State may scrap MoU with Maharastra Seamless

The state steel & mines department has served a showcause notice on Gurgaon-based Maharastra Seamless Ltd for unsatisfactory progress on its proposed steel project in the state for which the company had signed the Memorandum of Understanding (MoU) on August 26, 2004.

The department has threatened to scrap the MoU if the company fails to offer a suitable response clarifying the reasons for the inordinate delay in project execution within 30 days.

Maharastra Seamless proposed to set up a 0.48 million tonne per annum (mtpa) steel plant at Jajpur at a cost of Rs 450 crore.

The issue of showcause notice to Maharastra Seamless may well signal the beginning of the crackdown on non-serious players by the steel & mines department.

The MoUs of all major steel players including Posco India, Essar Steel, Bhushan Power & Steel Ltd, Visa Steel and JSL Steel had expired and the renewal of their pacts were under the consideration of the state government.

The state has signed 50 MoUs with various companies in the steel sector envisaging total investment of Rs 2.3 lakh crore and steel capacity of 83.66 mtpa.

Out of this, investments worth Rs 56,090.34 crore have been grounded as on March 31, 2011.

As many as 29 steel firms have started partial production, achieving a steel capacity of 8.66 mtpa out of the total envisaged capacity of 83.66 mtpa and Captive Power Plant (CPP) generation of 1069 MW.

The steel sector has hitherto generated an overall employment for 75,681 people which includes direct employment for 23361 persons and indirect employment opportunities for 52320 others. While 54841 people have been recruited from Orissa, the balance 20840 are from outside the state.

Among the companies that have made major investments are Jindal Steel & Power Ltd (Rs 11283 crore), Bhusan Power & Steel Ltd (Rs 7000 crore), JSL Ltd (Rs 5367.59 crore), Essar Steel (Rs 5077 crore), Tata Steel (Rs 1818.12 crore), Adhunik Metaliks Ltd (Rs 1740 crore) and Brahmani River Pellets Ltd (Rs 1430.65 crore).

Posco India has invested Rs 329.15 crore while ArcelorMittal is yet to make any investment on its greenfield steel project. Other steel investors who are yet to invest anything are Amtek Metal and Mining Ltd and Deo Mines & Mineral Ltd.

The steel units that have kicked off partial production are mostly the small and medium players, including Aarti Steel which has achieved a capacity of 0.25 mtpa, Adhunik Metaliks (0.26 mtpa), SMC Power Generation Ltd (0.25 mtpa), Sree Metalicks (0.28 mtpa), OCL Iron & Steel Ltd (0.08 mtpa) and MSP Metaliks (0.12 mtpa).