Crisis-hit ferroalloys industry loses exports market

Thirty-five ferroalloys units spread over the State with a total requirement of 400 MW used to pay Rs. 1150 crore to the Discoms.

Ferroalloys industry based in Andhra Pradesh has almost stopped exporting its products to South East Asia, Middle East and Europe.

Till 2012, almost half of their finished product was getting ready-made market outside, which has now been captured by Qatar, Kazakhstan, Oman, Malaysia, Oman and Norway.

Thirty-five ferroalloys units spread over the State with a total requirement of 400 MW used to pay Rs. 1150 crore to the Discoms, Rs. 650 crore towards excise duty, Rs.150 crore for VAT and CST and Rs. 35 crore towards imported raw material during their hey days. However, exorbitant increase in power tariff has put them now in a crisis that is worsening.

AP is now charging them Rs. 4.87 per unit, dispensing with special offer being extended to them which saw an investment of Rs.2,000 crore during 2002-12 due to ‘stable’ power policy. On the other hand, their counterparts are getting power at about Rs. 4.20 per unit in Chattisgarh and Rs. 4.10 to Rs. 4.15 per unit in West Bengal. Though the tariff is fixed at Rs. 4.85 per unit, most of the producers in Odisha have no dependence on the grid due to captive power generation.

“The cost of production for one tonne of manganese alloys is now Rs. 52,000 to Rs. 54,000 a sales realisation of Rs. 45,000. Similarly, a tonne of ferro silicon is costing us Rs.74,000 as against sales realisation of Rs.64,000 forcing us to either shutdown or scale down our operations,” said AP Ferro Alloys Producers’ Association vice-chairman P.S.N. Raju. During a chat with The Hindu , the ferroalloys producers said on Saturday that as of today, 29 of 35 units had been shutdown. Other six are being operated due to various compulsions. Anjaneya Alloys Ltd Senior General Manager (Commercial) Sandeep Kr. Bairoliya said several investors had put their money in AP increasing the number of units from six to 35 during 2002-12 due to its ferroalloys friendly power policy. “Subsequently, the tariff was raised steeply. Tariff was enhanced by Rs.2.22 during past four years.”

“Our working capital base is eroding fast. The debt burden is also putting a heavy toll on us as; if we default continuously, our loans will be declared as NPA,” said Vidhan Mittal, MD of MDA Mineral Dhatu (AP).