VISL employees, families worried as India’s first alloy steel plant faces closure

The Central government has reportedly started the process to shut down the century-old VISL in Shivamogga, Karnataka.

ByMahesh M Goudar

Published Jan 24, 2023 | 12:58 PM Updated Jan 24, 2023 | 10:47 PM

VISL closure

The story of Visvesvaraya Iron and Steel Limited (VISL) is also the tale of an ambitious project that pioneered the production of high-quality alloy and special steels and pig iron in pre-independent India.

Established by Bharat Ratna Sir M Visvesvaraya, an engineer of the erstwhile state of Mysore, at Bhadravathi town in Karnataka’s Shivamogga district during the reign of Nalvadi Krishnaraja Wodeyar on 18 January, 1923, VISL is also the country’s first alloy steel plant.

VSIL had seen many ups and downs ever since it was established as Mysore Iron Works. It was named after Visvesvaraya in 1975. The factory gave Bhadravathi the sobriquet, the steel town, a name that many fear might soon be relegated to annals of history.

Efforts are on to keep the plant sailing. The latest move came from former prime minister HD Deva Gowda, who on 15 January, wrote to Prime Minister Narendra Modi to drop any plans to shut down the public-sector undertaking (PSU).

The PSU is now under the Steel Authority of India Limited (SAIL).

Gowda writes to Modi

In his two-page letter, the Janata Dal (Secular) supremo also highlighted the socio-economic consequences of the closure of the unit.

“Under the Central Government disinvestment policy, future in the non-strategic sector, CPSEs (Central Public Sector Enterprises) will be privatised, otherwise shall be closed. The SAIL management has started the closure activities of VISL, Bhadravathi,” the former prime minister claimed in his letter.

“I sincerely hope that with few crores of investment, this company can be transformed into a profitable venture and can further contribute to the development of ‘Atma Nirbhar Bharat’ by catering to the varied departments like defence, railways and automobile sector,” he appealed.

Deve Gowda pointed out the factory’s challenges: “The following challenges such as disinvestment, divestment, privatisation and others are being faced by the factory. But they have not yielded any results: Instead, it has affected the morale of the working class and the citizens of the region.”

Praveen Kumar, the General Manager of VISL, dismissed the news of closing down the part as mere rumours.

“We have not received any kind of information from the Union government on the closure of the plant. No work has been hampered as the factory continues to operate. The higher authority has not yet taken any call on the closure of the plant,” he told South First.

Also read: Centre prepares to invite EoIs to sell Vizag Steel Plant

The BJP, too, is worried

However, Deve Gowda is not the only one who fears that the plant will be shut down permanently. Shivamogga MP BY Raghavendra too expressed the belief that the PSU will be closed. He was part of a delegation led by former chief minister BS Yediyurappa, who met Narendra Modi on the issue.

“A delegation led by Yediyurappa tried to convince the prime minister to find a way to continue the operations, but couldn’t succeed. The Union government is closing down the plant not only because of financial losses but also for failing to attract private investors,” he told South First.

“The Union government is shutting down over 92 such institutions or plants in the country. We had called for a bid from private investors but there were no respondents. We are putting in efforts to stop the authorities from closing down the factory,” he added.

The BJP MP blamed the Deve Gowda government for the development. “The poor policies and lack of visionary leadership during Deve Gowda’s regime as the prime minister are the main reasons for the current condition,” he said.

“I appeal all not to politicise this matter as this process is being carried out across the country,” he added.

In the red

The factory has made more losses than profits. “The company reported its first loss in 1928, within five years of setting up of the plant. The following year, 1929, the factory suffered a loss. However, in the next two decades, the company performed well in terms of production, marketing and revenue grossing,” according to Wikipedia.

“The company had again run into losses in 1970; however, it reported profits of ₹24.13 lakh in 1972. In the following year, the performance declined to such an extent that the SAIL was made to think of disinvesting VISL. Irrespective of the factory’s financial conditions, it continued to remain under SAIL.”

“The company’s fortune changed when it started to make profits from 2004. Since then, the company has witnessed ups and downs. Now, it is being shut after suffering losses for the past few years,” a labour union leader claimed.

According to the latest financial reports, “The company has incurred a loss of ₹377.11 crore by the end of the fiscal year 2021-22. The company has reported losses in the last four quarters. In the current fiscal year, by the end of the third quarter, in September, the company reported a loss of ₹79.51 crore.”

“The assets stand at ₹271.24 crore as on 30 March, 2022. It declared the company’s asset evaluation stands at ₹263.65 crore on 30 September, 2022. The company’s liabilities were ₹63.54 crore by the end of the last fiscal year (2021-22),” SAIL claimed.

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Labour unions, Opposition blame BJP

The news of the Union government initiating the process to shut down the factory has worried the employees and their families.

The contract employees launched an indefinite protest opposing SAIL’s move on Sunday, 22 January. The factory has over 2,000 employees, including 1,340 contract workers.

“The company overall has 2,000 employees. There are around 10,000 people dependent on these employees. The officials have orally conveyed to all employees that the factory will be shut shortly,” VISP Contract Workers Union general secretary and contract employee Rakesh Reddy told South First.

“Officials cited the mounting loss and debts as the reasons. This displays the failure of the state and central governments in keeping the plant running,” he said.

Reddy accused the governments of lacking political will. He said the employees are not against privatisation but are opposing the anti-labour policies of the government.

Bhadravathi’s Congress MLA BK Sangamesh blamed the BJP for the move. “It is a shame on the senior leaders in the government. They could not prevent the Union government from closing this century-old plant.”

He pledged his support to the protesting employees.

“The closure will throw thousands of employees and their families into the streets and negatively impact the region’s socio-economic status. Shivamogga MP BY Raghavendra and his father, former chief minister BS Yediyurappa, showed scant interest in saving this plant,” he added.