DRI raids sub-standard CRGO importers

New Delhi, Oct 15 (KNN) In a crackdown on unscrupulous use of inferior-quality steel in transformers, the Directorate of Revenue Intelligence (DRI) has raided factory premises and go-downs of at least six companies in Delhi and Jaipur, following a lead that these firms are involved in illegal trade of non-prime CRGO, sources said.

Raids were conducted by the agency on October 9 and 10.  For several weeks, KNN has been raising the issue of cheap CRGO imports that caused several fatal accidents. 

Industry sources said that if concerned executives of these companies are interrogated properly by DRI, they could reveal names of big sharks involved in this trade.

India does not have any manufacturing facility for CRGO, or cold rolled grain oriented electrical steel, and the transformer industry, which is the sole user of the material, entirely depends on imports to meet its requirements.

The annual requirement of the CRGO, also called electrical steel, for the Indian transformer industry is estimated at 3 lakh tonnes, which amounts to 12 per cent of the total world production.

However, the bulk of the electrical steel imported into the country is of scrap-grade which is available at half the price in countries like US, Japan, Korea, France, Italy, Germany, Russia and Poland, allowing unscrupulous traders to make 100-250 per cent profit.

Despite the order issued by the steel ministry in 2012 stipulating Bureau of Indian Standards (BIS) certification for CRGO imports, import of second-hand CRGO is still going on unhindered due to connivance of officials from BIS and customs. The entire import finds its way into transformer industry.

As a consequence, transformers supplied by unscrupulous vendors to utilities barely last for 3-5 years, though being capital goods they are supposed to have life of over 25 years.

Transformer manufacturers now avoid directly importing electrical steel for meeting their raw material requirement and instead place their orders through traders. So by the time whistle blowers get to know, the low-quality steel is not only processed but also consumed in the manufacture of transformers.

The modus operandi is, small units are being set up in foreign countries like Sri Lanka, Thailand, Nepal, Bangladesh and Dubai to process non-prime CRGO and then bring back the processed material to India as transformers parts, thereby avoiding the very nomenclature meant for CRGO. Importers are also using fake BIS certificates to get their consignments cleared through customs.

Indian Transformers’ Manufacturers Association (ITMA) has brought the issue of second-hand CRGO imports to the notice of concerned ministers and officials. Even power minister Piyush Goyal expressed concern over the bulging heap of junked transformers in the country.  However, no action was taken against importers or unscrupulous transformer manufacturers earlier.  (KNN/NM)