Staff oppose Vizag Steel's divestment

Employees' unions of Rastriya Ispat Nigam Limited (RINL), the holding company of Visakhapatnam Steel Plant (VSP), are strongly opposing the move to privatise the company.

It may be recalled that the VSP board had recently approved the proposal to divest 25 per cent shares in the company and has sent the same for Centre's approval. Currently, the Centre holds 100 per cent stake in VSP.

The divestment is expected to fetch the government Rs 4,000 crore. Of the 25 per cent, the government has decided to allot 5 per cent shares to the employees of VSP and the remaining 20 per cent to private companies.

"We welcome the proposal to allot 5 per cent shares to VSP employees but at the same time we will not allow the management or the government to divest 20 per cent shares to private parties," Mantri Rajashaker, general secretary, Visakha Steel Employees Congress, which is a recognised union in VSP, told Business Standard.

The INTUC (Indian National Trade Union Congress), affiliated to the ruling Congress government, too is opposed to the move.

The government had, in the year 2000, proposed to privatise the unit when the plant was in huge losses and was referred to the Board for Industrial and Financial Reconstruction. Then too the unions had strongly protested the move.

"Now because of the employees hardwork and commitment, the VSP has turned around. It has cleared all its debts and is earning profits every year. At this juncture, how can workers allow the disinvestment plans?" V Dhana Raju, president, CITU (Centre for Indian Trade Unions)-affiliated Steel Plant Employees Union, asked.

"The central government needs funds, and accordingly the board of directors has taken this decision. There will be no harm to the company' growth with this divestment," a senior VSP official said.

VSP is now a debt-free company and has been clearing all its accumulated losses. Last year, the company earned a net profit of over Rs 1,300 crore. It has embarked on an expansion plan with an investment of Rs 8,200 crore, which it is generating mostly through internal accruals. Post expansion, the company's production capacity would increase to 6.3 million tonnes from the existing 3 million tonnes.