Videocon to defer its Bengal steel project

Videocon to defer its Bengal steel project

Kolkata: Consumer electronics and home appliances manufacturer Videocon Group has decided to defer by three-six months the launch of its Rs15,000 crore steel and power plant in West Bengal, betting that the global economic slowdown would push down costs.

“We expect the import cost of machinery required to set up the plant to come down sharply in the next few months. This would help bring down the overall project cost," chairman Venugopal Dhoot said.

A multitude of investments in the steel sector in the state are getting delayed because of the slowdown and a gloomy outlook for the steel industry. Banks are not willing to lend to the companies until they are certain about viability of the projects.

“Banks are not convinced about the viability of the project until we can prove that we have secured at least 50% of the coal supply required for the project," said Lalit Beriwala, director of Shyam Steel Industries Ltd, which has planned a 1.6 million tonnes per annum steel plant in the state.

Even smaller companies are feeling the pinch of the slowdown. Ajay Kumar Tantia of Jai Balaji group, which has proposed a Rs16,000 crore steel and captive power plant in Purulia district, said banks are going slow on disbursement. He said the next 10-15 days would decide whether the project gets delayed or not.

“The caution on the part of banks is a consequence of the general market conditions," said K.K Agarwal, executive director of Allahabad Bank. “Many of the projects are yet to even start and prices of steel are already falling sharply. The entire situation is forcing banks to reassess the viability of projects," he said.