Jayashree Chemicals, an SK Bangur Group firm and the only caustic soda manufacturing plant in Odisha, is staring at closure, with an accumulated loss of over Rs 15 crore.
The company's plant at Ganjam in south Odisha, is facing a serious financial crisis weighed on by escalating input costs and hike in power tariff that accounts for nearly 65% of its production cost.
"The company is incurring a loss of more than Rs 1 crore every month. The key raw material- salt is mostly imported from Gujarat and the cost of this raw material has doubled since the beginning of the plant's commercial operations. The company had taken a loan of Rs 90 crore in 2010-11 to fund its expansion plan but now we are defaulting on payments to our bankers,” said a senior company official.
Burdened by the steep cost of power, Jayashree Chemicals had sought exemption in electricity duty from the state government for 10 years. The hike in power tariff had nullified the reduction in power consumption which the company had achieved through installation of membrane cell technology.
The state government, was, however, yet to take a call on electricity duty waiver for the company.
"We had given due representations to the departments of industries and energy and also to Industrial Promotion & Investment Corporation of Odisha Ltd (Ipicol), pleading our case for electricity duty exemption. But the government has been unresponsive to our request so far,” the official added.
An industries department official said, “The proposal of Jayashree Chemicals is still under scrutiny and an appropriate decision will be taken.”
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Meanwhile, Jayashree Chemicals said the government's inaction will force it to go for lay-off, culminating with the shutdown of the plant.
"If this situation persists, we will have to take a painful decision to retrench our employees followed by plant closure. Currently, the plant engages more than 400 employees directly and over 500 others in the contractual and casual labour category. Apart from around 1,000 families that are directly dependent on our plant for livelihood, the plant also supports local salt producing farmers,” the company official said.
By using locally available salt, to the tune of 40,000 tonnes, the company is providing support to local salt producers and all people associated with salt industries. Jayashree Chemicals also contributes Rs 25 crore every year to the state exchequer.
Jayashree Chemicals had ramped up caustic soda production capacity of its plant at Ganjam from 22,500 tonne per annum (tpa) to 53,200 tpa. The company had also invested Rs 150 crore on switching over to membrane cell technology from mercury cell technology.
The company which is engaged in the manufacture of caustic soda, liquid chlorine, hydrochloric acid and sodium hypo chlorite counts Emami Paper Mills, Ballarpur Industries Ltd, J K Paper, Hindalco Industries and National Thermal Power Corporation (NTPC) as its major clients.