Punjab furnace industry struggling to survive

Shivani Bhakoo

Tribune News Service

Ludhiana, July 17

If the slowdown in auto, real estate and infrastructure sector was not enough, the setting up of steel recycling unit in Rohtak has come as a double blow to furnace industry of Mandi Gobindgarh and Ludhiana. The industry feels if the shredding plant — a joint venture of the Central Government and Tatas — was set up in Punjab, the dying furnace industry could gasp for breath.

The industry is of the view that because of “non-interested” approach of the Punjab government, the Central Government has decided to come up with the plant at Rohtak, Haryana, despite the fact that Rohtak doesn’t have any furnace cluster. They said if the plant was set up in Punjab, it would have been much beneficial for furnaces and foundries in the state.

There are around 150 furnaces in Mandi Gobindgarh alone and over 50 in Ludhiana. Around 100 foundries are also dependent on furnaces (foundries mould the scrap and send it to furnaces, which then make all kinds of steel to be used in the auto sector and construction business). The moulded steel is absorbed in different kinds of industries also.

Mahinder Gupta, president, Furnace Association, Mandi Gobindgarh, while talking to The Tribune here said: “The furnace industry is in bad condition for a couple of reasons such as slump in the auto sector, be it commercial vehicles, private, two-wheelers or four-wheelers. Secondly, the infrastructure and construction businesses are also down these days. Apart from these, the major concern is heavy transportation cost which is incurred by the industry to bring scrap from overseas or from outside the state.”

Naresh Kumar, another furnace owner, said earlier (six months ago) only in Ludhiana, around 1,12,800 tonnes of production was witnessed in one month, which has now shrinked to just 42,000 tonnes because of slowdown.

“We have been sending various representations to the state government to grab the opportunity to put up this particular plant in Punjab. If it was here, we would not have to spend huge money to get scrap from outside (Punjab is not near ports and heavy transportation cost is incurred). Compared to Punjab, the Khattar Government in Haryana was able to find a suitable place for the particular plant near Rohtak, which is expected to be functional by 2020”, Gupta said.

President of Induction Furnace Association of North India KK Garg said: “There are no takers of steel in the auto sector and prices have come down drastically. The ingot which was priced at Rs 36,000 per metric tonne is now available for Rs 30,500 per metric tonne. Had the plant been set up near Ludhiana/Mandi Gobindgarh, we would have gained as most of the stock is absorbed here in this part of the region,” said Garg.

“There are no furnaces in Haryana and NCR and all the scrap will come to Punjab (from Rohtak when the plant gets operational). And again, we will be paying freight on that. Had the plant been here, the scrap would be available at much cheaper rates,” Garg added.