Operations affected as the unit has no captive mine
Visvesvaraya Iron and Steel Limited (VISL), a Public Sector Undertaking (PSU) set up at Bhadravati in 1923, has stopped production for a period of two months from April 5.
This came as no surprise since the PSU, a dream project of Diwan of Mysore M. Visvesvaraya, that once provided alloy steel for strategic sectors like defence, aviation and railways, was not as lucky as private mining firms that got easy access to licences and clearances to extract iron ore in Bellary district. The PSU has had no captive mine for a long time and this had seriously hampered production in VISL for nearly a decade.
The PSU began to face serious problems after the company had to de-commission its dedicated mine in Kemmannugundi in 2004 owing to the expiry of the lease period. The permission to extend it was denied as the area comes under the purview of the Bhadra wildlife sanctuary. Since then, VISL has been purchasing iron ore from the open market at high prices, resulting in escalation in cost of production and decline in profit.
In January 2007, the company had requested both the Union and the State governments to allot a captive mine of 143 hectares in North-Eastern Block Range in Sandur taluk. In July 2007, the State Government had recommended the Union government to grant permission for VISL to undertake mining in 143 hectares of land in the NEB range for a period of 30 years. The private mining firms that were eyeing the rich iron ore deposits there had challenged the recommendation in the Delhi High Court.
The petitions filed by the private mining firms were dismissed by the High Court. While delivering the judgment in favour of VISL, the court had even questioned the intentions of the petitioners. After the clearance of legal hurdles, the survey and demarcation work of mine allotted for VISL was completed. VISL can commence mining here after availing approval from the Directorate of Mines and Geology (DMG), Ministry of Commerce and Ministry of Mines for the survey report.
However, delay in allotment owing to bureaucratic and legal hurdles has pushed the PSU to the red. The company has posted loss from the past few years owing to high production cost and antiquated production system, and the accumulated loss by the end of the year 2011-12 was more than Rs. 100 crore.
The decline in the demand for steel and the slump in the price in the global market owing to economic recession have complicated matters for VISL. The management has decided to halt the production for a period of two months from April 5.
The workforce that was around 12,000 in the year 1989 has come down to 950 now. The management had introduced voluntary retirement system here as part of its cost-cutting exercise. VISL has hired 1,200 contract workers. Speaking to The Hindu , J.N. Chandrahas, president of VISL Employees’ Association, said that permanent workers will get salary and other benefits even for the period when there is no production. The management has agreed to pay wage for 20 days per month during this period for contract workers also, he added.
There are 950 permanent staff members and 1,200 contract workers in the PSU Permanent employees to be paid full salary, and those on contract to get part of their wages
There are 950 permanent staff members and 1,200 contract workers in the PSU
Permanent employees to be paid full salary, and those on contract to get part of their wages