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Blow to MSME sector, 10 induction furnace units closed in Odisha's Sundargarh

Industry sources said the 10 standalone IF units procured power from Tata Power Western Odisha Distribution Limited and were closed after high electricity tariff rendered the units unsustainable.

In yet another blow to the struggling MSME sector in Sundargarh district, 10 standalone power-intensive induction furnace (IF) units producing ingots have been closed. Earlier, short supply of ingots, the raw material used in re-rolling mills, had led to the closure of half a dozen such units in the district. 

Industry sources said the 10 standalone IF units procured power from Tata Power Western Odisha Distribution Limited (TPWODL) and were closed on June 30 after high electricity tariff rendered the units unsustainable. 

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Several sponge iron plants like Scan Steel, Suraj Products and Bajrangbali Steel, which depended on TPWODL for power supply, had stopped operating several of their IF units. These plants are now operating just one or two IF kilns by arranging electricity on their own. 

Director of Maa Girija Ispat Pvt Ltd, Sameer Agarwal said his unit was among the 10 that had to close down. The high power cost of Rs 6.50 per unit made it tough to operate the IF units. Agarwal claimed IF units like Subh Ispat and Bajrang are also set to close by the end of this month. Each closed IF unit employed around 100-150 workers. 

The combined ingot production capacity of the closed units was around 18,000-20,000 tonne per month. The IF units of sponge iron plants, closed earlier, had led to total monthly production deficit of about 15,000 tonne ingots and billets. The standalone IF units used to produce ingots which were consumed by re-rolling mills to produce flat and long products. 

Agarwal informed, in 2005 around 40 standalone IF units had come up in the district of which 20 were closed permanently by 2018 and the rest in the later years. Odisha Sponge Iron Manufacturers’ Association (OSIMA) chairman Yogesh Dalmia said Sundargarh had emerged as the leading producer of ingot and billet, but the closure of almost all IF units in the district will have a huge impact on local economy.