Kalinganagar steel units seek help from OMC

The recession hit industries located in the Kalinga Nagar area of Jajpur district, have appealed to the state government and the Orissa Mining Corporation (OMC) to come to their rescue for keeping their units operational.

They have sought supply of iron ore and chrome ore at fair and reasonable rates and acceptance of the H-1 rate in the auctioning of ores by OMC to overcome the raw material sourcing problem.

The desperate call by 11 industrial units in the Kalinga Nagar Industrial Complex (KNIC) follows the 25 percent erosion in the capital base by these companies in the third quarter. While Jindal Stainless has taken a hit of about Rs 500 crore, Visa Steel suffered a loss of Rs 24 crore and Rohit Ferrotech incurred a loss of Rs 47crore during this period.

Purushottam Kandoi, president, Kalinganagar Industries Association (KIA), said, “the KNIC units incurred heavy cash loss during the third quarter with about 25 percent erosion in their capital base. Unless, the OMC, the main supplier of iron ore and only supplier of chrome ore to these units, comes to their rescue the last quarter of the current fiscal will be worse.

He said, OMC management has been fixing workable rates of the ores deviating from the three year old practice. However, it needs to assess the ground realities faced by these units before fixing the raw-material price.

Alleging that OMC is maintaining the disparity in the rates for same grade of ore in the different sectors, Kandoi said, it is charging Rs 1709 per tonne of iron ore at Daitari when it is sold at Rs 1152 per tonne in the Barbil zone. Such discrepancy should go since the selling rate of the finished goods is same throughout the state and these units must be served from the nearest source.

These units have so far invested more than Rs 15,000 crore employing about 30,000 persons. Out of the total investment, the bank loans are about Rs 12,000 crore. While the Union government and the Reserve Bank of India (RBI) are relaxing the norms to help the steel industry face recession, the OMC is going back on its promise to provide required raw material to them.

Seeking highest level of political intervention to resolve the issue, Kandoi said, they have made a representation to the chief minister Naveen Patnaik about the problem. Unless urgent action is not taken by the government, the industrial units in Kalinganagar will be forced to lay off the employees, he warned.