The Hindu : Tamil Nadu News : Steel Authority to study melting shop proposal for Salem plant

Online edition of India's National Newspaper
Sunday, Aug 01, 2004

Tamil Nadu

Tamil Nadu

Steel Authority to study melting shop proposal for Salem plant

By R. Gopalakrishnan

SALEM, JULY 31. The Union Steel Ministry has asked the Steel Authority of India Limited (SAIL) to consider the feasibility of putting up a steel melting shop (SMS) in the Salem Steel Plant (SSP) to enable it to overcome the historically-derived disadvantage of a major missing link in the value chain.

Addressing a press conference at the SSP, Ram Vilas Paswan, Minister for Steel, said the absence of a crucial SMS and a slab making facility caused problems in the plant, whose workforce had shown dedication. The plant depended on two private companies (Jindal Stainless and Shah Alloys) for supply of slab and faced a strategic disadvantage in the market.

Investments to the tune of Rs. 800 crores in the hot rolling and cold rolling mills here, commissioned in the mid-1990s, only led to a higher capital cost without commensurate profitability in the absence of an SMS, he said.

Short-term plan

As a short-term measure, the Ministry decided to invest Rs. 40 crores in updgrading the slab mill in the SAIL's Alloy Steels Plant in Durgapur, to improve the quality of supplies to the Salem plant. The cost of putting up an SMS here, estimated formerly at Rs. 400 crores, might need a relook in the current situation. It was a matter for experts to look into, said Mr. Paswan. Declaring that the proposal (of the erstwhile National Democratic Alliance Government) for disinvestment in the SSP was "deferred", Mr. Paswan announced a one-time cash grant of Rs. 1,000 each to all 1,351 employees so that they could "retain their morale and commitment" to this unit.

The Salem plant made a profit of nearly Rs. 2 crores in 2003-04 against cumulated losses of Rs. 900 crores earlier. More importantly, the SSP was a SAIL unit and the SAIL was making handsome profits now. "If one brother in a family falls ill, that does not mean the family will abandon him".

(Sustained profitability of the SAIL fulfilled the requirement, elaborated by Mr. P. Chidambaram, Union Finance Minister, that public sector units which made profits continuously in a competitive market situation would not be privatised, Mr. Paswan told The Hindu earlier on his way to Salem.

He was replying to a question whether the retention of the SSP in the public sector after years of losses met the criteria set by the Finance Minister).

Quota in private sector

Mr. Paswan said that as many public sector units (having job reservation for Scheduled Castes and other disadvantaged sections) were privatised in recent years, a Bill would be introduced in Parliament to enforce a quota in the private sector.

He appealed to all political parties to support the proposed legislation.

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