The ailing 130-year-old Indian Iron and Steel Company gets a fresh lease of life with its merger with Steel Authority of India Ltd.in Kolkata
THE 130-year-old Indian Iron and Steel Company Ltd (IISCO), the country's oldest integrated steel plant, was given a fresh lease of life when Ram Vilas Paswan, Union Minister for Steel, Chemicals and Fertilisers, announced recently that the Burnpur-based company would be merged with Steel Authority of India Ltd (SAIL). After meeting with Buddhadeb Bhattacharjee, West Bengal Chief Minister, in Kolkata on August 31, Paswan said there would be no shortage of funds for IISCO's revival. "SAIL has earned a profit of more than Rs. 2,500 crores this year, so funds will not be a problem. Whatever is required for the revival of IISCO will be given," he said, while speaking to mediapersons after the meeting.
After this merger, IISCO will become the public sector giant's fifth integrated steel plant. The other four are located in Bhilai, Bokaro, Durgapur and Rourkela. A statement by SAIL after the announcement said: "In principle, a decision has been taken for the merger of IISCO with SAIL. However, procedural requirement of approval of the Board for Industrial and Financial Reconstruction (BIFR) and the Union Cabinet will be followed. The revival package worked with the approval of the BIFR will continue to be implemented after the merger. The government of West Bengal will continue to extend the benefits committed to IISCO as part of the revival package under the approval of the BIFR. This will continue even after the merger."
THE announcement is a major victory for the Left Front government in West Bengal, which, for years has been fighting a desperate battle to get the ailing IISCO back on its feet again. Just 10 days before the announcement was made, Buddhadeb met Sajjan Jindal, chairman of the Jindal Iron and Steel Company, assuring him of the full cooperation of the State government, if he wished to acquire IISCO. According to observers, perhaps this made the Centre sit up and do something about the company, which till 2001 had employed over 25,000 people. This move has also given a fillip to the State government's endeavours at industrial resurgence in West Bengal.
Earlier, SAIL and the government had tried repeatedly to find a joint venture company to revive IISCO. In April 2000, SAIL had even issued a global tender for a strategic partner for the company. However, in spite of the shortlisting of multinational companies such as Tyazhpromexort (TPE) of Russia, Mitsui of Japan, and Broken Hill Proprietary (BPH) of Australia, nothing came of it.
IISCO's history goes back to 1874, when James Erskine set up a plant at Kulti to produce pig iron. The company changed hands numerous times till finally it was taken over by the Indian government on July 4, 1972. Seven years later, it was made a wholly owned subsidiary of SAIL.
The timing of its merger with SAIL seems to be right. After 30 years of being in the red, it was only last year that IISCO registered a net profit of Rs.27.09 crores on a turnover of Rs.1,051.26 crores. But this was the result of a number of factors, not just its operations. In the previous two years, IISCO's net losses were Rs.182.32 crores and Rs.179.87 crores. Its accumulated losses are reported to be a whopping Rs.955 crores.
During a visit to the Burnpur plant earlier this year, Paswan announced a modernisation project for IISCO worth around Rs.341 crores. Of this, Rs.230 crores has been earmarked for the Burnpur plant, and Rs.111 crores for the modernisation of the collieries and iron ore mines. This is a part of the revival package approved by the BIFR. "This merger will benefit both IISCO and SAIL. We have one of the largest deposits of iron ore in the country and now SAIL can fully utilise it. We are also hoping that SAIL will be putting money into the modernisation of iron ore extraction as well as modernising the plant at Burnpur," Bhaskar Kumar, IISCO spokesperson told Frontline.
The company's iron ore mines at Chiria, Gua and Mandharpur are considered to be the best in the country. The deposits in Chiria, estimated at two billion tonnes, are the second largest in the world after those in the Ural mountains. With the global steel market facing a crisis of sorts owing to the shortage of iron ore, SAIL is placed at a far more advantageous position now, with IISCO's mines at its disposal. Apart from this, IISCO has three collieries in Chasnala, Jitpur and Ramnagar, which contains more than 125 million tonnes of coking coal.
SAIL's own iron ore deposits are around 800 million tonnes, spread over Jharkhand, Orissa and Chhattisgargh. With IISCO entering within its fold, the company's deposits will increase to more than 3.2 billion tonnes.
THE new development has cheered up the workers of IISCO. The company's permanent workforce stands at 16,700. When its Kulti works was wound up, 3,000 of its employees opted for the Voluntary Retirement Scheme (VRS). "The response to our VRS scheme was not that good probably because the workers were waiting for revised wages," said Kumar. IISCO has not had any wage revision since 1997. Over 37 per cent of the company's income went towards wages.
The merger is a victory for the Save IISCO Committee, comprising all the five trade unions in the steel sector - the Centre for Indian Trade Unions (CITU), the All India Trade Union Congress (AITUC), the Indian National Trade Union Congress (INTUC), the Hind Mazdoor Sabha (HMS) and the Bharatiya Mazdoor Sangh (BMS). Its struggle started in 1985.
Eighty-five-year-old Chandra Sekhar Mukherjee, Chairman of the Committee, told Frontline, "The demand for merger with SAIL was the second phase of our movement. Honestly, we never thought this would finally happen. Everybody here is absolutely overjoyed. But we will not give up the movement, as there is still a lot of work to be done for the revival of IISCO."
The merger has saved not just IISCO, but the entire town of Burnpur, which is totally dependent on the steel company. The smaller industries - such as cement units, re-rolling mills and refractories - that over the years grew around the Burnpur works can now heave a sigh of relief, as the demise of IISCO would undoubtedly have meant their closure.