‘Move on joint venture has created confusion among employees’

The move by Steel Authority of India Ltd. (SAIL), the biggest Indian steel producer, to invite Expressions of Interest (EoI) from interested parties to run one of India’s oldest operational steel plant, the Visvesvaraya Iron and Steel Plant (VISP), at Bhadravati, in a joint venture, has created apprehension among workers.

The Expressions of Interest on SAIL’s website states that proposals from interested parties should be filed by October 31.

Established in 1918, VISP was the dream project of the Dewan of Mysore M. Visvesvaraya. For many years, it provided alloys and special steel for strategic sectors such as defence, railway, nuclear energy, aviation and auto components. In 1989, VISP became a subsidiary of SAIL before being merged with SAIL in 1998.

The VISP’s dedicated mine at Kemmangundi was de-commissioned in 2004 following the expiry of lease, forcing it to purchase iron ore from the open market.

Naturally, this hit profits because of the higher cost and lower margins.

In 2009-10, 2010-11 and 2011-12, VISP incurred losses of Rs. 100 crore, Rs. 129 crore and Rs. 130 crore, respectively. Production at the plant has remained staggered since April 2013 because of poor demand, escalating cost of raw material and the generally depressed global market for steel.

The VISP Employees Union has opposed the move to form a joint venture to operate the plant.

J.N. Chandrahas, union president, told The Hindu that the Expressions of Interest is the first step towards the eventual privatisation of the unit. He pointed out that the Union government had promised to modernise the plant when it was merged with SAIL.

Metallurgical and Engineering Consultants (India) Ltd. (MECON), the public sector consultancy, had recommended in 2008 that SAIL invest Rs. 3,392 crore for the purpose, which would ensure the plant’s viability and profitability, Mr. Chandrahas said.

Mr. Chandrahas said the Expressions of Interest “has created confusion among the workers”. He called for the withdrawal of the Expressions of Interest, failing which, according to him, workers would stage an intense protest. He pointed out that both the Union and State governments have given the necessary approvals for allotting a captive mine in 143 acres of land to the VISP in the NEB range in Sandur taluk.

The government should expedite the process of sanctioning the mine, which will result in lower raw material cost, he said.


Meanwhile, a meeting of elected representatives from all political parties in Shimoga on September 29 opposed the move to form a joint venture. Speaker Kagodu Thimmappa said that Chief Minister Siddaramaiah would be urged to take an all-party delegation to the Centre over the issue.

Meanwhile, an indication of the Steel Ministry’s unease with the proposal is revealed by the fact that its Expressions of Interest states that the announcement should not be taken to mean “an offer/invitation for sale of equity shares or any securities to any institution/public”.