Orissa chief minister Naveen Patnaik is not apprehending any adverse impact of the global meltdown on the investments lined up in the state. ?We do not foresee any impact of the global meltdown on the state?s investment climate?, Patnaik told FE.

Notwithstanding the Orissa government?s belief that the global meltdown would not have any impact on the investment proposals in the state, companies there have started shutting down operations, cutting down productions, putting on hold project implementations and expansion programmes to meet the challenges posed by the market downlook.

Vedanta Aluminium Ltd (VAL), which has set up a 1 million tonne per annum refinery at Lanjigarh, has decided not to go ahead with its expansion plan. The company was proposing to ramp up the capacity to 6m tonne with an investment of Rs 7000 crore. It has also postponed the expansion of its smelter plant at Jharsuguda. The plant?s capacity was supposed to be increased to 2.8m tonne from the present 0.5m tonne.

Vedanta Aluminium has also resorted to cost cutting by refusing to renew contracts of workers and consultants, shrinking perks and facilities of its employees, and freezing recruitments to enable itself to face the global financial crisis.

?The ongoing projects will be completed. But, we would take a wait and watch policy on expansion programmes now?, said Vedanta spokesperson Sasanka Patnaik. ?As we have almost completed two of our major projects?refinery and smelter-cum-power plant–we would be able to pass through this crisis?, he said.

Jindal Stainless Ltd (JSL), which is setting up Asia?s biggest integrated stainless steel facilities at Kalinga Nagar in Jajpur district, is planning to defer its expansion programmes because of the global financial crisis. After commissioning the ferro alloys facilities and the 250mw captive plant, the company is setting up a 0.8m tonne SMS, 0.8 mtpa cold rolling mills (CRM) and 1.6 mtpa hot strip in phase one of the project. In the second phase, JSL was proposing to add facilities for 0.8 mtpa stainless steel and 1.6 mtpa carbon steel with an investment of about Rs 8000 crore.

?We may defer the orders for the phase-II expansion programme?, said JSL chief resident manager Rajdeep Mohanty. JSL is now busy restoring the ferro alloys units, which had to be shut down owing to the breakdown of the power supply tower on October 16, 2008, when a cyclone hit the area. The ferro alloys units are expected to resume operations by this month-end.

?We are going to slow down ferro alloys production as there is hardly any demand in the international market,? said Mohanty. ?We may be forced to do some cost cutting exercises if the crisis deepens?, he added.

The other steel and ferro alloys companies in Kalinganagar those have resorted to production slowdown are Nilachal Ispat Nigam Ltd (NINL), MESCO Steel, VISA Steel, Rohit Ferrotech, Nilachal Ispta Nigam Ltd and Maithan Ispat Ltd. In fact, representatives of the companies recently sought a bailout package from the state government, expressing their inability to sustain plant operations in the present situation.

?With demand for steel and ferro alloys drastically falling in the international market, small companies have no other option but to resort to production cuts?, said Niranjan Mohanty, president of the Utkal Chamber of Commerce & Industries (UCCI), an apex body of the industries in Orissa.

IMFA, the country?s largest ferro-alloys producer, has shut down one of its five 157 MVA facilities at Choudwar in Cuttack district from November 1. As a result, the production capacity of 2 lakh tonne per annum would be affected. The company has also shut down one of its 108mw plant.

?There is no demand for the product in the market. And, more so, it is difficult to remain competitive in the market with imported coal to feed the power plant?, said IMFA spokesperson Sanjeev Das.

Orissa has topped the list of states by lining up investments worth Rs 6 lakh crore in the sectors like steel, aluminium, power, ferro alloys, cement, port and IT.