The Hindu Business Line : `Wire products units on the verge of closure'

THE wire products manufacturing units in and around Madurai, using mild steel wire rods as basic raw material, are on the verge of closure as they are forced to procure their requirements from steel traders paying higher prices, instead of obtaining the same from the mills directly.

Visakhapatnam Steel Plant, (VSPL), the main suppliers of wire rods, was supplying wire rods to all small-scale industries (SSI) in the State on a long-term contract (LTC) basis and also through spot disposal, based on the requirements.

During 2003, the company pushed the wire rods through hardware dealers, along with other fast moving steel items like angles and channels. As dealers got heavy profits in these items, wire rods were sold to small-scale units at a lesser rate. A situation was thus created, in which, the SSI units were forced to procure their requirements compulsorily through hardware dealers.

Later on, when these units directly approached the company for direct supply, they were told that piece-meal orders are not acceptable and orders could be booked only on a long-term basis. However, orders from SSI units on LTC were not booked. The company has preferred to supply only through hardware dealers.

Despite their lifting 100 per cent of their LTC quantity, they are given the benefit of lifting the excess quantity in the stockyard in Tamil Nadu. This has helped the emergence of a cartel like situation among dealers holding huge stocks and hold the market to ransom, demanding higher prices now, creating artificial scarcity in supply, alleges Mr P.T. Krishnamoorthy, Secretary, Madurai District Tiny And Small Scale Industries Association.

More Stories on : SSI | Tamil Nadu | Steel

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