If Sterlite doesn't open, dependent SSIs will suffer: Assn

Chennai: As the heat and dust over the closure of Vedanta’s Copper smelting plant in Thoothukudi is yet to settle down even after the state government ordered its closure two months ago, the Copper Consumers Association of South India (CCASI) say their industries are getting choked up due to lack of supply of raw material.

The Sterlite plant’s closure has added to their woes in not meeting the requirements of consumers and has thinned down the workforce in many small-scale industrial units in the form of retrenchment. The association has demanded the government to ensure alternate source of procuring the raw material – copper, and thereby help about 50,000 industries in India to survive.

“The sudden closure of Sterlite has affected our copper supplies, which account for about 40 per cent from Thoothukudi. While 20 per cent is met through the unorganised sector, the rest is obtained from Hindalco and through exports,” say Hemanth Mehta, Hon. Treasurer and A. M. R. Gandhi, of CCASI. Speaking to reporters here on Tuesday they claimed the sudden stoppage of Sterlite’s business operation has created a huge scarcity of copper in the market and there has been a steep increase in the copper premium of upto 9 %.

Sterlite copper is the leading manufacturer in India and procuring raw materials from them is not only time saving but also cost effective. The sudden closure of the plant created a serious dent in the overall profitability and growth of cable and wire industry due to non-availability of material. At present, copper imports at short notice is not possible since most of the contracts are already done. Also, the transit time is long and the overall cost of imports is much higher as compared to sourcing from Sterlite group.

The CCASI is the representative association of consumers of copper in south India. Copper is primarily used in manufacturing all types of electrical and electronic equipment and over 20,000 workmen are employed under medium and SSI sectors in south India. The association has urged the government to take steps to facilitate the resumption of Sterlite copper smelter plant’s operation or work out a strategy where they could source the raw material.

“The average annual requirement for copper for us is 10 lakh tons. And nearly 40 per cent of this is met by Sterlite’s plant. Already our production has slowed down and we are unable to meet the orders due to the closure of Sterlite. If we continue to forego the raw material for another six months, then there will be over 20 per cent reduction in workforce,” Mr. Hemanth Mehta told this correspondent.

According to Ajit B. Jain, director, Swarnagiri – wire insulation company, his firm which employed 150 men was forced to lay-off 50 workers due to drastic reduction in copper supplies.

Sterlite’s closure a huge loss to winding wire industry

The Winding Wires Manufacturers Association of India president Sudhir Kumar Agarwal has claimed that the sudden closure of Sterlite’s copper plant has resulted in huge loss to winding wire industry and impacting the production of all electrical and electronic equipments.

“This is  affecting the entire supply chain in terms of deliverability, cost and growth of economy. This has created acute shortage of copper in India and in the long run it will affect gro-wth of Indian economy which is growing as the fastest growing economy internationally,” he said.

If the closure continues, the industry will be forced to import copper at an additional cost of about 5 per cent more than domestic prices, resulting in cascading effect for the ultimate user and can be highly inflationary.

 WWMAI represents the association of producers of winding wires made of copper, which are primarily used in the manufacture of all types of electrical and electronic equipments such as transformers and switch gears, electric motors, generators, alternators, auto electricals, consumer durables and electronics, refrigeration and air conditioning, agricultural pimps, etc. About 25,000 men are employed in 500 units under the medium and SSI sectors having an installed capacity of 3,50,000 MT per annum and the production of about 2,50,000 MT.