Visakhapatnam: Ups & downs are not new to Steel Plant
Ups and downs are not uncommon for Visakhapatnam Steel Plant. The struggle faced to establish VSP in the City of Destiny decades ago continued even to sustain it years later.
Visakhapatnam: Ups and downs are not uncommon for Visakhapatnam Steel Plant. The struggle faced to establish VSP in the City of Destiny decades ago continued even to sustain it years later. Though initiated with a capacity of 3 million tonnes at a cost of Rs 2,000 crore, the estimated cost had increased to Rs 8,000 crore as the works got delayed for almost two decades.
From 1988, the departments came into existence one after the other at the plant. Coke ovens and coal chemical plant, Sinter plant, blast furnace, steel melt shops and thermal power plant opened their doors gradually. It took years for the Steel Plant to fall back on track from the huge losses it incurred initially for its establishment.
Nine years before, the plant invested to the tune of Rs 12,300 crore to raise its production capacity of 3.6 MT to 6.3 MT. Paying interest for the financial aid turned out to be a challenging task for the company. While earning profits, the VSP was able to sail through the crisis to an extent. But during the years it made losses, the interest rate grew even further. For two years till 2002, the VSP witnessed losses.
Again it started making profits from 2002 to 2015 consecutively. In 2002-2003, the plant's turnover was Rs 5,059 crore, while the net profit was to the tune of Rs 522 crore. In 2007-08, the turnover was Rs 10,433 crore and net profit was Rs 1,943 crore. However, the plant slipped into losses in 2015-16, incurring a loss of Rs 1,604 crore. And the trend continued for the next two consecutive years. Trade union representatives say that there are multiple reasons for the plant to face a financial crisis. There was a time when the plant was also referred to the Board for Industrial Finance and Reconstruction (BIFR) in 2003-04 to tide over the crisis. "Lack of own captive iron ore mine, huge amount of interest paid for the loans availed for expansion plans and fluctuations in steel price in the international market were some of the major reasons for the plant to slip into losses," says J Ayodhya Ram, president of the recognised Union of RINL.
However, the gloomy situation did not deter the employees from bringing the plant back on track by striving hard. As if the losses incurred were not enough, trouble came in the form of POSCO, the South Korean steel joint as it proposed to set up a special grade Greenfield steel plant at Ukkunagaram. The proposal erupted huge protests as it drew the wrath of the employees and the trade unions.
Followed by continued protests, the joint venture with POSCO came to a grinding halt. Now, with RINL's disinvestment plans getting louder, the battle resumes. But
the million dollar question is whether the company will withstand the test of time like it did in earlier times or not.