Workers cry foul as Kerala's Punalur Paper Mill seeks to reboot as brewery

From making paper in 1888 to trying to make alcohol in 2022, it has been a long and chequered 124 years of operations for Punalur Paper Mills Ltd (PPML). Around six years after its revival plan fell apart, the company is now looking to reboot as a brewery, but the proposal is mired in controversy.

The management of PPML, Kerala’s first paper mill that was established as a private company in 1888 (as Travancore Paper Mills Co Ltd), is reportedly planning to start a brewery in its place. An application for approval to establish a brewery is pending before the state excise department and, according to sources, the application is one among the two breweries under active consideration of the government for approval.

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The plan has, however, run into opposition from the workers’ union and environmentalists. Moreover, it is allegedly in violation of the memorandum of understanding (MoU) the mill management signed with the state government in 2011.

Failed revival plan

The mill had closed down in 1987 and then, after an agreement with the workers’ unions in 2008 and an MoU with the state government in 2011, it re-opened in 2015. However, it could operate for just nine months before shutting shop again. The reason given by the management then was that running the mill was not financially viable. It was under heavy debt. The unavailability of raw materials and labour unrest were the other reasons for the closure of the company.

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A consortium of local businessmen subsequently took over the ownership of PPML from Hyderabad-based Akula Boards and, right now, the 85 acres of paper mill are under the ownership of TK Sundareshan. The management of the mill has reportedly applied to convert the paper mill into a brewery. But this has raised environmental concerns.

Environmentalist CR Neelakandan told The Federal that the establishment of a brewery should be opposed by any means in a place like Punalur, which is facing water shortage. “It will exhaust the water resources besides polluting them,” he said, adding that the ecological damage it will cause will be based on the capacity of the brewery.

Violates MoU with the govt

Moreover, the plan for a brewery goes against the MoU signed by the management with the state government on February 27, 2011, at Thiruvananthapuram in the presence of then Chief Minister VS Achuthanandan. Castless Junior, a former councillor of the mill ward and the vice-president of the paper mill workers’ union, told The Federal that the use of the paper mill for any function other than the manufacture of paper or related things is in violation of the MoU.

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K Raju, former minister and former Punalur MLA who took part in giving shape to the MoU, said that it specifically contained the clause that paper or related industries should be established at the place. “As per modern technology, establishing a paper mill needs only 10 to 15 acres. In the rest of the place some big industry should be established,” he added.

As a precursor to the signing of the MoU, on August 20, 2010, certain concessions in regard to electricity dues and sale tax dues were granted to the mill by the government. The government order said various concessions would be granted as and when PPML took steps to restart operations. “The government will take steps to cancel the concessions if the company fails to implement the approved revival scheme,” it said.

Later, the MoU, legally binding till date, was signed between the state government and Akula Boards, which took over the company, as a mandatory procedure ahead of the opening of the plant. The company was restarted in September 2015, but it was short-lived. The PPML plant closed after functioning for just nine months.

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The Federal called the present owner Sundareshan over phone, mailed him queries, and reached out to his staff via WhatsApp. Till the time of publication of this article, there has been no response.

Workers’ woes continue

Amid the back-and-forth between the company and the state government, the employees appear to have borne the brunt of the closure. For years together they were out of work with little support from their employer. Kollam MP NK Premachandran pointed out that even when the mill reopened briefly in 2015, the workers hardly stood to gain. “The workers didn’t receive any (major) benefits; they just got some initial benefits,” he said.

Even now, there seems to be no solution in sight for the employees. S Muralidharan Pillai, former secretary of the paper mill workers’ union, expressed distrust about the motives of the management. Citing the 2008 agreement, he alleged that the management made false promises and deceived the workers.

On November 20, 2008, Akula Boards entered into an agreement with the workers’ union, giving an assurance that all eligible workers would be given employment with the relaunch of the mill. In the terms of settlement, it categorically maintained that it would take in all employees who had not attained superannuation and who were physically fit to work.

“The management, for the sake of starting the mill, ran it for a few months and closed it saying paper production is unviable and not profitable,” Muralidharan said. “If we had got any hint that the management may not open the mill and will not give employment and incentives as promised, we would not have signed the agreement,” he added.

Little trust in management

What’s causing ire among the employees is the belief that the paper mill could still be viable, but the management is not keen on it. “The paper industry is still viable and there are at least Rs 200 crore worth machines inside the mill. Our request to the government is to ensure that the paper mill starts functioning so that hundreds of workers may get employment,” Muralidharan said. He added that he and other workers had also seen mill machinery being shifted in lorries, which they suspect was for selling those machines.

“Those who lost jobs in 1987 were yet to be superannuated by 2015 and many were hopeful of getting the jobs.  Moreover, I only received a paltry compensation of Rs 53,000 from the period of 1987 though I began service in 1972,” he said.

Sasidaran Pillai, former joint secretary of the paper mill workers’ union, also said that the new management of the mill ‘cheated’ the workers by assuring them jobs.

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When the mill was first closed on August 30, 1987, it had 807 workers. A few workers committed suicide following the closure.

Now, the workers are worried that they will be left without jobs in the company yet again, as it reopens as a brewery. Alcoholic beverages are an entirely different industry from paper-making, and the employees are not trained for it. The management’s past behaviour does little to assure them that they will either be re-skilled for brewery work, or given adequate compensation. Hence the resistance to the reboot plan.

We did try, says management

The PPML management, however, insists that it had no option but to close down again in 2015, due to raw material procurement issues. A source close to the paper mill management said: “The mill was operational for at least nine months after the inauguration and what was conspicuous was the unavailability of the raw material. Raw material of 110 tonnes a day is required for the functioning of the mill. We had to import it as the transportation cost of the locally produced raw material is very high,” he said.

“Though we approached banks for financial assistance, none was willing to provide it. Unofficially they said the paper industry is not profitable and hence the reluctance,” Nelson Sebastian, a Congress leader and former management member, told The Federal.

“To run one machine 15 kv electricity is needed. But since we had inadequate supply, we ourselves established a 110-kv sub-station,” he explained. “We were compelled to remit more than Rs 4,30,000 as electricity charge per month whether we used it or not. We approached the government to cancel the 110-kv sub-station due to exorbitant costs. We also had to amass Rs 18 crore for revamping the machines. Due to financial liability, we shut down the mill,”

Sebastian pointed out that the mill did function for nine months from September 2015 and the paper produced was sold to many companies.

The paper industry is unviable unless financed by a bank, he said and confirmed that since the management found the paper industry unviable, it had applied for permission to establish a blending plant to start a distillery and brewery in the place of the paper mill.