December 2011 - SIMA

CHAIRMAN’S MESSAGEI am happy that Mr. Deependra Kashiva has joinedSIMA as it Executive Director. He has beenassociated with the Indian sponge iron industry foralmost 30 years. With his vast experience andknowledge ,I am sure that his contribution to SIMAwill be immense. Immediately after joining ,Mr.Kashiva has taken many initiatives in the interestof sponge iron industry and particularly to ourmember units. Let us all give him due support &co-operation so that SIMA may emerge morevibrant and responsive to its members.Indian sponge iron units are presently at criticaljuncture. The entire industry is very badly affecteddue to non availability of critical raw materials andtheir ever rising price and sluggish market whichis not able to absorb the increase cost of productionresulting erosion of bottom lines of all sponge ironproducers. The confidence level is so low that thefuture investment programmes are not finalized asentire sector is struggling to continue even existingoperations. Sponge iron sector, which was earlierrecorded top priority, is now a neglected sector. Itis a very ironic situation knowing well that ambitioussteel production plan which cannot be fullyachieved without the support of sponge iron sector.Closure of iron ore mines in certain areas ofKarnataka, Goa and Odisha and substantial exportiron ore have affected the iron ore availability. Totake care of present iron ore scenario it isimperative that iron ore export should be bannedand fiscal incentive be given to the iron orepelletizing units. Government should award theiron ore mines only to those units who undertaketo set up agglomerationfacilities at the mine pit head.On the coal front CIL will not beable to meet fast emergingrequirement of coal in thecountry. Recent actions of thegovernments of Australia &Indonesia and weakening of Indian rupee haverestricted the option of using imported coal.Government of India should invite the private sectorinvestment and streamline the procedure foropening new mines at the earliest. This should beaccorded top priority by the government. Therecent decision of the government to examine go/no go area on a case to case basis is a step inright direction. However, the process should beexpedited at the earliest.Our all 3 gas based units are also very badlysuffering because non availability of natural gas.These units are unable to use imported LNGbecause its prices are 4 times higher than theprevailing domestic prices.This sector, has been contributing more than Rs.40,000 cr revenue across the value chain, providesemployment to more than 1,50,000 persons andcontributes more than Rs. 4000 cr as excise dutyand more than Rs. 1700 cr as VAT to theexchequer. I am sure government will give dueimportance to this sector which it richly deserve.B.L. AGRAWALDECEMBER-2011/1