Slump in steel demand leaves Orissa units reeling

The slump in demand for steel and aluminium in the country in the aftermath of the economic downturn has taken its toll on the small and medium enterprises in Orissa. Units in the state have witnessed a 30 per cent drop in sales in the past two months.

Gauri Sankar Dash, secretary general, Orissa Assembly of Small and Medium Enterprises: “Following the global financial meltdown, the demand for steel and aluminium has been declining and units which were supplying raw materials to these industries have been badly hit. On an average, there has been 30 per cent decline in sales over two months as the fresh orders bagged by these units from the domestic as well as export market have been almost negligible for these units.”

Dash said most of the SMEs in the state are cash-strapped and in no position to pay their employees. He added: “These SMEs may be compelled to go for retrenchment of their employees if the economic crisis deepens and the demand does not pick up in the near future.”

Niranjan Mohanty, president of Utkal Chamber of Commerce and Industry, said: “The government needs to invest more on infrastructure to revive the declining demand. ”

Mohanty added the SMEs need to be given a greater time for settling their outstanding dues to the banks as liquidity was simply not available.

“Currently, an SME unit is given the NPA (non-performing asset) status by a bank when it has been unable to settle its outstanding dues within three months. We want SMEs to be given six months for settling their dues,” he added. Hemant Sharma, director, industries department, Orissa said: “Orissa SMEs have been hit hard by the credit crunch as banks have now imposed stricter methods of checks and control and are reluctant to lend to the SMEs.”

“As prices of metals like steel, aluminium and copper have slid due to fall in demand, firms are mulling to cut production. SMEs supplying raw materials to these industries have been hit. Also, the SMEs in the state engaged in textiles sector and exporting their products to the overseas markets have been affected due to the downturn,” he added.