Mandi Gobindgarh steel industry rusting

Manav Mander

Tribune News Service

Ludhiana, March 23

The steel town of Punjab, Mandi Gobindgarh, 55 km from Ludhiana, which is known as one of the oldest iron and steel hubs (in operation since 1930s), is dying a slow death.

This town, comprised a dense cluster of nearly 500 rolling mills, induction furnaces and foundries, can churn out everything from ingots, construction steel, specialised high carbon steel to every known description of angles and channels.

The sad part of the story is that more than a third of the units in the town’s industrial cluster have shut down. Many have literally vanished while some have been taken control of by banks to recover their loans. Many others are on the verge of closure.

The existing operational units are working at minimum capacity. Factories that ran round the clock have now been running single 8-hour shifts. Sundays, which earlier were busy days, are now off days here.

“The local industry is facing many problems. We are Unhappy over high power rates, lack of tax benefits and unfriendly attitude of the state government. The town, once famous in Asia for its steel products, has lost its sheen,” said Jagdish Chand, a re-rolling mill owner.

Power woes

Failure of the Punjab State Power Corporation Limited to provide uninterrupted power supply to the industrial sector is one big reason for the pitiable condition of the industry. Despite depositing advance power consumption charges, consumers have not been able to get sufficient power to run their units un-interrupted. Compulsory weekly offs have been imposed on the industry, making things worse for them.

Apart from the shortage of power, the costly power is the major cause of concern for the furnace industry. Purchasing private power has also become impossible for the industry due to heavy cross subsidy imposed on it. “High amount of cross subsidy imposed on power is a major deterrent to the industry,” said Lalit Jain, another industrialist from the area.

In Punjab, nearly 50 per cent of the secondary steel makers, who produce steel through the induction route, have shut their units. The main reason why these units have shut down is the high cost as well as the shortage of power. Nearly 15 or 20 per cent manufacturers have put up their furnaces on sale, but have failed to find buyers, and those in business have cut down their production to 50 per cent. The main raw material of the steel industry is power and it is already in short supply,” he added.

Labour shortage

The launch of the Mahatma Gandhi National Rural Employment Guarantee Scheme is one major reason for labour shortage here. The frequent wage revisions are also being blamed by the industry as another reason for the problem.

“Shortage of labour is one major challenge being faced by the industry of the state. After the launch of MGNREGA scheme, labour is shifting to their native places. On one hand the industry is not being supplied enough power and on the other we are forced to pay wages to the labour even if they are sitting idle due to power cuts. The loss is ultimately borne by industrialists,” said Satish Gupta, who runs his furnace unit in the steel town.