Sword Of Damocles Hangs Over Steel Entrepreneurs
The falling prices in the world steel market, reduced import duties on steel, eroding profits and a growing sign of recession in the Indian economy have given a fright to steel entrepreneurs.
All the ambitious steel projects were mooted during the boom in stock markets in 1994-95 and 1995-96. But conditions since then have changed for the worse in the capital market as also in the steel market. Many of the steel projects assumed their viability on a HR coils price of $450 to $475. Prices are now down to $300 and less. In such conditions to talk of export-oriented HR coils project is to live in an unreal world.
The existing producers feel that if steel industry becomes unprofitable, the biggest losers would be the financial institutions who have poured in or committed Rs 30,000 crore to the industry. The steel producers do not want these institutions to finance any new greenfield steel plants and turn the market more uneconomical.
The Standing Committee for the Ministry of Steel in its 18th report feels that in view of the massive capital requirements, production of primary steel is likely to continue to be the responsibility of the public sector for a considerable time.
It said that public sector's role in development of the steel industry could not be easily abdicated not withstanding the changes in the economy during the past decade,