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
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.