Punjab steel re-rolling mills eye Pak market

Induction furnaces and steel re-rolling mills of Punjab are eyeing the markets in Pakistan and west Asia.

The steel units in Pakistan do not have the technology to produce engineering tools. There is a big market for engineering tools in Pakistan. Some of the Indian manufacturers are supplying to Pakistan via Dubai but that is not cost-effective.

Mandi Gobindgarh Chamber of Steel President JP Sharma told Business Standard that Mandi Gobindgarh was 300 kilometers away from Lahore, which is the hub of steel units in Pakistan. Many steel units in Punjab, which are on the threshold of closure could be revived with opening up of trade between India and Pakistan.

Specialised products like engineering equipment, sponge iron-based casting and ingot moulds can be exported from Mandi Gobindgarh in large volumes. Sharma added that Pakistan and west Asian countries needed huge quantities of steel for development of infrastructure and entrepreneurs of Punjab could tap this opportunity. "It would be viable to export via Pakistan to Afghanistan that needs large quantities of steel for reconstruction work," said Sharma.

He said that the units in Mandi Gobindgarh expanded their capacities in the last two years anticipating a boom in demand. The surge in demand was shortlived and the recession affected their profits. Since most of the entrepreneurs pumped in huge funds they could shut down their units but were scouting for alternative markets.

Some industry representatives visited Pakistan with Captain Amarinder Singh about two months back to initiate a dialogue with the potential buyers in Pakistan. As a result of this initiative a company in Mandi Gobindgarh has received an order for 1,000 tonnes of steel via Pakistan embassy.

About 300 steel re-rolling mills and 70 induction furnaces in the town are working 4-5 days a week for about 12-14 hours a day. Whereas the units can operate round-the-clock for the whole week.

About 60,000 persons are getting direct employment and another 1,50,000 persons are indirectly earning from this industry.

Besides the cyclical fluctuations local factors like late refund of VAT charges and inspector raj have also adversely hit the industry.

"The thaw in the Indo-Pak relationship can go a long way in reviving the industry, which played a vital role in the economic development of this region", said Sharma.