Magnesite unit's fate hangs in balance

By A. V. Ragunathan

SALEM, OCT. 14. The fate of the Salem unit of Burn Standard Co., a Central Government enterprise, hangs in balance, because it is being ``starved of working capital and raw materials.''

What causes concern for the workforce and the officials of the unit is that the Board for Industrial and Financial Reconstruction has directed the Industrial Investment Bank of India to advertise for change of management.

If there are no responses, the BIFR reserves the right to take further action, which might be even winding up of the unit.

Voicing apprehension over the move to either privatise or close down, the officials and workers of the unit have come under the banner of ``Save Burn Standard Committee'' to jointly take up their cause.

According to informed sources, earlier the company had under its wing six refractory units at Jabalpur, Newar, Gulbarbari, Durgapur, Ranigunj and Salem, and, two engineering units at Burnpur and Howrah (manufacturing rail wagons).

In 1994, the entire company was referred to the BIFR which subsequently ordered for the closure of all the refractory units, except the Salem unit. In fact, the BIFR had sanctioned Rs. 60 crores as part of the revival package, out of which about Rs 30 crores had been earmarked for the Salem unit.

The sources admit that the unit, which has been making profits ever since its inception, suffered a cash loss of Rs. 11 lakhs in 1999-2000 and Rs. 1.5 crores in 2000-01. But the blame for the setback is put on the company's management which seems to be more lenient to the engineering wings than the refractory unit.

The order book position of the Salem unit is full up to March 31, 2002. Having a long-standing reputation in magnesite prospecting, particularly the dead burnt magnesite, the Salem unit had still recently emerged as a leading player in the market.

But the cut in anti-dumping duty has opened up the domestic market to Chinese DBM, which is known for negligible silica content and cheaper price (less by Rs. 1,500 a tonne).

The committee is confident that the unit could be made visible if adequate working capaital is made available and uninterrupted supply of raw materials is ensured. It has mooted three suggestions - the unit can be made a separate entity; or it can be made a subsidiary of SAIL, or, it can be handed over to the employees to be run through a cooperative set-up.

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