STERLITE Industries has grown dramatically during the last decade. Its turnover increased from Rs.83 crores in 1990-91 to Rs.2,925 crores in 1999-2000. During the same period its net profits rose from Rs.10.28 crores to Rs.337.63 crores, and its net wort h from Rs.42.08 crores to Rs.1,695 crores. Its rapid growth is a classic example of the dramatic rise of a clutch of medium-level enterprises in India during the "reforms decade".
Sterlite's main activity was the production of cables for the telecom industry. The rapid growth of the company is closely linked to the telecom revolution in India during the last decade. It established a Telecom Cables Division in 1988 and has plants a t Aurangabad and Silvassa manufacturing cables.
Its first move in the direction of establishing backward linkages was in the field of copper production. This proved controversial. Its attempt to locate its copper smelter at Ratnagiri in Maharashtra drew sharp protests from the local people, who feared environmental damage.
In October 1994, Tamil Nadu Chief Minister Jayalalitha laid the foundation stone for the company's copper smelter project in Tuticorin.
Two aspects of the company's conduct in Tuticorin have been particularly controversial. The environmental clearances obtained by it have for long been a subject of bitter complaints by the local people, particularly the fisherfolk. In particular, the cop per smelter project's Environmental Impact Assessment (EIA) generated much controversy. There were allegations that the EIA was conducted before the company finalised its project, implying that the parameters were changed later. Dave Santillo, a scientis t associated with Greenpeace, on a visit to Chennai in 1997, remarked that the EIA was "one of the most shoddy pieces of work" that he had ever seen. The EIA remained silent on parameters related to suspended particulate matter, particularly those relati ng to levels of heavy metal such as lead in the effluent.
THE other aspect of Sterlite's conduct in Tuticorin - and one which may have relevance to the employees of Bharat Aluminium Company Ltd, - relates to the company's reputation as an employer. The unions claim that most of the workers at the company's smel ter in Tuticorin are in the category of contract labour, engaged by contractors. The unions have repeatedly complained of lax safety standards at the plant. The company was subjected to intense media scrutiny after an explosion occurred in the plant on A ugust 30, 1997. It made references to a bomb blast which were never proved. However, what certainly happened was that at least two workers died, and two were maimed, in an industrial accident. The explosion ripped off the lid of the rotary holding furnac e. Molten metal at about 1,200Celsius fell on the workers; union sources said that only skeletal remains were recovered from the furnace (Frontline, October 3, 1997).
The unions, backed by human rights organisations, later claimed that complaints from the workers of an impending disaster were ignored by the management. Union sources have for long said that the contract labour system is not conducive to maintaining lab our safety standards.
The Sterlite scrip has attracted controversy in the past. The scrip was among those that rose "abnormally" in May-June 1998, resulting in a payments crisis, much like the current situation in the bourses. The matter was later scrutinised by the Securitie s and Exchange Board of India (SEBI).
Sterlite's chairman and managing director, Anil Agarwal, a non-resident Indian who lives in London, controls a chain of steel companies across the world. He has made acquisitions across the world. Anil Agarwal acquired a 100-year old copper mine in Austr alia, a gold and copper mine in Armenia and a copper smelter in Mexico.
After the acquisition of the Madras Aluminium Company (Malco) in 1995, Sterlite was reported to be considering a greenfield aluminium complex. However, a leading consultancy firm apparently advised Agarwal against such an investment because capacity coul d be acquired from an existing producer. Sterlite's acquisition of Balco is in line with the company's strategy to increase its market share in the aluminium business.
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