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Mayank_Pandit
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The government’s decision to lower the excise duty on the products of the mini steel plants buy rs 150 per ton, and to give them financial assistance to diversify there out put away from mind towards special steels and alloys, is welcome. it will not buy any means and the problems that these plants face they have still to liquidate there huge depths to the state electricity board, and the demand for than products is still highly uncertain.
some of the mills which-were teetering on the brink of collapse will be saved, and the managements of the remainder will have something positive to look forward to and plan for. why has the government given this relief to the mini steel plants only ? For, the problems which integrated steel plants face are no less serious than those confronting the mini plants. They too are saddled with nearly a million tonnes of unsold finished steel, and as for there cost of production being substantially lower than those of the mini-plants, this is to a large extent an illusion created by accounting convention and the government's own tax laws.
These conspire to make the provision for depreciation in the calculation of costs wholly unrelated to the actual cost of replacing wornout plant and machinery. Any realistic attempt to do so would require the plant to set aside revenue amounting to not 5%, but around 15%, of other fixed investment every year to meet future replacement costs.