Metkore Steel and Alloys Limited (MAIL) has declared lockout at its Ferro-chrome manufacturing plant located in the north coastal Andhra district of Srikakulam.
The company managing director Prashant Boorugu was arrested last year by Mumbai Economic Offences wing for default of payment to the scam-hit National Spot Exchange Limited (NSEL),
The management has pasted a lockout notice on the factory gates in the early hours of Friday ahead of the first shift, according to the local sources. Around 300 workers were employed in the factory's operations.
The company has cited increased power costs and losses, among other factors, as the reason for declaring lockout.
Efforts to reach out to the management representatives, who shifted their base to Bangalore few years ago, were not successful. The deputy commissioner of labor (DCL) of Srikakulam district, D Venkataratnam, said he was not aware of the development.
The company was engaged in the manufacturing of high grade carbon Ferro-chrome for use in the stainless steel industry. The plant has an annual capacity to produce 30,000 tonnes of Ferro-chrome products.
Metkore, which is listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), had reported a net profit of Rs 48.75 lakhs and a total income of Rs 105.25 crore for the quarter ended December 2014. The promoters hold 74 per cent stake in the company. Earlier this month, the company informed the BSE that it has pledged 2.5 million shares against a loan to a firm.
In June last year the factory employees reportedly blocked the representatives of the public sector Steel Authority of India (SAIL) and NSEL from inspecting the Ferro-chrome stocks that were kept at the company's warehouses in Tekkali town.
The inspection was planned after the Maharashtra Protection of Interest of Depositors (MPID) court allowed the auction of Metkore's Ferro-chrome stocks worth of Rs 91 crore under the supervision of the monitoring and auction committee appointed by the Forward Markets Commission (FMC).
Metkore's total payment obligation was at Rs 114 crore in July 2013 of which the company paid Rs 19 crore in the same year. The NSEL defaulters list include five members and 14 clients (some are similar names with different addresses) from the undivided Andhra Pradesh with a total pay-in obligation of Rs 484 crore when the scam of alleged trading of commodities involving fictitious stocks came to light.
Prashanth was among the seven executives of the defaulting borrowers, mostly hailing from AP, that were arrested last year. AP-based NCS Sugars managing director N Nageshwar Rao was also among them.
In 2008 Metkore had acquired GMR Ferro Alloys and Industries. Metkore MD Prashanth is the son-in-law of Grandhi Eshwar Rao, the promoter of Vasavi Industries and a brother of GMR group chairman Grandhi Mallikarjuna Rao.
According to Metkore website, Prashanth Boorugu looks after strategic management and operations. "He is expanding the operations of MAIL in ferro alloys and has also undertaken backward integration measures like acquiring mining rights,"it says.