Walking through the residential quarters of Visvesvaraya Iron and Steel Plant (VISP) in Bhadravati is like entering a ghost town. Very few among the 1,000 houses are occupied; the rest are in a dilapidated state, some enveloped by weeds.
This is not surprising as VISP, a public sector unit owned by Steel Authority of India Ltd. (SAIL) and a symbol of decentralised industrialisation in early 20th century, is set for disinvestment today. Another industry that was the backbone of the town, State-owned Mysore Paper Mills (MPM), has also stopped production. There has been a drastic reduction in the workforce of both the big industries.
The local economy of Bhadravati hinges on VISP and MPM. Many families here are directly or indirectly dependent on these firms for their livelihood.
ADVERTISEMENT
For instance, sugarcane growers here are in dire straits owing to the decision to halt production at MPM. Transport operators too are now forced to look for other options.
This is reflected in the overall population figures as well. While the town had a population of 1,60,661 in the census of 2001, it declined to 1,51,102 in 2011. The decline is directly linked to the fall of the two premier industries that once saw its population swell.
Authorities say that it was owing to losses incurred by VISP and MPM that the workforce had to be downsized by offering voluntary retirement scheme and freezing fresh recruitment.
ADVERTISEMENT
Meanwhile, recommendations to modernise VISP and MPM have simply been put on the back burner.
The government halted production at MPM from November 2015, and sent workers on mandatory leave. The State government plans to give it to a private firm on long lease. The antiquated production methodologies and change in the market dynamics caused by economic liberalisation are blamed for the loss incurred by these firms. There was a drastic slump in the price of paper in the international market in 2008, and import duty on the product was withdrawn by the Centre during this period. The Indian market was flooded with paper products produced abroad and MPM was not in a position to compete with the foreign players.
International market
Owing to decline in the demand for steel and subsequent slump in its price caused by the global economic slowdown, the VISP had to suspend production for nearly four months in 2013.
The delay in allotment of captive mine is cited as another reason for the losses it incurred. The captive mine owned by VISP in Kemmannugundi was decommissioned in 2004 owing to expiry of the lease period.
The firm has been purchasing iron ore at a premium in the open market since then, resulting in escalation in production cost and sharp decline in profit margins.
The Cabinet Committee on Economic Affairs of the Centre had given in-principle approval in November 2016 for disinvestment in VISP.
A delegation of the functionaries of VISP Workers’ Union met Union Minister for Steel Chaudhary Birender Singh in New Delhi recently and requested him to drop the disinvestment move and provide funds to modernise it.
J.N. Chandrahas, president of the union, told The Hindu that Mr. Singh told assure the delegation that SAIL would invest funds to modernise VISP if the State government sanctions a captive mine.
The State government has sanctioned a 140-acre captive mine in NEB range to VISP, but the firm is yet to get possession of it as there are legal hurdles to surmount.
Sorry plight
Meanwhile, the people in the town face an uncertain future. Eranna, president of the Karnataka Kabbu Belegarara Sangha district unit, said MPM used to to enter into buyback agreement with the cane growers. As the production has come to a halt, farmers will have to switch over to other crops.
Deepak, a resident of Gandhi Nagar in Bhadravati, is planning to sell two trucks that he had purchased on loan from a nationalised bank three years ago. The truck was used to transport sugarcane to MPM and ore to VISP. With both these options gone, Deepak said he would clear the loan by selling the trucks and switch over to other business.