Steel cluster hopes to gain from sops

The steel cluster of Mandi Gobindgarh in Punjab expects to gain from the impetus given by the government of India and the state governments in the north for infrastructure development during the financial year 2009-10.

The steel units of Mandi Gobindgarh have been adversely affected since the last quarter from the delays in execution various proposed housing and infrastructure projects during the present slowdown.

The slowdown was to some extant made up by the revival of ship-breaking industry in India as the steel scrap available was cheaper than the imported ones.

J P Goyal of Bhawani Industries Limited told Business Standard that the units supplying to automobile manufacturers were hit more than the others as their payments have been locked for the moment. He added that those making TMT Steel, alloy steel and castings were able to protect their bottomlines even in the wake of the recession.

Goyal supplies TMT steel, alloy steel and exports steel castings to the USA, the Netherlands and Australia.

"No doubt, businesses have been affected, but the proposed expenditure in infrastructure development aimed at generating employment in the country would give a big push to our units." Gupta foresees a bright future and plans to diversify into value-added products in steel and hopes to make fresh investments in the next financial year.

"With the prime lending bank rates cut and the availability of raw material (steel scrap and furnace oil) at the a viable price we hope to create a strong base for the future," he said. The substantial fall in the steel prices and the abolition of import duty on steel scrap helped the units to stay afloat despite the slackening demand in the last quarter.

Sudhir Goyal of Madhav Udyog Pvt Ltd told that the volumes slashed and margins squeezed in the last quarter and in the current quarter. But the release of additional liquidity by the Reserve Bank of India coupled with the thrust of the government on infrastructure development keeps their spirits up.

"Due to good credit rating we are being approached by the bankers for fresh lending. We are open to expansion and would go for fresh investment once we get the order in hand and we are quite optimistic to do better once the Lok Sabha elections are over."

The units in Mandi Gobindgarh, some of which are over 50 years old are now mulling technological upgrade. As the command of business has shifted from old generation to new professionally qualified young entreprenuers. Keeping in perspective the correction in the prices of most inputs and easy availability of credit many of them envisage to upgrade their small businesses and consolidate their existing ventures.