Bengal steel sector hit with a double whammy

Kolkata: The steel industry of West Bengal has been hit with a double whammy as operations commenced in green zones. There are several hurdles to resume operation with a truncated workforce, while the risk of becoming insolvent increases if they remain closed.

West Bengal is a hub of small and medium steel companies and only a handful of them have resumed operations with a marginal workforce, which is neither feasible nor practical, steel industry players said.

Production in primary steelmakers like SAIL in the state has been continuing during the lockdown, but at a lower scale.

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The announcement of commencement of activities in green zones from Monday has resulted in the flow of some orders and inquiries for delivery in the small and medium units.

“Out of some 250 steel units, only around 15 units have received permission to restart work. The permitted workforce is too small to make the operations viable. At least 50 per cent of workers’ strength is required in each plant to make it viable,” Chairman of Steel Rolling Mill Association Vivek Adukia told PTI.

“We have written to the state government about it and hope to get some positive response,” he said.

Not many will be able to continue running their facilities if the units cannot operate with more workers, and there lies another problem.

If the plants do not open, small steel companies will be headed towards insolvency and 80 per cent of the units in West Bengal are small and medium players, said Gopal Saran, an advisor to the sector.

Besides, manufacturing facilities cannot run in isolation. “Unless administrative offices are allowed to open, how plant operations can be managed?” Saran asked.

The companies have to execute orders received before the lockdown and order inquiries have also started flowing in from green zones now, he said.

Saran said, “How can the companies do it with 50-75 people out of an average of 600-2000 employees?”

According to industry estimates, at least 30-40 per cent of workers have left for their homes and there is a shortage of labourers for logistics.

Moreover, units which are opening are facing a social issue in managing their workforce.

“Workers who are not inducted are protesting and the question on salary arises when they are not engaged,” Adukia said.

Adukia pointed out that the industry requires permission to transport their products to clients to raise cash that had dried up in the last 40 days of lockdown.

The industry is looking ahead for a guideline from the state government to make their next move.

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