operation, such as local and overseas projects, switch board assembling, telecommunication infrastructure installations, earthing, lighting and surge protection, incorporating world renowned brands.
‘Venora Lanka Power Panels is the first Sri Lankan company to receive the licence, in accordance with the UK Trade Mark Act 1994, to use the trade mark “Best Enterprise”. It won a global award at the event, ‘Golden Awards for Quality and Business Prestige’, held in Geneva, Switzerland, in 2015.
‘Within a short span of time, with the perfect blend of progressive thinking and expertise, Venora Group has expanded to consist of, Venora International Projects, Venora Telecom, Venora Industrial Solutions and Venora Lanka Power Panels (BOI approved). Further, Venora has established its overseas presence through Venora Engineering Kenya and Venora Engineering Myanmar.’
Share market moves into positive territory; indices up
By Hiran H. Senewiratne
CSE trading got off to a positive note yesterday but during the last session of the day the momentum slowed. However, the market is now moving towards positive territory following the Central Bank announcement of a downward trend in interest rates, market analysts said.
Amid those developments the market witnesses improvements in both indices and in the turnover.
The All- Share Price Index up by 12.8 points and S and P SL 20 rose by 6.97 points. Turnover stood at Rs 710 million with one crossing. The crossing was reported in JKH which crossed 430,000 shares to the tune of Rs 60.2 million; its shares traded at Rs 140.
In the retail market top seven companies that mainly contributed to the turnover were; JKH Rs 212 million (1.5 million shares traded), Access Engineering Rs 44.7 million ( three million shares traded), Lanka IOC Rs 34.5 million (264,000 shares traded), Browns Investments Rs 28.6 million (5.3 million shares traded), LOLC Finance Rs 23.8 million (4.7 million shares traded), Capital Alliance Rs 22.9 million (615,000 shares traded) and First Capital Holdings Rs 19.2 million (574,000 shares traded). During the day the 31.4 million shares volumes changed hands in 9000 transactions.
Yesterday, the Central Bank’s US dollar buying rate was Rs 285.16 and the selling rate Rs 298.85.
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