Post News Network
Jajpur, Nov 24: With the Mesco Steel Plant in Kalinganagar here remaining closed for over 10 days, speculations are rife that the steel producer might wind up its operations in the state.
This has put employees of the steel plant in a lot of distress as they apprehend losing their jobs in case the plant is permanently closed. The plant has remained closed due to recurring losses arising out of a slump in steel prices in the international market.
The slump in steel prices has resulted in losses for most steel plants with many of them not having their own mines for which they are facing an acute shortage of raw materials to run their units.
Moreover, Mesco Steel is plagued with the extra burden of Maithan Ispat which it purchased for a sum of Rs 1,200 crore around four months back. However, the company in its bid to maintain a strong face has claimed to have shut down the plant for maintenance purposes. However, sources say the plant is closed as it is incurring losses of about Rs 7 crore every month.
Sources said production of value-added steel has gone up in China due to which the country is managing to sell steel for cheaper prices in the international market.
The steel manufactured from Kalinganagar Industrial Complex has however failed to become value-added and has lagged behind in term of sales compared to China steel. Steel manufactured here is costlier compared to China’s steel due to high transportation and production costs. This has resulted in a slump in demand for the local steel and has pushed the local industrialists into distress.
Mesco Steel was the first to establish its steel plant in Kalinganagar here when the late Biju Patnaik was chief minister. Patnaik had then imposed a condition asking steel plants to establish their manufacturing units first without which they would be not allocated any mines in the state. The company had earlier claimed to have suffered a loss of over Rs 20 crore during June, July and August this year. However, the company is now claiming that is not making any profit and that it its profit and loss are on an even keel.
When contacted, joint managing director Purnachandra Sahu said the plant has been shut down for maintenance and will resume operations soon.