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ShareKolkata: Are steel projects in West Bengal in a Catch-22 situation?
As pockets in rural Bengal burn in Maoist violence, steel players such as JSW Steel, Jai Balaji and Shyam Steel find themselves in a tense wait-and-watch situation.
Incidentally, all the projects announced are in Maoist-infested areas of West Midnapore and Purulia.
Caught in the crossfire, especially at Salboni in West Midnapore, JSW Steel's 10 million tonne integrated steel plant is watching the ground reality closely. The Jindals have decided to postpone the first phase of the project by almost a year.
Asked whether the current unrest in West Midnapore had anything to do with the delay, Biswadip Gupta, CEO, JSW Bengal, told DNA Money, "We are concerned about the ground reality, but the decision to defer the first phase of the project is because of the downturn in the global steel industry. This unfortunate issue (Maoist terror) has cropped up now."
Analysts, however, say the impact of the current unrest cannot be ignored considering that Maoist leader Bikash has publicly announced to the media about his plans to continue the movement against the proposed steel plant and the special economic zone.
Gupta, on his part, said, "At present it is not safe or prudent to work now...it's a wait and watch policy."
He said, "We are utilising this time to do some enabling work like getting the coal mine ready and putting our logistics in place."
JSW had acquired around 4,800 acres of land at Salboni and already invested Rs 200 crore.
The entire project cost is Rs 10,000-12,000 crore in the first phase, which is now likely to go onstream only by 2013.
Purulia, till now, has remained calm, but analysts feel, being a Maoist stronghold, the heat of violence could be felt there, too.
For players like Shyam Steel, Jai Balaji and Adhunik Steel, all of which are setting up steel projects in Raghunathpur, Purulia, it is also "wait and watch".
Lalit Beriwala, director, Shyam Steel, said, "There has been no impact on our project... the situation has been calm here. Most of the unrest has been limited to the West Bengal-Jharkhand border."
However, he said, if the unrest spreads to Purulia, then he may have to sit with the state government and take a call on changing the site of the project, though he does not foresee such an extreme eventuality.
Shyam Steel requires 1,200 acres for a 1.1 million tonne per annum (mtpa) steel plant, 150 mw captive power plant and one million tonne cement plant at an investment of Rs 3,500 crore.
The state government is in the process of acquiring 600 acres, which are likely to be handed over to Shyam Steel over the next 2-3 months.
Jai Balaji is setting up a 5 mtpa plant, three mt cement plant and 1,215 mt captive power plant, at an investment of Rs 16,000 crore (two mt in the first phase along with 400 mw power plant and 1 mt cement plant).
