Punjab steel units contemplate diversification

It took months for the government to check steel prices, but still it has failed to achieve the desired results for SMEs in Ludhiana

According to S C Rehlan, regional chairman, Engineering Export Promotional Council (EEPC), the issue of steel prices is still not settled.

The ingot prices that were Rs 33,300 PMT in the beginning of this month have now touched Rs 42,000 PMT, a 26 per cent increase.

Rehlan said that even though the central government had taken various measures to break steel cartels and curb steel exports, industries in Punjab still failed to benefit.

He alleged that when the export duty on steel products was implemented, the steel supply to engineering industry was limited by the steel producers.

With the export duty on steel items likely to be waived off, it once again could lead to escalation in steel prices.

Rehlan added with engineering industries in state not able to sustain themselves, many industrialists in state have started diversifying into other ventures, including real estate.

According to Rehlan, the trend towards diversification would continue, unless steps were taken to protect the SMEs.

DS Chawla, former president, United Cycle and Parts Manufacturing Association, Ludhiana, adds it is not only the steel prices but prices of other raw materials that have gone up in past.

The prices of MS round that was Rs 27,000 PMT in December has touched Rs 47,000 PMT in June

Similarly the prices of Hb wire that were Rs 32, 000 PMT in December have now touched Rs 54,000PMT.

Also the prices of rubber that were Rs 100 per kg in December have now touched Rs 148 per kg.

Chawla said already the hike in steel prices had forced closure of many small enterprises based at Ludhiana, engaged in manufacturing bicycle parts. The rest have cu their production by 30-35 per cent. Now with prices of other components also going up, the consequences could be severe.

Another factor hampering growth of SMES in Punjab is the price of furnace oil.

According to PD Sharma, president, Apex Chamber of Commerce and Industry (Punjab), the price of furnace oil that was Rs 13 per litre two years back has now touched Rs 38 per litre.

Sharma rued that while the Centre had asked the state government to slash sales tax on petrol and diesel, no concrete steps were taken to bring down the sales tax on furnace oil used by forging industry and cycling industry.

Also with surging inflation and RBI deciding to suck the excess money from the market by increasing the Credit Reserve Ratio and Repo rates, the industrialists apprehend a hike in PLR.