Sesa Goa and Salgaocar are well known names in the mining industry. In separate interviews, Sesa Goa Managing Director P. K. Mukherjee and V. M. Salgaocar & Bro Pvt. Ltd. Managing Director Shivanand V. Salgaocar spoke to The Hindu on various issues.


What has been the impact of the mining ban?

P. K. Mukherjee: We are struggling for cash flow. The debts are getting rolled over, and whatever cash we had we are utilising in the best possible manner. We have not yet touched the employees, but managerial cadres. We have gone for salary cuts. The number of such people is 700-800. From January, depending on their take home pay, the salary cut ranges from 10-25 per cent.

Shivanand V. Salgaocar: It is a challenging time because it is beyond anybody’s controlOn one side the market is getting affected, and, on the other, for all of us there is uncertainty. We got relationships that we have built, with our stakeholders, truck contractors, the workers, barges. The people will start really feeling the pinch. It is pathetic to hear that they have bought trucks by pledging their jewellery. I am hoping that the situation does not get out of hand.

Are you still paying your employees?

SVS: I don’t know for how long. I am still paying full salaries for my employees. In my case, I am paying all my permanent employees, all I have done is asked them to sit at home so they don’t incur expenses on the canteen and transportation and they don’t create a nuisance there. The temps - I am paying them 50 per cent. My monthly bill is Rs.5 crore on salaries alone. We are talking about 800 people plus temps.

Did you see the ban coming?

PKM: No, absolutely not. We knew that some sort of problems would happen, regulatory things, because that was on the cards right from the time the new government came in Goa. They came with the election plank of huge problem with the mining. In June or July, the Chief Minister published a draft mining policy, in which he talked about capping the total capacity for sometime, at 45 million.

But he said mining is going to stay. People like us who are in the business for 60-70 years said it was welcome steps, let the cleansing happen and black sheep weeded out. The whole stoppage was definitely not expected. For that matter, the whole stoppage and then cleaning, to my mind, I have not heard anywhere in the country or world except Karnataka.

In Karnataka, the dimensions were different. Here there has been peaceful coexistence for decades. When the matter is in SC that takes the priority for us and the governments, but from October 5 till date there has been no hearing. The situation in the villages is quite bad. In its letter to the CEC, the State government has spoken about the economic contribution of mining, they are talking about a multiplier effect of Rs.17,600 crore.

SVS: What can you do when somebody files a case? The entire petition is based on the allegations contained in the Shah Commission. None of them are sustainable.

What are you doing about your buyers?

PKM: We have given force majeure, and there is absolutely uncertainty in the minds of all stakeholders, whether it is investor, buyers, employees, absolute uncertainty. As far as the market is concerned, India is the biggest loser, because whatever market has been developed will be lost. Moreover, no steel mill works on the principle of they like me and they don’t like others.

The point is all blast furnaces in the world work on a particular blend of ore, and any change in the blend of ore means lot of research and development. So, tomorrow if Sesa is going to export, they are not going to say please give it. Again, I have to see the level of the market, and it will take its own time, or you sell it to traders, who will cut your throat. Though we are saying China is going down, it has crossed import of 700 million tonnes. There is 40-50 million tonnes of additional export has come from South Africa, and these people are expanding the operations to fill this gap. When we come back, those people will not leave it because they have also invested.

SVS: It has resulted one complete lack of confidence in the buyers, nobody is interested right now, the ore is basically a low grade ore that we are supplying and not a highly priced or highly valued, not very difficult to come by, and, in the last one year, since no ore is available because of the monsoon, they have made alternative arrangements. I doubt how much of this market that we have lost … we will be able to recover. Our buyers are hoping that this opens up again. Now, they are buying from Australia.

Will you then lose the customer forever?

PKM: Hopefully not. I think the relationship has been built over 30-40 years. But it would be a painful process to come back.

What irks you most?

PKM: Most of the matters are being dealt by people who do not have any stake in that. For them, Goa is one tiny State, what difference does it make.

So much is being talked about fly-by-night operators, what are your comments?

PKM: The industry as such is not organised, there are a number of black sheep. That is 80:20 concept - volume-wise, 80 per cent is done by the relatively cleaner people, and 20 per volume is manned by 80 per cent of the people.

SVS: There are people who have gone out, there are some mining companies who went a little over board but you can’t stop the whole industry just because there were some black sheep.

There is a division of a company in which there is irregularity, you don’t stop operation of the company to do the audit. You cannot blacklist or paint everybody with the same brush. There is a drop in revenue collection for the Centre by way of duties and income tax, the State government used to get royalty and inclusive of VAT it would be around Rs.1,200 crore that would have been lost.

(The correspondent was in Goa at the invitation of GMOEA.)


Minefield of woesFebruary 3, 2013

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