SAIL’S Salem unit sale hits a road block

LAND CON­TRO­VERSY AND EM­PLOY­EES’ UNION IS­SUES MIGHT PUT A SPAN­NER IN CEN­TRAL GOVT’S PRI­VATI­SA­TION PRO­POSAL

Resource Digest - - CONTENTS -

The ear­lier idea to pri­va­tise Steel Author­ity of In­dia Ltd’s (SAIL’S) stain­less steel unit at Salem, Tamil Nadu, might get de­layed. Land and em­ployee union is­sues, be­sides opposition from the state govern­ment, might put a span­ner in the cen­tral govern­ment’s de­ci­sion (the cen­tral govern­ment owns SAIL).

The process has be­gun to se­lect trans­ac­tion and le­gal ad­vi­sors and an as­set eval­u­a­tor for the strate­gic sale. It is learnt that the last date for ex­pres­sion of in­ter­est for the trans­ac­tion ad­vi­sor has been ex­tended twice, as only a sin­gle en­tity had par­tic­i­pated. The ad­vi­sor here would ad­vise on the modal­i­ties and tim­ing of strate­gic dis­in­vest­ment of this unit and two oth­ers, where a sale de­ci­sion was taken, and pre­pare a de­tailed op­er­a­tional scheme to im­ple­ment the process.

Of the land with the plant, about half is not freehold and is an­other ob­sta­cle, said sources. Also last month, Chief Min­is­ter E Palaniswami wrote to Prime Min­is­ter Naren­dra Modi that the move would cause “con­sid­er­able un­rest” among peo­ple whose lands were ac­quired for the unit. He said lo­cals have a “deep sense of pride and at­tach­ment” to the unit, which pro­vided em­ploy­ment to 2,000 peo­ple.

Ac­cord­ing to a pri­vate com­pany ex­ec­u­tive who did not wish to be named, busi­nesses are likely to stay away till these is­sues are re­solved. Some me­dia re­ports had sug­gested that Jin­dal Stain­less was keen on buy­ing a stake in the Salem unit, al­though there has been no of­fi­cial word.

Be­sides Salem, the Cen­tral govern­ment had de­cided on strate­gic dis­in­vest­ment of SAIL’S Al­loy Steels Plant at Dur­ga­pur, West Ben­gal, and Visves­varaya Iron and Steel Plant in Bhadra­vati, Kar­nataka. The govern­ment has bud­geted to raise Rs 15,000 crore from strate­gic dis­in­vest­ment in 2017-18.

An un­named critic of the de­ci­sion on Salem said that it is one of the bet­ter plants of the state-owned com­pany and re­quires only bet­ter man­age­ment to run ef­fi­ciently. “It is func­tion­ing at 35-40 per cent of its to­tal ca­pac­ity and is not over­staffed, un­like SAIL’S other units,” the critic pointed out.

The Salem plant is spread across 4,000 acres and sup­plies wider width stain­less steel sheets/ coils, where the yearly in­stalled ca­pac­ity is 70,000 tonnes in cold rolling mill and 3,64,000 tonnes in the hot one. Its steel melt­ing shop can pro­duce 1,80,000 tonnes of slabs a year. In ad­di­tion, it has a stain­less steel blank­ing fa­cil­ity with a ca­pac­ity of 3,600 tonnes a year of coin blanks and util­ity blanks/ cir­cles.

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