The Steel Ministry’s efforts to rejuvenate the sick Vishweshwaraiah Iron and Steel Plant (VISP) - the Steel Authority of India ltd’s (SAIl) subsidiary situated in Bhadravathi in Karnataka, by seeking a joint venture (JV) partner to operate it, has met with strong political protests from the state government - that incidentally is a Congress dispensation - which is of the view that by calling a private entity to run the unit would ultimately lead to its privatisation.
SAIl had floated a expression of interest (EOI) in September this year seeking a JV partner from India as well as from abroad to run VISP. Sources informed The Pioneer several entities from Japan and Germany had shown interest in the EOI, however soon after this the unit’s labour union as well as the Karnataka Congress unit launched an agitation against the move.
VISP’s union, sources said, have sought SAIl’s direct intervention in reviving the sick unit, seeking equity participation from the Maharatna company in the form of a brownfield expansion rather than seeking an outside entity as a JV partner. With the unit’s union as well as the state Congress launching strong objections and agitating against the move (with VISP’s workers’ union even going on an indefinite hunger strike), SAIl as well as the Steel Ministry are now left with no option and the matter is currently hanging in balance.
At the same time, VISP is staring at a financial crunch as it has been registering losses consecutively since the last four years. In 2012-13 it suffered losses to the tune of Rs 117 crore, in 2011-12 the losses were 130 crore, in 2010-11 they were 129 crore, while in 2009-10 they stood at 100 crore. In fact official sources said that if the stalemate continued, then VISP may even find it difficult to pay salaries by January 2014.
At the same time with lok Sabha elections just a few months away, sources added that the Steel Ministry may be forced to put the hunt for a JV partner to revive VISP on hold as it is a Congress Government which is at the helm in Karnataka, and the Centre may not like to risk showing itself as a divided house and offer cannon fodder to the Opposition.
VISP - is one of India’s oldest steel plant which was set up 1918 and was acquired by SAIl in 1989. In its heydays VISP has been a major producer of top quality alloy steel and saleable steel and had leading automobile makers as well as bearing manufacturers on its client list. Envisaged by the then Dewan of Mysore M Visvesvaraya, it manufactured alloy steel for various significant sectors like defence, railway, nuclear energy, aviation and auto components.
However owing to poor demand over the past few years and increasing raw material costs coupled with the slump in the global steel market, VISP ran into rough weather. Several of its staff, sources said, has been cut down through the voluntary retirement scheme. SAIl in its EOI had sought an entity having experience in producing alloy steel and carbon steel. VISP has a manpower consisting of 818 officials and workers and has a capacity of 1.18 lakh tonnes per annum.