THE merger of the county's oldest integrated steel plant, the West Bengal-based Indian Iron and Steel Company (IISCO), with Steel Authority of India Ltd (SAIL) was cleared by the Union Cabinet on June 16. The much-awaited nod from the Centre brought to an end the woes of the 130-year-old ailing IISCO, situated in Burnpur. The merger was first announced in August 2004 by Ram Vilas Paswan, the Union Minister for Steel, Chemicals and Fertilizers.
Following the Cabinet meeting chaired by Prime Minister Manmohan Singh, Union Finance Minister P. Chidambaram told mediapersons: "The Cabinet today authorised the Ministry of Steel to permit SAIL to initiate the process of merger of IISCO with the steel giant after taking approval of the BIFR [Board for Industrial and Financial Reconstruction]." IISCO, a wholly owned subsidiary of SAIL, will now be its fifth integrated steel plant. According to sources in SAIL, the new Managing Director of IISCO is likely to be Nilutpal Roy, Executive Director (Works) of the Durgapur Steel Plant. Significantly, after spending 30 years 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. Yet its accumulated losses are reported to be Rs.955 crores.
In a press statement, SAIL Chairman V.S. Jain said: "With this approval, SAIL is now in a position to finalise and implement future plans for further growth of IISCO. SAIL will invest in upgrading various facilities of IISCO at Burnpur as well as its collieries and mines." The steel behemoth is planning to invest around Rs.3,000 crores to modernise the IISCO plant. The initial investment will be to upgrade rolling mills. According to Jain, IISCO needs "infusion of manpower from various SAIL units to meet the requirement of absorption of new technology and also to bridge the gap in skills that eroded over time".
SAIL has a lot to gain from the merger. IISCO's iron ore mines at Chiria, Gua and Mandharpur, considered to be the best in the country, will now be at the disposal of SAIL, whose own iron ore deposits are around 800 million tonnes. The merger will increase its deposits to more than 3.2 billion tonnes. IISCO has three collieries in Chasnala, Jitpur and Ramnagar, which contain more than 125 million tonnes of coking coal. "With SAIL's financial and managerial capabilities and the availability of potential with IISCO mines, collieries, large infrastructural facilities and good work culture, there would be greater synergy for capacity expansion and technological upgradation of the plant," said Chidambaram.
IISCO's product profile include beams, channels, angles (equal and unequal), rounds and special sections like the "Z" section, which is reportedly not produced by any other iron and steel manufacturer in the country. Moreover, the proximity of IISCO's mines to its plant site reduces the total cost of production, especially in terms of freight cost. Once the Burnpur plant is revived, "it will be one of the least-cost producers in the industry". After the company's Kulti works was wound up a few years ago, 3,000 of its employees opted for the voluntary retirement scheme (VRS). The permanent workforce of IISCO today stands at a little over 16,000.
The clearance for the merger is also a cause for celebration for the Communist Party of India (Marxist)-led Left Front government of West Bengal and the Save IISCO Committee, comprising all the five trade unions in the steel sector, which have been carrying out a sustained campaign for the cause of IISCO for more than 20 years.
Suhrid Sankar ChattopadhyayCOMMents
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