May cut staff by 40-50% as delay in approvals takes its toll on the steel maker’s plans.
With its Orissa project not making much progress, Posco India, the subsidiary of South Korean steel major Posco, has decided to scale down its operations substantially. The company is proposing to set up a 12-million-tonne steel plant envisaging largest foreign direct investment of Rs 52,000 crore at Paradip in Orissa.
The company has sounded out its employees, mostly in the non-executive cadre, to look for jobs elsewhere in view of the delay in implementation of the project and the global slowdown.
Sources said, the management wanted to issue retrenchment notices to the employees, but later reconciled to communicate the message verbally through individual interaction after some of its staff members pointed out that a formal notice will jeopardize their future career. Different department heads have been assigned the responsibility of communicating the exit message to the employees.
When contacted, Saroj Mohapatra, general manager (HR) of Posco India, said, “There is no plan for reduction of staff strength at present. There is no such thing on the agenda.”
At present, the company has about 40 employees across departments such as land acquisition, mines, construction, human resources and administration based at three locations – corporate office in Bhubaneswar, site office at Kujang and liaison office in New Delhi. Around three-fourth of them are non-executives.
This is about half the staff strength the company had two years back. The number of Korean employees has come down from 43 to only 10 in the same period.
Though it is not clear what will be the extent of downsizing, the target is to reduce the headcount by nearly 40-50 per cent, according to sources.
Sources said, the decision to scale down operation has more to do with delay in implementation of the project than the global recession. The company has been unable to acquire its required 4,004 acres of land due to local resistance even after three-and-a-half-years of singing the MoU in June 2005.
Though the proposal for diversion of forest land has got the Supreme Court nod, the project has only received the Stage-I clearance from the Union Ministry of Environment and Forest (MoEF). Sources said, the final MoEF clearance will only come after the company meets the required conditionality which includes deposit of Rs 400 crore for undertaking afforestation in the project area and other mitigation measures.
Similarly, the company’s bid for prospecting licence for Khandahar mines is hanging fire after being entangled in legal issues. Though hearing of all the claimants of this property is over, the state government is yet to recommend Posco’s application for grant of prospecting licence (PL) to the Centre. With the assembly elections in the state round the corner and the ruling coalition’s aversion to rake up any controversy at this juncture, uncertainty looms large on the timely recommendation of PL.
Meanwhile, the company’s management has made it clear that they will not start construction of the project without the PL for captive mines and handing over of the forest land to them.
