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Industries reel under input cost rise, energy crisis

Article Republished By Javier Troconis

Express News Service

VISAKHAPATNAM: Industries in the State, especially the energy-intensive processing ones, are severely affected due to the load-relief measures imposed on them following a power crisis. The power holiday came as a shocker to the industries as they were not given any advance notice.There are approximately 450 large- and medium-scale industries in manufacturing sectors, such as pharma, ferroalloy and other processing industries.Major units such as the Vizag Steel Plant have been spared as they have captive power plants. 

However, only 10 per cent industries in the State are currently able to generate their own power. On the other hand, owning captive coal-fired plants is not a feasible option for medium-scale units.While solar plants cannot meet the requirement at night, such industries do not have any mechanism to store solar power as well. Terming it a double whammy, sources in industry circles said the power-intensive processing units are facing a tough situation as they are not just dealing with the power crisis but also with the steep rise in the cost of raw material. They added that even in the current power scenario, they cannot stop production.

“The economy is in a unique phase as the cost of basic raw materials has gone up considerably and so has the input cost. This has led to a spike in the price of finished products. As a result, the offtake of the finished products has come down,” another source said.While the government had declared a power holiday—besides the normal weekly off—for industries till May 15, industries anticipate that it will be extended if the situation does not improve. Industries have been allowed to function five days a week and that too for only 12 hours. 

Speaking to TNIE, JN Pharma City CEO Lal Krishna informed that there are around 250 pharma industries in the State and most of them have coal-based captive power plants or diesel generators. 
Stating that the others are purchasing electricity from private sources at higher prices, Lal Krishna said increase in cost of power generation and raw material, along with other factors has led to a 7-10 per cent rise in price of pharma products. “Ultimately, the end-user is the most-affected due to the spiralling prices,” the CEO pointed out.

As much as 50 per cent production at a unit of a Kolkata-based alloy industry in Vizag has been hit as a result of the power supply disruption. Sources in the company said yearly production capacity at their Vishakhapatnam unit stood at 120,000 tonnes but the expected per-day production loss is “equivalent to the percentage of power cut imposed on the unit.” Its wholly-owned subsidiary manufacturing unit at Bobbili with a production capacity of 46,900 TPA, is also facing a similar situation. However, they added that the other units in West Bengal are functioning hassle-free.

Stating that the government should come to the rescue of the industries, Suresh of Vizag Profiles Group, a firm that is engaged in steel handling, trading and manufacturing since two decades, told TNIE, “No new medium-scale industry has opted for a captive power plant as Andhra Pradesh was a power surplus State in 2014.” Elaborating, he said those who have captive power plants could not sell the surplus power to the grid and those who were able to sell it, were not paid. The surge in prices of coal and diesel has also resulted in an increase in the production cost. As a result, there is an increase in GST revenue. The government should reduce GST to compensate the spike in production cost, Suresh opined.

Production loss stands at 50%
Sources in a Kolkata-based alloy industry   said yearly production at their Vizag unit stood at 1.2 L tonnes but the expected daily loss is “equal to percentage of power cut imposed on the unit.”

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