Andhra Pradesh - Visakhapatnam   

Slowdown hits Vizag’s industries hard

VISAKHAPATNAM: The buoyancy in the economy pepped up the spirit of industries based in Visakhapatnam in the first three quarters of 2008 but the market recession in the United States during last three months of the year led to a lot of uncertainty.

With investors developing cold feet to put their money in new projects due to worldwide recession, uncertainty also dogs the projects in the pipeline, at least for the time being.

The fledgling IT industry in the city became the first casualty of market slump with Microsoft, Google, Oracle and other major companies cutting down their orders to about 20-strong city-based vendors. This also has put a question mark over the efforts to promote the city as tier-II destination for investments in IT sector.

Rashtriya Ispat Nigam Limited, the corporate entity of Visakhapatnam Steel Plant, suffered a jolt due to drastic fall in demand for steel consequent upon slowdown in infrastructure sector.

It felt the pinch more than other major steel-makers because of the fact that it has no captive mines to cut down its production cost.

Now on expansion mode to increase its capacity from 3 to 6.3 million tones, VSP would need 27 million tonnes of iron ore and 8.5 million tonnes of coking coal to meet the targeted production of 16 million tonnes by 2020. Already it is faced with inventory control with products worth Rs.3,500 crores lying in the stockyard forcing the management to slash production drastically.

The slump in market has also forced other industries to impose a big cut in production.

The Hindustan Shipyard Limited, which began with lot of hope due to the Group of Ministers’ decision to clear its takeover by Ministry of Defence, is facing worst-ever crisis with elections round the corner.

As of now, the Union Cabinet has not cleared the proposal with various ministries clarifications on the takeover plan on various counts.

The Visakhapatnam Port, which was relegated to second slot last year after turning frontrunner as the country’s premier port, is already hit due to slowdown. Sources say it is likely end the fiscal at the same slot with cargo throughput at last year’s level.

The market condition will also make it difficult for Bharat Heavy Plate and Vessels, which was taken over by BHEL in May, to become a dedicated unit for industrial boilers with a turnover of Rs.1,000 crores in next five years.

The Mittal Group has put on hold its plan for investment in $9 billion refinery and petrochemical complex at Achyutapuram after it suffered heavy losses in steel business. Delhi-based Unitech, which was allotted Knowledge City project at Kapulauppada in an area of 1750 acres, is likely to take its own time to ground work due to recession-hit realty sector.

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