Fourteen re-rolling mills located in the coastal area, which have a production capacity of 400 to 4000 tonnes per month, have been depending on VSP for semis (billets, blooms, mis rolls) for the last three to four years.
A few years back, based on the request of VSP officials, these mill owners converted their units from scrap-based to semis-based.
For this they had invested about Rs 50 lakh to 4 crores on each unit, and these mills have been consuming Rs 350-400 crores worth of semis from VSP every year.
Due to increasing demand for steel products in the domestic market, VSP has hiked its product prices by Rs 2,500 to Rs 3000 per tonne during April to August this fiscal.
This price rise adversely affected the financial conditions of the fourteen units.
Unable to bear the price, all of them, which depend on VSP solely for raw materials, stopped production for nearly 30 days from August 23 to September end.
Following a plea from the mill owners, the VSP agreed to accord a discount of Rs 9 00 per tonne. With this all the14 mills have recommenced production from October 1.
