The Narendra Modi government's 2017 strategic plan of disinvestment by clearing sale of 100% stake in three special steel producing units of Steel Authority of India Ltd. (SAIL), Vishweshwaraya Iron and Steel Ltd (VISL), in Bhadravathi, Karnataka, Salem Steel in Tamil Nadu, and Alloy Steel Plant in West Bengal, is being materialised now. SAIL has already rolled out tenders to both international and domestic companies for all the three units. The workers of the VISL are fighting this move of SAIL by protesting in front of the unit.
The ruling All India Anna Dravida Munnetra Kazhagam (AIADMK) government of Tamil Nadu has decided to join hands with the Dravida Munnetra Kazhagam (DMK), the opposition party in the state, and prevent privatisation of the Salem Steel Plant. The workers of all the three steel plants have been protesting, ever since the disinvestment plan of the government was announced in 2017.
Speaking to NewsClick, Jagdish, the union leader of the VISL workers’ union noted that the protest which started on July 5, 2019, will go on till the government rolls back its plans of disinvestment. He went on to say that, “It’s ironic that the government instead of reviving it is interested in privatising it.” Various media reports have observed that these steel plants are running into loss and that is why the plan to privatise them. As Jagdish rightly asks, “Does this logic make any sense? First, it is not true that we are running into major losses and second these losses can be dealt if the government revives the plant. But neither the government nor SAIL is interested in doing this and are hell bent upon privatising the plant.”
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As he explained, the firm in the last three years has incurred loss of Rs 80-100 crore which is nothing compared to losses incurred by the integrated steel plants in the country which run into thousand of crores.
VISL, which was taken over by SAIL in 1997, produces alloy steel and pig iron. It was started by M. Visvesvaraya, a diwan of Krishnaraja Wodeyar and then ruler of Mysore, in 1923 under the name of Mysore Iron Works. This, however, is not the first attempt to privatise VISL. In 2000, there was a plan for privatisation, but it was then said that the defence ministry would take over the plant. But nothing materialised. As The Hindu had reported then, the problems of VISL - the premier producer of alloy steel in the country, founded by Dr. M. Visvesvaraya, in the Thirties - could be attributed to the lack of financial and technical support. Burdened by mounting losses, the State Government asked the Union Government to arrange for the takeover of VISL. As a result, VISL was taken over by SAIL in 1989 as a subsidiary of it. In December 1998, VISL was merged with SAIL.
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As Pramod Melagatti writes in 2000, “However, the expectation that good days of VISL would begin and that it would turn around after it was taken over by SAIL proved to be short lived as it continued to suffer “discrimination” in the absence of adequate investment for the modernisation of the plant. The Union Government had made a commitment during the takeover that it would invest around Rs. 500 crore on the technological upgradation of VISL. In the past 11 years, SAIL has invested only Rs. 200 crore on this plant. The investment made is not adequate and because of it VISL has not been able to yield the desired results. Lack of planning is also attributed as one of the reasons. SAIL invested Rs. 20 crore for modernisation of the ferrosilicon furnace, which was subsequently scrapped.”
Nineteen years later, Jagdish said, there is not much of a difference in the treatment received by the VISL from SAIL. He said, “It (SAIL) has systematically neglected VISL to create a narrative of loss. We demand SAIL start investing in VISL instead.” Referring to the notice (image below) released by the union government in February 2019, regarding the allotment of the iron ore for VISL, he asks, “Was that just a gimmick to get our votes?”
On June 28, 2018, the Deccan Herald reported Chaudhary Birender Singh, then Union minister of steel as saying, “Setting up of a new steel plant with one million tonne capacity normally requires Rs 6,000 crore investment. We are thinking of replacing old machinery and also increase the capacity of VISL to one million tonnes per annum.” Referring to this quote of the minister, Jagdish asks, “Where did this plan disappear? And what about the talks about modernising VISL? Were those talks just to get votes?”