 "Lenders prepare Monnet Ispat for recovery")
The AOSF held that market forces should be allowed to determine the floor price of iron ore offered for electronic auctions.
"They (OMC) should open the material to the market and allow the market forces to decide the workable rates for each bidder, especially when they are seeing that their e-auctions are total failures. Moreover, the condition of forfeiting earnest money is also another cruel method of punishing the steel industries who fail to lift for reasons like low funds, no viability and high base rates. Despite this, they have mercilessly forfeited as much as they can," Purushottam Kandoi, president of AOSF wrote in a letter to V K Saraswat, member, Niti Aayog.
Though Odisha has drawn a rush of investment proposals in the steel sector, the condition of steel producers with operational projects in the state has been deplorable since 2011. Most the steel units were either shut or running at 10-20 per cent of their rated capacities. Only 1-2 steel companies are operating at capacities in the range of 25-50 per cent, the AOSF letter claimed.
"Industries are permanent structures and are bound by numerous commitments to their labourers/employees, bankers and to the society at large. In any adverse situation, they cannot just wind up their business activities and shift to some other line of business. Taking advantage of this situation, the raw material suppliers like mine owners, transporters and various other suppliers have exploited these industries", said Kandoi.
He alleged that the mine owners have stacked more than Rs 3 lakh crore in their bank accounts/ private chests whereas the steel industy is facing the heat of bankruptcy, resulting in NPA (non-performing assets) and SDR (Special Drawing Rights) to the tune of Rs 3 lakh crore.
While the miner's cost of raising iron ore is hardly Rs 500 a tonne, they were selling it at an exorbitant price, using monopolistic practices, the federation said.
