Bengal government plans phased closure of Durgapur Chemicals

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Durgapur Chemicals Ltd.

Durgapur News Service, 19 August 2016: In a major policy making decision, the Mamata Banerjee led West Bengal government has decided to close down three sick industrial units Lily Biscuit, Neo Pipes and Tubes and National Iron and Steel Company (Nisco) and disinvest Durgapur Chemicals Limited.

In a meeting held on 17 August 2016, the state cabinet has decided to put up Durgapur-based Durgapur Chemicals Limited (DCL) for disinvestment in a phased manner. The government, however, said that it would absorb the DCL employees elsewhere.

DCL started commercial production of Phenol, Phtalic anhydride, Mono-chloro Benzene, Caustic Soda, Chlorine and Hydrochloric Acid in 1968, making it one of the pioneering industries of the industrial town of  Durgapur. On 17 February 2009, a new 100 tons per day membrane cell plant was inaugurated as an added capacity augmentation initiative.

However, the plant continued to post financial losses. In an attempt of making a turn around, the company which had been incurring continuous losses due to obsolete technology, higher costs and increasing dependence on budgetary support to meet operational deficit, the state government took financial cum operational restructuring from February 2004 to July 2010.

A performance audit done from 200607 to 2010-11, to assess the post restructuring performance of DCL was submitted by the CAG on 31 March 2011.

The CAG report mentions that the paid up capital of DCL had reduced from INR 406.01 crore to INR 57.28 crore. For implementation of the modernisation projects, the borrowings of the company increased from 6.29 crore in 2006 to 62.60 crore in 2011.

CAG in its report stated that the company failed to mobilise adequate working capital due to its inability to generate own resources. The company could not recover its cost of operation as cost growth outstripped the growth of sales realisation during 2007-11.

The trade unions meanwhile expressed concern at the disinvestment plans for DCL. Mr. B K Chakraborty, District CITU president said, “We never expected such a decision from a government that talks about protecting worker’s right and developing am industry-friendly environment.

The decision is seen by political analysts as the first non-populist move by the Mamata Banerjee government since it came into power in 2011.

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