With No Revival Hope, Closed Plants Sold at Scrap Value

Published: 29th July 2014 08:42 AM  |   Last Updated: 29th July 2014 08:42 AM   |  A+A-

CHART.JPGROURKELA:  State Government’s claims of industrial growth notwithstanding, the situation has turned from bad to worse. Many medium and small iron and steel industries in Sundargarh are heading towards a premature death owing to the prolonged recession. Many have already been closed down over the last four years.

Industry sources said properties of several medium and small industries have been taken over by banks for default of loan. In majority of cases, since no bidders are coming forward to take over, the defunct units are sold as scrap.

Chief Manager of UCO Bank’s mid-corporate branch (MCH), Rourkela, Satish Kumar said around five corporate loan accounts to the tune of `100 crore have turned ‘bad’, while talks are on with holder of one account for repayment of loan. He said three accounts with a value of around `80 crore are assigned to different parties for take-over.

Kumar informed that during auction of the Angul-based Jai Jagannath Casting Pvt Ltd, an induction furnace unit, no bidder came forward and the plant and machinery were sold as scrap. Another major blow was the closure of Barbil-based Shree Metallics Ltd in adjacent Keonjhar district which defaulted `66 crore of the UCO Bank’s MCB. If other banks are taken into consideration, the loan default will amount to a whopping `400 crore, Kumar said. Shree Metallics was the first plant in the State to be set up with indigenous technology.

A senior officer at the SME branch of State Bank of India (SBI) here said eight to 10 iron and steel manufacturing units have faced closure, while none is interested to take over management of three sponge-iron plants  in Sundargarh.

Odisha has around 95 sponge-iron plants. The Rourkela cluster with 45 plants and rated collective production capacity of around 9,000 tonnes per day is seen as the country’s largest and important iron and steel producing place if sponge-iron route is considered. Now, the daily production is pegged at 2,000 tonnes.

The Keonjhar cluster has above 20 to 25 sponge iron plants followed by 15 in Jharsuguda-Sambalpur region and some more plants are running in Dhenkanal, Angul and Mayurbhanj districts. The units in Sundargarh employ around 15,000 people with direct jobs and 35,000 with indirect jobs.

Industrialist and former president of Odisha Sponge Iron Manufacturers Association (OSIMA), Gouri Shankar Agarwal, said a handful of sponge-iron plants having their own iron ore mines are managing to survive. At least seven plants are hoping for management takeover and loan accounts of 15 others have either become NPAs or nearing NPAs.

Sources said the high cost of inputs has spelt doom for the sector. While iron ore’s landing cost is priced at `6,000 per tonne, that of ‘linkage’ coal amounts to `2,300 and open market coal comes at `3,500.

Besides, there are no buyers for the expensive finished products. Due to continuing loss over the years, the plant managements have exhausted working capital.

Rourkela Chamber of Commerce and Industry (RCCI) president, Subrata Patnaik, said the Government should look into the issue. Union Tribal Affairs minister Jual Oram said he would review the situation and take it up at appropriate level.


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